Insights

Deloitte SA 2015/16 Budget

Greater transparency needed

Citizen activism is steadily increasing and it will be reasonable to expect that the citizen will demand even more credible information on the performance of the state. The performance of the state in turn will be directly dependent on the strength of having the basics in place – good leadership that drives good risk management through sound internal controls, robust oversight and credible reporting. It is encouraging that the state has launched a “Back to the Basics” programme but these efforts will be futile if citizens themselves can’t evaluate the success that this initiative should bring.

Previous budget speeches have consistently emphasized socio-economic transformation. Good governance, anti-fraud and corruption prevention efforts, ethical conduct, sound controls, strong oversight, transparency and accountability are words that regularly feature in the budget speeches –and rightfully so.

These are issues that underpin improved service delivery, economic growth and a better life for all. The 2015 budget speech is not expected to be any different in this regard especially in the current economic climate where there is simply no room for wasted resources on an expenditure budget exceeding R1.2 trillion.

Big buildings cannot be built on weak foundations. A strong nation cannot be built if the basics, such as internal controls, risk management, ethical conduct and transparent reporting are not in place. The risk of these fundamentals coming across as mere rhetoric in the budget speech is unfortunately very high.

Many initiatives over the last 20 years have delivered varying degrees of success, from clean audit activities to world class codes on corporate governance and progressive legislation. The challenge of spending the budget optimally and effectively will remain hotly contested, particularly in the context of high unemployment, inequality and valuable resources being wasted through misappropriation and poor management.

Citizen activism is steadily increasing and it will be reasonable to expect that the citizen will demand even more credible information on the performance of the state. The performance of the state in turn will be directly dependent on the strength of having the basics in place – good leadership that drives good risk management through sound internal controls, robust oversight and credible reporting. It is encouraging that the state has launched a “Back to the Basics” programme but these efforts will be futile if citizens themselves can’t evaluate the success that this initiative should bring.

It will therefore be interesting to see if the Budget speech by Minister Nene goes as far as being explicit about initiatives to tangibly and regularly report on the performance of the state at all levels, against the objectives linked to the budget.

Just to illustrate this point further: would it not be valuable and very relevant if we had a municipal rating index so that any citizen can see how well each municipality is performing, perhaps every six months, if not every quarter? Would this type of rating index not create a healthy competitive environment fostered through peer pressure with each municipality striving to be better than the next?

Similarly, Eskom, SAA, SABC or other state-owned enterprise leadership could be inspired to be at the top of the index of best performing state-owned entities if there was a regular and credible scrutiny, oversight, reporting and rating of performance assessed against the basics of good business practice by the State itself.

No one likes to be named and shamed. It could be argued that leadership in government would go a long way towards gaining citizen confidence if they regularly reported on the actions being taken to improve their performance ratings every so often in reaction to publicly reported performance ratings. Credible self reporting means that when the auditors report on the state’s performance ther should be no contradictions.

Citizens should be empowered through credible information and should form part of constructive engagements and evaluations of the manner in which valuable and scarce resources are being deployed. Score cards are a great tool and need not be limited to just the external auditor’s report.

While frameworks and guidance exist for individual entities to measure and report on their performance, there are two main hurdles to overcome: 

(i) The optimal management of data is generally immature even though South Africa is in the midst of the data era. Even the United Nations is talking about the “Data Revolution”. Big Data is powerful but the data gathered must be reliable. This means that data must be coded, collated and packaged simply yet meaningfully, supported by underlying records, before the information can be interpreted and used for reporting and decision making. The benefits of aggressively overcoming the data management hurdle far exceeds the cost of the efforts to be made.

(ii) The timeliness and simplicity of reporting on performance needs to be improved. The state must virtually be able to, at the touch of a button, have a simple reflection of the performance of entities, using comparable indicators allowing for a publicly visible credible scorecard/rating index at frequent intervals. The rating index must be understandable by the general public.

Data is an undeniable asset which can be leveraged to propel South Africa’s socio-economic transformation. Citizens must be empowered by easily accessible and reliable data on the performance of elected officials to hold them accountable in the true spirit of a democracy.

Did you find this useful?