Third Quarter Expenditure Reports: Departments of Public Works & Police

Standing Committee on Appropriations

22 March 2011
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Committee met with the Departments of Public Works and Police as part of its hearings on Third Quarter Expenditure Reports.

In the presentation by the Department of Public Works its representative said that the Department had spent 75% of its allocated budget. The spending on infrastructure and dolomite risk management was low (at 46% and 6% respectively) while it had spent 71% of departmental expenses, 57% of access for disabled people and 11% of inner city regeneration budgets. Almost 90% of the funds were committed and rollovers would be requested. In terms of projects, 112 were at the construction stage, 80 at final delivery stage and 86 completed. It had spent 79% of its Administration budget, 77% of its Immovable Asset Budget and 50% of its Expanded Public Works Programme (EPWP) budget. It had spent 0% of its funds earmarked for energy efficiency as spending had been delayed by a challenge around the capacity for the management of the project as well as a protracted bidding process which had resulted in the late awarding of the bid. The Inner City Regeneration programme was being rolled out to other provinces and would also be rolled out to rural areas. The Expanded Public Works Programme had made a significant difference in the way municipalities had been reporting as there had been an increase in the amounts spent by municipalities and provinces.

There were questions about the significant under-expenditure in the EPWP, compensation of employees as well as transfers and subsidies, particularly given that the Department had requested additional funding in relation to these. Members asked what progress had been made with the Inner City Regeneration programme and what plans were in place to spend its entire allocated budget, why none of the funds allocated for energy efficiency had been spent, if the Department had planned for a rollover on infrastructure funds, why it had overspent 173% of its budget allocated for state functions, why there had been such minimal improvement in EPWP incentives to municipalities and provinces and what mechanisms were in place to address the poor expenditure on this programme. The Chairperson asked why the Director-General was not in attendance, why the EPWP figures were different from those noted by National Treasury and if the programme was working as it had not created sufficient jobs.

The Department of Police total third term expenditure amounted to 72% of the allocated budget with compensation of employees at 75.3% and goods and services at 67.7%. The high expenditure on compensation of employees resulted from 2010 World Cup compensation-related payments. Slower spending on goods and services was mainly due to the spending performance of the Integrated Justice System (IJS), amounts earmarked for the Criminal Justice System (CJS) as well as IT network and hosting upgrades. The current network infrastructure needed to be upgraded and increased in capacity. In terms of the way forward, there was a higher degree of certainty around the timelines and completion of these projects. No amounts were shifted from payments for capital assets to current payments. There was a higher degree of certainty around the timelines and completion of projects. SAPS had also undertaken to ensure e-Docket compliance by 20 stations identified as the primary contributors to reported crimes. Of the matter of exhibit management, 75% of all exhibits would be processed electronically by December 2011 and all exhibits would be extracted from scenes of crime and placed on the system. A portion of the IJS/CJS monies would also be used to train detectives and branch commanders in the utilisation of the system.

The Committee asked if Parliament had approved the transfer of R19.8 million from capital assets to compensation of employees, why there had been such slow expenditure around the IJS and CJS,   if it was being implied that Parliament had approved an unlawful shifting of funds and what the motivation for this transfer was. Members asked what the deadline was for e-Docket compliance and for all exhibits to be extracted from scenes, what structural changes had taken place within the Department and what mechanisms were in place to ensure the security of exhibits.

Meeting report

Department of Public Works (DPW) Third Quarter Expenditure Report
In her presentation, Ms Cathy Motsisi, DPW Chief Financial Officer, said that at the end of the third quarter of the current financial year, the Department had spent 75% of its allocated budget. At only 46%, the spending on infrastructure was low with 71% of this being spent on departmental expenses, 57% on access for people with disabilities, 11% on inner city regeneration and 6% on dolomite risk management. Almost 90% of the remaining funds here were committed and rollovers would be requested. The Dolomite spending was low largely as a result of spending being directly related to the RAMP projects which had been put on hold. The status on projects was 112 were at the construction stage, 80 at final delivery stage and 86 completed. The financial performance per programme showed it had spent 79% of its Administration budget, 77% of its Immovable Asset budget and 50% of its Expanded Public Works Programme (EPWP)budget.

It had spent 0% of its funds earmarked for energy efficiency as spending had been delayed by a challenge abut the capacity for project management as well as a protracted bidding process which had resulted in the late award of the bid. Progress had however been made subsequently.

The Department had received a budget adjustment from National Treasury for its Devolution of Property Rates of around R750 million as the budget had been significantly increased. All this had been transferred to the various provinces.  

Mr Rachard Samuel, DPW Deputy Director-General, Inner City Regeneration, explained the project was started in Tshwane and was also rolled out to various other provinces. It had also engaged local municipalities, the Department of Rural Development and Land Reform, the Department of Cooperative Governance and Traditional Affairs as well as the provinces with a view to rolling this project out to different rural areas. To this end it had various projects at a planning stage. These included the Balfour (Mpumalanga), Mount Frere (Eastern Cape), Kokstad (Kwa-Zulu Natal), Tosca (Northern Cape), Peddie and Bizane (both Eastern Cape) rural precincts. It had a rollout plan in place to conduct feasibility studies for six regional offices. These offices were in Durban, Mthatha, Mmabatho, Johannesburg, Polokwane and Mbombela.

Mr Stanley Henderson, EPWP Deputy Director-General, said that the EPWP grant had made a significant difference in the way municipalities had been reporting. There had, for example, been an increase in the amounts that both municipalities and provinces spent. Approximately 70 municipalities had signed protocols since the Municipal Summit in 2010.

Discussion
The Co-Chairperson, Ms M Mabuza (ANC), Chairperson of the Portfolio Committee on Public Works, asked why there had been such significant under-expenditure on the EPWP, compensation of employees as well as transfers and subsidies, particularly given that the Department had requested additional funding for these.

Mr P Rabie (DA) asked for more to be spent on access for people with disabilities. What progress had been made with the Inner City Regeneration programme and what plans were in place to spend its entire allocated budget?  

Ms R Mashigo (ANC) asked why none of the funds allocated for energy efficiency had been spent. Had the Department planned for a rollover of the infrastructure budget?

Mr J Gelderblom (ANC) asked why it had spent 173% of its budget allocated for state functions.

Mr M Mbili (ANC) asked why there had been such minimal improvement in EPWP incentives to municipalities and provinces. Was this as a result of capacity issues within the Department or within other spheres of Government? What mechanisms were in place to address poor expenditure on this programme?

The Chairperson asked why the Director-General was not in attendance. Was DPW requesting additional funds so as to use those in other areas? Why were the figures it presented on EPWP different from those noted by National Treasury? Was this programme working as it did not appear to be, due to its failure to create more jobs? As there had been such poor performance with this programme, it appeared that the approach to it was problematic.

The Co-Chairperson said that the fact that there had been numerous Acting Directors-General had limited the efficacy of the Department. As a result, the Committee was pushing for the appointment of a permanent Director-General. There had also been a commitment to have the large number of vacancies filled as soon as possible. The filling of these vacancies would also go towards improving the efficacy of the Department.

The Chairperson said that the Department should be allowed to speak for themselves on these issues as it would make it easier for the Committee to hold them to account in this way.

Ms Motsisi answered that the Director-General had furnished an apology for not being able to attend the meeting, though this was not mentioned to the Committee. 

Mr Henderson answered that the capacity challenges for the EPWP were mostly found within the implementing bodies. The Department did however engage with these bodies so as to ensure better implementation. Although more could be done with this programme, studies conducted with people on the ground had shown that the programme was indeed succeeding. As the purpose of the wage incentive was to intensify labour intensity, this was not easily achievable within the short-term. What was needed was a shift in mindset away from the dependence on machine-based technologies. The Department was involved at the planning stages of various projects to ensure they were more labour-intensive. It did this through, for example, the employing of data capturers whose duty it was to collate data what would make it easier for municipalities to access the wage incentive.  

Mr Samuel added that Minister Gwen Mahlangu-Nkabinde had recently announced a programme which sought to both employ significant amounts of artisans and retired engineers and also ensure direct job opportunities. DPW was looking at improved ways of executing its programmes, such as employing people directly and not through the private sector. The Minister was committed to ensuring job creation was improved through this programme. The Department could meet with the Committee to discuss the measures put in place to ensure its success.

The Chairperson said that due to time constraints, the Committee would meet later with both the Department and  the Minister to be briefed on this as well as to look at ways of addressing the challenges faced by this programme. The Department also needed to expand its report on the Inner City Regeneration programme, particularly how it had spread out and how far it was in relation to these.

Ms Motsisi continued that the Department had taken note of the issues raised by the Committee and would respond in writing to the questions raised.

Ms Mashigo asked if there was sufficient time to have the Department answer some of the more pressing questions as the Committee needed answers to these when compiling its Quarterly Report.

Mr Mbili proposed that the Department be given more time to provide its answers in writing as there was not sufficient time. The Co-Chairperson agreed with Mr Mbili’s proposal particularly as it could, in its written response, engage the Acting Director-General.

The Chairperson said the Department should provide the answers posed by the Members in writing. In order to ensure the success of the EPWP. The Committee would have to work together with the Department and would be engaging more with the Department on this.

Department of Police Third Quarter Expenditure Report
In his presentation, General Stefan Schutte, Chief Financial Officer, Department of Police, said that the expenditure of each quarter in a financial year would not be precisely equal. The linear spending performance after nine months would thus not relate directly to 75% spending. Total spending amounted to 72% of the total allocated budget with compensation of employees at 75.3% and goods and services at 67.7%. Payments for capital assets stood at 59.6%. The higher expenditure on compensation of employees resulted from 2010 World Cup compensation-related payments, earlier in the financial year. Slower spending on goods and services was mainly due to the spending performance of the Integrated Justice System (IJS), amounts earmarked for the Criminal Justice System (CJS) as well as IT network and hosting upgrades. The spending performance on payments for capital assets was in accordance with planning at the beginning of the financial year (the delivery of vehicles usually took place in the second half of the year). No amounts were shifted from payments for capital assets to current payments. The main focus areas for the IJS were business architectural design emphasising integration and an exchange of information between departments, ICT infrastructure, integrated case management objectives, identification services and business intelligence.

The main focus areas in relation to the CJS were an integrated and cumulative approach which would contribute towards a modernised CJS, the improvement of timeous investigations of crime scenes, case load reduction and improved cycle times of forensic investigators, operational matters such as equipment provided for and the upgrading of systems such as the
Automated Fingerprint Identification System (AFIS) and DNA information.   

In terms of the upgrading of hosting and network infrastructure, the SAPS was dependent on a secure dissemination of information. The processing of information was, in turn, dependent on computer applications, the deployment of which required an underlying network and hosting infrastructure. The current network infrastructure needed to be upgraded and increased in capacity.

In terms of the way forward, there was a higher degree of certainty around the timelines and completion of projects. SAPS had also undertaken to ensure e-Docket compliance by 20 stations identified as the primary contributors to reported crimes. In relation to exhibit management, 75% of all exhibits would be processed electronically by December 2011 and all exhibits would be extracted from scenes of crime and placed on the system. Part of the IJS/CJS monies would also be used to train detectives and branch commanders in the utilisation of the system.

Discussion
The Chairperson asked if Parliament had approved the transfer of R19.8 million from capital assets to the compensation of employees.

Gen Schutte answered that the transfer had been approved by Parliament.

Ms L Chikunga (ANC), Chairperson of the Portfolio Committee on Police, asked if it was being implied that Parliament had approved an unlawful shifting of funds. Spending around IJS and CJS was worrying, particularly as this was a recurring problem.

Gen Bheki Cele, National Commissioner, Department of Police, replied that IJS matters were conducted in a cluster approach. It had been working together with the Department of Justice Director-General to ensure better spending on this. 

The Chairperson asked a representative of the National Treasury to assist in clarifying this.

Mr M Govender, Director, National Treasury, responded that the National Treasury was within the prescripts of both the Public Finance Management Act (PFMA) and the Adjustments Appropriations Act to allow this transfer. As funds had been shifted from the payments for capital assets to current payments, it was allowed.

The Chairperson said that the Committee would engage further with National Treasury on this as it was unclear to the Committee what the exact procedure in such instances was. Situations such as these brought the credibility of budgets into question.

Chairperson Chikunga asked what the motivation for this transfer was.

Gen Schutte answered that the adjustment estimates took place after the 2010 World Cup. The shift took place within one Programme (Programme Two) and was merely an item change (from Capital Assets to Current Payments). 

Gen Cele added that the compensation of employees was not budgeted for as it stemmed from the withdrawal of private security firms on the eve of the 2010 World Cup which, in turn, had necessitated the Department having to utilise many more SAPS members. The Department was currently waiting to be reimbursed by the Local Organising Committee for this.

The Co-Chairperson asked what ‘reduction in furniture’ entailed.

Gen Schutte answered that the main item here was for office furniture that was intended to be purchased within Programme Two.

Gen Cele added that there had been certain structural changes within the Department at management level which resulted in a reprioritisation of certain items.

The Chairperson asked why there had been such slow expenditure in relation to the IJS and CJS.

Gen Cele answered that this was largely due to the IJS being a cluster and the Department wanting to ensure a cohesive approach to matters related to the cluster. The Department had been having meetings with the Director-General of the Department of Justice in order to increase expenditure on this.

Commissioner Sam Tshabalala, SAPS Divisional Commissioner:
Technology Management Services, added that 98% of the division’s money had been committed. The only delay came around the hosting of a network and a delay in a consignment delivery. One hundred percent of its funds had been dedicated to projects planned which had been planned for the financial year and every effort had been made to avoid fiscal dumping.

Mr Joe Phahlane, SAPS Divisional Commissioner, Forensic Services, added that the division was confident that it would spend all its allocated funds.

The Chairperson asked how it intended to achieve this as it had, within a nine-month period, spent only 21% of its budget. The statements by the two Divisional Commissioners seemed to be contradictory.

Mr Phahlane answered that the structural changes within the Department necessitated a review of plans to ensure that procurement was not done for its own sake. Measures had been put in place to address this. The delay in spending therefore came about as a result of this review and the insistence on proper planning.

A member of the Portfolio Committee on Police asked what structural changes had taken place within the Department.

Gen Cele answered that the technology and forensics divisions had been merged in an effort to improve their efficacy. This had resulted in the need for a review of projects as well as delays in delivery. The Department was however confident that it would spend most, if not all, of its allocated funds.

Ms D Kohler-Barnard (DA) asked what the deadline was for e-Docket compliance. What was the deadline for all exhibits to be extracted from scenes as there were many that were degenerating?

Mr Tshabalala answered that this would be rolled out to all 10 major police stations by the end of the next financial year. This would then be rolled out to other stations.

Mr Phahlane added that the system would not be a physical storage facility but rather a tracking system which would make it easier to locate exhibits. The system would therefore assist in managing exhibits. Exhibits would be loaded onto the system by the middle of the coming financial year. Measures were also in place to ensure the fast-tracking of exhibits to laboratories so as to ensure they did not lose any evidential value. 

Mr M Swart (DA) asked what mechanisms were in place to ensure the security of exhibits.

Mr Phahlane answered that the system would not be accessible to anyone other than SAPS members. The Department was also putting more effective access control mechanisms in place.  

Chairperson Chikunga asked how the slow IJS expenditure had affected the work of the Department and the rest of the cluster.

Mr Phahlane answered that the Department had, in certain instances, and in an effort to improve its work, redirected funds that they felt could best be utilised in other areas.

Gen Cele added that the Department was fully committed to ensuring the success of the IJS and CJS as well as to making SAPS work as effectively as possible.

Chairperson Chikunga, in closing, said that the Department was generally doing well at managing its finances. The Portfolio Committee was aware of the work done by the Department for the 2010 World Cup and its waiting for reimbursement from the LOC. The Committee would however want to know if there were any shifts during the fourth quarter. 

The meeting was adjourned. 


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