Report of the Standing
Committee on Appropriations on the Appropriation Bill [B3-2011] (National
Assembly – Section 77), dated 14 June 2011
Having considered the Appropriation Bill [B3 – 2011], referred
to in terms of Section 10(a) of the Money Bills Amendment Procedure and Related
Matters Act No.09 of 2009, the Standing Committee on Appropriations reports as
follows:
1.
Introduction
Section 27(1) of the Public Finance Management Act No. 29 of
1999 (PFMA) requires that the Minister of Finance (the Minister) tables the
annual budget for a financial year in the National Assembly before the start of
that financial year or, in exceptional circumstances, on a date as soon as
possible after the start of the financial year, as the Minister may determine.
Section 26 of the PFMA requires Parliament and each provincial legislature to
appropriate money for each financial year for the requirement of the State and
the province, respectively. In executing
this mandate, the Standing Committee on Appropriation was established in terms
of section 4(3) of the Money Bills Amendment Procedures and Related Matters Act
No.9 of 2009 (hereon referred to as the Act). In line with section 10(1)(a) of
the Act and after the adoption of the Fiscal Framework, the Standing Committee
on Appropriations has a responsibility to consider the Appropriations Bill and
report on the Bill to the National Assembly.
In the process of dealing with the Appropriations Bill,
section 9(7) (a) of the Act requires the Committees on Appropriations of both
Houses to consult with the Financial and Fiscal Commission (FFC). On 15 and 17
April 2011, the advertisement was placed for the general public inputs and no
inputs were received from the general public. Therefore, the only stakeholders
that made submissions to the Committee (through an invitation) were as follows:
·
Financial
and Fiscal Commission (FFC);
·
Public
Service Commission (PSC); and
·
Human
Science Research Council (HSRC)
2.
The Review of the Overall
allocations for 2011/12 financial year
The 2011/12 budget was tabled by the Minister of Finance in the
National Assembly with the Appropriations Bill (the Bill) on 23 February 2011.
The Bill was referred to the Standing Committee on Appropriations on 9 February
2011 for consideration and reporting to the House. The Bill was tabled together
with the Division of Revenue Bill, Estimates of National Expenditure (ENE),
Budget Review and the Budget Speech. Given the fact that Committees on Finance
and Appropriations have different mandates derived from the Act, the
Appropriations Bill was therefore referred to the Standing Committee on
Appropriations.
The national budget for the 2011/12 financial year has
allocated R499,4 billion to national departments of government. This allocation
excluded the direct charge of R385,3 billion. The direct charges were not part
of the Appropriations Bill hence are directly charged from the National Revenue
Fund (NRF). The direct charge included the following items of the budget,
namely President and Deputy President’s salaries; remuneration for Members of
Parliament; State Debt Cost, Provincial Equitable Share (PES); General fuel
levy sharing with metropolitan municipalities; Skills levy and Sector Education
and Training Authorities (Setas); and Judges’ and Magistrates’ salaries. The
appropriation also excluded an amount of R4 billion which was put aside for
contingency reserves in 2011/12 budget. In the 2011/12 financial year, the
total budget has increased when it is compared to the 2010/11 financial year.
In the 2010/11 financial year , R441.5 billion was appropriated before
adjustments. This showed an increase of R57.9 billion or 13 per cent of the
initial budget. Of note, the budget increase was driven by the large increase
on transfers to municipalities, provinces, universities, technikons, public
corporations, private enterprise, and non-governmental agencies.
3.
Economic Classifications Allocations
for the 2011/12 budget
Table 1 (below) shows that the economic classifications were
divided into three parts, namely, current payments (compensation of employees
and goods and services), transfers and subsidies, payment of capital assets and
payments for financial assets. In the economic classification funds have been
appropriated as follows:
Table 3.1: Economic
Classification Budget Allocations for 2011/12 Financial Year
|
|
Budget
Allocations 2011/12 |
|
||
|
Economic
Classifications |
2010.11 |
2011.12 |
Amount increase |
% Increase/ Decrease |
|
Current Payments |
128. 693611 |
145.328795 |
16.6 |
12.9 |
|
Transfers and
Subsidies |
302. 645250 |
342.195169 |
39.5 |
13.0 |
|
Capital payments |
9290470 |
11.206872 |
1.9 |
20.6 |
|
Payments for
Financial Assets |
888.601 |
750.100 |
-1300 |
-15.6 |
|
TOTAL |
441517932 |
499480936 |
57.9 |
13.1 |
Source: National
Treasury (2011)
In the 2011/12 budget, an amount of R145.3 billion or 29.0
per cent was allocated for current payments in the budget. This has increased
by R16.6 billion or 12.9 per cent when compared to the 2010/11 financial year’s
budget. Part of the current payments budget included allocations in the
following areas:
·
An
amount of R92.3 billion or 18.4 per cent was allocated for compensation of
employees; and
·
An
amount of R52.9 billion or 10.5 per cent was allocated for goods and services.
An amount of R342.1 billion or 68.5 per cent was allocated
for transfers and subsidies. This reported an increase of R39.5 billion or 13.0
per cent when compared to the 2010/11 allocation. Transfers and subsidies
included items such as money transferred to municipalities, provinces,
government agencies, non-governmental agencies, universities and technikons. An
amount of R11.2 billion or 2.2 per cent was allocated for payments for capital
payments. The payments for capital assets have reported an increase of R1.9
billion or 20.6 per cent when compared to the 2010/11 budget.
4. The Five Priorities of Government
The Standing Committee on Appropriations (the Committee) has
adopted a tradition of inviting National Treasury together with other
identified departments. This exercise intended to foster transparency,
deepening democracy and ensuring good public participation. This consultative
approach provided the Committee with an opportunity to engage with the
departments on their plans to spend the allocated resources for the 2011/12
financial year. The hearings were more focused on the government policy
priorities. Five departments were identified for the hearings on the
Appropriations Bill for 2011/12. These included the Departments of Education,
Health, Cooperative Governance and Traditional Affairs (CoGTA), Public Works
and, Rural Development and Land Reform. The departments briefed the Committee
on their annual performance plans (APPs) and budget allocations for the 2011/12
financial year. The allocations for policy priorities would be discussed in the
next section.
The Appropriation Bill mainly supported the five policy
priorities of government. These included:
The above-mentioned priorities were reflected in the 12 national
outcomes adopted by Cabinet. These outcomes were high-quality basic education;
improved health and life expectancy; greater public protection and safety; more
rapid employment creation and inclusive growth; a skilled and capable
workforce; efficient economic infrastructure networks; vibrant rural
communities and food security; sustainable human settlements and improved
quality of household life; responsive and accountable local government;
protection of environmental assets and natural resources; international
cooperation for a better and safer world; and a development-oriented public
service and inclusive citizenship.
4.1
Allocations
for Job Creation
In line with
the 5 million jobs which need to be created through the implementation of New
Growth Path (NGP) in the following ten years, an amount of R48.8 billion was
added to the baseline for job creation at the national governmental level. According to programs,
R10 billion was set aside for job creation and would be spent on the Industrial
Policy Plan, small enterprise development, and youth development, and R10.4
billion was set aside for public transport, roads and rail infrastructure. The
Committee was of the view that the role of government in the real economy was also
to create a conducive environment for jobs to be created by other role players,
including the private sector. Government was not the only role player in
creating jobs but other social partners also had a role to play as well as
government agencies. The National Treasury indicated that the Job Fund of R9
billion would be administered by the Development Bank of Southern Africa (DBSA),
with a view to creating more jobs.
The
Committee welcomed additional allocations to support industrial and economic
development in order to create more jobs, which included R600 million for
enterprise investment; R750 million for the Competition Commission and other
economic regulatory agencies; R250 million for the Industrial Development
Corporations (IDC); R120 million for National Tooling Initiative, R282 million
for Micro-finance Apex Fund; and R55 million for Khula Enterprises to pilot a
new approach to small business lending. Even though the Committee welcomed the R2.8 billion for rural
development, the programs meant for developing and upgrading rural
infrastructure, especially rural roads, would be monitored. An
amount of R9.5 billion was added for Further Education and Training (FET) to
promote skills development. It was the view of the Committee that the area of skills development
was an important aspect in relation to job creation and economic development,
both in the short- and long-run. The Committee noted that, once these people
were trained, they would be in a position to be self-employed and create
opportunities for others.
4.2 Department of Basic Education
The Department of Basic Education: Vote 15 was allocated a
total budget of R13,8 billion for the 2011/12 financial year. The budget
comprised of five programmes, i.e. Administration (R301 million), Curriculum
Policy, Support and Monitoring (R1,8 billion), Teachers, Education Human
Resources and Institutional Development (R521 million), Planning, Information
and Assessment (R6,3 billion), and Educational Enrichment Services (R4,8
billion).
In the 2011 State-of-the-Nation Address, the President of
the
The Committee has noted that three conditional grants would
continue from the 2010/11 financial year, namely, National Schools Nutrition
Programme (NSPN), HIV and AIDS life skills programme and Technical Secondary
Schools Recapitalization Grant. In addition, there were three new conditional
grants that have been introduced in the 2011/12 financial year, namely: the
Dinaledi Schools Grant, Education Infrastructure Grant and the Schools
Infrastructure Backlog Grant. The Committee noted that the Accelerated School
Infrastructure Delivery Initiative (ASIDI) grant which was mainly for infrastructure
would be instrumental in ensuring that schools operated within the basic
requirements of safety that included, amongst others, provision of water,
sanitation and electricity.
With regard to vacancies in the Department of Education
(DoBE), concern was expressed and it was reported that the situation was
exacerbated when the former Department of Education was split into two
departments, namely, the Department of Basic and the Department of Higher
Education and Training, in 2010. The Public Service Commission has however
reported that various government departments cited the lack of capacity as an
excuse for their inability to meet spending targets and yet the same
departments reported higher rates of funded vacant posts. The Committee
expressed concern at the delivery of the School Infrastructure Programme and
questioned the capacity of the DoBE to fast track the replacement of the 395
mud schools. The DoBE has however committed itself to replace 50 mud schools
during the 2011/12 financial year. It was not clear whether the Heads of
Departments in various provinces were placed under any form of monitoring with
regards to budgets allocated to their departments, and what measures were in
place to ensure that they were held accountable for the expenditure thereof.
The DoBE reported that savings were made through the
internal development and publishing of workbooks contrary to the initial plan
to outsource the service provider. Although the Committee was concerned about
the delays and sustainability of this process in the long run, the DoBE indicated
that funds to sustain the process would be sourced from provinces.
The Human Science
Research Council (HSRC) reported that research studies have found that 10 to 12
percent of teachers were 20 to 24 days absent from work per year, due to
official duties. It was also found that three quarters of leave taken were for
one- or two-day sick leave which did not require a medical certificate. This
and the number of leave days taken for official duties impacted on the quality
of basic education produced and needed to be addressed by the Department of
Basic Education.
4.3 The Department of Co-operative Governance and Traditional Affairs
The Department of Cooperative Governance and Traditional
Affairs: Vote 3 was allocated a total budget of R47,9 billion for the 2011/12 financial
year. The budget comprised of seven programmes, i.e. Administration (R212,5
million), Policy, Research and Knowledge Management (R46 million), Governance
and Inter-governmental Relations (R34,2 billion), Disaster Response Management
(R821 million), Provincial and Municipal Government Systems (R248 million),
Infrastructure and Economic Development (R12,3 billion), and Traditional
Affairs (R83 million).
In the 2010/11 financial year, the Department of
Co-operative Governance and Traditional Affairs (CoGTA) incurred an under
expenditure that amounted to R115,2 million. This was incurred under the
Compensation of Employees, Payments for Capital Assets and, Goods and Services
and Transfers. It was reported that the aforementioned under expenditure was
due to vacant posts not being filled on time and delays in the procurement and
delivery of furniture, and projects being implemented late including projects
not being completed in respect of the Community Works Programme (CWP). Although
there was an undertaking by the CoGTA to fill vacant posts by end of June 2011,
the progress reports approach, as a measure in monitoring projects within the CoGTA,
needed to be closely monitored to ascertain the extent to which it would be
effective.
The CWP, which was allocated R243 million, needed to be
monitored more closely since it would be instrumental in creating work
opportunities for historically marginalized communities. This was in line with
the priorities of Government in respect of job creation. However, the Committee
expressed concern at the capacity of the CoGTA to improve in the 2011/12
financial year given its record of under expenditure during the 2010/11
financial year. It was reported that the Special Purpose Vehicle (SPV)
initiative, which would be finalized in June 2011, has been allocated R192
million. This initiative was aimed at supporting municipalities with low
capacity, and infrastructural delivery challenges. It concerned the Committee that
a substantial amount of funding had been allocated for capital projects despite
a considerable under expenditure on capital assets in the 2010/11 financial
year. Part of the concerns raised by the Committee was the spending of 15 per
cent component for sport facilities under the Municipal Infrastructure Grant
(MIG) programme. The Department of Cooperative Governance and Traditional
Affairs, and the National Treasury indicated that it was a municipal discretion
on how to spend this allocation. It was
the view of the Committee that funding provisions for sports facilities needed
to be solely for the purposes of sports and should not be discretionary.
It appeared that there seemed not to be proper communication
between CoGTA, provincial and local government in terms of service delivery issues.
The Committee called for a thorough needs assessment on service delivery. It was of serious concern to the Committee
that policies on traditional cultural practices such as initiation and ‘ukuthwala’
were not finalized as yet. This was despite a number of deaths that were
reported from the initiation schools. The CoGTA was encouraged to expedite the
finalisation of these policy issues and to provide a progress report thereon to
the Committee. A number of municipalities still struggled with managing their
budgets and complying with the National Treasury’s regulations, it was thus
imperative for the CoGTA to assist municipalities in order to ensure sound
administration.
4.4 Department of Health
The Department of Health: Vote 16 was allocated a total
budget of R25,7 billion for the 2011/12 financial year. The budget comprised six
programmes, i.e. Administration (R326 million), Health Planning and Systems
Enablement (R160 million), HIV and Aids, Tuberculosis and Maternal, Child and
Women’s Health (R8 billion), Primary Health Care Services (R730 million), Hospitals,
tertiary Services and Workforce Development (R15 billion), and Health
Regulation and Compliance Management (R525 million).
The Department of Health (DoH) reported under expenditure in
all programmes for the 2010/11 financial year, this amounted to R742.933 million.
This was due to among others, banking details of suppliers not verified before
the end of the financial year, and that the Information Technology (IT)
equipment was not processed as the Bid Adjudication Committee for the
procurement of the server only granted approval in the first week of March
2011. The Committee felt that banking details would have been verified if
proper planning was in place.
The Committee noted an under spending on transfers which
amounted to R509,3 million which was mainly due to the transfers for the
Hospital Revitalisation Grant of R452 million which had been stopped. The
Committee was concerned about funds of some of the non-governmental
organizations that were not transferred, such as Lovelife (R38 million),
Zivikele NGO (R600 000) and the National Health Laboratory Service (NHLS)
- Cancer Register (R415 000).
The Committee was further concerned that facilities worth
millions of rands were deteriorating across the country. This was a clear
indication that infrastructure planning, support and maintenance needed to be
given attention as a matter of urgency. However, there were plans in place to
establish a project support office within the DoH, which would be dispatched
across the country to assist provinces with infrastructure backlogs. The Love
Life had under spent by R38 million, and the Committee was concerned if the programme
needed those funds from the DoH. It was a serious concern that hospitals and
clinics were not completed on time due to lack of capacity and, as a result, this
led to under expenditure. The above-mentioned under expenditures had a negative
impact on job creation and service delivery, which raised concern about the DoH’s
ability to spend its 2011/12 budgetary allocation.
The Committee was concerned that lack of planning led to the
DoH paying interests of R254 million for late payments under the Zola Hospital
Project. The DoH was requested to prioritise support for hospitals and clinics
in provinces that were in dire need such as in the
4.5 The Department of Rural Development and Land Reform
The Department of Rural Development and Land Reform: Vote 33
was allocated a total budget of R8,1 billion for the 2011/12 financial year.
The budget comprised of five programmes, i.e. Administration (R606 million),
Geospatial and Cadastral Services (R388 million), Rural Development (R441
million), Restitution (R2 billion), and Land Reform (R4 billion).
The Committee welcomed the risk management strategic element
under the Administration programme, which aimed to ensure that there existed
effective and efficient financial management that would result in a reduction
on irregular, fruitless and wasteful expenditure, and losses through criminal
conduct.
In respect of Geo-spatial and Cadastral Services, the
Committee noted that the reported turnaround times for examination of cadastral
documents and registering of title deeds was commendable. The 23 per cent
increase in the budget allocation for rural development was encouraging. The
Committee was concerned about the future of land restitution because its budget
had decreased for the 2011/12 financial year; this was despite outstanding
commitments amounting to R12 billion that have already been made. As a result
of the decline, the annual performance plan for the restitution showed that the
Commission on Restitution of Land Rights would only implement 360 backlog
projects. With respect to land reform, the Committee noted an increase from
R2.1 billion in the 2010/11 financial year to R4.2 billion in the 2011/12
financial year, reflecting an increase of 100 per cent.
The Committee was concerned at the fact that the Department
of Rural Development and Land Reform
(DoRDLR) has not yet quantified the number of outstanding court cases in
respect of land restitution and land reform. The Committee was informed that
there were about 346 outstanding court cases against the DoRDLR and that the
number could increase.
The Committee noted that approximately R13 billion had been
allocated to the Departments of Agriculture, Forestry and Fisheries and Rural
Development and Land Reform in the 2011/12 financial year and this was set to
reach R14 billion in the 2013-14 financial year. However, as a share of overall
budget spending, this amounted to less than 2 per cent of the country’s overall
budget of R890 billion and was inadequate to address rural development and land
reform as one of top 5 priorities of government. The
recession had led to a high number of jobs being lost in the agriculture
sector; however, there were a number of countries in Africa like
4.6 Department of Public Works
The Department of Public Works: Vote 7 was allocated a total
budget of R7 billion for the 2011/12 financial year. The budget comprised of
five programmes, i.e. Administration (R751 million), Immovable Asset Management
(R5 billion), Expanded Public Works Programme (R1, 5 billion), Property and
Construction Industry Policy Regulations (R34 million), and Auxiliary and
Associated Services (R33 million).
The Department
of Public Works (DoPW) reported that the Expanded Public Works Programme (EPWP)
was in support of the New Growth Path and would use labour intensive methods to
create jobs, deliver services, and build decent communities. Provinces and
municipalities would be supported by the DoPW in respect of investing in job
creation in return for cash incentives for further job creation opportunities. Through
the delivery of public and community services, the target was to create 4,5
million short and ongoing work opportunities with an average of 100 days for
poor and unemployed people so as to contribute to halving unemployment by
2014,. The Committee noted that the EPWP allocation has increased in the 2011/12
budget, therefore, it was resolved that a workshop with the DoPW and the National
Treasury be held in order to address the expenditure challenges relating to the
programme.
The DoPW
reported that it had a vacancy rate of approximately 1300 posts, from which
only 645 were funded. Five-hundred-and-eighty-three (583) of the 645 funded
posts have been advertised and were in the process of being filled. With regard
to the asset register, it was reported that the DoPW was working in conjunction
with the Department of Rural Development and Land Reform, the Surveyor General’s,
Auditor General’s and the Accountant General’s Offices in order to complete it.
The
Committee expressed concern at the fact that the DoPW’s asset register had not
been finalised. With regard to Energy Efficiency project, which had a total
budget of R70 million (reduced from R120 million due to slow expenditure) for
the 2011/12 financial year, concern was expressed at the performance of this
project since it could also be utilised as a mechanism for job creation.
In respect of
the contents of Programme 1 (Administration) of the budgets of all departments,
it was stated that there were disparities irrespective of the guidelines issued
by the National Treasury on an annual basis.
5. Committee Findings
The Standing Committee on Apprpriations made the following
findings:
5.1 The intervention of teacher training
Programme through the Funza Lushaka bursary scheme was positive towards teacher
development.
5.2 The number of leave days taken by
teachers in the Department of Basic Education for either personal reasons or
official duties was very high, which negatively impacted on the quality of
basic education.
5.3 The Committee noted that the spending of
15 per cent for sports facilities under the Municipal Infrastructure Grant
funding was discretional to municipalities on how they spend it.
5.4 The Committee welcomed the
undertaking by CoGTA to fill vacant posts by end of June 2011. However, the
Committee would monitor the progress thereon.
5.5 There was an under expenditure in
the Department of Health of R509,3 million,
which was mainly due to transfer payments not being made to the Hospital Revitalisation
Programme (R 452 million), Love Life (R38 million), Zivikele NGO (R600 000), and
the National Health Laboratory Service (NHLS) - Cancer register (R415 000).
5.6 There were 346 outstanding court cases
against the Department of Rural Development and Land Reform that have not been
quantified and needed to be pursued since it had budgetary implications
5.7 The
Committee noted the undertaking by the Department of Public Works to finalise
the asset register.
5.8 The
Energy Efficiency Projects’ budget in the Department of Public Works had been
reduced from R120 million to R70 million due to slow expenditure during the 2010/11
financial year. This was concerning since that project could be utilised as a job
creation tool. .
5.9 There were disparities in respect of the
contents of Programme 1 (Administration)
of the budgets of national departments, despite the guidelines that were issued
on an annual basis by the National Treasury.
6. Recommendations
The Standing
Committee on Appropriations recommends as follows:
Notwithstanding the above recommendations and due to the
fact that no amendments were proposed, the Standing Committee on Appropriations
further recommends that the National Assembly adopts the 2011 Appropriations
Bill (without amendments).
Report to be considered.