The Committee was briefed by National Treasury on the overall first quarter spending on capital expenditure, non-personnel expenditure and conditional grants in the health sector. It was noted that seven provinces had projected to overspend and only
The Committee was then briefed by the Departments of Health from
In respect of the
With regard to
The Committee questioned
Provincial Budgets and Expenditure for health: National Treasury (NT or Treasury) briefing
Ms Julinda Gantana, Chief Director: Budgets Analysis, National Treasury briefed the Committee on the Provincial Budgets and Expenditure for 2009/10, as at 30 June 2009. Seven provinces had projected to overspend and only
KwaZulu-Natal Provincial Department of Health: Briefing on the
Mr Ndoda Biyela Chief Financial Officer (CFO), KwaZulu Natal Department of Health, said that by the end of the first quarter, the Department had utilised R46.2 million of the R449 million allocated to the Hospital Revitalisation Grant. R24.6 million of this grant, together with another R17,9 million, was spent on investment, building fixed structures, new machinery and equipment. He conceded that by the end of the first quarter, the Department had utilised 10.3% of the grant, but by the end of August, spending had moved to 16%. Mr Biyela said that this had indicated a gradual improvement in the delivery of projects.
The Chairperson noted that the National Department of Health had submitted a report in which it was indicated that the reasons for underspending on the Hospital Revitalisation Grant in
Mr S Mazosiwe (ANC,
Mr Biyela said that it related to the fact that there were other funded programmes that did not require the introduction of new personnel, or where funding was provided from the equitable share, and so the grants did not reflect the expenditure on compensation of employees. Where the implementation of the grant required additional personnel, it might mean the use of some of the grant money to get those human resources. These issues would be accounted for separately.
Mr Mazosiwe said that he had assumed that motivations for non-spending would be indicated, as Medium Term Financial budgeting allowed for Departments to prepare presentations timeously to ensure that spending took place.
Mr Mazosiwe referred to the Division of Revenue Act (DORA) which detailed the relationship between National Treasury and departments. He said that the Committee needed to be informed about why departments were not spending the way they should.
Mr R Lees (DA,
Mr B Mashile (ANC,
Mr Biyela said that at the beginning of this month, the Department had introduced a system whereby all infrastructural projects were going to be managed on a monthly basis, through implementing partners coming to give a full account of progress on sites, and decisions being taken at the monthly meetings. This was done to improve process times. The National Treasury had been invited to be present at those meetings as well. The Department was increasing its role in operations as opposed to leaving it to other departments.
Mr Mashile asked if the spending on Hospital Revitalisation could assist with allowing certain hospitals and clinics to operate overnight.
Dr Zungu explained the priorities of the Department improving access to services. The areas that were not operational for 24 hours would mostly be the primary health care facilities and at this point the grant was focussing on hospitals, and those hospitals had almost the full advantage of being revitalised. Within that complex of
Mr Harris (DA,
Mr Biyela said that equipment was sometimes ordered from foreign countries, with the delivery scheduled in anticipation of the future dates of completion for installations.
Dr Zungu spoke to the economic classification of the Hospital Revitalisation Grant and buildings and other fixed structures. The key sites were Hlabisa and
Mr Harris said that it was expected that a detailed budget would appear for the infrastructure of the Hospital Revitalisation Grant. The Director-General of the Department of Health had spoken about technical problems at Hlabisa and
Mr Biyela said that
Mr M Makhubela (COPE,
Dr Dhlomo said that the province was almost covered with all hospitals in terms of ARV programmes, and the only hospitals that were not on the list were psychiatric hospitals.
Dr Dhlomo provided some background to the situation in the province, and said that the HOD had been fully employed in the Department. The team currently employed in the Department had been unable to articulate underspending. Two persons were therefore seconded from National Treasury, with the responsibility of reporting to Cabinet more regularly. The new team brought in had picked up on the irregularities and challenges in the Department and had been tasked with reporting to Cabinet every two weeks on the progress being made.
Dr Zungu said that some hospitals served as mental health hospitals and were not accredited; therefore some sites were not listed as hospitals.
Mr Harris asked for clarity regarding the Hospital Revitalisation Grant, asking whether money could be spent on new structures, or whether it must be spent on existing structures only.
Dr Zungu said that she was not answering the question on whether the Department was allowed to spend on other structures, but said that there were approved projects in KwaZulu-Natal that were still at the planning stage. The issue regarding
Mr Mazosiwe said the monitoring of projects should be looked at more carefully. The explanations given by the Department had not been satisfactory. More detailed project- by-project information was required to allow the Committee to give more comprehensive feedback.
Mr Lees said there should be a link between capital projects and the use of them once they were completed. Mr Lees also asked that the Department speak to the negative expenditure of R110 million.
Mr Biyela said that the negative R110 million was really an accounting exercise, and the Department would try to explain this better the next time. The trade-off would have to be managed and the Department did not want to be reckless.
Dr Zungu said that some of the spending might reflect well in terms of numbers, but at times spending in some areas was not quite appropriate. Problems had arisen when there was an inability to account for how the money was spent. There had been delays in the spending for two of the Hospital Revitalisation projects and there had been some scrutiny around procurement processes.
Mr Mashile said that Hospital Revitalisation should be linked with primary health care to ensure that systems were functioning optimally. Clinics should be able to operate for 24 hours. Mr Mashile added that under-spending or non-spending was often viewed as non-delivery of services to the people.
Mr Biyela said that the Department needed space to put mechanisms in place to match spending with what was happening on the ground. He said that the Department was currently placing greater emphasis on getting value for money for investments and spending incurred. He asked the Committee to bear with the Department for the next few months. The Department was meeting with implementing partners on 30 September to review every project in full, in terms of budgets, because spending was often not matched with what was happening on the ground.
Ms Gantana said that National Treasury was happy with the explanations given by the MEC, and was confident that the new team would deliver on its mandate. Given that the emphasis was on getting better value for money, the practices that led to over expenditure last year would not be repeated.
Mr Thami Mseleku, Director-General, National Department of Health asked the Deputy Director-General, Dr Kamy Chetty, to report further on the Hospital Revitalisation programme in KwaZulu-Natal.
Dr Chetty said that when the Hospital Revitalisation Programme started, there was a realisation that the focus could not be on the infrastructure. Organisational development, quality of care and modernisation of equipment were added as components for that programme. The Department did not focus on what the current stock was, but looked at the state of repair or disrepair of the hospitals. If a certain state of disrepair existed, then it made more sense to rebuild the whole hospital. Because of planning prior to 1994, the Department used to have illogical placements of hospitals, sometimes a few kilometres apart. Therefore, replacement of a hospital would also address more appropriate planning. This was encouraging, as quite a few of the Hospital Revitalisation programmes were in respect of newly-built hospitals. The Department was also encouraging the building of smaller hospitals with fewer beds to make better economic sense. The Department could provide details of these hospitals to the Committee, including those due for refurbishment.
Mr Lees expressed concerned that the Department had not addressed National Treasury’s statement that “concerns were raised over the province’s withholding of conditional grant funds by Provincial Treasury to address provincial wide cash flow problems.”
Mr Lees asked National Treasury to indicate to which provinces this applied.
Ms Gantana said that the concern was raised specifically regarding the
Eastern Cape Provincial Department of Health briefing on the Comprehensive HIV and Aids Grant and Forensic Pathology Services
Mr Phumulo Masaulle, MEC Health, Eastern Cape Province, said that he was disturbed by the announcement of the National Treasury that the
Ms Pumla Vazi, Chief Financial Officer: Eastern Cape Provincial Department of Health, reported on the two grants that had illustrated under spending, the Comprehensive HIV and Aids Grant and the Forensic Pathology Services Grant. The HIV and Aids Grant had quite a number of challenges, one of which was the compensation of employees, and linking the codes with the computerised Persal system. These problems had been sorted out and payments were made centrally at the head office. HIV and Aids spending had now moved to 105%.
In regard to the Forensic Pathology Grant, many challenges had been experienced with the transfer of funds, because the Service Level Agreement had not been signed yet, and the Addendum had not been included. This issue had been resolved, with the Forensic Pathology Grant now having met the 5 month expenditure which was at 42% by the end of August.
Dr Litha Matiwane, General Manager: Hospital Services: Provincial Department of Health, said that the main challenge of the Forensic Pathology Grant involved the implementing agent and the finalisation of the contract. This matter had been finalised. The other challenge for both grants was the compensation of employees. It had been difficult to link the computerised codings for expenditure and personnel from the conditional grant side. The Department had put together a team to work on this matter, and most of the issues had been sorted out.
Dr Matiwane said that the main challenge regarding the Comprehensive HIV and Aids Grant, was firstly around the Compensation of Employees (COE) and secondly around the payment to the National Health Operation Services. The method of payment to the National Health Operation Services had been restructured and centralised for all grants. The Department now had an accelerated payment approach that located the Department within the 30 day process. Members were referred to the documents for further details.
Mr D Bloem (COPE, Free State) asked whether the task team that had been appointed was working together to sort out the problems and if there were any timeframes attached to their work for completion of their tasks.
Mr Masaulle apologised that this was not shown in the presentation. The Department was working with National Treasury on one of the challenges, to assist with the timeous payment of creditors. A team had been put in place to report continuously on a monthly basis to the Provincial Executive Council, and timeframes were identified. The capacity for human resources in the Department would improve, as would the financial capability. With regard to overspending, he noted that future projections had not been furnished to the National Treasury. The amount reflected what had been spent to date, so that it was spending without projections. He said that this had not been presented as it should have been.
Mr Mashile said that the Department seemed to be plagued by restructuring and re-organisation of the unit, especially with regard to payments. The Department needed to ensure that services were aligned and institutional arrangements were sorted out.
The Chairperson said that the Department had not indicated what was spent in the first quarter, and what had happened in that quarter.
Mr Lees said that the issue of employee compensation had been raised again. He expressed concern about the use of grant funding for employees. He asked whether these were contract or permanent employees.
Dr Matiwane said that the compensation of employees was part of the Forensic Pathological Services Grant, and was a fully funded grant. The HIV and Aids Grant also allowed for payment for the compensation of employees. The Department had been assigned the task of building 15 mortuaries and 40 holding facilities. 13 mortuaries had been built and five holding facilities were in the process of being refurbished.
Dr Matiwane said that there was actual progress, and detail was available on the projects. Technical issues presented the major challenges for the two grants.
Ms Vazi noted that there was grant funding for compensation of employees for the two grants, and the Department should have brought more detailed information related to this matter. A finance task team had been formed and was in the process of speeding up payments for National Health Laboratory Services (NHLS). Complaints had been received regarding these payments as previously the institutions were making payments to the NHLS on their own, and this had caused delays. So far, the Department had paid R79 million and was are up to date with the payments to the NHLS.
Ms Vazi also said that a team was in place to deal with the compensation of employees and the Persal link codes.
Mr Harris said that the Department had not provided enough information to allow for questions, and should have provided a lot more detail in the report.
Mr S Montsitsi (ANC) said that the report did not provide enough information to allow the Committee to make an adequate evaluation of the report. There did not seem to be any improvement in conditions regarding the Hospital Revitalisation Programme.
Mr Harris proposed that the Department put figures in the report with clear explanations, and submit it to the Committee Chairperson.
Mr Bloem asked for a list of where facilities were installed, as this would assist with oversight work.
Mr Masaulle said that the Committee would be furnished with this information.
Ms Gantana appealed to the Department to use the In-year Management Tool, which would provide the Department with early warning signals regarding spending. She also said that National Treasury had not been aware that the Department might be overspending on its HIV and Aids budget, because since the beginning of year there had not been any indications of this. Ms Gantana encouraged the Chief Financial Officer and the Head of Department to use the tool provided to empower all the necessary role players to make informed decisions about whether the province would need additional funds. She further asked the Department to complete the projected expected expenditure for the remainder of the year, so that Treasury could have a complete picture of the spending trends.
Limpopo Provincial Department of Health: Briefing on the Hospital Revitalisation Grant
Ms Miriam Segabutla, MEC for Health,
Ms Segabutla said that she had met with the Department of Public Works and the National Treasury to see how spending could be improved in terms of the Hospital Revitalisation Grant. Mindful of the importance of this intervention to improve infrastructure backlogs and enhance service delivery, the Department had formed a technical task team that would work specifically on the improvement of project management functions. This was at the core of improving expenditure patterns and the quality of services provided. The province had not been doing badly in terms of expenditure, but would like to improve. The reasons for the challenge were related to the implementing agency. Under expenditure came about as a result of contractors being terminated by the implementing agency, who then did not act fast enough in ensuring that they were replaced.
Dr Jabulani Dlamini, Head of Department, Limpopo Provincial Department of Health, reported on the Hospital Revitalisation Grant. The Department had not performed well, having spent only 11% instead of 25% of the grant. The bulk of the money had been allocated to Infrastructure Development, and only 11.5% had been spent. The other three components of the grant have also not done well and these components were dependent on the completion of the infrastructure. The reasons for under expenditure were due to contractors not performing well, and their employment was terminated. New contractors were only appointed on 8 September, and hence improvements would be seen in the third and fourth quarter.
The Department had installed a team who would be looking jointly at monitoring with the Provincial Treasury through the Infrastructure Development Plan (IDP) process, and the Department of Public Works had come up with a turnaround strategy to address the problem. One of the outputs was that new contractors were installed on site. The Department of Public Works had placed Clerks of Work to monitor at each site continuously, to be able to remedy problems that arose more timeously. The major challenge with infrastructure was building on the same sites that were being renewed, and if one contractor was not performing then it would delay other contractors.
Mr Bloem asked how much was involved in the hiring of contractors, and what was the nature of the new contracts for the new contractors.
Dr Dlamini said that the cost of contractors was R71 million. The Department would submit a comprehensive report to the Committee detailing all the individual projects.
Mr Harris said that at the project level, more information was still required. With regard to the three projects that were terminated, Mr Harris asked how many discrete projects were involved under the Hospital Revitalisation plan. Mr Harris noted that seven projects were mentioned, and three were terminated. He asked for confirmation if there were 10 projects in total.
Dr Dlamini said that there were sub-projects within projects.
Mr Harris asked what motivated the decision to cut the Conditional Grant.
Ms Gantana said that National Treasury did not determine the individual allocations to provinces. Those allocations were determined by business plans submitted, and the decision was taken by the National transferring department, which in this case was the Department of Health.
Mr Montsitsi encouraged the Provincial Department to disclose its problems and engage in honest discussion because silence did not bode well for the lack of service delivery.
Ms Segabutla said that the report honestly reflected the position. The capacity challenges in regard to project management and personnel were acknowledged. Measures were put in place to ensure that spending was aligned with the money that was allocated.
Mr Lees asked if the Department had an explanation for low spending, as money had not been spent on Health Technology.
Dr Dlamini said that the small amounts spent reflected the delays when waiting for the technology for infrastructural development. The Department could not pay before delivery had taken place.
Mr Lees said that R50 million was transferred to the Province, in excess of what had been spent on this grant. He asked if this money was drawing interest, and if so, who could claim that interest.
Ms Gantana said that the interest accrued on the R15 million would remain within the Provincial Revenue Fund. The procedure at provincial level was that the money would still be within the Provincial Revenue Fund or within the Provincial Treasury before it was transferred if there was slow spending. Section 10(6) of the Division of Revenue Act stated that ‘the Transferring National Officer must evaluate the performance of programmes funded, through a conditional grant allocation in respect of a province, four months after the end of the financial year’. If Treasury received a comprehensive report evaluating the performance in terms of the spending, accompanied by a proposal that monies should be delayed for a reason, Treasury would certainly look into the matter.
The Chairperson asked what the problem was with the Department of Public Works, and if it was perhaps a capacity related problem. The Chairperson also asked the Department to respond, in writing, by the following Wednesday, on the R71 million.
Mr Mseleku said that after listening to the presentations it became clear that the Committee should be invited to provinces, as this might help provinces to standardise their presentations. With regard to budgets, Mr Mseleku said that infrastructure worked on the basis of projected costs of the project, the business plan, and so forth, and that this would fluctuate. The budget did not take past performance into consideration.
Mr Mseleku emphasised the need for an implementing agency and the need to be quite direct in engagement around this issue. Sometimes, when another department had to implement projects, there might be situations of under expenditure. This could be due to that particular agency not having submitted the relevant invoices if work had been done, or due to certain aspects of the work not being done, or due to projects not being monitored. This pointed to ensuring that the implementing agency had the capacity to implement the projects.
The Chairperson said that if the Department of Public Works was the implementing agency, then that Department should be invited to these meetings with the Committee.
Gauteng Provincial Department of Health; Briefing on the Comprehensive HIV and Aids Grant
Ms Qedani Mahlangu, MEC for Health, Gauteng Province, said that she would like to take the matter of the size of hospitals to the Minister because Gauteng had some of the largest hospitals and this needed special consideration. Over the past years the HIV and Aids Grant had been fully spent, but in the financial year under review this province had been under spending for various reasons. The challenge was that a particular unit in the Department did not have sufficient capacity to deliver adequately. The Department was currently dealing with this issue. The budget had increased and the Department needed to ensure that the different units dealing with HIV and Aids were communicating and coordinating matters effectively with each other.
Mr Bheki Sibeko, Acting HOD: Gauteng Provincial Department of Health, noted that there had been the trend of a massive increase in the grant, but current expenditure was a cause for concern. The HIV and Aids Council had been revitalised. 205 000 patients currently benefitted from the grant and a new target was set for 300 000 beneficiaries. The reflected under spending had resulted from the failure of the interface of the IT system to charge for the medicines supplied to sites.
The Chairperson asked how the system failure mentioned could be corrected and if the Department was saying that it did not affect service delivery.
Ms Mahlangu said that a new IT system, named Oracle, had been introduced and the Department had experienced difficulties with interfacing on the new system, because in some instances the charges were not always reflected when medication was delivered. This system had now been removed, and the Department had gone back to using the old system.
The Chairperson asked how the Department planned to reach 100 000 new beneficiaries for the HIV and Aids Grant in six months.
Mr Sibeko admitted that the Department had been ambitious in planning to increase beneficiaries to 300 000, but felt that it was sometimes useful to be ambitious. Medication was the key cost driver and the Department had plans in place to reach the target. These plans involved preventing the travelling of long distances for medication; the accreditation of more sites nearer to where people were living; and the training and employment of more staff and extra nurses. The Department might have to engage with Treasury around this matter as these plans might reflect negatively on the budget.
Mr Bloem asked if the IT system had only affected the
Mr Mseleku said that the new IT system had been implemented in
Mr Harris said the bad pattern of under spending in the Province should be highlighted, especially since only 8% of the budget had been spent. Mr Harris expressed concern that National Treasury had said that the Department had received R189 million to date, but the provincial health Department was saying that approximately R200 million had not interfaced and was therefore not reflected by the system. Mr Harris asked from where the Department had received the extra R11million, as it had spent more money than National Treasury had given. Although the Committee was discussing under spending, the presentation had reflected that the Department would require additional resources as a result of the increase in the intake of patients. Mr Lees asked if the Department was asking for more than had already been allocated, despite the fact that it would appear that it had been under spending.
Mr Sibeko said that it was true that estimated expenditure could be up to 35%. This related not only to the estimate of the interface for medication, but there was a possibility of accruals from the last financial year.
Mr Makhubela asked what could be done in order to monitor contractors. He noted that in respect of HIV and AIDS, there seemed to be limited capacity to improve the situation
Ms Mahlangu said that in respect of HIV and Aids unit there were currently eight people managing millions of rands. The budgets would be increasing, and the Department would be advertising for 17 additional posts this weekend. There had previously been a moratorium on the filling of posts in the Department.
Mr Makhubela said that there were limited financial resources to address huge infrastructural problems, and the Department had not said much about this.
Mr Bloem asked when the ‘Acting’ posts were going to be filled permanently.
Mr Harris said that R68 million of this grant had been under spent last year. Mr Harris asked what would happen to that money.
Mr Sibeko said that processing came from the total provincial allocation. It was estimated that because of the lack of interface, there would be R200 million spent. Mr Sibeko said that he assumed that the extra money was coming from the provincial equitable share.
National Department of Health noted that the Provincial Department had made an application to the National Department for a roll-over of the unspent funds of R68 million. The Department was waiting for a response regarding approval in this matter.
Mr Mseleku added that the National Department of Health would approach the National Treasury with regard to funds being withheld. If, by the end of a financial year, money was still with the National Department, then the National Department of Health would approach National Treasury for a roll-over.
Ms Gantana said that if the money had not been surrendered to the National Revenue Fund, National Treasury would ask for proof of commitment. Then an indication could be given to Provincial Treasury if it was in order to approve the transfer. The National Treasury had not approved the roll-over yet.
The meeting was adjourned
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