BRIEFING BY COMMITTEE STAKEHOLDERS AND NATIONAL TREASURY ON THE SAPS 2017 BUDGET HEARINGS

1. BRIEFING BY COMMITTEE STAKEHOLDERS AND NATIONAL TREASURY ON THE SAPS 2017 BUDGET HEARINGS Portfolio Committee on Police – 2017/18 Budget Hearings for SAPS, IPID and the Civilian Secretariat Presenter: Nompumelelo Radebe | Public Finance : Justice and Protection Services, National Treasury | 2 May 2017

2. Introduction There is no one-to-one link between the budget and expenditure of the South African Police Service (SAPS) and its performance over the last 5 financial years.

3. Presentation Outline • Overview of Resource Allocation in South Africa • The Case of SAPS – mechanisms used to assess performance over the last 5 financial years • Key Budget Issues for Consideration over the 2017 MTEF

4. RESOURCE ALLOCATION IN SOUTH AFRICA

5. Purpose of the Budget The budget is a key statement of the policy of government. It is the process through which government makes choices about competing priorities that need to be funded for services to be delivered. “To budget is to choose” 3

6. 1998 1999 2001 2002 2008 2009 2010 2011 2012 Key Budget Reforms in South Africa Linking performance with budgets Publication of Quarterly Performance Information Improving operational & allocative efficiency Performance Information Handbook and Tool Framework for Strategic Plans and Annual Performance Plans Functional approach to budgeting Budget Programme Structure Guidelines Money Bills Amendment Procedure and Related Matters Act Measurable objectives Framework for Managing Programme Performance Information Annual Reports tabled Estimates of National Expenditure and Provincial Budget Statements 1 & 2 Medium Term Expenditure Framework Public Finance Management Act

7. Budget Technical Structures and Decision Making

8. A Function Approach to Budgeting • Introduced to incorporate the national outcomes into the budget • Government (sub)programmes and activities grouped according to broad policy purposes or type of expenditure: “functions” • All government institutions that contribute to achieving a particular function are grouped together in a function group • Institutions in a function group negotiate amongst themselves on budgetary matters (i.e. baseline assessment, reprioritisation and priorities) and reach a common understanding and agreement around the work of the function focusing on service delivery • These agreements and negotiations are then reflected in the budget submissions put forward by the different institutions and also characterise collective budget analysis of the institutional budget submissions • Decisions of function groups tabled at MTEC, MinComBud and Cabinet

9. The Police Services Budget Group

10. Medium Term Expenditure Framework (MTEF) Process • Process through which resource allocation takes place in South Africa. • Programme and subprogramme budgets are linked to performance • National Treasury and DPME work with institutions through performance dialogues to refine and agree on the list of core performance indicators that will be used throughout the budget decision making process. • Institutions are required to submit MTEF budget detailing: • Policy priorities over medium term and alignment to Govt. priorities • A report against past performance (financial and non-financial) • Indicate how baseline reductions and the reprioritisation of funds impacts on the achievement of outputs (performance) for the MTEF period • Show where performance can be enhanced at no extra cost • Baseline analysis

11. Resource Allocation Considerations • Engage on policy development and policy implementation • Review current spending and service delivery trends (annual/monthly/quarterly) • Review previous financial years’ performance (financial and non-financial) • Capacity to spend in addition to baseline over the medium term • Alignment of new policy priorities to NDP and other government priorities • Fiscal Framework • Reprioritisation

12. THE CASE OF SAPS

13. Mechanisms Used to Assess SAPS’ Performance • Reporting mechanisms the National Treasury (NT) uses to assess the performance of SAPS • SAPS Budget Programme Structure • Budget Allocations to SAPS over the years • Expenditure and Personnel Management in SAPS • Alignment of the SAPS Budget/Expenditure with Performance

14. Reporting mechanisms NT uses to assess the performance of SAPS • 5 Year Strategic Plan and Annual Performance Plan • Set out programme performance indicators and targets to achieve goals and objectives annually/over MTEF period/5 years • Approved MTEF Budget • containsdetails of how much is allocated to a department per programme and economic classification; policies which will drive spending over the medium term • Drawings/spending projections • Monthly breakdown of how the department intends to spend the allocated budget • CJS 7 point plan project plans and other programme plans • Provides details of project activities, timelines and how allocated budget for specific programmes will be spent

15. Reporting mechanisms NT uses to assess the performance of SAPS (continued…) • Adjusted Estimates of National Expenditure (AENE) • indicates status of spending and achievement of performance targets as at the end of the first six months; other budget adjustments • Monthly in-year monitoring reports • monthly account of expenditure incurred against the budget • Quarterly Performance Report • In-year reporting of non-financial performance • Annual Report • Ultimate accountability document to Parliament: records, reports and evaluates past year’s performance. Provides the audited annual financial statements and audit report.

16. Alignment between Planning and Budgeting Documents • Strategic Plan • strategic outcome oriented goals • strategic objectives • Budget Programme structure • programme objectives should be linked to strategic objectives • programme and sub-programme performance indicators • Annual Performance Plan • annual targets for strategic objectives • programme performance indicators • annual and quarterly performance targets • Estimates of National Expenditure • selected performance indicators & targets • programme objectives and measures • link expenditure with performance • Quarterly Performance Report • progress on quarterly targets in annual performance plan • reasons for major deviation from targets • Adjusted Estimates of National Expenditure • mid-year progress on performance and spending • Annual Report • progress on annual targets in annual performance plan • ultimate accountability report to Parliament

17. SAPS Budget Programme Structure Programme 1: Administration • Programme purpose • Provide strategic leadership, management and support services to the South African Police Service; and provide for the functions of the Civilian Secretariat for the Police Service. Programme 2: Visible Policing • Programme purpose • Enable police stations to institute and preserve safety and security, and provide for specialised interventions and the policing of South Africa’s borders. Programme 3: Detective Services • Programme purpose • Enable the investigative work of the South African Police Service, including providing support to investigators in terms of forensic evidence and the criminal record centre.

18. SAPS Budget Programme Structure (Continued…) Programme 4: Crime Intelligence • Programme purpose • Manage crime intelligence and analyse crime information, and provide technical support for investigations and crime prevention operations. Programme 5: Protection and Security Services • Programme purpose • Provide protection and security services to all identified dignitaries and government interests.

19. SAPS Budget Allocations Over the Years

20. SAPS Budget Allocations: Average Percentage Change in the Budget per 5 Year Interval

21. Expenditure Management: 2011/12 – 2015/16

22. Main Drivers of Spending at Programme and Economic Classification Level

23. Key Spending Drivers at Item Level:2011/12 – 2015/16

24. Personnel Management in SAPS

25. Personnel Management in SAPS (Continued…) • Between 2007/08 and 2013/14, expenditure on compensation of employees grew at a higher rate than inflation, due to additional funding for ICS. • Consequently, with the exception of 2008/09, the year-on-year growth rate on CoE was higher than that of total departmental expenditure. • During this period, expenditure on compensation of employees increased by more than double, from R25.5 billion in 2007/08 to R51.3 billion in 2013/14, at a cumulative growth rate of 101 per cent. • CoE drivers in spending include basic salaries (64 per cent), employer medical aid contributions (11 per cent) and contribution towards the Home Owners Association (3 per cent). • Overtime payments to staff constituted an average of 1 per cent of total spending on CoE. • Above inflation adjustments in ICS for public sector employees have significantly impacted on the CoE budget for SAPS.

26. Linking the SAPS Budget and Expenditure with Performance: 2015/16 Source: SAPS Annual Reports and ENE

27. Linking the SAPS Budget and Expenditure with Performance: 2014/15 Source: SAPS Annual Reports and ENE

28. Linking the SAPS Budget and Expenditure with Performance: 2011/12 – 2013/14 Source: SAPS Annual Reports and ENE

29. Linking the SAPS Budget and Expenditure with Performance • No one-to-one link between specific allocation and specific target/output. Not yet at that advanced stage. • Difficult to assess for SAPS given that 75% of allocated budget goes to compensation of employees and some of the SAPS indicators are impact indicators • Programme Budgeting – information provided at programme level and not at the level of a police station • Need to assess the performance of specific projects or programmes within SAPS such as the implementation of the CJS 7 Point Plan, construction and upgrading of police stations, etc. • Are we measuring the right things? • Are we setting the right targets?

30. 2017 MTEF Considerations

31. SAPS Budget Allocation – 2017 MTEF

32. SAPS 2017/18 Budget Allocation per Programme and Economic Classification

33. Key Budget Issues for Consideration over the 2017 MTEF • Holding Budget – aggregate Government expenditure ceiling to be maintained • Compensation of Employees Ceiling – Implementation of headcount reduction strategies (reduced personnel numbers for SAPS) • Reprioritisation of baseline to fund existing cost pressures and new policy priorities (e.g. Farlam Recommendations, White Papers, SAPS Transformation Strategy) • Baseline reductions to fund other Government priorities (mandate paper) • Cost efficiencies and value for money assessments (expenditure reviews, March spikes) • Implementation of OCPO instruction notes • Performance assessments (e.g. police stations) and closing of non-performing programmes

34. THANK YOU