28 August 2007
JOINT BUDGET COMMITTEE:
EXPENDITURE REPORT
FIRST QUARTER 2007/08: DRAFT 3
INTRODUCTION
In pursuing the
ideal of building a democratic society through reconciliation and
socio-economic transformation, the challenge for government has been how to
optimally align and utilize the nations resources. It
is the responsibility of Parliament, as the guardian of the public interest, to
ensure that government is responsive to the needs of the people. To accomplish
this Parliament has established a variety of mechanisms and instruments,
predominately various specialized committees, to effectively monitor government
spending plans and performance.
The Joint Budget Committee (JBC) was established to, amongst other
things, monitor and report on government expenditure as provided in reports
published by Treasury in terms of Section 32 of the Public Finance Management
Act. The JBC has reviewed and reported on departmental spending on a quarterly
basis. In accordance with this practice, this report provides an analysis of
departments’ expenditure for the first quarter of the 2007/08 financial year.
The report is divided into two substantial sections. The first section
includes a general analysis of spending in terms of the economic
classifications of total, current, transfer and capital expenditure and in so
doing highlights instances of atypical departmental expenditure. The second
expands of these observations and examines spending in selected Departments.
SECTION ONE: REVIEW OF FIRST QUARTER EXPENDITURE
1. TOTAL EXPENDITURE
Total expenditure, consisting of current expenditure, transfer payments
and capital expenditure for the national and provincial spheres for the 2007/08
financial year is estimated at R530 billion - representing an increase of approximately
R60 billion compared to 2006/07. In the national sphere, that is excluding the
provincial equitable share, the estimate is reduced to R 261 billion. By the end of
the first quarter of 2007/08, national departments had spent R66.7 billion or
22.33% of the national budget. This compares favourably with the R55.7 billion
or 21.44% noted in the first quarter of the previous financial year.
Table 1
represents Departments’ expenditure at the end of the first quarter.
Table 1:
Departmental Expenditure at the end of the First Quarter
R'000 |
Total Budget |
Total
Expenditure |
% Total Exp.
for 1st Quarter |
2006/07 %
First Quarter Exp. |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
||||||||
|
|
|
|
|
|
|
|
|
Voted Amounts |
299,177,741 |
66,792,673 |
22.33% |
21.44% |
9.10% |
7.29% |
5.93% |
|
|
|
|
|
|
|
|
|
|
Central Government
Administration |
40,798,702 |
3,710,326 |
9.09% |
8.66% |
2.32% |
3.17% |
3.63% |
|
The Presidency |
254,741 |
50,761 |
19.93% |
17.87% |
7.00% |
5.96% |
6.97% |
|
Parliament |
835,714 |
146,516 |
17.53% |
14.11% |
9.05% |
3.72% |
4.75% |
|
Foreign Affairs |
3,856,363 |
584,857 |
15.17% |
20.09% |
1.47% |
3.95% |
9.75% |
|
Home Affairs |
3,314,589 |
491,638 |
14.83% |
18.48% |
4.37% |
6.42% |
4.04% |
|
Provincial and Local
Government |
28,844,175 |
1,560,021 |
5.41% |
3.81% |
1.86% |
1.77% |
1.81% |
|
Public Works |
3,693,120 |
876,533 |
23.73% |
25.59% |
3.17% |
10.03% |
10.53% |
|
|
|
|
|
|
|
|
|
|
Financial and
Administrative Services |
22,782,011 |
5,801,692 |
25.47% |
20.68% |
7.96% |
11.82% |
5.68% |
|
Government Communications
and Information Services |
375,812 |
115,326 |
30.69% |
26.41% |
20.56% |
6.41% |
3.72% |
|
National Treasury |
19,708,178 |
4,333,375 |
21.99% |
20.89% |
4.82% |
12.21% |
4.96% |
|
Public Service and
Administration |
357,283 |
74,132 |
20.75% |
20.67% |
6.33% |
5.63% |
8.79% |
|
Public Service Commission
|
105,357 |
23,079 |
21.91% |
21.23% |
7.13% |
8.25% |
6.52% |
|
S A Management
Development Institute |
71,126 |
16,720 |
23.51% |
23.17% |
7.19% |
8.53% |
7.79% |
|
Statistics South Africa |
1,100,289 |
187,469 |
17.04% |
16.06% |
4.40% |
5.65% |
6.99% |
|
|
|
|
|
|
|
|
|
|
Social Services |
102,686,269 |
30,742,537 |
29.94% |
31.57% |
15.47% |
8.90% |
5.57% |
|
Arts and Culture |
1,608,019 |
403,079 |
25.07% |
24.59% |
12.77% |
5.22% |
7.08% |
|
Education |
16,000,923 |
7,826,605 |
48.91% |
47.43% |
24.61% |
18.68% |
5.62% |
|
Health |
12,655,132 |
3,012,675 |
23.81% |
23.39% |
6.91% |
9.31% |
7.58% |
|
Labour |
2,032,865 |
560,242 |
27.56% |
21.70% |
4.52% |
19.05% |
3.99% |
|
Social Development |
67,232,108 |
17,935,360 |
26.68% |
29.88% |
15.74% |
5.52% |
5.42% |
|
Sport and Recreation
South Africa |
3,157,222 |
1,004,576 |
31.82% |
21.97% |
5.94% |
25.12% |
0.76% |
|
|
|
|
|
|
|
|
|
|
Justice and Protection
Services |
79,940,717 |
15,621,268 |
19.54% |
18.29% |
6.13% |
6.07% |
7.34% |
|
Correctional Services |
10,742,331 |
2,362,586 |
21.99% |
17.57% |
5.99% |
7.21% |
8.80% |
|
Defence |
25,922,255 |
4,149,803 |
16.01% |
14.39% |
4.43% |
4.24% |
7.34% |
|
Independent Complaints
Directorate |
80,891 |
16,605 |
20.53% |
21.91% |
5.63% |
8.09% |
6.80% |
|
Justice and
Constitutional Development |
7,277,770 |
1,379,833 |
18.96% |
18.92% |
5.51% |
6.84% |
6.61% |
|
Safety and Security |
35,917,470 |
7,712,441 |
21.47% |
21.26% |
7.52% |
6.89% |
7.06% |
|
|
|
|
|
|
|
|
|
|
Economic Services and
Infrastructure Development |
52,970,042 |
10,916,850 |
20.61% |
16.14% |
6.95% |
7.26% |
6.40% |
|
Agriculture |
2,281,166 |
433,140 |
18.99% |
18.05% |
4.82% |
8.48% |
5.69% |
|
Communications |
1,423,533 |
306,893 |
21.56% |
10.32% |
1.86% |
8.14% |
11.56% |
|
Environmental Affairs and
Tourism |
2,590,771 |
825,489 |
31.86% |
33.44% |
17.00% |
7.71% |
7.16% |
|
Housing |
8,877,608 |
1,502,852 |
16.93% |
20.87% |
5.87% |
4.77% |
6.29% |
|
Land Affairs |
5,678,519 |
1,317,048 |
23.19% |
9.67% |
6.95% |
9.51% |
6.73% |
|
Minerals and Energy |
2,966,113 |
770,564 |
25.98% |
13.88% |
7.80% |
10.24% |
7.94% |
|
Public Enterprises |
1,063,966 |
1,051,591 |
98.84% |
20.51% |
66.17% |
15.59% |
17.08% |
|
Science and Technology |
3,142,479 |
586,628 |
18.67% |
20.28% |
9.38% |
5.41% |
3.87% |
|
Trade and Industry |
4,845,583 |
1,001,561 |
20.67% |
12.15% |
5.35% |
9.19% |
6.13% |
|
Transport |
15,857,923 |
3,290,369 |
20.75% |
14.39% |
7.60% |
6.28% |
6.86% |
|
Water Affairs and
Forestry |
5,306,347 |
882,306 |
16.63% |
16.07% |
3.69% |
8.63% |
4.30% |
The Table
illustrates that nine Departments spent more or equal to 25% of their total
budgets. These included the Departments of Arts and Culture, Government
Communications and Information Services, Education, Labour, Social Development,
Sport and Recreation, Environmental Affairs and Tourism, Minerals and Energy,
and Public Enterprises. The remaining twenty-five Departments spent less than
25% of their budgets with the lowest spenders being the Departments of
Provincial and Local Government, predominantly due to their transfer schedule,
Home Affairs, Defence, Foreign Affairs and Water Affairs and Forestry.
2. CURRENT
EXPENDITURE
Current expenditure is categorised into two main components, namely
compensation of employees or personnel expenditure and goods and services.
Compensation of employees includes most payments to government employees,
except social contributions and payments to government employees working on
capital projects (classified as a capital payment). Goods and services cover
all goods and services used by a government department or entity.
Current
Payments in the national sphere for 2007/08 was estimated at R 89.97 billion,
which represents an increase of R10 billion compared in the revised estimate
for 2006/07. Departments’ spent R18.37 billion, or an average of 20.42%, of their
Current Budgets during the first 3 months of this year; a reasonable
improvement compared to the 19.7 % in the first quarter of 2006/07. It should
be noted, however, that due to the relatively predicable nature of current
expenditure and specifically compensation of employees, there is a risk of
underspending in this category.
Table 2
represents Departments’ overall Current Expenditure for the first quarter
2007/08
Table 2: Current
Expenditure at the end of the First Quarter
R'000 |
Total Current
Budget |
Current Exp.
for First Quarter |
% Cur. Exp.
for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Voted Amounts |
89,967,889 |
18,373,632 |
20.42% |
6.45% |
6.32% |
7.66% |
|
|
|
|
|
|
|
|
|
Central Government
Administration |
7,466,875 |
1,361,701 |
18.24% |
3.65% |
6.23% |
8.35% |
|
The Presidency |
223,138 |
42,476 |
19.04% |
4.47% |
6.79% |
7.78% |
|
Parliament |
574,826 |
82,836 |
14.41% |
2.31% |
5.38% |
6.72% |
|
Foreign Affairs |
2,772,176 |
492,177 |
17.75% |
2.05% |
5.22% |
10.49% |
|
Home Affairs |
2,079,228 |
351,772 |
16.92% |
4.58% |
5.99% |
6.35% |
|
Provincial and Local
Government |
352,077 |
68,818 |
19.55% |
5.97% |
5.99% |
7.59% |
|
Public Works |
1,465,430 |
323,622 |
22.08% |
5.22% |
8.78% |
8.08% |
|
|
|
|
|
|
|
|
|
Financial and
Administrative Services |
4,620,815 |
881,662 |
19.08% |
12.03% |
6.46% |
0.59% |
|
Government Communications
and Information Services |
250,515 |
70,788 |
28.26% |
13.18% |
9.54% |
5.54% |
|
National Treasury |
2,684,869 |
501,753 |
18.69% |
5.21% |
6.80% |
6.68% |
|
Public Service and
Administration |
335,291 |
72,319 |
21.57% |
6.48% |
5.76% |
9.34% |
|
Public Service Commission
|
103,663 |
22,757 |
21.95% |
6.99% |
8.38% |
6.59% |
|
S A Management
Development Institute |
40,293 |
8,814 |
21.87% |
5.68% |
8.40% |
7.80% |
|
Statistics South Africa |
1,076,763 |
178,748 |
16.60% |
4.42% |
5.65% |
6.53% |
|
|
|
|
|
|
|
|
|
Social Services |
3,594,735 |
613,533 |
17.07% |
4.78% |
6.21% |
6.07% |
|
Arts and Culture |
256,233 |
69,736 |
27.22% |
5.47% |
8.54% |
13.21% |
|
Education |
731,023 |
87,246 |
11.93% |
2.89% |
4.65% |
4.40% |
|
Health |
860,193 |
130,633 |
15.19% |
4.08% |
6.41% |
4.69% |
|
Labour |
1,159,812 |
247,579 |
21.35% |
6.83% |
7.73% |
6.79% |
|
Social Development |
389,836 |
57,117 |
14.65% |
4.00% |
4.33% |
6.32% |
|
Sport and Recreation
South Africa |
197,638 |
21,222 |
10.74% |
3.46% |
2.91% |
4.36% |
|
|
|
|
|
|
|
|
|
Justice and Protection Services |
65,177,048 |
13,970,116 |
21.43% |
6.75% |
6.79% |
7.90% |
|
Correctional Services |
9,678,717 |
2,246,157 |
23.21% |
6.39% |
7.27% |
9.55% |
|
Defence |
15,930,305 |
3,212,673 |
20.17% |
5.68% |
5.98% |
8.51% |
|
Independent Complaints
Directorate |
76,527 |
16,208 |
21.18% |
5.88% |
8.50% |
6.80% |
|
Justice and
Constitutional Development |
5,902,483 |
1,079,249 |
18.28% |
5.13% |
6.57% |
6.58% |
|
Safety and Security |
33,589,016 |
7,415,829 |
22.08% |
7.64% |
7.07% |
7.36% |
|
|
|
|
|
|
|
|
|
Economic Services and
Infrastructure Development |
9,108,416 |
1,546,620 |
16.98% |
4.47% |
2.94% |
9.57% |
|
Agriculture |
921,407 |
174,817 |
18.97% |
4.58% |
6.64% |
7.75% |
|
Communications |
321,689 |
62,316 |
19.37% |
7.59% |
5.91% |
5.87% |
|
Environmental Affairs and
Tourism |
639,646 |
141,693 |
22.15% |
6.34% |
7.72% |
8.09% |
|
Housing |
393,596 |
50,332 |
12.79% |
3.44% |
3.77% |
5.58% |
|
Land Affairs |
1,265,561 |
211,133 |
16.68% |
3.99% |
6.08% |
6.62% |
|
Minerals and Energy |
574,130 |
108,146 |
18.84% |
4.73% |
6.16% |
7.94% |
|
Public Enterprises |
129,421 |
26,483 |
20.46% |
234.88% |
-224.77% |
10.36% |
|
Science and Technology |
222,226 |
42,168 |
18.98% |
5.36% |
7.19% |
6.43% |
|
Trade and Industry |
871,828 |
140,448 |
16.11% |
4.21% |
5.44% |
6.47% |
|
Transport |
722,666 |
85,353 |
11.81% |
2.07% |
6.66% |
3.08% |
|
Water Affairs and
Forestry |
3,175,667 |
530,214 |
16.70% |
4.57% |
6.01% |
6.12% |
Table 2
illustrates that only two Departments spent more or equal to 25% of their
current budgets as at the end of the first quarter. These were the Departments
of Arts and Culture and Government Communications and Information Services. The
remaining 32 Departments spent less than 25% of their current budgets and 21 of
them less than 20%.
Table
3 illustrates Departments’ with the highest current expenditure at the end of
the first quarter.
Table 3: Highest Current Expenditure to date
R'000 |
Total Current
Budget |
Current Exp.
for First Quarter |
% Cur. Exp.
for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Government Communications
and Information Services |
250,515 |
70,788 |
28.26% |
13.18% |
9.54% |
5.54% |
|
Arts and Culture |
256,233 |
69,736 |
27.22% |
5.47% |
8.54% |
13.21% |
|
Correctional Services |
9,678,717 |
2,246,157 |
23.21% |
6.39% |
7.27% |
9.55% |
|
Environmental Affairs and
Tourism |
639,646 |
141,693 |
22.15% |
6.34% |
7.72% |
8.09% |
|
Public Works |
1,465,430 |
323,622 |
22.08% |
5.22% |
8.78% |
8.08% |
The
above-mentioned departments spent plus-minus 25% of their current budgets by
the end of the first quarter, which is considered to be an appropriate level of
expenditure. Government Communications and Information Services
spent the highest portion by the end of June at R70.8 million or 28.26% of its
budget. The second highest was the Department of Arts and Culture with R69.7
million or 27.22%. This is of particular interest considering the relatively
high number of vacancies in the Department noted in previous years.
Table
4 illustrates Departments’ with the lowest current expenditure at the end of
the first quarter.
Table 4: Lowest Current
Expenditure to date
R'000 |
Total Current
Budget |
Current Exp.
for First Quarter |
% Cur. Exp.
for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Sport and Recreation
South Africa |
197,638 |
21,222 |
10.74% |
3.46% |
2.91% |
4.36% |
|
Transport |
722,666 |
85,353 |
11.81% |
2.07% |
6.66% |
3.08% |
|
Education |
731,023 |
87,246 |
11.93% |
2.89% |
4.65% |
4.40% |
|
Housing |
393,596 |
50,332 |
12.79% |
3.44% |
3.77% |
5.58% |
|
Parliament |
574,826 |
82,836 |
14.41% |
2.31% |
5.38% |
6.72% |
The
Department of Sport and Recreation spent the lowest share of their Current
budget, R21.2 million or 10.74%. The second lowest was the Department of
Transport, at R85 million or 11.81%. During the previous financial year the
Department of Sports and Recreation spent 61.19% of its current budget; Transport
66.07%; Education 88.63% and; Housing 95.56%. As can be seen from the figures
above, the aforementioned Departments are following the same trends as last
financial year were money were shifted using virements from compensation of
employees to other line budgets.
3. TRANSFER PAYMENTS
Transfers and subsidies include all unrequited payments made by a
government department or entity. A payment is unrequited if the government
department or entity does not receive anything directly in return for the
transfer to the other party. Both current and capital transfers are included in
this item. Departments’ transferred R47.7 billion, or 23.53%, of their Transfer
budgets during the first 3 months of the year.
Table 5
represents Departments’ overall Transfer expenditure for the first quarter of
2007/08.
R'000 |
Total Transfer
Budget |
Transfer
Payments for First Quarter |
% Transfer
Exp. for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Voted Amounts |
202,562,856 |
47,655,465 |
23.53% |
10.46% |
7.80% |
5.26% |
|
|
|
|
|
|
|
|
|
Central Government
Administration |
31,320,269 |
2,263,289 |
7.23% |
2.13% |
2.51% |
2.58% |
|
The Presidency |
24,716 |
7,868 |
31.83% |
31.75% |
0.13% |
-0.05% |
|
Parliament |
247,903 |
63,356 |
25.56% |
25.15% |
0.00% |
0.40% |
|
Foreign Affairs |
640,153 |
72,501 |
11.33% |
0.00% |
0.01% |
11.31% |
|
Home Affairs |
508,523 |
128,269 |
25.22% |
8.43% |
16.63% |
0.16% |
|
Provincial and Local
Government |
28,486,832 |
1,490,832 |
5.23% |
1.81% |
1.69% |
1.74% |
|
Public Works |
1,412,142 |
500,463 |
35.44% |
2.87% |
15.71% |
16.85% |
|
|
|
|
|
|
|
|
|
Financial and
Administrative Services |
18,117,413 |
4,907,652 |
27.09% |
4.73% |
12.29% |
10.07% |
|
Government Communications
and Information Services |
123,087 |
43,810 |
35.59% |
35.59% |
0.00% |
0.00% |
|
National Treasury |
17,011,419 |
3,830,554 |
22.52% |
4.76% |
13.07% |
4.69% |
|
Public Service and
Administration |
18,868 |
1,438 |
7.62% |
4.36% |
3.26% |
0.00% |
|
Public Service Commission
|
27 |
0 |
0.00% |
0.00% |
0.00% |
0.00% |
|
S A Management
Development Institute |
29,216 |
7,200 |
24.64% |
8.21% |
8.21% |
8.21% |
|
Statistics South Africa |
1,176 |
-298 |
-25.34% |
0.00% |
-24.40% |
-0.94% |
|
|
|
|
|
|
|
|
|
Social Services |
99,000,698 |
30,120,364 |
30.42% |
15.87% |
9.00% |
5.56% |
|
Arts and Culture |
1,346,644 |
333,343 |
24.75% |
14.21% |
4.61% |
5.94% |
|
Education |
15,265,892 |
7,738,264 |
50.69% |
25.66% |
19.35% |
5.68% |
|
Health |
11,760,745 |
2,879,301 |
24.48% |
7.14% |
9.52% |
7.82% |
|
Labour |
835,993 |
310,526 |
37.14% |
1.46% |
35.53% |
0.15% |
|
Social Development |
66,832,820 |
17,876,478 |
26.75% |
15.81% |
5.52% |
5.41% |
|
Sport and Recreation
South Africa |
2,958,604 |
982,452 |
33.21% |
6.09% |
26.61% |
0.51% |
|
|
|
|
|
|
|
|
|
Justice and Protection
Services |
10,901,375 |
1,205,487 |
11.06% |
3.21% |
2.13% |
5.72% |
|
Correctional Services |
30,859 |
7,048 |
22.84% |
8.31% |
7.66% |
6.87% |
|
Defence |
9,607,151 |
895,979 |
9.33% |
2.44% |
1.43% |
5.45% |
|
Independent Complaints
Directorate |
48 |
5 |
10.42% |
0.00% |
10.42% |
0.00% |
|
Justice and
Constitutional Development |
943,241 |
222,952 |
23.64% |
9.00% |
7.29% |
7.35% |
|
Safety and Security |
320,076 |
79,503 |
24.84% |
8.87% |
7.17% |
8.80% |
|
|
|
|
|
|
|
|
|
Economic Services and
Infrastructure Development |
43,223,101 |
9,158,673 |
21.19% |
8.34% |
8.45% |
4.40% |
|
Agriculture |
1,308,824 |
234,852 |
17.94% |
4.95% |
9.86% |
3.13% |
|
Communications |
1,094,301 |
242,892 |
22.20% |
0.16% |
8.74% |
13.30% |
|
Environmental Affairs and
Tourism |
1,947,449 |
678,207 |
34.83% |
20.50% |
7.62% |
6.70% |
|
Housing |
8,477,441 |
1,451,636 |
17.12% |
5.98% |
4.81% |
6.33% |
|
Land Affairs |
4,014,373 |
950,178 |
23.67% |
7.19% |
9.74% |
6.75% |
|
Minerals and Energy |
2,382,824 |
662,094 |
27.79% |
8.57% |
11.25% |
7.97% |
|
Public Enterprises |
933,620 |
1,024,948 |
109.78% |
42.84% |
48.91% |
18.03% |
|
Science and Technology |
2,917,799 |
543,827 |
18.64% |
9.68% |
5.28% |
3.68% |
|
Trade and Industry |
3,956,163 |
857,438 |
21.67% |
5.62% |
10.00% |
6.06% |
|
Transport |
15,093,723 |
3,204,620 |
21.23% |
7.89% |
6.28% |
7.06% |
|
Water Affairs and
Forestry |
2,030,204 |
332,929 |
16.40% |
2.19% |
12.72% |
1.48% |
Table
6, below, illustrates Departments’ with the highest Transfer expenditure at the
end of the first quarter.
Table 6: Highest Transfer Expenditure to date
R'000 |
Total Transfer
Budget |
Transfer
Payments for First Quarter |
% Transfer
Exp. for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Public Enterprises |
933,620 |
1,024,948 |
109.78% |
42.84% |
48.91% |
18.03% |
|
Education |
15,265,892 |
7,738,264 |
50.69% |
25.66% |
19.35% |
5.68% |
|
Labour |
835,993 |
310,526 |
37.14% |
1.46% |
35.53% |
0.15% |
|
Government Communications
and Information Services |
123,087 |
43,810 |
35.59% |
35.59% |
0.00% |
0.00% |
|
Public Works |
1,412,142 |
500,463 |
35.44% |
2.87% |
15.71% |
16.85% |
The
Department of Public Enterprises transferred the highest percentage of its
allocated budget at R1.02 billion or 109.78%. The Department of Education
transferred the second highest at R7.7 billion or 50.69%. At the end of the
2006/07 financial year Public Enterprises transferred 89.88% of its
transfer budget, Education 100%, Labour 102.49%, Government Communications and
Information Services 100%, and Public Works 99.48%.
Table
7 illustrates Departments’ with the lowest Transfer expenditure at the end of
the first quarter.
Table 7: Lowest Transfer Expenditure to date
R'000 |
Total Transfer
Budget |
Transfer
Payments for First Quarter |
% Transfer
Exp. for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Provincial and Local
Government |
28,486,832 |
1,490,832 |
5.23% |
1.81% |
1.69% |
1.73% |
|
Public Service and
Administration |
18,868 |
1,438 |
7.62% |
4.36% |
3.26% |
0.00% |
|
Defence |
9,607,151 |
895,979 |
9.33% |
2.44% |
1.43% |
5.46% |
The
Department of Local Government transferred the lowest percentage of its budget
by the end of the first quarter with R1.49 billion or 5.23% being allocated.
The Department of Public Services and Administration transferred R1.5 million
or 7.62% of its budget. It should be noted that the Transfer Spending varies
between Departments depending on their specific transfer schedules and agreements
with the recipient entities.
4. CAPITAL EXPENDITURE
Capital assets comprise five main categories, namely buildings and other
fixed assets, machinery and equipment, cultivated assets, software and other
intangible assets and land and sub-soil assets. Expenditure on goods, such as
items worth less than R5000, are not included under capital expenditure but
categorised as goods and services.
Table 8
represents Departments’ overall Capital expenditure for the first quarter of
2007/08. Departments’ spent on average 11.49% of their Capital budgets during
the first 3 months. They spent on average 3% of their Capital budgets during
April, 4.86% during May and 3.13% during June. Average departmental spending on
Capital budgets is much lower than Current and Transfer expenditure.
R'000 |
Total Capital
Budget |
Capital Exp.
for First Quarter |
% Capital Exp.
for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Voted Amounts |
6,646,996 |
763,576 |
11.49% |
3.48% |
4.87% |
3.13% |
|
|
|
|
|
|
|
|
|
Central Government
Administration |
2,011,558 |
85,336 |
4.24% |
0.36% |
1.55% |
2.33% |
|
The Presidency |
6,887 |
417 |
6.05% |
0.00% |
0.00% |
6.05% |
|
Parliament |
12,985 |
324 |
2.50% |
0.00% |
1.50% |
0.99% |
|
Foreign Affairs |
444,034 |
20,179 |
4.54% |
0.00% |
1.67% |
2.87% |
|
Home Affairs |
726,838 |
11,597 |
1.60% |
0.94% |
0.51% |
0.15% |
|
Provincial and Local
Government |
5,266 |
371 |
7.05% |
5.26% |
0.49% |
1.29% |
|
Public Works |
815,548 |
52,448 |
6.43% |
0.01% |
2.44% |
3.98% |
|
|
|
|
|
|
|
|
|
Financial and
Administrative Services |
43,783 |
12,378 |
28.27% |
4.57% |
6.55% |
17.15% |
|
Government Communications
and Information Services |
2,210 |
728 |
32.94% |
19.68% |
8.51% |
4.75% |
|
National Treasury |
11,890 |
1,068 |
8.98% |
0.20% |
5.14% |
3.64% |
|
Public Service and
Administration |
3,124 |
375 |
12.00% |
2.02% |
6.40% |
3.59% |
|
Public Service Commission
|
1,667 |
322 |
19.32% |
16.20% |
0.60% |
2.52% |
|
S A Management
Development Institute |
1,617 |
706 |
43.66% |
26.28% |
17.38% |
0.00% |
|
Statistics South Africa |
22,350 |
9,019 |
40.35% |
3.51% |
7.06% |
29.78% |
|
|
|
|
|
|
|
|
|
Social Services |
90,836 |
8,640 |
9.51% |
2.70% |
5.55% |
1.26% |
|
Arts and Culture |
5,142 |
0 |
0.00% |
0.00% |
0.00% |
0.00% |
|
Education |
4,008 |
1,095 |
27.32% |
3.69% |
20.38% |
3.24% |
|
Health |
34,194 |
2,741 |
8.02% |
0.59% |
9.53% |
-2.11% |
|
Labour |
37,060 |
2,137 |
5.77% |
0.86% |
1.59% |
3.32% |
|
Social Development |
9,452 |
1,765 |
18.67% |
11.86% |
3.06% |
3.76% |
|
Sport and Recreation
South Africa |
980 |
902 |
92.04% |
67.76% |
9.39% |
14.90% |
|
|
|
|
|
|
|
|
|
Justice and Protection
Services |
3,862,294 |
445,665 |
11.54% |
3.95% |
5.01% |
2.58% |
|
Correctional Services |
1,032,755 |
109,381 |
10.59% |
2.14% |
6.66% |
1.79% |
|
Defence |
384,799 |
41,151 |
10.69% |
2.48% |
2.37% |
5.85% |
|
Independent Complaints
Directorate |
4,316 |
392 |
9.08% |
1.32% |
0.90% |
6.86% |
|
Justice and
Constitutional Development |
432,046 |
77,632 |
17.97% |
3.01% |
9.62% |
5.34% |
|
Safety and Security |
2,008,378 |
217,109 |
10.81% |
5.36% |
3.69% |
1.76% |
|
|
|
|
|
|
|
|
|
Economic Services and
Infrastructure Development |
638,525 |
211,557 |
33.13% |
10.57% |
14.25% |
8.32% |
|
Agriculture |
50,935 |
23,471 |
46.08% |
5.97% |
6.18% |
33.93% |
|
Communications |
7,543 |
1,685 |
22.34% |
3.82% |
17.08% |
1.45% |
|
Environmental Affairs and
Tourism |
3,676 |
5,589 |
152.04% |
15.32% |
49.51% |
87.21% |
|
Housing |
6,571 |
884 |
13.45% |
1.64% |
9.21% |
2.60% |
|
Land Affairs |
398,585 |
155,737 |
39.07% |
14.05% |
18.10% |
6.92% |
|
Minerals and Energy |
9,159 |
324 |
3.54% |
0.36% |
3.08% |
0.10% |
|
Public Enterprises |
925 |
160 |
17.30% |
0.00% |
15.46% |
1.84% |
|
Science and Technology |
2,454 |
633 |
25.79% |
12.18% |
4.81% |
8.80% |
|
Trade and Industry |
17,592 |
3,675 |
20.89% |
3.09% |
13.68% |
4.12% |
|
Transport |
41,534 |
396 |
0.95% |
0.15% |
0.58% |
0.23% |
|
Water Affairs and
Forestry |
100,476 |
19,163 |
19.07% |
6.51% |
8.74% |
3.82% |
Table
9 illustrates Departments’ with the highest Capital expenditure at the end of
the first quarter.
Table 9: Highest Capital Expenditure to date
R'000 |
Total Capital
Budget |
Capital Exp.
for First Quarter |
% Capital Exp.
for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Environmental Affairs and
Tourism |
3,676 |
5,589 |
152.04% |
15.32% |
49.51% |
87.21% |
|
Sport and Recreation
South Africa |
980 |
902 |
92.04% |
67.78% |
9.39% |
14.87% |
|
S A Management
Development Institute |
1,617 |
706 |
43.66% |
26.28% |
17.38% |
0.00% |
|
Agriculture |
50,935 |
23,471 |
46.08% |
5.97% |
6.18% |
33.93% |
|
Statistics South Africa |
22,350 |
9,019 |
40.35% |
3.51% |
7.06% |
29.78% |
The
Department of Environmental Affairs and Tourism spent the highest
percentage of its budget at the end of the first quarter at R 5.5 million or
152,04%. The Department of Sport and Recreation South Africa spent the second
highest share at 92.04%. At the end of the 2006/07 financial year, Environmental
Affairs and Tourism spent 83.31% of its Capital budget, Sport and Recreation 26.03%,
The SA Management Development Institute 109.92%; Agriculture
189.21%, and Statistics South Africa 77.31%.
Table
10 illustrates Departments’ with the lowest Capital expenditure at the end of
the first quarter.
R'000 |
Total Capital
Budget |
Capital Exp.
for First Quarter |
% Capital Exp.
for First Quarter |
April % Exp. |
May % Exp. |
June % Exp. |
|
|
|
|
|
|
|
|
|
Arts and Culture |
5,142 |
0 |
0.00% |
0.00% |
0.00% |
0.00% |
|
Transport |
41,534 |
396 |
0.95% |
0.15% |
0.58% |
0.22% |
|
Home Affairs |
726,838 |
11,597 |
1.60% |
0.94% |
0.51% |
0.15% |
|
Parliament |
12,985 |
324 |
2.50% |
0.00% |
1.50% |
1.00% |
|
Minerals and Energy |
9,159 |
324 |
3.54% |
0.36% |
3.08% |
0.10% |
The
Department of Arts and Culture spent none of its Capital budget (0%), whilst
the Department of Transport spent 0.95%. During the 2006/07 financial year, the
Department of Arts and Culture only spent 0.79% of its allocated budget, Transport
33.44%, Home Affairs 156%; and Minerals and Energy 144%.
SECTION TWO: FIRST QUARTER
EXPENDITURE IN SELECTED DEPARTMENTS
Based on the general analysis of expenditure in Section One as well as 2007
Budget Priorities as indicated in the Estimates of National Expenditure the
Joint Budget Committee (JBC) identified a number of Departments to engage with
in greater detail. These included the Departments: of Public Enterprises;
Education; Transport; Housing; Home Affairs, Safety and Security and; Provincial
and Local Government.
Department of Public Enterprises
The Department
of Public Enterprise (DPE) has oversight responsibilities over the affairs and
performance of state-owned enterprises (SOE). In this role, it acts as the
shareholder-representative of government, ensuring that state-owned enterprises
are commercially viable and contribute to the growth of the country’s economy.
The department further ensures that SOEs business strategies are aligned with
sector departmental policies and regulatory frameworks such as the Public
Finance Management Act (PFMA).
The Departments
budget for 2007/08 was R1.064 billion. At the end of the first quarter, total
expenditure amounted to R1.052 billion or 98.84% of the Departments total
budget. Of this amount R1.025 billion was transfer expenditure allocated to the
SOEs.
The original Approved Drawings on the National
Revenue fund indicated that the Department planned drawing R438.4 million
during the first 3 months. The transfers to the SOEs therefore resulted in a
deviation of approximately R500 million. The
Minister of Finance also indicated that R3 billion would be set aside as
contingency money for the SOEs whilst the funding for the Pebble Bed Modular
Reactor (PBMR) and InfraCo remained subject to the approval of business plans
and resolutions of outstanding regulatory requirements. In light of these issues,
the Joint Committee agreed to solicit explanatory information for the
Department in respect of its spending for the first quarter.
Department of Education
In South Africa,
education has been identified as one of the most significant areas of
investment for meeting the challenges of the 21st century. The aim of the
Department is therefore to develop, maintain and support the South African
education and training system for the 21st century. Policy Priorities for the
Department for 2007/08 financial year included, amongst others, the popularisation
of the teaching profession, the improvement of access and quality in general education,
developments in Further Education and Training (FET), the intensification of
the implementation of no-fee schools policy and the extension of the primary
School nutrition programme to Secondary Schools.
The Department
of Education was the second highest spending Department for the quarter with
expenditure of R7.8 billion or 48.91% of its total budget. Although this was
inline with previous spending trends – during the first quarter of the previous
financial year the Department spent R6.7 billion or 47% of its total budget –
the Department spent R 600 million less then the planned R 8.4 billion in the
Approved Drawings on the National Revenue Fund. In addition, in relation to
expenditure in terms of the economic classifications, the Department spent
50.69% of its transfer budget during the first quarter, 27.23% of its capital budget
but only 11.93% of its current budget of which R 44.2 million or 16.83% was
personnel expenditure – well below the linear benchmark of 25%. In light of
this, the Committee agreed to examine aspects of the Department’s expenditure
for the quarter more closely.
It’s important
to note that 95.41% of the Department’s budget is allocated through transfer
payments, most of which is directed at higher education institutions, public
entities and transfers to provinces for conditional grants in terms of the
Division of Revenue Act. Of the Department’s total budget, 74.1% is directed at
to higher education institutions. In this regard, the Department has a standing
arrangement with National Treasury according to which 50% of the total grant is
transferred during the first quarter with the remaining 50% paid over the
months up until November. This is done to assist these institutions with their
cash flow management. During the first three months of the year the Department
therefore transferred R6.596 billion or 55.22%.
In terms of
monitoring transfer expenditure to higher education institutions, the
Department explained that it does so via monthly reports and annual reports,
which included annual financial statements. Conditional grants were monitored
in accordance to the Division of Revenue Act, which required receipt of
receiving monthly financial reports and quarterly narrative reports. These
reports were the checked against the approved business plans for each province.
Public entities were monitored through quarterly reports, which included
financial and performance information based on approved strategic plans of the
public entities.
Department of Transport
The Department
of Transport positions itself as the ‘Heartbeat of South Africa’s Economic
Growth and Social Development with the objective of providing an enabling
environment not only for transport mobility, but also for the use of transport
as a catalyst for economic growth, poverty alleviation and social inclusion. The
Department also has a major role in infrastructure development in preparation
for the FIFA World Cup and beyond.
The Department
of Transport spent R 3.3 billion or 20.75% of its total budget during the first
quarter. Of the R3.3 billion spent thus far, R3.2 billion was transfer
expenditure. This noted the Department spent only R85 million or 11.81% of its
current budget of R722.666 million. In light of this, the JBC examined aspects
of the Department’s expenditure and specifically current expenditure, in
greater detail.
In general
terms, the Department explained that underspending in both current and capital
categories during the quarter was a consequence on the longer-term nature of
certain projects, delays in invoices and claims and because certain critical
posts could not be filled. In this regard expenditure was expected to increase
during the year.
Concerning
current expenditure specifically, the Department highlighted the relatively
high level of vacant posts, partly due the restructuring of the Department the
high number of resignations experienced during the past financial year.
Although the reduction of the vacancy rate in the Department was identified as
a priority, the number of filled posts only increased slightly between April
2006 and March 2007 due to 63 resignations with 66 posts remaining vacant. It
is important to note that the size of the Department was increased in 2006 with
an additional 99 posts, which brought the total to 1022, being established. Of
this number 414 posts were not funded by the budget. During the previous MTEF
budgeting process, additional funding of R15 million per annum was allocated in
order to enable the Department supported these posts.
Of the amount
allocated to current expenditure, R541.8 million was assigned to goods and
services. During the period under review the Department spent R56.233 million
or 10.39% of budget for this purpose. Within the Department’s Programmes
underspending on goods and services was most acute in Transport Regulation
(Programme 3) and Integrated Planning and Inter-Sphere Coordination (Programme
4) respectively.
Department of Safety and
Security
The key
strategic priorities for the South African Police Service (SAPS) remain those
highlighted in the SAPS Strategic Plan (2005-2010) which are to combat
organised crime, combat serious and violent crime, reduce the incidence of
crime against women and children and improve the services provided by the SAPS
in general. The total budget of the Department for the 2007/08 is R 36
billion. During the first quarter, the
Department spent R7.7 billion or 21.47% of its budget. In light of the lower
then linear benchmark of 25%, the Joint Budget Committee opted to seek explanatory
information from the Department. In its response to the Committee, two
substantive issues were raised.
First,
concerning current spending and specifically good and services, the Department
highlighted that expenditure was affected due to the new arrangements by Public
Works relating to the devolved budgets, especially pertaining to the payments
for planned maintenance, property rates and taxes and leasehold expenditures
with the latter claimed quarterly and not monthly. The Department indicated
that this environment was being monitored closely and interventions would be
embarked upon were considered necessary.
Second, with
regards to slow spending for capital assets at R 217 million or 11% of the
allocated R 2 billion for the year, the Department indicated that this was the
trend as the more than 50% of the total provision for capital assets where
allocated for the purchasing of vehicles. Orders are placed at the beginning of
the financial year, with specific delivery schedules commencing from the second
quarter. In addition, the Department indicated that orders have been placed for
other capital related purchases such as vehicles, firearms, helicopters which
were again expected to delivered later in the year.
The Department
concluded that spending typically followed an S-Curve and so the evident
spending patterns was expected and in accordance with the strategic plan.
Expenditure would nevertheless be closely monitored.
Department of
Provincial and Local Government
The medium-term policy priorities and budgetary allocations of the
National Department of Provincial and Local Government (DPLG) resonate with the
broader objective of government, which is to grow and strengthen the capacity
of local government structures. For the last four financial years, the budget
of the Department has grown substantially and driven, mainly, by substantive
growth in provisions for the local government equitable share and the municipal
infrastructure grant. For 2007/08, Local Government policy priorities have
increased due to socio-economic demands, as national Government strives to
utilise public infrastructure investment as a vehicle to address
underdevelopment and eradicate poverty.
This Department
spent the lowest percentage of its budget during the first quarter of the
financial year with expenditure of R1.56 billion or 5.41 % of its budget. Around 96% or R28.487 billion of the Department’s budget, however,
consists of transfers through Programme 6: Provincial and Local Government
Transfers. Included in this amount is
R400 million to facilitate the eradication of the bucket system for sanitation.
The reason for the low expenditure during the first quarter was due equitable
share transfers being made in three transfers in line with the published
payment schedule with the first payment due in July 2007. During the previous
financial year the first payment was made during July (R6.77 billion), the
second in November (R5.1 billion), and the final payment in February (R8.42
billion). This noted, the Departments current expenditure for the first 3
months of the financial year was R69 million or 19.55% of its budget.
Department of Home Affairs
The Department
of Home Affairs has a mandate to protect and regulate the interests of the
inhabitants of the Republic in respect of individual status, identity and
specific rights and powers, and to promote a supporting service to the effect.
It is also responsible for managing migration, ensuring national security,
economic development and promoting good international relations. The strategic priorities for the Department
for 2007 were primarily to improve capacity to deliver on its mandate – to
deliver core services to its clients. This includes measure to address the
department’s structural and operational reorganization especially in the
frontline offices. In addition, the Department has prioritized the need to
increase its human resource compliance particularly at senior management
level.
The Department
of Home Affairs was the second lowest spending Department during the first
three months managing to spend R492 million or 14.83% of its budget. In
addition, the Department spent less then the amount stated in the Approved
Drawings on the National Revenue Fund, which suggested expenditure of R699.38 million.
At the end of the previous financial year the Department under spent its budget
by R237 million or 8%. Thus far the Department spent R352 million or 16.92% of
its current budget, R128 million or 25.22% of its transfer budget, and R11.6
million or 1.6% of its capital budget. Given the lower then linear benchmark of
25% expenditure for the quarter especially in respect of current and capital
spending, the Joint Budget Committee opted to seek additional information from
the Department. In its response to the Committee,
Department of Sport and
Recreation
South Africa is
plagued by disparities in the access to sport, particularly in the historically
disadvantaged communities. As part of the transformation process, Sport and
Recreation South Africa (SRSA)’s main focus is improving access to sport and recreation
at all levels of participation, with particular emphasis on its expanded
responsibility of co-ordinating the hosting of the 2010 FIFA World Cup. The
strategic objectives of the Department for 2007 included, amongst others, to facilitate
increased levels of participation of South Africans in sport and recreational
activities and to raise the profile of sports especially amongst
decision-makers in the face of conflicting and competing priorities.
The Department
of Sport and Recreation spent R1 billion or 31.82% of its total budget of R3.1
billion during the first quarter - significantly higher then the previous year.
Of the R1 billion spent, R982 million was transfer expenditure. This noted, the
Department only spent R198 million or 10.74% of its current budget during the
first three months.
Department of Housing
The mandate and
mission of the Department is to establish and facilitate a sustainable process
that provides equitable access to housing or all within the context of
affordability of housing services and access to social amenities and economic
opportunities. Notably within the Department’s
strategic objectives and framework, the Department has formulated the Breaking
New Ground (BNG) housing strategy which aims to, amongst other things, accelerate
housing delivery, improve the quality of housing products, ensure a single and
efficient housing market restructure and integrate human settlements and use
the provision of housing as a job creation instrument.
The Department
spent R1.5 billion or 16.97% of its total budget during the first quarter - R
300 million less than the amount stated on the Approved Drawings on the
National Revenue Fund. In this regard, the Department only spent R50 million or
12.8% of its current budget, R1.45 billion or 17.12% of its transfer budget,
and R884 thousand or 13.45% of its capital budget. Furthermore, it should be
noted that the Department under spent its budget by R171 million or 2.3% at the
end of the previous financial year. In light of the lower then linear benchmark
of 25% and the risk of underspending, the Committee decided to seek explanatory
information from the Department, which subsequently responded by giving a
detailed breakdown of expenditure by programme.
In this regard,
the reported underspending of R 23.2 million, or 20% of the total allocation of
R116.4 million, in Programme 1: Administration, was attributed to the ordering
of goods and services for which delivery and invoices remained pending. The
Department anticipated that expenditure would start to increase as the year
progressed. With regards to Programme 2: Housing Policy Research and Planning,
the expenditure of R4.422 million or 5% of the allocated R89.979 million, was
attributed to a delay in the payment of invoices on the information management
systems as well as a delay in the service level agreement with the SITA due to
the reviewing process that which were now in the process of approval. The Department
assured the Committee that as soon as these service level agreements were approved
expenditure would increase. Concerning Programme 3: Housing Implementation
Support, the Programme spent R15.5 million or 10% of its budget of R147.9
million. The Department indicated that underspending was a consequence of the
slow implementation of Accreditation on Municipalities Project. Expenditure in
this regard was again expected to improve in the next quarter as business plans
were received, reviewed and approved.
When reflecting
on housing expenditure it should be noted that 98.01% of the Department’s
budget of R8.5 billion was appropriated to Programme 4: Housing Development
Finance – where the Integrated Housing and Human Settlement Grant and the
operational budgets for the various public entities are located. Of this R1.4
billion or 17% was spent during the period under review. The Department
indicated that this was in line with projected expenditure with the transfer of
funds to provinces based on inputs received from the different provincial
governments and project life cycles. Expenditure is therefore likely to peak
later in the year.
Regarding the
monitoring of transferred funds, the Department indicated that they received
monthly reports on financial and non-financial information that was reviewed
and followed-up with provinces. Conditional grants were monitored in accordance
to the Division of Revenue Act. The Department visited their provincial
counterparts to review expenditure as well as revise their monthly cash flows
when required. In addition a Chief Financial Officers Forum has been
re-established where issues of non-spending in relation to business plans are
debated.