First Quarter conditional & capital grants: Provincial Departments of Arts & Culture spending

NCOP Finance

01 September 2009
Chairperson: Mr C De Beer (ANC)
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Meeting Summary

The Committee was briefed by the National Treasury (NT) and all nine of the Provincial Departments of Sport, Arts and Culture on the First Quarter expenditure of Library Conditional Grants. The NT had noted that not a single province had spent more than 15% of the total allocation for this Grant. The provinces in turn addressed this accusation and tried to account for their under expenditure.

Some Provinces, such as Mpumalanga and the Gauteng attempted to show that the NT's figures were incorrect, but it became apparent that the Committee was interested only in actual expenditure, and not in committed expenditure or transfers.

The Committee’s questions varied from province to province on technical issues related to some of the projects that were meant to be under way. Primarily the questions centred around ensuring that services were effectively delivered to the citizenry.

Mpumalanga was asked questions about vacancies that existed and what was being done to fill them, and about the discrepancies in the Departments figures and the NT's figures.

The Free State was asked questions about vacancy rates, figures showing a historical context of the grant and the Philippolis project. The Committee felt that the Free State’s presentation was not up to scratch, and requested that the Department return at a later date.

Limpopo was asked questions about capacity related problems, their interaction with municipalities and the amounts spent on computer equipment.

Gauteng was asked questions about how its model of expenditure operated, why its figures did not match with the NT's, and about how monitoring of expenditure was carried out.  

The Northern Cape was asked questions about how realistic its projections were for the construction of the three libraries it was undertaking. It was asked about service delivery in municipalities that had funding withheld, and about the monitoring model used.

The North West was asked questions about the issue of allocating funds to the Merafong Municipality, and how involved the province was in Integrated Development Plans (IDPs).

KwaZulu-Natal was asked questions about what mechanisms were in place to ensure municipal reports were received, how may mobile libraries there were and how actual expenditure reports would be handled.

The Eastern Cape was asked questions about capacity, the manner in which the grant allocations were dolled out and whether it needed to total the budget.
The Western Cape was asked questions about why no transferrals of funds had occurred, the problems in the Kannaland Municipality, and how their model for allocating expenditure worked. The Committee requested that the Department return at a later date as it was generally felt that the presentation skirted the essential issues.

Over the course of the presentations by the Provincial Departments, the NT and the National Department were called upon to advise the Committee on figures presented or technical problems. The National Department also advised that a performance audit of the grants and their impact on the ground would shortly be carried out.

Meeting report

First quarter spending: Provincial Departments of Arts and Culture
National Treasury (NT) presentation
Ms Julinda Gantana, Chief Director: Provincial Budget Analysis, National Treasury, briefed the Committee on the expenditure by provinces in the First Quarter, and their projected expenditure for the remainder of the financial year. Ms Gantana noted that a total of R4.7 billion over expenditure was projected for al the provinces. She said that this was in part due to inflation of infrastructure.

She highlighted the percentages of spending in different areas, noting that Education was at 25.5% of its total budget, Sport, Arts and Culture was at 22.2% and Personnel spending was at 24.1%.  The projected expenditure of each province was then discussed, and it was noted that all the provinces were predicted to over spend. The spending trends of the provinces were then discussed on a month by month basis, and a graph illustrating this discussed.

The Provincial Departments of Sport, Arts and Culture expenditure was then discussed. It was projected that an under spending of R19 million on personnel would occur in four provinces. The percentages of the main budget were then discussed in full detail for the provinces and it was noted that the Eastern Cape, Mpumalanga and KwaZulu-Natal all experienced a negative growth.

Personnel expenditure was then discussed, with the only province that overspent being the North West. Capital expenditure was also discussed, with the Northern Cape projected to overspend by R244 000.

The Conditional Grants were then discussed. The flow of information on these was addressed as were the spending rates, which were growing but were still below average. Specifically in terms of the Library Conditional Grant it was noted that all the provinces had spent less than 15% of the total budget.
It was noted that in the First Quarter the Provincial Arts and Culture Departments had only spent 7.3% of the 21.2% transferred for the Library Grant.

Discussion
The Chairperson said that slide 17 was important for the members to note, as it dealt with the Library Conditional Grants and the results of under expenditure on service delivery.

Mr B Mashile (ANC) said that it was important that the Provincial reports addressed the issue of under expenditure on personnel, because this was another important area, and the need to create employment could not be overlooked.

Presentations by Provincial Departments responsible for Arts and Culture
Mpumalanga presentation
Ms S Mjwara, Head of Department (HOD), Mpumulanga Provincial Department, gave an update of what had been done with the funding from the Library Provincial Grant in the first quarter. . This included the construction and renovations of libraries, although two out of the seven new libraries had burnt down, and the use of the Independent Development Trust (IDT) as an implementing agent for library infrastructure projects.

The issue under expenditure was discussed in fuller detail, with the province indicating that out of its budget of almost R56 million its expenditure, including commitments, came to approximately R34 million.

The reasons for the under expenditure were addressed according to their economic classifications. Under compensation of employees, this was due to the mobility in the sector creating vacancies. Under goods and services, it was due primarily to some activities being moved to now take place later in the year, and the budget for these projects had been set aside. The same was true for transfers and subsides.

The Province summarised its spending patterns over the last three years, claiming to have spent 62% of the annual budget.

Ms Mjwara outlined the monitoring capacity of the Department, where both an Operating Support Team (OST) and the Provincial Treasury played a role. The aim was to provide technical expertise to capacitate the Department

Discussion
The Chairperson noted that the presentation dealt with measures to assist municipalities, and asked how monitoring of this would occur.

Mr Mashile noted that the summary of spending patterns on slide 11, indicated a decline in personnel and said that this would impact on projects. He asked how schools would be involved and how they would have access to libraries. He asked what personnel were needed to fill certain key positions.
             
Ms Mjwara said that the Appropriation Bill, in relation to libraries, had been scrutinised. Initially, in this Province, this did not include school libraries. It had been revised, but was not yet published because it was still within the office of the Premier. She added that a memorandum of understanding had been signed with the Department of Education to ensure the involvement of school libraries. She added that before libraries were set up research was undertaken to ensure that communities, especially schools in the areas, benefited.

Mr T Chaane (ANC) asked if the Department could supply figures of how many vacant posts existed, and how many of these had been advertised.

Ms Mjwara said that 19 posts had been advertised, mostly for librarians, which were in short demand. She added that bursaries were issued, and internships were given to students to try to ensure that skills were retained.

Mr T Harris (DA) noted that in the presentation it was mentioned that seven libraries were built, but two had burnt down, and asked if there was any foul play involved.

Ms Mjwara said that the two libraries which burnt down were due to the municipal unrest that existed throughout the Province.

Mr M Makhubela (COPE) said that the Department had indicated that a remedial step had been put in place, and said that what was left was the implementation. If this was done properly, then the Province might break-through over and under spending.

Ms Mjwara said that the Department would try to learn from the previous financial year, and ensure that implementation occurred according to their plan. She added that the secondment of the Occupation Specific Dispensation (OST) unit, from the Provincial Treasury, had helped greatly to fast track infrastructure projects because the Department had been struggling with capacity issues. She said that monthly reports from them were received and site visits were also conducted by them. She said that the 62% expenditure was due to the OST unit’s intervention.

Mr Mashile noted that for the 2009/10 financial year, expenditure was less than 50% of the original budget, and asked what had happened to the difference.

Mr Vusi Shongwe, Mpumalanga MEC for Culture, Sport and Recreation, said the expenditure of 62% was for the first quarter, and that unless this was handled properly, overspending might occur later in the year.

Ms Mjwara said that according to her notes, she did not see the expenditure of less than 50%, and that for the 2009/10 financial year, expenditure was above 50%.  She said for 2008/09, a rollover was requested for an infrastructure project that was not completed.

Ms Gantana said that there were discrepancies in the NT's and the Mpumalanga Department’s figures, and added that the NT’s figures were the official amounts for the First Quarter.

Dr Graham Dominy, Chief Director: Archives; Libraries and Heraldry, National DAC, said that once funds started flowing into Provincial Departments, it became apparent that there was a critical shortage of skills, as well as difficulties in retaining skills. He said that one of the structural problems of a Conditional Grant was that permanent staff could not be employed, and only contract positions could be filled. He said that the National Department was hoping to negotiate with the Department of Public Services and Administration in order to rectify this because it was a dis-incentive for young people coming into the profession to have such insecurity.

Dr Dominy noted that Universities had been closing down schools of information sciences, which had resulted in a shortage of skills coming through the system. He said that there was an investigation into the training of librarians, archivists, and information specialists. He said that this was almost complete, and hoped that the report would give direction as to how to address the issue over the medium and long term.

Mr Chaane asked the Mpumalanga department to give an explanation of the discrepancies in the figures that Ms Gantana had mentioned.

Ms Mjwara said that the figures given by the Department represented expenditure to date, and that it included commitments.

The Chairperson said that this meeting was dealing with the First Quarter of the financial year, and not up until that day.

Ms Mjwara said that slide 8 indicated R11.1 million had been spent, but added that other commitments amounted to R23.9 million.

Mr Mashile said that there was a need to be realistic as 'commitments' did not address the issue of expenditure and service delivery because 'commitments' only showed intention and did not necessarily have an effect on the ground.  

Ms Mjwara agreed that sometimes commitments spoken of were not undertaken, but added that in slide 8 broke down the commitments, the first being for goods ands services, which were books that had already been paid for, and the second relating to the payment of capital assets, which was infrastructure and which had too been paid for. She said that this was why they were included in the presentation. She added that the Department had spent appropriately according to their business plan to date.

The Chairperson stressed again that the presentation was supposed to address under expenditure in the First Quarter, and asked the Department for a written response addressing this issue by Tuesday 8 September.

Mr Shongwe thanked the Committee and assured them that response would be delivered.

Free State Presentation
Mr T Kambule, HOD, Free State Department, briefed the Committee on the Library Conditional Grant expenditure for the province. The total amount allocated to the Department was R40 million, of which 13% had been transferred in the First Quarter amounting to more than R5 million. It was noted that of this, R3.7 million was spent. It was noted that the First Quarter was used to finalise plans and issue orders, and that delivery of goods would occur in the Second and Third Quarters. The reasons for the allocated amount not being spent were discussed. They included challenges in filling posts, and the processing of three year contracts for ICT systems. An analysis per economic classification of the budget was discussed, with the total expenditure amounting to 9%.

Notes on expenditure trends were then discussed, and issues dealt with included the appointment of employees, printing and publications, and computer maintenance. The issue of a contactor defaulting for the Philippolis library was also discussed. The infrastructural aims and challenges of the province were addressed, and these included the upgrading of security at 10 libraries which had been delayed, and the provision of ICT infrastructure to 59 libraries, which had also been delayed.

The general challenges faced included delays in recruitment, the approval of business plans before the beginning of a new financial year and the failure to have all contract workers in place by the new financial year.

The plans for addressing these shortcomings were also discussed briefly, along with an assessment of the Department’s monitoring capacity.  

Discussion
The Chairperson asked what the current vacancy rate in the Department was.

Mr R Lees (DA) asked the NT for clarity on whether permanent positions could be paid for by the Grant funding, as it seemed to be in this case. He noted that there was a contract for computer maintenance, but was concerned that the grant funding may not be approved in the future, and these projects would fall away.

Ms Gantana said that the Conditional Grant allowed for 5% per Province to be used for capacity building. She said that money for maintenance should come from the equitable share because it was an ongoing commitment. She said that in terms of the Schedule 4 Grant for infrastructure, this could be used for supplementing spending, and in this case there was more flexibility. She said that it was the NT’s view that, for more structured Grants, there was a need to make provisions for maintenance.

Mr Mashile said that there seemed to be serious challenges for the Free State in terms of procurement policy, and asked if the Province thought that it would overcome this issue and attain the necessary procurements to deliver services.

Mr Mashile noted that there seemed to be instructions not to use the State Information Technology Agency (SITA), which resulted in the Department ‘scrambling around’ to get services. He stated that it did not help the Committee if information was presented showing that the Department was on course, where this was not necessarily the case.

Mr Kambule said that it was believed that the Province could enter into an arrangement that did not include SITA, but added that this had since been closed, and the Department would function using SITA as the approved service provider.

Mr Chaane, referring to slide 6, asked how the cost containment measures hindered the process of recruitment. He asked how the maintenance cost of R900 thousand, on slide 6, related to the R9 000 for equipment reflected on the previous slide.

Mr Kambule said that the cost containment measures resulted in challenges for the Departmental accounting officer, who would have to have to write a submission to the Chief Executive Officer or the Head of Provincial Treasury to acquire authorisation to spend the budget that had been allocated. He said that even after approval had been given by Provincial Treasury, payment still had to go through them. He said that this matter had since been addressed and the cost containment measures, which made the delivery of services difficult, had been removed and departments were in a position to procure effectively.

Mr Chaane asked for an explanation of the costs involved in the defaulted contract on the Phillippolis library. He noted that the presentation had brought up challenges of employing a local contractor, but he felt that any contractor from the country should have been used as services needed to be provided. He noted that there were discrepancies, on slides 7 and 9, on the numbers of libraries which were to be supplied with photocopiers.

Mr Kambule said that the 30 was a typographical error, and that in reality 31 libraries would be supplied with photocopiers.

Mr Harris noted that there was no historical context in the document, and asked if the figures for the Conditional Grant from the previous two financial years could be provided. He noted that Slide 4 of the presentation said that expenditure had not been achieved because posts still had to be filled, and the cash flow projection called for 13% to be spent by the end of June, but the next slide indicated that 15% of the budget for compensation of employees had been spent. He asked how these numbers were related, as it seemed that the province had achieved its target. He asked how many libraries there were in the province, and how many were planned to be built.

Mr Kambule said that the target for the current financial year was 52 additional staff members. He said that there was a need to differentiate between employees who were on the Department’s approved establishment on one hand, and those who became additional to the establishment as a result of the implementation of the Library Conditional Grant, which amounted to the 52 staff members. He said that the money spent on compensation of employees in the First Quarter was for those employees who were already in the system, even though it was cited that the recruitment of the additional staff would only be finalised in the Second and Third Quarters.

Mr Kambule said that he was speaking under correction, but that there were approximately 63 libraries which were being serviced. He said that he would confirm this in writing.

Mr S Montsitsi (ANC) said that under normal circumstances the MEC needed to be present in order to clarify a number of issues. He said that the information given was insufficient; pointing out that slide 19 did not show under expenditure at all. He said that if there was a problem in the Free State, it needed to be addressed head on, and assistance requested from the Committee .

Mr Kambule said that he was instructed by the Chairperson to focus on the issues of the Libraries Conditional Grant, and said that some of the questions posed by members did not deal with this. He said that slide 19, dealing with the Basotho Cultural Village, indicated that everything was on track and spending stood at 17%.  He said that the Bloemfontein Sport Museum was funded by Conditional Grants, and this would be reported on along the same lines as the Library Conditional Grant.

Mr Montsitsi said that in terms of staff, the problem had probably been in existence for a number of years.

The Chairperson asked how old the books in the libraries were, as he felt that there was a need for contemporary and up-to-date books to be made available.

Mr B Mnguni (ANC) noted that two projects were cancelled, and asked whether this delay was due to the contractor defaulting.

Mr Kambule said that these projects, the Basotho Cultural Village and the Philippolis project, were cancelled by the Department of Public Works, which had detected shoddy workmanship. He said that the Philippolis project was going to be a library combined with a museum, and a specialised contractor was needed to finish off the project. He said that the contractor would not necessarily be appointed from within the Free State, and if necessary a contractor would be sought elsewhere. He added that due to delays a rollover was requested for the current financial year.

Mr Harris requested the 2008/09 budget. He said that an explanation was given for the shortfall in expenditure on slides 4 and 5, which stated 13% for transfers and 15% for compensation of employees. If underspending was due to posts still needing to be filled, he would like to know what percentage of the budget should be spent on compensation of employees in the First Quarter.

Mr Kambule said that slide 4 dealt with transfers that had been received, and 13% of the funds had been allocated, which translated to about R5.3 million. He said that R3.7 million of this had been spent, and added that R710 000 had been committed for the procurement of library materials. Slide 6 indicated outstanding maintenance invoices, and the difference was attributed to this. He said that payment would have been exacted if these invoices were received on time, and the position would not have been as bad as it seemed to be.

Mr Makhubela noted that on slide 25, it stated that for the Philippolis museum there was inadequate performance by a contractor, and then a sub-contractor was employed. He asked why there was a need to have two contractors.

Mr Montsitsi said that he was also interested in the 2008/09 expenditure, particularly the purchase of books. He asked for clarity on how the term 'goods and services' was interpreted on slide 11. He asked how many libraries had been built in the last financial year and to date, and noted that what was presented was an upgrade of 20 libraries, and installing ICT infrastructure in 59 libraries.

Mr Kambule said that slide 11 showed a quarterly analysis of Sport and Recreation Conditional Grant expenditure. He said that the goods and services would vary based on the business plan for this Grant.

He said that the appointment of a sub-contractor was necessary because the original contractor did not have the specialised skills to be able to complete the project, and Public Works deemed it essential to hire a sub-contractor.

Mr Montsitsi proposed that the Committee should not accept the presentation of the Free State, as it did not give nearly as much information as was needed. He said that the Department should return at a later date. He added that Mr Kambule should not regard the Committee as hostile toward him, rather towards the Department itself.

Mr Mashile said that information needed to be supplied showing how the Committee could assist in the province. He noted that the presentation dealt with future plans, but did not address the issue of actual under spending in the First Quarter.

Mr Makhubela said that he did not think the Department of Public Works could 'panel-beat' tenders given to particular contractors due to a perceived lack of expertise. He said that when the Free State returned, this issue needed to be addressed.

The Chairperson said that a response in writing should be submitted to the questions raised, and that they would return at a later date.

Ms Gantana said that the Free State had spent well in 2008/09, but had overspent, by R2.5 million, on capital spending. She added that almost 100% of the Library Conditional Grant funding had been spent in that year, and had exceeded the Sport and Recreation Grant allocation.

Dr Dominy referred the Committee to the document entitled ‘DG presentation to SCOF, March’, on slide 9. He said that this showed the budgeted Conditional Grants for the 2008/09 financial year. The totals per province were set out. Eastern Cape had R42 588 000, the Free State had R30 927 000, Gauteng had R35 321 000, KwaZulu Natal had R26 195 000, Limpopo had R42 926 000, Mpumalanga had R42 926 000, Northern Cape had R45 123 00, North West had R40 560 000 and the Western Cape had R31 431 000, with the total being R338 million.

Dr Dominy then said a presentation had been given to MinMEC a few months previously. This showed the actual expenditure with variances, and the total budget amounted to R344 646 000, showing a variance of approximately R7 million, which was due to rollovers from the previous year. He said that actual expenditure of all the provinces was R309 976 000, showing a variance of R34 670 000. He said the expenditure of all provinces was 89.9%.  He said that the Free State had spent well, with 92.9%.

Mr Harris asked if the Committee could get copies of this document as it was useful to compare the provinces.

Mr Mashile asked the NT, when they responded to the presentations, to help the Committee with the flow of information and give advice on the information’s accuracy.

Mr Lees asked the NT if the provinces were sticking to the 5% allowed for capacity building. He was concerned that the money for maintenance was taken from Conditional Grants and not from the equitable share, and asked if this would be challenged.

Ms Gantana said that there was 5% allowed for capacity. He said that it was the NT’s view that the continual maintenance should be provided for from the equitable share, but she admitted that there was a problem of maintenance budgets in general, but it had been discussed with Provincial Treasuries.

The Chairperson asked if the NT monitored this.

Ms Gantana said that at the beginning of each financial year, the budgets that provinces would table in February were scrutinised and comments were given to the Provinces. She said that the maintenance issue had been picked up over a number of years and there had been improvement, but much more needed to be done.

Mr Kambule said that the 5% had been utilised for assistance in administration support and supply chain management that was pertinent to the Conditional Grant.

The Chairperson noted that the Department should be given the chance to respond in writing and then return to give a full and accurate presentation at a later date.

Limpopo Department presentation
Ms Joyce Mashamba, MEC for Provincial Treasury, Limpopo, briefed the Committee on the province’s plans to resolve the challenges that it had in spending. These included meeting with the Department of Public Works, and assistance gained from the Independent Development Trust (IDT). She added that the Department had instigated an internal investigation to deal with the under expenditure.

Mr Mishack Mulaudzi, Head of the Provincial Department, reported to the Committee the expenditure patterns of the province over the First Quarter of the financial year. It was noted that actual expenditure amounted to nine% of the total budget. A breakdown of expenditure per economic classification revealed that the province had spent 24% of its budget for compensation of employees, 8% for goods and services, 6% for payment of capital assets, while nothing had been spent on transfers and subsidies. A further breakdown of capital expenditure was given, showing that actual spending had occurred only in the two areas; buildings and other fixed structures and computer hardware and systems.

Mr Mulaudzi described the capacity constraints which had led to the under expenditure, these included a Provincial moratorium on tenders, the fact that the bid committee was not yet appointed, a leadership gap and the failure of service providers.

Mr Mulaudzi then discussed the steps that had been taken to try to speed up expenditure. These included meetings held with Department of Public Works, the IDT assistance that had been requested, assistance from the National Treasury’s Technical Assistance Unit, and an internal investigation which the Department was undertaking to ensure that spending improved. 

Discussion
The Chairperson felt that the province had been honest and asked the Committee how to address the situation.

Mr Mashile noted that the province was doing well in respect of paying employees, but was concerned that these employees were idle because they did not have the necessary equipment to fulfil their duties. He said that there was a need to cooperate with Human Resources on the issue.

Ms Mashemba said that it was evident that some people were employed purely to give them work, and they did not necessarily add value to the Department. She added that issues of training were being explored, and that this option would be embarked upon where possible.

Mr Mulaudzi said that the people who were temporarily employed on the Conditional Grant were mainly data capturers. He said that part of their duties were to capture on the system hundreds of thousands of books which had not been catalogued.

Mr Mashile noted that the Limpopo Province relied heavily on IDT. He felt that IDT already had numerous requests from many departments and this would result in their capacity being over-stretched. He asked what measures Limpopo had taken to ensure that necessary capacity existed.

Ms Mashemba agreed that IDT’s capacity was over-stretched, but said that they were approached beforehand and had volunteered to assist.

Mr Lees asked why there was a moratorium on tenders for Grant expenditure.

Ms Mashemba requested that the moratorium on tenders was looked at in a positive light. She said that this occurred only for a short period during the elections, as departments tended to get excited at periods of transition, resulting in the issuing of dubious tenders. She said that some MECs were not going to return and those that did needed a starting point from which to move from, and so the moratorium was successful in this sense.

Mr Chaane said that it was evident that the major issue was capacity. He noted that a task team had been established to investigate this, and asked how far they were with the investigation, and if this information could be shared with the Committee .

Ms Mashemba said that the task team would report accordingly, and that they had been requested to move quickly as the issue was urgent.

Mr Harris noted that slide 4 indicated the amount spent on computers was R2 million. He asked if this sum was enough, and what the NT’s role was in defining expenditure at that level.

Mr Mulaudzi said that he was unsure what should be spent on computer hardware. He said that R2 million had been allocated for this. He said the expenditure would be focused on the wiring of libraries and the procurement of hardware. He added that currently there was a process under way throughout the country where libraries were shifting from one system to another.

Mr Harris noted that nothing was spent on transfers and subsidies, and asked the NT if anything other than municipalities fell under this economic classification, and if there was a general trend among the Provinces to leave this figure at zero if municipalities did not have sufficient capacity.

Ms Gantana said that municipalities mainly fell under the economic classification of transfers because libraries existed mainly at that level.

Mr Montsitsi noted that over the past two years the Department had sufficient capacity to spend allocated funds, and asked what had happened to that capacity. He asked how soon the task team would report, and if they would come up with a strategy. He asked the NT for its input on the situation.

Ms Mashemba said that the reason for the sudden decline in expenditure in this financial year was that employees had moved out of the Department to better positions. She added that this issue was being corrected.

Mr Mulaudzi said that the task team was internal and had a mandate to approach the problems of under expenditure. He said that the team would look into bottleneck areas within the entire process and identify problems and make recommendations which they would then ensure were implemented. He said the task team comprised of four senior officials from the supply chain and finance sections, and had been given two months to complete the process, which had started at the beginning of September.

Mr Makhubela asked if the Bid Committee had been appointed yet. He asked how wide the leadership gap was.

Ms Mashemba said that the Bid Committee was in place, and the problem only existed for approximately a month, but it had been corrected.

Mr Mulaudzi said that when people left, especially at senior management level, a vacuum was created. He said that it took some time to fill these gaps with replacements. He said that currently there were many acting employees filling these positions, but said that this caused instability as they were not permanent employees. He said that the gap was wide in the higher echelons of the Department, where there was an acting Head of Department or an Acting Chief Financial Officer.

The Chairperson noted that what had come out of the presentation was how much interaction there was between the NT, the National Department, and Provincial Departments to assist the Limpopo Province.

Mr Mulaudzi said that the training of personnel was going well. He said that in the last few weeks there was a group of highly qualified librarians assisting with the training of temporary workers and librarians in community libraries on how best to manage information resources.

Mr Mulaudzi added that the Department had advertised the positions in the higher levels of the Department and said that the interviews started on 4 September.

Ms Gantana said that the allocation was unconditional and the Province would make the allocation. She added that this would be informed by the needs and by the costing.

Ms Gantana said that in terms of coordination, when the NT published or collected data, a consultation usually occurred with Provincial Treasury and the Department in question. She added that specifically in terms of Limpopo, assistance was given within the Provincial Treasury as part of the NT’s financial management improvement programme.

Ms Gantana said that she agreed with the MEC on the issue of capacity, that numbers were not the problem, but rather a lack of skilled employees. She added that in 2008/09 the Province had overspent by R2.9 million on compensation of employees, and that for the current financial year the budget had been increased by R20 million. She said that even with this increased budget, there was still a projected over expenditure.

Dr Dominy said that the National Department accepted what the presenters had said. He said that interaction with the Department had already occurred, and that their proposal was that the treasury technical assistance unit would engage with the Department to address the skills issue in relation to procurement and infrastructure. He said that meetings had already taken place in order to put the process in motion.

Mr Mashile asked how much interaction there was with Provincial Departments and municipalities on Integrated Development Plans (IDPs).

Mr Harris felt that the figures allocated for computers was far too low.

Mr J Gunda (ID) asked the NT for fuller detail on the R20 million that had been budgeted for personnel, yet where over expenditure still occurred.

Ms Gantana said that in 2008/09 the Department’s budget was R54 million for personnel, and that it had overspent on this by R2.9 million. She said that for 2009/10 the budget was R74 million, and the current rate of expenditure was 25.8%, which indicated that the budget would again be overspent in the 2009/10 financial year.

Mr Gunda asked the Department why there was still a projected over expenditure if they had budgeted for R20 million extra when there was a lack of capacity and no output.

Mr Mulaudzi said that the issue of personnel expenditure was that temporary workers were hired, and that when they found full-time work they left. He said that this left a gap before the new appointees came into position. He said that the projected over expenditure was probably due to the benefits that these workers got, such as the need to increase their salaries by 36%.

The Chairperson asked if a report on the task team’s progress and plans could be submitted to the Committee within the next week.

Mr Chaane said that where a high staff turnover was experienced, under expenditure was more likely than over expenditure. He asked if a written explanation of this could be given because the resignation of people should not result in over expenditure.

Mr Gunda asked for a breakdown to be submitted in writing of how many temporary and other employees the Department had as this would give an indication of expenditure.

Gauteng Department’s Presentation
Ms Dawn Robertson, HOD, Provincial Department, briefed the Committee on the province’s expenditure for the First Quarter of the financial year. She also discussed the model that the province used for distributing the grant allocation among the provinces.

Ms Robertson said that the model that was used to distribute grant funds utilised local municipalities as implementing agents, meaning that the Department transferred funds to 11 municipalities where service level agreements had been signed.

The transfers that had already been made to municipalities included payments to Lesedi, Westonaria, Johannesburg and Midvaal. She noted that it was important to keep in mind that municipal and provincial financial years differed and that at a municipal level, the fourth Quarter was seen as the First Quarter at a provincial level.

A breakdown of what projects had been implemented in each municipality was given, with further details on their planned spending being discussed at length. This dealt with issues from furnishing libraries, procuring books and hardware, to the employment of staff. The Nonkeng Municipality was highlighted as a problem area, while the Midvaal municipality was shown to be doing very well.

Ms Robertson said that the Department, due to the transferral of funds to municipalities, had managed to spend 84% of its allocated budget. Concerns were expressed about the overall budget being too small.

Discussion
The Chairperson noted that the NT gave a figure of 1.4% spending in the First Quarter, and asked if this was due to the functions being devolved to municipalities

Ms Robertson said that she had contacted her financial branch and the figures that were presented were the correct figures, not the 1.4% indicated by the NT. She asked if this could be worked out later on.

Mr Mashile noted that there was a table showing expenditure, and asked if this was actual expenditure or figures transferred to municipalities. He asked the NT how expenditure was accounted for.

Ms Robertson said that currently the report was based on money transferred to the municipalities, but added that municipalities gave monthly reports on their expenditure. She added that in future both the percentage transferred and the amount actually spent by municipalities could be presented to the Committee. She added that slides were presented that gave an indication of what percentage of funds were actually spent by municipalities, and added that most municipalities had spent almost 100% of their budget.

Mr Mashile asked how the problem of the non-transferred funds to Nokeng Municipality was addressed. He noted that the model used by Gauteng was useful as it integrated with the IDPs of municipalities, but wondered if the conditions for temporary employment were covered in municipalities. He said that there was a need for permanent positions to be created

Ms Robertson said that there was a challenge around the suspension of senior managers in Nokeng, and the municipality had refused to accept any funds from the Department because they were in a period of transition. She said that this had been sorted out and money had been transferred to Nokeng, but said that it had resulted in a considerable delay in implementing projects.

Ms Robertson said that municipalities were loath to employ people on a permanent basis on Grant funding which they were unsure of receiving.

Mr Harris noted that the conditions of the Conditional Grant did not address core funding problems, he asked what figure the Province would want for their annual budget, and what the NT’s comments were. He asked the NT and the National Department to comment on the model used in Gauteng, and asked whether this was something that all the Provinces should be following.

Ms Robertson said that the KPMG audit report showed that the city of Johannesburg had invested more than R100 million in the delivery of library services in the province. She said that she could not recall the figures exactly, only that they were completely out of line with what the Province received for the Conditional Grant.

Mr Chaane noted that under project implementation, there were municipalities where there was no progress. He asked for an explanation of this.

Ms Robertson said that in terms of project implementation in the First Quarter, some municipalities had started planning within the previous financial year, but most had used the April to June period for their planning processes. She said that expenditure peaked in the second, third and fourth quarters, due to the process which the Province undertook.

Mr Chaane noted that the slide on page 5 dealt with the data on trend allocations in Johannesburg, and asked for more information to be given on funding for the internet project for Soweto Libraries.

Mr Montsitsi asked why some municipalities had not had funds transferred to them.

Mr Chaane asked why the money for furniture was not used for the Temba Library.

Mr Makhubela asked if the money for furniture for the Temba Library had been spent since the end of June.

Ms Robertson said that the money for the furniture for Temba Library had now been spent. She said there had been a delay in the process and the money was requested for rollover, which was granted.

Mr Mashile noted that the expenditure reflected in the presentation did not show actual expenditure on the ground because the total funds that had been transferred may not have been spent. He said that another form of reporting was needed by the Province, which showed the funds received by the NT, the amounts transferred to municipalities and the actual expenditure by municipalities.

Mr Lees said that even though the figures were not entirely accurate, the model was still good, and the presentation on the municipalities was comprehensive.

Ms Gantana said that the NT did not determine allocations per province, but the National department would be in a better position to answer this question. She added that the numbers reflected were the numbers transferred to municipalities, which were signed off by the HODs. She added that the NT did not make mistakes and an extensive verification process was undertaken to ensure the accuracy of the figures. 

Mr Harris asked for further detail of the model used by Gauteng.

Ms Gantana said that it was not within the ambit of the NT to dictate where services should be. She added that the Grant was transferred to provinces and in some provinces local municipalities delivered functions. She said that in Gauteng, where there was sufficient capacity, the model worked well, but that in provinces where there was insufficient capacity the model may not be applicable.

Mr Chaane asked the Department for a breakdown of their figures in comparison to the NT's figures, to be submitted in writing by 8 September.

The Director of the National Department agreed that the figures needed to be verified.

Dr Dominy said there was a debate under way on the roles of provinces and the roles of municipalities, and all that could be done from the National Department’s side was to provide data that would enrich the debate. He agreed that the model would work better in Gauteng than it would in other provinces. He said that if such a model was adopted, it would increase the monitoring and evaluation problems for numerous levels of government. He said that constitutionally, it remained the responsibility of the province to exercise the function. He added that in rural provinces, the ability to have bulk cost savings would be reduced, and the costs were being pushed to other spheres of government. He said that the formula for the distribution of the Grant was based on needs, capacity and to some extent population. He noted for example, that the Northern Cape was given additional funds because of the large distances between service centres, and the small populations that these catered to.

Mr Mashile stated that there was an issue strategy, in that transfers of funds to municipalities often aided in resolving issues of capacity, and withholding these funds due to capacity issues did not necessarily have the desired result. He asked the NT for clarity on what the condition was that stated that employees should be temporary on Conditional Grant funding, and asked if this held with municipalities as well. He added he felt that there was more value in having full-time staff that did decent work than there was for temporary workers.

The Chairperson asked the NT to make a note of that remark.

Ms Nelisiwe Mtimkulu, MEC for Arts and Culture, Gauteng, added that there was also the challenge of transferring funds to the Merafong Municipality. She said that the concerns of the Committee had been noted and assured them that the next time the Department presented they would supply full details.

Northern Cape Department’s presentation
Ms Sunita Vallabh, acting HOD, Provincial Department, briefed the Committee on the Northern Cape’s expenditure of the Library Conditional Grant.

Ms Vallabh said that 10% of the allocation spent was being used for buildings and other fixed structures. The major use of this funding was for the building of three community libraries in Barkly West, Richmond and Hanover.

Ms Vallabh said that construction of these libraries had commenced in March 2009, but that there had been significant delays in construction, as the project was supposed to be already 50% complete.

The allocation trends of the previous years were then given. 89.4% of the budget was spent in 2007/08, while in 2008/09 only 76.2% was spent.

Expenditure per economic classification for the First Quarter was then discussed, showing that 15.9% of the allocated budget had been spent on compensation of employees, 17% had been spent on goods and services and 11.9% had been spent on payment of capital assets. Overall expenditure amounted to 12.4% of the total Grant allocation.  

The monitoring and evaluation mechanisms were then discussed, with municipalities submitting monthly reports on expenditure to the District Office, who then compiled overviews of the spending, and submitted this to the Head Office.

The key challenge faced by the province was the delay in the construction of the three libraries which were only 15% complete instead of 50% complete, but it was still expected that that construction would be completed before the years end.

Discussion
Mr Mashile noted that the main issue were the three libraries, he added that as of the end of June only 12% of the budget was spent, and doubted whether the project would have been 50% complete, as the Committee was told. He added that the Department was supposed to have monthly meeting with those service providers, and requested that this information be relayed to the Committee . He stated that IDP processes needed addressed generally, especially in the cases where Departments did not utilise municipalities as implementing agents, and asked how municipalities were co-opted into the processes.

Ms Vallabh said that when the tender was awarded for the three libraries, the Department got a process plan from the Department of Transport which indicated how far the process should be at various times. She added that through monthly monitoring and site visits with the contractor, expenditure should have been at 50%  but was only at 15%.  She said that a breakdown of current expenditure and transfers would be submitted to the Committee by 8 September.

Ms Vallabh said that the IDP processes had been taken into account. She said that the Department’s planning started at a strategic level with meetings between the Departmental MEC and municipalities (Munimec). She said that a further measure were the District forum meetings, where municipalities were brought on board, and it was ensured that planning went ahead with IDP processes in mind. She said that despite these processes that had been put in place, there was little commitment from municipalities to contribute additional funding to library development in their jurisdiction. She said that they were very reliant on the Conditional Grant as municipalities were trying to deal with ‘bread and butter’ issues. She said that other than the funding status of municipalities, the functions of libraries still needed to be resolved. She said that overall, libraries did not factor into the IDP processes as critical issues.

Mr Makhubela noted that slide 17 spoke about delays in the finalisation of capacity building programmes due to delays from integrated service providers, and asked when the finalisation of this interaction would occur because the process needed to move forward.

Ms Vallabh said that slide 17 related specifically to Sport and Recreation, where the specific challenges were capacity building programmes. She said that on a Provincial level, the federations were not capacitated enough to provide the level of accredited training that the Province would have liked. She said that the current level of intervention was the conclusion of a Memorandum of Understanding with SITA to zone into sector specific training. She added that at this stage there were a limited number of South African Qualifications Authority (SAQA) accredited service providers.

Mr Chaane asked for elaboration on the implementation model that the Department used, because his reading of it was that funds were transferred to districts and then to municipalities, and reports also followed this chain.

Ms Vallabh said that the implementation model started at a strategic level with Munimec. The transfers to municipalities were not effected until business plans and letters of assurance were received, and it was also required that any funding that was transferred to municipalities went through the municipal decision making processes and was authorised by the municipal council and manager. She said that monthly reports were also received through the district offices, which undertook the monitoring and evaluation. These reports were sent to the head office, where they were verified against the transfers of payments and the business plans submitted by the municipalities. Where municipalities did not spend funding year on year, funds were not transferred. In these cases the Department would intervene at high-level meetings, but funds could not be transferred where municipalities had not ‘made good’ on expenditure. This system was approved by Provincial Treasury. In cases where there had been continual problems in specific municipalities, the Department had resorted to bi-annual transfers, to ensure that they managed to spend what was allocated to them.

Mr Gunda asked what measures were in place to ensure service delivery in the municipalities where funding was withheld due to under expenditure.

Mr Mashile said that the effect of withholding funds negatively impacted on service delivery, and asked how much accountability the province had for this. He stated that even though good reasons may have existed for withholding funds, the situation was different at a political level. He suggested that a person be appointed at a provincial level who dealt with the funds at a municipal level in cases where there was a lack of capacity. In this way, capacity building would be enforced using the funding allocated to them.

Ms Vallabh noted Mr Mashile’s concerns. She added that the Department did intervene to assist municipalities at both a technical level and a political level. She said that professional expertise and guidance was given to municipalities where the need arose, and if necessary programmes would be driven from a provincial base.

Mr Montsitsi noted that a management team was established for the purposes of monitoring the implementation of programmes. He asked if this team had found that allocations had been used where they were not supposed to be.

Ms Vallabh said that there were no specific cases where grant funding was used for other purposes. She added that it was indicated to municipalities that any deviation from the proposed business plan needed to be requested in writing, with a motivation. She said that this deviation needed to be endorsed by both the municipal manager and a council decision. She said that the management team was for the monitoring and evaluation of the Sport and Recreation Conditional Grant, and there had been significant improvement in this financial year.

Mr Makhubela noted that on slide 7, the issue of site identification had delayed a construction tender, and asked how long the process would take.

Ms Vallabh said that the site identification related to the equitable share funding, and was not grant funding. She said that this related specifically to the building of the Archive Repository, and due to certain requirements and specifications the site had not been finalised.

North West Department’s Presentation
Ms Grace Pimpiri, MEC for Arts and Culture, North West, briefed the Committee on the North West province’s expenditure of the Library Conditional Grant. It was noted that the province had spent 12% of its grant allocation.

The reasons for the under expenditure by the province were discussed. These included a scarcity of skills in the Librarianship profession which resulted in the replacement of staff taking significant time, the approval of a tender for books only being approved in May, and the delays in providing services for Public Internet Access.  

Ms Pimpiri noted that there was an allocation of R7.5 million for the building of community libraries in Ipelegeng, Mamusa, Utlwanang, Maquasie Hills, Lebaleng and Dertig. The building of these was to be implemented in the Second Quarter.

The issue of monitoring and evaluating the province’s expenditure was then discussed. It was noted that a Management and Monitoring Information System was in place, along with the in year budgeting and monitoring system in line with Public Finance Management Act (PMFA) and National Treasury requirements. In addition to this there was an internal audit section as well as the Auditor General’s reports.

Discussion
Mr Mashile asked for clarity on the issue of allocations for Merafong Municipality, and whether there was an interim arrangement between the North West and Gauteng to deal with this.

Ms Pampiri requested to submit this information at a later date.

The Chairperson said that the Committee Secretary would liaise with the acting HOD to get this information.

Mr Mashile said that there was a need to participate in the IDP processes and asked how information was disseminated on services through these processes.

Ms Pampiri said that the Department did participate in the processes and Departmental officials sat in on meetings.

The Chairperson noted that the Committee would be visiting the North West Province within the current financial year.

KwaZulu-Natal Department’s Presentation.
Ms Stella Khumalo, HOD, Provincial Department, briefed the Committee on how the Library Conditional Grant funding was being used.

Some of the projects that Grant funding was going towards were discussed. These included the Internet@yourlibrary project, the migration of a new automated library management system into all libraries, mobile services to promote a reading culture and a new library and Regional Library Depot being built for the Mbazwana Municipality.

The allocations and expenditure of the two previous financial years were discussed. In 2007/08 the Department spent its entire grant allocation, and in 2008/09 it spent 94% of its allocation.

Ms Khumalo said that for the First Quarter of this financial year the Department had spent 91% of its budget. The under expenditure, Ms Khumalo said, was due to the delay in SITA invoicing for internet connectivity costs.

The monitoring and evaluation of expenditure was then discussed. This included monthly financial reports being submitted to the National Department, internal audits on expenditure, and a performance management audit by Manto Management Consultants, who were appointed by the National Department.

Ms Khumalo said that there were expected delays in the expenditure of funds for the Second Quarter. This was due to a number of factors, including a two month delay in the Mbazwana infrastructural project and delays in converting to the new automated library system on a national level.

Ms Khumalo said that one of the key challenge faced by the Department was that of the non-compliance of some municipalities in submitting their monthly expenditure reports. She said that certain actions had been taken to address this issue, and would continue into the next Quarter.      

Discussion
Mr Mashile asked for clarity on the delay of two months on the Mbazwana project. He noted that a greater level of cooperation with municipalities was needed in terms of the payment of cyber-cadets, and asked what mechanisms were in place to ensure that municipalities reported on this.

Ms Khumalo said that the delay in the Mbazwane project was due to failure of the construction company to deal with the issues of project management. She said that the Departments approach was to set up an infrastructural committee made up of the Departments infrastructural unit, the Provincial Treasury’s infrastructural unit and Public Works. She said that an architect was appointed to deal with the technical issues around construction. She said that the architect reported that timeline management issues were not adhered to, but added that this issue had been resolved and close work was being done with the architect to ensure that the time lost was made up.

Ms Khumalo said that the problem was not with the actual payment of cyber-cadets, but rather in reporting from the municipalities. She said that as the number of libraries that were outfitted with cyber-cafes increased there would be a delay in recruitment and appointment processes. She said that as soon as the process had been finalised, the Department would work on an MoU and have the process finalised with the municipalities.

Mr Mashile noted that Gauteng’s problem of reporting on expenditure on the basis of transfers was applicable to KwaZulu Natal, and if this was the case, he asked how actual expenditure reports would be given to the NT and the National Department.

Mr Mnguni asked how effective the mobile libraries system was in terms of costs and effective service delivery. He asked how much unspent funds there were due to uncooperative municipalities.

Ms Khumalo said that non-compliance was not a problem to such an extent that funds were withheld. She said that the First Quarter was primarily for the payment of cyber-cadets. She said that in the second Quarter a larger transfer would be made to municipalities that had unaffiliated libraries which the Department assisted.

Mr Makhubela asked how many mobile libraries there were to service the rural areas.

Ms Khumalo said that there were two forms of mobile libraries projects, the one was the mobile library bus, but issues of delivery had not as yet been resolved. The other, she said, was the supply of Mobile Library Units (‘wheelie wagons’), to communities in very rural areas. Se said that the project was piloted in 2008, and there were only five units in one municipality. She said that the project had been met with a positive public reaction, and so the Department was looking at expanding the project.

Ms Khumalo said that the Department received a total amount of R34 million, and the calculations of the National Department were based on this total amount. She said that this would mean that there was 10.4% actual expenditure. R3.9 million was allocated in the First Quarter, but the Department ad only managed to spend R3.6 million, the remainder was unspent due to delay in invoicing by SITA.

Mr Mashile noted that Ms Khumalo was talking about quarterly budget allocation and asked what would happen if a particular project exceeded its allocation within the timeframes of a particular quarter. He said that the inability to overspend on quarterly allocations would be limiting to service delivery.

Ms Khumalo said that there was leeway given for particular projects as long as they remained within the total allocation. She said that the Department had a number of outstanding commitments which were not presented on, and this illustrated that they were not limited by quarterly allocations. She added that the quarterly budget could only be surpassed with the approval of the National Department, who would require to be notified of the intentions to make changes to the business plan.

Eastern Cape Department Presentation
Mr Bubele Mfenyana, HOD, Provincial Department, briefed the Committee on the Department’s expenditure of the Library Conditional Grant. He described the purpose of the grant and the business plan, noting that 39 libraries were due to be upgraded

Mr Mfenyana discussed the expenditure of the grant over the previous years. 48% of the allocation was spent in 2007/08, 84% in 2008/09 and 6% in the First Quarter of the current financial year.

He then gave a detailed account of what the Grant funds would be used for. This covered a range of areas including staff training, the new Library Management System, security, literacy programmes and maintenance of library facilities.

The monitoring capacity of the Department was then discussed and it included in year monitoring reports, quarterly reports and annual reports submitted to the National Treasury and the National Department.

Mr Mfenyana highlighted the expenditure of the first quarter, which included plans for the Literacy Programme being approved, procurement plans being approved and the installation of Closed Circuit Television security systems in 14 libraries.

Mr Menyana highlighted the reasons for under expenditure by the Department. In the case of the upgrading of library infrastructure, the challenge had been in the capturing of the infrastructure budget. In terms of the ICT infrastructure, nothing was spent due to delays in SITA’s site visits. Delays in the approval of the procurement plan for Library material had resulted in under spending in that area. For the compensation of employees, the reasons for under expenditure were due to 12 vacant posts for public librarians and problems around some librarians being paid in the wrong codes.

A description of the amounts transferred to the Department and the amount spent was given. In total R11 674 000 was transferred out of a total of R55.5 million. Of this R3.6 million was spent while R4.3 million was committed.

Mr Mfenyana said that the way that under spending was going to be resolved to some extent was to continue with the implementation of the literacy programme, the delivery of library materials and the signing off of 14 cabled libraries.   

Discussion
Mr Mashile noted that only R11 million out of R55 million had been transferred to the Department and asked why the remaining funds had been withheld.

Mr Mashile noted that, similar to the Limpopo Province’s reliance on IDT, the Eastern Cape was relying on SITA, and was concerned that SITA may be unable to handle the workload. He suggested that private service providers should be sought as recourse to this situation.

Mr Mfenyana responded that the transfers of funds were designed in such a way that only portions were given at a time. He said that he accepted the point on SITA.

Mr Mashile asked what the transfers of funds was based on. He asked what informed quarterly allocations if business plans were submitted for the entire year.

Mr Makhubela noted that there was a mistake in the figures on the library management information systems. One copy showed this as expenditure, and the other as commitment. He asked if this mistake had also occurred in the figures given to the NT.

Ms Gantana said that on the issue of monitoring and payments to Departments, the commitments were picked up in terms of the projections moving forward. She said that the projected over or under expenditure should include the commitments. She said that the expenditure for the First Quarter corresponded to the actual expenditure given in the presentation. She said that the breakdown of the R55 million was not monitored on a monthly basis, but the totals corresponded. 

Mr Mfenyana said that the figure was not supposed to be written as expenditure, but rather as commitment.

A Director from the National Department said that transfers made to provinces adhered to the cash-flow requirements of the business plans, and payments were made were only for what they needed at the time, and no more.

Dr Dominy said that the upgrading of libraries was related to this issue, and an agency that worked for the National Department was monitoring expenditure at that level. He said that one of the concerns raised was what the meaning of upgrading was. He said that by the next financial year, much tighter categories in which to evaluate expenditure would exist.

Mr Mashile asked the NT for clarity on what constituted ‘commitments’, because as he understood the term, it was when a tender was concluded and signed off for a particular amount.

Ms Gantana agreed with Mr Mashile’s understanding and said that there was a clause in the Division of Revenue Act (DORA) for rollovers to be made for commitments, but only where there was proof of this in the form of a tender document.

Mr Mashile noted that if a service provider was not appointed, there could not be a commitment. He said that if a tender was not concluded it could not amount to a commitment because it could still be cancelled.

Mr Lees noted that the NT did not talk about the issuing of a tender. He said that a commitment arose when there was an issue of liability, which could only happen after a tender was awarded. He said that this could not be withdrawn without being regarded as breach by an involved party.

Mr Montsitsi noted in slide 15, that R3.5 million which was supposed to have been spent was actually commitments, and he asked if this meant that there was no actual expenditure.

Mr Mfenyana said that the total budget was R55 million, and of that R43.8 million had not yet been transferred to the province. He said that the R11.6 million was what had been received. He said that what was reflected was commitment, where the Department had an obligation to the tenders. He said that the actual expenditure was R3.6 million, and the commitment was R4.2 million.

Mr Mashile said that it seemed that according to the business plan the Department, it did not need R43 million as of that time. He added that it might have been project implementation that was at fault.

Mr Montsitsi felt that the National Department had allocated more funds than the Province required. He said that he agreed with Mr Mashile, and the balance of R43 million was not required by the Province at that stage, given their ability to spend. He said that this brought into question the issue of delivery, and this issue was not dealt with effectively even when funding was available. He said that capacity needed to be built first, before such large sums were given to the Province.

The Chairperson noted that two years ago R100 million was reallocated from the Eastern Cape to the Northern Cape for housing.

Mr Mnguni said that what the province was trying to say was that it only got funds in portions. He said that when the actual expenditure and commitments were added together expenditure on the whole was much better. He added that this was not only a problem of the Eastern Cape but of all the Provinces.

Mr Chaane agreed with Mr Mnguni and said it was incorrect to come to the conclusion that the Province did not need the additional R43 million. He noted that slide 6 showed a breakdown of what the entire budget would be used for. He said that the situation presented was no different than what had been presented by the other provinces and the funds would overlap into the second quarter, which would result in expenditure going up. He said that it seemed to him that the problem was capacity, but added that if this was not the case, then an explanation of why under expenditure occurred must be given. 

Mr Mashile felt that both interpretations of the situation were correct, but that they came from different places. He said that what was being said was that if the National Department allocated funds according to cash flow needs, the Province still fell short by R4 million in the first quarter. He said that that kind of under expenditure showed that the Province would not do much with the remaining R43 million because they still had remaining funds from the first quarter. He said that the Department needed to improve its expenditure drastically and unlock all of the problematic areas of the past.

Mr Montsitsi said that he spoke under correction, but that the objective of the exercise was to ensure that delivery occurred, and the accountability of the provinces. He said that if Treasury transferred funds which were not utilised it resulted in delay in delivery. He said that any province needed to indicate if it had problems. He said if no problems existed, then service delivery should be achieved. He said it was clear how much of the funds was utilised.

Mr Mfenyana said that the comments made by members were noted and appreciated. He said that the Department did not have significant problems in capacity. He said that rather it was the delivery strategy that needed to be re-examined, and if the Department had transferred funds to municipalities the Department might have been better off. He said that another problem that the Department faced was the dependence on other agencies, where infrastructure fell to Department of Public Works and ICT fell to SITA. He said that the relationship with these agencies needed to be addressed to see if they assisted in the delivery of services.

Mr Mfenyana said that in terms of the remaining allocation, staff needed to be paid, and books which were being ordered needed to be paid for. This could not be paid in the first quarter because the planning and procurement processes were dealt with at that time. He said that he accepted the concerns of the members,. He added that the NT’s technical assistance unit was assisting by trying to unlock some of the challenges faced in the Province. He said that it was hoped that significant improvement in expenditure would be seen as time progressed.

Ms Gantana said that some of the figures were alarming, but there were provisions in the Division of Revenue Act to deal with this. She said that, firstly, the National Transferring Officer was in a position to delay a payment by 30 days. She said that if problems persisted, the NT could be requested to withhold transferring funds altogether. She said that this would only happen as a last resort. She added that she was confident that spending would improve in the Second Quarter, but if there were problems there would be a need for the National Transferring Department to intervene.

Mr Gunda asked what stopped the NT from ensuring that implementation occurred now, rather than waiting for the second quarter. He said that the HOD was saying that SITA and others needed to be paid for doing work which had not yet been done, and asked what measures were in place to ensure that this did not happen in the future.

Mr Mfenyana requested to respond to these concerns by 8 September.

Mr Mnguni said that the Committee was being unfair to the province, noting that slide 17 showed that all the provinces had under spent.

The Chairperson noted and agreed with this, adding that the Committee was here to assist the provinces.

Dr Dominy said that the National Department had appointed three coordinators to monitor and evaluate the projects in the provinces, and they were intervening and working with the Department in the Eastern Cape. He said that in addition to this the NT’s technical assistance unit was also available. He said that there was an improvement in expenditure between the 2007/08 and 2008/9 financial years due to the assistance of that unit.

Western Cape Department’s Presentation
Mr Brent Walters, acting HOD, Provincial Department briefed the Committee on the Western Cape’s Library Conditional Grant expenditure for the first quarter.

Mr Walters noted that the grant allocation for 2009/10 was nearly R41 million. He said that the Department had signed Memoranda of Agreement with 27 municipalities in July, which would provide library services. He said that this was done only in July because that was the beginning of the municipal financial year.

It was noted that a rollover of funding for the Kannaland Municipality was requested, and that this amounted to R145 000.

A description of what the original business plan provided for was discussed. This included the staffing of community libraries, the purchasing of library material and literacy projects at community libraries.

Mr Walters indicated that no transfers had been made to any municipalities because allocations were only due to be transferred in the second quarter. It was noted that the only municipality without an allocation was Kannaland.

A description of the projects that would be undertaken and the allocations projected for these were then discussed. These projects included the maintenance project, literacy projects and the acquirement of library material.

Mr Walters then described the allocation criteria that determined the amounts received by municipalities. This depended on three things, the percentage of the total population in the province, the percentage of total circulation of libraries in the municipality and the percentage of libraries in the municipality.

The grant was divided into two allocations, where 74% would be transferred to municipalities while 26% would be used for centrally managed projects. The monitoring of expenditure was then discussed briefly. Mr Walters said that 90% of municipalities had complied with the monthly reporting and submitted reports on time.

Discussion
Mr Mnguni asked why Kannaland had an allocation of zero even though it fulfilled the allocation criteria.

Mr Mashile said that there was a rollover for Kannaland from the previous financial year. He said that the presentation had no substance or content, and that it did not assist the Committee.

Mr Harris noted that when calculating allocations there was a ‘percent in circulation’ and asked for clarification on this. He asked what the status of the libraries in Kannaland was, given that there were existing rollovers from the previous financial year.

The Chairperson asked what assistance was given to a struggling municipality. He said that the Auditor General’s report on Kannaland stated that it was one of the municipalities that received a disclaimer.

Mr Chaane said that the Department did not know how much of the funding was spent by municipalities in the First Quarter, and funds would only be transferred in the second quarter. He said that this suggested that nothing had been done on the municipal level in the first quarter. He used the example of staffing of community libraries, which had been approved by the district at R6 million, yet had to date an expenditure of zero. He asked for clarity on whether this meant that for the first quarter, staff were not being paid. He said that this was a single example of many where expenditure was zero.

The Chairperson asked what effect the non-transferral of funds had on service delivery.

Mr Makhubela asked what exactly was meant by ‘cash-flow’ in the presentation.

Mr Gunda was concerned that the presentation did not explain the needs of the people, and wondered how government could spend when it did not know what was happening in municipalities or on the ground. He noted that allocations had been made for certain municipalities, but that the transfers had not taken place and asked how this money would be transferred if there was no indication of what was happening in municipalities.

Mr Mashile strongly recommended that the province should come back at a later date and give a proper report so that the Committee could assist them properly.

Mr Harris disagreed with Mr Mashile, as he felt that the questions of the columns amounting to the zero expenditure had been addressed in the presentation. He said that he would give his support if Mr Mashile could indicate exactly the areas that needed clarification.

Mr Walters said that there was not a projection of transferring any money in the first quarter of the financial year. He said that it was the understanding of the Department that trends were to be presented on. He said that what the Department had done was to give the criteria and percentages of how funds were allocated in the past, along with an indication of the line-items. He said that it was not the case that nothing was happening in the municipalities. He said that there was a mismatch of quarters between provinces and municipalities, where the municipalities were still in their last quarter of the financial year while the first quarter had begun on a provincial level. He said that Memorandums of Agreement had been signed with all the municipalities and the funds would be transferred in the second quarter in line with the Department’s cash-flow projections. He added that 74% of the cash-flow was only allocated in the second quarter, which was when the transfers would be made. He said that in actual fact, the Department was a little ‘ahead of the game’ because it had shown how the funding would be divided up.

The Chairperson noted that in the NT’s documents, the Western Cape’s expenditure was 0.9% and asked where this came from.

Mr Walters said that the Department was scheduled to spend R1.8 million, but only R364 000 was spent. He said that not all the books purchased were received inside the first quarter.

Mr Walters said that the Department had allocated money to Kannaland to do a project, but the wrong materials were used for shelving for library books. He said that the Department felt that it should withhold the funding for the next year to negotiate with the municipality on how to move forward. He said that the Department had wanted to run the project itself but the municipality did not accept the offer. He said that the current situation was an allocation would be published in the adjustments budget and funding transferred to them. He said that a monitoring team would overlook the expenditure of those funds.

Mr Chaane said that this explanation had confused matters more, and the bottom-line was that the Department had hardly spent anything in the First Quarter. He asked for clarity from the National Department on the zero spending in the First Quarter. He said that none of the allocation had been used, and the Departments reasoning was that funds from the previous year were being used by municipalities, but that rollover had been approved for Kannaland only. He said that he agreed with Mr Mashile’s proposal of asking the Department to return at a later date, but was concerned that this would have the same result as they could not account for expenditure that did not occur in the First Quarter. He said that this indicated that there was no service delivery in the province, and that the Department needed to explain this. He asked the NT if the situation that was presented reflected in their reports.

The Chairperson noted that there were quarterly reports that needed to be submitted showing the financial plans of the Department and asked what the Western Cape’s report contained. 

Mr Lees said that he had no problem understanding the presentation, and service delivery continued from last year’s budget. He admitted that the percentage of expenditure was not favourable, but said that this was explained by the failure of deliveries. He appealed to members to stop playing a political game simply because it was the Western Cape, and to understand how financial years and allocations worked.

The Chairperson said that the reality of the situation was that there was a new administration in the Western Cape and the question was whether they were in line with the National Department’s performance plans, because the point was that there was a mandate to deliver. He said that there were certain questions posed by Members, and the Department would be given the opportunity respond. He said that the Committee was working towards solutions on how to get service delivery going at grass-root levels.

Mr Mashile said that all that was being said was that service delivery was misrepresented in the presentation. He noted that the last page showed that 24 municipalities had submitted last quarter expenditure reports in the last week of July 2009, but no information was given on what this was on, and added that this was exactly the type of information that was needed.

Mr Chaane said that despite members’ political affiliations, they were to interrogate all of the provinces. He said that it was wrong of Mr Lees to bring party politics into this. The Western Cape was represented by an official. He appealed to Members not to attack each other along party lines as this would inhibit the work that the Committee needed to do.

The Chairperson said that the Committee had a huge oversight function to perform, which would be done in a very serious manner. He said that the Committee was not a policing body, but that it would comply with the constitutional legislation.

Mr G Mokgoro (ANC) agreed with Mr Chaane, and said that there was a need to be very careful of politicising money matters. He seconded Mr Mashile’s suggestion that the report be restructured and presented at a later date. He added that the report needed to explain exactly how much was rolled-over, and what this was spent on.

Mr Harris also seconded this suggestion, specifically on the issues of the 24 municipalities and the expenditure reports on these. He asked how many libraries there were in Kannaland.

Mr Gunda said that the report said nothing on the needs of the people and how service delivery could be met. He asked which municipalities had signed memorandums of agreement and which municipalities were non-compliant, and when and how monitoring of these had occurred. He said that the Western Cape only needed to give clear explanations of how grant funds were spent. He added that he did not think that the acting HOD could supply all this information then.

Mr Walters said that he would respond to the questions in writing.

Mr Chris Adams, Director, National Treasury, said that the NT’s figures correlated to the figures presented. He said that this was in alignment with what the Department had planned to spend.

Mr Temba Wakashe, Director General, National Department of Arts and Culture, said that the National Department would follow up with the inputs and criticisms of the Committee in their technical committee meetings. He said that the unevenness in the style of reporting had been noted and would be addressed. He said that he supported the view that figures showing actual expenditure were needed, as a lack of actual expenditure figures distorted the situation to some degree.

Mr Wakashe said that this was the third year of the grant, and that it would continue to be disbursed until 2012 or 2013. He said that it was time to begin looking at the impact of the grant, and that a performance audit should be undertaken to see how it had benefited the public. He said that the questions of capacity would be looked into, adding that this was a common challenge nationally. He said that in future the reports would be broken down to show exactly how much was being spent in various areas.

Other Business
The Chairperson said that a letter had been received from the Minister of Finance inviting nominations of candidates to serve on the Land Bank Board in terms of the Land and Agriculture Development Act 2002, Act 15 of 2002. He said that members could make nominations by 15 September.

The meeting was adjourned.

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