A summary of this committee meeting is not yet available.
JOINT BUDGET COMMITTEE
6 November 2001
MEDIUM TERM BUDGET POLICY STATEMENT: INPUT BY TREASURY, EDUCATION, HEALTH & SOCIAL DEVELOPMENT
Medium Term Budget Policy Statement 2001
PowerPoint Presentation by National Treasury on the MTBPS Division of Revenue
Presentation by the Minister of Social Development (See Appendix)
National Treasury made a presentation to the Committee on the Division of Revenue in the Medium Term Budget Policy Statement. The shift of resources from National Government to Provincial and Local spheres was highlighted as well as the lack of capacity at lower spheres of government and their inability to spend.
The Departments of Education, Health and Social Development made a presentation to the
Committee thereafter. The Departments welcomed the increased allocation to Social Services as it indicates Government’s commitment to addressing inequality and poverty.
Presentation by National Treasury
Mr Ismail Momoniat spoke on how the fiscal framework works in the division of revenue. He said that the MTBPS covers:
- the budget reform agenda
- macroeconomic developments
- fiscal framework
- tax policy
- medium term expenditure framework
- and intergovernmental finances
The theme of the 2002 budget is reducing poverty, inequality and vulnerability.
The fiscal framework is characterised by:
- real growth in spending of 3.7% a year
- strong growth in spending on local government services, criminal justice and infrastructure
- continuing reduction in tax rates for low and middle-income groups
- declining debt and debt service costs as a % of GDP
- increase in deficit to 2.6% next year from 2.3% this year
Before revenue is divided there is a top slice of first deductions taken away from the total expenditure. The top slice is made up of debt servicing, contingency reserves and small statutory deductions like the payment to the IMF. The amount that is left is shared.
Then before allocations to departments take place a division between the three spheres takes place. Before division recommendations of the FFC are considered and a consultation process with the Budget Council, the Budget Forum and the extended Cabinet takes place.
The division of the revenue between the three spheres (vertical split) is a constitutional obligation in terms of section 214(2)(a) -(J) that also sets out the criteria that needs to be applied. It is important to look at the powers and functions of local government and provinces in determining the split. Provinces do not generate much revenue. Local authorities can generate 90% of the revenue but smaller authorities will raise much less.
Typically local government provision of water and electricity such as services accounts for two-thirds of their functions. The user fees for these services should cover the cost of the provision of these services. The local authorities therefore have significant revenue raising powers.
More than half of National governments budget goes to protection services. After this the next biggest slice is the transfer to Higher Education. The budget for Health is small because national Government does not provide this service.
When looking at the system it is important to have principles that inform on how the allocation takes place. These are the principles of intergovernmental fiscal relations:
- accountability and autonomy
- good governance
- broadened access to services
- vertical division
- each government is responsible for its own budget.
In the new demarcation rural areas are part of all municipalities. The question is how is there a redistribution to the rural areas. A grant is needed to help redistribution because without it the municipalities will collapse. Therefore there is an equitable share to help municipalities to provide services to poorer areas.
It is important the National Government does not bail out Provinces who overspend because they will think that they can do it all the time and National Government will help them out. Those provinces who stick to their budget should not be prejudiced by those who do not. It is therefore a policy that each government is responsible for their own budget.
The new allocations are in line with priorities and indicate a strong growth for:
Social security, HIV/AIDS action plan and early childhood education
Capacity in criminal justice sector
Administrative departments that play a role in delivering social services
Step up in infrastructure projects
The Additional allocation for new priorities identified cabinet has decided to divide it amongst the three spheres. From the total allocations it can be seen that the allocation to National Government is decreasing over the next three years and that local government is increasing rapidly. This shows a shift of resources from national government to provincial and local government.
Mr Momoniat said that the fundamental question is which budget should rise more rapidly. If the provincial allocation is looked at we need to ask if it rises fast enough taking into account the extra functions. Grants to local government is almost equal to the equitable share. There are however still too many grants in the system, treasury is looking at consolidating the grants. Just as attempts are made to reduce the grants many more are created like the poverty alleviation grant that becomes a conditional grant. The aim is to have fewer grants to ease the administrative burden.
There is a review on Health grants in respect of the tertiary services and training grants. The equity and access to tertiary services needs to be improved. The national tertiary services grant will fund 27 hospitals in all nine provinces as opposed to ten hospitals in four provinces. This review will be phased in over five years.
When looking at the local government sphere it shows the fastest growth over the MTEF period and this reflects a commitment to:
- delivering free basic municipal services
- expanding infrastructure network to provide basic services to more people
- provide adequately for governance costs
- cater for municipalities whose district councils have weak fiscal bases.
The new municipal boundaries add to the fiscal stress and therefore more transfers from national government is required. The capacity issue is also a problem for at local government level.
Provincial governments must be given time to plan for their budget because their share is only known in January or February and their budgets are due soon thereafter. It is not always true to say that they cannot spend money, sometimes the fault is with national government.
Mr Masutha (ANC) asked what criteria is used to decide what items fall under equitable share and what falls under conditional grant. He said that social grants fell within the equitable share and enquired if the formula took into account the number of beneficiaries of such grants.
A member referred to the problems with the delivery of free water and asked how it could be overcome.
Mr Tolo (ANC) commented that councillors were to be paid from the National Fiscus but this had not been happening. Apparently the equitable share is used to pay these salaries. Secondly, a greater part of the equitable share goes to social services and what is left goes towards other things. Roads are not being looked after resulting in gravel roads. Could there be grants for provincial roads.
Mr Momoniat replied that the National Department will put up water projects but after the first year nobody claims ownership of the project and then service stops. It is important that spheres of government co-operate with each other. If water projects are to be initiated it must be done with municipalities agreeing to it. If there is no agreement there will be no sustainable delivery. In respect of housing, low cost housing is provided but people cannot afford to pay municipal charges. This points out that co-operation between departments and levels of government is crucial.
Treasury is debating whether social grants should not become a conditional grant. Both approaches have their own set of problems but at the end of the day there is no excuse for provinces not to pay out social grants. If people apply for pension and application is delayed for six months there is nothing treasury can do. The Welfare Department cannot give proper information on how many applications were made and how fast they are processed.
Many municipalities do not have a tax base and cannot pay the councillors. The one component of the equitable share provides funds to pay councillors. The budget this year provides more than R100 million for this purpose.
R2.2 billion has been budgeted for provincial roads of which only 35% of this has been spent. In Gauteng the figures reflect that 0.7% is the amount spent. This is obviously incorrect but in terms of the PFMA the chief accounting officer of the Department must say exactly what is spent and this does not seem to be taking place. At this stage there is a spending problem.
A member asked if there is a formula for the disaster fund.
Mr Momoniat said that there is no formula because nobody knows when a disaster will occur and what the effects will be. For flood relief R300 million was transferred but it took a few months before all the money was spent. The damage amounted to much more than that.
Mr Momoniat concluded by saying that the spending figures are published in the Government Gazette and indicate that spending is low. It is important that Provincial Committees call the MEC’s to account for the low spending.
Department of Education
The Deputy Director General in the Department of Education, Mr Soobrayan, said that he would focus on three broad areas:
- strategic objectives
- programme objectives
- conditional grants
He indicated that the department is extremely pleased that they have turned the corner. In 1996/97 the increase in expenditure was high. This was sudden and not sustainable into the future. In 2000/01 there has been a decline in education expenditure because of the active intervention to curtail expenditure, especially personnel expenditure. Non-personnel expenditure has increased by 10 % per annum and this remains constant.
Four key priorities have been identified:
These four are interrelated and cannot be isolated from each other.
There have been gains in inter-provincial equity due to the equitable share. Significant problems with intra-provincial equity still exist. Even though school funding norms are progressive, it is less than expected because of low non-personnel expenditure.
Giving more money to poorer schools to achieve equity will be meaningless if there are no quality outcomes. Monitoring and evaluation instruments have therefore been introduced to assess performance of schools. The Department will be able to know what is going on in each school by conducting a school by school diagnosis.
The Department is trying to come to terms with why the cost of education is escalating at such a fast rate. Education and health is a major contribution to the increase in the CPIX. Poor people pay a lot of money on transport because the nearer schools are dysfunctional. As a result transport costs and child care costs increase.
The Department has concluded that there are basic things wrong in the education system. After the money has been allocated there is a lack of capacity to convert the money into resources quickly and cost effectively. Other reasons are procurement problems, the tender process and poor planning. It is therefore important that management capacity is improved.
The department sees infrastructure as an important priority. Spending decreased over the years from 4% in 1997/98 to 1% in 1999. Investment in maintenance suffered as a result.
The learner-teacher ratio had to be dealt with because it is an indicator for quality. A ratio of 1:34 has been achieved. The Northern Province has a ratio of 33.5:1 and this is good, sound and fiscally sustainable. However, the learner to class ratio is 1:40 as there are teachers but insufficient classrooms. Overcrowding still occurs and the most expensive resource, the teacher, cannot be utilised. The result is a decrease in quality.
The National Department now has a dedicated directorate to focus on infrastructure and capital investment. Hard work is being put into pressurising provinces to spend on infrastructure.
The Department has identified the following priorities:
- HIV / AIDS
- Early Childhood Development (ECD)
- School Effectiveness
- Further education and training
- Capacity of provincial departments
- Values in education
There is a White Paper for Early Childhood Development. The Department is committed to 10 year compulsory education. Early Childhood Development is important because such education makes the most significant contribution to the development of the poor. International studies show that an investment in ECD will yield the highest return than any other investment in education.
In relation to the conditional grants, it can be argued that if there are too many little grants, there will be a huge administrative burden. There needs to be a consolidation but the priorities must still be reflected in the consolidation. Effective control is needed over the grants or it will not be used properly.
Mr Soobrayan concluded by saying that the future looks good but there are challenges that will be confronted and solved.
Mr Rabie (NNP) pointed out the decrease in learners passing maths and physics on the higher grade and the alarming decrease in females passing these subjects.
A member asked what the effect was of learners leaving non-performing schools for performing schools. He wanted to know if the schools that are left are becoming white elephants.
Ms Sonjica (ANC) asked if the National Department has considered seconding staff to the provinces were capacity is a problem. She also wanted to know about the roll-over of funds that were for the salaries of the HIV co-ordinators.
Mr Masutha (ANC) commented that the Department of Social Development also has an interest in ECD. He asked if there was any interaction between different departments to complement each other and maximise output.
The DDG replied that the maths/physics statistics provide absolute numbers rather than percentages and that these are lower, partly due to a decline in overall learner enrolment. There is a demographic dip for the number of births and the number of persons entering the school system. In 1994 there was a bulge with a large influx and this is working itself out at the moment. The Department is focused on an aggressive programme to improve the number of learners passing maths and physics with matriculation exemptions. The number of females passing is a major concern. A person has been appointed to look into it. Many factors prevent female learners from advancing in maths and science. The trend is that when females do well in maths and science at primary levels it is carried through at secondary level. A major factor is gender issues at schools.
The exodus from township schools is a major problem. Besides the fact that learner numbers are reduced, it is the learners who do well that leave. The parents who play active roles in their children’s education and at the school are also lost. This has serious consequences but is not a general trend. There are many fine schools in townships. The DDG gave an example where a certain school starts at 6:45 in the morning and ends at 16:00 for no extra reward but for success. This is most cost effective when one considers the resources they have and the results that are achieved.
Seconding staff is often raised by provinces. The National Dept of Education is smaller than the smallest provincial department. It is difficult to second staff. There are programs to bring in capacity from outside the National Dept. This has achieved a measure of success in reducing admin backlogs, but a sustainable solution must be the transfer of skills. The SA public service grew rapidly since 1994 and at times it is difficult to fill posts due to lack of skills.
The HIV co-ordinators were paid from provincial budgets and the provinces had to claim it back. But these people are already working.
The Co-operation between departments is good but not the best at times because at the same time government officials have many things to do in a day. The interaction between Education, Labour, Health and Social Development is good but there is always room for improvement.
Because of time constraints, further questions would be in writing. Ms Hlangwana (ANC) asked the Department to respond to these in writing.
Department of Health
The Director General of the Department of Health, Dr Ntsaluba, said that he wanted to speak on four key areas of the MTBPS:
- general increases in health sector spending
- conditional grants for national tertiary services
- issues around poverty reduction
- issues of HIV / AIDS
The equitable share funding will increase and most goes to the social services in provinces. This is encouraging. The adjustment in the determination of the equitable share is very positive because it was always in favour of economic activity, now the trend is towards social development which means an increase for the health sector. Despite this, provinces are not getting as much as they expected for health. The provinces will therefore not be able to proceed fast enough to address inequities which is a major problem. When we look at the MTBPS we need to look at how to assist provinces to improve the equity in heath services.
Conditional grants that go to tertiary health services and the health professionals training and development is based on a limited info base and it must be ensured that these grants are properly specified. The tertiary services in various provinces are not funded to the same extent. There is disproportionately more funding for the Western Cape and Gauteng. The MTBPS states that this will be addressed within five years.
The Department is happy with the additional allocation to health professionals training . The Department wants to move post-graduate training from city hospitals to regional hospitals. The training platform needs to be stretched to provinces with no medical schools.
In relation to HIV / AIDS the department recognises the pressures on public institutions as a result of Immuno-Defficiency Diseases. What was asked for is not reflected in the MTBPS and it is important that this pressure is recognised.
The money will be used in a accordance with the current policy position of government:
- increase awareness
- roll-out community and home based care to take pressure off hospitals but at the same time not to abrogate government responsibility.
- strengthen the TB programme
- strengthen the treatment at institutions
The money for HIV / AIDS from the equitable share will be used for multiple purposes at provincial level such as buying drugs because provinces do not even have a week’s supply of certain drugs.
We need to ensure that the allocation that is reflected translates into the baseline allocation of health departments.
The best intervention by the Health Department in poverty relief is for the health sector to strengthen the platform for access to basic services. The national department and provinces have agreed on a package of services that will be provided to all South Africans. A clinic in one area does not provide the same services as a clinic in another area and this needs to be addressed.
There had been a debate about whether the primary school nutrition program / feeding scheme must be continued. It was decided that it should go ahead because many children are energy and multi-nutrient deficient. The feeding program must be extended to include grade R learners. There are some problems and it has been discussed with the Education Department. At schools with active school boards the children are fed on 80% of the school days. This is what the Department considers a successful school. Some provinces the children are fed on only 50% of the school days and at the end of the year there are roll-overs. This is unjustifiable. The menus need to be standardised and the food made by the community. It makes no sense for the large bread makers and manufacturers of peanut butter to provide the food.
In the provinces the primary school nutrition program is categorised with primary health care. If there is any overspending on any item falling under primary health care, money is taken from the nutrition budget. This should not be done because it is a conditional grant.
On the conditional grant for infrastructure, the DG said that there is not enough capital expenditure but it is improving.
The Department of Health is of the view that the MTBPS reflects areas that are a priority to the Health Department and it accords well with national health policy.
Mr Sikakane (ANC) asked what right did the DG have to intervene if the provinces do not use the money for what it was intended for. He commented that there are long waits, no medicine, no ambulances (example of an East London clinic). Medicines never go directly to where they are needed but routed through hospitals and often the clinic ends up only getting the leftovers. He asked if the DG could intervene in these cases.
Mr Hanekom (ANC) noted that spending in the provinces is on track in the second quarter except on capital. Three provinces have spent less than 10% of the allocation for capital expenditure and he asked the reason for this. Noting that there is a grant for hospital rehabilitation, he asked if provinces still get this grant if they cannot spend the allocation for capital expenditure.
Mr Hanekom commented that it seemed that a disproportionate amount of money is allocated to treating Aids-related diseases than is allocated to prevention, especially since the government policy is around prevention.
A committee member noted that despite the increase in the Health allocation, many economists say that there is no increase in real terms and wanted to know if this was correct. Further, are there no mandatory mechanisms to ensure that conditional grants are used for their intended purpose.
Dr Jassat (ANC) asked if it was realistic to move post-graduate teaching to areas with no facilities. Secondly was it feasible to implement the Brazilian experience for an HIV/AIDS patient or is it unsustainable. Thirdly is there variety in the food for the nutrition program because children cannot be expected to eat peanut butter and bread every day.
The Director General was asked if anything was being done to address the fact that people die because there are not enough ambulances.
Dr Ntsaluba responded as follows:
- If the allocation is not used properly the DG has no right to intervene. Influence could be exerted where conditional grants are not used appropriately and the further flow of money to the province can be stopped. Such action must be justified. This however is a small problem. The biggest problem is the division of the equitable share.
- The clinic in East London should not be supplied through hospitals because then it will get the leftovers. The Eastern Cape is a problem because there is a dysfunctional depot in Umtata and a large area depends on the PE depot. Tenders are going out for pharmaceutical distribution. In certain instances the medicines will go directly to the clinics. There is no shortage of drugs in most instances, sometimes the problem is with stock management. The stock is ordered only when there is nothing left. This can only be rectified with training.
- The government accepts that when the right sizing of the public service takes place, there are areas that need more health workers. The budget for personnel is around the 67% mark and going up. The number of workers are not going up. There is a real problem with understaffing but it is difficult to employ more staff if the budget for salaries is so high.
- The government is committed to prevention but the reality is that many persons have to be treated for HIV / AIDS. Where the numbers for treatment are so high, the cost will be high. The money is therefore needed for treatment.
- The Brazilian experience was considered. It is however based on significantly lower numbers than SA. In SA the number of persons needing treatment is much higher. The Brazilians do not have the same constraints as SA. For example, the WTO agreements and some of the drugs that are needed are manufactured in Brazil. Brazil has made advances but there are hidden costs in the system. If the hidden costs are taken into account then there will be a different picture of the resources that are needed. It would be difficult to go the same route.
- The Department wants to shift the training platform and it is showing encouraging results. The Kimberley Hospital is much different to what it was four years ago because of its partnership with Bloemfontein. Specialists are attracted by the relationship with the academic hospital.
- On the question of the rehabilitation grant, the DG said that the pace of spending on the rehabilitation of hospitals is disconcerting. Some tender boards and public works departments are not co-operating but mostly the problem lies with internal management.
- The allocation to social services has increased by 8%. It might not mean that the health sector has the same increase but we will have to see what is the increase in real terms.
- Many provinces are slow in addressing emergency care and addressing ambulance services. Sometimes the ambulance service is linked to the fire brigade service and this must be unravelled.
Due to time constraints further questions will be noted and the Department will have to respond in writing by no later than tomorrow.
Ministry of Social Development
The Minister read his submission to the Committee (see Appendix).
Mr Sikakane (ANC) asked how the capacity problem in provinces is going to be addressed.
Mr Masutha (ANC) expressed his concern that the financial implications of the new Child Care Legislation has not yet been investigated.
Mr Zita (ANC) asked what the relationship was between the poverty relief program and the social security initiative.
Another ANC member asked about the implications of the class action court case against the province in the Eastern Cape.
Response by the Minister
He said that the capacity of the provinces has improved since 1994 but for the provinces to face the present situation, the provinces are still not at the level that is expected of them. The Department of Public Services is running courses to assist in this.
The Minister said that when he became the Minister of Social Development in 1999 he was amazed to see that nothing had been done about the Child Care legislation that has been with the department and the Law Commission since 1996. Finally the Law Commission has made a report and the department is looking at the financial implications thereof. When the legislation comes before Parliament it is hoped all the costing would have been done.
The revamping of social security is looking at addressing poverty. It is the government’s aim to eradicate poverty and everything is being done to achieve this.
The Minister indicated that he does not want provinces to go to court when the public has a clear constitutional right to access to social security and it is clear what government’s obligations are. The Government lost the case.
Due to time constraints no more questions were put to the Minister and the meeting ended.
Presentation by Dr Zola Skweyiya, Minister of Social Development, to the Joint Budget Committee Meeting, Cape Town, 6 November 2001
Chairpersons and Honourable Members
In my presentations on the Intergovernmental Fiscal Review to the Budget Committee and the NCOP on the 12th and 23rd October, respectively, I outlined the areas of focus agreed to by the Council of Social Development Ministers. I also touched on the challenges we face at national and provincial level in discharging our mandate to deliver services to the poor and vulnerable in our society;
In my presentation today, I propose to deal with the Medium Term Budget Policy Statement of Government and the priorities of Social Development. I will also outline some issues, which the Members may wish to reflect upon.
Medium Term Budget Policy Statement
The Medium Term Budget Policy Statement identifies 'Reducing Poverty and Vulnerability' as the top policy priority in the preparation of the budget for 2002. It further identifies strengthening programmes that address the impact of HIV / AIDS. These two priorities are central to the work of the national and provincial departments of social development. Other priorities such as free basic services and the restructuring of the Post Office are also of importance to the people served by social development departments.
The Consolidated National and Provincial Medium Term Expenditure Estimates for social development reflect an average annual increase of about 3 percent. The estimates are:
2002/2003 R38 billion
2003/2004 R41.4 billion
2004/2005 R43.6 billion
The estimates also show that the consolidated budget for social development is the second largest, with education being the largest. The social services budget accounts for 58 percent of consolidated non-interest spending over the medium term. This is encouraging and is a reflection of the Government's continued commitment to addressing poverty and inequality in our country.
The national and provincial departments of social development, however, face many challenges in delivering on social development priorities within the Medium Term Expenditure Framework. These challenges relate to the five key priority areas of our work, namely, Social Security; HIV / AIDS; Poverty reduction; Social Integration; and Sector Reform.
Social Security Priorities
The Child Support Grant will continue to receive attention and we have set a target of 3 million beneficiaries by the end of 2002/2003. Given that the current number of beneficiaries has already reached 1.5 million, we expect to achieve this target.
Improving access to social security and the quality of service delivery is imperative. The replacement of SOCPEN with a new grant payment system is underway and we expect to have the initial design work completed early in the new financial year. This year we completed the development of norms and standards for social security and it is imperative that we do not delay their implementation. There is an urgent need to address the backlog of infrastructure in the provinces, especially at pension pay points in rural areas.
Honourable Members will be aware of the issues raised at previous hearings with regard to limitations in the coverage of the existing system of grants. These issues are being investigated by the Committee of Inquiry into Comprehensive Social Security. Arising from the work of the Committee will be major policy considerations that affect not only the system of social development grants, but also the social protection programmes of other departments. Major policy shifts can only be considered once the Committee has tabled its report with Cabinet and I have been informed that the report will be submitted shortly.
HIV / AIDS priorities
The expansion of the Home-Based Care/Community-Based Care will be our major intervention next year in the area of HIV/AIDS. I am however, concerned about the limited capacity of government officials to deliver at the scale required and we have therefore decided to direct more resources to supporting the initiatives of communities and faith-based organisations. In our response to HIV/AIDS we also need to pay more-attention to issues of food security and ensure that caregivers are adequately equipped for their tasks.
Our prevention programmes will target youth and we will be implementing our partnership with LoveLife. HIV/AIDS awareness will also be integrated into services provided by children's homes, secure care centres, places of safety and youth correctional facilities.
Our efforts to date in the area of HIV/AIDS have focused on children, youth and women. There are gaps in our response to the needs of older people and people with disabilities. We know that older women are in many instances the caregivers of adult and young children infected or affected by HIV/AIDS and we must ensure that they have access to support and information on
This year we launched the HIV/AIDS training programme for government planners and the programme is expected to reach 1200 officials over three years. Already we are finding a huge demand for the training and there have also been requests from NGO's and CBO's for training.
Poverty Reduction priorities
This year our Poverty Relief Programme is focusing on food security, HIV/AIDS, income generation for women, youth development, micro-financing and the integration of people with disabilities. WE have spent this year restructuring this three year programme, and the next year should see an acceleration of implementation.
A comprehensive review of Government's Poverty Relief Programme has been proposed in the Medium Term Budget Policy Statement. Such a review is necessary and timely for making decisions on the future of the Poverty Relief Programme. The departments of social development will contribute to the broad review and will also continue with its in-depth assessment of projects.
There are a number of cross-cutting initiatives to which the departments of social development must contribute. These include the Integrated Sustainable Rural Development Strategy, the Urban Renewal Programme and the Integrated Nutrition and Food Security Strategy.
Social Integration priorities
The recent media coverage on the sexual abuse of children has outraged many people and is an affront to all decent human beings. We are close to completing the Strategy on the Abuse and Neglect of Children and the Child Protection Register. Our big challenge lies in securing adequate resources for implementation. We rely on the NGO sector to provide child protection services and these organisations are facing their own budgetary constraints. Similarly, the inter-departmental Anti-Rape Strategy and the Strategy on Shelters for Abused Women and Children will be completed next year and will also demand resources for implementation.
On the legislative front, I have already informed this Committee that the SA Law Commission is expected to complete the drafting of the new Child Care legislation for introduction into Parliament next year. The Child Justice Bill will have implications for national and provincial departments of social development. Provincial departments, in terms of the legislation, will be required to provide probation officers and diversion programmes. The national department will be required to implement a comprehensive training programme for officials involved in the implementation of the legislation.
The Ministerial Committee on the Abuse, Neglect and ill-treatment of Older Persons provided us with a very comprehensive set of recommendations, many of which are being incorporated in our efforts to improve social security. The audit of homes is underway and will be completed by the end of this financial year. There are however, serious constraints on the capacities of provincial departments to follow-up on all the complaints received by the Committee in the course of its investigations.
We must make greater progress in our services to people with disabilities. My imbizos in the provinces highlighted the plight of people with disabilities in rural areas, and in particular, the plight of children with disabilities. Services to children with disabilities must be reviewed as a matter of urgency.
Members may recall the NCOP debate on substance abuse, which took place in September this year. The devastating impact of drug and alcohol abuse on the fabric of our society was echoed by many members during the debate. There was also a recognition of the link between alcohol abuse and the risk of HIV/AIDS infection, especially amongst our youth. The NCOP resolved that the Department of Social Development should co-ordinate a multisectoral and integrated response to drug and alcohol abuse. We intend to address the issue of substance abuse, working with the Central Drug Authority and Non-Governmental Organisations.
Sector Reform priorities
In my address to the NCOP on the Inter-Governmental Fiscal Review, I outlined the transformation agenda for the social development sector. The agenda is comprehensive and covers the following issues: subsidies to the NGO sector, legislative review, extending coverage of services to rural areas, norms and standards for services, as well as human resource issues in the government and non-government sector. Our major challenge is to effect transformation of the sector in the face of the financial crisis confronting a number of NGOs. The level of subsidies in many provinces and at the national level has not increased for three years while the demand for services has increased.
The Medium Term Budget Policy Statement provides for a conditional grant of R47 million in 2002/2003 to the provinces for the implementation of HIV/AIDS programmes. This will increase to R49 million in 2003/2004 and to R51 million in 2004/2005. This represents a significant increase over the allocation of R13 million provided in 2001/2002. It will be necessary to review these allocations as we make progress in expanding the Home-Based Care programme over the medium term.
Provision has also been made for conditional grants to improve financial management in the provinces. Each province will receive R1.2 million in 2002/2003 and this will be the final tranche of the grant. The grant to date has assisted the provinces with the implementation of the Public Finance Management Act, but it is essential that provinces develop permanent capacity to ensure the sustainability of the improvements achieved.
The social development budget continues to come under pressure from a number of sources. The number of Child Support Grant beneficiaries is expected to continue an upward trend, as will the number of beneficiaries of the Foster Care Grant. There is also pressure from the expectation that the value of grants must at least keep pace with inflation. I have already touched on the increased demand for other welfare services due to persistent levels of poverty and the impact of HIV/AIDS.
Within this context, it will be challenging for provincial departments to achieve the 80:20 distribution of resources between social grants and other welfare services. The expenditure pattern for provinces shows that an average of 90 percent of the budget is spent on social grants and the provinces with the highest levels of poverty are least able to direct resources to other welfare services.
Increasing financial assistance to NGO's and emerging CBO's will pose a further challenge to social development.
Addressing the infrastructure problems that impede service delivery is crucial over the medium term and we look to provincial governments to give this issue serious consideration in their budget allocation decisions.
An issue of major concern is the strain experienced by the provinces in meeting their existing statutory obligations, especially with regard to child protection services. The introduction of the Child Justice Bill will place further pressure on the provinces if adequate resources are not made available for the implementation of the legislation.
In conclusion, I must reiterate the need to address the human resource constraints in the provincial social development departments. We need more skilled officials to respond to the social development imperatives facing our country.
I thank you
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