Compilation of a Government Budget
Budget Information The following is essential in supplying information to The Legislature in order for it to make decisions about the budget allocations – these four factors are essential for classifying information: • Financial responsibility: the institution needing the finance should be clearly identified – the estimate of expenditure should be for a particular department, institution or section of
• a department. • Purpose of expenditure: every project or task will start with an objective – the expenditure proposals will centre around the objective: what needs to be done to satisfy certain needs, and exactly what advantages they hope to achieve.
• Expenditure items: once the specific objective is detailed, specific goods and services should be mentioned in order to realise the objective.
• Source of financing: the source of the funding itself will be the budget vote, a fund or account.
Parts of the Expenditure Budget The organisational unit is the authority responsible for a particular service. Each unit will then have a budget vote – here the objective of the expenditure is stipulated, e.g. to provide water services to people in a certain location. The objective of the budget vote is broad and general. The budget vote will list programmes such as administration, laying of pipes, construction of dams, etc. Each programme will consist of an objective (a sub-objective of the budget vote itself), a description and a structure. If the construction of a dam is one programme – the description will explain the function of the programme, and the structure will detail the capital and budgeted expenditure of the programme.
Provincial Government Finance
The most important consideration here is that the principles which apply to the central government should apply to the provincial authorities as well. South Africa is still in a state of transformation – many provincial legislatures are demanding the right to levy their own taxes, and to have greater autonomy. In reality each province is still very much at the mercy of the central government which allocates funding to each province according to a formula. The MEC for finance fulfils the same role as the Minister of Finance, except that he/she will have little or no influence on macro- economic activities of the state – he or she may also not regulate the economy of the province.
Provincial Revenue All the problems and considerations which apply to a national government, also apply to any provincial authority. Not only should provinces satisfy their own individual needs, but their budgets need to reflect a national framework, or macro-economic policy as put forward by the ruling party. As explained above provincial authorities are seeking greater autonomy is their ability to tax their citizens than present legislation allows. The following are the main sources of income at present:
National Government Grants This is the main source of income for provincial governments. The most recent budget – see provincial allocations in table 3 on the next page shows that there is an attempt to share the revenue equitably. Some provinces, though, feel the formula is not fair as the portion they receive is less than their contribution to the State Revenue Account.
The formula by which the national government arrives at distribution of revenue is often controversial and always difficult. Can there ever be a fixed formula for the equitable sharing of revenue to provinces? A fixed formula, say per capita, might disadvantage a province which has a small population, but which contributes much more to the central government than another province, for example.
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