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 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 4
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 Page 11 SP Pg. 9 APP 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
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 Page 15 SP Pg. 17 APP Comprises 2 divisions: Economic Policy and Tax and Financial Sector Policy 12
PROGRAMME 3: PUBLIC FINANCE AND BUDGET MANAGEMENT Page 16 SP Pg. 24 - APP - 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 Comprises 3 divisions: Public Finance, Budget Office and Intergovernmental Relations 13
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 Page 20 SP Pg. 44 APP 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
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): Page 23 SP Pg. 56 APP 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 Comprises 2 divisions: Office of the Accountant-General and Specialist Functions (Office of the Chief Procurement Officer) 16
PROGRAMME 5 CONT. : OFFICE OF THE CHIEF PROCUREMENT OFFICER 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 (OCPO) DDG: Chief Procurement Officer Dir: CPO Operations Management 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 18
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 Page 27 SP Pg. 81 APP Promote integration and strengthen links within Africa by creating an enabling environment for economic activity 20
PROGRAMME 7: Civil and Military Pensions, Contributions to Funds and Other Benefits Page 31 SP Pg. 92 APP 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. Comprise 5 business Units : Military Pensions and Medical Accounts, Special Pensions, IOD, Post Retirement Medical Subsidies and Other benefits 21
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 Page 33 SP Pg. 100 APP 22
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 Pg. 7 APP Programmes 2012/13 2012/13 2013/14 R'000 Budget Preliminary Outcome 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 2013/14 R'000 Budget Preliminary Outcome 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 25
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 Preliminary Outcome 2012/13 (R'000) 9.1% 1,558,076 Operational budget Transfer budget 6.9% Budget 2013/14 (R'000) 19,461,034 Percentage of operational to transfer budget 1,657,392 Operational budget Transfer budget 23,898,568 Percentage of operational to transfer budget 29
Appendix C: Spending by Programme 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 201213 Budget 201213 Prelim Outcome 201314 Budget 30
Appendix D: Major Funded Initiatives Prelim Outcome Budget Initiative 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 31