1. Strategic Plan, APP & Budget 24 April 2018
A presentation to the Portfolio Committee for Women in the Presidency The Parliament of the Republic of South Africa
Strategic Plan, APP & Budget
24 April 2018
The presentation provides summaries of financial management matters and results that were subjected to oversight by the Finance Committee and Audit Committee.

2. Table of Contents Introduction and Purpose of the presentation
The Legislative framework
The fiscal environment, principles and planning assumptions
Funding allocations
Risk Management & related matters
Conclusions

3. Introduction This presentation seeks to outline;
the CGE budget for the ensuing financial year (2018/2019);
Draw a link to the APP and other operating activities planned for the same period;
Highlight challenges, threats and opportunities and
Make recommendations for the appropriation for the Annual Plans activities and other matters related to the execution of the plan.

4. Legislative Framework
Chapter 13 of the Constitution of South Africa, Act 108 of 1996 and the Public Finance Management Act of 1999 (as amended) advances for values which espouses openness and accountability in the allocation and use of state resources.
Under Chapter 1 of the PFMA (The Act) the values are bolstered further by provisions stating that the object of the Act is to secure transparency, accountability and sound management of the resources
The Framework for strategic planning and Annual Performance plans of propagates that operational budgets must be linked to the institutions strategic objectives and their respective legislated mandates
Section 38 of the PFMA and related Treasury regulations promotes the integration of Risk Management practices into strategic planning and financial controls

5. NT - Framework for strategic planning

6. Planning principles, parameters and assumptions
General price changes at an annualised rate of 5,5%
Cost of living adjustment for remuneration at 6% p.a. – This will inevitably absorb the additional (but reduced from the previous projections) allocation ( 6% of current COE baseline of R54m)
Previous moratorium on specific vacancies must be retained/upheld, noting that unchanging operating and funding circumstances
To an extent possible, “zero basis” budgeting was followed, consultative approach taken where appropriate.
Rigidities present given the nature and structure of the CGE funding model v operating model – Most of cost components are structurally fixed ( Office overheads and establishment constituting over 80% of the annual budget). This leaves little space for planning of direct APP activities

7. The Fiscal environment - MTEF
Due to the general economic downturn and the resultant constrained fiscal space, over the medium term, National Treasury effected reductions in budget allocations against the CGE baseline.
For the year under planning (2018/2019), a reduction of R2,1 million was made, resulting in a final allocation of R80,7 million. The effective nominal increase of R2,5 million not sufficient to cover the growing spending pressures due to inflation and demands for service delivery betterment.
The budget and Annual Plan were as a result prioritised to ensure that service delivery occurs effectively whilst a sound financial position and performance is retained/sustained by the organisation.

8. At an average discount(inflation) rate of 6% p. a
At an average discount(inflation) rate of 6% p.a., at constant prices ( of period ending 2013).
The graph demonstrates that over the year, the CGE’s baseline was eroded by budgetary cuts.
In earlier period, increase in allocation only covered the effective inflation impact on the baseline - Stagnation
From 2015 period, the CGE operated with a depressed baseline, in Real Terms.
The picture is “worse” if the higher than CPI cost of living adjustments were factored in this calculation
MTEF projects increase in allocation at an average rate of 5,5% over the outer years but remain unfavourable as the baseline remains below the earlier period base in real terms/constant prices

12. The programme will be rolled-out mainly through the use of internal resources, primarily the officials – multi-disciplinary teams of Researchers, Legal & Education officers. The related COE of R19,6 million is earmarked.
Key drivers for Goods & Services, apart from the allocated office overheads, includes travelling & accommodation costs, as well as production of publishable. Goods& Services constitutes R5,2 m or 21% of the SO budget, totalling R24,5m in 2018/2019.
Projections for the future period are made on the basis of the current proportional allocations

14. This SO mainly activities on the ground, reaching out to the public, in liaison with like-minded institutions and other organs of state amongst others. The intensity of personnel time is mainly saturated under this SO. COE is budgeted to R16m of the total SO budget of R20,3 million for the 2018/2019 period.
Travel and accommodation is also a special feature under the R4,3 m good &services budget for this SO during the year 2018/2019.

15. The only alternative to risk management is crisis management --- and crisis management is much more expensive, time consuming and embarrassing.
JAMES LAM, Enterprise Risk Management, Wiley Finance © 2003

16. To support the main core programme, Commissioners and Corporate services activities are packaged under this programme. NB. The Administration component of the overall CGE annual budget is measured to constitute only 27%. Funds have been prioritised towards the main service delivery programme.
Reprioritisation of expenditure was based on the objectives of cost containment and plans for efficiency gains such as the planned use of technology, collaborations and partnering

17. Without good risk management practices, government cannot manage its resources effectively. Risk management means more than preparing for the worst; it also means taking advantage of opportunities to improve services or lower costs.
Sheila Fraser, Auditor General of Canada

18. Conclusions/Recommendations
That the PC notes and approve the allocation of funds for specified programme and expenditure line items, both for the 5-year plan and the APP for the 2018/2019 period.
That the PC notes the funding constraints and other risks outlined posing challenges and potential negative impact to the CGE programmes, including financial viability. Key to note are;
Due to the inadequacy of funding, the CGE will not be able to fill critical positions in the establishment, essential for the execution of the strategic plan – The mitigation plans in place may not be sustainable in the long run.
The Commission could not find scope in the available resources to set aside resources for the replacement of assets – the proposed budget for the current year and outer MTEF period could not provide funding space for Capital Expenditure
Notwithstanding, with cost containment and other mitigations, the Commission remains a going concern, focussing the limited resources primarily towards fulfilling its legislative obligations and mandate.

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