Govt to save R23bn over three years

Wednesday, February 17, 2010

Cape Town - A ministerial task team will help government save R6.5 billion Rand this year and a total of R23 billion over the next three years, says Finance Minister Pravin Gordhan

Announcing measures to cut down on tender fraud during his Budget Speech today, Gordhan said the saving exercise being conducted by the task team must be seen as the "first step to get better value for money".

"Too often, the culture in the public service and in state-owned enterprises is to ratchet up salaries, spend on frills, travel in luxury and spend more on marketing the agency than in fixing the service," he said.

He added that the task team was also looking at the possibility of rationalising some government entities and agencies if it helped reduced the cost of delivering a service.

"The resources that we have at our disposal belong to the people. If we do not use these wisely and sensibly, our contract with the people is eroded," he said.

The task team comprises Gordhan, the Minister in the Presidency responsible for Performance Monitoring and Evaluation Collins Chabane and the Minister of Public Service and Administration Richard Baloyi.

The announcement follows the release of the preliminary report by the ministerial task team in October during the tabling of the Medium Term Budget Policy Statement.

Following the initial savings of R14.5 million over three years at national level, the task team today announced that it had identified further savings, bringing the total savings over three years to R23 billion.

The amounts are broken down as R6.5 billion in the coming financial year, R8.6 billion in 2011/2012 and R7.9 billion in 2012/2013. Provinces would be able to save R12.6 billion over this period.

The performance monitoring and evaluation unit in the Presidency has introduced an outcomes focused approach which links outputs with actual achievements of government's outcomes.

The task team is also preparing a set of recommendations to strengthen and "fraud proof" the procurement process.

The recommendations will require a review of supply chain policies and include streamlining the approval of major government contracts and training officials in best practices.

The measures also include blacklisting those companies and individuals involved in corrupt practices, as well as improving investigating and prosecuting capabilities.

A supply chain compliance unit has also been set up in the National Treasury, which will work with the Special Investigating Unit (SIU) to investigate specific tenders where there is suspicion of corruption.

An inter-ministerial task team has also been established to co-ordinate anti-corruption initiatives.

In a media briefing shortly before the Budget Speech, Gordhan said the supply chain compliance unit had outlined five trends around fraud in the procurement system.

These included tender procedures not being followed, goods or services procured to government at inflated prices, government officials benefiting from tenders, government agencies and departments ordering unnecessary goods and services and payments not being made to service providers.

Gordhan said in a recent example government had paid R16 million to a service provider who had not rendered the necessary services.

The team was also working with the SIU on four investigations involving contracts worth R2 billion in total.

He pointed out that the team had already helped two provinces save R500 million by looking at current contracts and had also uncovered 1 200 government employees that had participated in tax and tender fraud.

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