.. budget? National and provincial departments are responsible for developing their own budgets, in collaboration with their political heads. Responsibility for preparing budgets rest with the executive, and not with the legislatures. Budget making in South Africa is the responsibility of all three spheres of Government: national, provincial and local. The spheres of Government are distinctive, interdependent and interrelated. In terms of the Constitution, the responsibility and the accountability for their budgets lie with the national, provincial and local government respectively. But the Intergovernmental Fiscal Relations Act 1997 creates new intergovernmental forums, the Budget Council and the Budget Forum, to coordinate national financial planning and fiscal policy within this decentralized decision-making process.
Reforms of the budget process over the past year have enhanced the cooperation between spheres of government in the Budget process and increased the involvement of national government departments and political office bearers of national and provincial governments. It also increased involvement of national and provincial legislatures and introduced greater transparency and openness to allow participation of all stakeholders and representatives of civil society. The Constitution requires that nationally raised revenues be divided equitably between the three spheres of government. This sharing of funds, called the vertical division, takes account of various criteria in the Constitution. In general the funds are allocated so that each level of government is able to provide basic services and perform the functions assigned to it.
The allocation also takes into account each sphere’s ability to raise their own revenue to pay for these activities. Local government, which is largely self-supporting, gets a much smaller share than provinces, which presently have limited sources of own revenue. Because local government is largely self-financing, the national budget process focuses mainly on spending by national and provincial government. Over half of spending on national and provincial services is the responsibility of provinces. Provinces are responsible for drawing up their own budgets, and accountable for the delivery of services within a national determined policy framework. The Division of Revenue is proposed by the national Cabinet, taking account of advice from the Financial and Fiscal Commission, and approved by the National Assembly through the Division of Revenue Act- While respecting the autonomous role of provincial governments in drawing up their own budgets, the Medium Term Expenditure Framework process is designed to build cooperation between national and provincial governments in developing their budgets within their allocations.
The process is designed to assist representatives of national and provincial line departments to analyse the policy options and consider their implications for budgets and the delivery of public services. The process is intended to elucidate the choices that the governments confront in delivering their reconstruction and development priorities within an affordable total level of public expenditure. The compilation of the medium term expenditure framework for national departments is primarily the responsibility of the department of State Expenditure. In compiling the detailed allocations of the national govemment’s budget, each national government department is consulted and there are detailed discussions between the Department of State Expenditure and the line department concerned. A summary of outstanding issues is presented to Cabinet to enable political office bearers to take the final decision on the allocation between departments, reflecting their policy choices and priorities. A similar process occurs at provincial levels in which provincial treasuries interact with provincial line departments to enable the Treasury to make recommendations to provincial executive council on allocations within the provincial budget total. The national Department of Finance endeavors to track the allocations being made by national government and the nine provinces to enable the national government to monitor the overall allocations to different public services.
This analysis, based on preliminary budgets, was published in the Medium Term Budget Policy Statement, and updated figures reflecting near-final provincial budgets were published in the Budget Review. In December 1997, Govemment published the Medium Tenn Budget Policy Statement for the first time. This document sets out the economic and fiscal framework within which the budget will be finalized, early indications of likely trends in the allocation of spending over the next three years, and a number of detailed policy choices facing government. It is a frank discussion of the framework within which the budget will be finalized. The publication of a Medium Term Budget Policy Statement several months before the budget enables parliament, the public and representatives of civil society to provide inputs into the budget process which are informed by an understanding of the economic constraints within which the budget is framed, and the policy choices which the government is considering.
This enables representations to be better informed, more realistic and targeted on the real issues. During the course of the Budget process, submissions were made by NEDLAC in the areas of health and education. In addition, a number of other formal and informal representations are received from representatives of business and organised labour, and from the non-governmental sector. These representations are considered carefully in the budget process. The introduction of rolling three-year budgets provides new opportunities for parliament and civil society to contribute to the budget. Medium term plans for each national and provincial line department are set out in the budgets.
This enables departments to plan the delivery of services within realistic estimates of what can be afforded. It enables stakeholders to interact with government about the best uses of available funds, and to comment on the policy priorities represented by the medium term allocations. Because these are rolling budgets, amended each year in the light of new information, representations, analysis and evolving policy priorities, reactions from stakeholders can be reflected in subsequent budget proposals. j) Has the legislation dealt with in section 215(2) of the Constitution been put into effect? k) What has your department done to inform and educate all South Africans, and particularly the identified vulnerable groups, about how to get their socio economic rights? 1) What has your department done to inform and educate all children about how to get their socio economic rights? The various publications of the Department provide South Africans with important information to evaluate government actions and expenditures. This enables citizens and parliament to participate in the formation of government policies that will result in honouring govemment’s commitment to fulfilling the socio economic rights of citizens. These publications are the annual Budget Review, the Medium Tenn Budget Policy Statement, first published in December 1997, and the People’s Guide to the Budget.
The People’s Guide is an accessible summary of the Budget which, is widely distributed, among others as inserts to newspapers and magazines, to local government offices and to libraries. M) What is your department’s understanding of the core minimum obligations ittzposed on it by the socio economic rights and the socio economic rights of children? See 2 (a-b) n) What minimum requirements for making sure the socio economic rights and the socio economic.rights of children are applied in a uniform way across the country have been set by your department? The division of revenue between provinces is based on an equitable revenue-sharing formula, to be phased in over 5 years. This aspect is more fully discussed below (o-p). o) Give a brief description of any current law and other measures, which have been adopted to improve or advance the rights to socio economic rights. p) Give a brief description of any current law and other measures, which have been adopted to improve or advance the rights of children to their soci o economic rights.
Not being a department delivering services to individuals, no laws or measures directly affecting rights or access to rights were introduced by the department. In ensuring sound public finances through its participation in the budget process the department facilitates the fulfilment of constitutional requirements by departments in a sustainable way. A central feature of the apartheid past was the unequal access to resources by sub-national governments to supply social services to their population. A key task of the department in the recent past was the preparation of the Intergovernmental Fiscal Relations Act (which came into effect on January 1 1998) which establishes a process for considering intergovernmental budget issues. The Act requires the Financial and Fiscal Commission to make recommendations concerning the division of revenue between the three spheres of government – national, provincial and local – and to submit these recommendations ten months before the start of the financial year.
It further requires the Minister of Finance to consult the provinces, local government and the FFC about these recommendations. The Act establishes intergovernmental bodies such as the Budget Council and the Budget Forum, to facilitate such consultation. The Act specifies that the Minister must present a Division of Revenue Bill indicating the final allocations to the different spheres and the nine provinces and submit along with the Bill a memorandum of explanation (Annexure E in Budget Review 1998). The Division of Revenue Bill for the 1998/99 financial year, introduced by the Minister on Budget Day, gives effect to Section 214 of the Constitution, which requires that an Act of Parliament must provide for: the equitable division of revenue raised nationally between the three spheres., the determination of each province’s equitable share; and any other allocations to the provinces, local governments or municipalities from the national share and any condition associated with these allocations. Accordingly, the Division of Revenue Bill states the allocations to each of the three spheres as well as each province’s equitable share. It also provides details of other allocations from the national sphere to provinces, local government and municipalities.
A number of the factors which the Constitution requires to be considered, aim at ensuring that sub-national governments are in a position to provide services to their citizens and thus contribute to the fulfilment of the socio economic rights. The most pertinent factors listed in Section 214(2) of the Constitution are: the need to ensure that the provinces and municipalities are able to provide basic services and perform the functions allocated to them; the fiscal capacity and efficiency of the provinces and municipalities; developmental and other needs of provinces, local government and municipalities; economic disparities within and among the provinces; and obligations of the provinces and municipalities in terms of national legislation. In determining the provincial equitable share a formula is used which takes into account the demographic and economic profile of provinces. It presents an important step in dividing revenue according to socio economic need and demand for social services rather than on the Legal Issues.