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

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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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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 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
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
  • 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
  • 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
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
  • 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
  • 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