Adjustments Appropriation Bill [B18-2011]: Department of Health briefing

Standing Committee on Appropriations

14 November 2011
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Department of Health compared its original budget for 2011/12 with its total revised budget which included roll-over funds from 2010/11 for unforeseen and unavoidable expenses o for the repair of 19 clinics damaged by floods (Health Infrastructure Grant), and the improvement of conditions of service. It outlined virements and gave detail of utilisation of savings.  Adjustments were summarised per programme and by economic classification. The Department then provided an in-year monitoring report for September 2011. This contained a departmental summary financial report by programme. Summary tables were given, in total and by province, of the six conditional grants – HIV and AIDS, Forensic Pathology, Hospital Infrastructure Grant, Health Professions Training and Development Grant, Hospital Revitalisation Grant, and National Tertiary Services Grant under the headings of annual budget, amount transferred, amount spent, and spending as a percentage of the annual budget. The Department had been allocated R5.5 million for information and communications technology services in the renovated Civitas building, but the Department had now moved in and did not expect to request more under these terms. The rent for office accommodation in the Civitas building payable to the Department of Public Works was not paid at the end of the last financial year, and so a roll-over was received this year. For hospital revitalisation, two provinces had received roll-overs: Gauteng and the Eastern Cape – R55.5 million and R29 million respectively. This amount was reduced by National Treasury based on current spending trends. The shifting of funds of R1.3 million from the capital programme was essentially to reprioritise funding at the Department's laboratories. Therefore there had not been a transfer between economic classifications. The biggest adjustment was in Programme 5 – Hospital and Tertiary Service and Workforce Management. There had been a substantial drive to improve the appointment of staff at the Department's laboratories. Expenditure at the end of September as a percentage of the adjustment budget was exactly 50% in terms of baseline or bottom line numbers. This suggested that the Department would be on target in spending the entire budget by the end of the financial year. Obviously the Department had to manage some of the variances within its budget, and some of its programmes were under-spending, while Programme 5 showed a slight over-spend. By economic classification, expenditure on transfers was currently at 51% and was on track. The Department was concerned at certain aspects of goods and services and capital expenditure at head office. However, with the virements and roll-overs quite a substantial amount of these funds should flow before the end of the third quarter – for example, the Civitas building, some research at the Human Sciences Research Council, and the facilities audit. Expenditure of conditional grants at the end of September stood at 45%. Obviously the Department had some issues on Hospital Infrastructure Grant funding at 38%, and the Hospital Revitalisation Grant at 42%. Even the HIV and AIDS grant was currently at 41. Some provinces–principally Mpumalanga and the Northern Cape, and to some extent North West - were showing a significant under-spending on the conditional grants.   

Unfortunately under-expenditure in the Hospital Revitalisation Grant had persisted for seven or eight years. The Department explained measures to curb under-expenditure and improve the delivery mechanism at national and provincial level through the Infrastructure Unit Support System. This was a structured collaboration between the national Department of Health, the Development Bank of Southern Africa, and the Council on Scientific and Industrial Research initiated in October 2010 to be concluded by 2013. The programme had already begun to produce results – for example, in the previous year, there was success in stabilising the under-expenditure. Major focus areas for the System were norms and standards for the full infrastructure development cycle to reduce the high cost per unit in development of the health infrastructure as well as many deficiencies in the operation of health facilities. Also with the help of the State Information Technology Agency, the Department was establishing the web-based Project Management Information System. The exciting component of this was the Project Monitoring, Management and Support Unit to unlock and support the potential of manpower in the provinces as well as in the national Department. Such monitoring included risk management. It was developing a cost model. The first cost model had already been developed and distributed to provinces. A particular problem was the conventional type of tendering procurement across Government. For maintenance, perhaps a term contract as and when required was appropriate rather than the conventional contract which was lengthy and subject to different kinds of abuses. In the course of this year, a marked improvement had been achieved especially at the construction, design and feasibility study level. The amount of expenditure on the construction stage was more balanced than in projects in other stages of development. The under-expenditure was fortunately declining.  

The Department had been given to understand that the National Treasury had established a policy reserve fund to be utilised when funding was required for the National Health Insurance scheme.

The criteria had been established for the pilots but the latter had not yet been selected. The Minster was expected to make an announcement. However, the Department had used a number of district health expenditure reviews to determine those criteria. A facilities audit had also been partially completed and would also serve as a guide.  

A Democratic Alliance Member asked if there was any budget provision for the National Health Insurance scheme pilots and did not necessarily agree with policy on the scheme in any case: if the Department did its job as it should there would be no need for the scheme. The Member asked about a reported withdrawal of the hospital revitalization grant, how much was spent and what the Department would do to rectify the matter, and why no money was transferred to LoveLife the previous year. What was the situation currently? Only 4% of 14 million had been transferred to the technikons and universities where it was necessary to train personnel in readiness for the new National Health Insurance scheme. A second Democratic Alliance Member observed that the scheme was just a funding mechanism, asked if the pilots would claim from a central fund, and if the pilots had to do with health care itself – for example, quality and standards of health care. A Member of the Congress of the People asked if the shifting of funds was in line with the Department's organogram, if posts were being abolished completely, or if  it was simply a financial saving strategy. The overall figure of the shift was in millions. African National Congress Members were concerned about the non-payment of rent on the Department's Civitas building and the resulting yearly roll-over of funds, asked why vacancies were not filled, if there was a budget for those posts what happened to the money that had been appropriated for them. The Chairperson did not want to discuss the politics of the National Health Insurance scheme and explained that the shifting of funds was not such a simple matter as it might appear since the appropriation of funds was based on an approved strategic plan. Such shifting meant that money appropriated for a particular purpose had not been spent. On Goods and Services the Department was at only 24% expenditure. What were the implications of such underspending? On Capital expenditure, the Department was at 19%. Why? Had this under-expenditure to do with planning? He thought that the Department's scenario for infrastructure indicated improvement but was worried about the dependence on consultants – a dependence which cut across departments. Was there a plan for these consultants to transfer their skills?

The Department of Water Affairs response to the Adjustments Appropriation Bill [B18-2011] presentation was deferred until 16 November 2011 because Members objected to the absence of the Acting Director-General.


Meeting report

Introduction
The Chairperson advised the Department that, although the Director-General had tendered apologies on account of attendance at a Cabinet meeting, such information should be confirmed in writing, as it was essential, in terms of the Public Finance Management Act (PFMA), that the delegation be formalised, lest subsequently others said that those present did not have a mandate.

The Chairperson noted challenges of infrastructure delivery in the provinces, especially as to hospital revitalisation. Also pilot schemes for the National Health Insurance scheme would start in 2012/12.  However, the Committee was not sure about the plans, and there were challenges as to the funding.

Department of Health Adjustments Estimates of National Expenditure 2011/12 Presentation
Mr Ian van der Merwe, Chief Financial Officer,  Department of Health, explained that the Department's original budget for 2011/12 was R25 731 554 000. With roll-over funds from 2010/11 of R231 314 000, unforeseen and unavoidable expenses of R 2 606 000 for the repair of 19 clinics damaged by floods (Health Infrastructure Grant (HIG)), and the improvement of conditions of service (ICS) amounting to R2 497 000, the total revised budget for 2011/12 amounted to R25 967 971 000 (slide 2; AENE page 131).

Mr Van der Merwe gave details of roll-over funds and unforeseeable and unavoidable expenditure (table, slide 3). Virements were outlined, with detail of utilisation of savings, under the headings of programme from which transferred, sub-programme, economic classification, amount in R'000s, motivation, programme to which transferred, sub-programme, and economic classification (table, slide 4). Further information on virements was provided (tables, slide 5-6).  Adjustments were summarised per programme in R'000s, under the headings of programme, main appropriation, adjustments appropriation, and adjusted appropriation (table, slide 7). Adjustments were summarised per economic classification under the headings classification, main appropriation, adjustments appropriation, and adjusted appropriation (table, slide 8). Details of revised budgets 2011/12 in R'000s per programme were provided (tables, slides 9-14; AENE, pages 133-136).

Mr Van der Merwe then provided an in-year monitoring report for September 2011 (slides 15 and following). This contained a departmental summary financial report by programme with figures in R'000s under the headings of adjustment budget, actual expenditure, funds available, % spent and % available (tables, slides 16-17). A summary of conditional grants provided figures in R'000s for the six conditional grants – HIV and AIDS, Forensic Pathology, Hospital Infrastructure Grant (HIG), Health Professions Training and Development Grant (HPTDG), Hospital Revitalisation Grant (HRG), and National Tertiary Services Grant (NTSG) - under the headings of annual budget, amount transferred, amount spent, and spending as a % of the annual budget (table, slide 18). A summary of grants per province provided, under the same headings, the totals for the grants by province (table, slide 19). Under the same headings, figures for each grant were provided separately by province (tables, slides 20-25)

Mr Van der Merwe commented that the Department had been allocated R5.5 million for the information and communications technology (ICT) services in the renovated Civitas building. This had been there for a while, but the Department had now moved in and settled into this building and this was the last year that such funds should be requested under these terms (table, slide 3). 

There was an additional sum of R7.5 million allocated for advertised services rendered in respect of the Khomanani Project (Programme 3) (table, slide 3). It was hoped that the tender would be awarded by the end of the third quarter.

The office accommodation in the Civitas building was at R30 000 000, payable to the Department of Public Works. It was not paid at the end of the last financial year, and so a roll-over was received this year. This money would also flow in the current financial year.

Under hospital revitalisation, two provinces had received roll-overs: Gauteng and the Eastern Cape – R55.5 million and R29 million respectively. This amount was reduced by National Treasury based on current spending trends.

The tuberculosis prevalence survey was at R3.8 million.  The Department had started the procurement processes. This money should flow out of the fiscus within this financial year.

An amount of R100 million was allocated for Infrastructure, planning support, the costing of public private partnerships (PPPs), etc. Dr Shaker would speak to those expenses. 

Mr Van der Merwe explained the shifting of funds of R1.3 million from the capital programme. This shift was also in fact between capital programmes and was essentially to reprioritise funding at the Department's laboratories. Therefore there had not been a transfer between economic classifications, but the Department had kept it consistent. 

Mr Van der Merwe explained the virements, giving summaries per programme. 

Mr Van der Merwe noted that the biggest adjustment was in Programme 5 – Hospital and Tertiary Service and Workforce Management (table, slide 7), which included all the roll-overs for the conditional grants on capital for the HRG, as well as the funding that was provided for the IUSS and the  PMSU of the R100 million. He then referred to the HRG roll-over -  R55.5 million (Gauteng), R29 million (Eastern Cape), and R100 million (public private partnerships (PPP) investigations), and to the unforeseen and unavoidable expenses of R2.606 million for 19 flood-damaged clinics as well as the R2.6 million, which all formed part of that adjusted budget (slide 13).  Essentially these were funds that would be transferred out to provinces for capital and restructuring expenditure. The R2.606 million had subsequently been included in the (HIG). So the Department managed those two grants – HRG and HIG – at a national level.

Compensation had an adjustment of R3.302 million, Goods and services R125.119 million, Transfer payments R105.4 million and Capital Payments R2.596 million (slide 8).

Mr Van der Merwe emphasised that there had been a substantial drive to improve the appointment of staff at the Department's laboratories.

Mr Van der Merwe commented on the Departmental Summary Financial Report (table, slide 16). Members would see that the Department had expressed its expenditure at the end of September as a percentage of the adjustment budget. This percentage had come to exactly 50% in terms of baseline or bottom line numbers. This suggested that the Department would be on target in spending the entire budget by the end of the financial year. 

Obviously the Department had to manage some of the variances within its budget, and some of its programmes were under-spending, while Programme 5 showed a slight over-spend. 

Mr Van der Merwe gave a breakdown by economic classification. Expenditure was also at 50%.  Transfers were currently at 51% and were on track. The Department was concerned at certain aspects of goods and services and capital expenditure at head office. However, with the virements and roll-overs quite a substantial amount of these funds should flow before the end of the third quarter – for example, the Civitas building, some research at the Human Sciences Research Council (HSRC), as well as the facilities audit that was conducted. 

Expenditure of conditional grants at the end of September stood at 45%. Obviously the Department had some issues on HIG funding at 38%, and the HRG at 42%. Even the HIV and AIDS grant was currently at 41%. So there was a considerable amount of committed funds that had to flow before the end of the third quarter.

Some provinces – principally Mpumalanga and the Northern Cape, and to some extent North West - were showing a significant under-spending on the conditional grants.  Mr Van der Merwe summarised the expenditure per province.  He noted that the adjusted budget of the HIG grant was at R1.704 million; this equated to 38% of budget spent, so this required head office of the Department to make some major interventions. On the HRG, after all the inclusions of roll-overs, the adjusted budget came to R4.2 billion, and, related to expenditure at the end of September, this equated to 41% of total budget spent. 

Mr Van der Merwe referred to the gazetting by provinces of projects that they wanted to complete by the end of the financial year. This to some extent complemented the HRG. Thus there were two grants that the Department administered from a national point of view. So this was where the Department would have to make much effort to expedite expenditure.   

Dr Massoud Shaker, Head: Infrastructure, Department of Health, said that from the beginning of the current financial year the Department had become responsible for the management and monitoring of the HRG as well as for the HIG. Unfortunately, the chronic type of disease of under-expenditure in the HRG had persisted for seven or eight years. He illustrated this pattern by a series of graphs (see second presentation document).

Dr Shaker explained a few measures that the Department had instituted to curb under-expenditure and improve the delivery mechanism at national and provincial level, while improving both quality and quantity of spending in all the provinces. 

One of the major areas whereby the National Health Council (NHC) had guided and advised the Infrastructure Unit, Department of Health, was  initiation of an accelerated health infrastructure service delivery programme, which was titled the Infrastructure Unit Support System (IUSS). This IUSS had five major types of flow of activity or focus area based on the challenges diagnosed in the course of the previous eight months while making sure that what was proposed was appropriate to the problems and challenges. This IUSS was a structured collaboration between the national Department of Health, the Development Bank of Southern Africa, and the Council on Scientific and Industrial Research (CSIR) that was initiated in October 2010. Hopefully it would be concluded by 2013. The objective was to optimise the acquisition, operation and management of South Africa's health care infrastructure through all stages of infrastructure life cycle. This programme had already begun to produce results – for example, in the previous year, there was success in stabilising the under-expenditure. He showed facts and figures (see second presentation document).

The major focus area of the IUSS was norms and standards for the full infrastructure development cycle. As Members would recall the Department had discussed extensively the lack of norms and standards in different levels and types of health services in the country. This manifested itself in the high cost per unit in development of the health infrastructure as well as many deficiencies in the operation of health facilities.

So, with the help of the CSIR, the Department was already beginning to apply these norms and standards, and the first type of output had already been distributed in March 2011 to all the provinces while making sure that these provinces adhered to those norms and standards.

The second focus area was undertaking an assessment of the status of more than 2 000 projects currently ongoing in all the provinces. Unfortunately there had previously been insufficient information of high quality on the actual, physical, and contractual status of the projects, although there had been financial information on the status of the projects. The situation had been very poor. The first phase had covered the entire HRG programme. The expert consultants had already been appointed and were in the field to determine the status of projects and how much had been spent and for what purpose. 

The other focus area that the IUSS was trying to improve with the help of the State Information Technology Agency (SITA) was the establishment of the Project Management Information System (PMIS). The information gathered from the status report was being captured in a web-enabled PMIS based on which the Department would be able to provide a report on physical, financial and contractual progress, while making sure that all the contractual commitments and obligations were met and that there were fewer challenges in terms of proper and appropriate reporting. In spending professional time in writing reports PMIS should be able to provide the baseline information.

The very exciting component of this programme was the establishment of the Project Monitoring, Management and Support Unit (PMMSU) that would unlock and support the potential of manpower in the provinces as well as in the national Department.  Dr Shaker gave details. Such monitoring included risk management.  The Department intended to ensure uniformity across infrastructure. Thus it was developing a cost model. The first cost model had already been developed and distributed to provinces. The Department was now moving to the detail of life cycle costs (see second presentation document).

Dr Shaker said that a particular problem was the conventional type of tendering procurement across Government which did not take account of the particular needs of different contracts, for example, for maintenance, perhaps the most appropriate type was a sort of term contract as and when required rather than the conventional contract which was lengthy and subject to different kinds of abuses.

In the course of this year, a marked improvement had been achieved especially at the construction, design and feasibility study level.  An analysis had shown the acceleration percentages, for example, in the Free State, because of the appointment of the managing engineer, the budget had been increased by 19% but the expenditure had increased by 237%, and nationally an 18% improvement had been achieved. 

The amount of expenditure on the construction stage was more balanced than in projects in other stages of development. 

The under-expenditure was fortunately declining.  

Mr van der Merwe explained that the Department had undergone a process with the National Treasury and had been told that this was a holding budget and that the Department would have to find funding from within the sector. However, the Department had been given to understand that the National Treasury had established a policy reserve fund to be utilised when funding was required for the NHI.

The criteria had been established for the NHI pilots. However, the pilots had not been selected yet, but the Minster was expected to make an announcement. However, the Department had used a number of district health expenditure reviews to determine those criteria. A facilities audit had also been completed to the extent of 64%. This would also serve as a guide.     

Discussion
The Chairperson welcomed Mr M Waters (DA), who was visiting the Committee.

Mr M Swart (DA) said that none of the NHI pilots had been accredited, yet it was hoped to introduce the NHI in 2012. What would they cost and was there any budget provision? He suggested that the Department had
'a slush fund' that it could use. He did not necessarily agree with policy on the NHI in any case. If the Department did its job as it should be doing, there should be no need for the NHI.

The Chairperson did not want to discuss the politics of the NHI scheme.

Mr Swart asked about a reported withdrawal of the hospital revitalization grant He asked how much was spent and what the Department would do to rectify the matter.

National Treasury explained that the total Departmental allocation for employees was not reduced in the adjustment budget. It was shifted between programmes.

National Treasury explained that, in respect of the Hospital Revitalisation Grant, the money in question was allocated during the previous financial year and remained unspent at the end of the year. The original roll-over amount was reduced in the 2011/12 financial year because of the weak performance on the grant.

The Chairperson asked which province.

National Treasury replied that it was Gauteng. The amount was reduced from R72 million to R55 million. 

Mr Van der Merwe replied that if there had been cause for a withdrawal of the hospital revitalization grant, it would have had to go through the National Treasury's process of withholding. He did not know of the specific case mentioned by Mr Swart, but he suggested that such there might be such a process under-way in the Northern Cape and Mpumalanga, which were under-spending. 

The Chairperson indicated that if Mr Van der Merwe was not sure, the National Treasury might provide information.

Mr Waters asked for clarity on the National Health Insurance (NHI) scheme 10 pilot projects. These projects had not yet been identified.

Mr Waters observed that the NHI was just a funding mechanism. Would the pilots claim from a central fund? Alternatively, did the pilots have to do with health care itself – for example, quality and standards of health care? 

Mr Van der Merwe confirmed that the pilots were concerned with the quality of health care. This was why a facility audit was in process as well as a district health expenditure review. He offered a detailed written response.

Ms R Mashigo (ANC) was concerned about the non-payment of rent on the Department's Civitas building and the resulting yearly roll-over of funds. She asked how the Committee could be sure that this was the last time that the Department asked for a roll-over for this building.

Mr Van der Merwe agreed that the roll-over for the building, especially for the ICT side, should not recur in future. The Department had occupied the building, all systems were in place, and the Department should be able to pay for these services this financial year.

The Chairperson asked what had happened to the other accommodation now that the Department had moved in to Civitas. He noted double payment – for the other property and for Civitas. When would this double payment end?

Mr Van der Merwe did not think that there remained any additional cost for other buildings. He noted that the Civitas building included laboratories.

 Ms V Rennie, Deputy Chief Financial Officer, Department of Health,  confirmed that the Department had fully moved from three buildings into the Civitas building. These roll-overs had been in preparation for the move to the Civitas building. The Department had handed the other buildings back to the Department of Public Works (DPW) and would therefore not be spending any more money on them.

Mr Van der Merwe added that the R30 million that had to be rolled-over would now be paid to the Department of Public Works as payment for the lease on the Civitas building, as the lease agreement had not been completed in the previous financial year. 

Mr L Ramatlakane (COPE) asked what the implications were of particular shifts of money (AENE, pages 138-139). He asked about vacant posts as well as the shift. In previous presentations the Department had raised the issue of personnel in preparation for the implementation NHI. However, there were many posts that were vacant but not being filled, while the money allocated had been shifted elsewhere. What were the implications of that particular shift? 

Mr Ramatlakane said that the Committee did not have a plan of the Department. Was the shifting of funds in line with the Department's organogram, or were posts being abolished completely? Or was it simply a financial saving strategy?  The overall figure of the shift was in millions.

Mr Ramatlakane would find it useful to understand the personnel structure, given the implications of the shift, and the abolition of posts. What would be the plan in the next financial year?

Mr Ramatlakane asked about prioritisation and reprioritisation of the budget, and the shift. What was the contributory factor – was it a management issue?

Mr Ramatlakane was worried about the Department's abilities to implement all that it had set out to do as indicated in the presentation documents.

Ms L Yengeni (ANC) asked why the vacancies were not filled. Was it because there was no budget for the vacancies?  If there was a budget, it had to be asked what happened to the money that had been thereby appropriated for those vacancies. The President had said that vacancies must be filled by June. Since National Treasury had given approval, it must also explain.  

Mr Van der Merwe could report that the Minister of Public Service and Administration had signed off on the Department's new organogram. The Department's difficulty was that some of those vacancies were 'annualised numbers'. So it was a vacancy for 12 months. Over the Medium Term Expenditure Framework (MTEF) the vacancies were still within the budget.

Ms Yengeni thought that this response was not really clear. The Department had budgeted for the vacancies. Had it done so knowing that it would use the money for other purposes? The President had spoken to the nation that the vacancies must be filled and he had set specific targets. However, instead of doing so, the Department had allowed vacancies to remain. She asked why.

Mr Ramatlakane asked if money shifted did not really affect the Department's baseline, as it had implied. For how long did a post have to remain vacant for the Department to decide that it could not fill it within 12 months and must therefore decide to shift the money appropriated to another purpose.

Ms Yengeni observed that R22.4 million of the money that had been shifted – in other words, more than half of it - had originally been budgeted for the vacancies. R22.4 million was a large sum of money and it had to be asked what the reprioritisation of these funds said about the Department's planning. Was its planning so poor that it had to reprioritise? 

Mr Van der Merwe replied that the organogram was approved recently and was available. In that organogram, some positions had become supernumerary. In terms of the adjusted appropriation, the Department had actually added R3.3 million in adjustments to the total budget.  Expenditure at the end of September was 47% now spent (table, slide 17). Within compensation, there had been a move within programmes and certain economic classifications. The Department was actively filling vacancies in preparation for the NHI scheme and had advertised quite a number of positions in the past few weeks.

Ms Rennie emphasised that no funds had been moved from the compensation of employees to other economic classifications. The shifts were within the compensation of employees economic classification to other programmes, since the PFMA disallowed the moving of funds from compensation of employees to another economic classification.  Since April the Department had filled 165 posts so the effect would be reflected only in the third and fourth quarter of 2011/12. In the previous financial year (2010/11) the Department had a moratorium on hiring of staff in place, and that had been lifted in September in the last financial year. Hence there was now a vigorous 'fast-tracking' of dealing with the vacancy rate. At the beginning of the current financial year (2011/12) there was a new budget structure while the Department was waiting for the Department of Public Service and Administration to approve the organogram: the Department had received news that the organogram had been approved and therefore, during the adjustment budget process, the Department had begun realignment of the existing budget structure with the organogram – hence the movement of funds.

Mr Ramatlakane found this explanation quite useful. However, he asked to which programme the Department had moved the money and why the move was necessary. He pointed out that if the Department had been unable to spend the funds it should have surrendered them to the National Treasury.

The Chairperson asked why the whole idea of redesigning the Department had been necessary, and if the Department was now re-establishing itself.
 
Mr Swart asked why no money was transferred to loveLife the previous year. What was the situation currently?

Mr Van der Merwe replied that the Department had transferred funds to loveLife in terms of the service level agreement. It had also asked the organisation to submit a service level agreement for the current financial year. So some money had flowed from the portion withheld in the previous financial year.

The Chairperson said that the question on loveLife was on an historical matter of which Mr Van der Merwe might not be aware. There had been problems of relationship. Was it necessary to budget for loveLife? Could the funds be used for something else? However, it had to be asked how loveLife was going to survive unless it had other sources of support.  The Committee could not express a view unless it knew what the problem was.

Mr Swart argued that the previous year nothing was transferred to loveLife, while Mr Van der Merwe's view was that something had been transferred. He wanted the details.

The Chairperson asked the implications of the Department of Health's supporting loveLife and if the  HIV programme was coming to a stop.

Ms Rennie replied that the Department had the previous financial year budgeted R71 million for loveLife. In March, at the end of the financial year, the Department did transfer between R29 million and R30 million to loveLife, because only then had loveLife complied with its realigned priorities in terms of its business plan. It was only then that the transfer of funds was signed off. So the Department had decided not to request a roll-over for that remaining R32 million. This had been a deliberate decision because of the history. loveLife had been informed. It had tried to fight for the money, but the Department had told it that it refused to entertain such loveLife's request. So this year loveLife had undertaken to realign its business plan to fit in with what was available. The Department would not request a roll-over again if loveLife did not spend the money, and loveLife was fully aware of this. 

Ms Yengeni asked from where the money had come that was transferred to loveLife.

Ms Rennie replied that it had come from Programme 2 according to the previous year's budget structure. This year it was Programme 3.

Ms Yengeni asked how the Department classified its machinery and equipment.

Ms Rennie replied that it classified them under Capital Transfers.

Ms Rennie replied that the loveLife transfers were under Transfers and Subsidies, not Capital Transfers. The Department had two classifications of transfers.

Ms Yengeni asked, with reference to Section 43 (4) ( c) of the Public Finance Management Act (PFMA) how the Department would transfer R3.005 intended for capital expenditure [machinery and equipment] to loveLife to the compensation of employees (AENE, page 139).

Ms Rennie implied that the money was not linked to loveLIfe at all.

Ms Yengeni said that it was to compensation of employees. The Department  had taken the R3.005 million from Capital Expenditure. But in Programme 3 it was written 'machinery and equipment'. She was not satisfied.

Ms Rennie attempted to explain. 

The Chairperson observed that these questions were important. The Department had classified a certain amount under Capital, but Members found these confusing since these items were not Capital. He asked for an explanation in writing.

Ms Rennie thought that it could have been a typographical error, and tried to explain further. 

The Chairperson advised her that a written response would suffice. Members had based their questions on what the Department had submitted to Parliament.

The Chairperson understood that suddenly the Department no longer supported loveLife, an entity which had never been able to speak for itself before the Committee. The Committee would return to that subject later.

Mr Swart noted that only 4% of 14 million had been transferred to the technikons and universities where it was necessary to train personnel in readiness for the new NHI scheme.

Ms Rennie gave information on bursaries. The Department was increasing the transfers. It would be part of the conditional grant for training and development. The Minister had embarked on a campaign to encourage the medical schools to increase the intake of medical students.

The Chairperson asked if the Department could give the Committee a further explanation in light of the challenges in the supply of health workers.

Ms Rennie replied that the money would definitely flow in the current financial year.  

The Chairperson explained to Mr Van der Merwe that, for Members, the shifting of funds was not such a simple matter as it might appear to him, since the appropriation of funds was based on an approved strategic plan. Therefore, the Committee did not take kindly to such shifting, since it meant that money appropriated for a particular purpose had not been spent.

Mr Van der Merwe replied that the Department shifted funds as a last resort.

On Goods and Services the Department was on 24% expenditure. What was entailed in Goods and Services and what were the implications of such underspending? 

Mr Van der Merwe undertook to provide a written response.

On Capital, the Department was at 19%. Why? Had this under-expenditure to do with planning?

Mr Van der Merwe undertook to provide a written response.

The Chairperson observed that Dr Shaker's scenario for infrastructure indicated improvement. However, he was worried about the dependence on consultants – a dependence which cut across departments. He asked if there was a plan for these consultants to transfer their skills.

Mr Van der Merwe undertook to provide a written response.

Mr Swart said that there was a roll-over of R100 million on the infrastructure planning, infrastructure unit support project and the cost of PPP investigations (table, slide 3). This was a huge amount and he requested details on how that R100 million was made up.

The Chairperson asked for a written response.

The Chairperson noted that it had to conclude its report by the end of 16 November 2011, so would expect the responses by then. 

Department of Water Affairs response to the Adjustments Appropriation Bill [B18-2011]
The Chairperson explained that Mr Trevor Balzer, Acting Director-General, Department of Water Affairs (DWA), had telephoned him personally to explain that he had an obligation to meet his counterpart from Namibia that day. 

Mr Ramatlakane objected to the absence of the Acting Director-General, Department of Water Affairs (DWA).

Ms Yengeni (ANC) asked when this Department would take the Committee seriously. It was essential for the Acting Director-General, as the accounting officer, to be present.

Mr J Gelderblom (ANC) observed that it was now a habit that directors-general did not attend committee meetings. One could not carry on like this.

Ms Yengeni complained that these departments did not take Parliament seriously.

The Chairperson resolved that the Department of Water Affairs Response to the Adjustments Appropriation Bill [B18-2011] Presentation be deferred until 16 November 2011. The Acting Director-General would be expected to attend.

The meeting was adjourned. The hearings would continue the following day.


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