REPORT OF THE SELECT COMMITTEE ON FINANCE - 3RD AD 4TH QUARTER PUBLIC HEARINGS ON CONDITIONAL GRANTS AND CAPITAL EXPENDITURE

 

 1. Background                                            

 

The Select Committee on Finance embarked on the Public hearings on Conditional Grants and Capital Expenditure   (3rd and 4th Quarter Provincial Reports). The MECs of the relevant Departments were required by the Committee to report on the following:

 

 

2. Introduction

 

This report of the Select Committee on Finance is divided into two parts.

Part one of the report covers key issues that emerged during the course of the 3rd Quarter Public Hearings on Conditional Grants and Capital Expenditure (16-25 January 2006).

Part two of the report deals with the 4th Quarter Public Hearings on Conditional Grants and Capital Expenditure and key issues that emerged during such hearings (2-8 May 2006).

 

 The following stakeholders were invited to make presentations before the Committee:

 

 

PART ONE

 

 

3. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report     

    by the National and Provincial Treasuries

 

3.1    Report by the National Treasury

 

      The National Treasury gave an overview on the outcome of Conditional Grants and Capital Expenditure.  The presentation covered the provincial spending for the first 8 months (1 April to 30 November 2005) of 2005/06 financial year as follows:

 

·   It was reported that the spending was at R136, billion (62,1%) of adjusted (R 219,2, billion).

·   The highest rate of spending was in Kwazulu-Natal (63, 2%), Northern Cape and

    Mpumalanga at 63, 15.

·   Free State and Gauteng being the lowest at 60, 8.

 

3.2. Report by the North-West Provincial Treasury

 

The Department of Provincial Treasury reported that the total spending on conditional grants in the 3rd quarter was at 65,5%, with Department of Sport spending less than 50% and Department of Agriculture being the lowest at 1,2%. The Department informed the Committee that under spending was projected in the Department of Agriculture and also in the Department of   Health. The Department indicated that only 1,2% was spent in the Department of Agriculture during the first three quarters and that little spending would take place for the rest of the year. The Department went further to say that in North West there “was no Department of Agriculture”, as the new Head of Department (HOD), Senior Managers and some officials had been on suspension since June 2005.

 

 3.3. Report by the Limpopo Provincial Treasury

 

The Department gave an overview of the cumulative spending patterns for Health, Social Development, Sport and Recreation, Agriculture conditional grants, Housing and Provincial Infrastructure Grant. The Department informed the Committee that it had managed to increase the expenditure per quarter as follows:

 

Ř       R40.67 million (6.27%) in the first quarter,

Ř       R106.391 million (22.1%) in the second quarter, and

Ř       R241.860 million (43.5%) in the third quarter.

 

On Provincial Infrastructure Grant, the Department indicated that only 40.2% had been spent. The Department indicated that this was due to the fact that projects started very late because some of the Departmental business plans were changed. The Department concluded by indicating that most of the Departments were unlikely to spend their full Provincial Infrastructure Grants (PIG) in this financial year.

 

3.4 Report by the Mpumalanga Provincial Treasury

 

The Department gave analysis on trends in allocations, transfers and actual expenditure of conditional grants, capital and infrastructure expenditure as follows:

 

 

3.5 Report by the Northern Cape Provincial Treasury

 

The Department gave a broad overview on the following:

 

·         The total expenditure amount to R3, 336 billion.

·         Projected net under spending of R42 million or 1% of the adjusted budget.

·         Three Departments project to under spend on their adjusted budget.

·         Material underspending projected to occur in:

Ř       Social development by R45 million, and

Ř       Department of Agriculture and Land Reform by R41million.

 

 

3.6 Discussion

 

Committee Concerns and Comments

 

·         To what extent were the provinces utilising Section 18 of the Public Finance Management Act, which placed the powers on the Provincial Treasuries to assist the struggling Departments.

·         Whether North West Provincial Treasury had established, the Budget Committee, as they had indicated in their appearance before the Committee in 2005.

·         Concerned about low spending trends on the conditional grants, especially by Department of Agriculture- North West.

·         What mechanisms were they going to employ in order to monitor under spending in   their respective Provinces.

·         Whether big business was involved in supplying the required building materials for government projects.

·         North West Provincial Treasury was requested to provide clarity on the involvement of the Independent Development Trust (IDT) in some of the infrastructure developments.

·         Clarity was sought on financial management problems by the Northern Cape Roads and Public Works, which the Committee raised in the previous hearings.

·         The Mpumalanga Provincial Treasury responded that Section 18 of the PFMA could not be implemented by their Department alone. They would also need the intervention and support the Executive Council, and this issue was raised in their Provincial Lekgotha.

·         The North West Provincial Treasury responded by saying that the interpretation of Section 18 was ambiguous; this issue was still debated in their Province.

·         The North West Provincial Treasury replied that the Budget Oversight Committee had been established and was operational.

·         The North West Provincial Treasury reported that, the Department of Agriculture was being assisted by the Department in addressing their challenges.

·         The Limpopo Provincial Treasury conceded that, the issue of underspending was affecting poor people on the ground as it affects service delivery, hence the Department had intervened politically to unblock the unblock -ages.

·         The Northwest Provincial Treasury indicated that it had approached the South African Management Development Institute (SAMDI) and the Independent Development Trust (IDT) to assist Departments in order to ensure proper planning for infrastructure.

·         Northern Cape Provincial Treasury responded by indicating that the issue with the Department of Roads and Public Works had been referred to the Premier and the MEC of Public Works.

 

3.7 Report by the Western Cape Provincial Treasury

 

The Department briefed the Committee on the Conditional grant Allocations, Transfers, Conditional Grant –Cash flow management, Monitoring transfers, Division of Revenue, Expenditure, Monitoring Expenditure, and on Service delivery. On shortcomings of the Division of Revenue the Department, highlighted the following:

 

 

Committee concerns and Comments

 

 

4. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report 

    by National Treasury and Provincial Departments-Health

                       

4.1 Report by the Provincial National Treasury

 

The National Treasury reported that the total Provincial Health spending was at R29, 4billion or 62, 3% against R47, 1billion adjusted budget. The Department indicated that there had been an increase of R3, 9billion or 15, 4% compared to the previous year. The Department stated that the lowest rate of health spending was in Limpopo (55,6%) and Gauteng (61,6%), with Northern Cape  (66,1%) and Mpumalanga (65,5%) reflecting the highest rate of spending in health. The National Treasury reported that the health personnel spending was at R16, 7billion or 65, 2% (R25, 6bn adjusted budget).

The Department indicated that capital spending was at R1, 7billion or 42, 1%. The Department stated further that there had been an increase of 59, 9% compared to spending for the same period last year. The Department reported that the lowest rate of capital spending was in Limpopo at 27,9% and Free Sate at 35,3% and with Mpumalanga at 58,4% and Kwazulu Natal at 49% reflecting the highest rate of capital spending in health.

 

 

On Conditional Grants it was reported that five or more Provinces had spent less than 50% for the following grants:                   

·         Hospital Revitalisation.

 The National Treasury stated that the majority of grants reflected spending within the 50% and 70% range against the Division of Revenue Act.

 

 

 

4.2 Report by the Kwazulu-Natal provincial Department of Health

 

The Provincial Department reported that a total of R114, 042 million had been received for Comprehensive HIV and Aids grant, 97% had already been spent on this grant. The Department stated that 35% of R223, 939 million grant for Hospital Revitalisation had been spent, a rollover of some R99 million would be requested in 2005\2006.The Department stated that it intended using private developers rather than Provincial Department of Public Works. The Department said that proposals would be forwarded to the Executive Council for approval.

 

 On the Forensic Pathology Services grant the Department indicated only 5% of 24,9 million was spent, this was attributed to the late receipt of funding. The Department indicated that rollover of approximately R22 million would be requested. On Provincial Infrastructure, the Department reported that Ithala had advised that of the approximately R58 million provided, R33 million would not be spent this financial year and would be returned to the Department.

 

4.3 Report by the Mpumalanga Provincial Department of Health

 

The Provincial Department of Health, gave a summary of actual expenditure of all conditional grants .It was reported that the following grants had spent less than 50% :

 

 

The Provincial Department reported that the total expenditure of all the grants at the end of the third quarter was 67%. For under expenditure on Hospital Revitalization grant, the Department of Health informed the gathering that it was due to the failure by service providers to obtain guarantees timeously and also poor performance by some contractors. The Department had put in place mechanisms to address the problem of under-spending of some of the conditional grants. The Department assured the Committee that in the 4th quarter the situation would improve.

 

4.4 Report by the Eastern Cape Provincial Department of Health

                       

The Department projected under expenditure in the following grants:

 

 

The Department indicated that the projected underspending on the Coroner Services grant was reported to the Provincial Treasury and EXCO and the Department would apply for rollover funds. The Department reported that under-spending on Hospital Revitalization was due to contract payments not speedily processed and contracts\tenders not finalised. The Department informed the Committee that this grant would under-spend by R47 million. The Department would apply for rollover funds.

 

Committee concerns and Comments

 

 

4.5 Report by the Free State Provincial Department of Health

 

The Department of Health indicated that the following grants had an expenditure of less 50%   (as at 31 December 2005):

The Department was concerned about the Revitalisation and infrastructure grants, and was giving special attention in trying to improve the expenditure on these two grants. The Department indicated that they had a close working relationship with Department of Public works, Roads ad Transport.

 

4.6 Report by the North West Provincial Department of Health

 

The Department gave an overview on the current status of conditional grants as follows:

      performance of conditional grants.

 

Committee concerns and Comments

 

 

4.7 Report by the Limpopo provincial Department of Health

 

The Department reported that the conditional grants had been the major source of the capital expenditure of the Department with an average of 53% of the funds used being provided from the conditional grants and 47% equitable share.

 

·         The Hospital Revitalisation grant together with the Provincial infrastructure grant had provided the bulk of the capital used for facility upgrades, maintenance and provision of new clinics.

·         On the Expenditure on Hospital Revitalisation, the Department had surrendered R10 million to the National Department of Health with a request to increase the allocations for 2006/ 07 year.

·         The expenditure on this grant dependent on the progress made by contractors.

·         The capacity of emerging contractors and the availability of building materials had been a constraint on the completion of the contractors.

 

4.8 Report by the Northern Provincial Cape Department of Health

 

Briefed the committee on the performance of conditional grants in the Province as follows:

 

Committee concerns and Comments

 

 

4.9   Report by the Western Cape Provincial Department of Health

 

The Western Cape Provincial Department stated the following:

 

Ř       Slow performance of contractors, and

Ř       Late approval of business plans.

 

Committee concerns and Comments

 

 

 

5. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report by National Treasury and Provincial Departments-Social Development

 

5.1 Report by the National Treasury

 

The National Treasury outlined spending in social services, capital expenditure and on conditional grants as follows:

 

-          Investigation and prosecution of fraudulent activities.

-          Comprehensive review of all temporary disability grants.

-          Implementation of systems that provides updates on key indicators for how the programme is being administered, including early warning indicators.

-          Piloting, finalising and implementing a new disability assessment tool.

 

 

Social Assistance Administration Grant                             

 

 

 

Social Assistance Transfers Grant

 

 

·         Social Development spent R33 409m or 64,2% of the R52 023m allocation.

·         Transfers amounted to 69,3%.

·         The Highest being Mpumalanga at 71,2%; Limpopo at 66,7% and North West 65,9%.

·         The Lowest were Free State at 59,5%; Gauteng 60,1% and Northern Cape at 62,9%.

 

 

Integrated Social Development Services Grant

 

 

HIV and Aids Grant

 

 

 

 

5.2.             Report by the Free State Provincial Department of Social Development

 

Free State Provincial Department forwarded the following reasons for under expenditure on Capital, HIV and Aids, Integrated Social and Development Services Grant:

 

·         Saving on Infrastructure Grant due to the slow movement of contractors.

·         The contract for Monument Secure Care was replaced due to none performance of contractor.

·         This process delayed payments.

·         The Department had finalized its IT plan and orders were placed for IT equipment via SITA.

 

·         Under expenditure on HIV/AIDS was due to Memorandums of Agreement that were returned late and was incomplete received from NGO’s.

 

·         Under expenditure on Social Assistance Admin Grant was attributed to the Critical vacant posts that were not filled due to the Structure of South African Social Security Agency (SASSA) not finalized and approved by the National Department of Social Development.      

·         Under-expenditure in Social Assistance Transfer Grant was due to a disability Review Programme that was launched which resulted in the savings.

·         Reported that the Department was currently implementing a new monitoring system with the assistance of ABSA bank which would improve the monitoring and evaluation of grants to NGO’s?. Stated further that the approval was awaited from the Provincial treasury before it could be implemented.

·         The Training of NGO’s would be done in conjunction with the Provincial Treasury to improve skills for financial management in the NGO sector.

·         Said that the Department had established a monitoring and evaluation unit for NGO’S and CBO’s to monitor performance.

·         Indicated that SITA was currently assisting the Department in obtaining an IT system to assist with monitoring and evaluation of the NGO performance.

 

 5.3 Report by the Gauteng Provincial Department of Social Development

 

Gauteng Department of Social Development briefed the Committee on the current spending of the conditional grants as follows:

 

Social Assistance Grants

 

·         Reported that 61% had been spent of the total allocation as at the end of November 2005, the Department projected to spent less than the total allocation by an amount in excess of R 200m.

·         The Department had furthermore been spending significantly less than the current R 12million that had been spent on Social Relief of Distress (2004/05 R 820 000 was spent)

 

Social Assistance Grants (Administration)

 

 

Integrated Social Development Services Grant

 

·         Reported that 46% had been spent to date.

·         It is expected that the total grant will be would be spent by the end of the financial year as significant preparatory work had to be undertaken in the first portion of the financial year to ensure that organizations that are to be funded are capacitated to deal with the monies to be transferred.

 

     HIV/AIDS grant

 

·         Indicated that total allocation had been spent by the end of November 2005. Furthermore commitments would be honored from the R 40million suspended to the Department of Social Development by the Provincial Department of Health.

·         Informed the committee that community based services to persons infected and affected by HIV & AIDS as well as Orphans and vulnerable Children was rendered by 75 NGOs in terms of Service Level Agreements signed in the beginning of the financial year.

 

The Department concluded its report by indicating that it was improving its capacity to respond to the requirements of PFMA and the Division of Revenue Act.

 

5.4   Report by the Kwazulu-Natal Provincial Department of Social Development

 

The Department briefed the Committee on the expenditure for third quarter on all the grants that were being administered by it as follows:

 

Committee concerns and Comments

 

 

 

5.5   Report by the North West Provincial Department of Social Development

 

The North West Provincial Department of Social Development gave a brief overview on the following issues:

 

 

 

5.6   Report by the Mpumalanga Provincial Department of Social Development

 

The Department gave a summary on the expenditure of all conditional grants.  HIV and Aids (community based care) was at 74%, the expenditure was reported to be in line with the acceptable target. The Department indicated that the Integrated Social Development Services grant was at 80%. The Department indicated that the administration grant had spent 50% of the budget. The reasons for under spending were attributed to the non appoint of staff, delays in the acquisition of office space and the procurement of office equipment, which was dependant on the processes of SASSA.

 

 

 

Committee concerns and Comments

 

·         Clarity was sought on whether community based organisations had received training in business plan drafting.

·         Clarity sought on why only 60% was spent in capital projects, what was going to happen to the remaining 40%

·         The Department was required to outline their working relationship with Public Works.

·         The North West Department responded that there were currently busy trying to get people that would be assisting communities in drafting the business plans. The remaining 40% of the capital budget would be spent in the next financial year.A Committee had been established to deal with the problems between these Departments

 

5.11 Report by the Limpopo Provincial Department of Social Development

 

The Limpopo Provincial Department highlighted the followings:

 

·         Indicated that the Department was responsible for capital planning while Department of Public Works was the implementing agency.

·         Reported that IDT had also been engaged to assist in implementing capital works projects.

·          Projected that the funds on capital works would be fully expended at the end of the year.

·         Projected that the HIV and AIDS grant would be utilised by the end of the year.

·         Reported that SASSA grants would not be utilised and saving of R74million was anticipated. Indicated that this was due amongst other things to late advertisement of posts for SASSA and non-splitting of SASSA function from the Department.

 

5.12 Report by the Western Cape Provincial Department of Social Development

 

The Department of Social Development in the Western Cape gave a briefing on the conditional grants and on factors influencing spending trends. The Department highlighted, the delay in the approval of an establishment for SASSA and late approval of business plans as one of the factors influencing spending trends in some of the grants.

 

5.13 Discussion

 

Committee concerns and Comments

 

·         Concerned by the underspending in the Limpopo Department. Requested the Department to indicate mechanisms that were in place in rectify the situation.

·         Concerned with the late approval of business plans.

·         The Department of the Western Cape was requested to give details of the NGO’s that were receiving HIV and AIDS grants and to indicate to whom they account.

·         The Department of the Western Cape was requested to indicate their working relationship with the Department of Public Works.

·         Sought clarity on whether there was any likelihood of under expenditure if so; what steps were they taking together with their Provincial Treasury in addressing  the problem.

·         The Committee recommended that the Provincial Departments should engage with the National Department regarding the progress and implementation of SASSA.

·         The Limpopo Provincial Department reported that they were involved in negotiations with the National Treasury in order to increase its actual grant Provincial allocation.

·         The Western Cape responded that the issue of late approval of business plans was raised with the National Departments and there was an agreement that this problem should not persist. All the NGO’s were accounting to the Department.Reported that the Department was enjoying a good-working relationship with the Department of Public Works.

 

6. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report by National Treasury and Provincial Departments-Education

 

6.1 Report by the National Treasury

 

 

The National Treasury reported that the spending was at R46, 7billion or 64,6% against R72, 2billion adjusted budget. The National Treasury reported further that an increase of R4, 5billion or 10, 7% compared to the previous year.  The Department indicated that the Lowest rate of education spending were in Free State and North West  (63,6%), with Northern Cape (67,4%) and Limpopo  (65,6%) recorded the highest rate of spending in education. The National Treasury stated that the education Personnel spending was at R38, 7billion or 66, 4% (R58, 2billion adjusted budget). 

 

 

The National Treasury reported that the Capital spending was at R1, 3billion or 39,6%. The National Treasury stated that there had been a marginal decrease of 0,9% compared to spending last year; the lowest rates of capital spending were in Kwazulu-Natal (20,7%) and Mpumalanga (30,8%) .The Western Cape (58,4%) and North West  (56,9%) reflected the highest rate of capital spending in education

 

.

 

The National Treasury reported that the spending on the education grant was at 72,5%.Limpopo at 31,6% and North West at 46,9% were the lowest on the expenditure of HIV and Aids Grant (Life Skills Education). Western Cape at 51, 6 and Free State at 61, 9% recorded the lowest spending on National School Nutrition Programme.

 

 

 

 

6.2 Report by the Mpumalanga Provincial Department of Education

 

·         On HIV and AIDS grant, reported that the Department had spent 79% of its allocated amount for 9 months of the 2005/06 financial year and were to spend all funds allocated to them by 31 March 2006.

·          Said that the relevant stakeholders had been taken on board on the implementation of the Life Skills education in schools.

·          Indicated that the Department was to spend all allocated funds for 2005/06 on school nutrition.

·         The Department had spent only 19% of the allocated amount on infrastructure development projects and 49% of the allocated amount on capital projects for 9 months of the 2005/06 financial year.

·         Reported that the Department’s projects were monitored by projects Managers that were appointed by the Department of Public Works, since the Department did not have the capacity to monitor the projects.

6.3 Report by the Limpopo Provincial Department of Education

The Department reported that the expenditure on HIV and Aids grant was at 32.7%. The Department indicated that underspending was as a result of HIV and AIDS related activities that took place only during weekends and school holidays in trying to avoid disruption on learning and teaching at schools.  The Provincial Department indicated that spending on Provincial Infrastructure grant was at 51,9%. The reason forwarded for low expenditure was

 due to the fact that the business plan, which was available at the beginning of the financial year, was adjusted in order to cater for pressing infrastructure needs like learners under trees and in shacks.

 

 

 

 

6.4 Report by the North West   Department of Education

 

The Department reported that the expenditure spending on capital was at 68.5% as at the end of the 3rd quarter. The Department indicated that the reasons for under expenditure were problems with the advertised tenders. The Department spent 78.3% on infrastructure by the end of the 3rd Quarter. The Department reported that the spending pattern on infrastructure projects was on track and all projects would be completed on time.

 

6.5 Report by the Western Cape Provincial Department of Education

 

The Provincial Department reported that the Department expenditure as at the end of the 3rd quarter was 72,8% of the total available budget. The Department reported that it was doing well in administering HIV\AIDS and conditional grant. The Department indicated that the HIV\AIDS conditional grant allocation to education had remained relatively static in comparison with broader HIV\AIDS spending.

 

Committee concerns and Comments

 

·         The Western Cape Department indicated that they had model plans but what affected their implementation were the terrain and the size of the land.

 

6.6 Report by the Kwazulu Natal Provincial Department of Education

 

 

 

 

The Department projected the total expenditure of 98, 3% of budget by the end of the financial year. The Department reported that the conditional grants represented 3, 8% of the Budget for 2005/06. Informed the Committee that the Department had formed a joint task team with Department of Public Works, in order to ensure service delivery on infrastructure developments.  On HIV and Aids grant the Department reported that the expenditure was at 102%.

The reasons forwarded for over-expenditure were as follows:

Ř       Payment for funds committed in previous financial year rollover approved by Provincial Treasury for R13, 055,000 which was to cover commitments incurred in previous financial year.

The Department reported  that the reasons for under expenditure on National School Nutrition Programme was due to the late transfer of the additional funding in August, that had landed the Department in a situation where not the entire amount would be spent by the end of financial year. The Department projected that expenditure on the grant was 100% of total allocation.

 

  

Committee concerns and Comments

 

 

 

7. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report by National Treasury and Provincial Departments-Housing

 

 

 

 

7.1 Report by the National Treasury

 

 

The National Treasury reported that the spending on housing was at at R4, 6billion or 54,3% of an adjusted budget of 8,5billion.  The National Treasury stated that the sector projected to overspend by R188, 3million or 2, 2%. On Integrated Housing and Human Settlement Grant, National Treasury indicated that Northern Cape at 88,3%, North West at 81,1% and Western Cape at 63,3% were the highest, the Lowest being Limpopo (53,5%) Mpumalanga (53,7%); and Free State (55,3%).


On Human Settlement and Redevelopment Grant, the National Treasury

 reported that Housing had spent R31, 1 million or 127,4% of the R24, 4million allocation the Highest being Limpopo at 383,6%; Western Cape 131,4% and Free State stood at 98%, with Gauteng being the lowest at 6,4%.

 

 

 

 

7.2 Report by the Free State Provincial Department of Local Government and  

     Housing

 

The Department explained the expenditure of all conditional grants being administered by it as follows:

 

Committee concerns and Comments

 

·         How was the Department dealing with the issue of scarce skills, and whether project consolidate was assisting in this regard

·         Concerned about the expenditure that was below 50%.

·         Whether the Department was working with their own Provincial Treasury in trying to curb the problem of over\under expenditure

·         Whether that were any municipalities that had been accredited by the Department.

·         The Committee expressed its disappointment on the non-attendance by Kwazulu-Natal, Eastern Cape and North West Housing Departments.

·         The Department responded by indicating that skills analysis was done through the project consolidate in all the Provincial sectors.

·         Conceded that there had been a lack of communication between their Provincial Treasury and the Department, however it was reported that Treasury was now sitting in their meetings to observe how the money was being spent.

·         Reported that most of the municipalities lacked capacity, but the Department was working hard in addressing  the issue.

·         Indicated that there had been lots of improvement in the Province, and promised the Committee that in the 4th quarter the Free State Department of Housing would give a detailed report on the improved expenditure by the Department.

 

7.3 Report by the Limpopo Provincial Department- Local Government and Housing

 

The Department gave an overview on the following issues:

 

·         Reported that the municipalities re-directing of approved project scope caused delays in implementation of new projects on demarcation of sites.

·         Shortage of clay bricks in the province was also one of the problems highlighted by the Department.

·         It was reported that the contractors appointed experienced difficulties in acquiring finance to buy materials for construction.

·         The delays in the survey of land by municipality derailed implementation plans of the projects.

·         Reported that in 2005/2006 financial year units were distributed along 26 Municipalities in the Province.

·         Project Managers were deployed at those 26 Municipalities to manage the projects.

·         The Department was experiencing capacity due to unfilled Project Managers positions.

 

7.4 Report by the Mpumalanga Provincial Department- Local Government and 

      Housing

 

The Department gave an overview on the allocations, transfers and actual expenditure of conditional grants as follows:

·         The Department had an under expenditure of R29, 445 million as at 31 December 2005 the total unspent amount was R127, 323 million.

·         Reported that in terms of the projection made the Department should had been at 75% per.

·         Reported that percentage achieved was 66%. Indicated that 52.3% of the contracts were cancelled due to non-performance of the contractors.

·         Reported that the Technical Directorate responsible for project management, engineering services, quality control and inspections had a vacancy rate of 71%.

·         This had resulted in the slow delivery of houses and slow payments of contractors and developers.

·         The Housing Performance and Human Settlements had a vacancy rate of 68% and 31% respectively.

·         Reported that the department was constrained by the unavailability of funding to ensure that the posts were filled.

·         The Department had consulted the Provincial Treasury to revise the equitable share in order to deal with this problem.

 

7.5 Report by the Northern Cape Provincial Department- Local Government and Housing

 

The Department stated that the budget allocation for 2005/06 was R79 917million,84% of  that budget had  been spent as at December 2005.

The Department reported that projected budgeted amount for the 3rd quarter was R25 910million and the actual expenditure was R16 067million. The Department indicated that there was the lack of capacity at municipal level to implement housing projects. The department reported that there was inadequate operational budget to enable it to fill the vacant posts on the approved structure.

The Department stated that the capacity of the data lines in the Province had also affected the on-line subsidy administration in the Province.

 

 

7.6 Report by the Western Cape Provincial Department- Local Government and Housing

 

The Department stated that it had R532 million available for 2005/06 financial year. The Department reported that R76 million had been budgeted for N2 ring fenced fund. Excluding N2 ring fenced fund, the Department’s expenditure was reported to be at 78%. The Department said that about 9,394 houses were built and 13,161 sites were serviced by end of December. The department indicated that the expenditure exceeded projections at the end of the 3rd quarter. The Department reported that the National Department had deviated from the transfer schedule and transferred extra funding in April/May.

It was anticipated by the Department that 16,000 houses were to be built and 18,000 sites were to be serviced by March 2006.The Department indicated that the greatest challenge facing the Department was insufficient funding.

 

 

 

 

 

 

 

Committee concerns and Comments

 

 

·         The Western Cape Provincial Department indicated that the capacity within the Department was being addressed on an ongoing basis. On accreditation said that the Department was working with the National Department on this issue and that it was receiving the attention it deserves. The Department also highlighted the problem of migration as not only affecting planning but service delivery as well. Reported that informal housing were not erected with due regard to safety concerns, and that the provincial government was addressing the issue. Informed the Committee that the Department had applied to the National Government for the Emergency Housing Programme to deal with some of these challenges.

·         The Mpumalanga Provincial Department reported that they were legal technicalities involved in the issue of accreditation of municipalities. Referring to the Constitution stated that housing was the National competency. The Department urged NA and NCOP Committees to look at this issue. Reported that all the vacancies mentioned in the presentation, were part of the staff establishment but not all were funded. The expensive materials such as bricks were a challenge to the Department.

·         The Limpopo Provincial Department responded that SALGA was requested to do a review on the issue accreditation, in order to ensure the competency of municipalities in that regard. Responded that at this juncture 26 municipalities had been engaged by the Provincial Department on the basic stages (level 1) of accreditation. Which involve identifying people who were legitimately qualifying for housing subsidy. The Department was assisting Polokwane Municipality on capacity building.

 

The Northern Cape Department reported that Sol-Plaatjie Municipality was their pilot for accreditation.  Indicated that in the 4th quarter, the Department would give a detailed report on the progress pertaining to the accreditation of the Municipalities.

 

 

 

8. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments-Agriculture

8.1 Report by the Free State Provincial Department- Agriculture

 

Gave a brief overview on all the following grants being administered by the Department, the Comprehensive Agricultural Support Programme (CASP),the Land Care Programme (LCP) ,Agricultural Disaster Management (ADM) and the Provincial Infrastructure Grant (PIG).Reported  that the progress at farm level was being monitored by the extension staff. Indicated that the Department had entered into a number of service level agreements with various stakeholders.

Committee concerns and Comments

 

8.2  Report by the Eastern Cape Provincial Department- Agriculture

The Department indicated that advance proper planning was still a challenge. The Provincial Department informed the Committee that a big propotion of their budget was a rollover from last year.The Department reported that they were providing assistance to the emerging farmers. The Committee was informed by the Department that the Eastern Cape Development Cooperation (ECDC) was also assisting the emerging farmers in accessing  the  market. The Department indicated that they were working very close with their Provincial Treasury in making sure that their expenditure was acceptable. On food security ,the Department had a programme called siyazondla,this was their pilot project which based in Umbashe District Municipality.

8.3 Report by the Limpopo Provincial Department- Agriculture

The Department briefied the Committee on the perfomance of the conditional grants administered by the Provincial Department as follows:

·         Indicated that expenditure in CASP stood at 58% , whilst drought aid was at 100% and Land Care at 51%.

·         Reported that the Depatment was still experiencing engineering and project management capacity on capital projects at municipal level.

·          The Department was addressing the issue by putting the necessary mechanisims in order to rectify the constraits.

Committee concerns and Comments

8.4  Report by the North West Provincial Department- Agriculture

The Department reported that R33,million was allocated for CASP and the expenditure was R1,3 million, drought relief was allocated R16,million with the expenditure of R0 and on the support to communal farmers R0 was spent of the allocated budget of R5,million.The Department stated that the reasons for under funder expenditure would be attributed to the capacity constraits within the department.

Committe concerns and Comments

9. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments-Sport and Recreation

9.1 Report by the North West provincial department- Sport and Recreation

Gave a break down on the Building for Sport and Recreation Programme( BSRP),by  outlining all the projects the department was undertakingThe Provincial Department indicated that under  this grant no under-spending was projected.On mass participation programmee the Department reported that the expenditure was at 84% .

Committee concerns and Comments

9.2 Report by the Limpopo Provincial Department- Sport and Recreation

The Department reported that  the Limpopo Siyadlala programme was allocated R1 million for the financial year 2004\2005.The programme absorbed 32 coordinators.In the current financial 38 cordinators were employed.R75 000 out of the total budget of R2,6 million was not spent.

 Committee concerns and Comments

9.3   Report by the Gauteng Provincial Department: Sport and Recreation

Briefed the Committee on the mass participation programmee , competitive sport and also on capital expenditure as follows:

·         Reported that on the competitive sport the Department had received an allocation of R35million for upgrade of four competitive stadia.

·         Rand Stadium and HM Pitjie Stadium were  amongst those stadiums that were to receive upgrading.

·         Informed the Committee that the advent of the Municipal Infrastructure Programme impacted on Departmental  allocation of funds towards infrastructure developments projects.

·          Went further to say that the funding was allocated towards the upgrading of projects linked to the Mass Participation Programme.

·         The Department gave a number of reasons for under/overexpenditure on some of the conditional grants and the interventions thereof to address this probleum.

Committee concerns and Comments

 

·         Sought clarity as to why the Provincial Department was involved in upgrading stadiums that were financially viable, what would be the role of South African Football Association (SAFA) in that regard.

·         Committee expressed its concern in the involvement of the Provincial Department on competitive sport.

·         The Department was requested to provide the Committee with their strategic plan that would outline the objectives of the Department’s involvement in competitive sport.

10. Hearings on the 3rd Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Department-Public Transport, Roads and Works and South Africa Local Government Association (SALGA)

 

10.1 Report by Gauteng Department of Public Transport, Roads and Works

The Department outlined the conditional grant expenditure for 2001/2003 to 2005/06 as follows:

Committee concerns and Comments

 

10.2 Report by South African Local Government Association (SALGA) on the Accreditation of Municipalities

The South African Local Government Association (SALGA) reported that in the municipal Housing Indaba held in 2005, it endorsed the municipal housing accreditation with emphasis on sustainable institutional capacity to manage housing processes and projects and that there was an agreement on the phased in approach to accreditation. SALGA informed the Committee that it was agreed that accreditation needed to clarify roles and functions and that capacity building should be at both Provinces and prioritised municipalities. SALGA reported that the accreditation of municipalities would be based on three levels. SALGA concluded by indicating that about 13 municipalities had been priotoritised for accreditation.

 

Committee concerns and Comments

 

11. Recommendations

   PART TWO

                                                                   

1. Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the National and Provincial Treasuries

 

1.1 Report by the National Treasury

 

The National Treasury‘s presentation covered provincial preliminary outcome (as at 31March 2006) for the 2005/06 financial year. The National Treasury reported that the spending was at R214, 8 billion (98, 0%) of adjusted budget (R219, 2billion). The Department indicated that the highest rate of spending was in Kwazulu Natal at 99, 8%; Western Cape and Eastern Cape at 98, 6%, with Free State at 94, 4% and North West at 95, 8% being the lowest.

 

 

 

1.2   Report by the Gauteng Provincial Treasury

 

The Gauteng Provincial Treasury reported on the spending for 2005/06 financial year and conditional grants spending by stating the following:

 

·         Net underspending amounted to R885 million and represented 3% of adjusted budget.

-          Education at R395 million

-          Social Development at R424 million

-          Housing at R91 million

-          Finance at R71 million

 

 

 

 

-          Continue to hold individual meetings with Departments showing significant underspending and overspending,

-          Conduct training and address identified gaps,

-          Create a public finance unit that will specifically focus on monitoring the Departments spending and evaluating their performance,

-          Ensuring value for money and efficiency,

-          Detailed analysis and interrogate Departments expenditure,

-          Providing guidance and advise Departments on any issues relating to budgets spending and delivery,

-          Identify training needs and provide it where necessary,

 

 

 

-          Financially assist Departments to capacitate their Chief Financial  Officers, and

-          Introduction of non-compliance strategy.

 

 

 

 

 

 

Committee concerns and Comments

 

·         The Gauteng Provincial Treasury responded by indicating that the 78 million was money paid by departments into the precinct account .Reported that the Provincial government was planning a precinct from where all Departments would operate. Stated further that there had been underspending because work on the precinct had not progressed as originally planned.

·         Sought clarify as to what role, were the Standing Committees playing in monitoring the performance of the Departments.

·         The Department responded by stating that the Standing Committees often call Departments to account. The Department also indicated that it would be imperative for the Select Committee on Finance to interact with the Standing Committee on Finance in order to asses the extent to which that Committee was playing its oversight role.

·         Concerned that there were no time frames on the interventions that had been put in place by the department.

·         The Department indicated that a Director, had been appointed to oversee the implementation of the non-compliance strategy and that the Department would report on the progress in the 1st quarter results of 2006/7 financial year.

·         Sought clarity as to when, were the offices of the Chief Financial Officers CFOs) going to be adequately capacitated, and how soon would the Committee expect changes especially with regard to misallocation of funds,

·         The Department indicated that there was a CFOs forum in the Province, which dealt with a number of issues   such as that of capacity constraints.

 

 

1.3. Report by Free State Provincial Treasury

 

The Free State Provincial Treasury gave an analysis on the provincial expenditure as follows:

-          Provincial Adjusted Budget amounted to   R5, 703 billion

-          Preliminary expenditure including Social Security grants amounted to  R5, 078 billion or 89 % of Adjusted Budget.

-          Decreased to 87, 3 % of Adjusted Budget excluding Social Security grants.

-          Net under expenditure amounted to R625 million or 11 % of adjusted allocation for conditional grants.

 

 

1.4 Report by the Northern Cape Treasury

 

The Northern Cape Provincial Treasury gave a broad overview on the expenditure as follows:

-          Social Services at R74 million;

-          Provincial Treasury at R28, 5 million and

-          Department of Agriculture and Land Reform at R25, 2 million.

-          Health at R60, 363 million or 6% of the adjusted budget.

-          Office of the Premier at R0, 359 million or 4% of the adjusted budget.

·         Total Spending on Capital Expenditure amounted to R314, 9 million or 90% of the adjusted budget. Under expenditure of R34 million or 10% of the adjusted budget.

·         Expenditure on Conditional grants amounted to R1, 918 billion or 99.7% of the available funds have been spent as at 31 March 2006.

 

 

1.5 Report by the Limpopo Provincial Treasury

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

The Limpopo Provincial Treasury gave an overview on the performance of the conditional grants by indicated the following:

 

-          Late advertisement of posts for South African Social Security Agency (SASSA).

-          Non-splitting of the SASSA function from the department resulting in savings

-          Late acquisition of leased property.

-          The Departments were submitting monthly reports on conditional grants spending.

-          Achievability exercises were conducted in order to look at the spending trends.

-          The unit was not fully staffed owing to the evaluation of the newly created posts.

-          It was envisaged that the unit would have sectoral analysts looking at all Departments with and without conditional grants.

 

Committee concerns and Comments

 

 

1.6 Report by the Eastern Cape Provincial Treasury

 

The Eastern Cape Provincial Treasury reported the following in its presentation on the performance of the conditional grants:

-          Late finalization of business plans.

-          Litigation in revitalization tender.

 

Committee concerns and Comments

 

The Western Cape Provincial Treasury was not allowed by the Committee to present, as neither the MEC nor the HOD were present. The Committee made a decision that the Eastern Cape should be regarded as their  special project as soon as there was a clear picture on what was happening in the Province.

 

 

2. Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments of Heath

 

2.1 Report by the National Treasury

 

The National Treasury outlined the spending in Health, capital expenditure and conditional grants as follows:

 

 

 

2.2 Report by the Kwazulu Natal Provincial Department of Health

 

The Department gave a summary on the expenditure of all conditional grants by stating the following:

 

 

 

 

 

-          KZN Public Works,

-          Ithala Development Corporation, and

-          Independent Development Trust.

 

 

2.3 Report by the Free State Provincial Department of Health

 

The Free State Provincial Department of Health gave a brief assessment on the Department’s   trends in allocations, transfers, actual expenditure of conditional grants, capital expenditure of the department and monitoring capacity thus far, for 2005/06.

 

 The Department reported that the Hospital Revitalization expenditure was at 82%.  The Department said that there had been an agreement with Public Works, Roads and Transport in order to reach consensus on agreed-upon targets. The Department indicated that lack of funding to complete existing projects in the new financial year had impacted on the underspending.

On the Integrated Nutrition Grant, the Department reported that the expenditure was at 100%.

 

 

 

 

 2.4 Report by the North West Provincial Department of Health

 

The Department reported the following in its presentation regarding the performance and administration of conditional grants:

 

 

2.5 Report by the Limpopo Provincial Department of Health

 

The Department reported that the conditional grants had been the major source of the capital expenditure of the Department with an average of 53% of the funds used being provided from the conditional grants and 47 % from Equitable Share.

The Department reported that the equitable share had provided only 20% of the funds for buildings with 80% being sourced from the conditional grants.

The Department indicated that the Hospital Revitalization grant together with the Provincial Infrastructure Grant had provided the bulk of the capital used for facilities upgrades, maintenance and provision of new clinics.

 

 

2.6 Report by the Eastern Cape Provincial Department of Health

 

The Eastern Cape Provincial Department of health gave an overview on the Conditional Grants Expenditure for 2005/06 by stating the following:

 

 

 

 

Committee concerns and Comments

 

 

3. Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments of Social Development

 

3.1 Report by the National Treasury

 

The National Treasury reported that the spending was at R58, 0 billion or 96, 7% against R60, 0 billion of the adjusted budget .The Department indicated that there had been an increase of R7, 0 billion or 13,8% compared to the previous year. The Department reported that the lowest rate of spending was in Free State at 89, 4% and North West at 93, 0%

The National Treasury reported that Limpopo was at 99, 0% and Kwazulu Natal at 98, 8% reflected the highest rate of spending.

The Department indicated that the sector had underspent by R2, 0 billion

The Department stated that the underspending was linked to key initiatives in order to address the following

 

 

 

3.2 Report by the Limpopo Provincial Department of Social Development

 

The Limpopo Provincial Department of Social Development briefed the Committee on the spending of conditional grants as follows:

 

-          Social Grants Arrears,

-          Child Support Grant Extension, and

-          Food Security / Integrated Social Services.

-          Late advertisement of Posts for SASSA and non-filling of the posts due to a SASSA decision.

-          Non-splitting of the SASSA function from the Department resulting in savings.

-          Late acquisition of leased property.

 

 

 

 

3.3 Report by the North West Provincial Department of Social Development

 

The Department briefed the Committee on the expenditure for fourth quarter on all the grants that were being administered by it as follows:

 

-          The service provider was only approved in October 2005.

-          All food parcels have already been distributed and service provider billed the Department in March 2006.

 

 

3.4 Report by the Gauteng Provincial Department of Social Development

 

The Department gave a summary on the expenditure of all conditional grants as follows:

 

·         The National HIV and AIDS was spent entirely for the 2005/06 financial year.

 

·         This could be attributed to long established relationships that existed with service providers that have been rendering t services on behalf of the Department.
The integrated Social Development Service Grant was introduced in the financial year under review as a replacement of the Emergency Food Security program.

·         79% of the Allocation for the 2005/06 financial year was spent as at the end of the financial year as the business plan for the programme was concluded by the Province and approved by National Department in August 2005.

·         An allocation on capital and maintenance budget was R 24,420,000 million.

 

·         A transfer to the Department of Transport Roads Public Works was at R24, 4 million.

 

 

 

3.5 Report by the Western Cape Provincial Department of Social Development

 

 

 

The Western Cape Provincial Department of Social Development highlighted the following issues in its presentation:

 

 

Committee concerns and Comments

 

 

The Committee will need to monitor the issue off pensioners being ripped off by the” loan sharks” and shop owners. The Members of the Committee were urged to monitor this issue in their respective constituencies.

 

 

4.   Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments of Agriculture

 

4.1   Report by the National Treasury

 

The National Treasury gave an overview on the following:

 

 

      

 

 

 

-          Spending of this grant had been subsumed in the spending of a range of programmes and therefore no reporting was required.

 

 

-          However, provinces reported spending of R265, 7 million or 106,3% (86,0% including provincial roll-overs) of R250 million allocation (R309 million including provincial roll-overs)

-          Transfers amounted to 100, 0%.

-          Highest expenditure was in Free State at 172,9%; Eastern Cape at 141,1% and Limpopo at 125,0%.

-          The Lowest: was North West at 13, 0%; Northern Cape 69, 7% and Gauteng at 79, 9%.

 

 

 

 

4.2   Report by the Northern Cape Provincial Department of Agriculture

 

The Department reported that a total of R81 million from the equitable share of 83 million had been spent. Indicated further that total of 38 million of the conditional grant allocation of R58 million had been spent.

The Department stated that the Northern Cape Province was struggling to recruit and retain good and relevant scarce skills. Lack of Agricultural engineers and Industrial Technicians (competition with industry and recruitment by Private sector) was also reported as a problem the Department was facing.

 

 

 

 

4.3   Report by the North West Provincial Department of Agriculture

 

The Department stated that the expenditure on the Comprehensive Agricultural Support programme was at 13% with the Land Care expenditure at 29%. The Department indicated that the under expenditure in relation to both the Land Care and CASP was mainly due to one or more of the following factors:

 

4.4   Report by the Western Provincial Department of Agriculture

 

The Department informed the Committee that the Comprehensive Agricultural Support Programme had received R19.26 million with R19, 38 million being spent. The Department reported that an amount of R121 000 had been transferred from their equitable share to make up the short fall. The Department reported that this was due to the lack of capacity to spend. The Department stated further that the budget was not enough to appoint such staff.

 

4.5   Report by the Free State Department of Agriculture

 

The Free State Department of Agriculture gave an overview on the expenditure of Comprehensive Agricultural Support Grant, Land Care Programme, Agricultural Disaster Management and Provincial Infrastructure Grant. The Department indicated that they were large spikes in spending in the third and fourth quarter due to a problem in the work ethic in the organisation and due to the fact that some  of the implementation systems were not up to standard.

 

 

4.6   Report by the Gauteng Department of Agriculture

 

The Gauteng Department of Agriculture reported that the total Landcare spending for 2005/2006 was100%. The budget for the Comprehensive Agricultural Support Programme was R 5 727 000.The grant per farmer was limited to R150 000 00.

 

4.7   Report by the Limpopo Department of Agriculture

The Department briefied the Committee on the perfomance of the conditional grants administered by the Provincial Department as follows:

 

 

-    Three major projects in three districts were implemented.

 

-    There was community participation under Extended Public Works Programme.

 

 

 

 

Committee concerns and Comments

 

 

 

5.   Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments of Roads and Transport.

 

5.1 Report by the National Treasury

 

The National Treasury reported that the Provinces have spent R4; 72 billion or 108,0% of R4, 35 billion adjusted capital budgets for the Roads and Transport Sector.The Department stated that the lowest rate of capital spending was in Free State at 77,0%) and North West at 95,6%). The National Treasury reported that Gauteng was at 185, 7% and Kwazulu Natal at 106, 0% reflected the highest rate of capital spending. The Department indicated that Gauteng spending was constant at 66,8% for December, January and February and had increased by 105,2% in March to 185,7%. The Department indicated the largest capital budgets (adjusted) were for Limpopo at 111, 7% and Free State at 60, 1%. The National Treasury reported that the lowest capital budgets (adjusted) were for Western Cape at 0, 7% and Gauteng at 4, 5%.

 

 

 

5.2 Report by the Kwazulu Natal Department of Roads and Transport

 

The Department informed the Committee that despite the budget increases received over the past years and the increases proposed over the Medium Term Expenditure Framework period the Department remained woefully under funded for the execution of its mandate. The Department said that it required additional funding to address the network backlog.  The Department stated further that the backlog had two components viz. securing a minimal equity road network, and restoring the network to its true asset value by increasing the level of maintenance expenditure.  The Department informed the Committee that it proposed to implement a 5-year strategy that required an annual additional budget of R2, 4 billion.

The Department indicated that their total budget was R1 747 712 with actual expenditure at R1 747 724. This showed 0.001% over expenditure.

 

5.3 Report by the Western Cape Department of Roads and Transport

 

The Western Cape Department reported that the actual spending of the Provincial Infrastructure Grant was 100%. The Department stated that they were still facing the problem of capacity constraints. The Department reported that there were shortages of personnel with public transport expertise.

 

Committee concerns and Comments

 

 

 

 

 

5.4 Report by the Northern Cape Department of Roads and Transport

 

The Northern Cape Department of Roads and Transport reported the following in its presentation:

 

 

 

 

 

5.5 Report by the Limpopo Department of Roads and Transport

 

The Department sated that their infrastructure management was structured as follows:

 

Committee concerns and Comments

 

 

 

 

 

 

 

 

 

 

5.6 Report by the Eastern Cape Department of Roads and Transport

 

The Department reported that it had spent its whole conditional grant budget of R675330 million for the fourth quarter. The Department indicated that R1, 3 billion was spent on roads infrastructure, which was 49% of their conditional grant allocation.

The Department reported that the Capital expenditure outweighed the maintenance allocation, which was R841 million.

 

5.7 Report by the Gauteng Department of Roads and Transport

 

The Department reported that they were the recipients of the Provincial Infrastructure Grant from National Treasury.

The Department said that the grant was used for maintenance and rehabilitation of roads.

 

The Department indicated that an amount of R147 911 million had been received in conditional grants, a total amount of R122 117 million had been spent which translated to an expenditure of 83%.

 

 

Committee concerns and Comments

 

 

6.        Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments of Local Government and Housing

                     

 

6.1   Report by the North West Department of Local Government and Housing

 

The average delivery per year was 12 000 of completed houses.

For the 2005/2006 target of 22 000, the Department included a figure of 10 000 for the two pilot projects.

 

The Department forwarded the following reasons for under expenditure (2004/2005):

 

-          Lack of implementation capacity at Municipal level

-          Departmental decision 2002

-          Management of consultants

-          Hands off approach of department

-          Lack of management information

-          Non-compliance with contractual conditions

-          Blocked projects

-          Forward planning

-          Delays in processing claims (Province/Municipalities)

 

6.2   Report by the Northern Cape Department of Local Government and Housing

 

The Northern Cape Provincial Department reported that the budget allocation for 2005/06 was R79, 917million, R82; 524 million  (103%) was spent as at March 2006.The Department stated that the budgeted amount for the 4th quarter was R12, 886 million and the actual expenditure was R15, 493 million

The Department said that the Human Settlement Roll-over of 3,180million from 2004/05 to 2005/06 had been spent.

 

 

6.3   Report by the Limpopo Department of Local Government and Housing

 

The Limpopo Department Local Government and Housing gave an overview on the expenditure of the following grants:

 

 

 

The Department reported that in 2005/2006 financial year, units were distributed along 26 Municipalities in the Province. The Department held further that Project Managers were deployed at those 26 Municipalities to manage the projects. The Department informed the Committee that it was experiencing capacity constraints due to unfilled Project Managers positions.

 

 

6.4   Report by the Western Cape Department of Local Government and Housing

 

The Department reported that 100% of available funds had been spent. The Department reported that a sum of R 456 million was allocated for conditional grants, a sum of R77 million was a rollover and R40 million was from the Provincial Funds.        

The Department stated that about 16,053 houses had been built and 18,412 sites serviced.

 

Committee concerns and Comments

 

 

 

 

7.   Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments of Education

 

7.1    Report by the Eastern Cape Department of Education

 

The Department said that the expenditure on HIV and Aids had improved as the grant had only under spent by R700 000; the under spending was due to the problems pertaining to invoicing. The Department stated further that when they started with the HIV and Aids programme, they had problems pertaining to staffing and the Department was hard at work in trying to resolve this issue of capacity as it had adversely affected the monitoring of expenditure.

 

7.2   Report by the Northern Cape Department of Education

 

The Department indicated that the

HIV and AIDS grant was R 2,318 million at the expenditure of 88%. The Department held that the budget for the

National School Nutrition Programme was R 31,033 million and the expenditure stood at 93%. The Department said that the Infrastructure Capital budget was R30, 6 million and the expenditure was 88%.

 

 

 

 

The Department indicated that conditional grants had contributed significantly to service delivery. The Department stated that it intended to make incremental additions from the vote line budget to enable it to eventually become independent of these grants.

 

 

7.3   Report by the Free State Department of Education

 

The Department indicated that the HIV and Aids budget was R8, 4million and the expenditure on the grant stood at 94%. On the National School Nutrition Programme, the Provincial Department informed the Committee that the budget was R 68, 5 million with the expenditure of 88,5%. The Department indicated that the budget from own infrastructure grant was R79, 7million at the expenditure of 92%; Provincial Infrastructure grant budget was R60, 5 million, and expenditure was at 101.7%.

 

7.4   Report by the Limpopo Department of Education

 

The Department reported that the National School Nutrition Programme had spent R191 million of a budget of R204 million (93%). The Department reported that on HIV and Aids their plans were ineffective as they were unable to spend the whole allocation. The Department assured the Committee that changes would be made for this year’s allocation and the performance of this grant would improve. The Department stated that on infrastructure, R235 million was spent out of budget of R264 million.

 

7.5   Report by the North West Department of Education

 

The Department indicated that the financial performance of the Department had drastically improved in 2005/6 compared to 2004/5.The Department held further that the improved performance was as a result of rigorous monitoring and pressure that had been brought upon by the all responsible managers.

The Department indicated that the performance of Conditional grants had shown an improvement from 86.5% to 97.4%, capital expenditure from 65.9% to 94.7% and Infrastructure from 67.7% to 98.8%. The Department reported that the expenditure was 97% on the HIV and Aids programme and 98% on infrastructure.

 

7.6   Report by the Western Cape Department of Education

 

The Department informed the Committee that their initial budget for construction and maintenance was R188, 472 million, but was adjusted upwards to R373, 808 million. The Department stated that R20 million was earmarked for provision of classrooms in “Black African” schools. The Department indicated that an amount of R777 000 had been set aside for the establishment of a Project Management Unit to manage the additional classroom allocation in “Black African “areas.

 

The Department reported that the Western Cape was receiving approximately 48 000 new immigrants each year. The Department stated further that approximately 18 additional schools needed to be built per year, in order to accommodate the school going children of these immigrants. The Department indicated that the allocated budgets did not provide for this need.

 

7.7    Report by the Kwazulu Natal Department of Education

 

The Department reported that an amount of R837 million was spent on infrastructure out of the budget of R854 million. Stated further that the under- spending was in repairs and maintenance. The Department indicated that R44 81 million had been received for HIV and Aids programme had had overspent by 11%.

The Department stated that they had monthly reporting systems and regular meetings were held with districts as the HIV and Aids programme had been spread out to various directorates.

The Department indicated that that the allocation for the National School Nutrition Programme was R198 849 million with R198 980 being spent.

 

Committee concerns and Comments

 

 

 

 

8.    Hearings on the 4th Quarter Conditional Grants and Capital Expenditure: Report by the Provincial Departments of Sport and Recreation

 

8.1   Report by the Eastern Cape Department of Sport and Recreation

 

The Department reported that the conceptualization of the Siyadlala Mass Participation programme had equipped the Department with an effective tool for resuscitation and development of sports and recreation in the province and the country. The Department stated that the programme allowed for interventions in areas where there was no participation due to lack of resources. The Department gave a detailed presentation on the province’s achievements in terms of performance against goals, budget and quality.

 

8.2   Report by the Northern Cape Department of Sport and Recreation

 

The Department reported that the budget for the Mass Sport and Recreation Participation Programme was R2, 640 million, with the total expenditure of R2, 492 million (94%).

The Department indicated that the underspending of R148, 000 for 2005/2006 was due to the following reasons:

 

-          Resignations of coordinators (due to permanent employment).

-          Delays in appointment of some coordinators.

-          Savings on some of the budgeted items such as training of coordinators, holiday programmes and other MPP games.

 

The Department indicated that the

programme was sustainable only on the basis of conditional grant and this was proving to be a challenge.

 

8.3   Report by the Kwazulu Natal Department of Sport and Recreation

 

 

 

The Department indicated that the budget for the Mass Participation programme was R1 Million and it had increased to R2, 640 million in 2005/06 and had also seen a substantially increase to R10, 7 million for 2006/07.The Department indicated that the number of hubs had increased from five hubs in 2004/05 to nine in 2005/06.The Department stated that the Siyadlala Mass Participation Programme would continue to be treated as a priority programme by the province.

 

8.4   Report by the Western Cape Department of Sport and Recreation

 

The Department said that there had been an increase in the conditional grants from R1 million in 2004/5 to R2, 6 million in 2005/6. The Department stated that it had expanded its programmes in order to cover all six regions. The Department indicated that the decrease in the capital grant allocation made it impossible to cover the backlog in facilities in the disadvantaged communities.

 

 

Committee concerns and Comments

 

 

Following presentations by the relevant Provincial Departments the Committee instructed the Departments to comply with the Division of Revenue Act, specifically the section that deals with the Provincial Infrastructure Grant as there were Provinces that were not adhering to that aforesaid section.  In the 1st quarter public hearings on conditional grants the Committee will focus on the quality of spending, impact of spending and also on the value for money. The Committee will also monitor the expenditure of the Provincial Equitable Share. The Committee was highly disappointed by the non-appearance of all the Mpumalanga Provincial Departments that were requested to brief the Committee.

 

Observations

 

 

Recommendations