The Department of Communications appeared before the Joint Budget Committee on 22 June 2005 to account for its expenditure trends. The expenditure trends of the Department of Communications have been a cause for concern for the Joint Budget Committee for the previous three financial years.

For the last three financial years, the department has been underspending tremendously, and then spending more that 50% of its budget in the last month of the financial year. In both the 2003/04 and 2004/05 financial years, the Department spent funds in excess of R700 Million in the last month of the financial year. This resulted in the Joint Budget Committee calling the Department to appear before the Committee to present an explanation for its expenditure patterns.

In response to the Committee’s request to explain its expenditure patterns, the Department indicated that in the 2004/05 financial year, it made a once-off allocation of R750 million to recapitalise the post office. However, the Department did not provide the Committee with an explanation for the previous two financial years.

The Department had not recorded any material under spending in the past three years.

The Department started a process of restructuring during 2004 so as to ensure that it had enough capacity to enable it to deliver on its mandate. In this regard, the Department has filled 352 posts. However, there are 188 more vacant posts. The Department further indicated that the issue of personnel is a challenge as it depends on allocations from the National Treasury.

No provision for ICT infrastructure has been made within the Department, even though this is a core function of the Department. The Department would ideally focus on improving staff and using technology to strengthen the State.

The following issues were raised and discussed with the Department:

The Department assured the Committee that it would avail its cash flow projections, which are linked to its strategic plan. The Department further informed the Committee that it has a shareholder management unit within its finance section that monitors State Owned Enterprises through the Public Finance Management Act (PFMA) regarding the requirements of strategic plans by entities. These lay the basis of the public entity within the year.

Although the strategic plan was not reviewed in the past, the National Treasury now requires that it be reviewed annually. Furthermore, the Department also submits its financial statements to the Auditor-General and presents to Parliament in the Annual Report.

The Department further indicated that there has been an improvement in terms of reporting as compared to the past three or four years. The Department has been behind three or four years in terms of submitting its financial reports to the Auditor-General, but this is improving.

In terms of its expenditure trends, the Department indicated that it’s expenditure trends are affected by both internal and external sources. The Department therefore does not determine its expenditure on its own.

The Department provided an explanation for the last financial year’s expenditure, but failed to provide explanations for the preceding two financial years. Furthermore, the focus of the Department seems to be on preventing under expenditure, and not on the quality of expenditure.

The focus of the hearing was on the expenditure planning and discipline of the Department in order to ascertain whether resources are spent in a meaningful way. However, the Department was only focused on the fact that it never reflects any material under expenditure at the end of the financial year.

The Joint Budget Committee needs to work with the Portfolio Committee on Communications to monitor the department in terms of its Strategic Plans. The Committees further need to follow up on the non-allocation of funds to the ICT function, which is a crucial function of the department.

The Joint Budget Committee also needs to further keep track of the monthly and quarterly expenditure patterns of the department.

Report to be considered.