Fourth Quarter Expenditure Reports 2008/9: Departments of Transport, Home Affairs, Labour, Public Works and Health

Standing Committee on Appropriations

11 August 2009
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Committee was briefed by various departments on their reasons for under expenditure in the last financial year.

The Department of Transport accounted for under expenditure as due to additional funds being allocated to the Department, high vacancy rates and problems of payment. The Committee asked questions about what constituted 'Goods and Services', questions around the South African National Roads Agency Limited, the provision of transport to school children and those living in rural areas. Other questions related to the turnaround strategy for licence boards, bus subsidies and whether the issue had been resolved, and the amount allocated to the taxi recapitalisation.

The Department of Home Affairs said its under expenditure was due to project related problems, specifically that of the Smartcard ID project. Instances of over expenditure were also addressed, as well as problems of capacity. The Committee asked questions about the problems associated with the projects, and it became known that the State Information Technology Agency (SITA) was not performing. The Director General was asked to give some further information on the audit that was due for completion and a full report back on the issue in due course. Other questions related to corruption, overspending in some areas and accountability of funds given to institutions.

The Department of Labour attempted to explain the under expenditure by citing problems associated with capital projects and the lack of claims to social insurance, and problems around the vacancy rates in the inspectorate. The Committee asked technical questions regarding the clarification of social insurance and transfers made to non profit organisations. The Chairperson reprimanded the Department for a clear lack of planning and failure to account for this, saying that the Department would be called upon at a later date, when the Director General was available, to address these concerns.

The Department of Public Works said that the under expenditure in this Department was due to problems in paying invoices which were submitted in March. The Committee asked questions about the delay in this payment, and queried the motives of the Department in requesting a rollover. Questions about the Cuban programme also arose.

The National Department of Health discussed the various problems it had in terms of getting projects started, and vacancy rates and provincial expenditure, which accounted for the under expenditure. The Committee asked questions about the delays in the Nursing College project and the Hospital Revitalisation projects. Other questions related to vacancy rates and provincial under expenditure.

Meeting report

Fourth Quarter Expenditure Reports 2008/9: Under expenditure of various Departments
Department of Transport (DOT) presentation
Ms Mpumi Mpofu, Director General, DOT presented to the Committee a detailed report of the Department's expenditure for the previous financial year. She gave a brief introduction correcting the figures indicated in the letter received from the Committee.

She noted that funds were shifted from compensation of employees to elsewhere, and summarised the instances of under expenditure in the Department. She said that where under expenditure had occurred for projects, requests for rollovers of these funds had been made. These included funds for Passenger Rail Agency of South Africa (PRASA), outstanding payment to South African National Roads Agency Limited (SANRAL) and a number of 'Goods and Services' projects.

She said that under expenditure had occurred because of a number of factors, which included additional un-requested funds being allocated to the Department, a high level of vacancy rates which the Department was in the process of addressing, capacity challenges and consultation problems and late claims being made from certain service providers.

The section dealing with the bus subsidies was not presented, and was only included at the end of the presentation, in the event that the Committee wanted clarity on this issue.  

Department of Home Affairs (DHA) Presentation
Mr Sagaren Naidoo, Chief Financial Officer, DHA, presented to the Committee a report detailing the Department’s under expenditure and the reasons for this. Mr Mavuso Msimang, Director General, DHA, also interjected at various points to give fuller explanations of the issues being discussed by Mr Naidoo.

Mr Naidoo stated that the Department had met the appropriate deadlines In accordance with the Public Finance Management Act (PFMA). He gave a review of the programme structure of the Department, noting that two of the main areas of under expenditure were project related. These were the Smartcard ID project and the Advanced Passenger Processing (APP) project.

Mr Msimang explained that the State Information Technology Agency (SITA) had not awarded the tender for the Smartcard ID project, and this process had already taken over a year.

Mr Naidoo noted that over-expenditure had occurred in the last quarter, but said that this was to counteract under expenditure that had occurred earlier in the year. He added that the administration programme had a greater expenditure than it should, but said that this was because Information Technology fell under this classification.

Mr Naidoo said that due to the elections earlier this year, the Department had also allowed provinces to overspend in some instances. He then briefly discussed the transfers of funds to different agencies (see attached presentation for details).

Department of Labour (DOL) presentation
Mr Bheki Maduna, Chief Financial Officer, DOL, and Mr David Kyle, Executive Manager of Financial Management, DOL detailed the expenditure of the Department. The Chairperson interrupted asking specific questions, which in turn steered the direction of the report.

Mr Maduna said that all branches within the Department had contributed to under spending which totalled 6% of the year's budget.

Mr Kyle, at the request of the Chairperson, explained what comprised the Service Delivery and Social Insurance branches, as these were the highest areas of under expenditure.

Mr Kyle addressed the issues of vacancies, especially regarding the Inspectorate. He then spoke about the Department’s transfers and subsidies, with specific focus on non-profit organisations and households, at the request of the Chairperson.

Delays in specific projects were then discussed. These involved problems in getting site-clearance, communication difficulties with owners of land in Bochum, and problems around the INDLELA project, which arose because the area was rich in dolomite, which caused sinkholes.

The reasons for the under spending on social insurance was that there were fewer claims made than were anticipated.

Department of Public Works (DPW) presentation
Mr Solly Malebye, Director General, DPW and Ms Cathy Motsitsi, Chief Financial Officer, DPW gave a comparatively short presentation which was focused on a defence of the Department’s expenditure, and which contested the under spent figures that the Committee had mentioned in its correspondence.

Mr Malebye said that not all capital projects tied in with the financial year and It was here that discrepancies in the figures arose.

Ms Motsitsi gave a comparison of the two previous financial years to give an Indication of the progress that the Department had made. This was shown through slides on financial performance and expenditure by economic classification.

Ms Motsitsi said that the under spending was due to a failure of payments to the Property Management Trading Entity (PMTE), who had rendered some services to the Department in mid March, and because of this the Department had not been able to pay them by the end of the financial year.

She said that this absolved the Department, as they had not in the final result actually under spent, although the figures had indicated this, adding that the amount needed had already been requested for rollover.

National Department of Health (DOH) presentation
Ms V Rennie, Acting Chief Financial Officer, DOH, assisted by Mr Thami Mseleku, Director General, DOH, presented to the Committee the reasons for the Department’s under expenditure.

Ms Rennie outlined the reasons for under spending in the various programmes of the Department. In programme 1, this occurred because of delays in payments to contractors. In programme 2, this occurred because of the slow progress of projects as well as problems in payments to certain non-governmental organisations (NGOs). Problems with the Nursing Colleges project and the Hospital Revitalisation project also accounted for under spending in programmes 4 and 5.

In explaining under expenditure at a provincial level, Ms Rennie briefly discussed cash-flow issues in the Free State, funding being withheld from Mpumalanga, the historic under funding of the Western Cape, which had delayed the Khayelitsha project, and tender problems in the Eastern Cape.

Mr Mseleku added that the issue related to capital projects, and that the Department’s role was to ensure that provinces had sufficient funding.

Department of Transport issues

The Chairperson asked if the turnaround strategy for Operating License Boards (slide 11 of DOT’s presentation) was meant to address the issues of people being made to travel long distances to apply for learner’s or driver’s licenses or select appropriate dates.

Ms Mpofu said that this was not related to driver’s or learner’s licenses, but rather it was related to the Operating License Boards at a provincial level, which issued operating licenses to buses and taxis. This turnaround strategy was only approved in February 2009. She said that the issues linked to this were efficiency and an anti-corruption strategy to ensure the fluid functioning of these offices.

She said that a best practice model was in place to deal with the issues of learners and drivers licenses and this was under implementation. This involved the establishment of computerised learner license programmes, which would be implemented in mobile units countrywide, and which would greatly improve the efficiency of this process.

The Chairperson asked if there was a way forward regarding the bus subsidies.

Ms Mpofu said that this was resolved, and added that the reason this appeared as an over expenditure was that it was not initially budgeted for. The National Treasury (NT) had paid the bus companies through the Department of Transport, which was why this appeared as an over expenditure. She added that a new grant for this was in place, which would be provided to provinces.

Ms R Mashigo (ANC) asked for clarity on how the Department qualified items as 'Goods and Services' on slide 19. She asked if it was necessary for money to be shifted from compensation of employees, noting the problem of approving funds for a particular area only to see it shifted to another that was used for an unintended purpose. She wondered if this was seen as unauthorised expenditure, and whether it needed to be addressed by proper Parliamentary procedures.

The Chairperson said that according to the Public Financial Management Act (PFMA), funds could be shifted around. He added that he was aware that at times departments asked for a specific budget, only to shift these funds for other purposes. He noted that this was an interim period, and because of this the amounts indicated by the NT and those of the departments might differ as outstanding invoices were paid off.

Mr Dan Pretorius, Chief Financial Officer, DOT, said that 'goods and services' referred to discretionary expenditure where projects were developed, and it also covered administrative costs such as stationary, telephone bills, travelling costs and so forth. He said that the shifting of funds could only be done to goods and services from compensation of employees. He said that these funds were not requested from the NT, and it was necessary to shift these. He said that the additional R46 million was shifted because the Department had a number of unfunded mandates. He stressed that this was not unauthorised expenditure.

Mr Collins Letsoala, Deputy Director General: Financial Services, DOT, said that along with the discretionary expenditure, payment of consultants also fell under this classification. He added that anything that did not have another classification as prescribed by the NT fell under 'goods and services'.

Ms Mashigo asked if this had an expenditure limit.

The Chairperson was concerned about the term 'discretional'.

Mr Letsoala said the issue was that functions translated in programmes, which in turn translated into projects. In this way additional expenditure would not occur outside of what the programmes were meant to achieve.

Mr Pretorius said that these were the final figures that would be reported in the Department’s Annual Report.

Ms Mpofu added that because vacancies existed, there was extra money that could be shifted from compensation of employees, and this was the reason for the shifting of funds.

The Chairperson asked for clarity on the issue of SANRAL,  saying that a clear timeline needed to be given as to when the issue of re-clarification of roads in the country would be resolved. He noted that road maintenance posed serious problems in municipalities, and the Department would need a large litigation budget and a clear strategy to deal with the appeals relating to  accidents that occurred on those roads.

Ms Mpofu said that the SANRAL programme was approved in 2007, but this was an area with which the Department had some difficulties. The reclassification exercise would be finalised in 18 months, but the main issue at the moment was finding the asset register, which would indicate who had ownership of the roads. She added that an interim process of transferral of municipal roads to SANRAL was under way.

The Chairperson noted that R 50 000 was allocated in 1999 for taxi recapitalisation, and wanted to know if this amount was still the same. 

Ms Mpofu said that the taxi recapitalisation scrapping allowance was approved earlier this year for R 54  000. She added that this would be adjusted according to inflation each year.

Ms Mashigo asked the delegation what their plans were for transport to be provided to people who lived in rural areas. She also asked who was responsible for school transportation, whether this lay with the Department of Transport or Department of Education, and what the key issues were in providing transport those who lived in rural areas.

Ms Mpofu said that the Passenger Rail Agency of South Africa (PRASA) programme had entailed buying buses for 2010, and said that they would be used to provide critical services. She said that a process of 'demand generation' needed to be done, and where long distance transport was to be set up, buses needed to be run before the railway system was set up to ensure that efforts made were not fruitless.

The Chairperson reminded the Department that must ensure that its strategies would be achievable. He cited the example of the Mthatha to Eat London train, which took 24 hours, and was therefore unattractive to people as a form of transport.

Ms Mpofu noted that this was primarily intended for freight, and that passenger transport was a secondary objective.

Ms Mpofu said that the Department of Education was unwilling to provide funding for school transportation, as this was not a core function of that department. She added that a short-gap measure was in place for learners who lived more than five kilometres away from schools, where free bicycles were provided.

Department of Home Affairs issues
Ms Mashigo asked for assurance that if the tender for Smartcard ID's was issued in May last year, the project would have been piloted by December.

Mr Msimang assured her that this would have been the case.

The Chairperson asked if there were any service level agreements signed with State Information Technology Agency (SITA), which fell under the Department of Public Services and Administration, and what was to happen, given that delivery of this did not occur.

Mr Msimang said that in terms of legislation, any procurement by any Department had to be done through SITA. He said that a service level agreement was in place, but that the Department was currently experiencing problems, and at the moment the Minister was considering cancelling the tender and pursuing alternative options.

The Chairperson noted that SITA had not performed in a number of cases and needed to be brought forward to account for this. He said this was an indication of a lack of capacity, but that something needed to done as the implications affected other parties. He recommended that the Committee invite SITA to account for this.

Mr Msimang added that a further constraining factor needing to be addressed was that the tender process was audited by the Auditor-General's office, but there was a leakage of information that led to the Board at SITA stopping the process. He said that because of this a forensic audit was ordered by SITA, and the Department was advised to wait for completion of that process. He was concerned that an alternative option may have been put into motion by the time the forensic audit was complete.

The Chairperson said that he hoped this audit was near completion as it caused delays, and added that, if necessary, NT needed to be assigned to this issue. He asked Mr Msimang to indicate to the Committee, when he next met with them, by what date the forensic audit would be complete.

Mr Msimang said that the process had gone on far too long and that he would report to the Committee exact timeframes involved.

The Chairperson, referring to slide four, noted that there were problems in having large amounts of funds budgeted for administration and this needed to be addressed, but agreed that the IT projects in this programme comprised the bulk of expenditure.

Mr Naidoo admitted that this was a problem, and such amounts should rather be reflected in other programmes.

The Chairperson was concerned that the funding given to the Government Printing Works (GPW) and the Film and Publications Board (FPB) would not be accounted for, and asked how this was to be monitored.

Mr Naidoo said that traditionally the only funds transferred to the GPW were for bank charges, amounting to R200 000. Recently GPW had approached the Department and the NT requesting funds for new passport machinery, which was the amount indicated. He said the Chief Executive Officer of GPW sat on the Executive Committee and monthly reports were submitted to Department of Home Affairs, which were discussed in its Executive Committee meetings, and which, in turn, were forwarded to the NT.

The Chairperson asked if this funding was a set, once-off amount.

Mr Naidoo said that it was, but that it would be staggered over a two-year period.

Mr Msimang added that the GPW reported to the Home Affairs Portfolio Committee, and that it was audited independently.

Mr Naidoo said that the FPB’s allocation of R33 million was not a full allocation, and merely augmented the FPB  budget. The FPB was a Schedule 3A (of PFMA) entity, which meant that any surplus profits and unspent funds would be returned to the NT. He said that the FPB reported separately to the Department of Home Affairs and to the NT, but that controls similar to those placed on GPW existed.

Ms Mashigo noted that the main function of the Department was the service to citizens. She said that she was aware of the problems faced in the Department, notably corruption, inefficiency, and problems associated with IDs being issued under wrong names. She asked what measures were in place to counteract this and ensure the proper servicing of citizens. She asked whether the Department was in consultation with the South African Revenue Services (SARS), and what the state of their vacancy rate was.

Mr Msimang admitted that there were corrupt activities occurring within the Department, adding that these always involved third parties. He assured the Committee that efforts were being made to block the loopholes in the corruption chain. He said that efforts were under way to identify all areas of corruption, and there had been success in some cases. He said that he hoped that this would be achieved through the introduction of good administrative procedures and proper use of technology, but it would take time.

He noted that the high vacancy rate was due to a fundamental restructuring of the Department where vacant posts could not be filled. He added that it was the goal of the new Minister to ensure that vacancies were filled by competent individuals and that this process could not be rushed.

Mr Msimang said that there was collaboration with SARS at borders. SARS was responsible for customs, while Home Affairs was responsible for immigration. He said that there was a body responsible for aspects of border control, which included both DHA and SARS, and which was responsible for coordinating activities at the borders.

The Chairperson noted that Slide 4 indicated an overspending of R226 million, and asked how this was catered for. He said that the statement made by the delegation, on Slide six, that overspending by the provinces was allowed, was worrying, and he reminded the officials that the PFMA was the guiding document, which set out that no department should spend what was not available. He suggested that the intention of the delegation may not have been conveyed properly.

Mr Naidoo said that the R226 million referred to an amount in the last quarter, but this figure actually counteracted under spending of the same amount in the previous quarters, meaning that, when viewed overall, there had not been any over or under spending.

Mr Naidoo assured the Committee that the intention was not to let managers have free reign In terms of budgeting, and that over expenditure existed only within the Department, and not at a higher level. He said that in the instances of overspending, the money came from other areas or provinces that had unspent savings. He referred to this as “guarded spending” and reiterated that it was only because of the elections that certain instances of over expenditure were allowed.

Mr Msimang added that the over expenditures were pre-authorised on the understanding that they could fill the place of an under expenditure elsewhere. This was preferable to having  under expenditure across the board. He emphasised the point that this was pre-authorised, and additional funds were only given to projects that were seen to be performing well.

Department of Labour questions
The Chairperson asked for clarification of what comprised the Service Delivery and Social Insurance branches, as seen in Slide 2.

Mr Maduna said that Service Delivery was the branch to which the 110 labour centres and ten provincial offices reported.

Mr Kyle explained that this comprised ten provincial offices, because Gauteng was split into a northern and a southern office. The 110 labour centres managed various regions within the provinces, and these reported to the Deputy Director General for Service Delivery. He added that Service Delivery offices had direct contact with the public, which was comprised of the DOL Inspectorate and employment services practitioners, all of whom were located within the provincial offices and labour centres.

Mr Kyle said the Social Insurance branch housed the Unemployment Insurance Fund (UIF) and the Compensation Fund. The former carried a nominal budget of R1000 per annum, and the reason was that if the UIF were suddenly to encounter financial difficulty and need to be financed through the fiscus, the bailout would be directed through this allocation.

Mr Kyle then explained that the Compensation Fund had an allocation in respect of injuries sustained on duty by public servants in national departments. The claims would be processed through the Fund, but the administrative costs involved in this would be claimed back from the Department of Labour, and this expense would be settled under the main division.

The Chairperson asked if this had a budget of R10 million.

Mr Kyle replied that It was R10 million for the year under review, but the current year’s budget was R8 million.

The Chairperson asked for a fuller explanation of the 'transfers and subsidies to non-profit organizations” on Slide 8.

Mr Kyle said that the Department of Labour, in a bid to increase the representation of women and disabled persons in the workforce in South Africa, paid a wage subsidy to the National Councils for the Blind, the Deaf, and the Physically Disabled. This enabled them to employ staff who promoted these groups in the workforce in South Africa. He explained that should the posts be vacant, the subsidy would not be paid.

The Chairperson asked what was meant by the reference to 'Households' on the same slide.

Mr Kyle said that this was an economic classification that arose with the introduction of the Standard Charter of Accounts (SCOA). It referred to a situation that if an employee left a department, an amount would be paid In respect of leave credits. This was due to a change in leave policy, as the amount paid was not considered as compensation of employees. Because the person was no longer employed, the payment would be made to that person’s “household”. Also included were amounts to be paid to those who successfully applied for voluntary severance package dispensation, which he said was currently running.

The Chairperson commented that the Department had been quite slow in filling vacancies in the quarter from December to March, and said that this problem would show the effects later on.

Ms Mashigo asked if Environmental Impact Assessments had been done on the Indlele project, as these should have revealed that the Indlele area comprised dolomite that would cause problems, before large amounts of funding were requested.

Ms Mashigo asked whether the Department had any retention strategy, as the vacancy rates were increasing. She was primarily concerned about the vacancy rates in the Inspectorate, as this was a critical area.

She noted that the Department had transferred money from current payments to capital payments, and this was not spent. She said that this indicated serious problems in spending.

Ms Mashigo asked if there were awareness campaigns to inform people that they could claim social insurance, as she noted that there was a very low claim tendency in this area.

The Chairperson wondered why all the departments' capital assets were under-performing. He said that even though the Department had given reasons for these shortcomings, it was apparent that there was little planning occurring. He said that plans needed to be submitted to NT in August, and it seemed clear that the Department would, however, wait until the beginning of a new financial year before commencing planning of projects. He said that this was a huge problem. He said that the vacancy rates did not only apply to what the Department called the 'Service Delivery' branch, but were spread throughout. The DOL could not carry on working like that, and the Committee, in terms of the new legislation, would be keeping a close eye on what was happening, to ensure that money allocated was being spent, since if this did not happen there would be no reason to continue allocating funds to those projects.

The Chairperson noted that the Department of Labour had one of the smallest budget allocations, but said the delegation had given no motivation that this be increased. Instead, it seemed that Parliament would have to cut this budget. He said there was clearly a lack of capacity, and this resulted in South Africa having to import skilled labour unnecessarily. He said that the Department would be called back at a later date, when the Director General was available, as he felt that the present delegation was unable to respond properly to the questions posed.

Department of Public Works questions
Ms Mashigo noted that the explanation of the delay in payment to the PMTE was not satisfactory. She asked when the PMTE was first engaged, and wondered why this spending was undertaken at that time when it could have occurred earlier. She also asked what projects had required Cuban assistance.

Mr Malebye said that the Cuban programme was concerned with technical support in the field of engineering. He said a bi-national agreement existed between Cuba and South Africa, and that there were projects under way also with the departments responsible for health and housing, in respect of engineering matters, throughout the country. The Cubans were allocated to specific projects that aimed to transfer skills to young South Africans. He said that this hoped to address the skills shortage faced in these areas. He said that this agreement was in place for a period of three years.

The Chairperson said that he was aware that some projects overlapped across financial years, but added that, in respect of this issue, when the financial year ended, two months were given for all expenditure to be cleared. He hoped that the figures presented were the final figures for that financial year. He said that it was his understanding that outstanding invoices would be cleared within those two months, and added that he was still unsure why this occurred.

Ms Motsitsi said that outstanding payments could not be made by 1 April, because this was a new financial year. She said that only when the NT approved rollovers in the following month could the outstanding payments, to which the Department was committed, actually be settled.

Ms Mashigo said that Parliament was not approving of rollovers of funds. It was her impression that the Department had planned to apply for this money to be rolled over solely in the interest of settling outstanding invoices without having to use the original budget allocation from the previous financial year.

Ms Motsitsi said that services were rendered for projects in mid March, which accounted for the pending settlements required by the Department, but that invoices allowing for payment were received only after the end of that month.

Ms Mashigo asked how much was being spent on the Cuban programme, and suggested that universities and retired individuals who had the necessary skills could help with the transfer of these skills, which would allow the Department to spend the money elsewhere.

Ms Mashigo also asked for more details to be given around other projects which the Department was undertaking.

Mr Malebye said that detailed written reports could be supplied on both the Cuban programme and other projects that were under way.

Department of Health questions
The Chairperson asked why two of the parties mentioned in the report were not paid before their contract expired. 

Ms Rennie said that the Department did not have the funds at the time to pay the first, and that the second could not be paid in the financial year as the claim had been submitted too late.

The Chairperson asked for clarification on the cash-flow issues of the Free State, and what the current status of the province was.

Mr Mseleku said that part of the problem with cash-flow issues in the province was that this resulted in a blanket approach to how financial management was undertaken. The relevant departments needed the NT’s approval of funds, including those ear-marked for projects. He said that currently the Department was aware that there would likely be under-spending by the Free State, because of this relationship with the NT, which would have the effect of slowing the pace of the projects being undertaken, through delays in payments of invoices. He added that he could foresee similar problems in cash-flow management in this financial year, but that work was being done with the NT to minimise this.

The Chairperson noted that past publicity around this situation was very negative, and he was concerned that if this was repeated this year, the publicity would be worse and the Department would be seen as incompetent.

Mr Mseleku said that the province had instituted a centralised management scheme, where finances were managed from the NT. He said that the Premier had indicated that it would be beneficial if management was taken over by the National Health Department, which he said the National Department was not particularly keen to do, but that this would be done if necessary. He added that this was not yet being discussed, and he thought that the province was applying its own internal section managers to the problem, which he hoped was helping.

Ms Mashigo asked what caused delays in the Nursing Colleges being set up. She asked if the Hospital Revitalisation was the right approach. She noted that even though the intentions were good, the implementation took a long time. She asked for how long this had been included in the programme, and if there was any quicker alternative.

Mr Mseleku noted that in 2006, it was stated that Nursing Colleges would be reopened, and by 2008 this was done. He said that the issues had involved whether to simply re-open old Colleges, or to amalgamate them. The next phase would be to conduct an audit of nursing needs in each province, and match this with the existing infrastructure, to see how many Colleges each province would require. He also noted the difficulty in unbundling these colleges from universities, a process that would require collaboration with the Department of Education. He said that after this was done, the question of how many colleges would be required could be addressed, which the audit project would reveal. The delay came in when the tender for this was being adjudicated, and it was discovered that there was a potential conflict of interest, which had necessitated the re-advertisement of this tender.

Mr Mseleku agreed that in the initial phase of the Hospital Revitalisation project, expenditure was very slow. Because of this the NT had pulled back funding, saying that if the pace of the project was improved, these funds would be made available. He said that the project was then intensified, but funding was not forthcoming, leading to further debates how this would be funded. This year, the President had announced that this project would again be fast-tracked using public/private partnerships (PPP), which resulted in this model being explored with NT and a Task Team being appointed to fulfil the mandate. This would be a long process, extending over two to three years. Another problematic issue had been that the private sector offered its services on the basis of the PPP, and the State was unable to compete against this due to high costs. He said that capacity was still an issue, as was the hiring of unreliable contractors.

Ms Mashigo asked for more information on what was involved with the agreement between the DOH and foreign doctors. She asked if this money could be better spent on providing basic services, and wondered what led to this agreement being set up.

Mr Mseleku said that South Africa did not have enough doctors working in the public sector, but said that the National Health Insurance process may amend this. He noted that some provinces were running at a 60 %vacancy rate for doctors, which had resulted in further issues of supervision over new staff and interns. Because of this South Africa had to rely on countries with surplus doctors, and had entered into bilateral agreements with those countries.

Ms Mashigo was concerned that some of these foreign doctors might move from positions where they were placed to more metropolitan areas.

Mr Mseleku said that if this occurred, the contracts with these doctors would be terminated and they would be sent back to their country of origin. However, he admitted that agreements were often difficult to enforce. He stated that the relationship with Cuba was unique, and doctors were recruited from there because of solidarity, but all other agreements were very clear on a contractual basis.

The Chairperson, noting that the Khayelitsha project was delayed for two months, asked if this was now under way. He noted that the DOH had issues with the DPW in Mpumalanga and the Western Cape, and stated that this was a clear problem of planning. He said that he would like clarity on why DPW would take up a function that it knew it did not have the capacity to fulfil. He added that this would be discussed with the National Council of Provinces, to clarify the relationships.

 Mr Mseleku said that the Khayelitsha project was under way, but he was unsure of the time that the project would take to complete. He said in the case of Mpumalanga, the problem lay with the Department itself, and was related to capacity and other issues.

The meeting was adjourned.

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