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MEDIA STATEMENT BY MINISTER JEFF RADEBE ON THE MANDATE PAPER FOR BUDGET 2018

Our Government adopted the National Development Plan (NDP) in 2012 as the Blue print and overarching vision for Vision 2030. The Implementation of the NDP is one of the key government imperatives under the current administration and is aligned with the Africa Agenda and the global Sustainable Development Goals (SDGs). In 2014 the Government adopted the Medium Term Strategic Framework (2014 – 2019) as the first 5year term to implement the National Development Plan.

Guided by the NDP, our developmental state’s most important task is to grow the South African economy through various legislative, regulatory and programmatic instruments. This aims to facilitate the achievement of our historic mission and democratic mandate to transform South Africa from a society damaged by the injustices of colonialism and apartheid to a truly non-racial and non-sexiest society characterized by social justice and increased opportunities particularly for black South Africans. The concept of introducing the Budget Prioritisation Framework or Mandate Paper is the brainchild of the National Planning Commission, which first muted the idea to facilitate better alignment of NDP priorities and Budget.

The National Planning Commission (NPC) was established in May 2010 to develop a long term vision and plan for South Africa.  The appointment by the President in 2012 as an advisory body made up the Chairperson, Deputy Chairperson and 24 experts drawn largely from outside the Government. The mandate of the NDP is to take a broad, independent and critical view of South Africa by consulting with and drawing on the skills and expertise. The Role of the NPC is stipulated as follows:

    Perform planning advisory for Government, Cabinet and Government

    Lead role in directing new areas of research and analysis

    Engagements with various stakeholders and sections of society

    Contribute to International Partnerships and networks on national planning

    Undertake detailed planning in selected sectors

    Promote and advance the implementation of the NDP

The NPC since its first appointment focused on the process of the development of the NDP by 2012 for its approval and adoption. In process led to the identification of key outcomes for monitoring by the DPME which led to the adoption of the MTSF 2014 -19 to guide the implementation monitoring of the NDP for the 5year period. In 2016 this was supported by the necessary resource allocation to expand the capacity of the DPME’s organisation establishment. From that period on the DPME started the process of Mid Term Review of the Performance and implementation of the NDP. This document will be made available next week at the 5th Anniversary Celebrations of the NDP.

It was in the execution of its advisory role that the NPC recommended the intervention of the establishment of the Mandate Paper to facilitate budget prioritisation to meet the objectives of the NDP.

Faced with the reality of the three key challenges of poverty, unemployment and inequality, in our society of the NPC developed in 2017 the three NDP levers of growing a strong and inclusive economy, developing the capabilities of our country. The change in context has also important bearing on our planning processes.

South Africa adopted a long-term plan - the National Development Plan: Vision 2030 (NDP) to guide Government programmes and initiatives. On the basis of this vision and framework a Medium-Term Strategic Framework (MTSF) was developed and approved by Cabinet to drive implementation of the NDP over the period 2014 to 2019. At its August 2016 Cabinet identified the need to strengthen the alignment of the South African Budget, the Medium-Term Strategic Framework (MTSF) and the National Development Plan (NDP), and for budget prioritisation. The Department of Planning, Monitoring and Evaluation (DPME) was instructed to develop on an annual basis the Mandate Paper to guide the budget process for 2018, to ensure a focused implementation of Government’s plans.

In that year the Mandate Paper 2017 identified the priorities of Higher Education, Social Security and Job creation. This ANC led Government on the 16th of August 2017 concluded an important step in the furtherance of the objectives of the NDP through our budget reform programme. This is the approval of the Mandate Paper for 2018, which serves as the Budget Prioritisation Framework.

The need for the corrective and structural intervention such as the Mandate Paper is to enhance the precision and targeting of budget allocation to NDP objectives through the identification annually of a set of priorities, reflective of objective assessment and conditions at the time. The Mandate Paper therefore allows the MTEF Budget to be much more agile and response instruments of resource allocation to deal with both parameters of the expenditure and revenue generation.

The Mandate Paper is an addition to our planning tools to ensure effective prioritisation and ensure that resource allocation supports implementation of the NDP, within the prevailing socio-economic context and fiscal framework. The Mandate Paper process precedes and guides the budget process. The budget processes will continue to be managed by the National Treasury in terms of the Public Finance Management Act.

The Mandate Paper is an instrument for budget prioritisation, and the process through which it is developed, will be strengthened as part of the process of institutionalizing planning, which includes the introduction of legislation. Next Year and in the future the Mandate Paper will be completed earlier in the planning cycle by the end of April each year, to guide all State Institutions in developing their budget proposals for the following financial year.

Internationally, several countries considered to be Developmental States have adopted the National Development Plan similar to the NDP: Vision 2030. Some other countries have complemented their planning instruments with Budget Prioritisation Frameworks such as the Mandate Paper to guide budget allocations and determine priority spending areas. Our vision of South Africa as a developmental state is rooted in our realities of its mixed economy, in which the inclusive reconstruction and development achieves socio- economic transformation, reduce inequality, deracialize the economy and ensure state participation in strategic sectors.

The NDP focus us on the overall objectives, supported by South Africans, to eradicate poverty and substantially reduce inequality by 2030 through the creation of jobs and accelerating inclusive economic growth.

It is critical that Government uses all the instruments at its proposal to drive job creation and growth. The annual Government budget, totaling R1.6 trillion in 2017/18 allocates resources to the various activities of Government and is central to making our plans a reality.

StatsSA recently released figures showing that poverty has not improved but worsened in our country. The importance of the mandate paper must be demonstrated by this example. Whilst the StatsSA data was released only a few weeks ago. The Mandate paper process for 2018 had already prioritised the key drivers of poverty for the Budget 2018 which are unemployment and years of schooling, and the priorities identified of job creating / small business development and education as the first key priorities.

Similarly, the Mandate Paper had already identified the priority of the agriculture sector, as had the Nine Point Plan. This decision has been supported by the recent economic growth GDP figures of 2.5%, for the first quarter of 2018/ 2019 taking our South African Economy out of a technical recession, but more importantly that this growth has been agriculture sector led, which was already identified as a Budget 2018 priority.  

The Mandate Paper builds on the mid-term review of performance against targets in Government’s Medium-Term Strategic Framework. It therefore factors in recent progress and challenges in Government’s performance and service delivery in the context of the NDP. The Mandate Paper takes stock of the current socio-economic conditions and its implications for the budget and society. Slow economic growth is impacting on Government revenues and therefore on Government’s ability to expand service delivery in critical areas. The fiscal constrains require even further the more robust and responsive reallocation of funds to the areas of greatest need away from areas that lack performance and have minimal impact.

The Mandate Paper also factors in discussions within the Forum of South African Directors-General and the deliberations of the August 2017 Cabinet Lekgotla. Further work was done by FOSAD Directors-General before the Mandate Paper was submitted to Cabinet on 16 August 2017 and approved including the list of seven priorities for the 2018 Budget.

Principles and criteria for prioritisation

Prioritisation focuses on strengthening the three key levers of NDP implementation, namely:

       ·         Growing the economy.

       ·         Enhancing the capabilities of South Africans

       ·         Building a capable state.

In light of slow economic growth and lower Government revenues, and in order to limit the growth of debt and remain within prudent fiscal limits, the overall medium-term budget allocations cannot be increased in 2018. Therefore, urgent priorities for the 2018 Budget, deriving from cost-pressures and the need for catalytic spending, will have to be funded from reprioritization. In reprioritizing, the interests of youth, women, children, small business, the informal sector and the environment must be factored in. Consideration must also be given to high-risk areas such as higher education, public transport and land reform.

Given the absence of fiscal space, departments will have to identify non-core spending and non-performing programmes (relative to MTSF targets and indicators) to fund priorities they identify and also to fund national priorities. This means that it is important to focus on areas where Government expenditure can be reduced. In addition to non-core and non-performing programmes, areas identified by the Mandate Paper for reducing expenditures are:

      Limiting the use of consultants through capping this expenditure item;

      Strict limits on contingency liabilities and litigation costs through developing a mechanism with the Department of Justice to determine cases to be defended or for arbitration;

      Optimising state procurement by setting pricing parameters and centralising procurement of major items, as well as improving contract management and procurement compliance;

      Improving returns and value for money from state infrastructure projects, also through combatting collusion and strengthening project management to prevent cost escalations due to delays; and

      Insist on good governance and penalise lapses in governance by withholding transfers and/or guarantees.

In addition, priority will be given to areas that:

      Promote efficiency in general administration budgets and through cooperation and integration of systems across many functional areas through, for example, one-stop shop investment centres, shared services centres and intergovernmental coordination (including the use of the service points of the Post Office for extending the reach of service delivery);

      Explore revenue-generating opportunities and alternative funding of Government services. 

The priorities as approved by Cabinet for Budget 2018 are:

1.    Job Creation and Small Business Development

2.    Youth Development

3.    Infrastructure expansion and maintenance

4.    Land reform, smallholder farmer and agriculture development

5.    Comprehensive social security, education and skills

6.    The Integrated plan to fight crime

7.    Advancing the South African national interest in SADC, African Continent, BRICS and Indian Ocean Rim Association.

After its approval by Cabinet on 16 August 2017, the Mandate Paper and priorities are being discussed in meetings of the Medium -Term Expenditure Committee (MTEC) convened by National Treasury where the spending and funding proposal of different departments and function groups are being considered. The priorities will therefore be factored into the recommendations of MTEC to the Ministers’ Committee on the Budget and Cabinet for the finalization of the Medium -Term Budget Policy Statement and Budget 2018.

Enquiries: Tshegofatso Modubu on 083 276 0786 / Tshegofatso.Modubu@dpme.gov.za Mmabatho Ramompi on 076 480 3513 Mmabatho.Ramompi@dpme.gov.za

DPME Facebook: Department Planning, Monitoring and Evaluation: @DPMEOfficial #NDP2030

Issued by the Department of Planning, Monitoring and Evaluation (DPME)

7 September 2017

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