4th Economic and Social Rights Report SAHRC

1
4th Economic and Social Rights Report - SAHRC

• National Treasury presentation to the Joint
  Budget Committee
• 11 November 2003

2
Overview

• The SAHRC is empowered by the constitution to
  monitor and assess observance of economic
  social rights
• National Treasury recognises important role of
  SAHRC
• Need to clarify how SAHRC role fits in given
  oversight role of Parliament and legislatures
• How do we hold government and its departments to
  account for their performance

3
What is stated in chapter 13

• Examines role of treasuries policy,
  programmatic legislative Constitution
• Challenge treasuries on their role in meeting
  economic and social rights of SAns
• Comments on nominal and real values in budget
  allocations 1999/00 to 2001/02
• Role of treasury in budget allocative process
  does it ensure realisation of economic and social
  rights

4
Methodology

• However, data collection methodology is severely
  limited - should use existing budget documents
• Existing survey methodology lacks validation
• While some findings are useful, needs to
  recognise importance of collective responsibility
  in Government
• What is the appropriate role of Treasuries in
  promoting economic social rights?

5
Our response focuses on..

• Intergovernmental system and budget
  decentralisation
• Role of Treasury
• Reforms that improve resource allocations
• MTEF
• Budget Process
• Measurable objectives and service delivery targets

6
Intergovernmental System and Budget
Decentralisation

• Constitution establishes 3 spheres
• Section 214 divides nationally-raised revenue
  between 3 spheres
• Takes account of functions and fiscal capacity of
  each sphere
• National govt or departments cannot determine
  budget of province or municipality
• Spheres not tiers, with govts not administrations
• Cannot hold one sphere resp for another
• Water provision a municipal function, cannot
  expect a provincial treasury to know what funds
  are spent on water

7
Role of Treasuries

• Constitution
• Chapter 13 and section 216 in particular
• PFMA
• Manage the budget preparation process
• Manage implementation of annual national budget
• Facilitate implementation of the DoRA
• Coordinate intergovernmental fiscal and financial
  relations
• Budget allocations determined by Cabinet,
  provincial EXCO or mayoral/executive committee
• Budget reforms to widen participation
• MINCOMBUD, Cabinet, Budget Council, B Forum

8
Performance in Government

• HR report grappling with difficult concept
• Does not take account of key performance
  documents in national/provincial govt
• ENE, IGFR
• Strategic plans and performance measures
• Survey methodology is problematic
• Figures provided are inaccurate
• Figures cannot be compared btw govts like IGFR
• Assess a government as a whole
• Cannot assess every dept to perform every other
  function
• Treasuries are a type of back-office operation

9
Outputs and Inputs

• HR report focuses on inputs rather than outputs
• Need to focus on outputs
• Inputs like how money says nothing about
  performance
• Key is to assess how resources used
• Example of school education
• Budget of R45 bn, but 80 used for personnel
• Key is to contain personnel expenditure, increase
  capital and npnc (learner support materials etc)
• Role of parliament and legislatures in holding
  executive to account, approving budget etc

10
Budget reforms in SA
1997 1998 1999 2000 2001
2002 2003

• Accounting standards
• Procurement reform
• Plannning, budgeting, reporting link

Measurable objectives
Strategic plans tabled in Parliament
Estimates of National Expenditure
Public Finance Management Act
National Expenditure Survey
Medium Term Expenditure Framework
Intergovernmental System
11
MTEF budget process
Medium term policy review
Macroeconomic framework, fiscal policy DoR
Preparation of MTSF
MTBPS
Cabinet lekgotla
Cabinet lekgotla
Jan April July
Oct 2003
Departmental and agency planning budgeting
Preparing budget submissions
MTEC review recommendations to Cabinet
Preparation of Budget Documents
May Aug Nov
Feb 2004
12
Medium Term Expenditure Framework

• Based on four principles
• Fiscal policy and the budget framework
• Policy priorities and public expenditure
• Political oversight of the budget process
• Budgeting for service delivery
• Budget is driven by priorities like
  poverty-alleviation, social services and grants,
  economic priorities, crime-prevention etc

13
(1) Factors affecting fiscal policy

• Level of taxation
• Rise in tax burden may impede economic growth
• Slowdown in tax burden may require higher
  borrowing or less spending
• Level of borrowing
• Borrowing for investment may boost longer-term
  growth
• Interest costs may crowd out other expenditure in
  the long term
• Too much Govt. borrowing pushes up interest rates
• Balance between capital and recurrent spending

14
How three-year budgeting works
2003 MTEF

• Increase to baseline, determined by
• Revised macroeconomic framework
• Draw down on contingincy reserve
• Policy priorities / alignment with dept. business
  plans
• Vertical division of revenue
• Inflation adjustment in 3rd year.

2003/04
2004 MTEF

2004/05
baseline
2004/05
2005/06
2005/06
baseline
2006/07
15
(2) Policy priorities and public expenditure

• MTEF budget process strengthens link between
  policy priorities and expenditure
• Departmental strategic planning aligned with
  medium-term policy priorities
• Budget submissions based on strategic plan and
  policy priorities
• Budgets evaluated on basis of Governments
  priorities articulated by Political Executive

Child support grant extended to indigent children
under 14 yrs phased in over the 2003 MTEF
period. Priority is to reduce poverty and
vulnerability
16
(3) Political oversight of budget process

• Executive responsible for policy and
  prioritisation ensured by MTEF budget process
• Manage the tension between competing policy
  priorities and budget realities
• Improve legislative oversight through JBC, SCOPA

Trade-off between extending child support grant
to children lt 14 years or increase spending on
school books, or can both be accommodated within
approved fiscal framework
17
(4) Budgeting for service delivery

• MTEF deepens medium to long-term certainty
• Budget certainty supports policy for the
  phasing-in of CSG
• Allows for medium-term reprioritisation
• Legislative reforms provide manager with greater
  flexibility accountability for use of resources
• Budget documents contain service delivery
  commitments
• IGFR, ENE, Appropriation Bill, DoRA, Budget
  Review
• Measurable objectives and output targets included
  in national and provincial budgets

18
Future challenges

• Better formulation of service delivery
  objectives, outputs and targets
• Better use of existing documents
• Legislatures
• SAHRC
• Public
• Improving monitoring and evaluation systems
• Strengthening the accountability cycle
• Aligning strategic plans, budgets and annual
  reports
• Performance agreements of line-managers