Reading Budgets

This presentation

• Explains how to read the budget tables in the February budget votes

• Explains how to read the budget tables in the annual reports

• Describes some of the narrative that is in each of these two documents

Expenditure tables in vote (p333)• Each vote is divided into programmes• A programme is made up of sub-programmes• Estimates are given for seven years– Three years before current year– Current year (still in progress)– Budget year for voting– Two ‘outer’ years of MTEF

• Current year can have 3 estimates– Original allocation, adjusted (October), & revised

Narrative in the vote• Budget summary table• Overall aim & purpose of each programme• Strategic overview of 7-year period• Table of selected performance indicators• Detailed expenditure estimates for 7 years• Discussion of expenditure trends• Discussion & table of revenues• Section for each programme with further

disaggregation & sub-programme information

The size of the numbers• Remember to add the 0s:– National budget usually millions (000000)– Provincial budget usually thousands (000)

• All numbers are in nominal terms. They are not adjusted for inflation.– If inflation if 5%, then a nominal increase of less than 5%

means that the buying power of the budget is less than before.

• Inflation measures the change in prices over 1 year.• Government often reports increased allocations over

three years i.e. for full MTEF period. So the increases can seem bigger than they really are.

Categorising expenditure

• The economic classification gives the ‘bookkeeping’ breakdown for the programme as a whole.

• Three main economic categories:– Current payments – spent for things to be ‘used

up’ in budget year. Includes SALARIES– Transfers & subsidies – money paid to other

institutions who will spend it (e.g. CCMA, NEDLAC)– Payments for capital assets – spent for things

that will last more than one year

Structure of annual report

• General information• *** Programme performance ***• Report of the Audit Committee• Annual financial statements• Human resource development

Budget table in annual report (p10)• All numbers are for year on which Department

is reporting i.e. 2009/10.• Voted is what was voted in February as adjusted

by revisions in October.• Roll-overs are unspent money from previous year• Virement is money shifted between programmes• Actual expenditure is what was spent• Variance is difference between total vote (incl. all

adjustments) and expenditure. A positive amount means the Department under-spent.

• Separate table for transfer payments (p11)

Reading numbers critically• Think about real, not only nominal, changes.• Compare expenditure with original allocation.• Consider whether the economic breakdown

e.g. % spent on salaries, is appropriate.• Compare trends in expenditure with trends in

performance indicators.• Ask whether the performance indicators

measure things that will benefit PEOPLE.• What else??

Reading the annual report

Aim of Dept of Labour• To play a significant role in reducing

unemployment, poverty & inequality, through policies & programmes … aimed at: improved economic efficiency & productivity; skills development & employment creation; sound labour relations; eliminating inequality & discrimination & poverty in the workplace; improving employment and protecting & improving workers’ rights & benefits.

Labour’s five programmes• Administration: Overall management & support and

advisory services to department• Service delivery: Protect health & safety of workers and

enforce policies• Employment & skills development services: Achieve

objectives & targets of national skills development strategy

• Labour policy & labour market programmes: Establish equitable & sound labour relations environment

• Social insurance: Administrative & support services to Unemployment Insurance and Compensation Fund