JOINT BUDGET COMMITTEE REPORT ON THE MEDIUM TERM BUDGET POLICY STATEMENT
(MTBPS) 2006
Introduction
The MTBPS is guided by the obligations of
government embodied in legislation and oversight by Parliament, and by the
policy direction and political mandate as expressed in the State of the Nation
Address. In that address earlier this year, President Mbeki declared “
The
Joint Budget Committee reports as follows:
The Minister of Finance, the Honourable Trevor Manuel, tabled the Medium Term
Budget Policy Statement (MTBPS) before Parliament on
The report is divided into three broad sections. Section 1 outlines the presentation of the
National Treasury on the MTBPS. Section
2 outlines submissions of departments and other organisations. Section 3 lists the general concerns and
recommendations of the Joint Budget Committee on the MTBPS. Note that no submissions were received from
economists, although the Committee had extended invitations.
The following departments did not make any submissions to the Committee:
Department of Communications;
Department of Defence; and
Department of Labour.
The delegations of the following
departments made submissions to the Committee, but did not have either the
executive authority or accounting officer present:
Department of Correctional Services;
Department of Justice and Constitutional Development;
Department of Safety and Security; and
Department of Sports and Recreation.
The following indicated written submissions
Department of Provincial and Local Government;
Department of Trade and Industry;
Department of Transport; and
SALGA
The Committee appeals to the departments that their accounting officers or the
executive authority should present to the committee in future MTBPS hearings.
Joint Budget Committee
Mandate
The Committee’s mandate regarding the MTBPS requires it to consider the
distribution of available financial resources for expenditure against
government policy priorities. This mandate is distinct from that of the
Portfolio and Select Committees on Finance, which deliberate on the
macro-economic, fiscal and intergovernmental dimensions of the MTBPS respectively.
The Committee has interpreted its mandate to mean that it should consider the
following:
·
The likely impact of expenditure allocations in the MTBPS on
the effectiveness and efficiency with which departments can respond to
government’s stated policy priorities; and
·
Whether departments are making the tough choices required,
tailoring their planned expenditures to priorities, choosing effective
strategies and seeking efficiency in implementation.
The
hearings aim at addressing these issues, and preparing the Committee and
Parliament for its deliberations and vote on the Budget and the MTBPS over the
MTEF period.
Section 1: Briefing by the National Treasury
Sitting as the Joint Budget Committee, the Portfolio and Select Committees
on Finance, the Committee was briefed on the MTBPS by the Minister of Finance
and the Director-General (DG) of the National Treasury on
The Minister outlined the substantial increase in broad expenditure trends over
the past decade, although strong revenue trends facilitated tight fiscal
deficits. The economic outlook for the
medium term was described as a continuation of the recent strong growth rates
and commodity prices that are largely due to international demand factors,
emanating from particularly
The National Treasury highlighted the following:
·
Considerable short-term challenges, namely managing the
fiscal-monetary policy mix;
·
Long-term challenges, namely reducing poverty and
inequality;
·
Poor agriculture sectoral performance in the economy; and
·
Vibrant construction industry output growth.
·
The widening trade deficit since 2004 is a matter of concern. The widening current account deficit due to
increasing reliance on imports is of concern, and the situation is exacerbated
by the current negative government and household savings. Over the medium term, government savings are
projected to turn positive. Prudent
management of the demand factors for oil and related fuel imports is necessary,
as these factors pose a continuing threat for inflation outlooks, although oil
prices are projected to be in a decline over the medium term.
Key issues in terms of the medium term budget trends noted by the Minister are
listed below.
The national budget is broadly in balance over the MTEF period, and is
projected to be in surplus in 2007/08.
Section 32 (of the PFMA) reports should report expenditure trends of all
national and provincial departments.
These reports are useful documents that may aid oversight bodies to
interrogate departments’ expenditure track records and possible remedial
actions. Savings could be identified
early on and unspent funds have to be returned to the National Treasury so that
they can but re-applied elsewhere.
Government’s focus on infrastructure as key to development is demonstrated by
the additional R28 billion for public infrastructure over the MTEF.
Social services remain the major spending area of the 2007 MTEF with 57% of total
allocations.
Other specific key spending areas are the strengthening of criminal justice
system and public administration to improve the quality of social services,
such as education, health, and welfare.
The Provincial equitable share grows by 7% in real terms over the MTEF and
additional conditional grant allocations will be made. The new provincial boundaries present
significant challenges for provincial fiscal management.
The Local Government equitable share grows by 11% in real terms over the MTEF
and additional conditional grant allocations will be made.
Considerable (R45.7 billion) capital expenditure transfers to municipalities’
over the MTEF, with the most (R24.7 billion) destined for infrastructure to
roll out basic municipal services.
Capacity building in municipalities is a priority matter for the National
Treasury.
The 2006 MTBPS noted the following key public spending priorities identified at
the start of the 2007 medium-term expenditure framework (MTEF).
“Investment in stadiums and public transport to ensure a successful 2010 FIFA
World Cup.
Strengthening the criminal justice sector, with particular emphasis on visible
policing and improving court case flow.
Stepping up investment in the built environment in the form of housing, roads,
water, sanitation and community facilities.
Contributing to improved economic efficiency through investment in roads, rail,
electricity generation and supply, dam construction and skills development.”
Some examples highlighted in the National Treasury’s submission to the
Committee are matters of concern.
Savings by Correctional Services of R800 million.
Savings by Land Affairs of R1 billion.
Members of Parliament engaged the Minister and the DG of the National Treasury
on a number of issues, which are listed below together with the responses.
The need to ensure stable and sustainable international capital inflows in
order to create healthy balance of payments.
A suggestion was made that the National Treasury should renew efforts
for the country to become more export-oriented to minimise the current account
deficit. The National Treasury’s
response gave acknowledgement to the need to become more export-oriented, but
emphasised the need to be globally competitive – this would mean a mind shift
away from old trade thinking which focused on making money towards governments
creating incentives for business to manage their time and labour creatively
(“self-discovery”). The effect of oil
import inflation and a myriad of other factors playing themselves out on global
markets all impact on a worsening current account situation, which makes
government intervention quite difficult.
Further to its response, the National Treasury explained policy options
in curbing current account deficits, among others through constraining domestic
expenditure through either monetary policy (interest rate hikes) or fiscal
policy (tax increases, less government expenditure). As government would like to play a
significant role in creating the public goods necessary for employment creation
and poverty alleviation, it most probably should concentrate on capital
expenditure and/or save where possible in order reduce interest rate pressures
that would lead to greater investment expenditure by the private sector.
The additional R80 billion over the MTEF may be too expansionary and government
capacity constraints may hamper the effective spending of funds. The National Treasury in its response agued
that the it was not a too liberal allocation in the light of critical service
delivery needs and increasing government monitoring, evaluation and oversight
mechanisms. Section 32 (of the PFMA)
reports are examples where government could track expenditure trends and
provide remedies once significant deviations, especially in terms of under-expenditure,
are detected. The National Treasury also
argued that the powers that it and legislatures have in re-allocating unspent
funds from underachievers to performing entities would prevent the under-spending
or wasteful expenditure of public funds.
Tax policies.
A strategic approach to skills development is needed that transcends mere
funding of skills development initiatives.
The National Treasury in its response argued that it is not empowered by
law to be responsible for skills development initiatives. Mathematics pass rates are for example key
indicators of a skilled labour force and the National Treasury is not
responsible for attaining associated targets.
This example illustrates the interrelatedness of skills development, as
critical shortages of teachers of mathematics and science are cluster
performance areas. The National Treasury
however argued that it facilitates financial support programmes by the relevant
departments and entities, such as bursaries for further education and training
(FET) institutions, which target essential skills such as quantitative and
artisan skills.
Section 2: Briefings by other
national departments and organisations
Theme 1: Rural Development and Urban Renewal
Department of Agriculture
The Committee inquired about the various savings incurred by the
department, most notably savings as a result to vacant posts. Written submissions should be provided to
substantiate the reasons for these various savings.
The Committee inquired about the reason for a number of vacancies not being
filled. The department acknowledged a
significant staff turnaround figure. A
staff retention strategy is in place, although the strategy is only successful
in so far as public sector frameworks.
There is for example no minimum stay period. The Committee expressed its concern for the
need for continuity in skills transfer in the department, in the wake of
persisting vacancies. The Committee
requests that the department submit a written response on how the department
would deal with this issue.
The Committee inquired about the progress on the One-Stop-Shop programme. The Department argued that better leadership
alignment between itself and Land Affairs is necessary to ensure the success of
the programme.
The Committee inquired about specific budget items that saw chronic
under-expenditure and what the department is doing to remedy the
situation. The Department should submit
a written explanation on this issue to the Committee.
The Committee inquired about the absence of a dedicated programme for food
security. The department responded that
there was a move away from providing farmers with food parcels. The department observed that poverty is more
effectively reduced by the distribution of social grants. The Department of Agriculture informed the
Committee that it was a leading department in the area of poverty reduction
through targeted conditional grants to the other spheres of government.
According to the assurances given to the Committee by the DG, the Committee observed
that that the Department of Agriculture might have the necessary resources and
capacity to implement its programmes.
However, before this can be conclusively stated, the Committee stated
that further analysis was needed.
The Committee noted at the end of the submission of the Department of
Agriculture that some questions have not adequately responded to. The Department must submit further written
submissions on the issue of the One-Stop-Shop, items that saw chronic
under-expenditure, poverty reduction strategies, credibility of some of the
statistics presented, and grants issued to certain beneficiaries, among
others. The Committee requested the
department to report in writing on the issues that were not adequately
answered. The DG responded that such a
response would be received within seven days of the request. The department should also submit a written
submission on strategies for skills transfer continuity in the department.
The Department of Agriculture did not make any proposals for the 2007 MTEF to
the Committee. It is the Committee’s
observation that there needs to be closer cooperation and coordination between
the Departments of Agriculture and Land Affairs.
Department of Land Affairs (DLA)
The submission of DLA highlighted the work the department does in rural
development and the degree to which issues of land restitution are being
address according to government priorities.
The Committee inquired about the extent of housing and land availability
coordination. The department responded
that municipalities identify land need.
The department only makes land available and does not manage housing
provision. The department stressed the
importance of municipal IDPs to identify the various housing backlogs.
The Committee inquired about the appropriateness of the
willing-buyer-willing-seller concept to reach targets set out for 2014. The Committee expressed its concern that the
concept was hampering the progress of reaching these targets. The Committee was not satisfied with DLA’s
answer to its question. A written
response to explain how it will reach the 2014 targets is required. DLA needs to explain in this submission on
what processes and systems it will or has established to speed up the efforts
to reach the 2014 targets. Added to
this, DLA needs to explain how these processes and systems may impact on the
department’s funding allocations for the outer years.
The DG responded to various questions on under-expenditure by arguing that
under-expenditure during the first two quarters of the financial years is a
common feature of the department. To a
large extent, under-expenditure on land restitution is due to the slow pace at
which claimants came forward. The DG
assured the Committee that expenditure would pick up from the third quarter. The DG is of the opinion that the operations
of DLA are adequately funded over the MTEF.
The department stated that its under-expenditure on compensation for employees
is due to persistent vacancies. The
department noted that it has a problem in absorbing interns that graduate from
its internship programme.
The Committee inquired about the delays in the deeds office that appear to be
curbing service delivery. The DLA
responded by arguing that the recent property boom presents serious challenges to
its efforts and if more registration needs to be done, then the department will
need more capacity. A systems upgrade
will therefore be necessary. The
Committee took note of these restraints, but urged DLA to fast track its
programmes despite of these challenges.
The Committee inquired about the capacity of municipalities that facilitate the
delivery of DLA functions. It was agreed
in the session that when the Department of Provincial and Local Government
makes it submission, the issue of local government capacity would be
addressed. The Committee commented that
area based planning may be superfluous in the light of known local government
capacity constraints. The DLA argued
that business process re-engineering might prove to be the answer. This entails assisting municipalities with
target setting and the necessary training and support, such as decentralising
officials to local centres. DLA must
submit a written response to the Committee that motivates why the department
sees the decentralisation of its officials to local centres as an appropriate
strategy.
It is the observation of the Committee that DLA might have adequate access to
financial resources over the 2007 MTEF to reach its targets, taking into
account the information that was displayed by the department. However, before this can be conclusively
stated, the Committee stated that further analysis was needed. The department has to increase its capacity
to implement its programmes in the light of key challenges, such as the
exploding property boom and high staff turnover.
The department must provide a written submission to the Committee, detailing
the following issues that have been mentioned above:
Detailing the processes and systems to speed up the efforts to reach the 2014
targets and how these processes and systems may impact on the department’s
funding allocations for the outer years;
Reasons and remedial actions for under-expenditure in all the programmes;
Reasons and remedial actions for persistent vacancies;
Details of the department’s retention strategies, especially for interns; and
Motivation for the decentralisation of officials to local centres as an
appropriate strategy for supporting local government in delivering
agriculture-related services.
The department did not make any proposals for the 2007 MTEF to the
Committee. It is again the Committee’s
observation that there needs to be closer cooperation and coordination between
the Departments of Agriculture and Land Affairs.
Department of Water Affairs and
Forestry (DWAF)
The Committee expressed its concern about global warming and the need to
re-circulate water for domestic use.
DWAF acknowledged to the concern and remarked that
With regards to intergovernmental coordination, DWAF undertook to renew efforts
to assist with setting up the One-Stop-Shops with stakeholder line departments.
The Department commented on the concern about the pace of eradication of the
bucket system. A targeted number of
backlogs to be eradicated had been set by DWAF for end of 2007. The Committee confirmed that DWAF had
committed itself to achieving these targets.
It was not clear from DWAF’s response that it is on track with the
eradication of bucket system backlogs.
This issue requires a further written response from the department to
the Committee, whereby the department should highlight what constraints and
risk factors it may face in trying to achieve the 2007 targets.
The Committee expressed its concerned that retired engineers returning, as
consultants may be an expensive option for the DWAF. DWAF remarked that it is only temporary
solution. A longer-term solution will be
to set up a learning academy for engineers.
Over the medium term the supply of qualified engineers should be
sustainable.
The Committee expressed its concern that money allocated and used for disaster
management purposes should be put to the correct use and yield value for
money. The Department undertook to where
necessary provide a detailed breakdown of geographical expenditure trends. The Committee requires that DWAF submit these
detailed breakdowns in writing.
The Committee inquired from DWAF about the reasons for available relief funds
for disaster relief not being used. DWAF
responded with saying that at least every district municipality should have a
disaster management response team and centre.
The problem is that funds are sometimes tied up in contingency reserves,
which means that these funds cannot be proactively used for long-term disaster
management.
The Committee expressed its concern that the restructuring process of water
boards is not clear. The Committee
requires DWAF to provide a written submission on the restructuring process
within three (3) months or if possible in its third quarterly report. The submission provide detailed information
on, among other things, the progress of the restructuring process, associated
timelines, targets, and constraints faced, how DWAF would assess the capacity
of water boards, and DWAF’s plans to assist municipalities in the process.
DWAF explained the reason for a R50 million rollover destined for commercial
forestry activities – the department still farms 70 to 80 million hectares of
plantations. Some designated areas
(‘Categories A’) were sold off to the Department of Public Enterprise. DWAF was paid through the exchequer account
and is accounted for as revenue. The
rollover facilitated the inclusion of the amount in the adjustment estimates.
It is the observation of the Committee that DWAF has the necessary resources to
implement its programmes, but the recruitment and retention of highly skilled
personnel, especially engineers, is a matter of concern.
DWAF must provide a written submission to the Committee, detailing the
following issues that have been mentioned above:
Describing its progress with the eradication of bucket system backlogs;
Providing a detailed breakdown of geographical expenditure trends; and
Describing the restructuring of water boards;
The Committee recommends that DWAF undertake to cooperate and coordinate with
other line department stakeholders when developing service units such as
schools and clinics. The department did
not make any proposals for the 2007 MTEF to the Committee.
Agri-SA
The Committee expressed its interest in Agri-SA’s commitment to the
land reform process. Agri-SA responded
and stated that its members support land reform support the 30% national
government target. Agri-SA is also committed
to assist with capacity-building effort after legal expatriation processes.
Agri-SA stated that provincial governments need to play bigger role in road
infrastructure investments and maintenance in order to assist agricultural
activities. Agri-SA requested additional
allocations through national government structures in terms of assisting
farmers with the effects of avian flue, as well as coping with broad-based
black economic empowerment issues.
The Committee expressed its concern about the need for more women and landless
residents to be more involved in the agricultural sector. Agri-SA responded by stating that it is
committed to the sector plan on gender transformation together with NAFU. Agri- SA stressed the need for expropriation
to be market related and that farmers should not alone bear the cost of
national programmes such as land restitution.
The organisation did not make any proposals for the 2007 MTEF to the Committee.
Theme 2: Justice and Protection Services
Department of Correctional Services
The department did not make a presentation to the Committee, although a
written submission was received. The
Committee noted that information provided in the written submission was
essential but insufficient for the purposes of the 2006 MTBPS hearings.
The department’s submission highlighted key policy priorities that
informed its proposals to the National Treasury. These are investments in various IT systems
for streamlining and improving both internal and external services, investments
in security equipment, which include complying with minimum security standards,
and the management of remand detainees (MRD) project, which aims to address
inadequacies in the management of remand detention.
The department did not make any proposals for the 2007 MTEF to the Committee.
Department of Justice and
Constitutional Development
The department did not make a presentation to the Committee, although a written
submission was received. The Committee
noted that information provided in the written submission was essential but
insufficient for the purposes of the 2006 MTBPS hearings.
The key policy priority areas of the department are:
·
Investing in its expanded capital works programme;
·
Increasing its capacity and enhance efficiency;
·
Increasing the capacity of SIU and LAB; and
·
Reducing criminal case backlogs.
The department highlighted the following matters raised in the 2006 MTBPS that
may inform decision-makers in terms of the department’s funding proposals:
·
“Strengthening the criminal justice sector, …especially
court case flow;
·
Improving the capacity of the state to deliver in the fight
against crime;
·
Skills development;
·
Additional allocations are under consideration to improve
administration of justice, including funds to retain staff and increase
personnel in LAB, SIU, the judiciary, and magistracy;
·
Emphasis on
·
Funding is proposed for the construction of the new HC
Mpumalanga and
·
Management of monies in trust.”
The
department did not make any proposals for the 2007 MTEF to the Committee.
Department of Safety and Security
The department did not make a presentation to the Committee, although a written
submission was received. The Committee
noted that information provided in the written submission was essential but
insufficient for the purposes of the 2006 MTBPS hearings.
The key policy priority areas of the department are:
·
Crime prevention and public safety;
·
Actions against organised crime syndicates;
·
Improving effectiveness of the criminal justice system
·
Upholding national security; and
·
Safety at big events.
The
department highlighted the following matters raised in the 2006 MTBPS that may
inform decision-makers in terms of the department’s funding proposals:
·
“Strengthening the criminal justice sector, with particular
emphasis on visible policing… and
·
Provision for costs associated with policing and border
control…”
Additional funding was requested for the 2007 MTEF period for the following
areas:
·
Investments in capital infrastructure (facilities);
·
Further enhancement of policing capacity, vehicle fleet
management, and deployment system; and
·
Security arrangements during 2010 Soccer World Cup.
The department did not make any proposals for the 2007 MTEF to the Committee.
Theme 3: Employment and Economic Development
Department of Minerals and Energy (DME)
A R10 million rollover was due to the late arrival and payment of capital
goods ordered in the previous financial year.
The Committee raised its concern about the trend with some municipalities to
rather pursue private sector loans than accessing grants administered by
departments. The DME noted in response
that this might be a problem of the architecture of government. The constitution does grant municipalities’
considerable powers to raise money through external loans. The incentive is therefore created to rather
raise unconditional loans through private sector funding for through other
entities such as DBSA, than accessing grants that are tightly controlled and
monitored by other spheres of government.
The DG added that he is obliged by the PFMA to withhold transfers to
municipalities if those municipalities do not have the required systems and
management capacity to administer the funds.
The Committee enquired about the nature of electricity provision backlogs and
how the department see the alleviation of these. The DME’s response took into consideration
that rural areas pose particularly big challenges. Local government communication flows or the
lack of it result in unrealistic expectations.
The DME acknowledged that it should be more robust in its communication
strategy to local government. The DME is
creating capacity at regional offices in provinces.
The DME explained that there is no link between energy failures and rollovers. The DME has plans that will enable them to
improve on the bulk infrastructure in the country. The department is busy with a process for new
generation energy supply and infrastructure is being invested, either new or
refurbishing of existing infrastructure.
In terms of value for money concerns, the DME acknowledges that there is weak
electricity delivery in some areas.
However the department is focussing on household connections and not on
other related electrical infrastructure.
Fortunately, the National Treasury has assigned additional allocation
for bulk electrical expansion. Technical
Audits are done to give credibility to the value for money principle once
municipalities or Eskom has completed projects.
The Committee enquired about the department’s commitment to developing skills
in this sector and filling current vacancies.
The DG explained the knowledge-intensiveness of the sector and that
scarce skills, such as scientists and geologists, are required. Affirmative action laws exert pressure on
private sector firms to keep a pool of these scarce skills. DME relies on the services of consultants in
the areas where key vacancies exist.
Additionally, private sector firms offer strong competition in terms of
salaries. The DME’s internship programme
is relatively successful as part of the broader scarce skills and retention
strategy to retain skills.
The Committee expressed its concern with the alleged lack of capacity at many
municipalities to submit the required business plans in order to access grant
funding. The Committee argued that
provincial and national departments should through their monitoring and
evaluation roles are able to assist municipalities with targeted capacity
building. The DG suggested that too
close compliance of the PFMA in terms of assessing municipal capacity to spend
grant funding might inhibit service delivery.
The DG assured the Committee that provincial departments are
increasingly being capacitated in monitoring and evaluation of municipalities,
as well as in assisting municipalities with accessing and spending grant
funding.
The DME highlighted a matter of grave concern, namely that information and
statistics on schools and clinics is invariably unreliable and that effective
communication and coordination between other line departments, such as DWAF, is
crucial for the effective functioning of these service units. In terms of municipal-wide planning, the DME
is guided by the inputs of the community as contained in IDPs to guide their
planning efforts.
DME need to ensure that Eskom plans are in line with development by getting as
closely involved as is necessary in IDP formulation. For this to happen, solid institutional
arrangements to work with local authorities should be in place. Eskom is currently doing a pilot that looks
at large capacity energy provision in
The Committee enquired about the extent of integrated planning by different
line departments on broad range of development issues. The DME remarked that there is an
infrastructure joint plan from the coast to the interior that is in line with
national economic growth. The integrated
human settlement paradigm presents a challenge to joint planning efforts. The DME needs to submit further explanations
in terms of integrating planning initiatives to the Committee.
The DG is in general satisfied with the current and medium-term allocations,
especially in terms of the electrification programmes.
It is the observation of the Committee that DME has the necessary financial
resources to implement its programmes, but the recruitment and retention of
highly skilled personnel is a matter of concern for its capacity to implement
its programmes. The DME needs to submit
its integrating planning initiatives to the Committee in writing. The department did not make any proposals for
the 2007 MTEF to the Committee.
Dept of Environmental Affairs and Tourism (DEAT)
A question to the department inquired about the reason for the frequency of
virements in the past financial year, considering the transparent nature of
annual budget planning processes. This
question requires a written explanation by the department.
The committee inquired about what can be done to improve local government’s
capacity to implement service delivery programmes that require DEAT
support. The DG’s response mentioned
that DEAT had done an audit of bottlenecks after the adoption of ASGISA. Serious backlogs were identified around the
fast tracking of environmental impact assessments (EIAs) in the local
government sphere. Provincial
governments unfortunately cannot earmark additional funds for EIA-related
capacity building. The Committee
requires the department to stipulate the exact steps it will take to speed up
the EIAs and capacitation of municipalities. This must be submitted in
writing.
A question to the department inquired about the usefulness of the SETA
initiatives for the attainment of the department’s objectives. The DG responded that the design of the SETA
system lends itself effectiveness only for the capacity-building medium and
larger firms, whereas tourism industry-related firms are predominantly (at
least 70%) small and micro enterprises.
A question to the department inquired about the completion date of the
A question to the department inquired about the adequacy of current budget
allocations to DET. The DG replied that
the department had demonstrated that it could manage public monies well and
that with additional allocations it would be better able to target and promote
tourism in
It is the observation of the Committee that DEAT might have adequate access to
financial resources over the 2007 MTEF to reach its targets, taking into
account the information that was displayed by the department. However, before this can be conclusively
stated, the Committee stated that further analysis was needed. The Committee express its concern that DEAT’s
submission was particularly focused on tourism.
DEAT must provide a written submission to the Committee, detailing the
following issues that have been mentioned above:
Detailing
the reasons for the frequency of virements in the past financial year; and
The
impact of vacancies on service delivery in the programmes, and in which
functional areas these vacancies occur.
The
department did not make any proposals for the 2007 MTEF to the Committee.
Dept of Public Service and Administration
(DPSA)
The Committee expressed concern over the existence of ghost posts and what
the DPSA is doing about it. The DPSA explained that “creative management” by
corrupt employees account for the existence of these ghost posts. An example is the shifting of vacancies from
one area of need to another unit. DPSA
acknowledged that there are weaknesses in the whole human resources planning
framework. DPSA recommended tighter and
centralised oversight mechanisms over how posts are created and utilised,
backed-up by clearly communicated and agreed upon norms and standards. Committee noted these recommendations and
requires that the DPSA outline how the department would implement these recommendations
in a written submission to the Committee.
The DPSA noted that there are thousands of vacant posts, with every single
government department contributing to the figure. A total vacancy figure of 24 000 for public
sector institutions was mentioned; however this may need to be confirmed for
correctness.
Furthermore, the control over delegation flows and abolishment of surplus posts
need to be highly centralised. In the
wake of misconduct, disciplinary actions necessarily follow. DPSA acknowledged that despite its efforts,
weaknesses exist in disparate planning in creation of and abolishment posts at
various government departments.
It is the observation of the Committee that DPSA has the necessary financial
resources to implement its programmes.
DPSA need to prepare a written submission to the Committee on the following
issues:
Implementation
of department recommendations to improve the human resource planning framework;
What
DPSA will be doing to curb the remuneration disparities between civil servants
in rural and urban areas;
·
Public sector personnel expenditure projections in the light
that the department will soon be starting with salary and wage negotiations;
·
Strategies to employ and fill vacant posts in the public
sector;
·
Latest strategies for determining bonuses in the public
sector;
·
Strategies to employ former civil servants; and
·
What DPSA will be doing to fast-tracking employment in the
department?
The department did not make any proposals for the 2007 MTEF to the Committee with
regards to its own departmental budget.
Dept of Public Enterprises (DPE)
The DPE presentation highlighted the relatively small budget and large
transfer components, and how this should be interpreted in terms of its
mandate. The DPE sees only minor changes
over the MTEF period, with the only significant changes with transfers and
subsidies. The Minister briefly
sketched the outline of the various enterprises under the auspices of the DPE.
The DPE welcomes last year’s and this year’s increased allocations to the
Pebble Bed Modular Reactor (PBMR). The
department is still looking for strategic investment partners. Some technical difficulties prevented the
timeous conclusion of the project, such as the procurement of scare capital
equipment
Denel and Alexkor also will receive additional funding over the MTEF. Denel is
in a process of recapitalisation, while Alexkor will see a capital infusion as
well as a separation of non-mining activities.
The Minister explained that there were delays in the construction of two more
gas-powered power stations, due to the delays in the procurement of the
required scare scarce capital equipment on international markets and the
delivery of the equipment.
Questions to the Minister related among others to the timeframes attached to
the completion of the PBMR. The Minister
replied that the 2007 deadline for the start of the project is on track,
although an EIA process first needs to be completed. Due to other associated arrangements, the
PBMR will only be connected to the national grid in 2013.
It is the observation of the Committee that DPE has the necessary financial
resources and capacity to implement its programmes. However, a question to DPE inquired about the
impact of vacancies on service delivery in the programmes where these vacancies
occur. This question requires a written
explanation by the department to the Committee.
The Minister indicated that he is reasonably satisfied with the MTEF
allocations and did not make any proposals.
Federation of Unions of
FEDUSA
presented its economic outlook and noted its concern about the inflation
outlook as presented by the National Treasury.
In the light of recent exchange rate developments, FEDUSA feels that
inflationary pressures would mount, with oil price increases further impeding
economic growth. FEDUSA is concerned
about low foreign direct investment, which it argues is an important driver for
employment. Slower international growth
is risk factor that should be monitored closely.
FEDUSA urged Minister of Finance to promote export growth over the MTEF, and
the SARB to continue keeping a watchful eye on inflationary pressures. Government’s fiscal and macroeconomic
policies facilitated progress in business confidence, successful inflation-targeting,
a gradual rise of productivity, increased black and women economic empowerment,
higher real growth figures, etc. Public
infrastructure spending allocations are generally good news, although FEDUSA
argues that the money use for the Gautrain project could be better spent in
upgrading the entire rail system.
FEDUSA indicated that daily allowance paid to participants in EPWP is too
low. This was also the stance in its
2005 MTPBS submission
The following summarises FEDUSA’s recommendations.
·
More expenditure should be diverted to current public
infrastructure, especially public train and rail infrastructure.
·
Serious investment in public sector human capital formation.
·
More fixed investment projects, such as harbours and
transport systems.
·
Municipalities to improve capacity to spend and deliver.
·
Crime prevention strategies should drastically improve.
·
Higher child care and old age grants.
·
More allocations for training, education, and health,
especially to benefit hospitals and for HIV and Aids alleviation and
caretaking.
·
Abolish retirement fund tax.
·
Carefully risk management current account of balance of
payments impact on inflation rate.
·
Land reform should be finalised as it is critical for job
creation and housing projects.
For
the outer years of the MTEF, FEDUSA proposes significantly more allocations for
the transport sector. Various
maintenance backlogs as well as supply chain blockages should get immediate
attention, especially rail and train related infrastructure. FEDUSA stated that
it is liaising with various chambers of commerce to encourage them to invest in
large-scale projects.
·
The Committee felt that some issues that FEDUSA recommended
on should be communicated to the relevant portfolio committees.
FEDUSA argues that care should be taken with tax rebates, as it may encourage
unsustainable credit growth driven by consumption expenditure. Basic financial training for citizens should
help to avoid unsustainable credit growth.
FEDUSA stated that it is involved in various workshops and social dialogue
forums that would help to overall quality of public service delivery. FEDUSA argued that the SETAs are not
well-organized and not functioning at full steam.
Department of Transport (DOT)
The department did not make a presentation to the Committee, although a
written submission was received.
Two key priorities for DOT are investments in road and rail to contribute to
economic efficiency and the investment in stadiums and public transport to
support the 2010 Soccer World Cup. To
this end, DOT made proposals to the National Treasury for additional funding
over the 2007 MTEF for the following areas:
South African Rail Commuter Corporation Ltd for upgrades: R1.1 billion;
·
Maintenance and rehabilitation of national roads: R1.1
billion;
·
Earmarked allocations for provinces for rural access roads;
·
Transfers to local government for public transport
investments: R5.5 billion; and
·
Supporting infrastructure for 2010 Soccer World Cup: R4.75
billion.
The
Committee requires DOT need to send a detailed written report on the
department’s expenditure details of the outer years of the 2007 MTEF.
The department did not make any proposals for the 2007 MTEF to the Committee.
Theme 4: Social Services
Department of Education (DOE)
The department stated that it was very optimistic and confident about
additional allocations that it received over the MTEF.
The DG noted that invariably national priorities translate into the spending of
rands and cents at provincial level. He
referred to the example of the recapitalisation of FET funding. Some provinces are however cutting their own
FET allocations, which is not quite the correct interpretation of the national
department’s action. In terms of the
department’s overall performance, coverage and access to education is almost
equal to developed nations. However, the
department receives weak evaluations on the quality of service delivery, in
that numeracy and literacy standards are poor.
The DG noted that DOE’s budget continues to grow in real terms, while learner
numbers have stabilised. Encouraging is
that per learner expenditure between provinces is levelling out. Personnel expenditure continues to decline as
proportion of budgets in favour of other inputs.
The DG summarised DOE’s main challenges.
·
Previous bids such as no-fee schools were under-funded.
·
Backlogs in most basic services areas, such as sanitation
and water, occur at too many schools.
Although
aggregate expenditure is on track, some provinces such as
The DG argued that DOE’s proposals for new funding over the MTEF were based on
the importance of distinguishing between national and provincial departmental
funding areas. An important observation
by the DG is that in some areas of expenditure, funds should flow through the
national department to the provincial department in order to increase the
quality of monitoring of funds.
In response to the Committee’s inquiry about the extent of interaction and
communication with other departments when planning new schools, the DG felt
that they have close cooperation with DWAF and DME, in terms of basic services
areas.
The committee showed interest in how DOE will tackle backlogs in school
formation. The DG stated that the planning
may be and still is inadequate, although realistic in terms of the revenue
envelope. The DG emphasised that there
definitely is neither under-budgeting nor under-spending on the programme
responsible for building schools. Data
on backlogs is actually becoming better and through regular provincial
reporting on the matter, infrastructure delivery is speeding up.
The Committee inquired about the monitoring of funding of schools. The DG responded by explaining how each
province has the discretion to change the rankings of a school, i.e. move them
up or down the quintiles.
The department expanded on its ‘Qidsup’ project in response to a question. This project aimed to assist the poorest
schools. A basic resource package is
sent to the identified school to assist with the improvement of quality of
learning.
In response to a question on the ‘Morkel Model’, the DG explain that this model
merely assigns the available funds in a province for education to the optimal
number of teachers that can be employed by the state in that province. The DG acknowledged that the model cannot be
blamed for the real problem in the country: there are too few schools and the
assignment of teachers to the available class space and numbers of learners is
not operationally efficient. The
Committee noted that this may be the situation on aggregate, but that various
disparities exist between provinces and areas within.
The Committee inquired about the efforts of DOE to ensure that “no learner will
learn under a tree.” The DG explained
that achieving this target is problematic in the light of migration and the
zoning of schools. Another target
mentioned by the DG is that each learner should have one textbook per subject.
The Committee probed the efficiency and value for money for some food provision
programmes at school. The DG conceded
that to avoid an inefficient practice, tight monitoring is necessary. DOE increasingly aims to encourage school gardens
and local parent involvement in its food provision programmes, either voluntary
or through a co-op arrangement.
The Committee inquired about the reasons for rollovers in three separate
programmes of the department from the last financial year. In response the DG remarked that the business
units at regional level had seen the rejection of some business plans and
therefore unspent funds.
The Committee wanted to know how the situation of temporary teacher posts is
being handled, and in his response the DG explained that temporary posts could
only evolve into permanent posts if teachers are suitably qualified.
The Committee announced its apprehension about the abilities of some provincial
education departments to spend all monies allocated to them. The DG acknowledged that provincial
treasuries would have to commit themselves to the expenditure commitments of
provincial departments vis-a-vis the national department.
The Committee inquired about the value of the FET system for the whole country,
upon which the DG suggested that the current outcomes of FET are
successful. The matric pass rate is
however a matter of concern; the pass rate worsened over the last year,
although in defence it should be mentioned that there were 40 000 more
matriculants last year.
On FETs, the Committee stated that the provinces should regulate the distribution
of funds to it, and if these funds are not used, it should be clear where the
funds are re-allocated. The DG remarked
in turn that DOE has full