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 MilestoneDate 2008 MTEF Guidelines, CFO letter June 2007 Submission of Infrastructure Funding Requests27 July 2007 MinComBud: Discussion of spending and policy priorities18 July 2007 Cabinet Lekgotla: Considers policy priorities and MTSF24-27 July 2007 MinComBud: Fiscal Framework and Sector Policy Issues8 August 2007 Budget Submissions10 August 2007 Budget Council Lekgotla: Revised Fiscal Framework, Division of Revenue (DoR), and Policy Issues August 2007 MinComBud & Finance MECs: DoR Discussion4 September 2007 MTEC DiscussionsSeptember 2007 MinComBud: Consideration of MTEC recommendations & MTBPS themesBeginning of October 2007 Extended Cabinet: Approval of Division of RevenueOctober 2007 National Assembly: Tabling of the MTBPS30 October 2007 Cabinet: Approval of 2008 MTEFNovember 2007 National Assembly: Tabling of the Budget27 February 2008

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. 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) Census and Survey Information Evaluations Programme Performance Information

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 the MTEF 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 Performance Information in MTEF budget bids ProgrammeOutcome Indicators Output IndicatorsSubprogramme Trendable Quantitative Performance Information Past 3 years, current year expected, & medium-term targets* All DepartmentsPilot Departments

22. In the programme sheets of the MTEF database the following performance information is requested: Key outcome measures / performance indicators Measure/Indicator Planned targets for 08- 09 e.g., Outcome 1 State target 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. Performance Info in the MTEF Guidelines

23. Programme: Sector Services and Partnerships Measure/Indicator Planned targets for 08-09 Total agricultural production of maize by small farmers20,000 tons Total agricultural production of sugar by small farmers15,000 tons Total agricultural production of oranges by small farmers40,000 tons EXAMPLE – Dept. of Agriculture

24. In the subprogramme sheets the following performance information is requested: Outputs are the final products, or goods and services produced for delivery. o Report progress achieved against targets in the 2007 ENE in the first quarter. Performance Info in the MTEF Guidelines Measure/IndicatorTarget as reflected in the 2007 ENE Progress in achieving target against ENE 2007 Planned targets for 08-09 e.g., Output 1 State targetState progressState target Key output measures / performance indicators

25. EXAMPLE – Dept. of Agriculture Measure/IndicatorTarget as reflected in the 2007 ENE Progress in achieving target against ENE 2007 Planned targets for 08- 09 Approval of the performance improvement plan for the extension and advisor services by sector partners March 2008The department is on track to meeting with target. The improvement plan is in draft stage with a comment period to follow. None Number of beneficiaries in the agrarian and land reform programmes receiving training and mentorship 10,000None, the programme will be operation in September. Therefore the target of 10,000 will not be met. Anticipated target is now 6,000. 10,000 Number of small farmer seminars held in rural areas n/a 25 Subprogramme: Sector Services

26. In TQ Performance sheets (Annexure 5), pilots are requested to provide the following trendable and quantitative information: Past PerformanceEstimate/ Baseline MTEF Targets 04/0505/0606/0707/0808/0909/1010/11 Programme Outcome####### Subprogramme Output####### 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 MTEF Pilot Performance Info

27. Past PerformanceEstimate/ Baseline MTEF Targets 04/0505/0606/0707/0808/0909/1010/11 Market SA agriculture Export value of agricultural produce R2bR2,5b R3bR4bR4,5bR6b Overseas marketing Number of importers enrolled in Dept. of Agriculture marketing programme ---30,00040,000 Number of agriculture exhibits at tradeshows 81416 171817 Average cost per tradeshow exhibit R20,00 0 R25,000R24,000R28,000R25,000R26,000R27,000 Number of small farmers assisted to reach overseas markets ---4000 4500 EXAMPLE – Dept. of Agriculture Programme: Market SA Agriculture Subprogramme: Overseas Marketing

28. Annexure 5 also includes information requested on performance indicator definitions: INDICATOR TITLE Identifies the title and whether it is an outcome or output indicator. SHORT DEFINITION Provides a brief explanation of what the indicator is, with enough detail to give a general understanding of the indicator. PURPOSE/IMPORTANCE Explains what the indicator is intended to show and why it is important. SOURCE/COLLECTION OF DATA Describes where the information comes from and how it is collected. METHOD OF CALCULATION Describes clearly how the indicator is calculated. DATA LIMITATIONS Identifies any limitations about the indicator data, including factors that may be beyond the department’s control. CALCULATION TYPE Identifies whether the information is cumulative or noncumulative. REPORTING SCHEDULE Identifies if an indicator is reported quarterly or annually NEW INDICATOR Identifies whether the indicator is new, has significantly changed, or continues without change from the previous year. DESIRED PERFORMANCE Identifies whether actual performance that is higher or lower than targeted performance is desirable (e.g., a disease rate lower than targeted is desirable). INDICATOR RESPONSIBILITY Identified the individual/organisation responsible for the definition, data analysis, interpretation and reporting in connection with the indicator. INDICATOR DATA ADMINISTRATOR Identifies the individual/organisation responsible for ensuring the data for the indicator is collected and assembled according to the schedule defined. INDICATOR ROLL-OUT DATE Expected date for start of data collection for the indicator. INDICATOR STANDARD Identifies the standard level of performance Pilot Performance Info

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&A Thank you