FINANCIAL AND FISCAL COMMISSION

1. FINANCIAL AND FISCAL COMMISSION SUBMISSION FOR THE DIVISION OF REVENUE 2008/09 August 2007

2. Introduction • Submission in terms of Chapter 13 of the Constitution and Chapter 9 of IGFR Act • Includes recommendations for the 2008 DoR • Incorporates supplementary submissions made during the course of 2006 • Incorporates work currently in progress

3. National School Nutrition Programme (NSNP) • It is feasible to extend the NSNP from primary schools to secondary schools. • The Northern Cape is already providing for some needy learners in secondary schools with funding from both the conditional grant and the main departmental budget. • All Provincial Education Departments (PEDs) should adopt and entrench the NSNP as their full responsibility.

4. NSNP cont. • Before the NSNP can be extended to secondary schools, Government should address the following: • PEDs should engage the necessary personnel with appropriate skills levels for the implementation of the Programme on a full-time basis. • Budget allocations for the NSNP in primary schools should be increased in order to cover learners who are presently excluded from deriving the benefits of the Programme.

5. NSNP cont. • PEDs should implement the NSNP in schools that have been declared “no-fee-schools” by the Minister of Education. • The National Department of Education should develop national norms and standards to guide the implementation of the Programme throughout the country in a uniform and consistent manner. • Presently, there are no uniform norms and standards for the NSNP, which creates problems in terms of its application throughout the provinces.

6. NSNP cont. • The National Department of Education should ensure that the quality of information is improved upon. • The information obtained would be useful in the planning and budget processes of the NSNP. • Where necessary, PEDs should supplement the NSNP conditional grant with funds from their respective budgets. • Presently, this is the case in the Northern Cape. • Where necessary, improvements in procurement procedures should be undertaken.

7. NSNP cont. • Kitchen equipment and infrastructure in all provinces should be upgraded. • Improvements in capacity for the monitoring and evaluation of the NSNP are vital, in order to address difficulties that arise during the course of its implementation. • Consideration should be given to increasing the number of feeding days beyond the current prescribed minimum.

8. Review of Financing of School Infrastructure and Educational Outcomes • The framework for the Provincial Infrastructure Grant (now the IGP), should support infrastructure development in areas most in need and where it is most likely to improve school outcomes • The effective coordination of planning should be instituted with immediate effect

9. Financing of Learner Support Materials (LSM) and No-Fee Schools • LSM should be defined to mean stationery, textbooks, learner and teacher aids • In line with international trends • There is a need for a separate budget for textbooks, stationery, learner and teacher aids • A separate budget is also needed for maintenance, repairs and equipment. • This would assist in monitoring and identifying how much was budgeted and spent in each area.

10. Financing of Roads and Transport Infrastructure • All provinces must put in place effective road management systems, in order to gather accurate data on road conditions. • This information can be used in their road spending priorities. • The impending review of the PES should consider provincial road expenditure needs and should be configured in a manner that enables provinces to fund their maintenance needs. • Unless ongoing needs of provinces, in terms of roads/transport infrastructure, are explicitly considered in the review of the PES, the condition of roads will continue to worsen, with the required costs rising exponentially.

11. Financing of Housing Delivery • A process for the collection of data on homelessness should be initiated. • Such data should, in future, be included in the housing formula, as part of the indicators of housing need. • Housing surveys in other countries collect data on homelessness as part of indicators of housing need. • Housing supply shortage is considered to be one of the causes of homelessness.

12. Economic Impacts of the 2010 Fifa World Cup • Positive impact on imports, which might lead to balance of payment deficit and hence inflationary pressure. • It is estimated that owners of capital will benefit more than labour. • On household income – high-income earners will benefit most. • It is estimated that, on the whole, household income will increase by 0.42%. • It is estimated that National government will receive the bulk of the revenue generated by hosting the World Cup, followed by local government.

13. 2010 Fifa World Cup cont. • The Commission identified two types of legacy effects: • Legacy effects of a national character: • In this regard, the Commission suggests the appointment of a national agency to oversee these effects. • Location-specific legacy effects: • To be handled and managed by authorities of host cities. • On project management, there is a risk of cost overruns and project delays. • Fiscal policy should focus on long-term objectives by ensuring that the budget deficit does not exceed 3% of GDP.

14. Performance of Provincial Government • Fiscal performance and capacity were measured on the basis of the evaluative criteria in Section 214(2) a-j of Constitution e.g. national interest, developmental needs, stable and predictable revenue shares. • Quantitative aspects of analyses involve comparing budgeting/spending trends over the past three FY’s (2003 to 2005), the current FY with MTEF period (2007 to 2009).

15. Performance of Provincial Government • Stable and Predictable Growth Paths • To ensure stable and predictable allocations of revenue shares between different programs/categories of spend, national/provincial treasuries should aim for stable budget growth paths over a 7-yr period - from the recent past 3 yrs through to the forthcoming medium term budgeting and planning cycle. • Prioritised programmes to show above-average growth The policy prioritisation of a department, programme, or category of spending should be supported by higher than average annual budget growth • Entrenchment of best practice The further institutionalisation of best practice project planning & budgeting methods (which separate planning from implementation and align them to the fiscal year) should be encouraged • Reporting of service delivery programmes • Every departmental service delivery programme should be defined by and reported in the Provincial Budget and Expenditure Review, according to: - actual and targeted beneficiaries - personnel numbers and budgets by occupational skills level - current items & capital assets used in service delivery • Provincial departments should report on these non-financial indicators on behalf of their service delivery agents

16. Performance of Provincial Government A measure for determining socio-economic impacts • A methodology to measure the socio-economic impact of government capital/current spending should be standardised across government departments/programmes.