Outline

1. An Overview of Government’s Medium Term Strategic Framework (MTSF) 2014-2019 for the Standing Committee on Finance

2. Outline • Background to the Medium Term Strategic Framework 2014-2019 • MTSF 2009-2014 • The National Development Plan • An overview of the 2014-2019 MTSF • Two overarching themes: • Radical economic transformation • Improving service delivery • Selective review of the priority outcomes

3. Background • According to a 2003 DPSA report on the ‘Machinery of Government’ the MTSF: “would inform the business plans of Departments, as required by the National Treasury in terms of the requirements of the MTEF” • The draft MTSF itself would emerge from an internal government process: “short, medium and long- term priorities are drafted by departments, refined by clusters and FOSAD [Forum of South African Directors-General], and finalized by Cabinet at the January Lekgotla” • Annual reviews: • Relevant MTSF would be reviewed at mid-year Cabinet lekgotla • This would inform the MTEF and government’s annual Programme of Action • MTSF 2004-2009 and MTSF 2009-2014 • Relatively high-level, informed by broad electoral commitments and scenario planning as well as the internal planning process referred to above

4. National Strategic Planning and the NDP • Green Paper on National Strategic Planning (2009) lays out the rationale for more extensive planning: • mobilisation of society around a commonly agreed set of long-term goals • Greater coherence in government’s work • Longer term planning is good for South Africa... will encourage a longer term view from all key institutions, allowing them to invest with greater confidence • The Green Paper notes a change in the MTSF, becoming more detailed with the outcomes and targets being inputs into the Presidency’s performance management work • On the role of Parliament: “[will] need to develop mechanisms to oversee the planning process and to contribute to ensuring successful implementation of a national plan” • Green Paper process culminated in the National Development Plan 2030: Our future, make it work

6. From NDP to the MTSF • In the presence of the NDP as an overarching, long-term plan the MTSF process has been reoriented toward conversion of the NDP into medium-term 5 year plans • Cabinet decided in 2013 that the 2014-2019 MTSF should form the first five-year implementation phase of the NDP • MTSF has been aligned to the national governing party’s [2014] election manifesto • As with previous MTSFs the intention is that MTSF 2014-2019 will directly inform departments’ planning and oversight of plans and performance • Performance agreements between the President and each Minister will reflect the relevant actions, indicators and targets set out in the MTSF • National and provincial departments will submit strategic plans for the period 2015-2020 to Parliament and provincial legislatures by February 2015 incorporating relevant actions and targets in the MTSF • It appears that the process by which MTSF is developed has also remained the same: intergovernmental process across spheres of government

7. Initial responses to the MTSF • The MTSF 2014-2019 was released by the Presidency on the 8th of August 2014 but there has been relatively little response to date • A recent report by one private economic consultancy suggests that few in the private sector are aware of the MTSF and there is significant scepticism among those who are • Some concerns have been expressed that the aim of reducing unemployment to 14% by 2019 (from 25.5% at present) may be unrealistic • Broader issue is the relationship between the NDP and MTSF • NDP was based on wide consultation, though the final report was still subject to significant contestation • The MTSF is an internal governmental process that does not involve further external consultation with stakeholders and citizens • Remains to be seen whether the process from NDP to MTSF has addressed some stakeholder concerns or/and introduced new ones

8. Structure of MTSF 2014-2019 • Two overarching themes: radical economic transformation and improving service delivery • 14 priority outcomes, building on previous MTSF and the NDP. Within each priority outcome there are: • Broad objectives and themes • A set of specific sub-outcomes specifying: actions required, Minister responsible, the relevant indicator with current baseline and the MTSF target • A set of core ‘impact indicators’ – drawn from the sub-outcomes – that will be used to monitor and evaluate performance in the relevant area • Two perspectives particularly relevant to the Standing Committee on Finance: • The role of SCoF in conducting oversight over the activities and performance of National Treasury, its agencies and SARS • The role of SCoF in conducting oversight over alignment of the Budget, fiscal framework, revenue collection and various money bills with policy priorities • Remainder of the presentation discusses two core MTSF themes and provides a selective overview of the priority outcomes with emphasis on issues particularly relevant to the Standing Committee

9. Theme 1: Radical economic transformation • placing the economy on a qualitatively different path that ensures more rapid, sustainable growth, higher investment, increased employment, reduced inequality and deracialisation of the economy (MTSF 2014-2019) • Emerged from 2014 election manifesto • No technical definition of this notion: contested because ideas of ‘radical’ interventions vary depending on perspective • Broad agreement on the fact that radical change requires multiple, mutually reinforcing interventions • E.g. Changing the urban spatial distribution requires initiatives relating to: urban planning, local economic development, transport infrastructure and services, housing, etc.

11. Theme 2: Improving service delivery • Improving the capacity of the public service is one of the core issues addressed by the NDP, but it is an issue that relates to all other specific functions. MTSF notes that: • backlogs remain and the quality of services is uneven • challenge is therefore to improve the quality and consistency of services, which requires improvements in the performance of the public service, municipalities and service providers • Measures to improve the capacity and developmental commitment of the state will therefore receive high priority over this MTSF period • Local level: • national and provincial departments of local government will focus on improving the quality of targeted oversight and support available to municipalities • focus on ensuring that municipalities provide and properly maintain an adequate core set of basic services including water, sanitation, electricity, municipal roads, refuse removal and traffic lights

12. Theme 2: Improving service delivery • Provincial level: particular attention will be given to the management of service delivery, human resource management and financial management • National level: bring greater predictability and stability to the management of the political-administrative interface by establishing the role of administrative head of the public service • Corruption: Prevent public servants doing business with the state; ensure transparency in public expenditure and contractual relations with the private sector; improve capacity to investigate and prosecute corruption cases; strengthen anti-corruption legislation

13. Priority outcomes • Quality basic education • A long and healthy life for all South Africans • All people in South Africa are and feel safe • Decent employment through inclusive growth • A skilled and capable workforce to support an inclusive growth path • An efficient, competitive and responsive economic infrastructure network • Vibrant, equitable, sustainable rural communities contributing towards food security for all • Sustainable human settlements and improved quality of household life • Responsive, accountable, effective and efficient local government • Protect and enhance our environmental assets and natural resources • Create a better South Africa and contribute to a better Africa and a better world • An efficient, effective and development-oriented public service • A comprehensive, responsive and sustainable social protection system • A diverse, socially cohesive society with a common national identity

14. Outcome 4: the economy • Twenty pages detailing ten sub-outcomes, which align to the elements of radical economic transformation already outlined above. Informed by the NDP vision to accelerate economic growth to reduce unemployment and inequality and create an inclusive society (decent employment through inclusive growth) • Locates existing plans (Industrial Policy Action Plan (IPAP), New Growth Path (NGP), Agricultural Policy Action Plan (APAP), Minerals Beneficiation Action Plan (MBAP), National Infrastructure Plan, etc) within a broader framework • Aims to find a balance between creating a stable and supportive environment for growth and investment while at the same time addressing structural challenges in the economy and society • Recognises that inequality is an obstacle to growth and investment so growth-oriented policies must address the distribution of ownership and income • Provides a set of high-level impact/outcome indicators:

17. Outcome 6: Infrastructure • NDP identifies the need to invest in economic infrastructure to support the country’s economic and social objectives • to deliver electricity, water and sanitation, telecommunications and public transport • to diversify the country’s industrial base, raise exports and compete internationally • Challenges: expand provision and coverage; maintain existing infrastructure; coordinate investment between government and private sector; create appropriate institutional, policy and regulatory environment • Issues of possible interest to the Committee: • Sustainable financing of infrastructure plans given large demands in many sectors, including choice of appropriate financing options (e.g. user pays versus financing from general tax revenues) • Need for pricing to incentivise investment without hurting growth • The role of Regulatory Impact Assessments for infrastructure projects • Aims for public investment to constitute 10% of GDP by 2019 (6.8% now) • Five sub-outcomes:

18. Impact indicators • [Energy Ministry] • Adequate generating capacity commissioned • Electricity generation reserve margin increased • Additional SA coal and gas enabled for energy production

19. Outcome 7: Rural areas • Vision is to have rural areas which are, spatially, socially and economically well integrated • Economic growth, food security, jobs and improved access to basic services, quality education and health • Aim that by 2030 agriculture will create 1million new jobs • Need for leadership on: land reform, communal tenure security, financial and technical support to farmers, and the provision of social and physical infrastructure for successful implementation • Priorities: • Sustainable land reform • Small famer development and support (financially and other wise) • Growth of sustainable rural enterprises and industries – resulting in rural job creation

20. Outcome 8: Human settlements • strive to achieve measurable progress towards breaking apartheid spatial patterns with significant advances made towards retrofitting existing settlements offering the majority of South Africans access to adequate housing, affordable services in better living environments, within a more equitable and functional residential property market • Three sub-outcomes toward the above goal: • Adequate housing and improved living environment • Develop a functional and equitable residential property market • Improve institutional capacity and coordination for better spatial targeting (government) • One area that may be pertinent to SCoF is the role of development finance institutions (DFIs) in providing finance for developmental housing initiatives and projects

21. Outcome 9: Local government • Given its role at the `front line’ of service delivery, local government has a critical role to play in the NDP’s vision but faces a number of key constraints. Some are addressed in general initiatives to improve the public service (see 12 below) but others require specific local government attention. • The five sub-outcomes are: • Members of society have sustainable and reliable access to basic services • Intergovernmental and democratic governance arrangements for a functional system of cooperative governance strengthened • Sound financial and administrative management • Promotion of social and economic development • Local public employment programmes expanded through the Community Work Programme (CWP) • MTSF also contains an updated list of 27 district priority areas based on limited access to basic services • National Treasury is responsible (with COGTA) for supporting and overseeing sound financial and administrative management, as per the relevant impact indicator

22. Outcome 10: Environment • NDP vision: South Africa’s transition to an environmentally sustainable, climate-change resilient, low-carbon economy and just society will be well under way by 2030 • MTSF refers to three phases: • 2014-2019: creation of a framework to implement the (above-mentioned) transition • 2019-2024: implementation of sustainable development programmes and targeting greenhouse gas emissions • 2024-2029: final steps in the transition and reductions in poverty and unemployment assisting in South Africa’s emissions peaking in 2030 • Some issues possibly relevant to the Committee • Potential short-run tradeoffs between environmental protection and economic objectives • The possibility of future legislation on carbon taxes • Constraints to economic activity from environmental limitations (e.g. water shortages)

23. Impact indicators • [NDT & DTI] • Increased FDI • Increased tourism arrivals • Increased tourism spend • Increased value-added exports “combines market integration, cross-border infrastructure development and policy coordination to diversify production and boost intra-African trade”

24. Problem of excessive turnover of department heads Identification of areas where departments/entities are not coordinating Regulations and guidelines should differentiate different kinds of procurement Capacity building and professionalising SCM Provide real-time operational support Ensure transparency and effective oversight Review and simplify regulations and guidelines where necessary NT to issue guidelines for financial delegations and support implementation of these

25. Outcome 13: Social protection • Follows from NDP vision of providing a minimum standard of living, while also recognising the developmental and transformative role of social protection • The overarching challenge is to develop a comprehensive system of social protection by 2030 while ensuring that the nature of the expansion is sustainable • Sub-outcomes: • Strengthening social welfare delivery through legislative, policy reforms; capacity building • Improved quality and access of Early Childhood Development Services for children aged 0-4 • Strengthened community development interventions • Deepening social assistance and expanding access to social security • Optimal systems to strengthen coordination, integration, planning, monitoring and evaluation of social protection services • Relatively few impact indicators for this outcome: halve rate of stunting; access to social assistance up to 95% for those eligible; double number who can access labour-related social insurance; double access to Early Childhood Development

26. Thank you