National Treasury

Presentation ofAppropriations Spending Report

Standing Committee on Appropriations

September 15, 2009

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Agenda

• Appropriations bill format • Programme budget structure review project• New appropriations spending report• Q1 appropriations spending overview

• An important tool by which Parliament allocates funds for performance of specific functions by executive in efficient, economical, effective & equitable way

• Mix of selected budget & accounting items (e.g., programme, econ. class., financing methods & earmarks)

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Appropriations bill format

Asterisk indicates specific & exclusive allocations which cannot be changed by the department

• Appropriations committee & the bill– Treasury is improving consistency of presentation

including:• What gets earmarked• Standardization of programme definitions• What is designated as specific & exclusive• Which transfers to identify & aggregation method

– For consideration: Appropriation committee to consider changes in programme structure ahead of budget finalization

– Committee would make recommendations & adopt the structure of the bill prior to tabling by the Minister of Finance on Budget Day

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Appropriations bill format

• Purpose of exercise improve functionality of programme budgeting – Enhance connection to government-wide strategic

frameworks– Departmental objectives & mandates– Support political decision-making & prioritization– Promote accountability & management

• Result in confirmed or revised budget programme structures for each vote

• Approval process includes Appropriations Committee consideration

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Review of programme budget structure

• Drafted a programme budgeting guideline. For example:– Definition: “a management unit established within a

department charged with the delivery of one or more clearly defined services in relation to mandates and specific objectives”

– Elements of a programme budget structure:

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Review of programme budget structure

Vote NameVote Aim

ProgrammePurpose

Measurable objectivesPerformance indicators

Public entitiesProgramme manager

SubprogrammeActivities

• Field tested with selected departments• Currently working with Health, Defence and Labour to

review structures

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Review of programme budget structure

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New appropriations spending report

Vote 7: National Treasury Expenditure per Appropriated budget Total

virements,

shifts, roll-

overs

Available

budget

Year- to-

date actual

expenditur

e

Percent of

budget

expended

Appropriation Act, 2009

Current

payments

Transfers

and

subsidies

Payment

for capital

assets

Total Total Total Total Total

1 Administration 181,257 1,304 6,208 188,769 - 188,769 51,327 27.2%

2 Public Finance and Budget Management 199,663 7,407 1,412 208,482 - 208,482 58,243 27.9%

of which - - - - - – Technical Assistance Unit Trading Entity 993 993 - 993 7,819 787.4%– Project Development Facility Trading Account 5,958 5,958 - 5,958 - 0.0%

3 Asset and Liability Management 63,653 - 752 64,405 - 64,405 13,326 20.7%

4 Financial Management and Systems 610,942 - 762 611,704 - 611,704 51,023 8.3%

5 Financial Accounting and Reporting 73,989 48,600 785 123,374 - 123,374 27,413 22.2%

of which - - - - - – Accounting Standards Board 7,242 7,242 - 7,242 1,811 25.0%– Audit (Auditor-General) 19,038 19,038 - 19,038 1,708 9.0%– Independent Regulatory Board for Auditors 22,018 22,018 - 22,018 5,500 25.0%

6 Economic Policy and International Financial Relations 81,922 5,000 709 87,631 - 87,631 22,241 25.4%

of which - - - - - – University of Cape Town: Economic Research Southern Africa 5,000 5,000 - 5,000 1,700 34.0%

7 Provincial and Local Government Transfers - 14,410,631 - 14,410,631 - 14,410,631 6,570,219 45.6%

of which - - - - - – Project Development Facility Trading Account: Neighbourhood - - - -

Development Partnership Indirect Grant 79,394 79,394 - 79,394 - 0.0%Conditional Grant to Provinces - - - - - – Infrastructure Grant to Provinces 9,249,247 9,249,247 - 9,249,247 2,325,660 25.1%– Gautrain loan 4,200,000 4,200,000 - 4,200,000 4,200,000 100.0%Conditional Grant to Local Government - - - - - – Financial Management Grant 299,990 299,990 - 299,990 - 0.0%– Neighbourhood Development Partnership Grant 582,000 582,000 - 582,000 44,559 7.7%

(R'000) (R'000) (R'000) (R'000) (%)

Economic classification

can be unhidden

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New appropriations spending report

• What this report provides is some pointers for assessing national departmental performance. However further investigation is needed: – Expenditure detail to programme level but not

subprogramme, activity or project level– Operational efficiency (i.e., value for money)

• Value of money assessments are as much as about evaluation as routine monitoring

• Quality performance indicators are useful for monitoring

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New appropriations spending report

• Trends shown by performance indicators can be tell just part of story. For any indicator we must ask if:

– Is it reliable– Is it clear what’s being measure– Is it verified and accurate– Is it cost-effective– Is it causing intended consequences– Is it relevant to service delivery

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New appropriations spending report

• In certain sectors spending and service delivery takes place in the provinces and by public entities that receive fiscal transfers and grants from national departments– Provincial spending is monitored closely although

each provincial treasury and legislature develop & pass budgets

– PFMA does not cover public entities in the same way as national and provincial departments. Over 300 entities, not on Basic Accounting System, autonomous of the Public Service Act, use accrual accounting, budget differently (i.e., not programme budgeting)

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Q1 appropriations spending overview

• Appropriation 2009-10 = R399.6 – R113 is for current payments (28%)– R278 for transfers mostly conditional grants and

public entities (70%)– R8.5 is for capital assets (2%)

• Year-to-date trends = R95.7 – R24.7 – current payments – 22%– R69.6 – transfers – 25%– R1.4 – capital assets – 16%

Note: All numbers in billions of Rands

Thank you

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