by Andrew Louw MPL – DA Provincial Leader in the Northern Cape
Date: 14 June 2017
Note to editors: The following speech was delivered in the Northern Cape Provincial Legislature today by the provincial leader of the Democratic Alliance, Andrew Louw MPL, during the debate on the budget of the Northern Cape Department of Co-operative Governance, Human Settlements & Traditional Affairs.
Against the background of the Department’s budget presentation and the Portfolio Committee’s consideration thereof, it will come as no surprise that the Democratic Alliance cannot, in good conscience, support this budget vote for 2017/18.
Our reluctance to support COGHSTA’s budget comes down to this: The budget submitted and presented by the Department does not address any of the serious deficiencies in financial management at the Department.
By failing to table any feasible, practical strategies to improve financial management and to manage fiscal pressures appropriately, it is abundantly clear that the Department has willfully doomed itself to repeat the mistakes of the past.
And we would be failing in our oversight duty if we approved that.
Proper financial management lies at the core of a Department’s ability to deliver on its mandate. The budget is about more than just how much money a Department gets; it is also about that Department’s ability to turn its money into service delivery. When we approve a budget, we are not just approving the intended expenditure; we are also saying that we have trust that the Department can deliver on its strategic outcomes.
We give money to this Department to build houses for the poor and the needy. We give money to this Department to develop integrated human settlements, which allow for safe and healthy environments to be created. We give money to this Department to assist municipalities in improving their performance, so that residents can benefit from better services. If we know that the Department cannot manage its resources properly, we know that these outcomes will not materialise.
When I raised my concerns during the presentation, the Department simply responded with a few vague and generic catchphrases, which were far too insubstantial to allay any fears.
For example, it should already be a standard practice that all Departmental activities are costed and linked with a specific strategic outcome. Indeed, if this is truly an entirely new approach to be followed by the Department, it implies that past activities were neither costed nor linked with a strategic outcome!
Furthermore, the Department’s statement that the Northern Cape Provincial Treasury has introduced measures to address financial management is no reassurance at all. We know, from annual reports submitted and signed off by the Department, that the Department has failed to adhere to the remedial measures implemented by Treasury to prevent overspending. The efficacy of Treasury’s measures depends on the willingness of the Department to implement them – and we can see that the Department has been very reluctant to do so in the past.
The reports submitted by the Department throughout the previous year indicated that there are serious difficulties in managing the budget as approved in the main appropriation. The revised estimates for
2016/17 are significantly higher than the amounts allocated in the main appropriation, with spending on Goods & Services alone 67% higher than the original estimate. While a Department may certainly run into unexpected difficulties or circumstances which necessitates an increase in funding, it is almost impossible to justify an increase of 67%.
Indeed, such an increase would rather indicate poor planning and unrealistic budget projections at the start of the financial year. At this point, I would like to note that officials from the Department agreed with the notion that their budget projections are not realistic. If the Department itself tells you that its budget is not realistic, you have no choice but to send them back to the drawing board to draft a realistic budget.
The Department tried to justify this increase in Goods and Services by blaming the processes around the local government elections and the establishment of Dawid Kruiper Local Municipality. With all respect, this is a flimsy excuse at best. The fact that local government elections and the amalgamation would take place was known to the Department well before it planned its budget. These were neither unexpected nor unknown. I am aware of the fact that the delays in constituting two municipal councils necessitated unplanned oversight visits. But are we really expected to believe that driving down to Gamagara and Kgatelopele once or twice made the Goods & Services budget increase by 67%?
And it raises the question – how many other factors are known to this Department for this financial year which is not catered for in the budget? What flimsy excuses will we hear at the end of this financial year?
Furthermore, the impact of overspending in 2016/17 on the availability of resources in 2017/18 is not addressed adequately. The Department reported that it had depleted its entire budget for Goods & Services within the first six months of the previous financial year, which will result in significant accrual payments in this financial year – yet there is no strategy which shows how accruals will be managed without adversely affecting service delivery in this financial year. To make matters worse, the budget for Goods & Services in this financial year increases by 3.5% from the main appropriation in 2016/17. While this certainly appears to be a reasonable increase, the impact of overspending in 2016/17 and the effect of accruals which still need to be paid means that it is highly unlikely that the Department will remain within the allocated budget. It serves no purpose to approve a budget which appears reasonable on paper, but which is impossible to apply in practice – especially not when those charged with managing the budget warns you that their projections are unrealistic!
Since there are no measures in the budget plan to ensure that the Department remains within its allocated budget, it is likely that the Department will simply repeat the patterns of overspending established in 2016/17. The Department half-heartedly tried to argue that there was no overspending in 2016/17; we will see the truth of that statement in the Annual Report. The fact remains that the revised estimates remain consistently higher than the main appropriation, which clearly indicates that the Department is unable to deliver on its strategic outcomes within the budget allocated to it by this House – and yet there is no plan to improve financial management at the Department.
The budget from this Department does not avoid the budgetary pitfalls of the previous financial year. I would like to cite just one example.
In the previous year, the Department reported that it was shifting funds from various units to ensure continued service delivery in the Municipal Governance and Public Participation unit in Programme 3. It needed the extra funding because the budget was, and I quote, “inadequate”. Yet, for this financial year, the Department plans a decrease of 2% for Programme 3. This is a fairly senseless decision.
It does not address the inadequacy of funding for the unit and it does not provide a realistic or adequate budget for the unit; it simply determines the inevitable conclusion that the unit will continue using the funds allocated to other units in other programmes. You cannot keep robbing Peter to pay Paul and yet the Department expects us, with this budget, to turn a blind eye to the continued robbery of Paul.
The Department indicated in its presentation that Programme 3 has been restructured, but we are not given the budget projections for any of the six sub-programmes. It simply cannot be that we give a blank cheque to any sub-program in any program in any Department; for us to conduct proper monitoring and oversight over the manner in which Departments executes their mandates, we have to know what is being given to whom and why.
Given the serious concerns that we have about financial management and the likelihood that these concerns will not be adequately addressed during the year under review, the Democratic Alliance cannot support this budget vote.
Andrew Louw MPL
DA Provincial Leader in the Northern Cape
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