Democratic Alliance Northern Cape Spokesperson for Provincial Treasury
Honourable Speaker, Honourable Premier, Honourable Members of the House, guests in the gallery, members of the media
Provincial Treasury has come a long way. There is much that this lead financial department has undertaken to do and we do concede that there have been successes along the way. These include assisting the Renosterberg municipality in being able to pay its salaries from its own revenue for the first time in years. As well as assisting Sol Plaatje municipality in dealing with debts to the value of R177 million, owed to it by other government departments. For these, and similar outcomes, we will give Provincial Treasury credit.
It will, however, take a lot more to get the Northern Cape public service out of the mires of past and current financial mismanagement. Thus, despite Provincial Treasury’s good intentions, I dare say that not enough has been achieved in line with improving financial management in the public sector. We cannot, after all, hide from the fact that in the 2010/2011 financial year there was a regression in the audit outcomes of the departments in the province; or that departments incurred irregular expenditure to the value of R1,32 billion; or that despite intervention in the health department, it retained a disclaimer of opinion and, on its own account incurred irregular expenditure to the value of over R1 billion.
The big question then is what more needs to be done in order for Provincial Treasury to provide us with tangible results?
After analysis of the problem, the Democratic Alliance came up with the three “C’s”. These are aspects that we believe are currently not being optimally employed by Provincial Treasury and the public service at large, and which are severely hindering financial progress within the public service. They are capacity, compliance and consequences.
I’ll start with the aspect of capacity…
The DA welcomes the commitment by Provincial Treasury to fill all vacant funded posts and we are aware that this process is well underway. At the same time, we acknowledge that Provincial Treasury has entered into contracts with firms to supply additional specialized capacity to municipalities that are undergoing interventions. We have also been informed that Provincial Treasury will ensure that these firms facilitate a skills transfer.
This is all good and well but it doesn’t solve the real problem, namely that too many unqualified people remain in senior management positions. The crux of this problem is political at heart. Provincial Treasury is not making progress in improving financial management across the public service because the people whom Provincial Treasury is trying to support, don’t have the required skills. In fact, they don’t even understand the concept of cash flow. A case in point is our municipalities – eleven out of fifteen poorly performing municipalities in the Northern Cape turned up their noses to offers of skilled interventions from Provincial Treasury. These municipalities are ignorantly asking for more money instead.
The DA highlighted this point in the COGHSTA debate and I will use this platform to highlight this very critical issue once again. CFO’s of at least 10 of the Northern Cape’s municipalities boast only matric as their highest qualification. In other words, they were not placed in positions of power due to their great skill and competence but rather they were redeployed due to their political allegiance. The answer thus lies at a political level. Hon. Members, if Provincial Treasury is to stand a fighting chance at rehabilitating our government institutions, especially our municipalities, cadre deployment must be stopped. Only then will our institutions be able to build up the required capacity to achieve clean audits.
Next, I will move onto the issue of compliance…
Financial stability, improvements, and ultimately success are tantamount to compliance with legislation and regulations.
This brings me to a direct failure on the part of Provincial Treasury. In the 2010/2011 financial year, most departments in the Northern Cape, including Provincial Treasury, were not aware of the requirement to have prospective suppliers declare whether they are in the service of the state or connected to a person in the service of the state, in order to ensure that officials do not abuse the system in order to favour their own businesses or those of their family members or associates. As a result, 9 502 awards, totaling over R394 million, were submitted to suppliers who had not submitted the required SBD4 declarations. This non-adherence to SCM requirements was a direct result of Provincial Treasury failing to roll out all new legislation timeously.
Whilst Provincial Treasury claimed that they had not seen this regulation posted on the website, this is not acceptable. Ignorance of a law is not an excuse for not adhering to it. Someone should have known about it – perhaps it was due to a capacity problem, as mentioned above. Regardless of the reason, the fact remains that non-compliance can have dire consequences.
This said, with the current state of the province’s financial affairs, we cannot afford to misdirect even one cent due to non-compliance. Every effort must be made to ensure 100% compliance at all times.
This is where the third “C”, namely consequences,+ comes in …
We can talk about non-compliance, financial misconduct, dishonesty and fraud, until we are blue in the face but talk won’t put an end to these debilitating problems.
On numerous occasions the Hon. Block has said that many departments are still not effecting payment to their suppliers within 30 days from receipt of an invoice. In his own words: “This undesirable practice has now reached disturbing levels and besides being in contravention of the PFMA and Treasury Regulations, this practice is severely affecting the cash flow positions and sustainability of businesses, especially the small medium and micro enterprises.”
During the provinces budget speech, the Hon. Block also indicated that he had mandated Provincial Treasury to take actions against those who do not comply with the prescripts of financial misconduct. This said, we are aware that Provincial Treasury is now tracking departments who are not paying SMME’s within 30 days and that they are reporting this data to National Treasury. We were also informed that Provincial Treasury wants accounting officers to start taking steps in this regard. However, there still do not appear to be concrete consequences for such offenders! Until such time as strict and standardized consequences are actually taken, non-compliance will continue to eat away at good governance.
The same can be said for corruption. According to the AG’s general report for the 2010/2011 financial year, there was a 129% increase in the number of investigations commissioned by departments and public enterprises. We also heard that Provincial Treasury recently fired a deputy director and that they are now preparing to defend their decision in the labour court. This is good, this is what we want to see, but on a much larger scale. Strict disciplinary action must be taken against all those guilty of financial misconduct . It must be clear as day what the consequences are and who the enforcer of these consequences should be. Until decisive action is taken in this regard, we will not even make a dent in the fraud and corruption that is eating away at the public purse.
In closing, allow me to reiterate the DA’s sentiments:
Without proper capacity, compliance and consequences, Provincial Treasury’s impact on sound financial management will remain minimal but if serious attention is paid to the three “C’s” by the greater public administration in the entire Northern Cape, then Operation Clean Audit 2014 might stand a chance of becoming more than just a pipe dream.