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Provincial Budgets and Expenditure Review 2002/03 – 2008/09 17 October 2006. Prov. Budgets and Exp Review (1). Two separate publications Local government Provinces Why two separate publications Scope of LG has grown substantially over the years and warrants a separate review

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Provincial budgets and expenditure review 2002 03 2008 09 17 october 2006
Provincial Budgets and Expenditure Review2002/03 – 2008/0917 October 2006

Prov budgets and exp review 1
Prov. Budgets and Exp Review (1)

  • Two separate publications

    • Local government

    • Provinces

  • Why two separate publications

    • Scope of LG has grown substantially over the years and warrants a separate review

    • The LG financial year is different from the provincial and national financial year

Prov budget and exp review 2
Prov. Budget and Exp Review (2)

  • Provincial budgets, expenditure and service delivery trends

    • Builds on the 2005 Provincial Budgets and Expenditure Review

    • Covers past expenditure and future budgets (2002/03 to 2008/09)

    • Provides consolidated information

    • Allows comparison between provinces

    • Critical document to inform on service delivery

  • Released one week before MTBPS

    • Assist in shaping the 2007 Budget

      • Inform policy priorities

      • Guide provincial EXCOs in budget preparation

Prov budget and exp review 3
Prov. Budget and Exp Review (3)

  • Importance for portfolio and select committees

    • Coincides with the tabling of annual reports and thus informs the debate

      • Are targets set in strategic plans achieved?

      • Are we getting value for money?

      • What are the service delivery challenges?

      • Do we have data to measure service delivery performance?

    • Platform for accounting officers to account

    • Foster good governance and transparency

  • Report on government performance

    • Policy analysts, Public, etc

Prov budget and exp review 4
Prov. Budget and Exp Review (4)

  • 8 chapters in the document

    • Introduction

    • Education

    • Health

    • Social Development

    • Housing

    • Agriculture and Land

    • Roads and Transport

    • Trends in Provincial Budgets

  • Annexures:

    • Extensive financial information

    • 1st attempt of non-financial data

Intergovernmental fiscal system 1
Intergovernmental Fiscal System (1)

  • 3 spheres of government

    • Independent, interrelated and based on principles of cooperative governance

      • All with different functions (exclusive and concurrent)

      • Provinces and municipalities have key service delivery responsibilities

      • Provinces and municipalities implement pro-poor programmes

      • Continued need for provinces and municipalities to improve their service delivery capacity

Intergovernmental fiscal system 2
Intergovernmental Fiscal System (2)

  • Key concurrent functions

    • School education, health, social welfare and housing

      • Policy formulation and setting of norms and standards a national competence

      • Implementation mainly at provincial level

    • Coordination challenges that arise

      • Is there alignment between provincial budgets and national policy priorities?

    • The Review highlights how each of these concurrent functions are structured

      • Which sphere is responsible for what

Intergovernmental fiscal system 3
Intergovernmental Fiscal System (3)

  • Revenue sharing arrangement

    • Vertical Division of Revenue

      • Between the 3 spheres

      • Informed by assigned service delivery responsibility and revenue raising capacity of each sphere

      • Based on governments policy priorities

    • Horizontal Division of Revenue

      • Among the 9 provinces

    • Division of Revenue Bill

      • Reflects the vertical and horizontal DOR

        • Culmination of an extensive intergovernmental consultative process

      • Approved by both houses of Parliament/NCOP

Intergovernmental fiscal system 4 vertical division of revenue
Intergovernmental Fiscal System (4)Vertical Division of Revenue

Intergovernmental fiscal system 5 funding of provinces
Intergovernmental Fiscal System (5)Funding of Provinces

  • Provinces determine own budgets guided by national policy priorities

    • National transfers (96,4 per cent) the largest share of provincial revenue

      • Own revenue (3,6 per cent)

    • Equitable share 82,3 per cent of available resources

      • Unconditional transfer

      • Provinces have discretion on how to allocate based on government priority

      • Main source of funding for social services

    • Conditional grants 14,1 per cent of available resources

      • Health conditional grants second largest share

      • Performance and evolution of conditional grants need thorough review

Intergovernmental fiscal system 6 consolidated provincial revenue
Intergovernmental Fiscal System (6)Consolidated Provincial Revenue

Provincial expenditure trends 1
Provincial expenditure trends (1)

  • Biggest budgets at provincial level

    • 51,4 per cent of non-interest spending taking place in provinces

    • Education, health and social development constitute 76,5 per cent of provincial spending

    • Non-social services include on average 23,5 per cent of provincial spending

      • Housing and sustained human settlements

      • Agricultural support to farmers

      • Construction & maintenance of provincial roads

      • Running provincial administrations & governance

    • Greater focus on provincial budgets, expenditure and performance needed

Provincial expenditure trends 2
Provincial expenditure trends (2)

  • Total spending between 2002/03 and 2005/06

    • Increased by R45 bn to R161,1 bn between 2002/03 2005/06

      • Real growth of 6,6 per cent per year (exclude social security grants)

    • Budgeted to reach R221,9 bn by 2008/09

      • A further R60 bn added (Real growth of 9 per cent per year)

    • Areas of growth

      • Education, health and social development

      • Capital spending more than doubled from R8,2 bn in 2002/03 to R19,8 bn in 2008/09

        • Delivery capacity improving

Provincial expenditure trends 4
Provincial expenditure trends (4)

  • Spending on social services

    • Education, health and social development

    • Makes up 76 per cent of total provincial spending

    • Spending nearly doubles from R88,8 bn in 2002/03 to R162,9 bn in 2008/09

      • Grew 6,7 per cent in real terms annually between 2002/03 and 2005/06

      • Budgeted for real growth of 4,9 per cent a year over the next three years

      • Bulk of social services are pro-poor

      • Rural provinces share of social services higher than urban provinces

Education 1
Education (1)

  • Education spending

    • Nearly doubles from R53,2 bn in 2002/03 to R94,9 bn in 2008/09

    • Equity and access improved

    • Capital spending grows sharply

    • Spending on LSM grows

      • New curriculum statement

      • NPNC also growing strongly

    • Pay progression for educators

      • Backlogs

      • Career-pathing, scarce skills, management

Education 3
Education (3)

  • There appears to be a lag in quality improvements

  • Trends in matriculation results suggests improved quality and reduced inefficiencies:

    • actual numbers passing the exam increased from 322 492 in 2003 to 347 184 in 2005

    • Matriculation pass rate improved from below 50% in 1997 to 73,2% in 2003. Drops to 68 % in 2005.

    • Growing trends in passes in maths (55 % of those who wrote) and science (71,1 % of those who wrote)

Health 1
Health (1)

  • Health spending

    • South Africa’s total health expenditure as a proportion of GDP is relatively high

      • Public sector funding at 3.4% of GDP compares favorably with middle income countries.

      • Relatively high expenditure influenced by large private health sector, escalating wage costs and the growing burden associated withHIV / Aids

    • Nearly doubles from R32,9 bn in 2002/03 to R60,6 bn in 2008/09

    • Grows 5,9 per cent in real terms annually

      • Improving equity

      • Primary health care, emergency ambulance and HIV and AIDS programme funding growing strongly

Health 2
Health (2)

  • Health spending

    • Capital more than doubles between 2002/03 and 2008/09

      • From R2,2 bn in 2002/03 to R5,5 bn in 2008/09

      • Growth in both buildings and equipment budgets

  • Growth in per capita health funding

    • Spending grow from R853 per head in 2002/03 to R1 178 in 2005/06

  • Primary health care more than doubles

    • R5,6bn in 2002/03 to R11,7 bn in 2008/09

  • Emergency medical services

    • Significant step up (14,3 % real growth)

Health 3
Health (3)

  • Improved equity and access

  • Net gain of 16 000 health professionals

    • Over 10 000 additional nurses being employed

    • Increase in EMS personnel

    • Gradual improvement in public sector doctors per 1 000 uninsured persons

      • All rural provinces show a net gain

      • moderate decrease in WC and Gauteng

      • 77 doctors per 100 000 uninsured population remains a concern

    • 32 282 health science students in training in various disciplines

Social development
Social Development

  • This chapter reviews the role of provincial social development:

    • in the context of vulnerability;

    • the institutional arrangements underpinning social development;

    • policy initiatives and legislative reforms;

    • spending, budget and service delivery trends in the sector

    • as well as focusing on overall expenditure and performance in the different programmes and large subprogrammes.

Fundamental restructuring in the sector
Fundamental Restructuring in the sector

  • Social Security moved to the National Sphere in

    • No longer part of provincial budgets from 1 April 2006

    • Administered by SASSA

  • Provincial Social Development Responsible for Community Development and Welfare services.

  • Provinces are now able to focus on improving the funding and delivery of developmental social welfare services.

Social development 2
Social Development (2)

  • Social development spending

    • Social welfare services programme

      • Child care, protection services, care for older persons, substance abuse, prevention and rehabilitation, disabilities, victim empowerment, HIV and Aids

      • Largest share of social development budgets

      • Stepped up significantly; set too grow 22 per cent per year over the next three years

    • The Children‘s, Old Persons, Child Justice Bills to have an impact on social services budgets moving forward

    • Development and research

    • Stepping up of welfare personnel spending

      • To increase the number of social workers

Social development 1
Social Development (1)

  • Social development spending

    • More than doubled from R2,7 bn in 2002/03 to R7,4 bn in 2008/09

      • An annual growth of nearly 21 per cent in real terms

      • Significant step up of social welfare services

      • All provinces experience very high growth rates from 16,6 per cent in Western Cape and 34,0 per cent in Eastern Cape

    • Stronggrowth in transfers to NGOs

      • More double over period under review

      • Recognises greater role of NGOs

    • Capital spending set to grow sharply

      • From R145 million in 2005/06 to R391 million in 2008/09

Non social services spending
Non-social services spending

  • Include, among others,

    • public works, roads and transport, housing and agriculture

      • Key in economic growth, job creation and food security

    • Approximately 25 per cent of provincial spending

    • More than doubles between 2002/03 and 2008/09

      • Sharp growth in housing expenditure to fund comprehensive housing strategy (R4 bn in 2002/03 to R8,7 bn in 2008/09)

      • Sharp increase in roads budgets (from R5,2 bn in 2002/03 to R11,7 bn in 2008/09)

      • Growth in agriculture budgets (R2,6 bn in 2002/03 to R5,2 bn in 2008/09)

Defining the public housing environment
Defining the Public Housing environment

  • SA public housing driven by government policy to provide low and medium income h/hlds with affordable housing

  • This is achieved through a range of delivery mechanisms incorporating essential services i.e. water, sanitation, roads and electricity

  • It aims to attract a range of community services necessary for integrated and sustainable human settlements i.e. Public transport ,Municipal services, Social infrastructure i.e. Schools, health and recreational facilities, Commercial

Delivery progress
Delivery progress

  • Construction of 1,9 million new houses

  • Transfer of 1,6 million government-owned houses to residents

  • Over 2,8 million subsidies approved since the introduction of the programme

  • Property assets worth over R37 billion have been transferred to poor households

  • Spending more than double from R4 bn in 2002/03 to R8,7 bn in 2008/09


  • A range of policies aim to modernize the sector and promote broad inclusiveness and equity i.t.o land ownership

  • The land and agrarian reforms programmes are by far the most important programs driving transformation

  • Agriculture contributes

    • 4% to GDP

    • 10% of total employment

    • Significantly to foreign exchange earnings

Institutional arrangements
Institutional arrangements

  • Agriculture is a concurrent function shared between national and provincial departments

  • National is responsible for formulating policies while provinces are the implementing spheres

  • National is separated into two departments:

    • Land Affairs – responsible for land reform programmes

    • Dept of Agriculture – accountable mainly for farmer settlement and support

  • The sector also enjoy support from numerous state agencies such as Land Bank, Agriculture Research Council, ARC, etc

Provincial expenditure by programme1
Provincial expenditure by programme sub-programmes

  • The majority of expenditure is for administration and farmer support and development

  • Total expenditure for the 2005/06 financial year amounts to R4,1 billion and is budgeted to increase to R5,2 billion by 2008/09

  • Spending is driven mainly by the farmer support and development programme which primarily aimed at unlocking the agricultural potential of the provinces

Concluding remarks
Concluding Remarks sub-programmes

  • Government continues to streamline agricultural reform by ensuring representivity by all citizens of South Africa

  • Through programmes such as CASP, LRAD and MAFISA, support is provided to beneficiaries to ensures sustainability of all reform projects

Roads and transport sub-programmes

Consolidated spending on roads

The three spheres of government spent a total of R12,9 billion on roads in 2005/06.

National accounts for R1.8 billion (13,9%) of the total aggregate.

Provinces account for R7.6 billion (58,7%)

Municipalities account for R3.5 billion (27,4%) of the total aggregate

In 2005/06

890 km of surfaced roads upgraded and 2 218 resealed

EPWP programme extensive in roads sector

47 000 jobs created

Consolidated spending on roads

Provincial transport spending
Provincial transport spending R12,9 billion on roads in 2005/06.

  • Provincial spending on roads

    • Roads expenditure account for 4,7% of total provincial budgets

    • Strong growth from R5,2 bn in 2002/03 to R7,6 bn in 2005/06

    • Set to reach R11,8 bn by 2008/09

  • Spending on road traffic management and safety stepped up

    • Provinces currently spending R1,5 bn

    • Budget to spend R1,8 bn by 2008/09

Provincial transport spending1
Provincial transport spending R12,9 billion on roads in 2005/06.

  • Overload control

    • Remain a priority to minimise damage to road network

    • 1,1 million heavy vehicles weighed at 97 weighbridges country wide

    • 64 362 penalties issued

  • Public transport infrastructure and system prioritised

    • Spending doubled from R684 million in 2002/03 to R1,3 bn in 2006/07

    • Set to grow sharply as funds are committed for 2010