1. Provincial Expenditure Report SELECT COMMITTEE ON FINANCE
as at
31 march 2017
Presentation
to the
SELECT COMMITTEE ON FINANCE
Date: 24 MAY 2017
Presentation by:
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2. Presentation Outline
Implementation of the provincial economic growth and development strategies
Unauthorised, irregular and wasteful expenditure
Provincial own revenue collection and challenges
Aggregate provincial expenditure
Economic Classification
Infrastructure expenditure on economic and social infrastructure
Fiscal Position
Recommendations
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3. Provincial Economic Growth and Development Strategies
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4. Population Trends Population Size
Youthful Population
Population Size
1996 (2.9m) (3.7m) – 2020 (4M)
Fertility Rate
(3.11) – (3.30) (2.90)
Life Expectancy
Male – 53.1; Female – 59.9
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5. HDI, GINI & Poverty – 2015 Data
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6. Provincial Economic Trends
SA & NW Average Annual Growth Rate
North West economy grew by 1% during 2016.
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7. Growth and Development Strategies
Taking into account the rural dynamics of the Province, the following Five (5) concretes are being implemented in line with the NDP in order to achieve sustainable development:
Agriculture , Culture and Tourism (ACT);
Villages, Townships & Small Dorpies (VTSD);
Reconciliation, Healing and Renewal (RHR);
Setsokotsane (comprehensive & integrated service delivery campaign); and
Saamwerk-Saamtrek (call for unity of purpose above race divisions).
The first two of the five concretes are specifically designed to ensure improved economic growth.
To ensure Comprehensive and Competitive Sound policies, the provincial government has completed the following two studies
Potential role and contribution of ACT and VTSD in boosting provincial and local development;
An integrated manufacturing strategy for the North West Province.
To further ensure growth of SMMEs through participation in the mainstream economy, the province will amongst others in the current financial year host 4 BRICS Investment Makgotla’s across 4 districts of the province
The Provincial Development Plan aligned to NDP anchored on the five concretes will be finalised by end of end of July 2017.
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8. Growth and Development Strategies
To Facilitate Growth and Development, The province has in the Previous Financial Year established:
Local, District and Provincial Chambers of Commerce in the context of VTSD SMMEs
ACT achievements:
Number of tourists to the province improved from 5.1% to 9.4% between first quarter and third quarter of 2016/17;
Artist development through VTSD recording studios (2 studios completed to date);
The province identified four Agriparks, one in each municipality of which Springbokpan in the Ngaka Modiri Molema district is operational. .
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9. Growth and Development Strategies
VTSD Expenditure with VTSD Transfer Payments
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10. Growth and Development Strategies
are owned by youth in the province
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11. Unauthorised, Irregular
and
Wasteful Expenditure
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12. CURRENT STATUS PER DEPT
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13. CURRENT STATUS PER DEPT
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14. STEPS TAKEN
Finance bill for unauthorised expenditure for R285 million was tabled before Provincial Legislature during March 2017;
Provincial Treasury has initiated various processes to assist departments in facilitating the clearance of irregular expenditure .
During , Provincial Treasury provided departments and in particular chief financial officers of departments and public entities further training on the guideline issued by National Treasury on the various processes of dealing with clearing of irregular expenditure.
The fifth administration mandated Provincial Treasury to establish a Committee (which includes Auditor General, Internal Audit, Office of the Premier and the Accountant General chaired by an Independent person) that will guide and advise Departments and Public Entities on how to deal with irregular expenditure incurred in prior years before being condoned by relevant authorities as indicated in the National Treasury guideline.
Terms of reference (ToR) has been developed and approved for the Committee. The committee is called PACO (Provincial Advisory Committee) and was appointed for a period of 2 years and commenced its work in November 2016.
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15. PROGRESS TO DATE
The committee has held 3 sittings so far and three (3) Departments (Office of the Premier, Culture, Arts & Traditional Affairs, Social Development) have appeared before the committee;
The rest of the Departments and Public entities are in the process of locating supporting documents from previous financial years and others cannot clearly indicate to the committee what investigations have been done and consequence measures taken;
About 5% irregular expenditure has been recommended for condonement by relevant authorities;
All departments and entities were instructed to investigate all outstanding matters relating to irregular and fruitless expenditure and take appropriate action.
Office of the Premier through the Integrity Management Unit follow up on the implementation Consequence Management measures
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16. UIF
In addition, all departments have been directed by EXCO to implement the following punitive measures for the prevention and reduction of UIF expenditure:
All accounting officers have been directed to implement the following serious consequence management actions:
In instances where officials have committed fraud and corruption and have been found guilty, they will be dismissed with immediate effect;
To recoup financial losses suffered by the state from pensions;
Open criminal cases with the relevant law enforcement authorities;
Blacklist affected officials to make it impossible for them to obtain jobs with National Departments or other Provincial Administrations and Municipalities;
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17. Provincial Own Revenue Collection and Challenges
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18. Actual Revenue Collection –31 march 2017
Collection has increased compared to the last financial Year (2015/2016) by 6.91 % with an estimation of over collection, only three departments still under collecting
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19. Actual Revenue Collection – 31 march 2017
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20. Actual Revenue Collection – 31 march 2017
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21. Actual Revenue Collection – 31 march 2017
Provincial Revenue Policy Aim to:
Increase contribution of provincial own revenue from 3.1% to 4.5% ;
Annually review provincial revenue enhancement strategy in order to:
Meet their revenue collection targets;
Expand revenue base by identifying new sources of revenue;
Minimise revenue collection costs through efficiency improvement;
Facilitates the process of recovering outstanding debt.
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22. Actual Revenue Collection – 31 march 2017
Main challenges include:
Failure by municipalities to pay collected motor vehicle licence fees;
Information system weaknesses failing to address abuses of public health services;
Loss of departmental revenue as a result of introducing E-Tender system
Protracted dispute between Tasima and E-Natis resulted in failure to adjust tariffs on time
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23. Aggregate Provincial Expenditure
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24. Expenditure as at – 31 march 2017
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25. Expenditure – as at 31 march 2017 economic classification
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26. Expenditure – as at 31 march 2017
The Province registered an improved spending rate at 98.1% compared to the 97.6% of the previous financial year, with the Department of Health and the Provincial Legislature recording over spending of 0.9% and 0.2% respectively;
Payments for capital assets improved from 92% in the previous financial year to 98% in 2016/17;
Personnel spending shows a stabilisation; from a reduced adjusted budget of Compensation of employees, the Province recorded 98.6% expenditure;
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27. NW Compensation of Employees
Comparative Analysis
NW Compensation of Employees
And
Goods & Services
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28. CoE Expenditure – as at 31 march 2017
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29. COE Expenditure – as at 31 MARCH 2017 (Y-on-Y comparison)
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30. COE Expenditure – as at 31 MARCH 2017
The Province implemented a flexible moratorium on filling of vacant position;
Departments had to get approval from the Provincial Treasury and Office of the Premier before filling any vacant position;
As a consequence of the implementation of the flexible moratorium, an amount of R502 million was shifted from compensation of employees;
Savings realised from the CoE, have been directed towards project and programme implementation.
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31. Goods & Services Expenditure – as at 31 march 2017
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32. Goods & Services (Core Items) Expenditure – as at 31 march 2017
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33. Expenditure as at – 31 march 2017 department of health
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34. Expenditure as at – 31 march 2017 department of education and sports development
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35. Conditional Grants Spending – as at 31 March 2017
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36. EPWP Conditional Grants Spending – as at 31 March 2017
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37. Infrastructure Expenditure on Economic and Social Infrastructure
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38. Infrastructure Spending as at 31 March 2017(incl. Con Grants)
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39. Infrastructure Spending as at 31 march 2017 (Excl. Con Grants)
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40. Fiscal Position Slide 40 Together moving Bokone Bophirima forward.
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41. PROVINCIAL CASH BALANCE AS AT 31 MARCH 2017
Table 1
Bank Accounts' Name
Balance as at
31 March 2017
Intergovernmental CC R
North West Provincial Exchequer R
North West Call a/c R
Fixed deposit R R
Table 2
Department
Office of the Premier R
Provincial Legislature
Health R
Culture, Arts and Traditional Affairs R
Community Safety & Transport Management R
Economy and Enterprise Development R
Finance R
Education and Sports Management R
Local Government and Traditional Affairs R
Tourism R
Public Works and Roads R
Social Development R
Rural, Environment and Agricultural R
Development
Cash in PMG accounts of Departments R
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42. Accruals as at 31 MARCH 2017 Slide 42
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43. Accruals as at 31 MARCH 2017
The main contributor to the Provincial Accruals is the Department of Health;
Through various interventions the accruals have been consistently reduced to almost half over a period of two years.
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44. Recommendations
It is recommended that the Select Committee on Finance note:
The aggregate pre-audited provincial spending of R billion or per cent of the adjusted allocation with a under spending of R million as at 31st of March 2017;
The improved revenue collection of 105 per cent or R1.153 billion compared to the under collection of per cent of last year;
The Province has contained spending on compensation of employees and no overspending has been recorded in respect of this expenditure item
The provincial spending on conditional grants of 94.5 per cent and the poor spending on infrastructure excluding conditional grants at 84 per cent;
Provincial Treasury will sourcing departmental plans to pay accruals from 2016/17 financial year by May 2017 and also to pay within the 2017/18 allocation where roll overs are not approved;
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45. Recommendations
Interventions to improve provincial spending and delivery in 2017/18:
All contracts for projects to be implemented in 2017/18 will be awarded before end of first quarter;
Provincial Treasury engaged departments to assess readiness of project implementation and roll out plans;
Focus will also be on infrastructure spending towards VTSD areas;
Planning for the 2018/19 financial year will be finalised by November 2017.
Infrastructure Delivery Management System (IDMS) to be strengthen and sustained within Provincial Departments;
Standard for Infrastructure Procurement and Delivery Management (SIPDM) will be institutionalised for infrastructure procurement.
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46. Thank you
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