1. 2009 Appropriation Bill Briefing to Select Committee on Finance and Appropriation 8 July 2009

2. Overview 2009 Appropriation Bill Structure of the Bill
Budget priorities
Key spending allocations
Revised cabinet structure
Technical corrections to the Bill
Explanatory memorandum to the Bill

3. 2009 Appropriation Bill
2009 Appropriation Bill initially tabled in Parliament at the time of the budget –
11 February 2009
Bill provides for the appropriation of money from the National Revenue Fund in terms of section 213 of the Constitution and section 15 of the PFMA
Spending is subject to the PFMA and provisions of the Appropriation Bill

4. 2009 Appropriation Bill cont.
Parliament is asked to pass the bill as soon as it is feasible so that the President can assent to it and the Act can be promulgated, before the end of July.
This is necessary as the financial year has already commenced and departments are incurring expenditure in terms of section 29 of the PFMA which makes provision for spending before an annual budget is passed,
Up to July, expenditure may not exceed 45% of the 2008/09 financial year budget.
After July, monthly expenditure can only amount to 10% of 2008/09 vote budget.
Departmental activities may soon be severely constrained should an Appropriation Act not come into effect

5. Structure of the Bill
Bill is divided by vote and by main division within a vote (programmes)
An aim is set out for each vote and a purpose is set out for each programme
Allocations are divided into:
Current payments
Transfers and subsidies
Payments for capital assets
Allocations marked with an asterix refer to specifically and exclusively appropriated allocations
Conditional grants are specifically and exclusively appropriated and are also listed in the Division of Revenue Bill

6. Summary of Budget priorities
Enhancing the quality of education
Improving the provision of health care
Enhancing citizen safety and reducing the levels of crime
Investing in built environment infrastructure
Decreasing rural poverty
Supporting public employment initiatives
Improving the capacity of the state
Mitigating the effects of climate change

7. Key spending allocations
Total additions to 2009/10 amount to R60.5 billion (R161 billion over the MTEF), including
R30 billion (R50 billion over MTEF) loan to Eskom
R5.6 billion (R25 billion over MTEF) more for the provincial equitable share
R2.5 billion (R13.2 billion over MTEF) for social grants and grant administration
R465 million (R4.1 billion over MTEF) for EPWP phase 2
R583 million (R4 billion over MTEF) for school nutrition
R750 million (R5.4 billion over MTEF) for reforms to the criminal justice sector, including integrated fingerprint and DNA databases, more police and courts capacity
R453 million (R4.1 billion over MTEF) more for provincial infrastructure: schools, clinics, hospitals, roads

8. Key spending allocations cont.
R755 million (R4.3 billion over MTEF) for municipal infrastructure
R1 billion over 2 outer years of MTEF for bulk water schemes
R711 million (R3.7 billion over MTEF) for more housing
R1.4 billion (R6.4 billion over MTEF) additional for transport infrastructure, roads, rail and bus systems
R364 million (R1.6 billion over MTEF) for industrial development
R197 million (R1.8 billion over MTEF) for rural development and land reform / restitution

9. Additional allocations per cluster: Central Government Administration and Financial Services
Home Affairs
R25 million (R1.1 billion over MTEF) mainly for expanding capacity in various areas (frontline offices, immigration services, contract management, etc) and for the 2010 FIFA World Cup design planning, port control transformation and systems for the automation of visa and permit processing
Public Works
R55 million (R575 million over MTEF) for the introduction of performance-based financing mechanisms; to expand scarce skills development initiatives for the built environment sector and continued infrastructure investment in border posts
R465 million (R4.1 billion over MTEF) to implement phase 2 of Expanded Public Works Programme

10. Central Government Administration and Financial Services cont.
National Treasury
R100 million (R900 million over MTEF) for the SARS modernisation agenda, keeping its resources aligned with revenue collection trends and for systems development costs associated with broadening the tax base and improving tax administration, compliance and fraud prevention and detection.
R100 million (R2.1 billion over MTEF) for the Infrastructure Grant to Provinces
R4.2 billion in loan to the Gauteng government to cover the province’s portion of the Gautrain project
R30 billion (R50 billion over MTEF) for the Eskom loan
R2.5 billion relating to the recommendations of the Moseneke Commission

11. Social Services
The bulk of social service spending entails transfers to provinces
Arts and Culture
R200 million (R334 million over MTEF) for completion of the Freedom Park project
Education
Transfers to provinces include R489 million (R3.7 billion over MTEF) for the National School Nutrition Programme grant
R1 billion mainly in 2011/12 for Higher Education

12. Social Services cont.
Health
Transfers to provinces include R200 million (R932 million over MTEF) for the Comprehensive HIV and Aids grant as well as adjustments for the Hospital Revitalisation grant
Labour
R300 million (R1 billion over MTEF) to maintain operations of Umsobomvu Youth Fund
Social Development
R50 million (R300 million over MTEF) for SASSA, for the increased uptake of social assistance and to strengthen grant management and anti-fraud systems
R2.3 billion (R12 billion over MTEF) in transfer to adjust social grants for inflation and to accommodate the increase in beneficiary numbers due to changes in the means test

13. Justice, Crime Prevention and Security
Correctional Services
R300 million (R900 million over MTEF) for personnel cost pressures
Defence
R250 million (R600 million over MTEF) for upgrading of the Waterkloof Air Force Base
Justice and Constitutional Development
R160 Million (R711 million over MTEF) mainly for OSD for legally qualified personnel and implementation of the Child Justice Act
Safety and Security
R100 million (R3.6 billion over MTEF) mainly for the Criminal Justice Sector Modernisation project and to cater for personnel capacity, especially in detective and forensic services

14. Economic Services and Infrastructure
Agriculture
R150 million in two outer years of MTEF for the Agricultural Research Council (CAPEX)
On provincial level, an adjustment in 2011/12 for Comprehensive Agricultural Support Programme grant
Communications
R100 million (R330 million over MTEF) for Sentech to cover costs of broadcasting digital and analogue signals simultaneously
Environmental Affairs and Tourism
R23.5 million (R641 million over MTEF), of which R300 million in 2011/12 for costs escalations related to replacement of the polar vessel – SA Agulhas

15. Economic Services and Infrastructure cont.
Housing
R1.5 billion mainly in 2011/12 as transfers to provinces (R1 billion for the Integrated Housing and Human Settlement Development grant and R500 million for the Khutsong housing project)
Land Affairs
R300 million in 2011/12 for the redistribution programme
R400 million in 2011/12 for the restitution programme
Minerals and Energy
R175 million (R675 million over MTEF) for the Demand Side Management, Energy Efficiency and Renewable Energy programmes

16. Economic Services and Infrastructure cont.
Public Enterprises
R1.6 billion for SAA, for conversion of a loan into equity
Trade and Industry
R250 million (R870 million over MTEF) for the Automotive Production and Development Programme
R10 million (R303 million over MTEF) for the South African Bureau of Standards
R50 million (R230 million over MTEF) for the Small Enterprise Development Agency Technology Programme

17. Economic Services and Infrastructure cont.
Transport
R900 million mainly in 2011/12 for the SA National Roads Agency
R200 million (R636.7 million over MTEF) for bus operations
R600 million in two outer years of MTEF for the South African Rail Commuter Corporation
R3 million (R13 million over MTEF) for the Railway Safety Regulator
R200 million (R350 million over MTEF) for taxi scrapping operations

18. Economic Services and Infrastructure cont.
Water Affairs and Forestry
R1 billion over two outer years of MTEF for the Regional Bulk Infrastructure Programme
R400 million over two outer years of MTEF for Working for Water
R150 million over two outer years of MTEF for Working on Fire

19. Revised cabinet structure
On 10 May 2009, the President announced the appointment of Ministers and Deputy Ministers
Necessitates reorganisation of national departments, including the renaming of departments and the establishment of new departments
An extensive process has been put in place by DPSA to give administrative effect to President’s new cabinet portfolios and provide administrative structures in support of ministers responsible for such portfolios
Process is expected to take a minimum of six months or so to complete

20. Revised cabinet structure cont.
Appropriation Bill tabled at the time of the Budget is based on the government structure that prevailed at that time
Schedule 1 of the Public Service Act has a list of all national departments. To bring new departments into existence, this has been amended by presidential proclamation
To ensure continuity, national departments that were in existence before 10 May 2009 will continue to exist until such time as reoganisation is fully completed

21. Technical corrections
Technical corrections to the Appropriation Bill originally tabled are proposed in terms of section 14 of the Money Bills Amendment Procedure and Related Matters Act, 2009
New budget votes need to be created so that there are budget votes which accurately reflect all of the new departments, both departments that need to undergo organisational development changes and those that are renamed departments
This is only a technical correction, as no funding will be allocated to the new votes at this stage
Only once new departments are fully established and become operational and functions have been effectively transferred, will it be possible to calculate accurate allocations in terms of the new vote structure

22. Technical corrections cont.
Overall funding and the funding allocated to each of the votes existing prior to 2009 in the Bill is not altered
Votes are being created to enable funds to be transferred to new departments from budget votes existing before as functions are fully transferred to new departments, and the new departmental structures are properly established
In terms of Section 33 of the PFMA, as functions are transferred between departments, so the associated funds can be transferred

23. Explanatory memorandum
In addition an explanatory memorandum is tabled depicting in broad terms how the new vote structure links to the vote structure existing before 2009
This memorandum is compiled with information communicated to the Treasury by 10 June 2009

24. THANK YOU