Health Conditional Grants Expenditure: hearings

Meeting report

FINANCE SELECT COMMITTEE
18 February 2005
HEALTH CONDITIONAL GRANTS EXPENDITURE : HEARINGS

Chairperson: Mr T Ralane (ANC) [Free State]

Relevant documents
National Treasury: 2005/6 Provincial Budgets – 2 February 2005
National Department of Health: Provincial Matters
Presentation by Gauteng Health Department
[No other documents were provided]

SUMMARY
The National Department of Health outlined the provincial expenditure for the National Tertiary Services Grant, the Health Professions Training and Development Grant, the Comprehensive HIV/AIDS Grant, the Hospital Revitalisation Grant, the Integrated Nutrition Programme Grant and the Hospital Management and Quality Improvement Grant.

During the discussion the Committee sought clarity on the following issues:
- the possibility of roll-overs at the end of the financial year;
- the reasons for underspending on the Hospital Revitalisation Grant in Kwazulu-Natal;
- the quality and impact of the grant expenditure;
- the slow spending of the Comprehensive HIV/AIDS Grant in Limpopo;
- the plans to resolve chronic underspending in certain provinces;
- the delay in fund transfers to Free State, Limpopo, Mpumalanga, Northern Cape and North West
- the monitoring of conditional grant spending.

The Kwazulu-Natal, Limpopo, Eastern Cape and Gauteng Provincial Health Departments provided a breakdown of their expenditure on the conditional grants for 2004/5 and 2005/6.

During the discussion, the following matters were raised:
- the impact of shifting of funds between projects;
- Eastern Cape over-expenditure of grant funds;
- Gauteng and Limpopo tendering delays with regard to Hospital Revitalisation
- co-ordination between Social Development, Health and Education provincial departments with regard to the HIV/AIDS grant;
- Limpopo’s tardy submission of the HIV/AIDS grant business plan in 2004;
- Gauteng sudden accelerated expenditure on the Integrated Nutrition Programme Grant in early 2005;
- Kwazulu-Natal proposal that flexible business plans be utilised to allow the shifting of funds from an under-performing project to one that was being rolled out rapidly.

MINUTES
Introduction by Chairperson
The Chair informed Members that the Minister of Health had submitted an apology to the Committee for not attending the meeting, as she had a prior engagement.

Briefing by the National Department of Health
The Director-General of the National Department of Health, Mr Thami Mseleku, informed Members that four provinces had confirmed their appearance today and one was a possibility. He stated that he was not sure whether the Committee had invited all nine provinces.

The Chair replied that the Committee was expecting the Free State, Limpopo, Northern Cape, Gauteng, Kwazulu-Natal, Eastern Cape, Limpopo and Western Cape provinces to address the Committee.

The Director-General stated that the Department would provide an exposition on the formula and criteria for the allocation of conditional grants, data on the trends and allocation

Mr G Muller, CFO: National Department of Health, presented the National Department of Health document on provincial health matters (document attached) which outlined the allocated expenditure for the National Tertiary Services Grant (NTSG), the Health Professions Training and Development Grant (HPTDG), the Comprehensive HIV/AIDS Grant, the Hospital Revitalisation Grant (HRG), the Integrated Nutrition Programme Grant (INPG) and the Hospital Management and Quality Improvement Grant (HMQPG).

Discussion
The Chair asked whether the figures referred to related to the 2 February 2005 or the 31 December 2004 figures.

Mr Muller replied that they referred to the updated 2 February 2005 figures.

The Chair asked the National Department to indicate the possibility of roll-overs at the end of the financial year, as well as the quality and impact of the expenditure.

The Director-General replied that the quality of spending would relate more to the extent to which the monitoring and evaluation of the programme in its entirety, but particularly as it related to treatment, improved to the extent that the Department was able to track impact and effect of the ARV on the people who were receiving the treatment.

Mr N Nene (ANC) [National Assembly] asked the Department to indicate whether some of the shortcoming still persisted, as matters could have changed between 31 December 2003 and 2 February 2005.

Mr Muller responded that he believed that the HPTDG and NTSG would be fully spent, or close to it. Large amounts will be spent on the rest of the grants, but there may be individual provinces which may not spent the full amount allocated.

This then related to the Chair’s question regarding roll-overs. In cases of delayed transfers, those roll-overs would take place at the national level. In cases where there were balances at provincial level, these funds would have to be rolled over at the provincial level.

Mr Nene asked the Department to indicate whether it was satisfied with the outputs and outcomes illuminated by its monitoring mechanisms.

Mr Muller replied that monitoring was a double-edged sword because it was needed, but on the other hand the monitoring requirements must not be made so onerous that it became difficult for provinces to utilise the funds.

Mr Nene sought clarity on the problems leading to the underspending of the HRG in Kwazulu-Natal.

The Director-General responded that there were various reasons that could be posited with regard to under-expenditure. One included that all that was reflected was a journal entry, and did not necessarily reflect the actual expenditure. This kind of phenomenon would also be reflected in the Comprehensive HIV/AIDS plan, especially the provision of Anti-Retrovirals (ARV), where the entries did not coincide with the deliveries made. The result was that the expenditure would rise as the payments were made for the goods ordered.

Mr D Botha (ANC) [Limpopo] asked whether the conclusions included in the 2 February 2005 statement (document attached) were correct.

The Director-General replied that this would depend largely on the elaboration from the provinces on the specific expenditure, as they could explain the actual expenditure on the ground. Thus the conclusions are correct in so far as they reflect what is written on paper, but they may not necessarily reflect the reality.

Mr Botha sought clarity from the Limpopo MEC on the slow spending of the Comprehensive HIV/AIDS Grant.

Mr Muller responded that, in the Northern Cape for example, the funds allocated for the Comprehensive HIV/AIDS Grant has been delayed. A team from the Department visited the province to obtain a plan from the province detailing the catchup that would need to take place on the spending of the grant as well as the service delivery that would have to take place. The Department was quite willing to accelerate transfers that were delayed if an accelerated spending pattern was taking place in the province.

Mr Botha sought clarity on the delay for the transfer of funds to the Free State, Limpopo, Mpumalanga, Northern Cape and North West Province for the Comprehensive HIV/AIDS Grant, as stipulated in the Provincial matters document.

The Director-General replied that this had to do with compliance issues. He stated that when he was with the Department of Education there were always very difficult time with regard to the views of Treasury, who correctly maintained that these were provincial funds and should be transferred, and the Office of the Auditor-General who maintained that the role if there was no compliance then the national department had a duty to retain the funds. This kind of tension has at least been resolved in the present case as there was communication between the parties involved. Treasury would inform the province that if there was no compliance it would be forced to delay the allocation of the funds. But in most cases those funds were eventually transferred.

The current delay merely meant that the Department was still engaged in discussions with the provinces with regard to compliance issues.

Mr A Manyosi (ANC) [Eastern Cape] asked the National Department to explain the failure by the Free State, Limpopo, and Mpumalanga departments to spend even 40% of the Comprehensive HIV/AIDS Grant allocation. He sought clarity on the measures in plan to ensure that the balance of the funds were properly spent by the end of the financial year, and that the funds were not spent simply for the sake of spending.

Mr Muller responded that he believed that "his provincial colleagues are mature enough not just to spend money for the sake of spending".

Mr E Sogoni (ANC) [Gauteng] asked the National Department to explain the extent to which the underexpenditure was attributable to lack of capacity within the provinces, as well as the steps taken to correct the problem.

Secondly, Mr Sogoni asked whether the National Department has analysed whether there was chronic underspending in certain provinces, and whether it had devised plans to support those provinces.

The Director-General replied to these two questions by stating that this should be explained in greater detail by the provinces themselves. He stated that a very small window of the total expenditure was being considered here, and a proper picture of the capacity of a province might not be judged properly simply by looking through that particular window. A better picture of the capacity within the province would be gained by considering the trends of expenditure within the province. There was mutual support between provincial and national Department with regard to business plans.

Mr Sogoni questioned the effectiveness of the National Department’s monitoring mechanisms, because the reality of the matter was that some provinces shifted the funds allocated to them to cover other expenses or shortcomings.

The Director-General replied that the DORA was very strict with regard to the processes involved in shifting funds from one grant to another. It might be considered part of the business plan, and might then not be a major issue. Yet the shifting of funds within provincial budgets would fall within the purview of the province’s accounting officer to do this within the legislative framework. Provinces did on occasion seek permission to deviate from the business plan, but did so within the legislative framework because they were aware that deviation from the business amounted to non-compliance.

Mr Muller added that this was very difficult to do via conditional grants from province to province but, as indicated by the Director-General, the movement of funds within a grant from one line item in the business plan to another was allowed, provided it was suitably motivated.

Mr Z Kolweni (ANC) [North-West] stated that the 2 February 2005 document indicated that there was continuous underspending on the HPTDG, and suggested that this indicated fiscal dumping.

Secondly, Mr Kolweni asked the National Department to indicate the extent to which its business plan complied with the Division of Revenue Act (DORA).

The Director-General replied that there was indeed compliance with DORA, as this was a legal requirement. He stated that he has only been with the Department for a month but he has looked at some business plans and was satisfied that they did comply.

Dr P Rabie (DA) stated that the Gauteng province has received permission to use the balance of the 2004/5 allocation to acquire equipment for the Pretoria Academic Hospital, yet the Tygerberg Hospital in the Western Cape which was also an academic hospital was experiencing severe financial problems and could possibly be closed down. He asked whether those funds could not instead be awarded to the Tygerberg hospital.

Mr Muller responded that the "spending patterns 2004/5" under the HRG in the Provincial Matters document indicated that Gauteng was awarded approximately R155m, of which they spent approximately R20m. Provincial requirements and funding was based on their strategic plan, and thus if the province decided that it was in its strategic interest to complete the Pretoria Academic University then so be it. The allocation to the Western Cape was R85m, and it has spent R88m to date. The Western Cape has its own priorities for the spending of these funds, which clearly did not include Tygerberg hospital.

The Director-General replied that most of the questions related very specifically to the provinces and would thus best be answered by them, whereas the National Department could only speak of the trends.

Dr Blecher, Director of Social Services, Treasury, stated that there was a disjuncture between the business plans and the broader strategic plans of certain provinces. In most cases the business plan would not form part of the strategic plan. At the moment there was only the Limpopo province that has received at least 66% of its transfers, and this related to the Comprehensive HIV/AIDS grant. The rest of the allocations have been transferred. This was due to the disjuncture between the strategic plan and its business plan. The synergy between the two must be ensured in future.

The Chair stated that the document indicated that 7 provinces spent above 60% of the HPTDG, and this must be investigated. He stated that input from all the provinces present would now be hear, and a discussion would follow afterwards.

Briefing by Kwazulu-Natal
Ms Ngonyeni, Kwazulu-Natal Health MEC, stated that Kwazulu-Natal was trying very hard to correct the current problems with underspending. In general Kwazulu-Natal was performing well on the total amounts of conditional grants allocated to it. A total of 82% against 83% has already been spent at the end of January 2005, as the figures in the document only reflected the spending as at the end of December 2004. It was only the HRG in which spending was extremely slow, and the reasons for this lay with the business plan.

She stated that it was hoped that spending within the province over the next two years would be high, as all five projects would be on site by then. It was only the INPG and the HMQIG in which spending was below target, and in both planning and approvals delayed the commencement of the projects. She promised that the funds allocated for each grant would be spent in full by the end of the current financial year.

Mr R Green-Thompson, Head of the provincial Health Department, stated that, as indicated by the MEC, corrective measures had been instituted for the HRG, INPG and HMQIG.

Hospital Management and Quality Improvement Grant
He stated that Kwazulu-Natal was currently running a management course which included financial management for all levels of management within the provincial Department, particularly at the hospitals. This should take care of the major part of the HMQIG.

Integrated Nutrition Programme Grant
There would be full expenditure by the end of the financial year.

National Tertiary Services Grant
The provincial Department believed that it was being underfunded in this regard, because it was in fact subsidising the NTSG from its equitable share. This was problematic because it was siphoning funds from the equitable share to supplement the NTSG.

Hospital Revitalisation Grant
As indicated by the MEC there had been under-expenditure here, and it was suggested that the provincial department re-suspend the R178m to take care of this. The first issue here involved the delays that occurred as a result of the appeals made for certain projects. The main project was the King George V hospital as the appeal process took a long time, and interfered with the progress of the project. The reasons for the slight delay at the Dr John Dube hospital in Inanda and the Dr Seme hospital in Kwamashu was due to the problems in identifying the true owners of the property, and this matter was being addressed by the provincial department.

This related to the question raised earlier by Members regarding the shifting of funds, which was possible once a certain project was identified as delayed and the funds could then move to another project that needed the funds. The business plan must be sufficiently flexible to allow such shifting, because the reality was that there were a number of hospitals in Kwazulu-Natal that needed revitalisation. A mechanism should be put in place to identify a project that was moving swiftly so that funds can be moved to it, rather than restricting spending to a specific project and then ceasing spending completely should that project slow down or stop.

The provincial department was now convinced that these measures were being taken into account and there should no longer be a problem with regard to the projects mentioned.

Mr H Conradie, CFO: Kwazulu-Natal Health Department, stated that it was at times very difficult to maintain the journals. The HIV/AIDS grant for example illustrated under-expenditure, but it really reflected 55% of the real spending of the province on HIV/AIDS, as the provincial department’s budget was much higher than the conditional grant figures. The problem was that the provincial department was required to journalise expenditure from outpatients to the various areas on the budget. The fact was that the detailed inventory journal entries always lagged a month behind, and was a problem that probably faced all provinces. It was not possible to arrive at the expenditure in such cases, especially where the function was funded by different grants.

The other problem was that the specific grants had specific requirements and reporting conditions, and the question was whether the portions relating to the conditional grant or the total figure must be reported on. With the HIV/AIDS Grant for example, the totals must be reported on because of the interlinking with the equitable share.

Briefing by Limpopo
Mr S Sikwati, Limpopo Health MEC, agreed that Limpopo was concerned at the manner in which it had been utilising the grant funding, but it has resolved to put measures in place to ensure that is began to fasttrack the spending of the grants. Limpopo was not succeeding on certain grants only, as it was only the HPTDG, Comprehensive HIV/AIDS Grant, INPG and the Drought Relief Fund that were not operating at optimal levels. There were some generic problems would relate to the non-transferral of funds utilised from the equitable share and, secondly, the non-communication within the provincial department itself.

It is true that the spending patterns have been very slow, but the province has decided to devise a process that would enable it to properly utilise the funds.

Health Professions Training and Development Grant
Limpopo will only be allocating bursaries this month, which involved approximately R15m. The provincial department was also transferring some of the funds to spend on specialists salaries, and it envisaged that all the funds allocated would be spent within the financial year.

Comprehensive HIV/AIDS Grant
Limpopo had a delayed start as a result of the challenges in the health system. The first problem was the human resource problem due to the rural nature of the province, the second problem lay in attracting health workers to the province. At the end of January 2005 the provincial department had utilised 72% of the funds.

Integrated Nutrition Programme Grant
Limpopo has spent very little in this regard, and most of the problems related to the provincial department’s relationships with NGO’s. By the time the provincial department transferred funds to the NGO’s, they still had funds allocated in the previous financial year that they have not yet utilised to provide the service. This failure to utilise funds was primarily due to lack of capacity. The provincial department aimed to ensure that the funds were properly utilised.

Drought Relief Fund
The provincial department experienced a problem regarding clarity as to whether the funds were meant for drought relief or cholera and other health matters. Limpopo has already submitted business plans to ensure that it utilises the funds allocated for malaria programmes.

Hospital Revitalisation Grant
The provincial department’s expenditure was not bad but was very slow, and was currently experiencing problems with the allocation of contracts. The Department of Public Works appointed emerging contractors who also delayed progress on site, and the provincial department was discussing this matter with the Department of Public Works to resolve the problem.

Hospital Management and Quality Improvement Grant
In order to deal with the problems experienced here the provincial department had employed a project manager to ensure the process was driven forward, and it was confident that the funds were utilised properly.

Mr F Moshwane, CFO: Limpopo Health Department, stated that a meeting was held to consider the trend of expenditure for all conditional grants and a plan of interventions were devised. The feeling after the meeting was one of confidence that all the funds allocated would be spent. Limpopo had a slow start with four of the conditional grants. The funds for the HPTDG has already been spent and only a few journals had to be finalised. The provincial department was currently transferring part of the medication expenditure of the HIV/AIDS Grant, and it was convinced that all the funds would be spent by the end of the financial year. Limpopo never had trouble with the HRG and almost all the funds allocated were spent. Chief Operating Officers as well as support staff were appointed for almost all of the 42 hospitals as part of the HMQIG, via the province’s equitable share allocation. All the funds will be spent by the end of the financial year.

The Chair stated that Mr Moshwane appeared to be repeating the MEC’s input.

Mr Moshwane stated that he was not repeating, and continued that a mechanism has been put in place to ensure that all the funds allocated for the HRG be utilised, in line with the requirements and business plan.

The Chair cautioned the remaining two provinces who are yet to address the Committee not to fall into the same trap as the previous presenters in promising that funds will be spent by the end of the financial year. For example, the Limpopo province was allocated R20m for the INPG but has only spent R3m to date, yet the MEC and CFO asserted that all the funds would be spent by the end of the financial year. He cautioned against making unrealistic promised to the Committee.

He stated that the Committee would ‘name and shame’ the provincial MEC’s who did not appear before the Committee today, as they clearly did not want to account to the nation.

Briefing by Eastern Cape
Superintendent General, Mr M Boya, apologised for the absence of the MEC as today was the opening of the Eastern Cape legislature. The province’s expenditure on conditional grants has, on the whole, picked up in the last quarter and in particular the quarter leading to the end of December 2004. The province had a slow start, but the rate has picked up and the province was confident that the year would end close to its expenditure targets. There were underperforming grants, such as the HPTDG, the NTSG, the HRG, the HMQIG and the INPG, with the INPG being the worst performer of the five grants. The province did experience capacity problems with regard to the general managing of the grants, as well as logistical problems affecting the tendering for the INPG.

National Tertiary Services Grant
The expenditure stood at 69% as at the end of December 2004, with the target set at 75%. The explanation for the variance was the incorrect allocation between expenditure and the equitable share, as the province was spending on the equitable share and had to bring the journals in line with the expenditure.

Health Professions Training and Development Grant
The delays experienced in the transfers were due to some of the beneficiaries who were not submitting monthly performance reports, which resulted in the provincial department witholding some of the transfers. The current expenditure as at end December 2004 stood at 58,8%.

Hospital Revitalisation Grant
The equitable share expenditure here was reflected incorrectly in the figures, and this was corrected in January 2005 to bring it into the correct expenditure item. The current figured reflected an over-expenditure of 112%, whereas the provincial department’s expenditure currently stood at 69%.

Comprehensive HIV/AIDS Grant
The province was performing well, and there was thus not much to explain here. Its expenditure currently stood at 76%, and was thus on target. Within this grant the province was experiencing teething problems that it was dealing with, such as the process of accreditation that was currently taking place. It was hoped that when this was finalised by the National Department that the province’s expenditure would be much higher for the next financial year and beyond.

Integrated Nutrition Programme Grant
The province’s expenditure stood at 33%, which was due to the province’s problems with the tendering process. A tender was awarded and had to be redone because of some administrative problems. The province was currently busy finalising the tender and once finalised it would clear some of the backlogs on the grant.

Hospital Management and Quality Improvement Grant
There were also misallocations with regard to this grant between the equitable share and the conditional grant. This has been resolved.

Drought Relief Funds
These funds were received very late, and the province was thus not able to comment at this stage on its performance.

Briefing by Gauteng
Dr L Rispel, Head of Department: Gauteng Health Department, conducted the presentation (document attached) which outlined the province’s expenditures on the NTG, HPTDG, HRG, HIV/AIDS Grant, INPG, HQMIG and the Provincial Infrastructure Grant during the previous and future financial year. The presentation also dealt with the provinces budget allocation trends, its monitoring and reporting functions and the challenges it faced in effective service delivery.

With regard to Dr Rabie’s earlier question regarding the Pretoria Academic Hospital, its construction has been an ongoing process for the last 20 years. The initial motivations for the grant were thus around the completion of the infrastructure development. Thus Pretoria Academic Hospital cannot be compared with Tygerberg, because Tygerberg was an existing hospital which did not require conditional grant funding to complete the infrastructure.

Discussion
Mr Manyosi requested the Kwazulu-Natal provincial department to explain whether, in view of the events that have impeded its spending of the HRG, it would efficiently and appropriately spend all the funds by the end of March 2005.

The Kwazulu-Natal MEC for Health responded that the provincial department was quite sure that it would have spent all the funds allocated to it by the end of March 2005.

The Chair reminded Ms Ngonyeni that she was on record and that the Committee would check in April 2005 whether the provincial department has lived up to its MEC’s promise.

Mr Manyosi asked Treasury to explain why the Eastern Cape and Limpopo provinces received their drought relief funds at such a late stage.

Mr Sogoni requested non-financial information from the provinces regarding the conditional grants, as this would provide a total picture of the current situation.

Secondly, Mr Sogoni stated that the Eastern Cape provincial department was doing very well. He asked the provincial department to explain the extent to which its expenditure figures were accurate, as funds were shifted between projects, and how Operation Tighten Belt impacted service delivery.

The Superintendent General of the Eastern Cape Health Department replied that it was very hard to operate under the environment created by Operation Tighten Belt, as the provincial department’s baseline budget was reduced by the mandatory surrender of approximately R200m. The provincial department had planned to use the R200m for the appointment of staff and certain goods and services. Due to this the provincial over-expenditure which was projected at close to R2b has now reduced to about R300 m. Yet further sacrifices had to be made into the following financial year as Health had a "top slicing" of R341 m of the next budget, and the provincial department would thus still have difficulties. This would not really affect conditional grants as their spending was protected from the cuts made in the equitable share.

Mr Sogoni asked whether the Eastern Cape would be able to contain over-expenditure on

The Superintendent General of the Eastern Cape Health Department responded that the figures at 31 December 2004 indicated 112% expenditure, and the corrected figures currently stood at approximately 69%. The main issue was that there were a number of infrastructure projects that were funded both from the revitalisation programme as well as from the equitable share, and there was thus a misallocation of funds from the equitable share into the grant. This error was picked up and corrected to 69%.

Mr G Shneeman (ANC) (National Assembly] stated that both the Gauteng and Limpopo provincial departments indicated that the delays regarding the HRG were due to incapacity of emerging contractors, and sought clarity on exactly what was being done to address the problem.

The Limpopo MEC for Health replied that agreement was reached with the Public Works provincial department to improve the quality of work provided by that provincial department as well as the improved quality of contractors, especially emerging contractors. The provincial department of Public Works however also faced a problem with capacity. Agreement was also reached to work very closely with the political heads of that provincial department in order to jointly monitor the HRG.

Mr Nene asked the Eastern Cape provincial department to explain the extent to which the misallocation of funds it referred to were due to the systems that were in place.

Mr E Jooste, Acting CFO: Eastern Cape Health Department, replied that the change in systems used did create problems in the general ledger with regard to allocations. These were being corrected by updating the necessary journals to reflect them within the conditional grants.

Mr Sogoni asked the Eastern Cape to explain whether it was addressing the problems it had expressed with the tender process regarding the INPG.

Mr Nene stated that the problem experienced by the Eastern Cape provincial department with regard to the tender process was a cause for concern that the problem could not be addressed at this very late point in the financial year..

Dr L Matiwane, Eastern Cape Health Department Chief Director: Hospital Services, responded to these two questions by stating that a tender was issued to a service provider to supply the Road to Health cards. There were however delays in the printing of those cards, which resulted in the delay in the tender process. The provincial department was busy fast-tracking the issue.

Mr Nene stated that there appeared to be three departments that dealt with HIV/AIDS funding, and requested clarity on the co-ordination of each.

The Superintendent General of the Eastern Cape Health Department replied that the co-ordination took place at the social needs cluster system that was in place in the Eastern Cape, which was probably common to the other provinces as well. Each project had a project leader and the Health Department was the lead department that ensured co-ordination across the departments, except for the project co-ordinated in the Premier’s Office. The co-ordination thus took place both at a political as well as at an administrative level. The spending on social mobilisation was co-ordinated by the AIDS Council, which also reported directly to the Premier’s Office.

The Limpopo MEC for Health responded that there was indeed co-ordination within the province between the Education, Health and Social Development provincial departments. The situation was even more advantageous in the Limpopo province because Health and Social Development fell under the same Department, and worked jointly with the provincial department of Education.

Mr Nene sought clarity on the straight line per capita expenditure referred to in the Gauteng presentation, as the figures it produced did no appear to make sense.

The Head of Department of the Gauteng Health Department responded that her presentation simply complied with the information requested by the Committee as contained in the letter forwarded to the provincial department. She agreed that there were problems with a straight line projection as it assumed for example that everyone was eligible for the INPG, which was not necessarily true.

The Chair stated that the Limpopo provincial department did not submit a business plan in early 2004 on the HIV/AIDS Grant, and asked whether it submitted that plan at all during 2004.

The Limpopo MEC for Health replied that he was not aware that the business plan had not been submitted, and he was presently clarifying the matter with the National Department. After consultation with the Nation Department he stated that the provincial department’s business plan was received on 1 June 2004. The plan was tabled late because the post for the official responsible for this function was vacant, and accepted that that fact was not a justification for the late submission of the business plan.

The Chair stated that the Gauteng provincial department’s spending as at 31 December 2004 on the INPG was 32% and the current expenditure stood at 72%. He requested clarity on the methods employed by the provincial department that resulted in the accelerated expenditure, and questioned whether this sudden spike was merely an inflated figure.

The Head of Department of the Gauteng Health Department replied that the provincial department’s in year financial reports, which should be read in conjunction with the financial figures, normally provided an explanation as to whether the funds have actually been committed or not. The provincial department’s quarterly report which was submitted in January 2005 indicated that approximately R3,5 m was committed for the INPG out of a total allocation of R10,3 m, and thus the R3,5 m spent in January 2005 did not constitute a large amount. The R3,5 m was spent on growth charts for children under 6 years, Vitamin A supplementation and some other minor expenses, and this amount would then clearly push up the expenditure to 75% of the R10,3 m. The expenditure was thus not unexpected because the provincial department had indicated in its quarterly report that the funds would be committed in that manner.

The Chair stated that the Gauteng provincial department’s spending as at 31 December 2004 on the HRG was 12% and the current expenditure stood at 24%. He requested the Gauteng provincial department to explain the possibility of roll-overs.

The Head of Department of the Gauteng Health Department responded that the same reasoning applied here as did to the Chair’s previous question on the INPG. She stated that 12% of the total HRG allocation was thus not an unusual expenditure when the total allocation was taken into account.

The Chair stated that President has granted Parliament the licence to embark on unannounced visits to properly exercise its oversight function and assess the expenditure.

The Head of Department of the Gauteng Health Department responded that the Committee was very welcome to visit any of the province’s sites. Parliament’s Social Services Select Committee had recently visited the province and were warmly welcomed, and enjoyed their visit.

Mr Kolweni asked the Kwazulu-Natal provincial department to explain its statement that the business plans should be flexible in order to allow the shifting of funds from one project to another.

The Kwazulu-Natal Head of Department replied that a number of measures had been put into place. A national committee was established and met on a regular basis and there was a meeting of the heads of the provincial health departments which was chaired by the Director-General of the National Department. This matter needed however to be addressed more robustly as the loop within the system needed to be shortened. The provincial department was pleading that should it be realised that the progress of a specific project was identified, the funds should then be quickly moved to a project that was running quickly. The provincial department was able to do this with its own equitable share grant, and that capacity should the granted to the HRG as well to allow the same methodology which would ensure that the shifting was done with full accountability, could be monitored and would achieve the stated outcomes.

Mr Kolweni requested the Limpopo provincial department to explain its statement that there was a lack of communication within the department, and the steps taken to rectify the problem.

Mr Sogoni asked the Limpopo provincial department to explain its statement that it was experiencing problems with lack of proper planning.

The Chair encouraged the Limpopo MEC for Health not to make unrealistic promises.

The Limpopo MEC for Health replied replied that he was certain that the provincial department had already begun to deal with the problem. He replied to the two questions by stating that these were not only external but also internal problems. In practice the provincial department would have to submit the business plan to the National Department for approval and a significant amount of time would pass until approval was received, which meant that the provincial department could only issue tenders much later. The problem was further compounded by the lack of communication between internal units within the provincial department. The decision was then taken to address this problem by the appointment of a person in the finances unit who would deal directly with the health branch within the provincial department, as this would ensure internal communication..

Input by National Treasury
Mr Hattingh, from National Treasury, stated that the discussions raised problems that needed to be addressed and the provincial departments provided explanations. As conditional grants involved both the national and provincial departments in a complex way, this kind of forum was extremely helpful.

Problems were experienced with conditional grant management in the past but, as indicated by the provincial department, that a new project manager has been appointed for the HRG, which was a step in the right direction. There were still several problems and consideration must be given to this issue. He agreed with the Kwazulu-Natal proposal that funds be allowed to shift to a fast-moving project, but the problem was that 90% of the business plans submitted to Treasury for such shifting were not feasible.

A new Chief Director was appointed at the National Department to deal with the HIV/AIDS grant, approximately R60m was allocated to boost the roll out and the national team was strengthening. It was however behind schedule, but it was a growing trend.

He stated that he was concerned about the HRG, as many people who were responsible for managing the HRG were not present today. The HMQIG were not functioning particularly well and more interrogation and reform on this was needed. The INPG will be phased out of the Department of Health within a year.

An interim adjustment was made to the NTSG during 2005. The management of the service level agreements and the monitoring of the performance of the agreements were not as tight as they should be and needed more consideration.

The Chair stated that all these matters would be carefully reviewed after the end of the financial year.

Closing remarks by Department of Health
Mr Muller stated that the reality of the matter was that, with the kind of exponential growth evident in the provision of the HIV/AIDS grant, the service delivery side would not always keep up with the expenditure.

The Chair state labour-intensive work was needed, and thus the more the expenditure grew the more people needed to be employed by the Department of Health.

The meeting was adjourned.