by Adv Boitumelo Babuseng MPL – DA Provincial Spokesperson for Economic Affairs
Date: 26 June 2017
Note to editors: The following speech was delivered in the Northern Cape Provincial Legislature today by the Democratic Alliance’s provincial spokesperson on Economic Affairs, Boitumelo Babuseng MPL, during the debate on the budget of the Northern Cape Provincial Treasury.
The Provincial Treasury plays a critical role in ensuring that there is good governance within the provincial administration. In fact, section 18 (2)(g) of PFMA provides that, “A provincial Treasury must intervene by taking appropriate steps, which may include the withholding of funds, to address a serious or persistent material breach of this Act by a provincial department or a provincial public entity.”
Currently, irregular expenditure incurred in the province is over R10 billion. The Department of Health is the main culprit and is closely followed by the Department of Education. The accounting officers of these departments and others have incurred irregular expenditure with impunity, ad infinitum and, more importantly, without consequences.
The R10 billion in irregular expenditure did not happen overnight. It accumulated over years in which the provincial treasury had access to financial statements and audit reports which highlighted the risks. We will certainly hold departments to account for their role in this mess, but the provincial treasury is not absolved from responsibility.
The failure of the provincial treasury to act against truant departments and accounting officers makes it complicit in criminal conduct. For the PFMA imposes a legal duty on the provincial treasury to act and if it fails to act in accordance with this duty, then it becomes criminally liable by way of omission.
The provincial treasury must no longer be allowed to turn a blind eye to this persistent unlawful and criminal conduct by accounting officers and officials. In the circumstances, since the provincial treasury has dismally failed to perform its statutory functions as provided for in the PFMA, more specifically sections 81, 82, 83 and 84, I have asked SCOPA to initiate an investigation in this regard.
Moreover, I have also resolved to formally lay criminal complaints against the accounting officers and CFOs of the departments that have incurred irregular expenditure in terms of section 86 of the PFMA, specifically Education and Health and officials at the provincial treasury. We owe it to the people of the province. The public purse must be respected by government officials and politicians for the government holds taxpayer money in trust for the benefit of the people.
The Auditor-General reported at the end of the 2015/16 year that allegations of financial misconduct were made against five heads of departments who, together, controlled approximately 49% of the provincial budget. These allegations were never investigated. In terms of Treasury Regulation 4.1.3, it is the responsibility of the provincial treasury to ensure that the relevant executive authority initiates an investigation and that a disciplinary hearing is held.
When asked about this serious failure, provincial treasury officials shifted the blame to the relevant executive authorities. We cannot treat the constitutional imperative of proper financial management as an exercise in passing the buck. As the head of the provincial treasury, the buck stops with you, MEC. Section 17(1)(a)(2) gives you the power to take decisions. Use it.
The Municipal Finance Unit at the Department of Co-operative Governance, Human Settlements & Traditional Affairs has been transferred to the provincial treasury because it has the capacity and expertise to deal effectively with matters of municipal finance. I commend the provincial government for this move.
However, the provincial treasury intends to appoint a panel of consultants to perform the statutory functions of officials. For example, the majority of the responsibilities assigned to consultants in the extensive scope of work are already assigned to municipal officials such as municipal managers and chief financial officers in terms of the Municipal Finance Management Act. Regulations on minimum competency levels have been effected to ensure that officials with the necessary financial skills are now appointed at municipalities.
Municipal officials receive salaries commensurate with the ability to do the work which will now be assigned to and carried out by consultants.
I am not referring to instances where there are temporary vacancies at municipalities. My concern is that the provincial treasury has decided to allocate duties assigned by law to municipal officials to consultants and to pay consultants while municipal officials are also drawing a salary. While we are operating within a constrained fiscal environment, provincial treasury is telling us that it is perfectly acceptable for the provincial government to pay three times for the same service to be delivered!
In addition, the provincial treasury itself has repeatedly reported to this House that municipalities do not want assistance from consultants appointed by them. Some municipalities have deteriorated to a state of dysfunctionality and the solution isn’t to provide more consultants who will also be chased away. The solution is outlined in section 139 of the Constitution, which allows for dysfunctional municipalities to be placed under administration.
In the circumstances, I find it difficult to eschew the conclusion that this panel of consultants serves no other purpose than to facilitate a corrupt patronage network at great costs to the public purse
While consultants are appointed to do work which should be performed by officials, the provincial treasury’s personnel numbers are also expanding. Between 2014 and 2017, the personnel numbers have increased by 16% and further increases are projected in the outer years of the current MTEF. Yet, at the same time, the provincial treasury is also responsible for the implementation of the moratorium on the filling of vacant, funded posts. It is a startling contradiction that the very same department which tells other departments not to fill vacancies are happily appointing more and more employees each year!
The provincial treasury’s budget for the compensation of employees in this financial year is 18% higher than the previous financial year and constitutes 67% of the total departmental budget. When 67% of your resources are used only to pay salaries, what do you actually have left to provide tools of the trade to your employees, to embark on oversight visits and or to fund the programmes you aim to undertake?
It is noted that the provincial treasury is involved in a process to review the organisational structure. One can only hope that the review will indeed establish a generic, streamlined structure which gives effect to the core mandates of the provincial treasury. Based on the facts at hand, it seems far more likely that the review will be part of a political ploy to ensure the appointment and compensation of loyal cadres in a bloated public service.
While the organogram is growing and expenditure on staff is increasing in the province, one critical position remains conspicuously vacant.
The position of Head of Provincial Treasury has been vacant since November 2014. The honourable premier has tried to justify the delay in making an appointment by stating that she wishes to appoint a suitably qualified woman to the position. Why, then, have all the acting HODs been male?
It would seem that the mental health hospital will be completed before a permanent head of provincial treasury is appointed!
For the reasons given above, the Democratic Alliance cannot and will never support this budget in the prevailing circumstances.
Adv Boitumelo Babuseng MPL
DA Provincial Spokesperson for Economic Affairs
082 302 2117 / 079 874 6179
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