Social Sector Expanded Public Works Programme (EPWP) Incentive for Provinces 4th Quarter 2011/12 performance report: hearings

Meeting report

Chairperson's introduction
The Chairperson welcomed Members and delegates and noted apologies from Mr B Mashile (Mpumalanga/ANC) and Prince M Zulu (KwaZulu-Natal/IFP) who were unavoidably absent. The meeting was initially scheduled for the morning but because of a plenary session, it was moved to the afternoon and this caused some delegates to be absent. The Chairperson apologised for the inconvenience and said that he had taken the matter up with the programming whip so that such changes could be communicated well ahead of time. The purpose of the meeting was to receive reports on the last quarter spending of the Extended Public Works Programme (EPWP) for the Social Sector. The grant had the main objective to help with the creation of jobs and was therefore allocated to various departments.

National Treasury presentation
Mr Edgar Sishi, National Treasury Director: Provincial Budget Analysis, briefed the Committee on the Expanded Public Works Programme (EPWP) for the Social Sector – Conditional Grant. Its purpose was to incentivise provincial social sector departments identified in the log-frame administered by the national Department of Public Works (DPW) to increase job creation by focusing on the strengthening and expansion of social service programmes that had employment potential. Based on past performance data, the DPW used an incentive model to identify eligible departments in provinces. These departments received an allocation from national Government through the DPW. The provincial departments were supposed to use these funds to pay the stipends or wages of community care-givers, and other community workers. The allocation criteria to provincial departments were based on the payment of stipends for volunteers and wages for other community development workers at a minimum of R60 per day. According to the National Treasury, the provinces could use a portion of the funds to expand the programme to different social service benefit areas such as community sport development and community safety awareness. Provincial departments were therefore required to sign an incentive agreement with the DPW to ensure that conditions were met and targets were achieved. The departments were also required to submit quarterly reports on performance.

The departments which received an allocation in 2011/12 in terms of the 2011 Division of Revenue Act (DoRA) were listed as follows:

Eastern Cape:    Social Development (R5.07 million)
Free State:         Health (R15.59million)
Gauteng:            Social Development (R15.07 million) and Health (R19.78 million)
KwaZulu-Natal:  Social Development (R4.5 million) and Health (R25.77 million)
Limpopo:            Social Development (R3.38 million) and Health (R24.95 million)
Mpumalanga:     Health (R3.31 million), Education (R9.9 million) and Safety (R0.2 million)
Northern Cape:  Social Development (R5.66 million), Health (R2.07 million) and Education (R6.16 million)
North West:        Social Development (R10.96 million), Health (R17.37 million) and Education (R13.89 million)
Western Cape:   Health (R8.66 million) and Education (R8.07 million)

On the percentage year-on-year growth of the Social Sector EPWP Incentive Grant for Provinces, the figures were as follows: Eastern Cape 0%, Free State 584.5%, Gauteng 462%, KwaZulu Natal 493.7%, Limpopo 158.7%, Mpumalanga 17.4%, Northern Cape 488.3%, North West 424.8%, and the Western Cape 1446%.

According to Mr Sishi, significant challenges were noted in some provinces. In the Eastern Cape, spending for 2011/12 was at 0%. It was still unclear if a rollover was required and that the Eastern Cape Department of Social Development had under-spent its overall budget by R18 million, particularly by under-spending on transfers. In the Free State, the provincial Health department was paying beneficiaries an amount of R55 per day instead of R60 per day. Feedback on engagements between the national department and the province on this matter of payment amount was still awaited. In Gauteng, the department was in the process of addressing the payment backlogs to service providers and non-governmental organisations (NGOs). As recommended by the National Treasury, the Department of Health and Social Development was to be re-configured into separate departments in line with the national norm. In Mpumalanga, the slow submission of reports by the education department to the national Department of Basic Education (DBE) was the major challenge. The Western Cape was paying care-givers in a fluctuating manner. The national department had been engaging with the province on the challenge and feedback was still awaited.

Mr Sishi said that the average quarterly expenditure as at 31 December 2011 was R34.6 million. In the 4th quarter an amount of R51.3 million was spent. There was thus an acceleration of expenditure during the 4th quarter, indicating a persistent lack of readiness by provinces and the national department at the start of the financial year. In order to avoid the delays experienced in 2011/12, it was critical that the national DPW adopted a strict approach in respect of finalising agreements and business plans. The first scheduled payment for this grant was Friday, 25 May 2012.  In terms of the Division of Revenue Act, these transfers could only be made if the plans and agreements had been signed.  Failure to conclude this process was going to lead to further delays in provincial transfers and expenditure.

Discussion
Mr M Makhubela (Limpopo/COPE) said the National Treasury had stipulated that the various departments pay the sum of R60 per day but they paid different amounts. What was the maximum amount which was to be paid?

Mr Sishi replied that the R60 was a minimum but each province was allowed to and encouraged to add its own money in order to provide for its project.

Mr C De Beer (Northern Cape/ANC) asked when the National Treasury started contacting the provinces for the documentation required in order to transfer the money. What was the situation in the Eastern Cape that caused the reported zero spending and what answer did the National Treasury get from the Eastern Cape.

Mr Sishi replied that the National Treasury constantly communicated with the provinces even before the year started. This was done on a weekly basis by the provincial analyst. The difficulty was with the various line functions and offices involved and some administrative procedures which caused the delays.

The Hon. Donald Grant, Member of the Executive Council (MEC) for Education: Western Cape, said that the Western Cape Education Department (WCED) had spent 83% of its budget by 31 December 2011 and as at 31 March 2012 it had spent 99.9% of its budget. The business plan and memorandum of the WCED had been signed off and sent to the National Treasury and the DPW.

Mr J Bekker (Western Cape/DA) asked for clarity on the under spending by the Eastern Cape and the Western Cape.

Mr Sishi said that the under spending in the Western Cape was with the Department of Social Development not the WCED. The specific reasons were not known yet. In the Eastern Cape, it was difficult to believe that there was zero spending. There was probably something wrong with the reporting from the province. After the situation was noticed, there was meeting held by the National Treasury and the provincial department to identify the problem and it was noted that there was something wrong with the reporting template and confusion on how to use it.

Mr Bekker asked why there were two departments combined in the Western Cape.

The Chairperson replied that the decision to join or separate departments was entirely in the hands of the provinces’ cabinets.

Department of Public Works presentation
Mr Stanley Henderson, DPW Deputy Director-General: EPWP, introduced the Department's briefing on the Social Sector EPWP grant for 2011/12, the provincial grant allocations for the period, the performance of the social sector grant which included transfers to provinces, compliance with the DoRA, and outputs and achievements. The presentation also included the expenditure of the grant and recommendations.

Ms Kelebogile Sethibelo, Chief Director: EPWP Operations, presented the performance of the Social Sector EPWP. In 2011/12, the social sector had entered its third year of participating in the EPWP Incentive Grant. During this financial year, the sector's comprehensive incentive grant model known as the “Social Sector EPWP Grant to Provinces” in the DoRA 2011 was allocated an amount of R200 358 000 by the National Treasury. The grant aimed to incentivise provincial Social Sector departments to increase job creation by focusing on the strengthening and expansion of social service programmes that had employment potential. The expected outputs of the grant were to increase the number of people employed and receiving income through the EPWP, increase the duration of the job opportunities created, increase the number of households or beneficiaries to which services were provided, and increase income per EPWP beneficiary.

The Incentive Grant allocated the following amounts to the various departments: Health: R117.3 million, Social Development: R44.5 million, Education: R38 million, Safety and Liaison: R0.2 million.

On transfer payments to provinces, the DPW had successfully transferred to compliant provincial public bodies 100% of the total allocation of R200 358 000 by the end of the 2011/12 financial year. Transfers were withheld in terms of Section 16 (1) of the DoRA 2011 from non-compliant public bodies. These transfers were, however, released once compliance was achieved. Examples included Western Cape Department of Health, KZN Department of Social Development, and Free State Department of Health.

The DPW, as the transferring department, achieved good compliance with the DoRA except in cases of delayed provincial transfers. These delays were as a result of non-compliance by the provincial departments, not the DPW.

Ms Sethibelo outlined the outputs of the grants as stipulated in the Conditional Grant Framework in DoRA 2011 according to levels of achievement. On full-time employment (FTE) target achievement, a minimum of 80% of the grant allocation was to be utilised for payment of stipends. The Eastern Cape, Free State and North West provinces achieved the set target with 100% each. The rest of the provinces performed below target resulting in an overall achievement of 10 683 FTEs as against the target of 11 615 FTEs. This was attributed to delayed beneficiary recruitment resulting in late project starts, attrition in projects, delayed provincial transfers to the projects, and stagnant compilation and late submission of performance and expenditure reports for In-Year Monitoring purposes. It was one of the conditions of the grant that a certain number of beneficiaries be reached to prove value added. With regard to Household Target Achievement (beneficiaries), KZN exceeded its target of 107 800 by servicing 115 632 instead. The Northern Cape achieved its target by 100%. Gauteng target performance dropped as it serviced 91 873 instead of 165 000 households. The rest of the provinces performed marginally below the target. On Non-Profit Organisation (NPO) support, a maximum of 20% of the grant allocation could be used for strengthening NPO delivery. Only four out of the 18 funded programmes did not utilise this aspect of the grant budget.

On the expenditure of the Social Sector EPWP Grant for Provinces, as at the end of April 2012, a total amount of R180 947 000 was spent by provinces. This was 90.31% of what was transferred by the DPW to provinces. Ms Sethibelo went further to give a clear comparative analysis performance from province to province. In outlining the fourth quarter Social Sector EPWP grant spending, the Eastern Cape had spent 0% while the Western Cape had spent only 47.9%. It was said that these anomalies needed to be addressed. The DPW, as the transferring department, had underspent. This was as a result of the withheld payments to the KZN Department of Social Development due to failure to comply with submission of progress reports.

Discussion
The Chairperson asked how the DPW was functioning with the National Treasury. There seemed to be a competition between the National Treasury and the DPW because the discrepancies in the figures were identified long before the meeting yet no communication was done to balance the records. From the differences in figures, it was clear that the sources of the information from the provinces were not the same. What was the reason for the discrepancy?

Ms Sethibelo replied that the DPW and the National Treasury actually noticed the discrepancy but did not have enough time before the meeting to balance the figures. The DPW got its information from the project managers.

Mr Sishi said that the information used by the National Treasury was obtained from the Chief Financial Officers and signed off by the Heads of Departments, and from the provincial treasuries.

The Chairperson said that the DPW had to stop receiving reports from projects managers as they were not mandated to furnish such information to the national departments.

Mr De Beer said that such a situation should never repeat itself. If there was a prescribed procedure for receiving information from the provinces, all the national departments had to adhere to the rules.

Mr Makhubela asked for reasons why some of the targets were not met. What was the explanation given by the Gauteng province for the drop in its performance?

Ms Sethibelo replied that the late start of the projects was one of the general reasons for the failure to meet targets.

Mr A Lees (KwaZulu-Natal/DA) asked what triggered the payments to the provincial treasuries from the DPW.

Ms Sethibelo replied that what triggered payment was the reception of the business plan and the grant agreement. Once these were received, letters were sent to the National Treasury which then communicated with the provincial treasuries thereby causing the flow of payments to provincial departments.

The Chairperson asked how many business plans had been received by the DPW this financial year and what was the source of the business plans.

Ms Sethibelo replied that the business plans were signed by the Heads of Departments of the eligible department.

Ms Pearl Lukwago, DPW Director: Conditional Grants, said that there were 22 public bodies eligible for the grant and 16 business plans had been received. There were six business plans that were still outstanding.

Eastern Cape Provincial Department of Social Development & Special Programmes presentation
The Hon. Ms Pemmy Majodina, Eastern Cape MEC: Social Development, briefed the Committee on the Department's 4th Quarter spending and analysis of the EPWP allocation and spending and transfer schedule. One of the amendments to the EPWP second phase was the introduction of a wage incentive grant with the intention to maximise creation of jobs by providing a financial performance reward. The Eastern Cape Department of Social Development received an allocation of R5 070 000 transferred by the Provincial Treasury as a conditional grant and R536 000 as a Social Infrastructure Grant to accelerate the expansion of job creation efforts in order to attain the achievement of the EPWP targets and also promoting service delivery targets. This grant targeted 285 community care-givers which rendered services to 17 home community-based care (HCBC) projects and was utilised for the payment of stipends and administration costs.

MEC Majodina outlined the breakdown for the 2011/12 allocation. 285 people were employed and received income from the grant to the amount of R4 104 000. 17 NPOs were supported to the sum of R966 000 and social infrastructure was allocated an amount of R536 000. This gave a total amount of R5 606 000. A detailed table was provided which displayed the transfer schedule to HCBC projects in the various districts. The table also showed the names of the organisations, the number of HCBC beneficiaries and the amounts transferred.

Discussion
Mr S Montsitsi (Gauteng/ANC) asked whether the amounts given per NGO in the districts were as a result of the need in the area or the size of the organisation. What was the selection criteria used by the Department?

Ms Majodina replied that the amount paid out was dependent on the number of beneficiaries in the area.

Mr Lees asked why about 70% of the allocations were paid out in the 4th quarter of the financial year. If so much of the money was paid out in the 4th quarter, what happened during the first three quarters?

MEC Majodina replied that there was no spending on the first quarter because the first transfer was received from the provincial treasury only in June and spending was only started in July, thus there was  much spending in the 4th quarter.

Mr D Bloem (Free State/COPE) said that many of the figures were very similar. How were these figures reached?

MEC Majodina replied that the allocations were based on the number of beneficiaries in the region.

Presentation by the Western Cape Education Department
The Hon. Donald Grant, Western Cape MEC for Education, introduced the WCED's presentation.

Ms Sandra Fortuin, WCED Chief Education Specialist, presented the 4th term report on the EPWP Incentive Grant. Besides the creation of jobs, the other project outcomes included the provision of Early Childhood Development (ECD) practitioners with career pathways and opportunities and also improving the quality of teaching and learning in the Department of Social Development and WCED’s registered ECD public and independent schools. The strategy used by the WCED was to identify 648 unemployed persons with a passion for ECD and eight unemployed matriculants who needed training and experience to improve their computing skills and assist them find permanent employment as data capturers. A selection criterion was that the candidates had to be unemployed, and 55% of the candidates had to be women, 40% youth and 2% people with disabilities. Other criteria were that the beneficiaries were to be selected from both urban and rural areas and that the beneficiaries would be working with young children (up to four years of age) and should therefore be suitable to do so as per the Children’s Act.

Ms Fortuin outlined the project achievements. The first was that 648 unemployed persons were trained as ECD practitioner assistants after completing a 10 month level 1 ECD skills programme and eight unemployed persons were trained as technical admin support staff and data capturers. Quarterly monitoring and evaluation was conducted by the EPWP project manager and head office staff.

With regard to expenditure, the daily wage of R60.00 was adhered to and each of the 648 ECD practitioner assistants received a monthly stipend of R1 200 for the duration of the course. The eight technical admin support staff each received a monthly stipend of R3 000 for a contract period of 12 months. The WCED had an allocation of R8 070 000 and, as at 31 March 2012, it had spent R8 065 690. This meant that the WCED had spent 99.9% of its allocation.

Ms Fortuin stated the challenges faced in the execution of the EPWP projects. Even though the further education and training (FET) colleges had conducted thorough screening assessments, there were still learners who dropped out of the learnerships. There was a total of 21 dropouts.. 

Discussion
Mr Makhubela asked if the selection of women was exclusively for women and did not include youth.

Ms Fortuin replied that there were positions for both male and female but because of the stereotype mentality about some jobs, some males did find it difficult getting onto the programmes. However, there were five males on the EPWP incentive grant.

Mr Lees asked for clarity on the adherence to the National Treasury prescribed daily wage of R60.

Ms Fortuin replied that the WCED adhered to the prescribed national treasury daily wage of R60.

Free State Provincial Department of Health EPWP Incentive Grant presentation
Dr Sipho Kabane, Head of Department, Free State Provincial Department of Health, presented the Department's 4th quarter report. The Free State Department of Health had submitted a business plan to the DPW in March 2011. The amount of funding requested was R15 586 000 and the target was that 948 home based carers were to benefit from this fund. The Department received the requested transfer. The third tranche of the transfer was due in October 2011 but it was withheld due to alleged non-compliance with the ministerial determination which required a daily wage of R60.00 to be paid. The Department had signed a memorandum of agreement to pay a minimum wage of R55 per day. From the allocation, the Department had spent only 68% of the allocated amount and it was left with a balance of R5 038 070.

A meeting was held with the DPW on the 21 November 2011 to discuss the non-compliance of the  Free State Department of Health. It was resolved that the wage was going to be increased from R55 to R60. The total expenditure at the end of the financial year was R10 547 930. The total target of 948 beneficiaries was reached as per the approved business plan.

Dr Kabane recommended that memoranda of agreement (MOA) for EPWP and business plans needed to be closely analysed before implementation. Reports from provinces had to be keenly monitored by the DPW. He recommended that the National Treasury should open a separate bank account for donations and grants so that they could not be affected by internal processes.

Discussion
Mr Makhubela asked if the misunderstanding about the payment of the daily wage occurred after the instruction had already been given that a daily wage of R60 should be paid. What was the Department going to do about the people who received R55 instead of R60?

Dr Kabane replied that at the start of the programme, the carers were paid R55 but after the discussion in November 2011, every worker got their R60 and that was the rate which was now being paid.

Western Cape Provincial Department of Health Social Sector EPWP Incentive Grant presentation
Ms Bernadette Arries, Chief Director: Human Resources,  Western Cape Department of Health (WCDH) extended apologies for the Western Cape MEC for Health who could not attend the meeting due to the change in time. The WCDH used the EPWP incentive grants to maximise outcomes within Primary Health Care and related programmes and to ensure skills synergy with the human resources (HR) plan.

The ultimate objective was to translate the EPWP opportunities into real jobs in the WCDH and at its NPO partners. This objective was going to be achieved through the training of Community Care Workers on accredited training, training 126 farm workers in Ancillary Health Care, the appointment and training of relief staff and the payment of stipends to carers and relief workers. From 2007 to 2012, the WCDH had trained 8 187 workers.

On the EPWP budget, the WCDH was allocated R8 664 000 for the 2011/12 financial year. From this total allocation, 80% was used for stipends and 20% was used for management capacity. There was an under expenditure of R3.3 million. This was as a result of under expenditure within the district allocations, delays in claims for the 4th quarter and delays in use of the R1.7 million capacity building allocation.

In outlining the plan of action for the WCDH, Ms Arries said that there was a request to the Provincial Treasury to roll-over the R3.3 million under expenditure.

Discussion
Mr Makhubela asked if any letters were sent to remind the officers in charge about the delays in the starting of the projects. If so, when were such letters sent?

Ms Arries replied that there was a strategic management team which met on a monthly basis to discuss how the programmes were doing. The follow ups were done continually and it was not only one formal letter which was sent out. It was a continuous process.

Mr De Beer asked if the request for the roll-over of R3.3million was approved.

The Chairperson asked what the WCDH had to say about the issues of under spending raised by the National Treasury. 

Ms Arries replied that there was a hold on one of the tranches of the transfers but all the money was subsequently received. From this allocation, a sum of R3.3 milion had not been spent and provided that the roll-over was approved, the money was going to be spent in the coming financial year.

The meeting was adjourned.