Treasury Guidelines & 2008 Budget process

1. Treasury Guidelines & 2008 Budget process Joint Budget Committee 31 August 2007

2. Overview • MTEF priority setting • 2008 Budget Process • Highlights • Conditional grants process • Programme Performance Information • Official Development Assistance • Infrastructure bids • Framework for Managing Programme Performance Information • In-year Monitoring Information for JBC • Q&A

3. How the MTEF works • Government runs a rolling 3 year budget process • Lets assume the police budget published in 2006 is as follows • R100 in 2006/07, R105 in 2007/08 and R110 in 2008/09 • For the 2007 budget, the R105 and the R110 are the baseline figures for police • To get the new third year, we increase the R110 by 6% or something, lets call it R116 in 2009/10 • Now we have a baseline of R105 in 2007/08, R110 in 2008/09 and R116 in 2009/10 • This is practically guaranteed to police. They then bid for extra resources over baseline • Let’s assume that we give them R5, R10 and R20, then their new budget is R110 in 2007/08, R120 in 2008/09 and R136 in 2009/10 • In the speech, we say that we have added R35 of new money to police… • …or we say that we have added R35 to the baseline for police • In each budget, only a small part of total spending is subject to active decision making • In 2006, only 5.8% of total spending was the subject of the budget process

4. Medium term expenditure committee • National department then runs a process to allocate between the departments • Provinces run their own processes • Departments are asked to interrogate their own baselines to absorb new priorities • Treasury evaluates budget submissions • MTEC listens to departments’ presentations • Asks tough questions • Makes recommendations to ministers committee on the budget • MinComBud make final decisions before budget is taken to cabinet

5. 2008 Budget Process • Budget Bids • Determining resource envelope • Medium Term Expenditure Committee – scrutinising budget bids • Cluster priorities/examination of cross cutting issues • Importance of Parliamentary oversight in 3 year allocations • MTBPS signals policy decisions

6. 2008 Budget Process Critical Dates

7. Highlights • Baseline examination and reprioritisation • Identifying recurrent and non-recurrent expenditure • Budget structures • Official development assistance (ODA) per programme • 2010 FIFA World Cup • Performance Information Framework • Conditional grants

8. New spending proposals format • Letter signed by Accounting Officer: maximum of four (4) bids • Detailed costing • Legislative, administrative, implementation plans • Outcomes and programme level; outputs at subprogramme level • Disclose deviations from original financial approval where business plans have been changed • Additional information requested by budget analyst

9. Improved Conditional grant process

11. Conditional Grants cycle aligned with budget cycle Identify non-financial information in business plan template Establish Grants Committee as part of MTEC structure Assess grant framework in relation to strategic plan and programmes of department Departmental capacity to monitor implementation of CG 2008 CG cycle

12. Infrastructure Budgeting Guidelines

13. Overview • To ensure a more rigorous approach capital bids will be appraised by the Capital Budgets Committee • Capital submissions were due on 27 July 2007 • Project Concept Note required

14. Classification • Three broad categories of capital projects/ programmes: • Mega projects (more than R300 million per year) • Large projects (between R50 million and R300 million per year within a given MTEF); and • Small projects (less than R50 million per year) • These are divided according to: • New projects/programmes • Existing projects/programmes

15. Performance Information

16. Outline • Performance Information Framework • GWM&E • Importance of Performance Info • Purpose of the Framework • Performance Information in the MTEF • All departments • Outcome and output indicators • Examples • Pilot departments • Trendable and quantitative indicators • Examples

17. Evaluations Census and Survey Information Programme Performance Information Performance Information Framework • The Framework for Managing Performance Information provides guidance on Programme Performance Information which is part of the Government-wide Monitoring and Evaluation System (GWM&E)

18. Performance Information Framework • Performance information is important to: • measure value-for-money (economy, effectiveness, efficiency and equity) • help identify and address underperformance/lack of service delivery in government programmes • improve linkage between strategic planning, budgeting and reporting • provide standards for developing indicators to national, provincial and local government • improve accountability and oversight of legislatures • reward good performance

19. Performance Information Framework • Purpose of the Framework is for guidance on: • Integrated structures, systems, and processes required for performance information • Roles and responsibilities for performance information: Presidency and Premiers office, National & Provincial treasuries, Public Service and Administration, Provincial and Local Government • Promoting accountability and transparency by providing Parliament, provincial legislatures, municipal councils with timely, accessible and accurate performance information • Publishing performance information • Standardising terminology on performance information

20. Performance Information Framework

21. Performance Information in theMTEF Guidelines • Increase focus on monitoring performance info • Report performance information in conjunction with the budget • Verify and validate the quality and usefulness of performance information All Departments Pilot Departments Performance Information in MTEF budget bids Trendable Quantitative Performance Information Programme Outcome Indicators Past 3 years, current year expected, & medium-term targets* Subprogramme Output Indicators

22. Performance Info in theMTEF Guidelines • In the programme sheets of the MTEF database the following performance information is requested: • Outcomes are the medium-term results for specific beneficiaries that are the consequence of achieving specific outputs. Outcomes should relate clearly to an institution's strategic goals and objectives set out in its plans.

23. EXAMPLE – Dept. of Agriculture

24. Performance Info in theMTEF Guidelines • In the subprogramme sheets the following performance information is requested: Key output measures / performance indicators • Outputs are the final products, or goods and services produced for delivery. • Report progress achieved against targets in the 2007 ENE in the first quarter.

25. EXAMPLE – Dept. of Agriculture Subprogramme: Sector Services

26. MTEF Pilot Performance Info • In TQ Performance sheets (Annexure 5), pilots are requested to provide the following trendable and quantitative information: • The template sets out key outcomes for each programme and key outputs per subprogramme. • Past performance, current year estimated performance that will act as the baseline against which targets will be assessed

27. EXAMPLE – Dept. of Agriculture Programme: Market SA Agriculture Subprogramme: Overseas Marketing

28. Pilot Performance Info • Annexure 5 also includes information requested on performance indicator definitions:

29. In-Year Monitoring Information for JBC Update • Based on requests from the JBC for more detailed information relating to departmental expenditures NT is developing an in-year monitoring report for the JBC • The report will include: • Monthly expenditures against budget at the aggregate national level and per vote at the programme level and by major economic classifications • Cashflow analysis and suspense account information • Departmental receipt information • The JBC could use these reports to quiz departments on spending trends and outcomes and outputs at the programme level • A draft report format will be shared with the JBC by mid-September 2007.

31. Q&AThank you