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While it is the custom and tradition of this House to steer away from controversy when delivering one’s maiden speech, we are today debating KwaZulu-Natal’s (KZN) budget in general and we cannot avoid the thorny and potentially controversial issue of good financial governance.

Regrettably, this topic is often ignored when the focus is on dividing up the fiscal cake. As Chairperson of KZN’s SCOPA portfolio committee, I am committed to taking on this priority challenge. As the Democratic Alliance (DA) indicated to the media at the time of the budget presentation, we have to be obsessive about solid financial governance in KZN where budgets have been cut to the bone.

My role, through my committee, is to fight for good governance and follow through on my undertakings, which includes consequences for misdemeanours. As a parent, I have learned many lessons, one of which was from my brother;
“When you promise a reward, go out of your way to deliver. When you promise a punishment, make damn sure you deliver, no matter the pain you feel as a loving parent”
The lesson is clear: You have to be consequent and follow through on your undertakings.

As the collective parents of our beautiful province, we must acknowledge that successive governments in KZN have failed our children in this regard. They have been quick to reward with bonuses and incentives, but have shied away from punishing where necessary.

We have fine legislation in the PFMA, MFMA, Treasury Regulations and a myriad other prescriptive acts. Previous governments have also been rich on policy, but poverty stricken on implementation. As a result, various departments and entities in KZN have gone unpunished and have become habitual offenders. This culture has given rise to an environment in which certain departments and entities appear before the Legislature to explain the same audit concerns every year.

The Auditor-General (AG) report from 2022/2023 notes the following repeat offenders;
• Transport, with management failing to maintain and review underlying schedules to support financial statement disclosures due to the impact of high vacancy rates in key financial positions, including that of chief financial officer
• Education with a massive staff debt and creditor book not to mention massive contingent liabilities as a result of medical negligence and;
• Public Works with its endless list of dodgy deals requiring extensive investigation.

While compliance with legislation has improved during the administration’s term, some key departments continue to struggle to implement adequate consequence management. This has led to an environment characterised by a lack of discipline and accountability for transgressions.

All KZN’s irregular expenditure was due to non-compliance with procurement and contract management legislation. The accumulated irregular expenditure from prior years has also not been properly addressed through recovery, condonement or write-off processes, as some departments could not demonstrate to provincial treasury that all instances of irregular expenditure had been investigated and disciplinary actions taken against those found to be responsible.

Every year SCOPA presents a host of reports for adoption to this House. These reports detail findings on each area of concern and direct the relevant department and entities to adopt remedial action and to report back to SCOPA, often within 90 days. Sadly, these advisories usually end up on a shelf, collecting dust, with few departments – if any - reporting back to SCOPA on the results of their remedial action. Where action is taken against financial miscreants, government has no flagging system to ensure that they do not re–enter public service via another department

There is a way to fix all of this and it lies in the legislation that we have to guide us.

All departments and entities are instructed, by the prescripts of the PFMA and various treasury regulations, to have fully functioning, resourced and staffed internal audit units. It is common cause that when a department receives a disclaimer or qualified audit opinion, one only has to look at the internal audit committee. Nine times out of 10, the department is understaffed and under resourced. Or it is not taken seriously by the accounting officer or executive political head.

It is internal audit units that do the hard slog of weekly, monthly and annual insistence of keeping good financial records, ensuring legislative compliance and adherence to pre–determined objectives. When these internal units work well, they turn everything into a process, rather than a much-feared event when the visit from the AG draws close. They convert a mad scramble into a measured, assured reflection of the department or entity’s work for the past year.

Accounting officers, together with senior management, should regularly monitor the effectiveness of preventative measures to improve the overall control environment. The provincial legislature should provide effective oversight to provincial government and hold leadership accountable for underperformance and non-compliance. These joint efforts will contribute significantly to our province fulfilling its mandate and improving the quality of its citizens lives.

The proof of the pudding is in the eating thereof. Where financial governance is taken seriously in South Africa, provincial departments and municipalities achieve unqualified audit opinions year after year.

Those departments and governments take consequence management seriously and apply consistent management. Those governments take heed of Chapter 9 institutions such as the AG and respect their recommendations. And those governments equip their internal audit committees with the personnel and resources they need - and listen to them!

KZN’s Government of Provincial Unity (GPU) has a clean slate on which to begin the 7th administration. It has a partner steeped in the traditions of good governance, a partner willing to share its expertise and willing to take decisive action against offenders when necessary.

KZN’s electorate have placed this solemn responsibility on our shoulders. The DA is confident that with the foundation of the GPU, this government can take bold steps into the future and achieve the prosperity and dignity that our citizens deserve. The DA will fight for this and we will not step back. We are resolute.

Issued by Tim Brauteseth, MPL - DA KZN Spokesperson on Finance and SCOPA