Expanded Public Works Programme 3rd quarter spending by provincial & local government

Standing Committee on Appropriations

20 April 2010
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Committee noted at the outset that it was concerned about a number of projects that were being undertaken by the Department of Public Works (DPW) in Pretoria. The Deputy Minister of Public Works briefed the Committee on the matters. The Rekgabisa Tshwane project would make a contribution to inner city development and would be extended to other cities, towns and villages. One of the goals was to bring government closer to the people. One example was the Civitas building in Pretoria which would soon be occupied by the Department of Health. According to reports on the third quarter of the 2009/10 financial year and interim reports on the final quarter, The Department of Public Works had spent 93% of its allocation. There was some under spending. This was mainly due to money budgeted for property rates not being transferred to municipalities. Although the Department had planned to pay all monies owing, in some cases local authorities had not been able to present invoices.

Members were concerned about renovations to historic buildings but were assured that all guidelines for heritage sites were being followed. Consultants' fees were explained as being within standard rates. Some programmes were behind in expenditure but it was normal with capital projects that the majority of spending only occurred late in the financial year. Provincial treasury representatives confirmed the difficulties that poor rural municipalities experienced in producing invoices for rates. Another problem was the lack of clarity of the ownership of some buildings.

The National Treasury had made provision for all outstanding rates to be paid some time previously but not all of that money had been used. Revised property valuations had led to an increase in the rates bill. Some provinces were asking for roll-overs. Members agreed that higher levels of government had a Constitutional responsibility to assist lower levels.

The Extended Public Works Programme was designed to create labour intensive job opportunities. Projects cut across all spheres of government. There would be specific targeting of programmes to assist the youth, women and people with disabilities. An incentive scheme was in place for local and provincial government, but this was not being utilised fully. The Department of Cooperative Government and Traditional Affairs also had a role in the job creation process. Funding for these was channelled through the Municipal Infrastructure Grant. Members of the Financial and Fiscal Commission felt that conditional grants were limited in their capacity to deal with unemployment and the equitable share formula would be more effective.

Members of the Committee felt that more emphasis must be placed on the design of grants and the incentive scheme. Issues discussed at the meeting had not been resolved.

Meeting report

Expanded Public Works Programme: 3rd quarter performance by provincial and local government
Chairperson’s opening remarks

Mr E Sogoni (Chairperson, Standing Committee on Appropriations, ANC) observed that many of the parties expected to attend the meeting were not present, and some had not tendered their apologies. These included South African Local Government Association (SALGA) and several of the provincial treasuries. The meeting would proceed nevertheless.

The Chairperson said that it seemed that the Committee was continuously repeating the same issues, but the messages seemed not to be heard. This meeting had been convened for two reasons. Firstly, it would deal with outstanding issues such as the Rekgabisa Tshwane project (RKTP). The impression from the Department of Public Works (DPW) was that this programme had been extended to other cities. This made oversight difficult. Another issue was that the building for the Department of Health (DoH) had been completed but was still standing empty.

The second, and main, issue that would be discussed related to the Department of Public Works (DPW) spending. Broadly viewed, it seemed that this was in order, but the problems became apparent on closer and more detailed examination. The uptake by provinces and municipalities for the incentive scheme around the Extended Public Works Programme (EPWP) was low. The Department had tried to convince the Committee earlier that it was working, but this was not apparently the case. The uptake at present was 17.5% in terms of local government and 58% for provincial government. The expectation was that 100% of allocations would be spent in the first quarter, but these figures now quoted related to the third quarter. No report was yet apparent for the final quarter. Actual service delivery was being compromised as a result. At the same time money should not be spent merely for the sake of spending.

Presentation by Deputy Minister of Public Works
Ms Hendrietta Bogopane-Zulu, Deputy Minister of Public Works, noted that the Department of Public Works (DPW) deeply respected Parliament and would not merely account to it, but would also share experiences. The DPW could not reach all corners of South Africa. It was aware of the challenges. Interaction with Members was a valuable exercise.

Ms Bogopane-Zulu told the Chairperson that he was correct with his observations on the RKTP. Pretoria was only one example of an inner city within a larger metro. A number of the buildings needed face-lifts. Some needed to be revitalised. This programme would also contribute to the local economy and inner city regeneration. Some of the smaller towns had been reliant on the railways or mining. The project would also create job opportunities and would bring government closer to the people. There was therefore a broadened scope to the project. A summary had been submitted to the Committee.

Ms Bogopane-Zulu said that there were concerns over the finalisation of the Civitas building. A delay of six to eight weeks was being experienced. The Department of Health (DoH) was responsible for its own contractors. An integrated technology company had been appointed to ensure the safe wiring of the building. Parliament had been serviced by different contractors. The December holidays had caused delays. Specialists were needed. The Civitas building met the required standards and was ready for occupation. There was a plan in place for the DoH to move in.

Deputy Minister Bogopane-Zulu was excited by the Extended Public Works Programme (EPWP). The EPWP had its own challenges but had now gone through the second phase, which dealt with incentive grants.

The Chairperson asked that the DPW deal with this aspect later and move on to the other matters. One issue to be addressed was the matter of unspent property rates transfers.

Ms Bogopane-Zulu said that the Chief Financial Officer (CFO) was prepared to discuss this topic. DPW had worked hard to pay its debts to municipalities. A broader political discussion was needed on rates policy. There were some buildings where DPW could not determine the ownership of buildings and could not therefore say who was liable for the rates.

Department of Public Works (DPW) presentation
Mr Sam Vukela, Acting Director-General, DPW, said that his presentation would cover four areas.  (DG), DPW) said that the DPW presentation would deal with financial performance up to the fourth quarter, a report on the RKTP, a report on the DoH accommodation issue and the EPWP.

Ms Cathy Motsisi, Chief Financial Officer, DPW, presented the quarterly performance to the end of December 2009. She also included the interim results for the final quarter. Some of these figures were still subject to correction. Of the Department's allocation of R6 billion, 93% had been spent. The DPW had had to pay additional amounts for rates. This was funded from the allocation for goods and services. The projection for March was that there would be an overspend of 104%.

Ms Motsisi said that 94% of the funds allocated for Programme 2 had been spent. In Programme 3, the national department had spent 82% of the allocation of R884 million. This included R352 million for incentive grants. Of this amount, 66% had been spent (R230.8 million). 77% of transfers to provincial departments and 57% of transfers to municipalities had been made. The figures presented for property rates expenditure represented the situation as at 28 February 2010. The consolidated figures for March 2010 had not yet been received. The provinces had requested roll-overs to make direct payment.

Ms Motsisi said that the full allocation of R1.3 billion had been transferred to provincial public works departments. The provinces in their turn transferred funds to the municipalities. A balance of R338 million had still not been spent. In Limpopo, nothing had yet been paid for rates. The municipalities had been late in presenting invoices. DPW had tried to resolve the issue during March. On the other hand, the Northern Cape was fully paid up with its rates bills.

Ms Motsisi said that of the R1.2 billion allocated for Programme 2, 90% had been spent. The Department of Agriculture had spent 99% of the funds transferred to it while the Department of Labour had the lowest figure. This was due to the late conclusion of agreements. There had been significant improvements with most departments. Where less than 90% had been spent in was mainly due to delays in starting projects.

Mr Peter Chiapasco, Acting Deputy Director General, DPW, noted that the Ms Bogapane-Zulu was doing a sterling job. The goal of the RKTF was to rehabilitate the offices of government departments in Tshwane. Equivalent projects would be carried out in other cities, towns and villages wherever government owned property. The intention was to bring services closer to the people. In some cases buildings would be used for multiple purposes.

Mr Chiapasco said that the allocation for the 2008/09 financial year (FY) had been fully spent. Some current projects were in Berea Park where the Department of Land Affairs would be located and premises for the Departments of Correctional Services and Arts and Culture. The latter would be close to Freedom Park. Allocations for the 2010/11 FY were fully committed to projects. Other projects were included the provision of an administrative building at Freedom Park. The HG de Wit building had become derelict but would be refurbished. This would provide 10 000 square metres of office space. The building at 38 Church Square would be refurbished as an annex to the National Treasury (NT) head office.

Mr Chiapasco said that space laws were being redefined. Many clients preferred A Grade accommodation. This led to the need for significant upgrades, as was the case with the Civitas building. DPW had a memorandum of understanding with the Tshwane municipality. There must be proper planning in the environment. The city wanted to see the area in question as a government precinct. Some sites had been bought for later development. He listed a number of these such as Oumashoop, Berea Park, Salvo Kop and HG de Wit.

Mr Chiapasco said that the different spheres of government did co-operate on projects. This led to better utilisation of property. The old Transvaal Provincial Administration (TPA) building had been reallocated. The Government Garage had fallen into disrepair and had now been take over by the Government Printer. State land had been used to build for the Departments of Education and of International Affairs and Cooperation, and had been occupied. The work on the Civitas building was finished. The building formerly occupied by the Department of Agriculture had been transferred to the South African Police Service.

Mr Chiapasco said that there was a challenge in the reconfiguration of government departments. Another challenge was the global economic meltdown. About R10 billion would be needed to service all the projects. The way forward was to re-look at inner city planning. A precinct plan should be developed. This should take into account the surrounding infrastructure. A city improvement district (CID) concept could act as a top up service. Jobs would be created. Projects should be seen as an integrated package of various services. In the case of the Civitas building, DPW was going to tender for a financial management package to maintain the building. This was a good model which would preserve the integrity of the investment. The benefits would be mirrored in the smaller towns.

Dr P Rabie (DA) said that Church Square was an area of architectural heritage. He asked if this had been considered in the renewal projects in the area. He hoped that the character had been retained.

Ms Bogopane-Zulu said that heritage buildings were governed by regulations. For any tender application on such buildings, the contractor had to demonstrate experience in this field. No changes could be made to the architectural structure.

Mr Chiapasco said that there were other historical buildings on the inventory beside Church Square.

Mr G Snell (ANC) asked if the figures were the original contract value. He wondered if there was an escalation clause which would inflate the final cost.

Mr J Gelderblom (ANC) said that the consultancy fee was between 50 and 80% of the project costs. The amount was R119 million. He asked if there was a norm and if there had been any negotiations. It sounded like a high number to him.

Ms Bogopane-Zulu replied that different procurement strategies were followed, and that DPW did negotiate over the professional service fees which were normally worth about 18% of the contract. Engineers and quantity surveyors expected a standard rate.

Mr Chiapasco said that consultants guided the project from precinct to building level.

Mr M Swart (DA) asked when the move into the Civitas building would start. Elements of the DoH would be moving from all over the city. He asked how many current lease agreements would need to be terminated. He asked how much this would cost the taxpayer.

Ms Bogopane-Zulu said that the deadline for the completion of the Civitas building had been the end of March 2010. Leases for the current properties had been signed up to the end of march. The move should start the following week and should be finalised by June.

Mr Chiapasco said that current leases were running on a monthly basis.

Mr G Oliphant (Chairperson, Portfolio Committee on Public Works, ANC) asked what would become of vacant properties.

Ms Bogopane-Zulu replied that new ministries had been formed and needed to be accommodated.

Mr Chiapasco added that buildings vacated by DoH would be transferred to other departments. The move was a massive exercise, as DoH occupied 100 000 square metres of office space. There were huge logistic considerations. The DoH was following its own processes but DPW would assist where it could. The move should be completed by the end of June.

Mr Sogoni said that government lacked resources. Everything must be done to save money. He asked how soon the Civitas building would be occupied. He said that the DoH should not be renting office space when its own building was ready to be occupied. He had not realised that the TPA was still in place. The presentation had touched on the relationships between all government structures. He asked what role the provincial Departments of Public Works played. He wanted to know the status of Black Economic Empowerment (BEE) compliance.

Ms Bogopane-Zulu replied that the TPA building was an historical name. These names tended to stick even though the building was now know as Public Works House. Unique arrangements had been made between DPW and the provinces. The DPW did not build schools, hospitals or clinics. Such bulk social work was done by provinces.. The DPW was the custodian of State property. Previously the old Public Works Department had dealt with the provincial departments. There was a forum to address cross-cutting issues. Matters relating to contracts and the empowerment of women, the youth, black people and persons with disabilities could be discussed there.

Mr M Mabuza, Deputy Director General, DPW, said that public works was a concurrent function for all nine provinces. There was a constitutional and policy framework. All nine provincial Members of the Executive Committee (MECs) and Heads of Department (HoDs) met on a quarterly basis in a forum which had previously been known as MinMEC. The question was how to pursue government programmes and manage relationships. One of the important discussions centred around the strategic objectives of government. There was a political mandate. It was up to the HoDs to plan the execution of projects.

Mr Sogoni looked through some figures. By the end of the third quarter, DPW had spent 72% of the allocation for compensation of employees, 53% of that for goods and services, 55% of that for infrastructure and 59% of the allocation for equipment. These were still figures for the third quarter. The allocation had been increased but not spent. The Money Bill Amendment would soon be debated. The Committee would have to look at spending patterns and try to justify increased allocations.

Ms Bogopane-Zulu said that the full allocation had been transferred to provinces.

Ms Motsisi said that the figure for compensation was shown as at the end of the third quarter. The figure of 72% at that stage of the FY was the norm. Expenditure for this purpose had since increased to 96.5%. The infrastructure figure reflected a trend that could not be measured on a linear basis. Payment was made according to the achievement of project milestones. Most projects would only be completed in the final quarter. Expenditure for this purpose currently stood at 86%.

Mr Sogoni also looked at the property rates payments. The Eastern Cape had only transferred 46% of these payments. He asked what the challenges were. He asked if the rates were not being paid. He understood that the problem in Limpopo was related to a lack of invoicing, but could not understand why these invoices were outstanding for a year. He asked if this was realistic. It was a pity that SALGA and the provincial treasuries were not present to explain.

Ms Bogopane-Zulu acknowledged that many municipalities had no capacity to collect rates. This was a pattern in rural as opposed to urban municipalities.

Ms Motsisi said that the delays in Limpopo were partially due to delays in compiling the valuation roll and partially due to a lack of capacity.

Mr Swart noted that he had studied the capital budget. It was clear that the target of 100% spending would not be reached in the current FY. The capital budget led to job creation, and he was worried that without this spending, the job creation would not happen. Members had often been told that DPW did not pay the rentals of leased premises. There was nothing about this in the presentation. He noted that a telephone number had been provided for telephonic enquiries.

Ms Bogopane-Zulu said that capital works presented a challenge in the devolution of the budget. The respective departments received expenditure. They set the priorities. Departments were part of the tender process. Often specifications were changed halfway through the process. DPW would like more control. It was improving its relationships with other departments. Monthly meetings were being held. She welcomed the comments on the Money Bills Amendment Procedure and Related Matters Act..

Ms Motsisi said that there had been delays in implementing capital projects.

Mr Swart said that DPW was still busy compiling a register of property. It did not know what property government owned. He asked when this would be completed.

Mr Snell said that the figures were now a public document. DPW should take another look at the status reports presented, which he said were misleading.

Mr Oliphant said that there was an issue to strengthen ties between national and provincial departments. There was a disconnect. The situation in Limpopo was unacceptable. He asked where the budget for capital works went. He felt that more government property was leased than owned. There must be some heritage for the next government. The question of the State register of assets was vexed. DPW was trying to correct the situation. It remained to be seen if the Department would be able to earn a clean audit report. One had to look at spending patterns.

Mr Sogoni said that members of the Portfolio Committee on Public Works were welcome to participate in the meeting.

Dr Rabie had analysed the capital budget. He asked who was responsible for coastal harbours. Some R104 000 had been spent there.

Ms Bogopane-Zulu replied that ports were the responsibility of DPW, as a shared responsibility with Marine and Coastal Management. There were also State-owned enterprises (SOEs) such as Transnet who were involved.

Mr Mabuza added that the DPW was the custodian. Maintenance was the function of the executive through a steering committee. This applied to all ports of entry. The ports were being upgraded.

Mr M Tiswa (Official from Eastern Cape Provincial Treasury) said that many poor municipalities could not submit invoices. This resulted in underspending on the property rates budget. Public works had to verify the missing information. A unit had been established recently to do this. The provincial treasury was concerned as the municipalities depended on finances.

Mr Jeffrey Mashele (Member of Committee on Finance, Gauteng Province) said that Gauteng had spend 57% of its R177 million allocation for rates. This had been adjusted to R185 million in November 2009. Every invoice received had been paid. The DPW could not, however, pay if there were no invoices on other property. The provincial authority held monthly meetings with the municipalities. They needed to understand what was outstanding.

Mr G Tembo, Director, National Treasury, said that in the 2004/05 FY R600 million had been provided by the State to clear all rates arrears. Not all of this had been spent. NT had assumed that the rates issue had been resolved. There had been subsequent claims. NT wanted to see this issue resolved. He wanted to know what DPW was doing about this. Hopefully the rates issue could be settled once and for all. There had been underspending on the rates grant in the previous FY and there had been requests for roll-overs. The new Property Rates Act had led to an escalation in the rates bill. Provinces needed to be reminded that they had to submit a proper request for a roll-over. This was troubling. The new Act had led to revaluations of all property and increased rates, while not all the allocation was being spent. This indicated a mismatch while additional funds were being requested.

Mr Sogoni said that the Public Finance Management Act (PFMA) required that higher levels of government should help out those municipalities which were in difficulties. He did not buy the story of inability to issue invoices. Some municipalities did not have capacity, such as Limpopo and rural areas of the Eastern Cape. The Constitution was clear. National and provincial government had to support the local sphere. It was not enough simply to write off debts.

Ms Bogopane-Zulu agreed that national government had a responsibility to help. This was a major challenge, and DPW was working on it. It was understood that DPW was the custodian of State property. An electronic asset register was being developed. Members would be introduced to this. There was a long chain, including quantity surveyors and the deeds office. DPW had gone through the procedure and was now getting a sense of what belonged to whom. A challenge remained where private houses were used for DPW purposes. This had often occurred in the former Bantustans. All had to work together on the aspect of property rates. DWP had developed a master plan. Everything would be done by 2012.

Ms Motsisi said a task team had been formed involving all HoDs to address the capacity of municipalities. The aim was to assist municipalities. Payment was slow.

Mr Sogoni said that it was clear that property rates were an issue. He hoped that the capacity was still there. Government had to assist rural municipalities. The people were not experiencing true freedom. He noted that the issue of the service level agreements (SLAs) had been raised. The Division of Revenue Act (DORA) made it clear that departments had to have submitted information and plans by October for the following year. It could not be the sole responsibility of NT. SLAs had to be signed by the start of the following FY. If this was not done, the budget for that department would be put aside and allocated to DPW instead. As long as the asset register was outstanding, DPW would never receive a clean audit. He was sure that they were moving in the right direction.

Presentation on Extended Public Works Programme (EPWP)
Deputy Minister Bogopane-Zulu said that the objective of the EPWP was to create labour intensive job opportunities. Skills development would also be achieved. Once capacity was achieved there would also be a programme of life skills development. The goal was to create 4.5 million sustainable jobs by 2014, with a corresponding development of skills and employment. The EPWP would be applied across all three spheres of government. A challenge lay in defining the structure. It was becoming clear that some elements were not moving forward. If the rural municipalities had no money to spend on the programme then they would never be able to benefit.

She said that the DPW would try to engage with municipalities on their integrated development plans (IDPs) and with the Department of Cooperative Government and Traditional Affairs (COGTA). DPW received the finances but the money did not belong to it to spend. The lowest share went to administrative coordination and technical support. The bulk of the spending was at provincial and municipal level. Money was transferred to provinces and directly to municipalities. There were areas of challenge but systems were in place to deal with these.

Ms Bogopane-Zulu said that DPW was looking at a youth development agency. Specific sectors were targeted, such as women and the disabled. DPW wanted to see the EPWP as a vehicle for job creation and skilled development, and to exceed its targets. Programmes ranged from the basic to extremely technical ones. The target was to have one member of each household employed by each project.

Mr Stanley Henderson, Acting Deputy Director General: EPWP, DPW, said that the wage incentive scheme was based on performance. The performance of the provinces and municipalities was calculated, after which they could draw in accordance with the figures through DORA. The implementation of programmes normally followed an “S Curve” pattern. Reporting reached a pinnacle in the third and fourth quarters. There was not an even spend of expenditure, and there would usually be low levels of expenditure early in the FY. Of the sixteen provincial departments which qualified for the incentive grants, five had been paid towards the end of the third quarter. The amount involved was R56.3 million.

Mr Henderson said that the total paid to provinces was R66 million of an allocation of R151 million. The two figures combined amounted to 77% of the allocation. In terms of municipalities, 68 qualified, of which 47 had been paid. This amounted to R114.2 million for the FY out of an allocation of R201 million, which equated to 57%. In all, 66% of the allocation had been spent.

Mr Henderson said that this was the first time a wage incentive scheme had been implemented. It was one of the best moves by government. His section was currently finalising the figures up to the end of the FY. Three provinces, the Eastern Cape, KwaZulu-Natal and the Western Cape, had moved funds. All qualified for the incentive in the final quarter on a basis of performance against the set targets. Across all provinces, municipalities had spent 57% of their allocations.

Mr Henderson said that DPW was doing something in terms of the slow uptake of the incentive scheme. There was a heavy focus on technical support. Labour intensive opportunities were being created. Municipalities and provinces had to report. More data capturers had been appointed and would be deployed where they were needed. Data must be properly audited. DPW was training departmental and provincial officials on reporting procedures. Implementing bodies would receive technical support to understand the reporting procedures

Presentation by Department of Cooperative Government and Traditional Affairs
Mr George Seitisho, Deputy Director General: COGTA) apologised for the absence of the DG who had another commitment.

Mr Reckson Luvhengo, Executive Manager: Community Works Programme (CWP), COGTA, presented the Committee with a list of Municipal Infrastructure Grant (MIG) programmes. There were 552 of these as at March 2010. The combined value was R8.7 billion. There was a need to zoom into job creation projects. The CWP was funded by a transfer to COGTA. It was part of the EPWP with the goal of contributing to job opportunities. The projects were 65% labour intensive with some 1 000 participants on site. Already 7 000 job opportunities had been created and he estimated this figure would rise to 101 000 by 2012/13.

Mr Sogoni asked how the status quo could be improved.

Mr Tembo replied that the funds for the creation of labour intensive jobs relied on municipal budgets. The incentive allocations were for additional funds and were not part of the primary funding source. NT felt that the creation of jobs through the EPWP was important enough to be pursued even without the incentives. Funding was through the MIG, Provincial Infrastructure Grant (PIG) and other programmes. In the Medium Term Expenditure Framework (MTEF) for 2009, R4.12 billion had been allocated and R2.175 billion in 2010. These were specific amounts for the two grants.

Mr Tembo said that by the end of the third quarter, 34.2% of the allocations had been received by provinces in terms of incentive payments. DWP had disbursed 42%. The difference had to be explained. There might be errors in the reporting. The issue of funds received for excellent performance was not included in the appropriations. There was an opportunity to adjust these. If they were not appropriated than provincial treasuries might not make funds available. This needed to be resolved.

Mr S Mashaba, Director, NT, said that NT was responsible to monitor the spending of conditional grant and the level of under performance. The municipalities were showing a three month lag on the required performance. NT was verifying the third quarter figures on the side of local government and the final quarter figures for provincial and national levels. NT would only see the municipal expenditure figures in two weeks. Only 57% had been moved to date. The challenge was to show the extent of the take-up of the grant. Grants provided funds based on monitoring and reporting. R78 million from the local side had not been transferred by the end of the FY. This was still subject to the roll-out process. In the new financial year, R600 million was involved in roll-over requests. Closer monitoring was needed.

Mr Tembo said that NT was concerned about the shortage of revenue. Money could have been allocated elsewhere. There were high costs involved. There was a trend to adjust funding in the middle of the year. Input was needed on this. NT needed to predict actual spending for the balance of the year. Better reporting was needed. There should be more projects in order to absorb available funds. There would be a discussion at the NT the following day to review performance.

Presentation by Financial and Fiscal Commission (FFC)
Mr Bethuel Setai, Chairperson, Financial and Fiscal Commission, said that the FFC had an issue with the design and management of grants. Data and performance had to be considered. The FFC had made a submission. Conditional grants had limited use when dealing with unemployment. The equitable share formula should be used for this. A review of the documentation showed that data was not being created at local level.

Mr Setai said that not all the provinces had the capacity to use their own funds. He said that further thought was needed around the disbursement procedure. The formula was not transparent. There was very different reporting on funds received. The report showed that in December 2009, R151 million had been appropriated. There had been a transfer of 34.3%, but this did not equate to actual expenditure. This stood at 5.1%.This issue had to be resolved. As at 28 February 2010 the figure was still only at 34.9%. The FFC was still sitting with provincial accounts. The DPW figures showed an expenditure of 59.3%. The jobs created had reached 73% of the target. He asked how this could be possible if the provinces were not spending their allocations. The numbers seemed to be high. Data capturing might be the problem.

Mr Setai said that a challenge was the disbursement of funds. Allocations were made after budget appropriation. This matter had been raised at the technical committee. There was a need for consistent data. It was not only about funds. The labour component had to be planned. The issue was in the design. The FFC proposed that there should be a matching grant. A pool could be created. This would impact on poor municipalities and provinces. Service delivery regulations must be transparent.

Mr Mashele said that there was a timing issue in transferring funds to programmes. There was a question of how to distribute funding. Money could only be spent once it had been appropriated.

Mr J Mohlala, Head of Department, North West Provincial Treasury, agreed with his Gauteng counterpart. There was a challenge of reconciliation. Municipalities were not performing.

Mr M Moyo, Municipal Manager, Alfred Nzo Municipality, noted that he  was representing the Executive Mayor of the Alfred Nzo Municipality in the Eastern Cape. The Municipality faced many challenges. R28 million had been set aside for projects but there was a challenge of capacity and cash flow. Labour was also a problem. There were 160 posts for cleaners in Matatiele and 100 for a water project. There were approximately 280 posts for service centres. The province had been active in the municipality at all times. A lot of work had been done. There was some under reporting. Data capturing was a common problem. The equitable share represented a bigger problem. This was particularly difficult at grass roots level.

Mr N Madike, Acting Senior Manager: Budget and Expenditure, Mpumalanga Provincial Treasury, said that Mpumalanga faced the same issues, particularly in the rural areas. There were questions of capacity, skills and reporting. This Provincial Treasury had agreements with NT and COGTA but had not had close involvement.

Mr Sogoni said that he had noted what the national and provincial departments were saying on expenditure. He had wanted to hear about the design of the incentive scheme. He wanted to know if it would help to achieve the goals. Provision had to be made for permanent employment. It was not enough to give a person a job for two days a month. He was especially concerned about the tiny municipalities. The Committee had been told that these municipalities did not have to reach the same qualifying standards as the bigger ones. He wanted clarity on this. Smaller municipalities must have the same access to funding. The MIG must be central to job creation.

Ms M Tlake (ANC) asked if the NT delegation could give a more focussed presentation. This would give Members more insight.

A Member said that a number of issues had to be debated, such as expenditure patterns. More clarity was needed on how money was appropriated. Authorities could not spend money before it was appropriated. This impacted on the planning and implementation of programmes. The NT did not decide on appropriations. Integrated decisions were made, since there was one National State budget and everyone was included in the cycle.

Mr R Mashigo (ANC) remarked that NT had reported that R78 million had not been transferred. NT seemed willing to accept the requests for roll-overs. She believed that the requirements for roll-overs had not been satisfied. Funds allocated under the MIG should be used to alleviate poverty before requests for roll-overs were made.

Mr Oliphant said that while nothing was happening, no-one wanted to take responsibility. The poor needed the money. There were protocols and procedures to be followed. This was a grey area. The Eastern Cape could only access R22 million. Other interventions were needed. The country should be able to boast of the EPWP as a flagship programme. This was not happening. The work was not being done. Another look at the methods was needed. The project must have some purpose, namely to get South Africans working.

Deputy Minister Bogopane-Zulu wanted to clarify two issues. Jobs must still be created before claims for the incentives would be considered. There were challenges. The question of incentives had been discussed. Something had to be done before a return investment would be seen. DPW was fully aware of the situation. She had noted the comments regarding provincial and local administrations. The DPW was looking at the design of the grants. This meeting was about the intention and running of the programmes. The discussion should be at another level. The incentive grant was a component. DPW might be blamed for transfers not being done. There had to be accountability. The receivers of the grant had no control over the mechanisms.

She added that it was important to note the challenges. DPW was doing the best it could to manage the grants. Data integrity would be improved by an increase in the number of data capturers. There would still be issues. She noted all the issues which had been raised. These would be considered and DPW would revert to the Committee. She had hope that the EPWP would work.

Mr Chuene Ramphele, Senior Manager, COGTA, said that there had never been a platform to discuss these matters. A forum was needed.

Ms Tlake objected. The meeting was about to be closed and Mr Ramphele should not be allowed to reopen it.

Mr Sogoni said that the allocated time for the meeting was almost up. The Committee would let DORA guide its consideration of the matter. It seemed that there had been a lack of proper planning. He agreed with what Mr Ramphele had said. The issues had not been resolved.

The meeting was adjourned.

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