1 20/21Special Adjustment Budget Bill Presentation to Portfolio Committee Premi mier, , Fin inance, ce, Coo ooperat ativ ive e Governance ance, , Huma man Sett ttle leme ment t and d Tradi diti tion onal al Af Affai airs 23 July 2020
2 P RESENTATION O UTLINE • Purpose of the presentation • Introduction and background • Preliminary Provincial Expenditure as at 30 June 2020 • Impact of COVID-19 on National and Provincial Finances • Adjustment to the 20/21 Provincial Fiscal Framework • Proposed Adjustments to the 2020/21 Budget • Concluding remarks • Recommendations
3 P URPOSE • To appraise the Portfolio Committee about the implications of COVID-19 pandemic to the 2020/21 budget; • To brief the Portfolio Committee on the Special Provincial Adjustment Budget prepared to respond to the COVID-19 pandemic; • To solicit the support of the Portfolio Committee on the Special Provincial Adjustment Budget and its tabling in its tabling in the Provincial Legislature today on the 23 rd July 2020;
4 I NTRODUCTION AND B ACKGROUND • The MEC for Finance tabled the Provincial 2020 MTEF budget in the Provincial Legislature on the 5 th March 2020; This budget was prepared in line with the key priorities of the 6 th Administration; • The objective of the 2020 MTEF budget as presented to the Portfolio Committee on the 5 th March 2020, was to • revive the competitiveness of the provincial economy through investment in economic infrastructure; • These included amongst others provision for investment in the following critical area: • Roads infrastructure, especially rural roads; • Provision of water; • Development of economic hub – Special Economic Zone
5 I NTRODUCTION AND B ACKGROUND The Hon State President declared COVID-19 as a National Disaster on the 15 th March 2020 and subsequently announced • the COVID-19 response package of R500 billion, of which R30 billion was to be reprioritised from the current budgets of provinces; • In line with equitable share formula, North West was expected to reprioritise R2.1 billion for COVID interventions; The Executive Council convened a Special Meeting on the 3 rd May 2020 to consider amongst others the Provincial • Response plan and its funding needs; • During that meeting, EXCO resolved on the following: • Appreciated the socio-economic measures announced by the President including the extraordinary budget and noted the expected R2.1 billion contribution from North West to the identified R30 billion to be contributed by provinces; • Agreed to protect the Department of Health from the budget cut; • Agreed to the reduction of targeted expenditure items such as ‘Accommodation, Catering, Venues and Facilities, S&T, rental and hiring, consumables, entertainment etc. ’
6 I NTRODUCTION AND B ACKGROUND • The Provincial Treasury led by the MEC for Finance engaged the provincial departments from the 12 th to the 21 st May 2020; • The Special Adjustment Appropriation Bill to be tabled today is a product of engagements and agreements with departments given the apex priorities and the need to save lives; The Minister of Finance tabled the special adjustment budget on the 24 th June 2020 which funded • COVID-19 intervention plans;
T IMELINE OF THE D IVISION OF R EVENUE - RELATED RESPONSE TO 7 COVID-19 • Response enabled through 2019 Division of Revenue Act (for March 2020): • Release of funds from Provincial and Municipal Disaster Relief Grants in March and May 2020 • Reallocations approved in terms of s20(6) of R4 billion in uncommitted grant funds for disaster alleviation in 2019/20 municipal financial year – Received R18.5 million for Health • 2020 Division of Revenue Act was enacted on 23 June 2020 • Gazetted frameworks include additional conditions to allow for COVID-19 spending from existing grant baselines (Gazette published on 3 July) • Enables the reprioritised use of about R7.4 billion in grant funds for provinces and R9 billion in grant funds for local government • The Special Adjustment Budget tabled on 24 June 2020 includes a Division of Revenue Amendment Bill that includes: • Additions to new COVID-19 component of the HIV, TB, Malaria and Community Outreach Grant • Additions of R11 billion to the local government equitable share • Downward adjustments to some conditional grants (to fund other COVID-response activities)
R EVENUE C OLLECTION AS AT 30 TH J UNE 2020 8 Vulindlela Previous Financial Year Analysis Current Financial Year Analysis EPRE Actual Percentage IYM Projected Actual Percentage Actual EPRE Revenue Original Collection Collection (Over)/Under Collection Collected (Over)/Under Original Budget Budget as at as at Collection as at as at Collection 2020/2021 2019/2020 30/06/2019 30/06/2019 '2019/2020 30/06/2020 30/06/2020 '2020/2021 R' 000 R' 000 R' 000 % R'000 R' 000 % R'000 1. Office Of The Premier 388 498 128.35% (398) 409 159 38.92% - 2. Provincial Legislature 1 563 309 0% - 1 649 740 44.88% - 3. Health 85 058 16 030 18.85% - 89 736 15 686 17.48% - 4. Arts, Culture, Sports and Recreation 3 875 2 602 67.15% (2 513) 4 059 97 2.39% (3) 5. Community Safety And Transport Management 775 811 186 820 24.08% (33) 818 481 62 919 7.69% (67) 6. Economic Development Environment Conservation And To 169 700 29 501 17.38% 6 173 060 10 377 6.00% (1) 7. Provincial Treasury 142 180 59 062 41.54% (570) 150 000 74 933 49.96% (125) 8. Education 21 551 7 173 33.28% - 22 735 4 188 18.42% - 9. Cooperative Governance And Traditional Affairs 327 148 45.26% - 345 81 23.48% - 11. Public Works And Roads 34 000 4 390 12.91% - 35 700 996 2.79% - 12. Social Development 1 877 776 41.34% - 1 980 357 18.03% - 13. Agriculture And Rural Development 12 672 5 136 40.53% (738) 13 286 1 834 13.80% - 14. Human Settlements 749 23 3.07% - 790 - 0.00% - Total 1 249 751 312 468 25.00% (4 246) 1 312 230 172 367 13.14% (196) a) Collection is derived mainly from interest generated by the Provincial Treasury due to underspending by provincial departments; b) Revenue-generating capacity by Provincial Departments is impacted adversely by the pronouncement on COVID-19 lockdown.
E XPENDITURE AS AT 30 TH J UNE 2020 9 Previous Financial Year Analysis Current Financial Year Analysis Current Financial Year Analysis EPRE Actual Percentage IYM Projected Actual Percentage Actual S40 Projections Proj Less Exp EPRE Provincial Department Original Expenditure of budget (Over)/Under Expenditure of budget (Over)/Under Original Budget Budget as at spent Expenditure as at spent Expenditure 30/06/2020 30/06/2020 2020/2021 2019/2020 30/06/2019 30/06/2019 '2019/2020 30/06/2020 30/06/2020 '2020/2021 R' 000 R' 000 R' 000 R' 000 R' 000 % R'000 R' 000 % R'000 1 Office Of The Premier 671 371 116 126 17.30% (281) 691 205 94 264 13.64% - 184 159 89 895 2 Provincial Legislature 486 864 101 842 20.92% - 504 294 89 346 17.72% 40 000 142 532 53 186 3 Health 12 273 741 2 927 010 23.85% - 13 197 187 3 319 205 25.15% (790 993) 3 419 411 100 206 4 Arts, Culture, Sports and Recreation 789 812 166 259 21.05% - 789 188 167 339 21.20% 28 550 172 723 5 384 5 Community Safety And Transport Management 2 265 151 614 903 27.15% - 2 368 808 409 558 17.29% - 618 264 208 706 6 Economic Development Environment Conservation And Tourism 986 369 225 289 22.84% - 1 015 811 204 048 20.09% - 237 971 33 923 7 Provincial Treasury 528 722 105 280 19.91% - 557 499 88 044 15.79% - 126 321 38 277 8 Education 17 109 951 3 951 489 23.09% - 18 379 620 3 874 365 21.08% - 4 373 047 498 682 9 Cooperative Governance And Traditional Affairs 539 734 119 161 22.08% - 648 046 138 768 21.41% - 164 157 25 389 11 Public Works And Roads 3 247 573 509 546 15.69% - 3 456 839 323 127 9.35% (27) 860 725 537 598 12 Social Development 1 747 033 375 168 21.47% - 1 878 410 326 103 17.36% - 397 426 71 323 13 Agriculture And Rural Development 1 165 711 202 064 17.33% - 1 222 601 170 181 13.92% - 220 822 50 641 4.27% 536 847 459 855 14 Human Settlements 2 216 515 366 815 16.55% - 1 803 986 76 992 - Total 44 028 547 9 780 952 22.22% (281) 46 513 494 9 281 341 19.95% (722 470) 11 454 405 2 173 065 a) The overall provincial expenditure is below the expected threshold by 5.05 per cent. b) The lowest expenditure is recorded by Human Settlements, slow progress on the implementation or finalization of Reconfiguration process continues to have an impact on spending; c) Expenditure is below the expected threshold of 25 per cent across all provincial departments with exception of Health. Actual expenditure is less that what departments projected to spend at the beginning of the financial year by R2.173 billion.
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