Department of Health on 1st Quarter Performance; Department of Cooperative Governance on Municipal Infrastructure Grant, Community Work Programme & 1st Quarter Performance

Meeting report

Department of Health briefing on First quarter expenditure report for 2014/15

Mr Ian Van der Merwe, CFO of the Department of Health (DoH), said the compensation of employees programme showed pressure due to the implementation of grading of assistant and deputy directors. The budget for compensation of employees was exceeded due to the appointment of a health attaché in Cuba. There was slow spending on the National Health Insurance (NHI) grant. To this end a service provider was appointed to assist with the recruitment of GPs. Vaccinations for the human papilloma virus would start in September 2014. Hence no expenditure on the budget of R200 million was reflected yet.

 

Major contributors to underspending of conditional grants were the comprehensive HIV/Aids grant (20.2% spent); the health facility revitilisation grant (17.0% spent), and National Health Insurance (12.6% spent). The Committee was taken through a summary of expenditure per province. Delays by implementing agents in awarding contracts on time resulted in projects starting later than anticipated. The Committee was taken through plans to improve expenditure performance in infrastructure programmes. The Department and the Treasury had embarked on a capacitation framework for the Infrastructure Development Management System (IDMS). The framework included the alignment of the organisational structures to the core business roles of the infrastructure units in each Provincial Department of Health and the Provincial Department of Public Works. The Committee was taken through plans for improving expenditure performance in the National Health Insurance pilot programme. Cost containment measures included measures related to travel, vehicle hire and accommodation.

 

Discussion

The Chairperson said there had to be engagement about the NHI. Slide 42 did not tell a good story. He asked the DG to explain more slowly about indirect grants.

 

Ms Malibona Matsoso, DoH Director General, replied that the infrastructure grant had been consolidated over the years. The problem was how to spend infrastructure money. The principle established was not to build more, but to maintain more. There were negotiations with the Treasury. The health estate amounted to R360 billion. The Treasury required that there be capital expenditure. The Department asked if the focus could be on fixing existing dilapidated facilities. 492 facilities had to be rehabilitated. There were 3900 facilities in the public sector. The Department wanted to rehabilitate the 492, and to maintain the rest. The provinces had to spend. Capacity had to be built in the provinces to maintain facilities. It was of no use to build facilities that could not be equipped. The priority was to get the existing ones working.

 

The Chairperson said it was not a good story if money was returned.

 

Mr Gcwabaza referred to slide 28. There was slow spending of the NHI grant in all provinces. It was a new programme. He asked what the challenges were.

 

Mr N Gcwabaza (ANC) noted that implementing agents (IA) were slow to award contracts. IAs were better placed to fast track projects. He asked about challenges. He asked if the process was too cumbersome.

 

Mr Gcwabaza said budgeting was for the whole that included construction, equipment and staffing. But building was not challenged. The result could be constructed facilities that were white elephants.

 

Ms M Dunjwa (ANC), Health Portfolio Committee Chairperson, remarked that the briefing had been too fast. There were things said about the Eastern Cape that she missed. The briefing did not present on the Western Cape. She asked if the provinces had the capacity to build clinics and plan for everything, including HR. There had to be understanding of communities, so that it could be known how many people would be served by building. The former regime was building white elephants. A capacity to manage was lacking. She asked why it was that the majority of hospitals were in a poor condition. It was acceptable to not want to focus on new building. But provinces had to be capacitated for planning. She asked that the presenter take the Committee through the Western Cape.

 

Dr C Madlopha (ANC) asked about the condition of existing facilities. The Treasury had taken the lead by identifying the number of facilities that could be rehabilitated. There was a three year MTEF period. Capacity checks at the beginning could kick start the process. Money was transferred to the provinces for implementation, but then there were problems related to a lack of planning. The first year of the MTEF could be used for planning, with implementation following on that.

 

Dr Madlopha noted that there was nothing in the NHI and HIV grants in the Free State. She asked about government interventions related to that. There was low spending in the Western Cape. The Department had plans to intervene, but the question was when that would happen. There had to be continuous monitoring. It would not do to wait until the end of the quarter with spending, and to only monitor when things went wrong. She asked if under-expenditure could be anticipated.

 

Ms Matsoso replied that mechanisms were needed to intervene and to redirect funds. Interventions were needed to respond to service delivery. The reformation of grants could start with the NHI grant and then proceed to the HIV grant. There had to be payment for drugs and tests, and the rest of the money could go to workshops.

 

Dr Madlopha was concerned about capacity to spend in KZN. There had to be a remedy for the province to fast track spending.

 

Dr Madlopha noted that the Treasury had reported that R2 billion would go to universities in Limpopo and Cape Town, but the money had not been transferred. She asked if challenges were resolved.

 

Mr A Shaik Emam (NFP) said the object had to be to change the lives of the poorest of the poor. The amount granted to the NHI did not tell a good story. There were underspending challenges in all provinces. He asked about interventions. Drastic measures had to be taken. It seemed that there was a lack of initiative, drive and capacity.

 

Ms Matsoso replied that a report on NHI payment had been prepared. Development funds were used. Every district could be reported on. Computers were installed that made it possible to report on the staff situation at existing facilities. There were negotiations with the Treasury for a 50/50 split between maintenance and rehabilitation of facilities. There were many small facilities in the former homeland areas. Catchment areas could not provide service. There was information about the condition of facilities that made it possible to distinguish between those that could be fixed and those that had to be rehabilitated. It was preferable to spend money on facilities that were already up and running. Every facility had been mapped. Not all hospitals were the same. R12 billion was available for health workers in existing centres. But the DORA framework did not allow for more resources to existing facilities. The Treasury was asked to unlock money to employ staff. The Department had the data that told the story, but the grant framework had to be changed to make intervention possible.

 

Mr Shaik Emam noted that the Department could not take money away from new building for maintenance spending. Better planning could have made it possible to anticipate the current situation. The Department had to include all projects budgeted for in the strategic plan, and where they were. Spending challenges had to be dealt with otherwise there would be fiscal dumping late in the year.

 

Mr M Figg (DA) said where there was underspending, people suffered. The state of health care was known to be pathetic. The Chairperson had asked for an explanation of the situation in the Western Cape, but he would ask the same for all provinces. Doctors, nurses and equipment were being lost. The Department was still a long way off from being able to spend money on clinics. On oversight there was a visit to a hospital where there had been no doctor there for a month. There were no health care professionals for clinics.

 

Mr Figg agreed that the presentation had been too fast, and hard to understand. Acronyms were used that were not easy to decipher. He could not understand what was being said on slide 28.

 

Mr Figg referred to the additional cost of appointing a health attaché in Cuba. He asked who had authorised that.

 

Mr Figg referred to slide 13. He asked if it was the norm to only transfer in the third quarter.

 

Mr H Volmink (DA) of the Portfolio Committee on Health, referred to value for money in terms of investment. He asked about the method of payment for the GP contract.

 

Mr Volmink asked about reasons for low spending for Gauteng of the health facilities revitalisation grant, and low spending on the health information management system.

 

The Chairperson said the approach of the National Department and the provinces differed. The provinces were told to revitalise, but they did something else. He asked if there were meetings with the provinces. There had been meetings with MECs in MINMEC. He asked why there was no agreement in approach.

 

Ms Matsoso replied that there were non-negotiables that everyone had to do, but the provinces were not doing them. There had to be a dashboard for every province, so that it could be known what had to be spent on programmes. The problem was that provinces under allocated, as was the case for HIV. Non-negotiables were based on MINMEC decisions. Allocation mechanisms were needed. There were executive decisions at the provincial level that were not in line with MINMEC.

 

The Chairperson said he was interested in solutions to change grants. When money was not used, people suffered.

 

Ms S Shope-Sithole (ANC) remarked that the Department had to hold the centre as a National Department. Challenges had to be known. The Standing Committee wanted scarce resources to be used well. According to the Constitution all spheres of government had to do business, but they were not to become divided in the process. South Africa was a unitary State, not a federation. The different spheres had to work in harmony.

 

Ms R Nyalungu (ANC) asked if transfers to NGOs in the third quarter were normal. She asked how that affected NGO performance. It seemed that there was a lack of people with ability to spend the NHI grant.

 

Ms C Ndaba (ANC), Health Portfolio Committee, said the DG had identified the challenges, and deserved support. Facilities had to be maintained and improved, also in the provinces.

 

Mr A McLaughlin (DA) remarked that there was cause for concern on every page. The summary of expenditure on slide 4 proved that there was no underspending on staff compensation. The Department was looking after itself.

 

Mr McLaughlin referred to slide 7. Blame was placed on the DPW for late invoicing. The question was how funds would be recovered. The reason for overspending on compensation of employees was cited as the appointment of a health attaché in Cuba. He asked if that was really necessary.

 

Mr McLaughlin referred to slow spending of the NHI. A service provider would be appointed. He asked why someone had to be appointed to help the Department to not spend.

 

Mr McLaughlin noted that 85 % of the budget was allocated to primary health care. The Department was headed for huge overspending. Money was used but not planned for. The question was where the money would come from.

 

Mr McLaughlin referred to delays in the recruitment of staff. The DoH had to have a handle on supply chain management issues. There were procurement issues, and hospitals were running out of stocks. Issue had to be taken with provincial staff. It was a people problem. There was insufficient documentation and staff was not doing what they had to do. Where there was underspending, someone was not doing their job. People suffered as a result. The National Department transferred to the provinces, but without oversight. It had to be seen to that provinces performed.

 

Dr Madlopha sympathised with good work done by the DoH. What the DG was trying to do with regard to rehabilitation of facilities was good. The Department had to create organisational structures that could implement oversight and monitoring. There had to be oversight meetings and reports. The DoH had to ensure that infrastructure plans were aligned with compliance.

 

Dr Madlopha asked what was included in Service Level Agreements (SLAs) with the provinces. SLAs had to be submitted to the Treasury if provinces did not adhere to them. There was a need to call in the provinces. The DoH had to spend according to predetermined objectives to get value for money. The SC appropriated according to how a Department was spending.

 

Dr Madlopha said doctors were adding 200 % above the medical aid payment. She asked if it was being regulated.

 

Ms Dunjwa said a full day was needed to look at issues. The situation in the Western Cape needed attention. A clear province by province picture was needed.

 

Mr Shaik Emam said the Department of Basic Education (DBE) had underspent on HIV counselling in schools. Projects that should not be taking place had to be identified.

 

Mr Volmink remarked that municipal heads were accountable to Premiers. Politicians could not do much. The Treasury had to be involved.

Mr Figg asked if research had been done to establish criteria for the grant framework.

Ms Matsoso replied that there was oversight of the grant framework. Six provinces had acting CFOs. She herself headed a steering committee for the implementation of grants. She needed a day to take the SC through all the data. Health facility planning was something different from infrastructure design.

Mr Hajani, Treasury, remarked that the Treasury had talks with the DoH. There had been a Damascus moment. Discussions were about the need to re-institute facilities that had fallen away. Nine heads of provincial health departments and the Treasury were brought together in one room. Underspending of grants was discussed in terms of the back to basics initiative. MINMEC had a role to play, but it had to be supported by technical experts. The Treasury was not soft on underspending. There were meetings with programme managers. He advised that the provinces be brought to Parliament.

The Chairperson concluded that the Department would be called back. Heads of provincial departments had to be called in, together with the treasury. Issues had to be dealt with province by province. The role of the DORA had to be looked at.

He thanked the DG for her forthright placing of issues on the table. He asked for a response in writing to unanswered questions.

Department of Cooperative Governance briefing on the Municipal Infrastructure Grant (MIG) projects and funding

Mr Khwathekani Bologo, Executive manager: Infrastructure at the Department of Cooperative Governance (DCoG), noted that the Municipal Infrastructure Grant Programme was the largest local government infrastructure development funding in South Africa. The Committee was taken through a summary of MIG expenditure by province as at end June 2014; performance of municipalities over the last 10 years; MIG expenditure per sector as at end June 2014, and the total number of MIG projects with actual expenditure per province (2013/14). Project status was indicated for Water and Sanitation; Roads and Storm Water; Solid Waste Sites and Sports and Recreational Facilities; Community Street lighting and Public Facilities, and Household Beneficiaries.

Challenges included inadequate planning in the context of Integrated Development Planning (IDP); lack of intergovernmental cooperation; lack of capacity to manage MIG projects (Project Management Units); the appointment of service providers and contractors who could not deliver, and late payment of service providers. Support to provinces included the establishment of teams by CoGTA in cooperation with the provinces, to address identified challenges. MISA addressed technical capacity challenges in municipalities. Apprentices were placed in municipalities for capacity development. MISA had adopted a differentiated approach to technical municipal support through district teams and the deployment of engineers.

Withholding, stopping and re-allocation of funds was done in terms of the DORA.

DCoG briefing on the Community Work Programme (CWP)

Mr Tozi Faba, National CWP Programme Manager, explained that the CWP was a community driven and government funded partnership programme designed to soften the negative impact of high unemployment. The initiative provided an employment safety net by providing participants with a predictable number of work days per month. The CWP was performing well in achieving its targets, especially those related to the provision of work opportunities. The Committee was taken through CWP performance from 2009/10 to the present. The target for 2014/15 was to scale up work opportunities to 187000. The CWP was not primarily a key infrastructure programme. It offered temporary relief in a desperate situation. Activities included maintenance of community assets and public spaces. The programme mitigated the impact of poverty and stimulated the local economy. Participants in the CWP were also provided with skills training. All appointed Implementing Agents had been inducted into the programme.

DCoG briefing on the state of expenditure for the first quarter, 2014/15 and cost containment measures

Ms Dorothy Snyman, DCoG CFO, took the Committee through the state of expenditure per programme as at end June 2014, and the state of expenditure per economic classification. Spending on the various programmes reached 25% or more for the MISA programme (28%), and for payments of capital assets (42.5%). There was underspending on the Community Work Programme (16.4%) and goods and services (16.8%). Cost containment measures were related to the engagement of consultants; travel and subsistence; and expenses related to catering and events. Additional measures included water and electricity, communication, and advertising.

Discussion

Mr Gcwabaza said Implementing Agents appointed were people with expertise. He asked why there were still delays. Untimely implementation led to late completion and escalated costs, which forced overspending. He asked how IAs were handled.

Mr Gcwabaza said cost containment measures were appreciated. On a next occasion, figures could be presented.

Mr Figg said there were challenges around withholding of funds. When funds were withheld, the beneficiaries suffered.

Mr Shaik Emam agreed that withholding of funds had impact on the ground. The question was what happened to municipalities that did not perform. Taking back money to the Treasury to have it given to someone else was not good.

Mr Figg asked for clarity about allocations of funds in terms of the DORA.

Mr Vusi Madonsela, DCoG Director General, replied that allocations were withheld in terms of the DORA for the sake of beneficiaries. The DCoG noted the comment and could identify with the sentiment. But the fiscus had to be protected. If funds were not spent, money was lost to other things. The Department worked with MISA to help with timeous spending of the MIG. MISA was capacitating itself to support municipalities. There had been an upswing in expenditure since the advent of MISA support. It might not be necessary to withhold funds in future.

Mr Figg asked if the Community Work Programme was useful and sustainable.

He asked if keeping people in part time employment for a long period was in line with labour law. There was 16 % underspending on the CWP. It was designed to assist the unemployed, but it was not used for that.

Mr Faba replied that a new institutional arrangement for the CWP came into being on 1 April. Labour law was strictly observed. Staff was being paid and trained. IAs had to train junior staff. Jobs were filled in as required.

Mr Figg asked what the Department was doing to intervene through investigations into fraud and maladministration. Nothing had been to officials who had been publicly identified for misconduct. He asked what role the DCoG could play to make municipalities accountable.

Mr Sigidi replied that some municipalities had been investigated, but the problem was that according to the Municipal Systems Act, the Department could not simply move in. The MEC had to be allowed to intervene. If nothing happened the Minister could intervene.

Mr Figg said municipalities were complaining that MIG funding was not received on time.

Mr Muthotho Sigidi, Deputy Director General: Intergovernmental Relations, replied that the MIG was transferred according to schedules in the DORA. Municipalities had to submit cash flow projections a year ahead of time. Transfers occurred in July, November and March. Transfers of the MIG and equitable share was part of the MTEF, hence it was in the DORA. Municipalities could plan three years ahead, but there were challenges in that regard.

Dr Madlopha said she was interested to know about assessments by consultants.

Dr Madlopha remarked that the challenges mentioned on page 7 had been around for a long time. She asked for details about what intervention teams were doing.

Mr Themba Dladla, MISA acting Head of Municipal and Sectoral Technical Support, replied that MISA would provide support through the placement of expertise. The approach was to use multidisciplinary teams to address areas of infrastructure through the whole life cycle. Interventions would be evaluated in terms of results. There was a differentiated approach. Details about intervention teams would be supplied.

Dr Madlopha asked about plans for the CWP. Because government was intervening on behalf of skills and providing food, there had to be a database of beneficiaries. There had been over-budgeting for the CWP in the first quarter, and spending only stood at 16.4 %. Vacancies impacted on the CWP.

Dr Madlopha referred to delays with the commencement of DCoG projects. She asked why delays occurred when there had been planning.

Mr Sigidi replied that every time municipalities were engaged when leadership changed, the planners were not there. The programme management approach was to look at units and educate them to plan for infrastructure projects.

Mr Madonsela added that there was the challenge of Annual Performance Plans that were tabled late. Some planned things were also revised. There were delays around procurement improvements.

Mr McLaughlin referred to national disaster management. Funds had to move from national to province to district to local, and were only paid out when necessary. The problem was that there had to be rapid support when disasters happened. Municipalities could not have a contingency disaster budget. The process had to be speeded up through special means. There could be equity share transfers to municipalities to create a steady source. There had to be a general speeding up and streamlining of the flow of funds, as municipalities only started with programmes once MIG funds had been received.

Mr Madonsela replied that there was also money available at the provincial level. Municipalities and provincial governments budgeted for disaster. Upon verification of disaster, harm suffered could be dealt with. The Department of Social Development intervened for immediacy relief. The DCoG repaired houses after hail. It had to be made sure that houses were not covered by insurance.

The Chairperson noted that there had been R1.3 billion underspending of MIG funds in the previous year. MIG was not established to go unused. He asked if the creation of a new Ministry of Water affected grants.

Mr Sigidi replied that the R1.3 Billion figure was derived from municipal reports. The figure would be lower after the auditing of financial statements. The R1.3 Billion was committed to projects. There were three to five districts in Limpopo who had received higher allocations. The Department went with the MIG team to give support where there was underspending. Areas also gave support. Individual municipalities would be looked at to see where the R1.3 Billion was sitting.

Mr Madonsela added that the Department of Water and Sanitation was only new in so far as the sanitation component was taken back from the Department of Human Settlements. It was responsible for bulk water, and did not impact negatively on MIG.

The Chairperson concluded that there would be a meeting with the Department after the second quarter. The MIG grant was important for service on the ground. He was happy to see improvement in expenditure. The Committee would write to the Department about information required. It happened that departments sent presentations to the SC, which was then changed at the last minute. The Standing Committee wanted to see funds spent properly. There had to be value for money.

The meeting was adjourned.