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 control over such monies; provincial departments are
not allowed to touch it. The DG alluded
to the proposal of FET institutions to be situated at a national level,
although he acknowledged this is a political question.
The Committee expressed its concerns over current mathematics and science
competency levels. The DG acknowledged
the problem and explained that the current undertaking is that mathematics or
at least mathematical literacy is compulsory for all learners. Teachers are increasingly capacitated by
comprehensive feedback when their learners are not doing well in especially
these subjects.
The Committee’s question about the appropriateness of the various provincial
budgets for FET and related institutions should be noted by the
department. Separate written submissions
to the Committee by the department need to be submitted. The Committee request that DOE supply to the
Committee the name of the province that did not absorb temporary teachers.
Although the department indicated that it had sufficient resources to deal with
its budgetary obligations within the 2007 MTEF, the Committee could not confirm
this as a fact. Further engagement with
the department is necessary.
Payment of capital assets was to finance the building of its
head-quarters. The department will have
to provide feedback.
Department of Public Works (DPW)
DPW’s presentation commenced with highlighting the key MTBPS
implications for the sector, amongst other things the substantial increases in
public infrastructure spending, especially in terms of basic services. DPW’s key role in the R370 billion set aside
for ASGISA related projects were highlighted.
DPW’s contribution to expenditure and economic impact was
contextualised. The Expanded Public
Works Programme (EPWP) was also briefly discussed.
DPW acknowledged that the pool of skills relevant for achieving EPWP targets is
a major constraint. Associated with
scarcity of skills, under-expenditure of Municipal Infrastructure Grant (MIG),
provincial capital under-expenditure, and equitable share under-expenditure by
both spheres, are also negatively influencing EPWP targets. The acting-DG assured the Committee that DPW
is reviewing the above-mentioned problem areas and processes. As an initial measure, the number of EPWP
offices has been rationalised.
Municipalities are encouraged to use their equitable share grants for
the implementation of the EPWP. Direct
support by DPW is provided to the 138 Project Consolidate municipalities. Provincial departments are faring much better
in spending provincial infrastructure grants with EPWP objectives in mind.
The Committee inquired about what should be done to capacitate provincial
departments to facilitate DPW objectives, such as EPWP. In response, the acting-DG argued that
regional DPW offices are capacitated to improve performance monitoring
In response to a question on the reason for the recent R32.5 million rollovers,
the acting-DG explained that the rollovers could not be seen as
under-expenditure, as some components of the 2005/06 budget did not pass the
criteria for supplementary appropriation.
The DPW should provide further written explanation on the matter.
The Committee asked the DPW to respond to FEDUSA’s opinion that the minimum
daily wage in term of EPWP projects is too low.
In its response, the DPW highlighted the urban and rural disparities of
the daily rates, and the fact that some municipalities have the discretion to
pay more than the minimum rate.
As at
In response to a question about its asset register, DPW responded by saying
that the department does have an asset register and that enhancements to the
electronic system are being made.
In response to a question on the department’s maintenance strategy, DPW
responded by saying that the department has a holistic approach on the
maintenance of public infrastructure.
For DPW it is quite important to source the minimum charge-out rates to
other departments in order to cost appropriately for maintenance budgets.
The Committee commented that the construction industry may not be geared for
particular large-scale government projects and that DPW may need to interact
with the private sector on this matter.
The acting-DG explained that there is a stakeholder’s forum where sector
participants engage with DPW. Following
from deliberations, and action plan will be drawn up.
DPW need to confirm in writing to the Committee that it does have an asset
register and describe the degree of completion.
The Committee noted the fact that DPW does not have a DG and this matter should
be addressed urgently. The department needs to report quarterly on the
progress.
Although the department indicated that it had sufficient resources to deal with
its budgetary obligations within the 2007 MTEF, the Committee could not confirm
this as a fact. Further engagement with
the department is necessary.
The Committee inquired about DPW’s specific requests for changes in its 2007
MTEF budget allocations that may be needed for the department to achieve its
output targets, but did not receive an adequate answer.
People’s Budget Coalition (PBC)
The combined PBC presentation welcomed the main expenditure priorities
defined in the MTBS. PBC is however
concerned that public infrastructure expenditure on service delivery
improvement should extend well beyond the 2010 point. PBC’s main other concern is that urban areas
is attracting far more resources than rural areas.
PBC argues for even more pronounced expansionary budget in context of
developmental state objectives. VAT is
seen as a regressive tax system to the detriment of the poor. Local government capacity constraints are
recognised. PBC argued for a more
extensive social security network.
PBC was not satisfied with allocations for the Pebble Bed Modular Reactor
(PBMR), due to massive capital intensiveness of the project and unanswered
questions regarding nuclear waste disposal.
Private capital sources should be exploited to fund the PBMR. PBC argued that Alexkor and particularly
Denel could not furnish adequate business plans and should therefore not have
qualified for additional MTEF allocations.
The coalition argued that money used for these two enterprises could be
re-directed towards social policy objectives and that technologies inherent to
these specific industries could be utilised for peaceful and commercial aims in
the country.
PBC did however welcome the additional funding allocated to Infraco. PBC also welcomed the additional allocations
for the N2 Gateway housing project. The
coalition is satisfied about the integration of Metrorail into the SA Rail
Commuter Corporation.
PBC noted that revenue constraints show up in the country’s high VAT: GDP
ratios. The PBC urges the Minister to
review this situation and to give priority to reducing VAT through a reduction
in the general rate and / or through the introduction of a tiered VAT
system. PBC announced that is was
bemused by the continuous announcements on under estimations of revenue.
PBC emphasised the implication of being a developmental state and this only
mirrored marginally in the MTBPS. PBC
argue that the state should be active in employment creation and capital
formation, especially through state enterprises. PBC is not satisfied with the current
direction of economic growth as it exacerbates income disparities.
The Committee urged the PBC to provide meaningful inputs for changes in
allocations in the outer years of the 2007 MTEF. The PBC’s publication does not critique the
current year. It gives forecasts for the
following 2008 MTEF, but these may be interpreted as proposals for allocation
adjustments for the outer years of the 2007 MTEF.
PBC, in response to a question on the topic by the Committee, acknowledged the
existence of the Integrated Sustainable Rural Development Plan, but insisted
that the direction of investments may be an area of debate.
PBC stated that the Section 77(3) of the Constitution calls for Parliament to
put in place legislation that would enable amendment of the national budget by
Parliament. This has still not been done
after 12 years.
The Committee noted that PBC was not forthcoming with recommendations in terms
of skills development and did not allude to any improvements in the SETA
system. Also the PBC did not comment on
the impact of HIV and Aids on public servants and on service delivery.
In response PBC acknowledged that it cannot change government capacity, but
government institutional capacity building and training is crucial. Something should be done about low morale and
poor staffing in the public service and holistic answers should be sourced.
Department of Health (DOH)
The DOH noted that the health-related priorities areas defined in the MTBPS
are line with the DOH’s priority areas submitted in previous years. These areas are explained below in terms of
the activities associated with these priority areas.
·
Proper remuneration structures for health professionals;
·
Improvements to emergency services in terms of turnaround
times and fleet replacements;
·
General upgrading of skills pool, but specifically mid-level
workers called clinical associates;
·
Equipment stock for technical procedures;
·
Formulation of a Comprehensive Plan on the Prevention, Care,
Treatment, and Support for HIV and Aids;
·
Hospital revitalization
·
Investments in key programmes such as TB.
DOH
indicated that it experiences a specific challenge in the pace of
revitalisation of hospitals; the R1billion allocated over the next three years
will not be sufficient for existing projects.
The Committee noted that there are four (4) unfinished hospital
revitalisation projects. The DG needs to
submit a written report that elaborates on the reasons for the slow pace of the
hospital revitalisation programme and remedial actions.
DOH stated that in 2010 the department would see a general competition for
funds on construction as opposed to social health related infrastructure. A crucial problem experience at provincial
level is the tracing of expenditure from equitable share on especially medical
equipment. DOH noted that additional Comprehensive
Plan on Prevention, Care, Treatment, and Support for HIV and Aids allocations
are necessary to improve effectiveness.
The Committee enquired about the strategies of DOH to alleviate HIV and Aids
through sharing best practices and if funds are adequate for its efforts. The department’s response was not
satisfactory and a written submission needs to be sent to the Committee.
DOH shared its concern with the monitoring of transfers, especially
health-related conditional grants, to provincial health departments. The department noted that the Auditor-General
often comments that accounting officers of national departments are not
monitoring provincial expenditure of grants.
The DG alluded that provincial departments feel burdened by conditional
grants and that they would rather concentrate on spending unconditional
equitable share grants. The DG concluded
that it is in a difficult situation with regards to monitoring provincial
expenditure, but undertook to assist provincial health departments to spend
their conditional grants.
The Committee inquired about the perceptions of slow delivery associated with
mortuaries, which is now a health function, and of the delays in forensic
investigations. The DG noted these
concerns and stated that substantial infrastructure upgrading of mortuaries has
already take place, as well as improvements in financial management of
mortuaries. A problem area is attracting
and retaining scarce forensic investigative skills. An amount (R36 million) for funding the upgrading
of mortuaries was transferred to the SAPS, but was unspent and transferred back
again to DOH. SAPS still needs to
invoice DOH for services rendered at mortuaries.
The Committee inquired about the supposedly linear relation ship between
increasing DOH budgets and improving service standards. In his response, the DG that many service
standards problems are related to human resource problems, for example
inadequate numbers of pharmacists at hospitals, which result in longer than
anticipated hospital stays. The DG argued that remuneration packages should
improve for all health professionals and this is a key priority area that the
department wants to address. The DG did
not respond to a question on the adequacy of current health budgets to
significantly improve service standards and the department needs to submit a
written response.
The Committee noted a ground-level concern from health workers that their lives
are often in danger, for example a trend in ambulance hijackings. It was not clear that DOH responded
adequately to this query and the department needs to submit a written
response. Another question on the
adequacy of current health budgets to address the backlogs within the hospital
revitalisation programme.
The Committee inquired about the reasons for the difficulties experience by
health institutions to obtain donor funding when it appeared that all the
necessary paperwork has been done. The
DG said in this response that the particular application criteria of donor
agencies may inhibit the fast-tracking of applications. The DG undertook to assist with assessing the
adequacy of applications for donor funding in specific cases.
DOH did not make any proposals for the 2007 MTEF period to the Committee. The Committee inquired about DOH’s specific
requests for changes in its MTEF budget allocations that may be needed for the
department to achieve its output targets, but did not receive an adequate
answer. A written submission needs to be
sent to the Committee.
DOH must provide written submissions to the Committee on the following issues
that were highlighted above:
·
The adequacy of current funding to curb HIV and Aids;
·
Sharing best practices in curbing HIV and Aids;
·
Ensuring the safety of health workers at ground-level;
·
Adequacy of current health budgets in improving service
standards and address hospital revitalisation backlogs.
·
Four hospitals that must be or have been constructed.
·
The Committee noted DOH’s concern about the need to improve
the remuneration packages for all health professionals, and especially in those
areas where bottlenecks have been identified.
Department of Housing
The Department of Housing introduced the key challenges of the sector. The department explained that the housing
backlogs are partially the result of various income and household settlement
formations. Migration trends also put a
strain on government to deliver housing and associated basic services in the
major cities. Lastly, housing backlogs in informal settlements are erratic in
that they are more susceptible to pressures from natural disasters.
The Department of Housing’s strategy to address the key challenges of the
sector is contained in its ‘Comprehensive Plan.’ Amongst other the following service delivery
areas are priorities:
·
Informal settlement upgrading;
·
Speeding up service delivery mechanisms and construction
projects;
·
Engaging with banking industry within the context of
Financial Services Charter to ensure access to property finance by historically
disadvantaged individuals;
·
Alignment of intergovernmental and inter-departmental
funding streams to enable municipal structures to deliver basic services
associated with housing projects; and
·
The accreditation of municipalities to effectively deliver
housing projects.
The
department submitted funding proposals to the National Treasury to assist with
fast tracking of housing pilot projects and general housing backlog
alleviation.
The department’s unforeseeable and unavoidable expenditure items for the
current fiscal year relate to funds released in response to several natural
disasters, affecting especially informal settlements.
The Committee raised its concern about the constant reports of inferior quality
of housing, and the cost estimations of this for the National fiscus. In response the DG explained that the
post-1999 withdrawal of major contractors left a void that was filled by poorly
skilled contractors. The DG assured the
Committee that quality inspections are currently the order of the day. The question relating to the cost of inferior
quality of housing was not answered and the department should submit a written
response to the Committee.
The Committee raised its concern that civil servants in rural areas are unable
to borrow from banks and inquired what the department can do about the situation. The Department did not address this question
and a written response needs to be submitted to the Committee.
The department explained the reasons for not achieving housing delivery targets
in some provinces. Amongst others the
difficulty of provinces to procure the required resources for projects, such as
timber, cement, as well as the necessary skills. The department acknowledged that there are
problems that prohibit the effective expenditure of all funds it receives from
the fiscus. It said backlog estimation
models are beginning to explain particular trends in specific locations. It was not clear how these models will help
the department to plan and spend better and a written submission on this topic
has to be provided to the Committee.
The DG noted the Committee’s concern that the average delivery period for a
housing project is up to three (3) years, as well as the slow pace of the
rolling out of housing pilot projects.
The department should provide the Committee with written explanations
and remedial actions for these concerns as they impact negatively on the
National fiscus.
The Committee noted that the absolute numbers of houses delivered by the
department has slowed down over the last couple of years and that contrasted
with the increase in its departmental budgets for the same period. The Committee therefore inquired about the
capacity constraints that face the department.
The DG explained that it has been a major challenge for the department
to budget in conjunction with the basic delivery planning tools, i.e. municipal
IDPs. As a response the department has
started process to develop a human settlement protocol, which aims to direct
the delivery of different social services at provincial level. As part of such a protocol, MECs should be
consulted to identify funds earmarked for specific projects and that would help
to inform IDPs. This protocol is in line
with the broader principle of intergovernmental relations. The Department also explained that the huge
human flows associated with migration are a major challenge for delivery. The scarcity of well-located land for
settlement and
The Committee inquired about the reasons for the numerous vacancies in the
department, and more specifically why basic positions such as clerks are
vacant. The DG explained the situation
by referring to the late finalisation of the human resources divisional
structure. The DG assured the Committee
that the situation of clerical vacancies would never occur again.
The Department did not respond to the Committees inquiry about the department’s
plans for future hostel upgrading and a written response should be sent to the
Committee.
The department did not make any proposals for the 2007 MTEF period to the
Committee.
The Committee requests that the Department of Housing respond in writing to the
following issues that have been highlighted above:
The cost of inferior quality of housing for the fiscus;
How the department intends to plan and spend better in order to effectively
address housing backlogs;
The long duration of housing projects;
The slow pace of housing pilot projects; and
The department’s plans for future hostel upgrading.
Department of Home Affairs (DHA)
The department, in response to its below norm (as it stated) mid-year
expenditure percentage of total adjusted budget, explained that due to
government’s cash based accounting system, payments for invoices received will
only be captured once payments have been generated. In terms of commitments and associated
expenditure, the department is therefore on target at the end of the first six
months of the fiscal year.
In response to a query why money destined for issuing ‘smart IDs’ has not been
thoroughly spent, the acting-DG replied that the appropriate IT infrastructure
was not in place, for example a database of all fingerprints. Amounts frozen by the National Treasury have
been released in the wake of the introduction of other required systems, such
as the electronic document management system (EDMS) and the Electronic
fingerprints identification system (EFIS).
The department argued that control for these systems are secure as
fingerprint identification (called the ‘biometric logon system’) is used
instead of usernames and passwords. The
department did not respond to a question as to the time frames for the start of
smart ID issuances and the electronic birth and death certificates database and
therefore the department needs to submit its answer in writing to the
Committee.
In terms of the visibility of Multi-Purpose Community Centres (MPCCs),
the department stated that the challenge is to fill vacant positions at these
centres. In the
The Committee noted that the 2008/09 allocations to DHA are lower than the
previous year and inquired whether this meant that the department’s major
functional challenges would have been reduced by then. The CFO explained that this allocation
projects that many capital expenditure projects may have been realised prior to
2008/09. The CFO noted that additional
funding over the MTEF has been requested from the National Treasury and if approved,
would see an increase in the outer year’s allocation. The additional funding is for major projects
aimed at improving services, including investments in IT systems such as EDMS.
In response to the effectiveness of the department’s mobile units, the CFO
explained that these units are equipped with the necessary technology to reach
almost all remote areas and deep rural areas.
The number per province will increase, with more populous provinces
receiving proportionately more.
The Committee inquired about the reasons for not filling vacancies, and also
about the amount of current vacancies that were advertised in the previous
(2005/06) fiscal year. DHA stated that
it will have sorted out all vacancy-related problems by the end of 2006/07, and
most or all vacancies should be filled by then.
In terms of its internship programme, the department informed the
Committee that it had lost a couple of interns, but overall the programme is
quite successful. The Committee requires
the department to make written report on the reasons and remedial actions to
address the problem of recurring vacancies.
The Committee inquired about the relationship between its management and its
audit committee and the effectiveness of the committee in detecting and
reacting to corruption and fraudulent practices. The CFO stated that the audit committee meets
four times a year.
In response to queries on the nature and implications of virements between
programmes through the year, the CFO stated that savings that were realised,
for example due to delays in filling vacancies, were used to fund other
priority programme areas, such as assisting refugees in their
applications.
The department, in response to the comments on the disclaimer by the
Auditor-General on the financial statements of the department in 2004/05, stated
that it went through considerable effort to improve upon management capacity
and systems. The department received a
qualified Auditor-General opinion in its 2005/06 annual report.
In terms of its incentives to avoid corruption, especially with 2010 in sight,
the department is rolling out the whistle blowing policy out to all its
offices. A toll free whistle blower
number exists to report fraudulent practices.
DHA has a fraud prevention plan in place. A key limitation for successful fraud
prevention, is finding the appropriate investigators. DHA has a counter-corruption chief
directorate. The department declared
that officials have been and will be immediately suspended when fount out. The department concluded that corruption is a
bigger national challenge and is not only confined to DHA. The Committee requires the department to
report on the effectiveness of its fraud prevention plan to root out fraud.
The department did not answer a query on why its expenditure trends normally
peak towards the end of the financial year and a written response should be
submitted to the Committee.
The Committee inquired about the impact of the extended hours of business of
DHA offices on the operations and specifically personnel management on the
department. DHA did not address this question and should submit a written
response to the Committee.
On a question about the integrity of the national population register, the
department said the appropriate IT and security system were being put in place
to improve the integrity of the system.
The Committee expressed it concerns over allegations that the department’s
systems are ineffective and inaccurate.
Notably are allegations about the loss of integrity of the ID database. The DG explained that there are limitations
to the current legislative framework that exacerbates social problems, for
example government is not allowed to take the fingerprints of children, hence
creating incentives for manipulation of and errors in the ID database. The DG agreed that without IDs, the problems
of child-headed families would be exacerbated.
The DG argued that members of the public should be educated on
population administrative issues.
The Committee suggests that DHA come up with mechanisms to ensure that acts of
corruption are deterred, and if once caught, perpetrators are dealt with
efficiently to deter further acts of financial losses to the report.
The observation of the Committee is that should DHA be allocated additional
funding as there needs to be considerable capacity-building efforts at the
department to ensure that funds are effectively and efficiently spent. The Committee noted the problem area of
vacancies.
The department did not make any proposals for the 2007 MTEF period to the
Committee. The department did not
adequately respond to a question on whether the department is confident about
the allocation in the outer years, in the light of the completion of capital
expenditure projects and the upcoming 2009 general elections.
The Committee requests that DHA respond in writing to the following
issues that have been highlighted above:
Deadlines for the start of smart ID issuances and the electronic birth and
death certificates database
Reasons for peaking of expenditure trends the end of the financial year;
Whether the department is confident about the allocation in the outer years, in
the light of the completion of capital expenditure projects and the upcoming
2009 general elections;
The impact of the extended hours of business of DHA offices on the operations
and specifically personnel management on the department;
The reasons and remedial actions to solve problem of recurring vacancies; and
A report on the effectiveness of its fraud prevention plan to root out fraud.
Finally, the Committee requires the Department to submit in writing what
measures it would put in place to assure that the department will not receive a
qualified report.
Department of Social Development (DSD)
DSD highlighted the medium term budget priority areas and these are listed
below.
Institutional reform of the social security service delivery system. The main enabler of policy in this regard is
the newly established Social Security Agency.
Institutional reform of the department itself in the areas of strategy
formulation, oversight, and monitoring and evaluation. In this regards, the National Treasury has
been approached and is assisting.
The expansion and consolidation of welfare and community development programmes
ands services.
Human capital development, both within department in stakeholders and partners.
Assisting with the coordination of the EPWP.
The review of the Social Assistance Act.
DSD’s key challenges for meeting the above-mentioned priorities are listed
below.
The substantial disparities in service provision and expenditure per capita
among provinces, for example in terms of subsidies paid to children’s and older
persons’ institutions.
A general lack of human resource capacity in the department.
Effective capacity building at key service delivery stakeholders, such as
social workers and NGOs.
The degree of success of future provincial expenditure, with the main areas
being the implementation of new legislation, such as Children’s Act, Older
Persons’ Act and Child Justice Bill, an the subsequent expansion of other
Social Welfare Services.
The under-expenditure from provincial Social Development departments is a
worrying situation. Under-expenditure is
largely on conditional grants, specifically on the integrated social
development grant. The main reasons for
this have been the late introduction of this grant and capacity constrains in
provinces, such as staff shortages. The
Committee noted that the department has reported to the Committee on the
problem of staff shortages last year and inquired about the progress in this
regard. The DG explained that although
the department has been awaiting the ministerial approval of a restructuring
process, it will not wait for final approval and will commence with a
much-needed recruitment drive. As part of the enabler for the recruitment drive
the DG created an office of the COO.
The department is going through significant efforts to recruit for the
Social Security Agency.
On this matter, the Committee further inquired about the department’s previous
commitment to recruit and retain social workers. The DG explained that the department has
adopted a recruitment and retention strategy.
It is however a considerable challenge to source the desired number of
social workers in
The department acknowledged that an important aspect of its human resource
capacity is the volunteer. Once all
volunteers are registered and paid stipends, some form of equalisation of
stipends would occur in order to attract more volunteers.
The department acknowledged that vacancies impacted to an extent negatively on
its ability to effectively deliver its functions. It was not clear from the department’s
response how and by when the vacancy situation will be addressed and a written
explanation needs to be sent to the Committee.
DSD acknowledged that it should monitor the effectiveness of transferred funds
to provincial departments and other institutions and that there are major risks
involved as these are substantial amounts of money. To this end, the department established a
Monitoring and Evaluation unit at chief directorate level and replicated this
unit at provincial level in order to capture relevant information at the lowest
possible level. DSD adopted a strategy
on how to monitor and evaluate effectively and this include site visits to
implementing institutions. The
department acknowledged that due to the challenges inherent in the current
intergovernmental relations system, monitoring and evaluation is still a big
challenge. To this end, DSD has
produced guidelines for grant implementation and reporting that has been
provided to its provincial departments.
DSD alluded to the challenge of dealing with the various accounting
officers.
DSD detailed the reasons for under delivery at provincial level, among others
the lack of knowledge by provincial departments and implementing institutions
on how to deal with tendering processes.
DSD did not respond to a specific question on the stage of completion and
challenges experienced with capital expenditure. The example was given of the building of some
departmental office buildings and the targeted date of completion for this
specific project was 2004.
The DSD acknowledged that the misuse of the department’s vehicles by its
employees is a problem, but contextualise the problem in terms of the government-wide
phenomenon. Part of the solution is a
proper asset management system, with which the National Treasury is assisting
departments. The Auditor-General will
qualify any department that does not have a proper asset management system.
The Committee inquired about DSD’s strategy to avoid the re-occurrence of
considerable under- expenditure. The
department did not sufficiently address this question and needs to submit a
written response to the Committee.
The Committee inquired about when the department will start implementing the
Older Persons Act and how communities will be made aware of the impact of the
act on them. DSD explained that one of
the challenges to implementation is to accurately identify older persons’
needs, and to first come up with norms and standards for old age homes.
The Committee inquired about the availability of data on projects in rural
areas, such as on services provided by NGOs, the monitoring thereof, and the
accountability implications for these services rendered. DSD explained that it is relying to a large
degree on community development workers to ensure that communities in the area
aware of all services that are provided.
The department acknowledged that it is difficult to effectively monitor
the vast amount of NGOs that render service on its behalf, as well as other
social development-related services. The
assessment and registration of NOG and services are constraint by time and
staff shortages. DSD explained that
there have been delays of fund transfers to NGOs in many cases due the lack of
capacity in these NGOs, for example in terms of producing appropriate business
plans.
The Committee inquired about aspects of the court decisions on the shift of
functions of DSD to the Social Security Agency and how loopholes could be
closed in future to avoid unnecessary litigation. The Committee also inquired about the reasons
for the need to contest certain issues in court. The department explained that the legal
capacity constraint is a considerable challenge in government. Corrupt and fraudulent officials and their
outside networks use a tactic whereby they litigate in volumes and the
Department of Justice simply cannot cope with this. Sometimes already finished cases are
resubmitted, thereby increasing the administrative burden on the defence and
resulting in increasing turnaround times of cases. The problem is that if some cases go
unopposed, the DSD need to pay up unnecessarily. The Law Society of South Africa will be
approached to assist in rooting out fraudulent lawyers. The Committee noted that certain aspects of
the recent litigation cases highlighted by DSD appear to be related to other
cases in the department. The department
explained the ensuing forensic investigation should determine the degree of
collusion. A database of findings will
be forwarded to the Committee by
The department, in response to a query on its progress in utilising SAPO for
points of payments, explained that various payment preferences are being
evaluated. The ideal is bank transfers,
but too few people have bank accounts.
There are arrangements with contractors to pay out grants on behalf of
DSD. Of essence is the element of
dignity that should always be associated to the handling and paying out of
social grants.
The department, in response to its efforts to capacitate NGOs in rural areas,
explained that NGOs are typically better capacitated than community and faith
based organisations. DSD has about 35
capacity programmes in the country to train and capacitate the latter. Key learning areas are compliance with
government legislation and procedures, and basic project management skills.
In response to a question on DSD’s efforts to incorporate farming communities
in the social grant distribution network, the DSD acknowledged that
accessibility to social grants by all eligible citizens is a priority. The department requested the details the
particular cases mentioned by the Committee and will follow up. The department will also follow-up on a
request of the Committee to report on the building of a DSD office in a
specified town worth R7 million.
The Committee noted that at regional level some posts in the Social Security
Agency are not filled and inquired about the operational readiness of the
Agency to fulfil its mandate. The
department explained that the situation is under control in that the necessary
arrangements are currently in place between the relevant provincial departments
and the Agency, which enables the smooth administration of social grants. These arrangements are expected to last until
the end of 2006/07, whereupon the Agency should be fully operational.
The Committee inquired about the reasons for the considerable increase in the
administration programme of DSD. It was
not clear that the department answered this question adequately and it needs to
submit a written response to the Committee.
The department did not make any proposals for the 2007 MTEF period to the
Committee.
The Committee requests that DSD respond in writing to the following issues that
have been highlighted above:
How and by when the vacancy situation will be addressed;
The department’s strategy to avoid the re-occurrence of considerable under-
expenditure and the success of this strategy;
The database of forensic investigative findings to be forwarded to the
Committee by 10 November 2006;
To indicate that the forensic investigative findings are in relation with
litigations from external parties to the department; and
The reasons for the considerable increase in the administration programme of
DSD.
Capital projects progress
Additionally, the department is requested to provide detailed information in
writing of its capital expenditure programmes for the 2007 MTEF and past
capital expenditure trends.
Department of Sports and
Recreation
The department only submitted a written submission.
The department’s additional funding proposals amounted to R491 million for
2007/08 and R494 million for 2008/09.
Funding increase proposals are for the following projects:
·
2010 Match stadiums
·
2010 Team preparation support;
·
Training of volunteers;
·
Funding of stadia (legacy facilities);
·
Mobilisation of South Africans; and
·
“Leaving a legacy for the Youth”-project.
The department did not make any proposals for the 2007 MTEF to the Committee.
South African Local Government
Association (SALGA)
The association only submitted a written submission.
SALGA noted that governments spending priorities generally are aimed at
assisting the poor. Priority areas are health, social welfare services,
education, the building of state capacity, and housing, municipal and community
services. In general SALGA is satisfied
with additional allocations in the adjustment budgets of departments. However one or two issues were highlighted
and these are listed below. SALGA expected:
That a specific allocation be made to address the shortage of social workers.
That additional allocations are made to establish salary parity between
employees of government and NGOs.
That 2006 MTBPS to announce the extension of the child support grant and an
extensive school nutrition programme to also cover children between ages 14 and
18.
Proposed the funding of a structured approach to building the capacity of the
local government workforce in programmes such as Siyenza Manje. SALGA also proposed a structured approach to
building capacity such as a second phase to the National Skills Development
Strategy. It is the Committees
recommendation that this programme should not only target grade 12 learners.
Allocations for neighbourhood development partnerships to further fund
improvements to settlements for sustainable communities should grow.
That there will be specific allocations for funding of electricity distribution
restructuring.
That local government would receive allocations to assist with the establishing
of transport authorities al local level to reduce public transport challenges.
Proposed additional funds for municipalities hosting the 2010 Soccer World Cup,
especially those neighbouring hosting cities, for public transport
infrastructure and system improvement.
Theme 4: International Trade
Department of Trade and Industry (DTI)
The department only submitted a written submission. No additional funding has been allocated to
trade initiatives for the 2006/07 year.
In its submission, DTI noted that the promotion of trade should be balance with
structural adjustments in the broad economy.
Supportive policies for especially labour market adjustment should
therefore become a priority area. These
policies should focus on safety nets and training for labourers.
The department did not make any proposals for the 2007 MTEF to the Committee.
Section 3: Committee observations and recommendations
3.1 Committee
concerns and comments
Some delegations did not include the DG of a department, in which
case the delegation was excused from presenting until such time that the DG or
acting-DG was present. These departments
are listed in the introduction of this report.
The Committee emphasises the PFMA requirement that the DG, as the
accounting officer of a national department, should account for expenditure,
among other things. Accountability
cannot be delegated, although responsibilities can be delegated in writing.
The Committee expressed its concern that most departments and organisations
that made submissions did not clearly articulate their submissions in terms of
their priority expenditure challenges and needs for the outlying years of the
2007 MTEF. Many departments also did not
address the appropriateness of the MTBPS comments with regards to their
respective service delivery areas as well as the appropriateness of additional
allocations in the 2007 MTEF.
In the 2005 Joint Budget Committee Report on the MTBPS hearings, the Committee
noted that the coordination between clusters needed to be strengthened, as this
would facilitate better understanding of other departments within the
cluster. The Committee noted during
various submissions during the 2006 hearings that it seemed that departments
that provide the various basic services for the effective functioning of
service delivery units, such as schools and clinics, were not effectively
engaging with each other. Examples of
schools without water and sanitation or clinics without electricity were
matters of grave concern for the members of the Committee.
Again, the management of transfers, especially conditional grants to provinces
and local government, and the ability to monitor these effectively were
highlighted as concerns.
3.2 Recommendations
2006
The Joint Budget Committee after its deliberations
made the following recommendations:
The JBC wishes to re-emphasise the expediting of resolution 1 of 2005
(See annexure 1). The committee requires competent
and financially skilled research staff plus additional human resources.
Committee also require appropriate ongoing training in budget analyses to
conduct more effective oversight.
The time period for oversight on the MTBPS be increased to conduct effective
oversight and have more interaction with various stake holders.
The human resource capacity within National Departments should be improved
noting the high vacancy rate witch necessitated the need to shift funds.
Departments should take appropriate measures to recruit and retain skilled
personnel. The present high turnover rate impacts negatively on service
delivery. The DPSA should report back in the current state of the existence of
“ghost posts” and develop measures and strategies to eliminate this problem as
it drains financial resources from the national fiscus. The DPSA should report
within 10 days on its proposal of the public service salary bill.
National departments should more robustly monitor the implementation of
conditional grants to Provincial and Local government. The internal monitoring
and evaluation of structures should be effectively implemented by all National
departments.
The equitable share be reviewed to ensure its objectives are not lost at
Provincial level.
Departments should in the following MTBPS take into cognisance, not only of the
current financial year, but also the two outer years when budgets and
programmes are developed as well as when presenting to the Committee. The
employment of the three-year medium term Expenditure framework for effective
strategic planning, budgeting, and service delivery is an imperative policy
tool for national departments.
DPW should report back to the committee on its progress of the national asset
register and the areas they have covered.
3.3 Review of the
2005 recommendations (see Annexure 1)
The JBC also reviewed the progress on its recommendations made and passed
by Parliament in 2005 and is of the opinion that there has been limited
progress as detailed below.
Recommendation 1 was done to a certain degree and the implementation should be
expedited.
Recommendation 2 Parliament has gone a long way at looking at legislation but
needs more progress
The JBC found that more departments such as Correctional Services and Defence
have been qualified by the AG. The JBC was disappointed to learn that more departments
are now receiving qualified reports, which underpins the need for increased
institutional and human recourse capacity
The continued focus on Recommendation 4 receive further coverage in this years
recommendations.
The observations of the committee on recommendation 5 is that it has not been
vigorously implemented as yet.
With respect to Resolution 6 on all committees of parliament should implement a
tracking process as soon as possible.
The JBC has now sifted its focus to identify departments and clusters
were significant under and over expenditure exist in relation to outputs.
Conclusion
The JBC expresses the hope that the report will contribute to a more effective
and efficient MPBPS and budget oversight process by all role players. The JBC
hopes that its constructive critical oversight will be welcomed in the spirit
of accelerated transformation of our institutions and structures and deepening
of our democracy. We wish to thank all those who made submissions, members of
the committee, and resource support especially those that came better prepared
to participate.
Report to be considered.
Co-chairpersons
The Hon. LL Mabe
The Hon. B Mkhaliphi
Annexure 1
Recommendations 2005
For
information purposes, the Committee’s recommendations contained in the 2005
Joint Budget Committee Report on the MTBPS hearings are included below.
The Committee recommended as follows:
The Committee recommends that Parliament enhance its effectiveness in
monitoring the capacity of departments to implement progressive policies.
The Committee recommends that Parliament pay particular attention over the
medium term to the effectiveness of facilitating policies regarding the key
MTBPS priorities of human and institutional capacity development and
infrastructure investment, as well as the focus on growth, macroeconomic
stability, raising the employment capacity of the economy, and reducing the gap
between the first and second economies.
In considering the budget documentation of key departments such as the Departments
of Home Affairs and Social Development, Parliament should satisfy itself that
such Departments have monitoring systems in place, ensuring that their
implementation supports their policies and that their policies have the
required outcomes. This will enable timely policy adjustments.
The Committee recommends that Parliament strengthen monitoring and oversight of
expenditure trends between national MTBPS functional allocations and Provincial
budget allocations to the smaller spenders supportive of social and rural
development and job creation (i.e. housing, land affairs, tourism and
agriculture) to address concerns of adequate financing at provincial level.
Parliament should explore ways to influence cooperation and complementarities
rather than competition between departments, particularly coordination of
planning between departments in the same cluster.
Parliament should follow up on the amendment of strategic plans in order to
align them with the MTBPS.
The Committee should carry out oversight visits, in particular to development
nodes.