The Standing Committee on Appropriations was briefed by the Department of Cooperative
Governance and Traditional Affairs (CoGTA) on the 2013/14 Budget Allocation. In the last year, the expenditure performance was analysed, showing total expenditure of 97.4%, with under-expenditure amounting to R53.44 billion. The economic classification and programme breakdown on the under-spending was given and it was specifically noted that the Community Works Programme (CWP) expenditure was 55.9% and the Municipal Infrastructure Support Agent (MISA) expenditure was 41.6% of the allocated budget. There were slides provided breaking down the under-expenditure, although these were later questioned by the Members. It was explained that at least a portion of the underspending related to posts not filled, or not filled until later in the financial year, and that these were mostly in the MISA and CWP departments. Some transfers had been fully paid, as detailed, but others had been withheld for failure to meet all conditions, or, in the instance of Bela Bela Municipality, withheld on the instructions of National Treasury. Overall there was underspending of R725.6 million on the Local Government Equitable Share. There had been rollovers requested, which were also set out.
The COGTA was intending now to develop a Post Audit Action Plan (PAAP), by the end of September 2013 and implement it. It would support four identified provinces to develop and implement Performance Management System (PMS) and ensure that core sets of local performance indicators were revised for approval. Struggling municipalities would be supported with communication tools. In order to improve turnaround times, the Department also planned to ensure greater availability of systems and implement two Knowledge Management Strategy interventions focusing on business process automation.
Members noted that although they had asked that the DCoG should not take this Committee through the Annual Performance Plan in detail, as this would have been done to the Portfolio Committee on Cooperative Governance, it was regrettable that no mention had been made of the Plan, which would have helped to identify whether the COGTA was in fact spending in line with the priorities and Plan. They asked for clarity on the position of the Department of Traditional Affairs, its spending, and how this would determine its future status since it had been mentioned that this Department would be operating independently. They also called for more detail about the withholding of funding, asking what periods of time were prescribed for certain events, and the rationale behind taking away the equitable share if there was not capital spending. They commented that if this Department failed to ensure proper spending on the Municipal Infrastructure Grant, various departments may call for funding to be removed from it and put to other grants. Overall, they noted that they were not particularly happy with the report, that the underspending noted in the past did not appear to have been well enough addressed and they wondered about the results of the Turnaround Strategy. The Department was asked to respond to all questions in writing.
Chairperson’s Opening Remarks
The Chairperson welcomed Members and the delegation from Department of Cooperative Governance and Traditional Affairs (CoGTA or the Department). The Chairperson said that the aim was not for the Director-General of the Department to go back and repeat the same issues it had placed before the Portfolio Committee of Cooperative Governance and Traditional Affairs, who would deal with the Annual Performance Plan, but rather to focus on spending. This Committee had already considered the third quarter 2011 spending, which was when the general spending of departments was measured, and was concerned about the spike in spending that was apparent. The COGTA needed to ask itself hw it would ensure proper and correct spending, and pointed out that some departments had achieved well, spending 99% of their budget. However, it was stressed that this Committee would not be looking only to figures on spending but considering how the spending was tied to the Annual Performance Plan (APP) and whether it was in line with the Department’s priorities.
The Chairperson said that this Committee appreciated that the Department of Water Affairs decided to take away its contribution to the Municipal Infrastructure Grant (MIG), because that grant was not performing and the money had instead been directed to a new Water Infrastructure Grant to ensure that people did receive water. This could well spell “the end of the road” for MIG if all departments started to claim they could spend better elsewhere, and if CoGTA was not properly monitoring the spending on MIG, and that was really the reason the Committee had invited the Department here today.
Ms D Nhlengethwa (ANC, Chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs) said that she appreciated the invitation and was hoping all Members present would have the opportunity to interact with the Department so as to scrutinise the issues to be presented.
Department of Cooperative Governance 2013/14 budget briefing
Mr Vusi Madonsela, Director-General, Department of Cooperative Governance (DCoG) expressed gratitude for this opportunity, and said that the presentation he would give indeed differed from that given to the Portfolio Committee on Cooperative Governance and Traditional Affairs. However, he called for guidance during the presentation, if necessary, so that the Department would zoom in on matters that the Committee Members wanted to hear.
Mr Charles Mwayila, Director General, Department of Traditional Affairs (DTA) said that the National Treasury had supported this department in giving budget for the advertised vacant posts in corporate and financial services. The advertisements were placed on the previous day. It was encouraging to note that DTA was growing and would in future operate independently of DCoG.
Mr Mawethu Mthyuda, Chief Financial Officer, CoGTA, summarised what the presentation would contain, and noted the spending of each of the programmes in the previous financial year, ending 31 March 2013. The Administration programme expenditure was 89.2%; Policy, Research and Knowledge Management programme spent 98.1%; and Governance and Inter-Governmental Relations expenditure was also 98.1%. He also outlined the financial performance by economic classification, highlighting that the Community Works Programme (CWP) expenditure was 55.9% and the Municipal Infrastructure Support Agency (MISA) expenditure was 41.6% of the allocated budget.
He outlined that in this financial year, there was under-expenditure of R53.443 billion, but that 97.4% of the total budget was spent. Expanding on these figures, he noted that 83% of this under expenditure was made up of transfer payments that had to be withheld, and the remainder of the underspending was largely due to posts that were either not filled, or not filled until much later in the financial year. These posts were within MISA and CWP. The CWP had under-spent by R46.979 million and MISA by R158.955 million. This was mainly due to late invoicing by the contracted service providers. Another under-spending of 3.2% was due to furniture orders not yet received and paid at year end.
Mr Mthyuda outlined, and gave full financial figures for, the transfer payment that had been made in full, since the institutions concerned had fulfilled all the conditions and requirements for transfer. These were:
- Municipal Improvement System Grant – R 230m
- South African Local Government Association- R26m
- Municipal Demarcation Board – R40m
- Commission on Cultural, Religious and Linguistic Rights (CRL Commission) - R34m.
He then outlined the under expenditure of R1.168 billion that was made up of transfer payments not made, or that had to be withheld on the instructions of National Treasury (NT), for:
- Municipal Infrastructure Grant- R 2.471m
- Local Government Equitable Share = R725.627m
- Disaster Relief Grant = R435.970m (only transferred when disasters have been declared)
- United Cities of Local Government G in Africa = R2.485m
- South African Cities Network -R1.847m.
He clarified that another reason for non-transfers was because the Local Government Equitable Share currently reflected an under-spending of R725.6 million that had to be withheld as advised by National Treasury as a result of lack of performance by municipalities on other conditional grants. The Disaster Relief grant reflected an under-spending of R 435.9 million. The grant was only utilised on the disasters that had been declared and the provinces and municipalities had fully complied with their legislative requirements. The transfers relating to the United Cities of Local Government in Africa had been suspended, pending discussions between executive authorities on future arrangements. The National Treasury requested the department to withhold the MIG amount of R2.471m for Bela-Bela Municipality.
He then detailed the content of the roll-over application to the National Treasury. A total amount of the R182.371 million had been requested as roll-over into the 2013/14 financial year, comprising:
- R123.8 m on the CWP programme implementation
- R36.8m for the MISA contracts
- R2.1m for SALGA to mediate disputes within UCLGA
- R1.3m for the National Disaster Management Centre (NDMC) assessments and verification process, - - - R4.6m for Office Accommodation, for which there were delays in invoices from DPW
- R11.3m on Equitable Share
- R2.4m on MIG withheld for Bela-Bela municipality until further notice from NT.
In respect of the requests, he noted that the National Treasury was considering the application and communicating with the Department on matters that required clarification.
In terms of departmental priorities for 2013/14 financial year, the DCoG would develop the Post Audit Action Plan (PAAP) 2013/14 by the end of September 2013 and implement it, for purposes of improving the next audit outcome. The Department would make all transfer payments for the period 2013/14 in line with the payment schedule and ensure that all deadlines were met for purposes of fast-tracking implementation at a local level. As part of initiatives to improve internal capacity and capability within the department, the Department was planning to review, and submit a report on the Human Resources Plan to the Department of Public Service and Administration (DPSA). The approved plan would be immediately rolled out within the Department.
Support would be provided to municipalities and provinces to develop section 46 and 47 reports. These reports would be used to develop the 2011/12 Section 48 report on performance of local government as required by the Municipal Systems Act. The DCoG would support four identified provinces to develop and implement a Performance Management System (PMS) and ensure that core set of local performance indicators were revised for approval. Struggling municipalities would be supported with communication tools by rollout of the Communication Strategy. This would support the initiative of promoting and communicating government programmes to communities. The departmental programmes would also be promoted through media engagements. The Department would develop a Donor Coordination Strategy and establish new international partnerships for purposes of improving regional and international relations. The Annual Fraud Plan and Annual Risk Management Plan would be revised and implemented in an effort to improve the departmental governance.
Mr Mthyuda concluded that in order to improve work turn-around time, DCoG planned to ensure 95% availability of key systems like BAS, Persal, Logis, internet, and email. It would also implement two identified Knowledge Management Strategy (KMS) interventions focusing on business process automation, which should ensure introduction of proper processes and systems that supported implementation of projects. It aimed to develop four research papers covering governance, service delivery and financial management by 31 March 2014, and these papers would form the basis for future policy initiatives that were aimed at improving these identified focus areas. As a department dealing with national policy development, the DCoG had established the DCoG Policy Forum, which was aimed at discussing new policy matters, government-wide initiatives, directives as well as priorities, in order to position the Department to act and respond according to these initiatives.
The Chairperson clarified that when he had commented, earlier, that the Committee was not wanting to hear a repeat of what had already been presented before to the Standing Committee, he was not indicating that the Committee was not interested in hearing anything about the APP, because this did help to clarify points such as how the DCoG would ensure that its budget was within the predetermined objectives, and the predetermined objectives could only be found in the APP. If there was no access to that, this was also not much use to the Committee.
Mr L Ramatlakane (COPE) asked for clarity on the R350 million that had been allocated to Department of Traditional Affairs, which amounted to about one quarter of the total allocations. He asked whether the Department of Traditional Affairs had now “qualified” to become an independent departments, or whether it still formed part of DCoG’s programmes. If the former, then surely there would be targets and plans that needed to be met in the particular year. If it had spent only 25% of what had been allocated to that department then questions must be asked as to what degree there had been achievement of targets and this would probably determine its future status.
Mr Ramatlakane asked what the reason was for withholding of money, as set out in the report and noted that there was a prescription period that was allowed for certain things to happen. He asked how those periods affected the final equation and what the implications were, and the results, of withholding money
Mr Ramatlakane noted that the Department previously took about 20 months to fill critical posts. He asked whether the Committee could expect to see the same problems again, in regard t the filling of the critical vacancies, and if there was a turnaround strategy in this regard.
Mr Ramatlakane also asked whether there was a plan that could be put in place to address the recurring problem of late invoices and where contractors were not paid on time. Certainly there should be a system of monitoring and evaluation which occurred on a monthly basis to try and avoid the problem of invoices that were submitted late by contractors.
Mr P Smith (IFP) asked why the figures were not the same, between slide 9 and slide 12. Slide 9 showed that the DCoG was apparently underspending by R1.412 billion but slide 12 showed underspending by R1.168billion. Even if, as he suspected, the first period showed R1.412 billion, later reduced to the second figure, it still did not add up. He also questioned how the figure of R1.168 billion which was due to transfers could be made up of the constituent parts that were cited as not paid on slide 12.
Mr Smith also questioned the logic behind the equitable share being withdrawn because the municipality failed to spend its capital grant and asked why the first would be taken away.
Mr M Swart (DA) asked whether it was really necessary to include, in the budget, the continuing payments for the South African Cities Network and United Cities of Local Government in Africa.
Mr Swart asked whether what had been done to sort out under-expenditure in the Department, and whether was there any internal audit that had been carried out.
Ms A Mfulo (ANC) said that she was not convinced that the Department really deserved this budget allocation, because she did not find much that was convincing in the report presented. She said that slide 6 of the report was talking about Community Work Program (CWP) for the whole year, of which the department had spent 55.9%, and on the Municipal Infrastructure Support Agent (MISA) it had spent 41.6%. In slide 7 there was spending of only 7.9% on Departmental Agencies, which was a serious challenge.
Ms Mfulo noted that in slide 16 of the report, which listed the Departmental priorities for the Administration Programme, had stated that the Department would support struggling municipalities with communication tools. She asked how the DCoG aligned itself with the Department of Communication, and to explain the alignment if it in fact existed. She believed that what was being set out here was in fact a duplication of the Department of Communication’s work relating to community radios, community newspapers and similar media.
Ms Mfulo asked how the Department aligned itself with municipal assessment tools, for the Programmes 2 and 3.
Ms Mfulo asked for more explanation on the 40 Ethics Committees which were mentioned in slide 18 of the report.
Ms R Mashigo (ANC) said that every time that this Committee was dealing with local government there were challenges of under-expenditure and every mechanism that was put in place seemed not to work.
Ms Mashigo asked what provisions had been put in place, if the 30 day payment rule was not complied with. She pointed out that it made no sense on the one hand to have systems in place that were supposed to ensure that people were paid within 30 days, when there was not compliance with that n the ground.
Ms Mashigo also questioned what motivation there was for this Committee approving the budget, if there were still roll-overs from the previous budget, and why the Department could not use the various mechanisms that were in place to spend its budget.
Ms Mfulo asked why there was so much outsourcing in the municipalities, in terms of contracts and consultants.
Mr M Matshoba (ANC) agreed with Ms Mfulo's question and comment that there was too much outsourcing of consultants in municipalities and said that this Committee had been asking the question for too long and it was time for full explanations from the Department.
Ms L Yengeni (ANC) asked why the Disaster Fund money was not getting to the people, what the problem was and which areas had claimed but had not received any money.
Mr J McGluwa (ID) asked whether the department was utilising consultants and what they were used for, and at what cost and what the mandate was for those consultants. He pointed out that this was not reflected on the report.
Mr J Gelderblom (ANC) asked what were the real challenges on MISA since the departmental expenditure was only 41.6% on that programme. It seemed from the report of the Auditor-General (AG) that far more attention had to be paid to that programme.
The Chairperson pointed out that the former programme of Siyenza Manje was substituted with the MISA programme, but there was now underspending. He asked whether this programme was really necessary and where the challenges lay.
Ms Nhlengethwa said that the Members were now expressing the same comments and questions raised by Members during the Portfolio Committee meetings, including concerns about MISA and the structures in place prior to that programme, and the Turnaround Strategy, although the impact of this was not apparent. The Members were waiting for the Turnaround to be finalised in June or July. There was an implementation plan, specifically for one province, and in each municipality her Committee would be doing monitoring and evaluation, to be able to draw up full reports. The impact of the Turnaround Strategy should become apparent from the next report by the Auditor-General.
Ms Nhlengethwa asked for clarity on the under-spending of the Department and whether there was a shortage of expertise in the country. There was also a concern on CWP, which was intended to assist and was not getting enough funding because the money was being given to the people who were mediating in the process.
The Chairperson asked why it was necessary to hire consultants to attend to CWP, what the role was in community works and what exactly it was that the DCoG itself could not do. He urged the DCoG to build its own capacity rather than paying the money to service providers. There was lot of work that people could do both in CWP and the Expanded Public Works Programme (EPWP) but what was needed was to think outside the box and change the way things were done so as to create jobs.
Ms Mashigo said that the Department should provide the Committee with the CWP report which explained as to why the Department had under-spent its budget.
The Chairperson requested the Departmental officials to answer in writing to all the questions raised by Members, by 6 June 2013. The reason for giving the department a short notice to respond to the questions was because the officials could have responded to those questions in that meeting. The Committee would also invite the Department to come and discuss with it the CWP and EPWP programmes.
The meeting was adjourned.
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