Public Works Budget Analysis Workshop

Public Works and Infrastructure

22 March 2010
Chairperson: Mr G Oliphant (ANC)
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Meeting Summary

The Applied Fiscal Research Centre observed that the Department of Public Works was an interesting example as it also provided services to provincial and local government and was involved in the transfers and subsidies to those spheres. Historically budget analysis had focused on financial matters; however, it was now important for committees to go further in their oversight and examine achievement of service-delivery targets. The Applied Fiscal Research Centre also reviewed the implications of the Money Bills Amendment Procedure and Related Matters Act 2009 (Act No. 9 of 2009), and the Government Immovable Asset Management Act 2007 (Act No. 19 of 2007).

The Department faced a dilemma as to how it could balance cost savings with the roll-out of service delivery. It had difficulties in filling key vacancies. This impacted on its ability to deliver services in fulfilment of its strategic plan. Transfers and payments were to be used only for their intended purposes. Municipalities were to report on a regular basis. However, there was a weak internal audit function in the municipalities. This was causing an increase in qualified and adverse audit opinions. Under the Money Bills Amendment Procedure Act, Parliament now had the powers to amend money bills, such as the Division of Revenue Bill though strictly speaking in terms of the Constitution this was not a money bill. Each portfolio committee had to submit an annual Budgetary Review and Recommendation Report after the adoption of the Appropriation Bill and prior to the adoption of the reports on the Medium Term Budget Policy Statement. All these recommendations would be taken into consideration in the forthcoming budget.

The Applied Fiscal Research Centre recommended that the Committee acquired an independent costing of the Government Immovable Asset Management Act otherwise it would be difficult to determine whether the Department and its Entities received sufficient funds to comply progressively with it. For example, the Committee should ascertain the cost for Government to acquire fully updated and operational asset registers.  The requirements for Annual Reports were defined in the Public Finance Management Act 1999; the Public Service Regulations 2001 (amended 2004); National Treasury Regulation 18.3 (2005): and National Treasury guidelines issued in 2000 and 2005. AFReC recommended the need for a single piece of legislation to consolidate the Public Finance Management Act, the Public Service Regulations, National Treasury Regulation 18.3 and the National Treasury guidelines. Parliament could dictate the format of the Annual Report, for example, the accounting officer must include any additional information required by Parliament or the provincial legislature. The AFReC suggested examples of fiscal oversight questions that the Committee should ask of the Department. It also suggested that the Committee require the Department and its Entities to publish on first pages of their Annual Reports their responses to the previous oversight report of the Committee.

Members asked how economic and functional classification were distinguished, about a non-financial template suggested for evaluating quarterly and annual performance, about performance indicators, the high level of vacancies and use of consultants in the Department, if AFReC had conducted a study of the performance of local government, about the Government Immoveable Asset Management Act process and the problem of incomplete asset registers, and what Members could do to ensure that promises were  implemented. The Chairperson commended AFReC’s proposals, and noted that the Department of Public Works was defensive, like most departments, in its interaction with portfolio committees.

National Treasury explained the Section 32 monthly report that monitored provincial budgets, expenditure and borrowing. It tracked the implementation of the Appropriation Act (and after October, the Adjustments Appropriation Act); provide a detailed analysis of national Government accounts thereby increasing transparency and accountability; and also provided a view of the link between expenditure, revenue and borrowing. Thereafter National Treasury discussed relevant sections of the Estimates of National Expenditure. National Treasury expected that DPW would approach National Treasury at the end of March 2010 for a rollover, and asked the Committee to question the accounting officer on the schedule of departmental spending throughout the year, and, if it was in excess, why. 

Members asked about the assets register, and if an outside body could provide assistance; about the implications of the Government Immoveable Asset Management Act; whether National Treasury could do anything to stop the use of conditional grants for purposes other than the intended purpose; observed that there was much budget dumping; and about reporting by local government. National Treasury acknowledged that the asset register was serious enough to warrant a special project and should not have to be discussed repeatedly.  Acknowledging a gap between allocations and spending, and that the DPW would not pay out unless it received reports, National Treasury advised Members that it would hold quarterly meetings with the Department. National Treasury acknowledged that there were people all over the country who needed jobs and were willing to work. Therefore ‘Why should spending not be as it should be?’ A budget had been provided to employ data capturers in the municipalities in order to improve reporting. National Treasury assured the Committee that better results could be expected in the near future.

Meeting report

Budget Analysis Workshop by Applied Fiscal Research Centre (AFReC)
Mr Ghalieb Dawood, Senior Public Sector Economist, AFReC, recalled meeting some Members of the Committee two years previously (11 March 2008). He explained that AFReC had worked with Parliament for a number of years. The Department of Public Works (DPW) was interesting in that it did not relate only to national Government, but also provided services to provincial and local government, and was involved in the transfers and subsidies to those spheres of Government.  

Mr Dawood began with a recap of the fiscal oversight function of the Portfolio Committee. It was important to note that budget analysis focused on two aspects; historically it used to focus on just the financial sphere; however, it was now important for committees to go further and pay attention to non-financial or service-delivery targets, especially with regard to the core outputs, which were to be found in the Estimates of National Expenditure (ENE) as well as in the Strategic Plan of the Department. Mr Dawood reviewed some of the important aspects of oversight over Departmental implementation of the Public Finance Management Act (PFMA). He spoke about the implications of the Money Bills Amendment Procedure and Related Matters Act 2009 (Act No. 9 of 2009), and the Government Immovable Asset Management Act 2007 (Act No. 19 of 2007) (GIAMA), especially with regard to the roll-out of GIAMA for provincial as well as local government. He dealt with oversight over the Department’s and Entities’ new Strategic and Performance Plans (2009-2014), and then considered some of the key strategic areas for Public Works for 2009 – 2014. It was important to ask to what extent the Department was performing in these key strategic areas in relation to the budget allocations for the current financial year. Finally he reviewed some of the suggested fiscal oversight questions that Members could ask of the Department while performing their oversight role.

Among the functions of the Portfolio Committee was to consider any bills introduced; this year the Department was planning to introduce two bills. These related to the appropriation of funds, as well as providing for the Expanded Public Works Programme.  Members were becoming aware of the Money Bills Amendment Procedure Act 2009 and the powers that this Act offered to the Portfolio Committee. The Portfolio Committee was also guided in its work by the PFMA 1999 (Act No 1 of 1999 as amended by Act No 29 of 1999).

The work of the Portfolio Committee also involved enquiring about, making recommendations for, and overseeing any aspect of the work of the Department and in particular the Department’s fulfilment of its Strategic and Performance Plans. The Committee was also to review the Department’s Annual Performance Plans, pre-Budget Analysis, Medium Term Budget Policy Statements (MTBPS), Annual Reports, and Quarterly Reports, and conduct site visits.

Section 27(4) of the PFMA stated that the measurable objectives of each programme of the Department, must be submitted together with the annual budget by the Department’s accounting officer. The Department needed to specify for each programme exactly what it wanted to achieve. Currently the Department had performance indicators that it listed in the Estimates of National Expenditure (ENE); it also had its main priorities. However, what one did not usually find were the measurable objectives, which were much ‘lower’ and more quantifiable in nature. They were more difficult to measure. There was need of a further analysis at the level of measurable objectives, so that one could quantify as well as monitor them. Also, personnel costs must be met within the departmental budgetary allocation for the Medium Term Expenditure Framework (MTEF). One of the trends that the national Department had implemented was cost savings. However, the Department was faced with a dilemma as to how it could balance cost savings with the roll-out of service delivery. Personnel costs increased with the inflation rate. The Department of Public Works had a very high vacancy and turnover rate. Thus the Department was faced with difficulties in filling those key vacancies, a difficulty that was impacting on its ability to deliver services in accordance with its strategic plan.

Transfers and payments were to be used only for their intended purposes. Municipalities were to report on a regular basis. However, there was a weak internal audit function in the municipalities. This was causing an increase in qualified and adverse audit opinions. There were to be regular monitoring procedures, and inspection visits and reviews of performance.

Under the Money Bills Amendment Procedure Act Parliament now had the powers to amend money bills, such as the Division of Revenue Bill (DoRB), though strictly speaking in terms of the Constitution it was not a money bill. Other money bills were the Appropriation Bill; the Adjustments Appropriation Bill; the Taxation Laws Amendment Bill; and other money Bills.

Each portfolio committee had to submit an annual Budgetary Review and Recommendation Report (BRRR) after the adoption of the Appropriation Bill and prior to the adoption of the reports on the Medium Term Budget Policy Statement (MTBPS) [Section 5(4) of Money Bills Amendment Procedure Act]. This would normally happen in the period of November to December.

The Chairperson asked why the Division of Revenue Bill was not a money bill in terms of the Constitution. 

Mr Dawood explained that the DoRB was technically a legal document that allocated resources to the various departments [as a preliminary to] the Appropriations Bill. If one wanted to know legally what had been allocated to the various governmental departments, that information would be found in the Appropriations Bill. The DoRB basically split what had already been allocated to the three spheres of Government in terms of the transfers that had been allocated. In other words, what was in the DoRB was sourced from the Appropriations Bill. Nevertheless, the Money Bills Amendment Procedures Act treated the DoRB as a money bill.

One of the mechanisms by which the Portfolio Committee would be providing oversight as well as reviewing money bills in future was the annual BRRR. In terms of Section 5(3) of the Money Bills Amendment Act:

‘A budgetary review and recommendation report –
(a) must provide an assessment of the department’s service delivery performance given available resources;
(b) must provide an assessment on the effectiveness and efficiency of he department’s use and forward allocation of available resources; and
(c) may include recommendations on the forward use of resources.’

This had implications for the Committee’s oversight as it needed to conduct proper budget analysis and in-year monitoring and evaluation on the delivery of outputs and outcomes as per the Department’s plans. All these recommendations would be taken into consideration in the forthcoming budget.

Of especial importance was the Government Immovable Asset Management Act (GIAMA) which stated the mandate of the Department of Public Works was to provide efficient and effective management of the assets of the Government. One of the programmes of the Department for 2010-2011 was to roll-out the implementation of this Act to provincial as well as local departments.

AFReC recommended that the Committee acquired an independent costing of the Act.  Without this estimate, it would be problematic to determine whether the Department and its Entities received sufficient funds to comply progressively with the Act. For example, the Committee should ascertain the cost for Government to have fully updated and operational asset registers in place; and the cost of monitoring the implementation and evaluating the impacts of the Act on service delivery.

The Chairperson said that the matter of asset registers was broad, and asked what Mr Dawood meant in practice.

Mr Dawood explained that each municipality would require a budget to comply with this legislation, since implementation entailed a cost. Municipalities complained that they were allocated certain responsibilities, but without funding. Essentially these were unfunded mandates. If an allocation were made, it might be found subsequently that the allocation had been too low and insufficient to cover all the responsibilities that the Act required. The success of this particular Act would depend upon that, since, if it was under-funded, there would be certain responsibilities that local government would be unable to implement. If it was sufficiently funded, the Department needed to be aware if local government was sufficiently funded for that purpose, so that when the Department made the allocations, local government could not claim that it had not received sufficient funds for the implementation of this particular Act. 

The Chairperson said that the Committee would have more discussion on this in future.

Mr Dawood said that the Budget Statement should stipulate performance information, namely strategic goals, strategic objectives, and performance indicators (measuring outcomes) and performance measures (measuring outputs). The Strategic and Performance Plan (SPP) should indicate long-term goals and objectives. The Annual Performance Plan (APP) should link SPP and budget with annual planned targets.
Poor specification of performance information invariably resulted in failure to report, or in under-reporting, in quarterly and annual reports.

To achieve effective oversight, departments and entities must have quantified core outputs with associated timelines. The budget analysis comprised the analysis of financial and non-financial information.

Financial analysis dealt with the size, weights, and trends in budgets. For example, it was necessary to ask if the MTEF allocations to the Department were sufficient to meet predetermined objectives; and if the splits and trends in functions (budgets per programmes) and economic classification (compensation of employees, goods and services, transfers and subsidies, capital payments) were sufficient to address predetermined objectives.

Mr Dawood explained that henceforth the Committee must analyse non-financial performance projections of the Department. Non-financial analysis had previously been largely overlooked. These dealt with the performance against predetermined objectives. For example, it was necessary to ask whether or not the strategic goals and objectives of the Departments and its Entities were clear and linked to priorities for 2010-2011; and if the staff and skills complement was sufficient to implement the programmes. Moreover, it was necessary to verify that non-financial performance indicators were authenticated.

Strategic and performance plans were to indicate the long-term goals of the Department over a period of five years. The annual performance plan was basically on implementation on an annual basis. It was often found that in the annual performance plan, performance indicators or targets were not properly specified. Mr Dawood gave examples relating to Public Works, since this was very important from the perspective of monitoring and quarterly reporting.    

The financial budget analysis essentially examined the weight as well as the trends of the budget. In other words, it was necessary to ask whether sufficient funds had been allocated over the MTEF to enable the Department to meet its specified objectives and priorities for the year.   

Mr Dawood indicated that it was quite clear that allocations to transfers and subsidies, which were increasing, made up the largest share of the Department’s budget (graph, slide 11). The main reason for this was the roll-out of the Expanded Public Works Programme (EPWP). Therefore this was the most promising area for cost-saving, and it was necessary to ask if the accounting officer ensured that these transfers (conditional grants) were used for their intended purposes. For example, it was necessary to ask if there were regular reporting procedures. Were external auditing requirements met? There was known to be a poor level of performance of conditional grants at the level of municipalities. To a large extent this was because of a lack of capacity on the part of municipalities, but also because of insufficient oversight. So it was necessary to ask if Public Works had established the necessary mechanisms to ensure that those funds were spend correctly. 

There had been a slight trade-off against payments for capital assets. For goods and services there had been a slight drop. The Department had targeted goods and services in its cost-savings drive.  This was interesting because the Department had focused on economies in such areas as advertising, advisory services, travel and subsistence.  However, if examined over the MTEF period it could be seen that the Department was making savings primarily in 2010-2011. If one monitored the projection over the remainder of the period, this improvement in cost-savings was not sustained. Advertising and communications started increasing from 2011-2012 onwards, and levelled off from the original estimates of 2009-2010. It was necessary to ask if the Department saw these cost-savings as only once-off or something that should be institutionalised for the future.

Mr Dawood indicated the weights of allocations per programme of the Department (functional classification) (slide 13). It was necessary to ask if the Department’s allocation for administration was sufficient to address its stated priority of replacing consultants with full-time staff.

Mr Dawood indicated the year-on-year percentage growth per economic classification (slide 14); ‘most of the line items had increased dramatically’. Compensation of employees had shown a big decrease, which was interesting in view of the Department’s stated intention to replace consultants with regular staff. Therefore one should ask if the Department was in fact allocating sufficient funds to compensation of employees.

Mr Dawood indicated year-on-year percentage growth per functional classification (slide 15), and noted a 200% increase in the allocation to the EPWP, a major priority for the Department, in 2009/10 to 2010/11. Also there had been a marginal increase for the other programmes.

The Chairperson asked Mr Dawood to explain the difference between economic and functional classification.

Mr Dawood explained that functional classification related to classification according to Departmental programme, whereas as economic classification related to activity, for example, compensation of employees.

If the Department was measuring something that was absolute, then it was important to use quantifiable numbers and not percentages. Since without any particular baseline it was difficult to actually measure what the quantities were. This was a problem with many provincial as well as with local government departments.

It was AFReC’s view that there needed to be a better differentiation between immediate and intermediate outcomes in the Budget Statement of Vote 6.

Mr Dawood reviewed key strategic areas for the DPW in 2010/11. According to its Budget Statement, the mandate of the Department, as articulated in the objectives of the GIAMA, was to ensure efficient and effective immovable asset management within Government in order to improve service delivery.

The Department was responsible for the provision of official accommodation for all national departments and all Members of Parliament; providing construction and property management services to client departments at the national level; and providing leadership for and coordinating the EPWP.

However, the Strategic and Performance Plan (SPP) and Annual Performance Plan (APP) needed to articulate clearly strategic goals, objectives and the linkages between programme outputs and outcomes with these predetermined objectives.

The Committee should ask the Department how well it did in terms of its key strategic areas for 2009/10: speeding up growth and transforming the economy to create decent work and sustainable livelihoods;
a massive programme to build social and economic infrastructure; a comprehensive development strategy linked to land and agrarian reform and food security; strengthening the Department’s skills and human resources base (major renewal of its skills and education system); intensifying the fight against crime and corruption; pursuing African advancement and enhanced international co-operation; sustainable resource management and use; and building a developmental state including improvement of public services and strengthening democratic institutions.

The Committee should ask the Department how it could show that the expected increase to R2.5 billion for the EPWP over the 2010 MTEF period related to additional jobs and skills created; the establishment of a proper monitoring and evaluation system; and its ability to report quarterly to the Committee.

With regard to the Construction Industry Development Board, contractor development was critical for the increased and sustainable roll-out of public construction projects. The Committee should ask how the Board would prioritise this output; if it had an effective monitoring and evaluation system in place to evaluate the outputs and outcomes associated with contractor development; and if the Board would be able to report quarterly on this to the Committee.

With regard to issues aired by other stakeholders, notably the South African Local Government Association (SALGA), the municipal property rate debt owed by provincial departments of public works to municipalities (for example R40 million in Limpopo) severely constrained the ability of small municipalities to address backlogs. The Committee should ask if the Department was prioritising the payment of these debts; and if the Department would facilitate liaison between provincial departments and municipalities.

The Financial and Fiscal Commission (FFC) had recommended an increased and stable flow of funds for maintenance, rehabilitation and addressing backlogs in the long-term; proposed to include possibly a road infrastructure component within the Provincial Equitable Share (PES) formula; greater coordination of road management functions across the three spheres of government – revision and modification of the inter-road authority coordinating model to include all municipalities and SALGA; and the introduction of a separate conditional grant specifically targeted at building technical capacity within the road management sector of sub-national governments.

The National Treasury had responded that this proposal would be dealt with as part of the review of the provincial equitable share formula; the proposal to expand the existing Roads Coordinating Body (RCB) might have merit as it could improve the intergovernmental co-ordination and resolve issues such as Roads Infrastructure Framework of South Africa (RIFSA); and that the Government through its Infrastructure Delivery Improvement Programme (IDIP) and Siyenza Manje programmes were stepping up efforts to build infrastructure capacity in provinces and municipalities.

In the post budget-tabling phase, the Committee was to deal with in-year reporting. Overseeing budget implementation embraced scrutinising the Departmental monthly expenditure reports and quarterly performance reports. Consideration of supplementary estimates included unforeseen spending, virements, and additional capital expenditure requests.

In its end-of-year reporting the Committee was to consider the Annual Report of Department, taking
into account financial information from such sources as the Standing Committee on Public Accounts (National Assembly) (Scopa); and non-financial information (evaluations).

In its co-ordination of oversight, the Committee should relate to Scopa, the Standing Committee on Finance (National Assembly) and the Joint Budget Committee.

After consideration by the Committee, Annual Reports were debated in the National Assembly.

The requirements for Annual Reports were defined in the PFMA, the Public Service Regulations, National Treasury Regulation 18.3 and National Treasury guidelines issued in 2000 in 2005.
           
AFReC recommended that the above should be consolidated into a single piece of legislation. Parliament could dictate the format of the Annual Report, as per Treasury Regulation 18.3, to the effect that in preparing the annual report of an institution, the accounting officer must, for example, include any additional information required by Parliament or the provincial legislature.

AFReC therefore suggested that the Committee require the Department and its Entities to publish on first pages of their Annual Reports their responses to the previous oversight report of the Committee. They should also publish their progress on priority outputs as defined by the Committee.

AFReC suggested examples of fiscal oversight questions that the Committee should ask of the Department:
Had the Committee recommendations in oversight reports on previous Annual Reports been implemented or reported on?
If applicable, how would Auditor-General findings be acted upon?
Where were the links between Departmental/Entity goals/objectives and individual Performance Contracts? Was the Performance Management (information) System (PMS) robust, implemented, and reported on?
Was there a dedicated Monitoring and Evaluation unit within the Department and its Entities?
Would the Department & Entities be able to furnish information required by the BRRRs?
How was the achievement of Strategic Goals and Strategic Objectives (as per SPP) measured, evaluated, and reported on in Quarterly and Annual Reports?
How would Department and Entities ensure that same goals and objectives targeted in Strategic and Performance Plans and Annual Performance Plans be reported on in Annual Reports, in order to facilitate better oversight?
Questions on the outputs and outcomes of EPWP and work of the Construction Industry Development Board.
How could the Department indicate whether its implementation of the GIAMA was fully funded?
How would the Department ensure that Provincial Departments prioritise the payment of property rates owed to municipalities?
How were vacancies, absenteeism, sick leave and employee health strategies implemented and monitored, and were they effective?

Further Discussion
The Chairperson asked about the non-financial template suggested for evaluating quarterly and annual performance (Slide 27).

Mr Dawood explained that the Department needed to state clearly how it performs against outputs. The template was just a suggestion. Currently departments did not list measurable objectives in the Estimates of National Expenditure (ENE), but they needed to do so.

Mr S J Masango (DA) asked Mr Dawood about performance indicators.

Mr Dawood replied that it was preferred to examine these separately.

The Chairperson asked Mr Dawood to explain further about the high level of vacancies, the Department’s use of Consultants and their capacity to handle the task.

The Chairperson asked if AFReC had conducted a study of how local government had performed. He noted that AFReC seemed worried about it, and said that assets were going to waste or were being illegally occupied.

Mr Dawood replied that one could not speak of high vacancies in a vacuum unless one made comparisons with other departments. He referred Members to the graphs. He felt that there was nothing to indicate that funds had been allocated for filling those posts. The Department had indicated that it was saving costs by withdrawing consultants. This seemed to be a temporary targeted measure, and it was a very small percentage of the budget.

The Chairperson asked about the GIAMA process.

Mr Dawood said, with regard to the GIAMA process, that a remaining problem was incomplete asset registers as noted by the Auditor-General. He said that all governmental assets had to be valued, and the Department faced a ‘huge’ problem because it did not have enough valuators.
 
Mr Masango asked what Members could do to ensure that promises were really implemented. He sought AFReC’s help in the implementation of the GIAMA, which was taking a long time.

Mr Dawood replied that all departments should have a monitoring and evaluations section. It needed to be at a high level, but exactly where it would be located would differ from one department to another.

Ms N Madlala (ANC) asked about decreasing job opportunities. 

Mr Dawood said that Ms Madlala’s point was valid since the Department was not increasing its personnel. It was necessary to ask the Department if it saw these cost reductions as sustainable. Mr Dawood noted that municipalities complained that they had not been paid by Public Works. While each sphere of Government was independent, the spheres interrelated, and the blame was shared. ‘We need all parties to sit around the table’. Mr Dawood said that procurement processes needed to be improved. He referred to the local government turnaround strategy of the Department of Co-operative Governance and Traditional Affairs (COGTA).

The Chairperson commended AFReC’s proposals. He observed that the Department of Public Works was defensive, like most departments, in its interaction with portfolio committees.

National Treasury. Usage of PFMA Section 32 Reports for Oversight Purposes
Mr George Tembo, Director, Public Finance, National Treasury, explained the format of the Section 32 report, a monthly document of the Accountant-General, National Treasury, published in the Government Gazette. The report covered the audited outcomes of the previous financial year (2008/09; and the current financial year, with a one month lag (February 2010 report referring to January 2010).

The report provided a summary table of national revenue, expenditure and borrowing.
Table 1: Revenue: Standard Chart of Accounts (SCOA) compliant, tax (South African Revenue Service [SARS]) and departmental revenue. The table showed all the tax revenue plus departmental receipts (budgeted versus actual)
Table 2: Expenditure: per vote, per main economic classification; budgeted versus actual, spending to date
Table 3: Revenue fund receipts and direct payments
Table 4: Detailed information on borrowing needs including how the debt was financed: domestic/ foreign market, loans, and bonds (short term or long term)
Table 5: Reconciliation of cash book (where the transactions were captured) and bank accounts (Paymaster General [PMG] and National Revenue Fund [NRF] balances)

The Chairperson asked Mr Tembo to explain the above in plain language.

Mr Tembo assisted Members, before proceeding to explain the purpose of the Section 32 report. This was to track the implementation of the Appropriation Act (and after October, the Adjustments Appropriation Act); provide a detailed analysis of national Government accounts thereby increasing transparency and accountability; and also to provide a high level “snap shot” view of the link between expenditure, revenue and borrowing. It was a public document – published in the Government Gazette. It was mainly used by Parliament and financial institutions. It provided a comparison of current month (and year to date) with the same period in the previous financial year, with an analysis by vote and main economic classification; current payments; transfers and subsidies and payment for capital assets; revenue collection by SCOA categories; debt - deficit plus extraordinary revenue and payments; and financing of the Debt - details by debt instrument.

Mr Tembo referred to the Appropriation Bill (Bill B3 – 2010). He discussed relevant sections of the Estimates of National Expenditure (ENE): the aim of the department; purposes of the Department’s programmes; the Department’s strategic overview; savings and cost effective service delivery; selected performance indicators; each programme’s details in terms of objectives and measures, service delivery focus, and expenditure trends; and the details of public entities in terms of strategic overview, savings and cost effective service delivery, selected performance indicators, service delivery focus, and expenditure trends.

Mr Tembo expected that the DPW would approach the National Treasury at the end of March 2010 for a rollover. The extent was not yet known. He asked the Committee to question the accounting officer on the schedule of departmental spending throughout the year, and, if it was in excess, why. 

The Chairperson said that it was important to do this on a regular basis so as to avoid qualified audits.

The Chairperson observed that the Department had had a history of being ‘a bad payer’. It lacked ‘the capacity to draw’. 

Mr Tembo said that if National Treasury came to know that there was a collapse of financial controls in the Department then it would not transfer the funds or it would revise the amount of funds that it would transfer. However, all the funds had flowed as they were meant to flow. Public Works needed to be satisfied that the conditions on the ground were suitable. Invoices must correctly reflect obligations; if not there might be delays in payments.

Further discussion
The Chairperson observed that Public Works owed much money to the departments.

Mr Kekana asked about the assets register.

Mr Tembo replied that it appeared to National Treasury that the asset register was serious enough to warrant a special project; it was not something that should have to be discussed year after year. However, such a project needed to be funded appropriately, not in piecemeal fashion. One should decide to do it over a specific period of time. He asked for thought to be given to the subject. .

The Chairperson asked if an outside body could provide assistance.

Mr Tembo said that it was a huge project that would take time to complete.

The Chairperson asked about the implications of the GIAMA. He said that budgeting must be taken into account. Moreover, it was not possible to complete the register of assets without the assistance of local government.

Mr L Gaehler (UDM) asked if there was anything that National Treasury could do to stop use of conditional grants for purposes other than those for which they were given.

Mr Tembo replied that his colleagues in Intergovernmental Relations, National Treasury, should be equipped to do so. 

The Chairperson noted that there was much ‘budget dumping’ and that the President had said that there should be no more rollovers.

Mr Tembo referred to Table 14 on page 9 of the National Treasury’s press release dated 10 March 2010, which gave information on the extent of provincial spending. More information would be available subsequently on spending, through the Incentive Grant, on the Expanded Public Works Programme.

Mr Tembo confirmed that National Treasury would have quarterly meetings with the Department of Public Works, since this was a priority programme for the state. He acknowledged that there were people all over the country who needed jobs and were willing to work. Therefore ‘Why should spending not be as it should be?’ He acknowledged a gap between allocations and spending, and that Public Works would not pay out unless it received reports.

The Chairperson said that one expected civil servants to perform their duties properly, and he had observed the same trend across the spheres of Government. 

Mr Tembo added that specifically there had been a lack of personnel to record data, and a budget had been provided to employ data capturers in the municipalities. He said that the Committee should ask the departmental accounting officer to provide more detail on a regular basis. He assured the Chairperson that one should be able to see better results in the near future, but that he was not defending the Department.

Mr Kekana asked how many municipalities had not made submissions. It seemed that there was a culture of non-submission; it was necessary to know how many in order to solve the problem. Otherwise the same problem would recur. He asked if it was mainly the rural municipalities that had not submitted.

Mr Tembo replied that his own assessment suggested that it was mostly rural municipalities that had not submitted because of their lack of capacity, for example, lack of personnel to receive claims or invoices.

The Chairperson requested Mr Dawood’s and Mr Tembo’s help with expediting the Department’s work on the asset register, and with regard to the high number of ‘acting’ positions in the Department. He said that Mr Dawood and Mr Tembo had complemented each other, and provided an ‘empowering’ session for the Committee. There was obviously work in progress; he asked for their contact details so that Members could telephone them with further questions if necessary. 

The meeting was adjourned.

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