PORTFOLIO
COMMITTEE
ON
SPORT
AND RECREATION
BUDGET
REVIEW
AND
RECOMMENDATION
REPORT
2010-11-02
CHAIRPERSON:
HON
B KOMPHELA
Table of Contents
1. Introduction
1.1
The Committee
1.2 The
Department
1.3 Process
followed by Committee on BRR Report
2. Strategic Priorities and Measurable
Objectives of the Department
2.1
Strategic Priorities of the Department
2.2
Measurable Objectives of the Department
3. Analysis of Strategic and Operational Plans
of the Department
4. Analysis of Expenditure Reports
5. Analysis of the Annual Report and Financial
Statements of the Department
6. Consideration of Reports of Committee on
Public Accounts
7. Analysis of the Quarterly Expenditure Reports
8. Committee’s Observations
9. Conclusion
10. Recommendations
The Budgetary Review and Recommendation Report
of the Portfolio Committee on Sport and Recreation, dated 29 October 2010
The
Portfolio Committee on Sport and Recreation, having assessed the performance of
the Department of Sport and Recreation, reports as follows:
1. INTRODUCTION
1.1 The role and mandate of the Portfolio
Committee
·
Consider
legislation referred to it
·
Exercise
oversight over the Department of Sport and Recreation and its statutory bodies, namely BSA and SAIDS
·
Consider
International Agreements referred to it
·
Consider
the budget vote of the Department of Sport and Recreation
·
Facilitate
public participation in its processes
·
Consider
all matters referred to it in terms of legislation, the Rules of Parliament or
resolutions of the House
In
terms of the Constitution of the
Furthermore, Section
5 of the Money Bills Amendment Procedures and Related Matters Act, No 9 of 2009
(the Act) provides that the National Assembly, through its committees, must
annually assess the performance of each national department and these
Committees must annually submit Budgetary Review and Recommendations reports
for tabling in the National Assembly. These should be considered by the
Committee on Appropriations when it is considering and reporting on the Medium
Term Budget Policy Statement (MTBPS) to the House.
1.2 The
role and mandate of the Department
The
Department of Sport and Recreation is the primary Government institution that
is responsible for formulating and implementing policy on sport and recreation.
It reports to and advises the Minister who, in conjunction with the Cabinet,
takes final responsibility for Government policy. The Department is headed by
the Director-General, who is responsible for ensuring that sport contributes
towards the maximising access to sport and recreation and encouraging
world-class performances that improves social cohesion and nation-building.
1.3 Process/
method followed by the Committee in writing the BRR Report
For
the period under review, the Portfolio Committee on Sport and Recreation, in
exercising its oversight role, had interacted with the Department of Sport and
Recreation and analyzed its 2009/10 to 2011/14 strategic plan, the 2009/10
annual report, A-G Report, SONA, the 2009/10 Estimates of the National
Expenditure and the Constitution.
2. STRATEGIC PRIORITIES AND MEASURABLE
OBJECTIVES OF THE DEPARTMENT OF SPORT AND RECREATION
2.1 Strategic Priorities of the Department
The Department’s strategic plan seeks to deliver
results along five strategic objectives that include promoting initiatives that
increase the number of participants in sports and recreation, providing assistance
to SA sports people to become winners in international and continental sports
competitions, raising the profile of sports and recreation through
transformation of the sport and recreation sector, and strengthening the
operations and management of the Department.
The following strategic focus areas are critical to
success of the Department:
2.2 Measurable
Objectives of the Department:
2.2.1 Mass
Participation Programme
Sport and Recreation South Africa (SRSA) should continue to pursue
initiatives that increase the number of participants in Sport and Recreation.
The Department has to broaden its focus to the area of recreation and
strengthen its relationship with the Department of basic Education in the
delivery of school sports programme. The department intends to increase mass
participation base through effective sports promotion programmes and intensive
media campaigns.
2.2.2 Sport
Development
Department intends to focus
on facilitating the transition from mass based programmes to high performance
through coordinating and monitoring the important areas of talent
identification and development as well as the delivery of scientific support to
national development athletes. The development programmes would be supported by
an effective national athlete tracking system. The regular programme impact
assessment at various provincial spheres to assess the level of club
development and talent identification. Furthermore the Department intents to
roll out a national sport facilities plan. The sports facilities plan would
enable the department to monitor the use of facilities and ensure proper
maintenance thereof.
2.2.3 High
Performance
The Department intends to
improve working relations with its key strategic partner in nourishing talent
in high performance sport in our country. Therefore Sascoc becomes the relevant
strategic partner of the department since its mandate is to deliver in the
focus are of high performance. The department intends to improve our country’s
international ranking through adequate scientific support to our athletes.
In general, the Department
realised that the above strategic focus areas needed to be supported by strong
regulatory framework, adequate financial resources, reliable sports information
and functional sports academies. The Department will continue to work closely
with departments such as Basic Education, Tourism and Health in order further
the spirit of corporative governance. In addition, the Department intends to
intensify its coordination efforts on the 2010 government guarantees to ensure
the hosting of successful 2010 FIFA World Cup. The department further intends
to finalise the White Paper on sport and recreation that will set the tone for
blueprint for sports in our country. The key focus of this policy document
would be transformation of sport and promotion of excellence in sport.
3. ANALYSIS
OF STRATEGIC AND OPERATIONAL PLANS
The
activities of the Department were organized under the following programmes:
3.1 Programme
1: Administration
The Corporate Services: This Unit dealt with Human Resources Department and outlined the human
resources strategy. This strategy was inclusive of a clear retention strategy
although the Report failed to indicate the skills retained. The Department had
set target of 2% for employment of people with disabilities. Therefore the
Department had exceeded its own target in employment equity. The current rate
of vacancies as reflected in the Report had been due to integration of staff
from the Sports Commission and the Department had about 37 vacancies in the
current financial year. This integration has improved the vacancy rate in the
Department.
Department outlined that the Audit Unit was not fully staffed and that
slowed down performance. Notwithstanding the above, the Department has not yet
met all the employment equity targets as set out in the Department of Public
Service and Administration (DPSA).
The Human Resources Unit had put in place a performance management
system and was constantly monitoring it. The employees of the department were
each entitled to 36 days per leave cycle annually. In addition employees were
entitled to 36 days sick leave per annum. In addition the performance systems
and individual agreements were not concluded since negotiations were still
continuing with relevant parties. The Department was currently developing a
succession plan. There were three vacant posts within the Senior Management
Services (SMS) of which one candidate must a woman in accordance with DPSA
equity targets.
3.2 Programme
2: Sport Support Service
This programme comprises of four sub programmes;
namely Sport & Recreation Services Providers, Club Development, Education
and Training, Scientific Support. It comprises an integrative financial support
provided specifically to Boxing South Africa and SAIDS. The graphics were
illustrated which gave funds spent on administration, client support, mass
participation, liaison and facilities coordination. Department had made
progress in the supply chain management such as awarding 45% of tenders to
disadvantaged individuals.
3.3 Programme
3: Mass Participation Programme
The purpose of this
programme is to increase the number of participants in sport and recreation with
special emphasis on disadvantaged and marginalised groups. The programme also
transfers conditional grants to provinces to promote mass participation in
communities and schools and achievements for the current year include among
others the following:
•
13 959 people trained as coaches, administrators and
facilities managers
•
0ver
4,5 million people participated in sport and recreation
•
Nine
national road -shows and 27 provincial road-shows were completed
•
Nine
provincial school tournaments were held during this period.
3.4 Programme 4: International Liaison and Events
The
purpose of this programme is to coordinate all international and
intra-governmental relations and support the hosting of identified major events.
The
measurable objectives were to assist national federations and other
stakeholders in promoting
3.5 Programme 5: Facilities Coordination
The
purpose of this programme is to coordinate the provision and management of
sustainable sport and recreation infrastructure by municipalities. Also oversee
the procurement of gymnasium equipment to certain municipalities as part of
government drive towards speedy delivery of sports services.
The
measurable objectives were to contribute towards skills development of
facilities managers. The greater
percentage of the allocated to this programme is used for compensation of
employees and purchase of equipment.
1.3.2.6 Programme 6: 2010
FIFA World Cup Unit
The
purpose of this programme is to ensure that all approved venues were ready for the
hosting of the 2010 FIFA World Cup in
The
measurable objectives were to enhance the Department’s objectives through policies
and directives, promoting
The
greater percentage of the Departmental budget (close to 60 per cent) was
allocated to this programme is transferred to entities such as Host Cities for
the 2010 FIFA World Cup. The expenditure grew strongly from R603.9 million in
2006 /2007 to R2.2 billion in 2009/10, at an average annual rate of 53, 9 % to
accommodate the cost of upgrading and construction of stadiums for the 2010
FIFA World Cup.
4. The Analysis of Departmental Allocations and
Expenditure Reports 2009/10
The Department of Sport and Recreations
was allocated an amount of R2.88 billion for the 2009/10 financial year which
is 0.7 per cent per cent of the main budget. This takes into account the
adjustment made by the Department during adjustment period in the same year. It
should be noted that during the adjustment the Department received about R23.9
million as an additional budget which has increased the total allocation of the
Department from the initial budget of R2.85 billion to R2.88 billion in the
2009/10 financial year.
However, the Department has only spent
R2.86 billion or 99.4 per cent at the end of 2009/10 which is R1.7 million or
0.7 per cent under-spending. According to National Treasury this under-
spending has emanated from the following programmes[1].
EXPENDITURE 2009/10 PER PROGRAMME
Per Programme |
Final Appropriation |
Actual Expenditure |
Variance |
Variance as a % of Final Appropriation |
|
R’000 |
R’000 |
R’000 |
R’000 |
Administration |
88,107 |
88,107 |
6,120 |
6.95% |
Sport Support Services |
126,841 |
121,311 |
5,530 |
4.36% |
Mass Participation |
454,668 |
451,830 |
2,838 |
0.62% |
International Liaison
and Events |
8,977 |
7,557 |
1,420 |
15.82% |
Facilities
Coordination |
6,392 |
5,862 |
530 |
8.29% |
2010 FIFA World Cup |
2,198,923 |
2,197,883 |
1,040 |
0.05% |
4.1. Administration
Programme 1 was allocated a total budget
of R84.5 million for the 2009/10 financial year after the adjustment budget.
The programme has only managed to spend at least R81.9 million or 96.9 per cent
of this budget. This means that the Department has under spent in this
programme. This level of under expenditure was due to the unfilled vacancies
such as the one for COO which was only filled in the fourth quarter of the
financial year. However, even though the budget has been under spent in this
programme but there is amount of R2.4 million which was shifted from this
programme to other programmes which then eventually decreased the balance of
the budget in this programme but the department still failed to spend it.
This movement of fund was done during the
adjustment period, though the PFMA allows it but it is subject to abuse in a
number of ways and results in unintended consequences. Firstly, when Department
moves funds from one programme to the other those funds do not move with a
programme so therefore this movement defeats the intended goal of that
particular programme. Secondly, people move funds precisely because of poor financial
planning in the particular financial year. It is also an indication that people
don’t make use of medium term expenditure framework (MTEF) correctly hence it
gives clear projections three years prior of how will the Departmental budget
will look like.
4.2 Sport Support Services
Programme 2 was allocated a total amount
of R124.1 million for the 2009/10 financial year after adjustments period, but
the Department only spent about R121.3 million or 97.7 per cent of this budget.
The slower than expected expenditure was due to the late submission of invoices
for training camps and other scientific support services. Part of the under
expenditure was delay in transferring funds to sports federations due to the
fact that the National Federations were unable to meet the funding
requirements. Of note is that an amount of R24.3 million was received by this
programme as additional budget from other programmes during the adjustment
period but the department still failed to spend the total allocations.
4.3 Mass Participation
Programme 3 was allocated a total amount
of R460.1 million for the 2009/10 financial year. The programme has only spent
about R451.8 million or 98.2 per cent at the end of the financial year. This
level of under spending was due to the postponement of the National Schools
2010 Football World Cup that was schedule for March 2010 but only took place in
May 2010. Of note is that an amount of R10.7 million was received by this
programme as additional budget from other programmes to this programme during
the adjustment period but the department failed to spend its entire budget.
4.4 International Liaison and Events
Programme 4 was allocated a total budget of
R9.1 million in 2009/10 financial year and the Department has also managed to
spend R7.5 million or 82.2 per cent. This shows a high level of under
expenditure of R1.6 million or 17.8 per cent of the allocation in the same
period. The slower than expected expenditure was mainly due to the delays in
rolling out of International and Tourism promotion projects due to the fact
that the team leader’s position was not filled. The Department indicated that the
new project leader will be appointed in the last quarter of the 2009/10 and the
rest of the projects will take place in 2010/11 financial year. Though the
level of under expenditure was high in this programme but it was further noted
an amount of R8.8 million was shifted from this programme to other programmes
during the adjustment period of the same year but still the Department failed
to spend the total allocations even after adjustments.
4.5 Facilities Coordination
Programme 5 was allocated a total amount
of R6.3 million for the 2009/10 financial year. Of this amount, the Department
has only spent up to R5.3 million or 91.7 per cent of the entire budget of this
programme. This is reflects R530 million or 8.3 per cent under expenditure in
this programme. The Department indicated that the slower than expected
expenditure in this programme was due to the delays in filling a deputy
director’s post which accounts for 87.8 per cent of the current payments
budget. Of note is that an amount of R80 thousand was moved away from this
programme to other programmes during the adjustment period in the same year.
The
Department further elaborated on the trends over the years on this project on
expenditure performance. The analysis indicated that the expenditure on this
projects pick up in July which is the beginning of the Municipalities financial
period.
There
is a clear indication that capacity to implement these projects at the local
government level is still a challenge. The department indicated that it was
useful to intervene by deploying engineers to Municipalities through an internship
programme which was discontinued in the current financial year due to lack of
funding. The department had always spent around 98 percent of the budget on
these projects over the years and therefore the Committee is fairly comfortable
with the expenditure level on this programme.
In
conclusion the department further raised a number of critical projects that are
unfunded to the value of R203 million. These projects are crucial for stability
of this department and its capacity development and therefore it is recommended
that the amount be granted to the department for execution of these projects.
The additional funding is critical considering that government has already committed
the funding of these activities.
5. ANALYSIS OF
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
5.1 Statement of Financial Performance
The total revenue of the
department amounted to R4.9 billion comprising R4.7 annual appropriation and
R217.1 million departmental revenue.
The total expenditure
amounted to R4.5 billion comprising R673 million total current expenditure;
R3.8 billion total transfers and subsidies; and R48.7 million total expenditure
for capital assets. The surplus for the year amounted to R348.6 million.
5.2.
Analysis of Auditor General Opinion: 2009/10 Financial Year
For
the financial year under review, the department received unqualified audit
report. The reasons cited for such a qualified audit report were that the
accounting officer of the department ensured that full and proper records of
the receivables for departmental revenue of the department was kept as per
prescribed norms and standards.
The
audit report also pointed to some irregular expenditure of an amount of R38, 4
million which was incurred without
adhering to the internal delegation of authority and non-compliance with proper
tender process. Those were picked up by the internal controls established by
the department and all cases were evaluated and condoned by the Accounting
Officer during the year. An amount of R2, 2 million incurred as fruitless and
wasteful expenditure due to double hotel booking and payment of venue not
utilized.
6. Report from the Committee on Public Accounts
Because
the department had received an unqualified audit, it was yet to meet with the
Committee on Public Accounts, wherein, recommendations by the Committee will be
made. That meeting is yet to take place.
8. ANALYSIS OF QUARTERLY EXPENDITURE
REPORTS
8.1 [To date, the portfolio committee’s method of work does not
include quarterly evaluation of departmental spending and performance. This
part of the report is therefore based on expenditure information supplied by
National Treasury].
8.2 Notwithstanding the
above, both the Committee and the Department recognised the urgent need for
regular interactions and quarterly reporting in order to ensure accountability
and improve effective service delivery.
9. Observations
10. Conclusion
The Committee is satisfied with the service delivery
performance of the Department. It is, however, concerned about the consistent
recurring matter of emphasis from AG-Report ranging from internal control,
irregular expenditure, unauthorised expenditure, and insufficient visits to
hubs, supply chain management and mass participation.
The Department has after many years received an unqualified
audit report with numerous matters of emphasis from the Auditor General.
Notwithstanding the consistent recurring matters, the Committee holds the view
that the resources of the Department are utilised economically.
11. Recommendations
For the current 2009/10 financial year the Department of
Sport and Recreation’ has been allocated R2.88 billion and based on the Department’s strategic focus on the 2010
FIFA World Cup, allocation for the MTEF period will be dramatically reduced for
the 2010/11 financial year and beyond. The implication is that those
financially struggling stadiums will have to work hard to financially sustain
themselves.
Based on the analysis of the Department’s budget for the year
under review (2009/2010), the following recommendations are proposed:
Report to be considered