Speech by MEC Phosa on the occasion of the tabling of the adjustment budget statement for 2011/12 to the Provincial Legislature in Nelspruit
25 November 2011
Honourable Speaker and Deputy Speaker
Honourable Premier, Mr D.D Mabuza
Chief Whip of the ruling party
Honourable Members of the Provincial Legislature
Director General and Heads of Departments
Chairpersons and members of Audit committees
Representatives of labour, business, civil society and media
Comrades and friends
Ladies and gentlemen
We strive for a self sustaining economy, which is able to accommodate all the needs of our people. This envisioned path has challenges but more importantly has endless possibilities.
The possibilities of continued improvement in the quality
of life of the people of Mpumalanga, which are propelled by the insightful
determination of the service delivery priorities spear headed by the governing
party, African National Congress, are always seeking our collective commitment
and responsibility to do more for our people.
Economic Outlook
The interlinked nature of the debt crisis and concerns about the banking sector in Europe, coupled with the inability of the advanced economies to generate sustained growth, continue to weigh negatively on the global and domestic economic outlook.
The Minister of Finance, Honourable Pravin Gordhan in his Medium Term Budget Policy Statement in October 2011 indicated that the real gross domestic product (GDP) growth in 2011 is now expected to average 3.1 per cent. This is somewhat below projections made in the National Budget Speech in February 2011.
The provincial economic growth prospects for this year appear to be in line with the national growth expectations, and also our forecast of 3.1 per cent in the Provincial Budget Speech on 24 March 2011. For the period ahead, Mpumalanga’s economic growth rate is expected to average 3 per cent next year and rising to 3.6 per cent in 2013.
The challenge for our province is to increase the economic growth rate to at least 5 per cent per annum, in order to create enough jobs and to significantly reduce the high unemployment. The provincial unemployment rate dropped with 1.3 percentage points to 29.1 per cent in the third quarter of 2011.
We are however, cautiously optimistic about job creation in Mpumalanga after a net gain of 7 000 jobs in the second quarter and 27 000 jobs in the third quarter of 2011, according to the Quarterly Labour Force Survey (QLFS) of Statistics South Africa.
Our province recorded the third highest job gains after Limpopo and the
Free State in the third quarter. The mining, construction and trade sectors were
the main contributors to this positive growth in employment.
The national and provincial inflation rates jumped to levels of 6.0 and 6.1 per cent respectively in October 2011. Inflation is expected to resume its upward trend in the coming months, before declining again in the second quarter of 2012. Increasing food, electricity and oil prices represent the main risks to the inflation outlook.
This situation requires an extraordinary commitment to prudency in
utilization of the limited resources, and collective loyalty to the objective of
a better life for all. In other words, we need:
- a total commitment of the public officials to the
work that they do for the benefit of the people of Mpumalanga;
- all the stakeholders in the chain of service
provision to adhere to the rules governing demand and acquisition of
services, goods and work;
- Service providers and contractors that are committed
to delivering first time quality service, and
- above all, South Africans, corporate and individual
citizens, to honour their tax obligation, for this help the government to
meet its service delivery needs.
Financial Performance on Infrastructure Delivery
The Province has spent on infrastructure a total of R 1.4
billion or 52 per cent of the total allocated budget of R 2.7 billion for
2011/12 financial year as at 31 October 2011.
The expenditure trends on infrastructure vary from department to department with the highest being the Department of Education at 80 per cent as at 31 October 2011.
Honourable Speaker
We will, working together with all relevant stakeholders,
provide support to infrastructure departments in order to fast track the
planning for 2012/2013 MTEF and improve reporting on infrastructure delivery
programme.
We will engage the service of the Infrastructure Delivery
Improvement Plan Technical Assistants to support the provincial departments on
improvement of infrastructure planning, budgeting, maintenance programme
management as well as procurement systems and practices.
The Members of the Executive Council are committed to
provide intensified monitoring and reporting on progress made on infrastructure
delivery programme.
Key Considerations for the Adjustment Budget
Improvement in Conditions of Service
The total adjustment to the provincial equitable shares include R283 million 491 thousand meant to cater for the higher than anticipated wage agreements.
We are required to prioritise health and education
personnel and use surplus funds to the wage requirements constructively.
Accordingly, excess funds should not be used to increase staff establishments,
but rather be directed towards addressing budget pressures, including accruals.
R1 million 462 thousand is also added to the
Further Education and Training Colleges (FET) Sector Grant to cover the full
costs of above inflation increases for Improving Conditions of Service at the
FET colleges.
Funding for Flood Damages
The floods in January and February 2011 caused damage to
houses, roads and schools in the province. R3 million 960 thousand has been
added with respect to disaster funding to provide for repair work to
infrastructure damaged by floods during the mentioned period.
The province receives an additional R3 million 600 thousand through the Education Infrastructure Grant and R360 thousand through the Housing Disaster Relief Grant in the 2011/12 adjustments.
Provincial Fiscal Framework
Honourable Speaker
The amounts proposed in the Bill will adjust the Provincial Fiscal Framework by R769 million 247 from R29 billion 197 million 955 thousand to R29 billion 967 million 202 thousand.
Vote 1: Office of the Premier
The Budget of the Office of the Premier increases by R7 million 239 thousand from R141 million 464 thousand to R148 million 703 thousand, of this amount, R239 thousand is allocated for payment of bursaries for students at institutions of higher learning and a further R7 million is for budget pressures which include litigation claims and investigations amongst others.
Vote: 2 Provincial Legislature
The Provincial Legislature will receive R2 million 400 thousand and R3 million 200 thousand towards an expanded programme of Taking the Legislature to the People to Mkhondo municipality and the State of the Province Address, respectively.
R2 million 343 thousand as well as R1 million 689 thousand
in revenue generated by the Provincial Legislature during the 2010/11
financial year will automatically go back to the Provincial Legislature in line
with section 22(1) (5) of the Public Finance Management Act.
The Provincial Legislature has received R3 million 837
thousand from the European Union in order to deepen and entrench people-centred
democracy, strengthen law-making and oversight capacity.
The Budget of the Provincial Legislature increases by R13 million 469 thousand from R193 million 974 thousand to R207 million 443 thousand.
Vote 3: Department of Finance
The Department of Finance receives R4 million 280 thousand from roll over and R7 million 700 thousand in order to cater for fluctuations in exchange rates. R23 thousand is also added to the baseline of the Department in order to account for the balance of the donation received in the previous financial year.
The Budget of the Department increases by R12 million 3
thousand from R216 million 573 thousand to R228 million 576 thousand.
Vote 4: Co-operative Governance and Traditional Affairs
The Department receives R24 million 900 thousand to support municipalities in the areas on technical services such as waste management, procurement of graders, fuel, repairs to graders.
R10 million is provided for any disasters that can occur
and a roll-over of R20 million 565 thousand in order to cover the costs of ICT
equipment in Disaster Management centre, Municipal Infrastructure Grant assessments
as well as transfer to Delmas plant.
The Department also receives R7 million for funding of
critical posts, R100 million to give effect to function shift from the
Department of Human Settlements and R536 thousand from the Expanded Public Works
Incentive Programme Grant for work performed in the infrastructure sector.
The budget of the Department increases by R163 million 1 thousand from R325 million 643 thousand to R488 million 644 thousand.
Vote 5: Agriculture, Rural Development and Land Administration
The Department receives R1 million 855 thousand from the Expanded Public Works Incentive Programme Grant for the Infrastructure sector.
A contribution of R1 million 64 thousand has been made
towards the Comprehensive Rural Development Programme by the National Department
of Rural Development and Land Reform.
The budget of the Department increases by R2 million 919
thousand from R969 million 111 thousand to R972 million 30 thousand.
Vote 6: Economic Development, Environment and Tourism
The budget of the Department increases by R47 million 721
thousand from R647 million 741 thousand to R695 million 462 thousand in order to
address budget shortfall for the Mpumalanga Tourism and Parks Agency. Amongst
other things, additional funding will cover standby and housing allowances, long
outstanding trade payables and tourism promotion initiatives.
Vote 7: Education
The Department of Education receives R109 million for improvement in conditions of service. A further amount of R1 million 462 thousand is allocated towards additional cost of the 2011 wage agreements for the employee in Further Education and Training Colleges.
This adjustment makes provision for additional R3 million 600 thousand from the national fiscus towards the rehabilitation of those schools that were damaged by storms in January and February 2011.
Further allocation of R113 million 703 thousand
Infrastructure Grant and R3 million 386 thousand in Technical Secondary Schools
Recapitalisation Grant is made available in this adjustment budget.
The Department also benefit from Schedule 5 conditional
Grants roll over approvals in the following conditional
Grants: National School Nutrition Grant to the tune of R7 million 50 thousand;
HIV and Aids Life Skills Grant amounting to R123
thousand as well as Technical Secondary Schools Recapitalisation Grant totalling
R316 thousand.
Job creation effort is incentivised through allocation of R10 million 437 thousand from the Expanded Public Works Incentive Programme Grant which is made up of R9 million 901 thousand generated from the social sector as well as R536 thousand from the infrastructure sector.
The budget of the Department increases by R249 million 77 thousand from R12 billion 951 million 753 thousand to R13 billion 200 million 830 thousand.
Vote 8: Public Works Roads and Transport
The baseline of the Department is adjusted downwards by R330 million 649 thousand in order to cater for the function shift of Traffic Management.
Honourable Members will recall that R30 million was allocated to the Department of Public Works Roads and Transport as earmarked funds for storm damages in the province. The funds have been reallocated to the Department of Health and are accounted for later in this address.
The Department receives a portion of the Infrastructure
Grant to Provinces amounting to R173 million 834 thousand that was previously
withheld due to slow spending in 2010/11 financial year.
We are encouraged by the improvements in the spending trends for the current financial year in the Department.
The Department receives an allocation from the Expanded Public Works Incentive Programme Grant to the amount of R1 million 70 thousand and R6 million 808 thousand from jobs created in Public Works the Roads Sector respectively.
Honourable Speaker
When roll over approvals are Granted on conditional Grants, the equitable share funding of departments that did not surrender unspent conditional Grant funding is reduced in order to reimburse the conditional Grant. This amount becomes a first charge on the budget of the respective department.
The budget of the Department is reduced by R3 million 879 thousand as a first charge to reimburse two conditional Grants namely the Public Transport Operations Grant and Overload Control Grant amounting to R3 million 548 thousand and R331 thousand, respectively.
The Budget of the Department decreases by R182 million 816
thousand from R3 billion 776 million 25 thousand to R3 billion 593 million 209
thousand.
Vote 9: Safety, Security and Liaison
The baseline of the Department of Safety, Security and
Liaison is adjusted upwards by R330 million 649 thousand in order to cater for
the function shift of Traffic Management.
By virtue of the function shift, the Department receives the Overload Grant amounting to R331 thousand which is a roll over from 2010/11 financial year. The Department receives some incentives for the jobs created in the social sector amounting to R196 thousand from the Expanded Public Works Incentive Programme.
The budget of the Department of Safety, Security and Liaison increases by R331 million 176 thousand from R122 million 553 thousand to R453 million 729 thousand.
Vote 10: Health
An adjustment amounting to R46 million is made available to the Department of Health in order to provide for the 1.3 per cent difference between the 6.8 per cent increase and 5.5 per cent on Improvement of Conditions of Service (ICS).
An amount of R100 million is added to the baseline of the
department to augment the line item of compensation of employees.
Roll-overs have also been approved at a national level on Schedule 5 conditional Grants amounting to R6 million 344 thousand. This is made up of R2 million 493 thousand from the Forensic Pathology Grant and R3 million 851 thousand from National Tertiary Services Grant.
The Department receives R3 million 310 thousand in incentives for the jobs created in the social sector.
R18 million 500 thousand is allocated for stabilization of building structure at Shongwe Hospital as well as provision of a dedicated electricity line.
A further amount of R8 million 620 thousand is allocated to the department to enhance security measures at the following 10 prioritized hospitals: Middleburg; Witbank; Embhuleni; KwaMhlanga; Mmametlake; Shongwe; Barberton; Rob Ferreira, Themba and Piet Retief.
The budget of the department increases by R182 million 774 thousand from R7 billion 365 million 135 thousand to R7 billion 547 million 909 thousand.
Vote 11: Culture, Sport and Recreation
Approximately R500 thousand of the funds previously
allocated for construction of two community libraries will be utilised to
purchase a site for a library in Klarinet. The remainder of the funds will be
used to purchase books to support secondary school education.
The department will receive R36 million to fund the budget shortfall in the construction of the archive building.
The budget of the department will therefore increase by
R36 million from R337 million 102 thousand to R373 million 102 thousand.
Vote 12: Social Development
The Department receives R4 million 462 thousand and R572 thousand in order to fund the absorption of 71 bursary holders, of which 46 are Social Workers and 25 Community Development Practitioners and other registered pressures respectively.
The budget of the department increases by R5 million 34 thousand from R956 million 57 thousand to R961million 91 thousand.
Vote 13 Human Settlements
The Department of Human Settlements receives R360 thousand
through the Housing Disaster Relief Grant for the rehabilitation of houses that
were damaged by storms during January and February 2011.
The Department receives R1 million for electrification of housing units in Nkomazi Municipality and R290 thousand for the payment of retention fees after the completion of the project in Mbombela at Phumlani village.
The R100 million earmarked for water provision is shifted from the baseline of this vote to the Department of Cooperative Governance and Traditional Affairs.
The budget of the department decreases by R98 million 350
thousand from R1 billion 194 million 824 thousand to R1 billion 96million 474
thousand.
The Honourable Premier in his State of the Province address earlier this year said:
“...for these good intentions to see the day of light, proper planning and tight monitoring of the implementation plans is extremely crucial.”
We would like to add that continued fiscal discipline and effective monitoring of expenditure are also critical to ensure that the government continues to provide for the needs of all the people.
Honourable Speaker
We are committed to a programme of cultivating an environment which will eliminate corrupt and ill conceived practices in the public service.
Accordingly, the provincial government has adopted and communicated a policy framework with the objective of restricting public officials from doing business with the government.
The awarded tenders that are within the policy threshold
are now published on the website of the Department of Finance.
We will also continue to enforce the vetting and rotation of staff in the
procurement environment.
Honourable Speaker, let me take this opportunity to extend my gratitude to the African National Congress and the Honourable Premier for entrusting us with the responsibility of managing the provincial fiscus.
I would also like to thank my colleagues in the Executive Council for supporting this adjustment budget proposal and its associated envisaged outcomes.
A word of thanks also goes to the members of the Budget
and Finance Committee for their undivided support throughout the process of
producing this budget. The Portfolio Committee on Legislature, Premier’s office
and Finance for contributing immensely to the successful execution of our
mandate.
The Auditor General, the Chairpersons and members of the
Audit committees in the various departments for their skilful and diligent
advices.
To the Acting Head of Department and Team Finance in general, thank you very much for your continued commitment and support.
Honourable Speaker,
We are confident that the adjustment budget that we table
today represents the wishes of the majority for continued improvement in their
quality of life.
We firmly believe that there is no better place to demonstrate our commitment to meet their aspirations and wishes than in the adjustment appropriation that we are proposing today.
I now have the honour to introduce Mpumalanga Adjustment Appropriation Bill 2011 and Estimates of Provincial Revenue and Expenditure for 2011/12 for consideration by the House.
May God Almighty bless the noble deeds that this adjustment budget is meant to fulfil.
I thank you.Issued by the Department of Finance, Mpumalanga Provincial Government
