One On One

Q & A – Gadija Brown

The Free State provincial government is on a major drive to turn around the fortunes of the province as the unemployment rate stubbornly remains high with several municipalities struggling to deliver quality services and pay suppliers on time. The Weekly’s Makoni asked the new Treasury MEC Gadija Brown, who outlined her plans for her first 100 days in office at a media breakfast briefing last week, what some of her most pressing issues are and how she hopes to address them. Makoni also asked Brown what sort of support she would want to receive to make her plans achievable. Excerpts:

Since assuming office at the provincial treasury, you have met with senior officials from your department and officials from other departments, what would you say are some of the most pressing issues which need your urgent attention?

Matters that I think would need my urgent attention include: the strengthening of governance matters with a view to better our audit outcomes, both at provincial and municipal level; looking at consolidating our budgets and finding efficiencies with a view to addressing fiscal pressures within the province – this will also assist in unlocking funds for most pressing issues; focusing on budget management, cash-flow controls, debtors in municipalities; management, revenue enhancement and development of financial recovery plans on both provincial departments and municipalities; improving audit outcomes; reducing unauthorised, irregular and fruitless and wasteful expenditure and support funded budgets on both provincial departments and municipalities; working with Cooperative Governance and Traditional Affairs (CoGTA) to ensure Service Delivery Budget Implementation Plan (SDBIP) is aligned with Budget and Quality performance information is submitted to the Auditor General of South Africa (AGSA) and supporting municipalities on sustainable payment plans particularly to bulk service providers.

Your mission as the provincial treasury is to instill sound financial management and good governance, but over the years, different government departments and municipalities have failed to implement major programmes and deliver quality services due to lack of skilled manpower as well as limited funds, the financial situation is not getting any better. How do you hope to ensure better financial management and good governance?

As stated above, we will be looking at consolidating our budgets, continue to enforce cost containment strategy and setting up focused structures to deal with, amongst others, issues of integrated planning, infrastructure, budget allocations and ensuring that we continue to professionalise our public sector. The Free State Provincial Treasury also conducted training for Chief Audit Executives (CAE’s) and Internal Auditors on the review of Annual Financial Statements (AFS) for Departments and Entities. This training will assist the CAE’s and Internal Auditors to identify proactively misstatements on the AFS with a view to submit high quality AFS for audit purposes.

The Provincial Treasury department, in conjunction with National Treasury and the Dept of CoGTA, are implementing the Municipal Financial Recovery Services programme at municipalities. The programme identifies distressed municipalities by assessing the status of key triggers such as poor reporting, weak audit outcomes, significant bulk services debts, and unfunded budgets. The focus areas of the support given to municipalities will be on Budgeting, Tariff setting, capacitation of municipal Budget and Treasury Offices, strengthening of governance, assisting in reviewing and establishing effective organisational structure, HR functionality, and service delivery.

Low and poor revenue collection is a challenge that has dogged several municipalities in the province for years because a significant number of residents doesn’t work, and therefore can’t pay for services, how are you going to work around this?

The “culture of non-payment” impacts all. It is evident that non-compliance to the Municipal Finance Management Act (MFMA) and the Public Finance Management Act (PFMA) is endemic across all spheres of government. The call to stop the “culture of non-payment” must be tabled at all municipal councils and agreements must be made that it adversely affects the sustainability of the institutions; and more critically, this “culture” threatens the livelihood of medium and small suppliers and state entities such as Eskom and Water Boards. I have requested all mayors and councils to update their indigent registers. A comparative exercise will be done by the economic units to determine the need… if a greater share of the national fiscus is needed and a report submitted to National Treasury to consider based on the indigent variances specifically to support rural municipalities with high poverty levels. I must also stress that credit management must be intensified by municipalities. My department will also support selected municipalities on procurement of smart meters.

Despite having limited funds, several government departments and municipalities in the Free State, have been red flagged by the Auditor General for high levels of irregular expenditure, fruitless and wasteful expenditure as well as unauthorised expenditure, what will you do to ensure this doesn’t continue?

The province is concerned about the irregular expenditure incurred and a task team will be established to ensure that the outstanding cases are dealt with in line with the regulations. The Provincial Treasury will be assisting municipalities to investigate these expenditures, and to take appropriate remedial and legislated actions of reporting to the municipal councils. It is also important to note that some of these expenditures are non-cash items such as depreciation and impairments; hence the Provincial Treasury also assists municipalities in ensuring that they have properly funded budgets.

Small scale businesses always feel let down by government when it fails to pay them within 30 days as prescribed, what’s so difficult about sticking to that payment plan?

As the Provincial Treasury, we are of the view that departments must pay their suppliers in 30 days and we are in agreement that non-payment of suppliers within 30 days destroys the very same suppliers that we are trying to build and develop. The challenge of 30 days payment is as a result of multiple elements and it cannot be attributed to one aspect only. It must be noted that the Provincial Treasury is currently doing the following processes to assist the Provincial Government on the payment of service providers in 30 days: Departments are required to report to the Provincial Treasury (PT) on the 7th of each month, and the Provincial Treasury reports to the National Treasury by the 15th of each month; Monthly assessments are done by Provincial Treasury on the 30 day payment information submitted by Departments. Where necessary meetings are arranged to discuss the submitted information and reasons provided. Furthermore, additional to non-compliance letters issued to Departments on 30 day reporting, the results or performance on 30 days payment by Departments are regularly presented at the relevant provincial structures.

Free State municipalities are among the biggest debtors to Eskom for bulk electricity supplies and there seem to be no concrete plan in place to pay up, will the municipalities be left to deal with this on their own?

The Provincial Treasury is assisting municipalities by serving on the Inter Ministerial Task Team and monitoring and supporting municipalities with implementation of the resolutions of this body. I am fully cognisant of the fact that municipalities cannot be left on their own to deal with this mammoth challenge. It therefore requires a collective effort. Thus it is handled in terms of the Intergovernmental Relations framework, to resolve any disputes between municipalities and ESKOM. The Provincial Treasury also fulfills its legislated role to support municipalities in drawing up funded budgets. The issues extend beyond just the actual debts themselves, but reflect the financial distress of the affected municipalities in general. It is for that reason that some of the municipalities such as Maluti-A-Phofung, Masilonyana and Mafube have been put and under the Financial Recovery Plan programme. We anticipate that the Financial Recovery Plan programme will yield positive outcome.

The Free State unemployment rate remains one of the highest in the country, you are not expected to be creating the much needed employment as government, but what would you like to see happening for the situation to improve in the province?

The provincial government is working hard to ensure unemployed is reduced in the Free State, Presently, the Office of the Premier, the Department of Economic, Small Business Development, Tourism and Environmental Affairs and other sector departments drive unemployment programmes within the province. Investment in infrastructure remains key in growing our provincial economy as well as to address the scourge of unemployment. In this instance we intend to unpack infrastructure investment per municipality and per town. Our view is that this will assist in directing investment in towns that are most economically distressed and are faced challenges of unemployment. Furthermore, our Department of Agriculture & Rural Development and Economic Development will play a significant role in this regard. You will remember that support to agro-processing and SMMEs is also key in dealing with issues of unemployment – thus concerted focus, investment and support on these sectors will be vital going-forward. Private and public partnership is quite critical in dealing with issues of economic growth and the attendant challenges of unemployment. In this regard we will continue to engage to create an enabling environment for private sector participation within the province. Innovation will play a role in growing our economy. We need to support our youth and ensure they are part of this innovation and thus be key drivers of the economy. We will keep working closely with our institutions of higher learning such as at the Central University of Technology and the University of the Free State and various colleges.

Provincial treasury has just concluded a staff headcount in Lejweleputswa Local Municipality, what has been the outcome and why do municipalities and government departments continue having high rates of ghost workers? What are some of the loopholes used by those breaking the law?

Provincial Treasury provided oversight on the Lejweleputswa head-count on the 31st May 2019. The analysis indicated that there were no variances on the staff numbers, meaning there were no ghost workers identified. Provincial Treasury also made recommendations on how to enhance the current controls and processes regarding staff establishment.

The new financial year for municipalities begins on July 1, what sort of support did they get in drawing up their budgets and how will they be assisted as the year progresses?

Technical support on the budget preparation process and the Municipal Standard Chart of Accounts (MSCOA) was provided to all municipalities to strengthen budget process as per Section 5(4)(b) of MFMA,2003. To remedy and/or address the challenges, the budget processes will be enhanced through active involvement of the MEC for Finance and will cover the following: Provincial Treasury will obtain tabled draft budgets from municipalities within five working days and a report for municipalities that failed to submit draft is submitted to the MEC for further escalation to mayors; Draft budgets will be assessed and findings and the recommendations communicated to municipalities before the beginning of budget bilateral sessions; Mayors and Members of Mayoral Councils for Finance will be invited by the MEC to engage on the tabled draft budgets; and municipalities are expected to present budgets during the budget bilateral which must reflect the inclusion of the treasury department recommendations. Among other initiatives, treasury will continue providing training and hands-on support to municipalities on completion of budget returns and schedules; Treasury will assess monthly In Year Reports and advise municipalities to adjust their budgets accordingly during the adjustment budget processes; and treasury insists that mid-year reports be tabled on/or before 25th January and submitted for evaluation to allow findings and recommendations to be incorporated in the adjustment budgets.

What sort of support would you like to get from the people of the Free State as well as businesses and other political parties?

Support from the people of South Africa, in particular the Free State, to participate in the stimulation of the provincial economy whilst addressing unemployment and poverty. The Free State Treasury will also support active participation of the private sector in our quest to stimulate provincial economy and enhancement of our budget process. Lastly, support and oversight from respective political parties will enable us to continue to take appropriate action on matters relating to enhancement of service delivery.