Treasury Guidelines & 2008 Budget process

Joint Budget Committee 31 August 2007

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

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

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

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

2008 Budget Process Critical Dates

Milestone Date2008 MTEF Guidelines , CFO letter June 2007

Submission of Infrastructure Funding Requests 27 July 2007MinComBud: Discussion of spending and policy priorities 18 July 2007

Cabinet Lekgotla: Considers policy priorities and MTSF 24-27 July 2007

MinComBud: Fiscal Framework and Sector Policy Issues 8 August 2007

Budget Submissions 10 August 2007Budget Council Lekgotla: Revised Fiscal Framework, Division of Revenue (DoR), and Policy Issues

August 2007

MinComBud & Finance MECs: DoR Discussion 4 September 2007

MTEC Discussions September 2007

MinComBud: Consideration of MTEC recommendations & MTBPS themes Beginning of October 2007

Extended Cabinet: Approval of Division of Revenue October 2007

National Assembly: Tabling of the MTBPS 30 October 2007Cabinet: Approval of 2008 MTEF November 2007

National Assembly: Tabling of the Budget 27 February 2008

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

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

Improved Conditional grant process

• 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

Infrastructure Budgeting Guidelines

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

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

Performance Information

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

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

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

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

IMPACTS

OUTCOMES

OUTPUTS

INPUTS

ACTIVITIES

The developmental results of achieving specific outcomes

The medium-term results for specific beneficiaries that are the consequence

of achieving specific outputs

The final products, or goods and services produced for delivery

The processes or actions that use a range of inputs to produce the desired

outputs and ultimately outcomes

The resources that contribute to the production and delivery of

outputs

What we use to do the work?

What we do?

What we produce or deliver?

What we wish to achieve?

What we aim to change?

Plan, budget, implement and

monitor

Manage towards achieving these

results

IMPACTS

OUTCOMES

OUTPUTS

INPUTS

ACTIVITIES

The developmental results of achieving specific outcomes

The medium-term results for specific beneficiaries that are the consequence

of achieving specific outputs

The final products, or goods and services produced for delivery

The processes or actions that use a range of inputs to produce the desired

outputs and ultimately outcomes

The resources that contribute to the production and delivery of

outputs

What we use to do the work?

What we do?

What we produce or deliver?

What we wish to achieve?

What we aim to change?

Plan, budget, implement and

monitor

Manage towards achieving these

results

Performance Information Framework

Performance Information in theMTEF 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

Programme Outcome Indicators

Output IndicatorsSubprogramme

Trendable QuantitativePerformance Information

Past 3 years, current year expected, & medium-term targets*

All Departments Pilot Departments

• 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 theMTEF Guidelines

Programme: Sector Services and PartnershipsMeasure/Indicator Planned targets

for 08-09 Total agricultural production of maize by small farmers 20,000 tons

Total agricultural production of sugar by small farmers 15,000 tons

Total agricultural production of oranges by small farmers 40,000 tons

EXAMPLE – Dept. of Agriculture

• 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 theMTEF Guidelines

Measure/Indicator Target as reflected in the 2007 ENE

Progress in achieving target against ENE 2007

Planned targets for 08-09

e.g., Output 1  State target State progress State target

Key output measures / performance indicators

EXAMPLE – Dept. of Agriculture

Measure/Indicator Target 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 2008 The 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

10,000 None, 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 n/a 25

Subprogramme: Sector Services

• In TQ Performance sheets (Annexure 5), pilots are requested to provide the following trendable and quantitative information:

Past Performance Estimate/ Baseline

MTEF Targets

04/05 05/06 06/07 07/08 08/09 09/10 10/11

ProgrammeOutcome # # # # # # #

SubprogrammeOutput # # # # # # #

• 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

Past Performance Estimate/ Baseline

MTEF Targets

04/05 05/06 06/07 07/08 08/09 09/10 10/11

Market SA agriculture

Export value of agricultural produce

R2b R2,5b R2,5b R3b R4b R4,5b R6b

Overseas marketingNumber of importers enrolled in Dept. of

Agriculture marketing programme

- - - 30,000 40,000 40,000 40,000

Number of agriculture exhibits at tradeshows

8 14 16 16 17 18 17

Average cost per tradeshow exhibit

R20,000

R25,000 R24,000 R28,000 R25,000 R26,000 R27,000

Number of small farmers assisted to reach overseas markets

- - - 4000 4000 4500 4500

EXAMPLE – Dept. of Agriculture

Programme: Market SA AgricultureSubprogramme: Overseas Marketing

• Annexure 5 also includes information requested on performance indicator definitions:

INDICATOR TITLEIdentifies the title and whether it is an outcome or output indicator.SHORT DEFINITIONProvides a brief explanation of what the indicator is, with enough detail to give a general understanding of the indicator.PURPOSE/IMPORTANCEExplains what the indicator is intended to show and why it is important.SOURCE/COLLECTION OF DATADescribes where the information comes from and how it is collected.METHOD OF CALCULATIONDescribes clearly how the indicator is calculated.DATA LIMITATIONSIdentifies any limitations about the indicator data, including factors that may be beyond the department’s control. CALCULATION TYPEIdentifies whether the information is cumulative ornoncumulative.

REPORTING SCHEDULEIdentifies if an indicator is reported quarterly or annuallyNEW INDICATORIdentifies whether the indicator is new, has significantly changed, or continues without change from the previous year.DESIRED PERFORMANCEIdentifies whether actual performance that is higher or lower than targeted performance is desirable (e.g., a disease rate lower than targeted is desirable).INDICATOR RESPONSIBILITYIdentified the individual/organisation responsible for the definition, data analysis, interpretation and reporting in connection with the indicator.INDICATOR DATA ADMINISTRATORIdentifies the individual/organisation responsible for ensuring the data for the indicator is collected and assembled according to the schedule defined. INDICATOR ROLL-OUT DATEExpected date for start of data collection for the indicator.INDICATOR STANDARDIdentifies the standard level of performance

Pilot Performance Info

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.

Q&A

Thank you