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