Appropriations Spending Report: Assessing Departmental Performance and Trends

1. National TreasuryPresentation ofAppropriations Spending ReportStanding Committee on AppropriationsSeptember 15, 2009

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

3. Appropriations bill format • 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) Appropriation bill structure Asterisk indicates specific & exclusive allocations which cannot be changed by the department

4. Appropriations bill format • 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

5. Review of programme budget structure • 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

6. 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:

7. Review of programme budget structure • Field tested with selected departments • Currently working with Health, Defence and Labour to review structures

8. Economic classification can be unhidden New appropriations spending report

9. 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

10. 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

11. 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)

12. 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

13. Thank you