NATIONAL TREASURY BRIEFING TO THE STANDING...

NATIONAL TREASURY BRIEFING TO THE

STANDING COMMITTEE ON FINANCE

ON THE 2015/16 QUARTER 1 & 2 REPORTS

Presenter: Lungisa Fuzile | Director-General, National Treasury | 13 October 2015

Programme Name

Targets Status

Targets Achieved Targets Partially

Achieved Targets Not Achieved

Administration 8 2 0

Tax and Financial Sector Policy 4 1 0

Budget Office and Public Finance 4 1 0

Assets and Liability Management 4 2 0

Civil Military Pensions, Contributions to

Funds and Other Benefits

3 1 0

Technical Support and Development

Finance Programme Management

6 5 7*

2

Quarter 1 summary of service delivery targets

Status of the service delivery targets for Quarter 1 2015/16 Financial Year

Indicator Quarter 1 target Target performance status

Administration

Cost efficient management of goods and services. Saving of 1% on goods and services. Partially achieved

Provide an effective and efficient information and

communication technology (ICT) service.

20% of approved ICT solutions deployed with 95%

compliance to SLA/OLA.

Achieved

Retain appropriately skilled personnel: Agreed percentage of

positions filled

89% of positions filled Achieved

Retain appropriately skilled personnel: Agreed percentage of

positions retained

95% retention rate Achieved

Business Continuity Management (BCM) facility established

and fully functional

80% of the continuity site fully operational. Achieved

Implement Enterprise Risk Management (ERM) strategy. 25% implementation of enterprise risk management

strategy

Achieved

Vetting of identified employees 10% vetting of identified employees Achieved

Retention of intellectual capital and institutional memory –

Knowledge Management (KM).

Pilot knowledge assets harvesting workshops in the

identified divisions.

Achieved

Exercise oversight over the public entities to enable the

achievement of government policy objectives in a financially

sustainable manner

First draft to be submitted to Public Entity Oversight Unit

(PEOU) in the 2nd quarter

Achieved

Implement the risk-based internal audit plan 30% implementation of the annual Risk - based Internal

Audit Plan.

Partially achieved

3

Quarter 1 targets performance status

Quarter 1 service delivery targets performance


Tax and Financial Sector Policy

Number of papers published by research

institutions and internally

Ten (10) academic and research institution

papers

Achieved

Implement Twin Peaks model legislation Enabling legislation to be introduced to

parliament during 2015 legislative cycle

Partially achieved

Implement savings and retirement policies Manage regulatory reform process through

further discussions of NT

Achieved

Provide economic analysis and assessment

of government policy proposals

Economic reports reflecting the number of

statistical releases of key economic data,

within two days of publication.

Achieved

Development and maintenance of economic

models

Model updates. Achieved

4


Summarised Quarter 1 service delivery targets performance


Budget Office and Public Finance

Ensure enhanced alignment of budget documentation

with fiscal guidelines based on principles of

countercyclicality, debt sustainability and

intergenerational equity

Design fiscal risks measures. Convene meetings

with stakeholders across Treasury

Achieved

Presenting public finance statistics according to function

and economic classification for consolidated government

i) Prepare baseline estimates

ii) Preliminary outcomes report data

iii) Preliminary annual financial statements (AFS)

numbers update.

Achieved

Providing guidance to departments and entities on the

classification of expenditure.

i) Issue training material for the updated SCOA

ii) Respond to SCOA requests within two weeks

iii) Convene monthly SCOA user forums

Partially achieved

Provide timely sectoral analysis and advice for policy

framework development.

100% of Cabinet memoranda to reach Ministry at

least one day in advance of the relevant Cabinet

meeting.

Achieved

Introduce reforms to enhance provincial and local

government fiscal frameworks

Gazette changes to public transport grant.

Begin consultations on detailed changes to other

local government infrastructure grants.

Consultation on draft amendment to the Municipal

Fiscal Powers and Functions Act (MFPFA).

Achieved

5




Assets and Liability Management

Analysis of corporate plans, shareholder compacts and

annual reports of SOCs, DFIs and water boards

Submit report on analysis of corporate plans and

shareholder compacts of SOCs and DFIs.

Submit business plan for review of the Land Bank.

Achieved

Review of PFMA submissions and applications for

guarantees, funding, borrowing limits and MFMA tariff

increases

Compile submissions on PFMA, guarantee and

borrowing limit applications.

Achieved

Review of the regulatory environment for SOCs/DFIs Analyse and compile responses to legislation,

policies and their impact on SOC/DFIs.

Achieved

Meet government’s total annual borrowing needs R 70.1 Billion (Cumulative) Partially achieved

Ensure timely and accurate payment of interest and

redemptions

R 22.2 Billion (Cumulative) Partially achieved

Retain and attract new investment Conduct one domestic one foreign road show Achieved

6




Civil Military Pensions, Contributions to Funds and Other Benefits

Pay 100% of all benefits within liability date Pay 100% of all benefits within the liability date. Partially Achieved, 91% of the

benefits were paid within the

liability date.

This is mainly due to delays in

submission of payments'

supporting documentation by

applicants (e.g. bank forms, Z894

etc.)

Ensure 100% compliance with National Treasury SLA 95% compliance with National Treasury SLA Achieved

To consistently improve client data integrity Complete monthly reviews (electronic data

verification) and undertake improvements as

opportunities are identified.

Achieved

100% customer service complaints are resolved within

seven days

100% complaints received are resolved within

seven days.

Achieved

7




Technical Support and Development Finance Programme Management

Establishment of GTAC and Programme 8 management

office

Quarterly reports to the

minister

Achieved

Number of technical assistance projects supported 100 + Partially Achieved

Capital project advice and expenditure reviews on behalf

of National Treasury

>10 projects a year Achieved

Number of interns appointed to municipalities 550 Achieved, 1281 interns serving on the internship

programme as 31 May 2015.

Number of municipalities assisted through MFIP 30 Partially Achieved

Audit action plans developed and implemented 278 Partially Achieved, 241 Municipalities had their audit

action plans for 13/14 in place by end of quarter one.

The outstanding Municipalities have developed their

audit action plans by quarter 2.

Long-term urban regeneration programmes registered

(cumulative)

15 Partially Achieved

Total number of catalytic projects approved (cumulative) 300 Achieved

Neighbourhood Development Partnership Grant projects

under construction (cumulative)

10 Achieved

Estimated third-party investment leveraged (cumulative) R 3000 Million Not Achieved

8





Number of projects confirmed for planning within

identified integration/ spatial transformation zones (per

year)

10 Partially Achieved

Integrated city development projects under

implementation

6 Achieved

Number of Jobs Fund projects approved (cumulative) 125 Not Achieved

Grant funding approved (cumulative) R7 950 m Not Achieved

New jobs contracted (cumulative) 140 000 Not Achieved

Placements contracted (cumulative) 70 000 Not Achieved

Training contracted (cumulative) 160 000 Not Achieved

Jobs Fund evaluation reports and dissemination of

learning

3-5 case studies.

1 learning event.

Initiate mid-term evaluation.

Not Achieved

9



2015/16 QUARTER 2 REPORT

Programme Name

Targets Status

Targets Achieved Targets Partially

Achieved Targets Not Achieved

Administration 6 4 0

Tax and Financial Sector Policy 5 0 0

Budget Office and Public Finance 3 2 0

Assets and Liability Management 5 0 0

Civil Military Pensions, Contributions to

Funds and Other Benefits

3 1 0

Technical Support and Development

Finance Programme Management

9 5 4

11

Quarter 2 summary of service delivery targets

Status of the service delivery targets for Quarter 2 2015/16 Financial Year


Administration

Cost efficient management of goods and services. Saving of 1.5% on goods and services Partially Achieved

Provide an effective and efficient information and

communication technology (ICT) service.

40% of approved ICT solutions deployed with 95%

compliance to SLA/OLA

Partially Achieved

Retain appropriately skilled personnel: Agreed percentage

of positions filled

91% of positions filled. Achieved

Retain appropriately skilled personnel: Agreed percentage

of positions retained

93% retention rate. Achieved

Business Continuity Management (BCM) facility established

and fully functional (People, Systems and Assets).

90% of the continuity site fully operational Partially Achieved

Implement Enterprise Risk Management (ERM) strategy. 50% implementation of enterprise risk management

strategy

Achieved

Vetting of identified employees 25% vetting of identified employees Achieved

Retention of intellectual capital and institutional memory –

Knowledge Management (KM).

i) Training and facilitation of knowledge assets harvesting

workshops in the identified divisions.

Achieved

Exercise oversight over the public entities to enable the

achievement of government policy objectives in a financially

sustainable manner

i) Engagements with and reviews of public entities: 1st

draft of strategic and annual performance plans.

ii) Public entities 2nd quarter report submissions to

Minister

Achieved

Implement the risk-based internal audit plan 60% implementation of the annual Risk-based Internal

Audit Plan

Partially Achieved

12




Tax and Financial Sector Policy

Number of papers published by research

institutions and internally

10 academic and research institution papers.

Achieved

Implement Twin Peaks model legislation Enabling legislation.to be introduced to

parliament during 2015 legislative cycle

Achieved

Implement savings and retirement policies Manage regulatory reform process through

further discussions of NT reform proposals

with stakeholders

Achieved

Provide economic analysis and assessment

of government policy proposals

Economic reports reflecting the number of

statistical releases of key economic data,

within two days of publication.

Achieved

Development and maintenance of economic

models

Model updates Achieved

13


Summarised Quarter 2 service delivery targets performance


Budget Office and Public Finance

Ensure enhanced alignment of budget documentation with

fiscal guidelines based on principles of countercyclicality,

debt sustainability and intergenerational equity

Complete first draft of fiscal risks write-up Achieved

Presenting public finance statistics according to function and

economic classification for consolidated government

i) Development/ revision of budget templates for

Budget 2015

ii) Presentations in budget workshops

iii) Roll out of quarterly reporting for public entities

iv) Move IYM, preliminary AFS and MTEC data to

storage

Achieved

Providing guidance to departments and entities on the

classification of expenditure.

i) Roll out SCOA training

ii) Issue at least three classification circulars

iii) Convene monthly SCOA user forums

Partially Achieved

Provide timely sectoral analysis and advice for policy

framework development.

100% of Cabinet memoranda to reach Ministry at least

one day in advance of the relevant Cabinet meeting.

Achieved

Introduce reforms to enhance provincial and local

government fiscal frameworks

i) Present progress to Budget Forum

ii) Submission of draft amendment to MFPFA to

cabinet

Partially Achieved

14




Assets and Liability Management



i) Submit report on analysis of corporate plans of water

boards

ii) Compile and disseminate a bulletin on quarter 1

infrastructure spending by SOCs/DFIs

iii) Engage all the relevant stakeholders

Achieved

Review of PFMA submissions and applications for

guarantees, funding, borrowing limits and MFMA tariff

increases

i) Compile submissions on PFMA, guarantee and

borrowing limit applications

ii) Compile submissions on funding requests from

SOCs.

Achieved

Review of the regulatory environment for SOCs/DFIs Analyse and compile responses to legislation, policies

and their impact on SOCs/DFIs

Achieved

Meet government’s total annual borrowing needs R156.7 billion (cumulative)

Ensure timely and accurate payment of interest and

redemptions

R89.8 billion (cumulative) Achieved



i) Submit report on analysis of corporate plans of water

boards

ii) Compile and disseminate a bulletin on quarter 1

infrastructure spending by SOCs/DFIs

iii) Engage all the relevant stakeholders

Achieved

15




Civil Military Pensions, Contributions to Funds and Other Benefits

Pay 100% of all benefits within liability date Pay 100% of all benefits within liability date Partially Achieved

Ensure 100% compliance with National Treasury SLA 95% compliance with National Treasury SLA Achieved

To consistently improve client data integrity Complete monthly reviews (electronic data

verification) and undertake improvements as

opportunities are identified.

Achieved

100% customer service complaints are resolved within

seven days

100% complaints received are resolved within

seven days

Achieved

16





Establishment of GTAC and Programme 8 management

office

Quarterly reports to the minister Achieved

Number of technical assistance projects supported 100 + Partially Achieved

Capital project advice and expenditure reviews on behalf of

National Treasury

>10 projects a year Achieved

Number of interns appointed to municipalities 800 Achieved

Number of municipalities assisted through MFIP 40 Achieved

Audit action plans developed and implemented 278 Achieved

Long-term urban regeneration programmes registered

(cumulative)

15 Achieved

Total number of catalytic projects approved (cumulative) 315 Partially Achieved

Neighbourhood Development Partnership Grant projects

under construction (cumulative)

20 Achieved

Estimated third-party investment leveraged (cumulative) R 3000 Million Not Achieved

17





Number of projects confirmed for planning within

identified integration/ spatial transformation zones (per

year)

10 Achieved

Integrated city development projects under

implementation

6 Achieved

Number of Jobs Fund projects approved (cumulative) 125 Partially Achieved

Grant funding approved (cumulative) R7 950 m Partially Achieved

New jobs contracted (cumulative) 140 000 Not Achieved

Placements contracted (cumulative) 70 000 Not Achieved

Training contracted (cumulative) 160 000 Not Achieved

Jobs Fund evaluation reports and dissemination of

learning

i) 3-5 case studies.

ii) 1 learning event.

iii) Initiate mid-term evaluation

Partially Achieved

18



NATIONAL TREASURY

FINANCIAL PERFORMANCE AS AT 30/9/2015

Performance per programme

20

Programme Final Budget

Casflow for the

period Actual outcome Variance % spend

1. Administration 366,665 171,090 169,653 1,437 99.2%

2. Eco Pol, Tax, Fin Reg & Res 133,892 64,852 61,842 3,010 95.4%

3. Public Finance & Budget Man 256,965 130,340 130,997 (657) 100.5%

4. Asset & Liability Management 3,116,930 1,049,206 1,044,148 5,058 99.5%

5. Fin Systems & Accounting 751,362 316,683 346,719 (30,036) 109.5%

6. International Financial Relations 1,247,442 57,468 26,454 31,014 46.0%

7. Civ & Mil Pen, Cont to Funds 3,962,941 1,605,112 1,497,961 107,151 93.3%

8. Tech Sup & Dev Finance 3,143,863 1,725,001 1,095,661 629,340 63.5%

9. Revenue Administration 9,434,439 4,717,220 4,717,220 - 100.0%

10. Fin Intel & State Security 4,542,805 2,261,849 2,261,849 - 100.0%

Total National Treasury 26,957,304 12,098,821 11,352,504 746,317 93.8%

Outcome per economic classification

21 21

Item Classification Final Budget

Cashflow for

the period Actual Outcome Variance % spend

Compensation of employees 725,539 369,026 373,251 (4,225) 101.1%

Goods and services 1,222,576 560,624 485,745 74,879 86.6%

Payments for capital assets 16,403 4,390 4,662 (272) 106.2%

Total Operational Expenditure 1,964,518 934,040 863,658 70,382 92.5%

Payment for Financial Assets 3,370,684 1,000,790 1,000,711 79 100.0%

Transfers and Subsidies 21,622,102 10,163,991 9,488,135 675,856 93.4%

Total National Treasury 26,957,304 12,098,821 11,352,504 746,317 93.8%

Provincial Equitable Share 382,673,477 191,336,757 191,336,757 - 100.0%

State Debt Costs 126,440,428 66,186,036 62,684,144 3,501,892 94.7%

Fuel Levy 10,658,909 3,552,969 3,552,969 - 100.0%

National Revenue Fund Payments 121,000 121,000 - 121,000 0.0%

Total Statutory Transfers 519,893,814 261,196,762 257,573,870 3,622,892 98.6%

Significant variances and reasons (1/3)

22 22

The main items making up the overall positive variance of R 746.3 million

are Transfers (R 669.3 million) and Operational Expenditure (R 77 million),

as follows:

• R 427.9m representing underspending by the Employment Creation

Facilitation Fund due to project delays. Some projects requested an

extension of the implementation period which has impacted the

scheduling of grant disbursements.

• R 217.7m representing a payment holiday on the Political Office Bearers

Fund due to the fund being in surplus.

• R 127.3m representing underspending on the Neighbourhood

Development Partnership Grant as a result of delays in the procurement

processes, unspent municipal transfers from the previous year and

payments to some municipalities being withheld due to non-compliance

with the DORA and the NDPG framework.


23 23

• R 26.5 million saving on the transfer payment to the African Development

Fund.

• R 20.5 million representing underspending on the Cities Support

Programme as a result of delays in the transfer of the funds to the DBSA,

owing to the possible configuration and redirection of funds to the Project

Preparation facility.

• R 6.7 million representing underspending on the Infrastructure Delivery

Improvement Programme. The second transfer payment to DBSA has

not been effected owing to the slow procurement of Technical Assistants

by the DBSA.

• R 11.1 million not yet settled due to unresolved disputes on the rent and

municipal charges billed for the 2nd quarter, as well as charges for data

lines and internet charges billed in the 2nd quarter.


24 24

• R38.4 million representing the balance of under spending on various

programmes.

• The aforementioned positive variances are partially offset by

overspending of R 130.1 million to the Government Employees Medical

Scheme in respect of the final obligation for the post retirement medical

benefits.

Questions and Answers

Thank You

25

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