DRAFT REPORT OF THE STANDING COMMITTEE ON APPROPRIATIONS ON THE APPROPRIATIONS BILL [B3-2010] (NATIONAL ASSEMBLY- SECTION 77)

Report of the Standing Committee on Appropriations on the Appropriation Bill [B3-2010] (National Assembly- Section 77), dated 21 May 2010

The Standing Committee on Appropriations, having considered the Appropriations Bill [B3-2010], referred to it in terms of the section 10(a) of the Money Bills Amendment Procedure and Related Matters Act, reports as follows:

Introduction

The Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009 sets out, among other things, the legislative framework for amendments to the Appropriations Bill by the House facilitated through the processes of Parliament and its Committee on Appropriations.

“Throughout South Africa nearly a million people have lost their jobs. Hundreds of thousand of families have been affected by retrenchments. Businesses and households are struggling to adjust to declining incomes and precarious levels of debts. South Africa is beginning to emerge from its first recession in 17 years, though the levels of recovery are likely to be very slow and uneven, with job creation lagging the return to growth and many households continuing to face hardships. However, healthy public finances and partnership with other sectors in the World have enabled the government to reduce the impact of the crisis”[1]. Money has been appropriated for 2010/11 budget and the responsibility now lies with the various government departments and agencies to spend it effectively, efficiently and economically. The President of the Republic of South Africa, Mr Jacob Zuma, in his state of the nations address, outlined clear priority areas where government needs to focus on for the next five years[2]. However, the greatest challenge is to make sure that these priorities are aligned with the budget. This report focuses on, amongst other things, whether the appropriation for 2010/11 does take these priority areas into consideration.

The Perspective on Legislative Framework

The Standing Committee on Appropriations (the Committee) was established in terms of section 4(3) of the Money Bills Amendment Procedure and Related Matters Act No.9 of 2009 (the Act) and section 4(4) of this Act provides for the powers and functions of the Committee. Section 7(1) of the Act requires the Minister of Finance to table the National Budget together with the Appropriation Bill. While section 10(1)(a) of the Act requires that, after the adoption of the fiscal framework, the Appropriation Bill must be referred the Committee on Appropriations of the National Assembly. Furthermore, section 10(3) of the Act indicates that the Committee on Appropriations cannot consider any amendment proposal before passing the Division of Revenue Bill and Fiscal Framework. Sub-section (4) of section 10 indicates that any amendment should be in line with the adopted fiscal framework. The Act requires the Committee to hold public hearings on the Appropriation Bill and proposed amendments. The Committee is also expected to report on the comments and the amendments to the Appropriation Bill to Parliament. Parliament has four months to pass, reject or amend the Bill as per the Act[3].

Performance and Aggregate Expenditure Review

Despite the challenges of the economic crisis, the National Treasury has tabled an expansionary budget of R441.5 billion excluding the direct charge of the Revenue Fund. The budget includes three economic classifications namely: Current Payments, which is allocated R81.8 billion for the compensation of employees and R46.8 billion for goods and services; Transfer Payments which receive the highest portion of the budget amounting to R302.6 billion in 2010/11; and Payment for Capital Assets, which is allocated R9.2 billion while Payments for Financial Assets receives R888 million. The appropriated budget for 2010/11 has increased when compared to the 2009/10 financial year where R438 billion was allocated. The government in general has reported an overall under expenditure of R5.8 billion or 1.3 per cent of the entire national budget for 2009/10. The general observation indicates that the bulk of this under-spending emanates from Current Payments and Capital Expenditure. However, the 2010/11 budget has increased by R2.6 billion or 0.6 per cent from the 2009/10 to 2010/11 financial year.

The Social Services cluster was allocated R129 billion of which R95.9 billion was allocated to the Department of Social Development. The largest portion of this department’s budget goes to social security programme, which aims to develop comprehensive social security policies and provide income support to vulnerable people. This budget has increased by R9.4 billion or 9.8 per cent when compared to the previous financial year where the Department was allocated R86.5 billion. However, the Department has under-spent its budget at the end of the fourth quarter of 2009/10. It was allocated R86.5 billion in 2009/10 but could spend R85.9 billion which is less by R572 million or 0.6 per cent of the allocated budget. According to information obtained from the National Treasury, it is clear that the under-spending is attributed to transfers and subsidies as well as to capital payments. An amount of R9.7 million was allocated for capital payments but only R3.6 million was spent in 2009/10. An amount of R86 billion was allocated for transfer payments but R84.8 billion was spent. The Department has reported an overspending in the current payments area. The current payments were allocated an amount of R462 million but the Department has spent R1.1 billion as at the end of the financial year. This means that certain amount has been shifted from both capital payments and transfer payment to offset overspending on current payments.

The Department of Social Development needs to come up with a clear plan on how it intends to rectify the under-spending. While the Committee has noted the under-spending and the shifting of funds, it remains concerned that the majority of poor people find it difficult to access social grants due to an array of reasons. The Department needs to act swiftly to correct these challenges which hamper the delivery of service to the poor.

The Department of Cooperative Governance and Traditional Affairs (CoGTA) is allocated approximately R43.9 billion in the 2010/11 budget. This shows a budget increase of R7.3 billion or 16.8 per cent when compared to R36.5 billion allocated in 2009/10 budget. This budget is dominated by the transfer payments of the Local Government Equitable Share and the Municipal Infrastructure Grant under the governance and intergovernmental relations programme. However, this Department reported an under-spending in the 2009/10 financial year. An amount of R36.5 billion was allocated but the Department spent R36.0 billion which is R513 million less than the allocated budget. The Department reported an under-spending in all economic classifications during 2009/10 with Capital Expenditure reflects the major under-spending. The high levels of under-spending are a cause for concern since Capital Expenditure and Transfer Payments form parts of the instruments which are meant to create jobs and enhance service delivery.

The Department of Justice and Constitutional Development is allocated R10.2 billion in the 2010/11 budget. The allocation shows an increase by R480 million or 4.6 per cent when compared to the previous year. In 2009/10, the Department was allocated an amount of R9.7 billion and spent 100 per cent of its budget, although money was shifted around by way of over-spending in the Capital Expenditure, Transfer Payments and mainly on Current Payments. The Committee has noted this level of over-spending and suggests that the Department should take more corrective measures to remedy the situation. Notwithstanding the provision of the PFMA in respect of virements and shifting of funds, the Committee remains concerned about this spending trend, as its might indicate a lack of proper planning.

According to the Public Service Commission (the Commission), it has lost about R8.7 million due to suspensions of personnel with pay. The Commission, during its presentation to Committee, indicated lack of compliance with the Public Service Act (PSA)in dealing with the suspension process. The PSA prescribes that case of misconduct including suspension must be concluded within 60 days, however, the departments have, in some cases, taken approximately 252 days to finalise a formal disciplinary process.

The Department of Defence and Military Veteran has received a total budget of R30.7 billion in the 2010/11 which constitutes 6.9 per cent of the annual budget of government. This department’s budget has decreased by R1 billion compared to the budget allocation of R31.3 billion in the previous year. The Department has under-spent on Transfers and Subsidies and overspent on Capital Expenditure and Current Payments. An amount of R742 million was allocated to Capital Expenditure but R1.1 billion was spent at the end of 2009/10. An amount of R20.7 billion was allocated for Current Payment but an amount of R20.8 billion was spent at the end of the financial year. The Department made virements and shifted funds from Transfer Payments to both Capital and Current payments. Although the Public Finance Management Act makes provision for virements, the manner in which these are done leaves much to be desired.

The Committee received a submission proposing a budget amendment from Mr Neil Galvin. In his presentation, Mr Galvin recommended that there was a need to increase or reprioritize certain programmes in budget of the Department of Defence Force and Military Veteran. A motivation was made that there is a need to increase the number of flying hours for pilots in South Africa because the Atlantic Treaty Organisation (ATO) requires about 200 flying hours per pilot to remain qualified. The Department has planned to cut the number of flying hours from 550 to 250 over the next three years and these hours were budgeted for the entire flying squad and not for single pilot as ATO requires. According to Mr Galvin, this poses a risk since the pilots need to fly adequate hours to stay combat. Mr Galvin argued that, if pilots were not given appropriate hours to fly, pilots retention rate may decrease. Therefore anticipated benefits from the training programmes may not be realised. Even worse, these scarce skills can not be replaced with ease. Furthermore, Mr Galvin recommended that this be addressed through providing more budget or reprioritising other programmes. The Committee was unable to conclude on the matter due to insufficient supporting information in this regard. .

2010/11 Budget Allocation

The 2010/11 Appropriation Bill [B3-2010] mainly supports the five policy priorities of government. These include:

Job creation and infrastructure,
Education and skills Development,
Improving health care services,
Rural development, and
Justice, crime prevention and policing

In line with the provisions of the Act and section 59(1) of the Constitution, the Committee invited certain stakeholders to comment and make inputs on the Appropriation Bill. The focus of these hearings was more tailored along the five priorities. The following stakeholders were invited by the Committee:

Fiscal and Financial Commission (FFC),
Public Service Commission (PSC),
Human Science Research Council (HSRC),
People’s Budget Coalition / COSATU (who could not attend),

The Committee also posted an advertisement in the print media inviting the members of the public to the hearings. The following members of the public responded to the advertisement and appeared before the Committee:

Malose Kekana in his private capacity, and
Neil Galvin in his private capacity.

The main purpose of these hearings was to ensure that all inputs and views of various bodies/ individuals are considered in compiling the Committee’s report as required by the Act. The Committee expresses its appreciation to those individuals and entities that appeared before it.

Job Creation and Infrastructure

While the government has prioritized job creation and infrastructure, there is a greater need for all sectors of society to support this priority. The government can not fully achieve this strategic priority on their own. President Zuma, in his address during the annual business meeting[4], urged all businesses to support the government in creating decent jobs. This is due to the fact that this function consists of cross-cutting elements in the process of implementation. Job creation as a priority contributes about 5.97 per cent of the main budget which shows 0.18 per cent increase compared to 2009/10 proportion. This increase is indicative of the government’s commitment to halve poverty and unemployment during the 2004 and 2014 period. While the world’s economic recession has put more pressure in their budgets, government has acted swiftly and can do more to overcome this challenge. Therefore, this level of increase can not be under-estimated especially if other stakeholders come on board by assisting government in achieving this goal. According to Human Science Research Council’s (HSRC) research, approximately 1 million jobs were lost during 2009/10. The majority of the people affected by job losses is youth within 15 to 35 years[5] age bracket. Most affected are those that did not receive any formal education and did not to complete school grade 12.

It is imperative for government to come up with creative measures to address mainly youth unemployment in order to ensure that the objective of halving unemployment by 2010 is realised. This can be partly achieved through effective utilisation of conditional grants and public entity subsidies designed to provide regional or municipal water, electricity, road and sanitation infrastructure, public transport, EPWP and national fuel pipelines by adopting labour intensive methods and systems. Importantly, government does not only carry a responsibility to provide conducive policy framework for the creation of jobs, but also to create an environment for the protection of jobs during periods of recession. Part of the government subsidies for 2010 budget include an amount of R3.2 billion allocated for private enterprises by the Department of Trade and Industry (DTI)[6]. The main purpose for this programme is to stimulate and facilitate the development of enterprises through providing incentive measures that support investment, job creation and regional economic development such as industrial economic zones.

Education and training have the potential to contribute to job creation as well. The establishment of comprehensive Further Education and Training Colleges, reopening of other sector colleges such as nursing and teacher colleges is vital in this regard. This will contribute greatly in the fight against unemployment and poverty as it will also contribute in creating more capacity for primary health care sectors and schools. Furthermore, it will reduce the levels of overcrowding in tertiary hospitals and of teaching loads. Universities, technical colleges and other similar colleges should focus on producing scarce skills and graduates that are required in the labour market. The observed misalignment between the curriculum and the labour market requirements remains a real challenge in creating decent jobs. This results in a number of young graduates and professionals being appointed into job positions where they can not perform optimally, however, the Committee welcomes the fact that the FETs will now be under the auspices of the reconfigured Department of Education.

The youth is mostly affected by the recent economic recession. Government has created a number of initiatives and opportunities to address youth unemployment but more need to be done. In 2010/11, R369 million is allocated to the National Youth Development Agency (NYDA) which is responsible for the coordination of youth development programmes. These funds should be channelled towards programmes that aim to create employment for youth. Importantly, relevant parliamentary committees should enhance in-year oversight and, close scrutiny is required in ensuring that a common goal of job creation for youth is realised. The lack of opportunities for the youth might lead to high levels of crime due to the widening gap between the poor and the rich.

Jobs can be created everywhere in South Africa as long as there is proper coordination and management of government resources in all three spheres of government. All different areas of the country have reflected major comparative advantages in various ways. This can be identified as a pillar for development whether in rural or urban areas to create jobs. Expanded Public Works programme which has created over 500 000 job opportunities and training people as an exit strategy is welcomed. While the Committee is mindful of the progress made in this regard, the Committee is concerned about the tendency of under-spending in this incentive (job-creation) grant. More attention is required to ensure that the programme functions effectively and expands to ensure that more poor people benefit in this programme.

Education and skills development

The budget of education and skills development shows the highest percentage of 21.6 per cent when compared to other four priorities. In 2010/11, the education sector has been allocated an amount of R29.8 billion excluding an amount of R8.4 billion for skills development and Sector Education Training Authority (SETA) as a direct charge from the revenue fund. Education and skills development is a major aspect of both economic growth and societal upliftment. The South African government has been investing vast resources in skills development in the context of National Skills Development Act but the performance of the SETAs remains a challenge. The matric pass rate for less-resourced schools is very low and the quality of education has not improved. Professor Crain Soudien has indicated that the throughput, in the form of a number of African graduates, remains very low in the institutions of higher learning in the Republic. Another challenge is observed at the basic education level[7]. It is therefore important to emphasise the need for more investment in the early years of schooling, starting with the Early Childhood Development (ECD). The evaluation of outputs from basic and higher education is important in ensuring that South African education system produces a workforce that is required by the economy –that is employable graduates.

Education should improve the learning foundation for children particularly in mathematics, literacy, academic languages and numeracy skills. The Education sector still faces numerous challenges including: the low pass rate, poor school management systems, inappropriate teacher training methods, poorly managed learner transport and lack of basic resources in some schools. A quintile system was introduced as a national ranking method that is used to measure the level of resources in schools, with quintile one being the poorest and quintile five being the well resourced schools. In fact, the quintile classification, has sometimes proved to be confusing as schools in the same areas can be classified differently. In some areas, this system has shown positive results but more support is required to address huge backlogs due to the imbalances of the past in the education sector. The Department of Basic Education has set aside R148.6 million for quality assessment, monitoring and evaluation. The aim of this programme is to ensure improved service delivery in basic education. This initiative is welcomed and it needs to be expedited and continuously monitored and evaluated in order to ensure that value for money is achieved. An amount of R3.8 billion has been set aside for vocational and continuing education and training, R3.7 billion is intended for recapitalisation of Further Education and Training (FET) colleges and technical colleges. Equally important, clear guidelines, measurable targets and, proper monitoring and evaluation systems are required to improve the quality of education provided by the education sector. This should include a clear plan that will deal with high levels of drop-outs from the educational system.

The Department of Higher Education has set aside an amount of R19.5 billion in 2010/11. However, the funding formula of the universities remains a cause for concern, since an inadequate portion of the allocation is transferred to previously-disadvantaged institutions of higher learning. In the contrary, bigger allocation is made for the universities which are well-resourced. According to the HSRC findings, the main challenges in the education sector are access to education, equity, quality and efficiency which leads to under-performance in the education sector[8]. The lack of quality education for poor communities results in a low labour absorption rate because most new entrants in labour markets lack basic skills and education to increases their chances of economic participation. There is a need for clear interventions from the Department of Higher Education to reverse this trend and to provide a safety net especially for those who have dropped out and remain unemployed. In order for this to be achieved, the Department of Higher Education needs to consider the creation of skills development centre which has an open entry system that will target those who want to enhance their skills even after dropping out of schools.

The above-mentioned proposals will seek to reduce the high levels of unemployment which are difficult to minimise even during the economic growth period due to lack of skills. Therefore, the prioritisation of skills development does not only lie with government, but government needs to provide necessary measures and instruments for public and private sectors to be able to contribute towards the realisation of this vision.

Improving Health Care Systems

The Department of Health has received a total allocation of R21.4 billion in the 2010/11 financial year. The allocation for health care is 9.4 per cent when compared to other government priorities. The bulk of this budget is allocated for the health services programme. The aim of this programme is to support health services in provinces including hospitals, emergency medical services and occupational health[9]. In South Africa, the life expectancy has declined over the past decade, largely as a result of deaths attributable to HIV/AIDS pandemic. Tuberculosis (TB) is another cause for increased deaths in South Africa. Approximately 70 per cent of people with HIV/AIDS are co-infected with tuberculosis. South Africa is one of the 12 countries that have experienced an increase in maternal mortality rate since 1990. The challenges in the public health care system include poor and ageing infrastructure, inadequate hospital management and lack of critical resources including skilled health workers. In acknowledging these challenges, the Department of Health has come up with ten-point plan which includes the following:

Provide strategic leadership and creation of social compact for better health outcomes,
Implement national insurance health plan,
Improve quality of health services,
Improve human resource management,
Overhaul the health care system and improve its management,
Revitalization of physical infrastructure,
Accelerated implementation of HIV/ AIDS plan and reduction of mortality due to TB and associated diseases,
Mobilise masses for better health for the population,
Review drug policy, and
Research and development.

The Committee and the relevant portfolio committee will monitor the implementation of this plan and its effectiveness.

The policy on HIV treatment has been adjusted. In the past, government hospitals and clinics were providing anti-retroviral (ARV) treatment to people with a CD 4 count of less than 200. Most recently, government has expanded ARV treatment to include people with a CD 4 count of less than 350. The number of people accessing ARVs is increasing, therefore more resources will be needed to ensure the success of this programme. The HSRC study shows that, for every person initiating treatment, another four to six people become newly affected. This calls for more emphasis on the need to appropriately balance the ARV treatment and prevention measures. The study also suggests that 50.8 percent of those who have tested for HIV were positive, this includes the 43 per cent of male tested positive and 56.7 per cent of females tested positive. The study shows that the number of females who are affected by this pandemic is increasing at an increasing rate when compared to males since 2005. Most of these people are youth between the ages of 15 to 24, and adults between the ages 25 to 49, between 2005 to 2008. The new treatment criteria and the current HIV Counselling and Testing (HCT) campaign, which is aimed at increasing the number of people going for testing, is welcomed. It is a step pointing towards the right direction to fight the pandemic. The government initiative of implementing medical male circumcision as HIV/AIDS prevention strategy which is regarded as part of a male sexual and reproductive health package is also welcomed.

Rural Development and livelihoods

The Department of Rural Development and Land Reform is allocated an amount of R6.7 billion in the 2010/11 financial year. The largest share of the budget of about R4 billion is earmarked for Land Reform programme. The aim of this programme is to ensure sustainable land redistribution in South Africa. About 40 per cent of the South Africans reside in rural areas, the majority of which is poor. While the Committee has noted the allocation, it is mindful that rural communities are faced with a number of complex challenges which include: economic marginalisation, high unemployment (including those who are discouraged from seeking employment), environmental deterioration, ineffective land management, lack of access to social security systems (social workers), and slow process in agricultural land reform. In its strategic plan for 2010/11, the Department of Rural Development and Land Reform has outlined its outputs targets for 2010/11[10] as follows:

Land agrarian reform and protection of natural resources

Increase the number of commercial farmer holders from 780 000 to 800 000,
Increase the percentage of small-scale commercial farmers from 4.0 to 10 per cent,.

Rural development and sustainable livelihoods

· Decrease the percentage of households with inadequate housing from 5.6 per cent to 2 per cent,

· Increase the percentage of households with access to water from 74.7 per cent to 90 per cent, and

Enable institutional environment for land reform

· Decrease the number of outstanding land claims from 4 296 to 1000.

The Committee welcomes the Department of Rural Development and Land Reform’s plans and it is mindful that close monitoring and evaluation, and strong ‘research’ are critical to address land reform. This process cannot only be conducted at a national level but it needs to be cascaded down to the provincial and municipal levels in order to ensure that budget implementation achieves its intended purposes. In turn, this will assist the government to identify problems and challenges in advance and, and plam and act proactively.

In 2009/10, the Department of Rural Development and Land Reform was allocated a total budget of R6.3 billion but R5.8 billion was spent at the end of the 2009/10 financial year. This represents an under-spending of R536 million due to lower spending on both Current and Transfer payments. This raises concerns about the achievement of departmental strategic objectives, and the Department of Rural Development and Land Reform should develop a remedial plan to rectify the situation in the 2010/11 financial year. In its strategic plan, the Department of Rural Development and Land Reform prioritised an accelerated rural development whose aim is to raise the levels of income, increase food production and improve viability of small-scale farming. This plan is long overdue considering the fact that the development of rural areas has been neglected for many decades in the past. The HSRC research study indicates that the allocated budget of R6.7 billion to R8 billion for 2010/11 to 2012/13 financial years will not be sufficient to address backlogs in rural areas. The Committee notes that the powers to coordinate rural development strategy rest with the Department of Rural Development and Land Reform but its implementation rests with number of government departments and entities. These include the Departments of Agriculture, Forestry and Fisheries, Water and Environmental Affairs, Transport, Public Works, and Cooperative Governance and Traditional Affairs. The commitments to this common goal and proper coordination among these departments are critical in ensuring successful rural development. The afore-mentioned study indicates that more funds should be channelled to rural development in addressing the following needs:

Improve water management, water reticulation and water retention schemes,
Land management, care and environmental services,
Agricultural support and extension to both commercial and household production,
Research and development for both commercial farming and household production,
Expanded processing nearer to agriculture producers where economically justified,
Attention to inputs costs, such as fertiliser and equipment,
More forceful export market development,
Meaningful expansion of agricultural training colleges, and
Investment in agro-industrial logistics platform- such as rural roads and ability to export time sensitive products.

While the Department of Rural Development and Land Reform’s plan seek to promote an integrated strategy for the implementation of the rural development, effective monitoring and evaluation, and research and development are required in ensuring a sustainable rural development. The green paper on rural development agency is welcomed by the Committee. The agency will co-ordinate the implementation of rural development strategy, overhaul land policy framework and consolidate all land related laws. It will also deal with the revision of tenure security law for farm workers. The Department, in briefing the Committee during engagements on the 2009/10 second quarter performance, had raised concerns about the ‘willing seller willing buyer’ approach which has made immaterial impact on the work of the Department of Rural Development and Land Reform to achieve its target for land redistribution. The Committee notes the pilot phase of the rural development project in Limpopo and request a progress report from the relevant Department to determine the progress made thus far.

The Fight against Crime and Corruption

The Department of Police has been allocated an amount of R52.5 billion which shows an increase of R5.5 billion when compared to the R47.6 billion in 2009/10 financial year. The bulk of this budget is allocated to the compensation of employees under visible policing programme. The aim of this programme is to enable police stations to institute and preserve safety and security and provide for specialised interventions and the policing of South Africa’s borderlines. In the previous year, the Department of Police has spent 100 per cent of their budget although there were shifting of some funds. The Department of Police has under-spent in Current Payments and over-spent on Transfer Payments and Capital Expenditure. This spending trend for economic classifications was offset by shifting of funds.

According to the Public Service Commission (PSC), the Department of Police does not comply with Public Service Act which provides that suspension process should take about 60 days. The Department took about 85 days to deal with the suspension of 650 personnel. In the process, the Department has lost about R5.4 million from suspension with pay. In 2008/09, the Department has lost R102 million due to financial misconduct and only recovered 61 per cent, while R99.1 million was lost in 2007/08 recovering 27 percent of this amount. The Committee is mindful that the Department is among the government priorities for the next five years and it firmly believes that the Department must take preventive measures to address financial misconducts.

The study conducted by HRSC revealed that South Africa is among countries with the highest murder rates in the world. The study suggests that most of these affected offenders are young men who are the majority of the offenders and victims of crime[11]. This suggests that youth in South Africa have more influence and more affected by crime, given the fact that 43.5 per cent of offenders are young people between the ages of 10 to 25 years. The study further indicates that this crime is simple characterised by people who know each other either as friends or relatives, suggesting that South Africa has high levels of contact crime which is ‘social’ in nature. This means that government needs to scale up its interventions that deal with the ‘social’ component of crime. It was suggested that government should spend more money on crime prevention rather than responding to crime. Social crime requires more effort from various stakeholders collectively. The Department of Police is not the only role player in addressing social crime, other departments such as education, Social Welfare, Economic Development, National youth Development Agency and even communities as a whole should also participate in the fight against crime.

Committee Findings

The Committee, after taken into consideration the Appropriation Bill [B3-2010], issues raised during public hearings and Section 32 reports (in-year monitoring instrument for government spending), has established that some departments do not fully comply with the range of prescribed rules and procedures, inter alia the Public Finance Management Act and the Public Services Act.

The following findings were made during the consideration of the Bill:

1. The implementation of the Money Bill and Procedures Related Matters Act 09 of 2009 is not being effected in its entirety.

2. There is a lack of compliance with the Public Service Act regarding the prescribed period of 60 days for resolving financial misconduct. Some government departments, such as the departments of Justice and Constitutional Development, and Police, exceed this period resulting in high expenditure being incurred for suspensions with pay.

3. The Committee has noted that some department under-spend on their budgets, particularly on Current Payments. This can be attributed to vacancy rate in government departments, which ultimately results in the departments shifting their funds within programmes and economic classifications. This is a general problem across the departments.

4. The under-spending in the Expanded Public Works incentive grant remains a huge challenge. The challenges of this grant include the lack of understanding of its purpose by provinces, uncertainty about refund as the grant compensates past performance and lack of communication among the stakeholders. The Department of Public Works is the custodian of this grant that aims to encourage job creation.

5. The youth remains most affected by crime both as victims and as offenders. More funds should be made available for social programmes to prevent the youth involvement in crime. The Justice, Crime Prevention and Security cluster is responsible for policies that aim to reduce crime.

6. The high levels of student dropouts from both tertiary institutions and basic education institutions due to the lack career guidance, motivations, high levels of unemployment and non affordability is still prevalent.

7. Funding formula for Universities does not seem to be reversing the injustices of the past since most historically disadvantaged institutions receive less budget allocations compared to the well resourced institutions.

8. The adjustment of the CD 4 count policy from 200 to 350, HCT AIDS campaign and medical male circumcision will require more resources to ensure sustainability.

Recommendation:

The Committee recommends that:

1. The departments should draw up turn around plans to address the weaknesses identified in this report and report back to the Parliament within 60 days on the proposed remedial actions.

2. A detailed project plan (schedule) for the implementation of the Money Bills Amendment Procedure and Related Matters Act 09 of 2009 be tabled in the House within 30 days by the Office of the Speaker.

3. The House considers the adoption of the Appropriation Bill without amendments.

Report to be considered

[3] Money Bill Amendment Procedures and Related Matters Act No. 9 of 2009

[4] This annual business meeting was held at the Sandton Convention Centre, in Johannesburg on 11 May 2010.

[7] Crain Soudien (2009), a professor at the University of Cape Town