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NATIONAL TREASURY
STRATEGIC PLAN 2013/17
PRESENTATION TO PARLIAMENTARY FINANCE COMMITTEES
14 May 2013
TREASURY AIMS AND OBJECTIVES
• Chapter 13 of the Constitution of the Republic of South Africa. According to
section 216 (1) of the Constitution national legislation must establish a national
treasury and prescribe measures to ensure both transparency and
expenditure controls in each sphere of government.
• Chapter 2 of the Public Finance Management Act (PFMA) clearly defines the
functions and powers of the department.
• Also, there are various other pieces of legislation that define the role of National
Treasury, these include the MFMA, financial sector legislation e.g. Banks Act.
2
TREASURY AIMS AND OBJECTIVES
• Develop fiscal policy framework and coordinate macro-economic policy
• Prepare a sound and sustainable national budget and equitable division of resources
• Equitably and efficiently raise fiscal revenue, while enhancing efficiency and
competitiveness of the SA economy
• Sustainably manage and make effective use of Government’s financial assets and liabilities
• Promote transparency to improve financial accountability and enforce effective financial
management
3
STRATEGIC ALIGNMENT OVER THE MEDIUM – TERM
4
The National Treasury will remain steadfast in facilitating and supporting the
aims of :
• The National Development Plan (NDP)
• The Industrial Policy Action Plan (IPAP)
• New Growth Path (NGP)
• National infrastructure programme coordinated by the Presidential
Infrastructure Coordinating Commission (PICC); and
• Government’s Outcomes approach
GOVERNMENT’S OUTCOMES APPROACH
The National Treasury has fully adopted the outcomes approach and directly
contributes towards achievement of the following Outcomes of Government:
4. Decent employment through inclusive economic growth
9. A responsive, accountable, effective and efficient local government system
11. Create a better South Africa and contribute to a better and safer Africa and World
12. An efficient, effective and development oriented public service and an empowered, fair
and inclusive citizenship
5
ECONOMIC OUTLOOK - positives
• US showing signs of economic strength, and the same is true of EMs and SSA
• Domestic outlook
– Growth forecast at 2.7 per cent this year, accelerating to 3.8 per cent by 2015.
– Fixed investment growth increased by 5.7 per cent in 2012
• Public sector investment expected to average annual growth of 9 per cent over
next three years
• Employment projected to grow by 850 000 jobs by 2015 /16, largely in the private
sector
– According to StatsSA employment increased by 199 000 (1.5%) in 2012/13, however
the unemployment rate remains high at 25.2 per cent in March 2013
– SARS exceeded Budget 2013 revenue target by R4 billion in 2012/13 financial year
• This reflected growth in small and medium businesses and efficient admin
– National Development Plan provides a framework that can shift South Africa towards a
new trajectory of economic growth and job creation
6
ECONOMIC OUTLOOK - risks
• Global
– European sovereign debt and systemic banking risks
– US fiscal policy uncertainties
– Rising international oil prices
– Soft emerging market growth (especially China) slows demand for exports (mining in particular)
– Japan’s actions are viewed by some to be risky
• Domestic
– Somewhat sluggish growth, low revenue
– Inflation is currently 5.9 per cent
– High household indebtedness
– Unemployment, particularly for young people and the less skilled
– Current account deficit, currency volatility
– Soft commodity prices
– Need to drive structural reforms to lift growth potential as a matter of urgency
7
STRUCTURE & COMPOSITION OF PROGRAMMES
• Programme 1 – Administration
• Programme 2 – Economic Policy, Tax, Financial Regulation & Research
(2 divisions – Economic Policy and Tax, and Fin Sec. Policy)
• Programme 3 – Public Finance and Budget Management
(3 divisions – Public Finance, Budget Office and Intergovernmental Relations)
• Programme 4 – Asset and Liability Management
• Programme 5 – Financial Systems and Accounting
(2 divisions – Office of the Accountant-General and Specialist Functions / Office of the Chief
Procurement Officer)
8
STRUCTURE & COMPOSITION CONT.
• Programme 6 – International Financial Relations
• Programme 7 – Civil & Military Pensions, Contributions to Funds & Other Benefits
• Programme 8 – Technical Support & Development Finance
• Programme 9 – Revenue Administration
• Programme 10 – Financial Intelligence and State Security
9
CHANGES IN ORGANISATIONAL STRUCTURE
• Reconfiguration of Programme 5: Financial Systems and Accounting
– Integrated Financial Management System (IFMS)
This programme has been shifted to the Office of the Accountant—General
– Chief Procurement Officer
All existing SCM units from the division: Specialist Functions now report to the
Chief Procurement Officer with substantially beefed up capacity
• Reconfiguration of Programme 8: Technical Support and Development Finance
– The introduction of the Government Technical Advisory Centre (GTAC) will entail
migration of technical advisory functions presently located in this programme.
– Monitoring of performance of GTAC will be coordinated from Programme 8 in the
future
10
PROGRAMME 1 - ADMINISTRATION
Provide leadership strategic management and administrative support to the department .
Plans over the next 3 years:
• Enhancement of the strategic sourcing principles that drive demand, logistics and contract
management and reduce cost
• Create a high performance culture by developing leadership and technical behavioural
competencies
• Provide adequate accommodation, compliant with occupational health and safety standards
• Actively promote the zero tolerance stance to corruption
11
Page 11 – SP
Pg. 9 – APP
PROGRAMME 2: ECONOMIC POLICY.., TAX,
FINANCIAL REGULATION AND RESEARCH
Provide specialist policy research, analysis and advisory services in the areas of
macroeconomics, microeconomics, taxation, the financial sector, and regulatory reform.
Plans over the next 3 years:
• Develop and maintain economic forecasting models for MTBPS and Budget Review
• Monitor the exchange rate and explore policy measures to ensure competitiveness
• Formulate and implement annual tax proposals such as the youth employment tax incentive
• Conclude the process to implement a carbon tax in January 2015
• Publish retirement reform legislative proposals
• Publish hedge fund regulations
• Publish “Twin Peaks” legislation
12 Comprises 2 divisions: Economic Policy and Tax and Financial Sector Policy
Page 15 – SP
Pg. 17 – APP
PROGRAMME 3: PUBLIC FINANCE AND
BUDGET MANAGEMENT
- Provide analysis and advice on fiscal policy and public finances, intergovernmental
financial relations, and expenditure planning and priorities
- Manage the annual budget process and provide public finance management support
Plans over the next 3 years:
• Strengthen alignment between budgeting and government’s strategic outcomes and
performance management framework, in cooperation with DPME
• Strengthen capital projects assessment and approval process
• Extend analysis on long-term fiscal sustainability in order to contribute to public discussion
and parliamentary oversight of the fiscus
• Undertake targeted expenditure reviews, including personnel spending and govt agencies
and public entities
13 Comprises 3 divisions: Public Finance, Budget Office and Intergovernmental Relations
Page 16 – SP
Pg. 24 - APP
PROGRAMME 3: PUBLIC FINANCE AND
BUDGET MANAGEMENT CONT.
• Continue with coverage of the consolidated budget and accounts to include information on
the whole of General Government
• Support the Department of Health in development of the NHI framework and financing
arrangements
• Support to provinces to improve performance in infrastructure delivery through the
implementation of incentive grants
• Implement the city support programme and improve alignment with neighbourhood
development partnership programme to strengthen management of built environment by
cities
• Review of local government infrastructure conditional grant system based on 2011 Census
• Implement key local government budgeting, financial management and reporting reforms
• Strengthen provincial budget oversight to improve budget execution and monitoring in
municipalities and provinces
14
PROGRAMME 4: ASSET AND LIABILITY
MANAGEMENT
Prudent management of government’s financial assets and liabilities
•
Plans over the next 3 years
• Arrange finance of government’s gross borrowing requirement of R610 billion over 3 years
• Maintain sound investor relations
• Contribute to the development of domestic capital market
• Deepen engagements with credit rating agencies through better coordination within and
outside government
• Actively manage government’s debt portfolio through buy-back and switch/exchange
• Maintain debt and debt service cost at sustainable levels
• Optimise the use of public sector cash through broadening the coordination to reduce
borrowing cost
• Exercise oversight over state owned enterprises to enable the achievement of
government’s policy objectives in a financially sustainable manner
15
Page 20 – SP
Pg. 44 – APP
PROGRAMME 5: FINANCIAL SYSTEMS AND
ACCOUNTING
Facilitates accountability, governance and oversight by promoting transparent, economic, efficient and effective management in respect of revenue, expenditure, assets and liabilities in the public sector.
Plans over the next 3 years (OAG):
• Review Treasury Regulations, issue Treasury Instructions and Circulars as a step to enforce financial management improvement in the three spheres (e.g., systems of delegations, financial misconduct, etc.)
• Maintain and improve current systems (BAS, Persal, Logis and Vulindlela)
• Refocus the development, implementation and maintenance of IFMS
• Monitor the state of financial management in national, provincial and municipal institutions and report to SCOPA & SCOF annually
• Support financial management capacity development in all three spheres of government
• Provide targeted support to priority departments, municipalities and public entities to improve financial management
16
Comprises 2 divisions: Office of the Accountant-General and Specialist
Functions (Office of the Chief Procurement Officer)
Page 23 – SP
Pg. 56 – APP
To develop, regulate and support an effective SCM system to enable the efficient,
economic, effective and transparent utilisation of financial resources for improved
service delivery.
Strategic Objectives:
• Modernise and enhance the state SCM system
• Promote, support, monitor and enforce the transparent and effective
management of state procurement
• Develop the SCM capacity of public institutions
• Develop professional and competent SCM officials
• Manage transversal term contracts to achieve socio-economic objectives
17
PROGRAMME 5 CONT. : OFFICE OF THE CHIEF PROCUREMENT OFFICER
PROGRAMME 5 CONT. : OFFICE OF THE
CHIEF PROCUREMENT OFFICER (OCPO)
18
DDG:
Chief Procurement
Officer
CD:
SCM Policy, Norms & Standards
CD:
SCM Governance, Monitoring & Compliance
CD:
Strategic Procurement
CD:
Contract Management
CD:
SCM Client Support
CD:
SCM Information,
Comm. & Technology
Dir:
CPO Operations Management
PROGRAMME 5 CONT. : OFFICE OF THE
CHIEF PROCUREMENT OFFICER (OCPO)
Progress in the establishment of the OCPO:
• OCPO Visioning Sessions
• Transfer of existing Specialist Functions
• Consolidation of SCM functions
• Recruitment
• Strategic Support
• Development of a SCM transformation programme
19
PROGRAMME 6: INTERNATIONAL FINANCIAL
RELATIONS
Manage South Africa’s interests in multilateral forums and institutions such as G20, OECD, MDBs, SACU, … with the view of shaping regional and global policies in the favour of Africa and SA
Plans over the next 3 years:
• Advance South Africa’s interests specifically, and those of Africa more generally, through regular strategic analysis, engagement and negotiation at financial and economic forums
– Continue exploration of modalities for the establishment of a BRICS-led development bank
– Use the G-20 forum of leading economies to find collective solutions for reviving global economic growth
• Increase Africa’s voice and South Africa’s influence in international institutions and for a
– Develop appropriate institutional mechanisms to support effective coordination of South Africa-OECD bilateral relationship
– Advocating the creation of a third chair for Sub-Saharan Africa on IMF Executive Board
• Lead the reform of the governance and administration structures of African institutions
– Reform of the SACU revenue-sharing arrangement and other aspects of the 2002 Agreement
• Promote integration and strengthen links within Africa by creating an enabling environment for economic activity
20
Page 27 – SP
Pg. 81 – APP
PROGRAMME 7: Civil and Military Pensions,
Contributions to Funds and Other Benefits
Provides for non–contributory civil pensions, post retirement medical contribution
subsidies and other benefits for pensioners and their beneficiaries, administered on
behalf of National Treasury through a Service Level Agreement with the Government
Pensions Administration Agency ( GPAA)
Plans over the next 3 years:
• Automate core payment processes for Military Pensions, Special Pensions , Medical Accounts, and
Injury On Duty
• Automate the Post Retirement Medical subsidy application form for retirees in Departments and
medical scheme switches for members.
• Introduce a Client Liaison/Key Account management system for Departments and Key Stakeholders
that will improve turnaround time for pension payments.
• Conclude Service Level Agreements with Key Stakeholder Departments i.e. SAPS, Military Veterans ,
Compensation Fund and Medical Schemes.
• Research options for pre-funding employee benefits such as post-retirement medical subsidies and
injury on duty compensation, with a view to reducing the state’s unfunded liability.
21 Comprise 5 business Units : Military Pensions and Medical Accounts , Special
Pensions, IOD, Post Retirement Medical Subsidies and Other benefits
Page 31 – SP
Pg. 92 – APP
PROGRAMME 8: TECHNICAL AND MANAGEMENT
SUPPORT & DEVELOPMENT FINANCE
Provides technical assistance on project and programme management, support for
public-private partnerships, local government financial management assistance,
funding of neighbourhood development projects and support for employment creation
– New initiative over next three years: phasing in of integrated city support grant
Major projects over the next 3 years
• Renewable Energy Independent Power Producer Programme: second round of project
approvals has been completed
• Broadening of scope of the Neighbourhood Development Programme to support urban
network planning and implementation
• Strengthening of Municipal Financial Management support and Infrastructure Skills
Development Grant aimed to strengthen the ability of selected municipalities and entities to
manage infrastructure effectively
• Strengthening of Jobs Fund administration to accelerate project implementation: 66 projects
currently approved; third round of proposals now under review
• GTAC starts to exist as a standalone component in this MTEF
22
Page 33 – SP
Pg. 100 – APP
Programmes 7, 9 and 10
These Programmes report directly to Parliament
They include:
• Programme 7: Civil and Military Pensions, Contributions to Funds
and Other Benefits
• Programme 9: Revenue Administration
• Programme 10: Financial Intelligence and State Security
23
STRATEGIC INTENT
This update to the National Treasury’s Strategic Plan was written with the intent to
• Demonstrate the divergence from “Business as Usual”. A systemic and concerted focus
on ensuring an optimal exit from the global economic crisis
• Promote employment. Working on a range of measures to reduce unemployment rates,
with a special focus on reducing youth unemployment rates. The NDP proposes a range of
labour activation policies and these will be supported in due course.
• Ensure fiscal sustainability. A stable tax base and sustainable public finances anchor
South Africa’s economic stability. In this regard, actively considering fiscal policy choices and
maintaining a tax system that is fair, equitable and designed to promote inclusive growth will
remain high on the agenda.
• Improve the quality of public spending. We can do more with less – improving the
efficiency, and embedding a culture of efficiency in public spending is paramount to
achieving our goals. A number of measures, ranging from expenditure reviews to eliminating
wastage and strategically shifting the composition of resources spent in the public sector will
continue over the medium term.
24
Financial Resource Plan for 2013/14
25 25
Pg. 7 – APP
Programmes 2012/13 2012/13
Preliminary
Outcome
2013/14
R'000 Budget Budget
1. ADMINISTRATION 319,867 296,832 341,691
2. ECONOMIC POLICY, TAX, FINANCIAL REGULATION AND RESEARCH 122,508 111,234 145,859
Operational budget 96,315 85,043 119,723
Transfers 26,193 26,191 26,136
3. PUBLIC FINANCE AND BUDGET MANAGEMENT 241,427 221,052 252,312
Operational budget 203,325 182,958 213,545
Transfers 38,102 38,095 38,767
4. ASSET AND LIABILITY MANAGEMENT 282,807 278,205 2,995,196
Operational budget 82,762 78,158 90,196
Transfers 200,045 200,047 2,905,000
5. FINANCIAL SYSTEMS AND ACCOUNTING 686,335 639,346 724,589
Operational budget 613,450 566,466 641,014
Transfers 72,885 72,880 83,575
6. INTERNATIONAL FINANCIAL RELATIONS 1,041,769 1,003,051 1,112,529
Operational budget 31,226 29,900 37,214
Transfers 1,010,543 973,151 1,075,315
SUBTOTAL 2,694,713 2,549,720 2,705,823
Operational budget 1,545,914 1,558,076 1,657,392
Transfer budget 19,631,690 19,461,034 23,898,568
Percentage of operational to transfer budget 7.87% 8.01% 6.94%
Programmes 2012/13 2012/13
Preliminary
Outcome
2013/14
R'000 Budget Budget
7. CIVIL AND MILITARY PENSIONS, CONTRIBUTIONS TO FUNDS AND OTHER
BENEFITS 3,351,760 3,343,603 3,497,031
Operational budget 49,742 174,836 51,857
Transfers 3,302,018 3,168,767 3,445,174
8. TECHNICAL SUPPORT AND DEVELOPMENT FINANCE 1,999,636 1,994,291 2,777,806
Operational budget 149,227 143,883 162,152
Transfers 1,850,409 1,850,408 2,615,654
9. REVENUE ADMINISTRATION 9,149,374 9,149,374 9,534,393
10. FINANCIAL INTELLIGENCE AND STATE SECURITY 3,982,121 3,982,121 4,174,554
GRAND TOTAL 21,177,604 21,019,109 25,555,960
NATIONAL TREASURY
STRATEGIC PLAN 2013/17
PRESENTATION TO PARLIAMENTARY FINANCE COMMITTEES
14 May 2013
Appendices: Index
A. Human Capital
B. Operational and Transfer Budget
C. Spending by Programme
D. Major Funded Initiatives
27
Appendix A: Human Capital Statistics as at 31 March 2013
• Create a high performance culture by attracting, developing and retaining
technical and behavioural competencies.
• Total staff complement = 1189, 67 % female, 80% black, 12 employees
with disabilities. At senior management level, 71% is black, 42% is
female.
• The National Treasury has a vacancy rate of 8.2% (106 posts)
compared to 9.5% (122 posts) at 31 March 2012.
• Partner with pipeline organisations to address the employment equity
barriers through targeted and integrated attraction, development and
retention practices.
28
Appendix B: Operational and Transfer
Budget
29
1,558,076
19,461,034
9.1%
Preliminary Outcome 2012/13 (R'000)
Operational budget
Transfer budget
Percentage of operational totransfer budget
1,657,392
23,898,568
6.9%
Budget 2013/14 (R'000)
Operational budget
Transfer budget
Percentage of operational totransfer budget
Appendix C: Spending by Programme
30
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
11,000,000
P1 P2 P3 P4 P5 P6 P7 P8 P9 P10
201213 Budget 201213 Prelim Outcome 201314 Budget
Appendix D: Major Funded Initiatives
31
Initiative
Prelim Outcome Budget
2012/13 2013/14
(R’000) (R’000)
Integrated Financial Management System 152,584 166,231
Infrastructure Delivery Improvement Programme 85,000 85,000
Jobs Fund 589,868 1,258,024
Neighbourhood Development Partnership Grant 658,132 653,041
TOTAL 1,485,584 2,162,296