4th Quarter, 2009/2010 Expenditure reports: National Treasury, Departments of Arts & Culture & Public Works

Meeting Summary

The Departments of National Treasury, Public Works and Arts and Culture presented a report on their fourth quarter expenditure to the Committee. Each of these departments reported on certain areas of underspending, giving reasons and the initiatives taken to correct this in future. For all, unfilled vacancies resulted in areas of underspending.

National Treasury noted that the total expenditure had amounted to 99.7% of the allocated funds, with 0.3% (R176.8 million) being under-spent. This had occurred in Programme 3, due to lower spending on the Capital Structure and Financial Distribution Policy, delays in development of the Treasury Management System, and cost savings, as well as vacancies, although National Treasury now intended to try to groom current staff for promotion to higher levels. Programme 4 under-expenditure related to delayed spending on the Integrated Financial Management Systems project, partially attributable to capacity constraints in the State Information Technology Agency, which was executing this project. Underspending for Provincial and Local Government transfers was due to lower spending by the municipalities for the Neighbourhood Development Partnership Grant (NDPG), a hybrid grant involving direct transfers to municipalities, and to municipal service providers. Under expenditure in Fiscal Transfers resulted from a lower than budgeted payment for the Financial Intelligence Centre. The initiatives included filling of critical posts, performance monitoring on each programme, cost-saving measures, and detailed plans for the Integrated Financial Management System and Treasury Management System. There would be a review of budget projections for the NDPG grants, and closer monitoring of transfers in line with approved business plans, demonstrating value for money, sustainability and leverage. Members questioned the Programme 7 under expenditure on the NDPG, asked for a list of beneficiaries, asked about staff resignations, and commented that there would be challenges in obtaining NDPG funding. A Member thought that there had been incorrect appropriation and that work should be carried out at a faster pace.

The Department of Public Works described the Expanded Public Works Programme, noting that the Infrastructure Sector Incentive was applicable to Provincial departments and municipalities, that the Environmental Sector Incentive was applicable to National departments, through their appropriations from National Treasury, that the non-State Sector Grant (NSSG) was paid to NGOs and NPOs through the Independent Development Trust, and the Social  Sector Grant was paid to the Provincial Departments of Social Development and Education. The progress for the 4^th quarter of the 2009/10 financial year was described, in respect of both provinces and municipalities. 77% of the provincial allocation was paid, and 57% of the municipal allocation, but this figure rose for 1^st quarter 2010/11 appropriations, based on the 4^th quarter reports. The EPWP Incentive Grant was beginning to have its intended effect of encouraging public bodies to exceed their Full Time Equivalent (FTE) work opportunity targets. KwaZulu Natal, Gauteng, Western Cape and Eastern Cape had exceeded their targets, and the number of municipalities who could access the incentive would rise from 68 to 126 in the 2010/11 financial year. This Department had received approval for rollovers for four projects, which were fully outlined. A more rural bias for projects was suggested. Members asked about the reasons for underspending,  asked for more details on the EPWP programmes, asked about the data capturers, and further details on the R54 million rollover

The Department of Arts and Culture reported on underspending in relation to the Capital Works Budget, the budget for Investing in Culture, the World Cup and spending on machinery and equipment. It noted that most of the capital works projects, although initiated and monitored by this Department, were actually approved, tendered for and run by the Department of Public Works, who was largely to blame for the delays  in procurement and payment, although there had also been cancellation of some projects. Initiatives put in place to improve this were described, including calling in National Treasury’s Technical Assistance Unit. The Investing In Culture programme had been placed under a moratorium, pending a forensic investigation, and the Special Investigating Unit was now trying to recover funds lost. There would be stricter monitoring for projects in future. The various areas of underspending for the World Cup were explained, and it was noted that a rollover had been requested. The last area related to amounts not spent for furniture and equipment, which could not be transferred to other projects. Members felt that this Department was not spending sufficiently to ensure service delivery, questioned the results of the forensic investigation, disciplinary actions and recovery of funds from the Investing in Culture project, enquired what turnaround strategies were planned, and questioned the link between vacancies and under spending, as well as timeframes for filling vacancies.