2019/20 PROVINCIAL BUDGET SPEECH PRESENTED BY MS. MOTLAPULA ROSHO, MEC FOR FINANCE AT THE NORTH WEST PROVINCIAL LEGISLATURE ON 04 JULY 2019
Honourable Speaker, Ms. Susan Daantjie Honourable Deputy Speaker, Ms. Viola Mocumi Honourable Premier, Prof TJ Mokgoro Honourable Members of the Executive Council Honourable Members of the Provincial Legislature Executive Mayors and Mayors of Municipalities Modulasetilo wa Ntlo ya Dikgosi, Kgosi Moshe Mabe Chairpersons and Board Members of Public Entities Administrators, Heads of Departments and CEO of State Owned Entities Distinguished Guests Bagaetsho, Dumelang Honourable Speaker, on the 5th of March 2019, the former MEC for Finance, Economy and Enterprise Development stood on this podium and introduced the 2019 Appropriation Bill to this House. This was done in line with section 27 (2) of the Public Finance Management Act (PFMA). As we are all aware, subsequent to the general elections held on the 8th May 2019, the Premier of North West, Honourable Prof Mokgoro reconfigured the provincial departments in line with the Constitution of the Republic of South Africa. The reconfiguration of the departments has necessitated the withdrawal of the Bill which was tabled in March 2019 and the introduction of the aligned 2019 North West Appropriation Bill. The process of reconfiguration entails movement of functions from one department to another and is envisaged to improve efficiency, well-coordinated and integrated government operations which will lead to improved service delivery.
In preparation of this new Appropriation Bill, the Provincial Government has commenced with the process of ensuring that the 6
Administration priorities as outlined in the State of the Nation Address and the State of the Province Address are incorporated in the 2019 MTEF Budget.
, this Bill is tabled in line with the principle of
funds follow functions
” aligned to Proclamation No
. 8028 and as such the following elements as contained in the State of the Province Address as pronounced by the Premier remain the focus areas:
Unemployment (Grow the economy and creation of jobs)
Provision of water and sanitation,
Improvement of roads with specific emphasis on rural areas,
Provision of housing,
Effective delivery of quality health services,
Fighting crime and corruption, and
Facilitate access to quality education and land Mmusakgotlha, re tlhoka go ikamanya le moono wa ga Tonakgolo Rre Job Mokgoro fa a ne a re
Sechaba sa Bokone Bophirima se re neile maikarabelo a bo-kgajane le botshwara teu, pholo tsa rona di gokeletswe mo megomeng, pelesa mo letlhajaneng. Re goga morwalo
re semeletse re a lema”.
The department therefore, embraces the profound commitment made by the Honourable Premier and we confirm that as a department we are equal to the task.
also reiterated the Presidents’ call towards the
country’s seven main growth
priorities which will be a focal point for the next five to ten years. The priorities are:
Economic transformation and job creation
Education, skills and health
Consolidating the social wage through reliable and quality basic services
Spatial integration, human settlements and local government
Social cohesion and safe communities
A capable, ethical and developmental state
A better Africa and World
the latest statistics show that the provincial economy has only grown by 0.19 per cent in 2018 compared to the national growth rate of 0.8 per cent which also reported a Gross Domestic Product (GDP) decline of 3.2 per cent in the first quarter of 2019. These growth rates are lower than the planned annual growth rate of 5.6 per cent that is believed to be significant enough to half unemployment and poverty by 2030. The provincial population is growing at an annual rate of 1.62 per cent and it is projected to increase from the current 3.85 million people to 4.06 million between now and the next two years. This growth rate is much faster than the economic growth rate, which means that our people are getting poorer, and therefore are justified to expect much more efficient, coordinated and integrated delivery of services from the provincial government. About 60 per cent of the population live in poverty and are mostly located in rural areas. In addition, the Province is experiencing rapid urbanisation and migration of poor people especially in the two districts of Bojanala and Dr. Kenneth Kaunda. This is creating service delivery pressures for secondary cities located in those districts.
it is important to indicate that low income households and small businesses are severely affected by the hardships of the underperforming provincial economy. Over the years, the administered prices for commodities that are necessities for households and critical production inputs for small businesses have increased faster than the inflation rate. For instance between 2018 and 2019, the price of electricity increased by 13.8 per cent and water tariffs increased by 14.6 per cent. The average petrol price increased from R6.92 per litre to R16.57 a litre between June 2008 and June 2019 while average wage rates grew by inflation rate or lesser.
the Premier has clearly outlined the provincial initiatives that seeks to stimulate provincial economic growth through collaborative effort between government and private sector in all areas across the province. Resultantly, the budget I am about to table serves as a means towards mitigating the current surmountable service delivery challenges as well as creating a conducive economic environment for the public and private sector involvement. In our quest to improve the living conditions of our people, we commit to broaden community participation, with specific reference focus to designated groups (youth, women and people with disabilities) in the economy through creation of employment and business opportunities. This budget further seeks to accelerate the provision of quality education, health care, decent housing, water, sanitation, roads and other services. This coupled with the provision of a decent social wage to our people, will have a greater impact on reducing poverty and inequality that is prevalent in our Province. Greater efforts will need to be directed towards the Dr Ruth Segomotsi Mompati and Ngaka Modiri Molema Districts since these two have a GDP per capita lower than that of the other two districts and of the provincial average.
, e tsentse tlhako mo kgamelong. Maemo a ikonomi a bokete mme le fa go le jalo, re tlhoka gore mo gare ga yona tobetobe e, re ntshe ditlhogo mme re tseye karolo go bona gore baagi ba rona ba bona thebolelo e e lolameng ya ditirelo. Go botlhokwa gore re nne le mananeo a a kobisitseng go fitlhelela maitlhomo a a tla re kgontshang go rebola ditirelo le go tsaya karolo mo mananeong a ikonomi naga ka bophara.
, Provincial Treasury together with Office of the Premier will ensure implementation of reconfiguration of departments and public entities takes place
without any interruptions on service delivery. Provincial Treasury has already completed the re-alignment of the Provincial Budget and is progressing well with changes to provincial financial systems and related banking arrangements.
The Provincial Treasury has introduced programmes which promote monitoring and enforcement of Audit Actions Plans to ensure that Departments and Public Entities are held to account and provide the Executive with measures to prevent repeat findings and achieve improved audit outcomes. Such measures will include but not limited to withholding of funds where there are no improvements in the audit action plans that Departments and Entities have committed to implement, and these funds will be redirected to service delivery programs.
, the Sixth Administration is resolute and will deal decisively with irregular expenditure as follows:
In line with Premier’s pronouncements, the
Provincial Treasury has commenced with the pre-audit of bids/tenders in excess of R10 million to provide assurance and limit potential irregular expenditure timeously before the awarding of the bids. This will improve accountability in the bidding processes;
Relentless oversight with punitive measures to culminate into consequence management will be intensified by conducting investigations, identifying loss to the state and holding officials accountable;
Investigative capacity will be established in Provincial Treasury to assist Departments and Entities to conduct independent investigations and fast track recommendations relating to current and previous years irregular expenditure;
Funds will be withheld where continuous transgressions are identified in Departments and Public Entities to limit further incurrence of irregular expenditure;
In partnership with the Public Service Commission, the Provincial Treasury will inculcate a culture of ethics to promote behavioural change in the Public Service;
Approval of deviation and variation will no longer be automatic and be subjected to stringent scrutiny effective from today. The Provincial Treasury will intensify the assessment for the approval and where it is found to have been implemented without due consideration and approval, responsible officials will subjected to financial misconduct and external stakeholders to recovery of the loss.
, during the last quarter of 2018/19 financial year, Provincial Treasury, in collaboration with National Treasury, conducted Supply Chain Management (SCM) competency assessment of all officials in SCM units of all Departments, Public Entities and Municipalities. The aim of the exercise was to identify skills gaps and implement training and capacity building interventions. The identified capacity building intervention programs will be rolled out in the third quarter of 2019/20 financial year. The Provincial Treasury has embarked on a process to professionalize SCM in the North West Provincial Administration. In responding to this, SCM Practitioners have been registered with the Chartered Institute of Purchasing and Supplies (CIPS). National and Provincial Treasury finalized Supply Chain Management Framework and is already rolled out to Provincial Departments and Public Entities for implementation. The framework enforces Provincial Departments and Public Entities to have capacitated SCM units including dedicated contract management components.
As per the Premier’s announcement, the
Instruction note which monitors the sub-contracting and the reduction of the threshold from R30 million to R10 million given our rural nature and the socio-economic conditions will be issued during the second quarter of the current financial year. This process is intended to benefit businesses owned and operated by people from designated groups (women, youth, people with disabilities).
Working together with the Department of Trade and Industry, Department of Economic Development, Environment, Conservation and Tourism and Provincial Treasury will identify and set aside some locally manufactured products to be procured by government and its entities. This process intends to empower SMME businesses operated by designated groups (women, youth and people with disabilities).
the Premier expressed his concern regarding the audit outcomes of municipalities based on the recent report by the Auditor-General (AG). I
n responding to the Auditor General’s report on 2017/18
Audit Outcome, Provincial Treasury in collaboration with National Treasury, is rolling out a municipal finance improvement programme. This National initiative complements the Provincial municipal support strategy to support efforts of municipalities to improve their Audit Outcomes. The Provincial Government remains committed to support and strengthen the capacity of municipalities to management its own financial affairs. Provincial Treasury implemented the contract management support programmes with resources deployed to all 22 municipalities. The objective of the contract management support programme is to support municipalities to establish effective contract management systems and develop a consolidated municipal contract register for effective monitoring at provincial level.
Provincial Treasury will work together with National Treasury and Department of Cooperative Governance and Traditional Affairs to enforce general financial management compliance in line with section 62 of the MFMA to improve accountability and address the following in municipalities
Weak/Collapsed Control Environment;
Non-Compliance to Laws and Regulations;
Implementation of Standard Operating Procedures to address Non-Compliance to key financial management practice;
Provincial Treasury will aggressively deal with any municipality that fails to comply with applicable laws and regulations which amongst others include withholding of grants in particular Equitable share, in line with Section 216 of the Constitution of the Republic of South Africa. Specific non Compliance with the following will be subjected to the above actions:
Municipalities that adopted unfunded budget and deliberately ignored recommendation of the Provincial Treasury;
Municipalities that flaunts SCM processes and regulations;
Mismanagement of financial resource that results in no value for money;
Mismanagement of conditional grants funding;
Tighten the policies and implementation that relates to the abuse of overtime in all municipalities and report quarterly on the matter for corrective measures.
The Provincial Fiscal Framework
Honourable Speaker, the main source of funding for the provincial budget remains the equitable share amounting to R112.992 billion over the MTEF period. Conditional grants allocation contributes 17 per cent to the provincial budget with the total budget of R23.825 billion and Provincial Own Revenue contributes 3 per cent or R3.944 billion over the MTEF. The 2019 MTEF budget amounts to R141.016 billion of which R44 billion will be spend in the first year of the MTEF (2019/20).
the allocations for provincial departments have no material changes to the previously tabled appropriation except incorporating transfer of functions through the implementation of the principle of funds follow functions. In addition, Members of the Executive Council will provide more details on programmes and plans of action for their respective votes when tabling the vote speeches later this month. The allocation to the following departments and institutions have not been affected by the reconfiguration:
receives R486.9 million in 2019/20, R484.5 million for 2020/21 and increasing to R511.7 million in 2021/22 financial year. This allocation will enable the Legislature to strengthen its Constitutional responsibilities around good governance and to fulfill its oversight role. Furthermore, the allocation also caters for maintenance of the Provincial Legislature building.
The budget to the
Department of Health
remains R12.3 billion for the 2019/20 financial year growing to R14.4 billion in the outer year of the MTEF. This allocation will ensure provision and continuous improvement of health care service in the province. Furthermore, the allocation will assist in preparing the department for the rollout of the NHI once the bill is passed by parliament. The allocation further allows the Department of Health to focus more on maintenance of health facilities in the province.
Community Safety and Transport Management
receives an allocation of R2.265 billion in 2019/20, R2.388 billion for 2020/21 and R2.518 billion for 2021/22. Of this amount, an amount of R412.162 million has been set aside in 2019/20 for learner transport, that accumulate to R1.375 billion over the MTEF period. The Provincial Treasury embarked on an extensive learner transport verification process during the month of April and May. This process has been concluded and the recommendations of the report will be implemented in due course.
Public Works and Roads
receives R3.2 billion in 2019/20 financial year, R3.3 billion in 2020/21 and R3.5 billion in 2021/22 financial year. Given the high level of unemployment in our province, the emphasis of the 6
Administration is Jobs, Jobs and Decent Jobs. During the 2019/20 financial year and going forward, the Department of Public Works and Roads will ensure promotion of labour intensive and contractor development when implementing infrastructure projects.
Through the process of reconfiguration, the name of the Department of Finance has been amended to align with Section 17 of the Public Finance Management Act which stipulates that there is a
for each province consisting of the MEC for Finance and the department responsible for financial matters. Consequently, this Department is allocated R528.7 million in the first year of the MTEF to continue with its oversight responsibilities with regard to financial matters in departments, municipalities and entities. This allocation increases to R652.4 million in the outer year.
, the following departments have been affected by the reconfiguration process and their budget allocations are as follows:
Office of the Premier
allocation includes funding for special programmes which have been moved from Department of Social Development. Consequently, the Office of the Premier is allocated R671.4 million in 2019/20 financial year increasing to R722.3 million and R765.6 million in the two outer years respectively.
The Department of
Arts, Culture, Sports and Recreation
receives an amount of R789.8 million in the first year accumulating to R2.478 billion over the MTEF. Notably, the department received the sports and recreation functions from the Department of Education and relinquished the Traditional Affairs function to the Department of Cooperative Governance and Traditional Affairs. This allocation will assist the department to contribute to the provincial economic growth by creating job opportunities in cultural and creative industry.
Economic Development, Environment, Conservation and Tourism
receives R986.4 million in 2019/20 financial year, R1.026 billion in 2020/21 and R1.082 billion in 2021/22 financial year. Included in this allocation funding for promotion of tourism from the former Department of Tourism and also funding for environmental services and conservation from former department of Rural, Environment and Agricultural Development.
Department of Education
remains the biggest beneficiary of the provincial budget with an amount of R17.1 billion allocated in 2019/20 financial year. The allocation of this department constitutes 38.9 per cent of the provincial budget. Cumulatively, the department will receive R55.2 billion over the MTEF period. From the 2019/20 allocation, an amount of R1.333 billion will be transferred to schools with public ordinary schools receiving a bigger share of R981.097 million.
relinquished the Special programme to the Office of the Premier. Consequently, the department receives an amount of R5.6 billion over the MTEF period with R1.7 billion in 2019/20 financial year. This allocation will ensure that the department continues to implement programmes that are geared towards the protection of the rights of women and children. The environmental services and conservation moved from the Department of Rural, Environment and Agricultural Development.
Consequently, the Department of Agriculture and Rural Development is allocated R1.2 billion in 2019/20 increasing to R1.3 billion in the outer year. It is important to note that agriculture in our Province contributed 3 per cent to the Provincial GDP in 2017. This allocation is therefore intended to stimulate economic growth through investment in amongst others farmer support and Agro-processing.
Department of Cooperative Governance and Traditional Affairs
has been allocated R1.7 billion over the MTEF, with R539.7 million allocated in the first year of the MTEF. This allocation will assist the department to strengthen the governance relating to Traditional leadership in the Province. Furthermore, in view of the challenges experienced in our municipalities, the allocation will ensure filling of critical positions which would improve interventions in municipalities and thus improving governance and service delivery.
Water is a scarce commodity in the Province and the country at large. To this end, a number of projects have been funded through the Departmental allocation as well as indirect grant to the tune of R115 million in 2019/20 in order to deal with this challenge. Over and above the National Department of Water and Sanitation allocation, the Province has availed a further R227 million over the MTEF to intervene in water and sanitation challenges throughout the Province.
Department of Human Settlement
receives an allocation of R2.2 billion for 2019/20 financial year accumulating to R6.6 billion over the MTEF period. This department is mainly funded through the Human Settlement Development Grant. In addition, to ensure that our people become rightful owners of their houses, an amount of R50.388 million and R53.160 million has been allocated in the first two years of the MTEF to deal with title deeds.
subject to the finalization of the review process of the Infrastructure Delivery Management System (IDMS) and the Publication of the Framework for Infrastructure Delivery and Procurement Management (FIDPM), the perpetual underperformance affecting service delivery to our people can no longer be tolerated. The Provincial Government in implementing EPWP as a flagship programme aimed at addressing unemployment and poverty alleviation will be biased towards Women, Youth and People with Disabilities. To this end, this programme is anticipated to create an estimated 38 000 (24 000 is provincial contribution and the balance of 14 000 relates to municipalities) work opportunities in the current financial year and it is the Province intention to double the numbers over the MTEF by strengthening monitoring and reporting on this programme Honourable Speaker, in support of the provincial government cost containment effo
rts and in line with Hon Premier’s pronouncement, the
directive of alternative building and road material where 30% of the new infrastructure budget should be directed towards this initiative, effective from today.
No new infrastructure should be created without considering the use of alternative building and road material. Any deviation from this policy statement should be motivated and lodged with the Office of the Premier and Provincial Treasury for consideration and approval.
, to demonstrate government commitment to resolving the office accommodation challenges coupled with reduction of expenditure on leases, the Department of Public Works and Roads is expected to table detailed implementation plan on accommodation for approval to Executive Council before end of August 2019. Such an implementation plan must ensure that all challenges would be resolved before end of the current financial year. To ensure that we do not lose any opportunity for job creation, the Provincial Treasury will be putting systems in place to assess all tenders that would explicitly outline labour intensive programmes, training and contractor development as a requirement, including penalty clauses for non-compliance by contractors as well as crafting a monitoring system to track all employment opportunities created. In this instance, programme managers will be expected to upload employment statistics on a monthly basis including matters relating to sub-contracting, deviation and variation and spending on alternative building material. This programme will be closely monitored by Provincial Treasury to ensure that the Province tracks all jobs created. Our focus areas on roads will be to ensure that most of our economic, eco-tourism, agricultural and access routes are trafficable to facilitate economic growth and development in the Province.
we further commit to improve on the speed, consistency and the quality in attending to maintenance and upgrade needs of our roads as expected by our communities. In addition, we will explore more efficient, effective and economic methods of delivering quality roads infrastructure, cutting down on rehabilitation and upgrade costs per kilometre.
In our efforts to create opportunities for the youth, an amount of R40 million has been allocated to the Department of Public Works and Roads in the current financial year. This allocation is geared towards supporting the implementation and expansion of the National Youth Service Programmes and funding Cooperative contracts for skills transfer, experiential learning and capacity building. This amount excludes the R12 million allocated to the
in the Office of the Premier which details on its programmes will be announced by the Hon Premier during his budget speech. Government will continuously monitor the work done by all the departments on programmes relating to youth development and will report quarterly to the youth of the Province on the progress registered.
in our endeavour to provide effective delivery of quality health services in the Province, an amount of R700 million is allocated to the Department of Health over the MTEF. The allocation is earmarked for the upgrading and maintenance of health facilities for the implementation of the National Health Insurance (NHI). In support of the Presidential Pronouncement an amount of R191 million has been set aside in the current financial year to address the sanitation challenges in our schools. In order to improve the condition of our roads with specific emphasis on rural areas, an amount of R984 million has been allocated to the Department of Public Works and Roads over the MTEF for upgrading the roads. Considering the current infrastructure delivery challenges in the Province ranging from under spending, increasing accruals, huge project cost and time overruns we remain resolute that we will implement the
“No Plan No Budget”
approach and only projects that are ready for implementation will be funded moving forward.
the process of reconfiguration and realignment of the Provincial Departments has also affected their entities. This process of rationalization of Public entities is envisaged to improve efficiency, well-coordinated and integrated operations leading to improved service delivery.
The process of merging Mmabana and Provincial Arts Council has been concluded. The process of merging Parks and Tourism Boards into one entity has commenced and will be concluded in the current financial year including the listing of the merged entity with National Treasury. The two entities are now housed in one department while the process of finalizing all legislative and regulatory requirements unfolds. This process will also entail the relocation of Dirapeng from NWDC to the envisaged merged entity. This August House will be updated about all the developments relating to the rationalization of public entities. Honourable Speaker, the Province will be transferring a total amount of R602 million to entities in the current financial year and government remains concerned about the state of governance and financial management in these entities which can no longer be tolerated. To mitigate against this deteriorating state of affairs within our entities, transfer agreements will include conditions that should be met by all entities for improved governance and financial management.
I am confident that effective implementation of this budget will ultimately improve service delivery and stimulate our economy to grow and create much needed jobs. For successful implementation of this budget, we need cooperation, support and dedication from all role players.
, as I conclude, I want to emphasise the importance of spending budget according to plans within the financial year. Allocations of Departments that do not spend accordingly, will be redirected towards critical service delivery priorities.
, in line with clarion call made by President
Ramophosa during the launch of the ruling party manifesto of “growing the economy together”, the Provincial Government has agreed to convene the
following two important engagements in August which are geared towards the implementation of our integrated programmes relating to job creation and stimulation of economic growth in the Province:
Economic Growth and Jobs Summit;
Integrated Infrastructure Planning and Implementation Lekgotla Further details will be communicated by the relevant departments during respective departmental budget speeches. I wish to reassure the people of North West Province that despite the budget limitations, the budget presented today is anchored on interventions to address shortcomings in service delivery.
, please allow me to express my appreciation for the guidance and support received during the compilation of the 2019/20 budget to:
Honourable Premier Prof. Job Mokgoro;
Honourable Members of the Executive Council;
Honourable Members of the Legislature;
The Head of Department and Team Treasury (TT) for putting together this important resource plan for implementation of government programmes;
Support staff in my Office and my family.
allow me to table the following documents which I have the honour to present to this August house:
North West Appropriation Bill, 2019
Estimates of Provincial Revenue and Expenditure
A copy of the Provincial Budget Speech 2019