Division of Revenue Bill: Ekurhuleni Municipality; Department of Health on Conditional Grants

NCOP Finance

12 March 2003
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Meeting report

SELECT COMMITTEE ON FINANCE

FINANCE SELECT COMMITTEE
13 March 2003
DIVISION OF REVENUE BILL: EKURHULENI MUNICIPALITY; DEPARTMENT OF HEALTH ON CONDITIONAL GRANTS

Chairperson:
Ms D Mahlangu (ANC, Gauteng)

Documents received:
Ekurhuleni Metropolitan Municipality presentation
Ekurhuleni Municipality: Financial Plan, Policies & Strategies
Notes prepared by Department of Health
Graphs accompanying Notes by Department of Health
Committee letters sent to municipalities and departments (Appendix 1& 2)

SUMMARY
The Ekurhuleni Metropolitan Municipality and the Department of Health appeared before the committee in order to provide information about the spending of conditional and other additional grants. The municipality did not provide the correct information. The Department of Health explained the reasons for the under-spending of the additional grants by the provinces and what steps are being taken to remedy this.

The potential role of local government in providing primary health care was also discussed. The Director General of Health supports moving this competence from the provinces to municipalities though the Constitution would need amending.

MINUTES
Ekurhuleni Metropolitan Municipality
Mr Mawela (Chief Financial Officer) and Mr Mofokeng (Executive Director: Corporate Services) represented the Ekurhuleni Metropolitan Municipality. [The document presented did not provide the requested information. This was later provided in their follow-up document: Financial Plan, Policies & Strategies]

Discussion
The Chair commented that their presentation did not really touch on what the Committee had been asked to present as they had wanted them to focus more on the additional grants. She said that the committee was concerned over the capacity of municipalities to facilitate these grants. They want to make sure that service delivery is not blocked by unforeseen circumstances.

Mr Ralane (ANC, Free State) queried the R4.4 billion outstanding debt. The Chair also asked for how many days had they owed this debt as the Public Finance Management Act legislates that debt must be paid within 30 days.

Mr Mawela replied that the greater part of the debt was inherited from a period longer than 30 days. He agreed that bad debts are a problem for local government as no provision is made for them. The nonpayment of electricity bills and money owed to them by government institutions like schools and Public Works made up most of the debt. He added that these institutions have a tendency to only pay every six months or once a year.

Mr Mofokeng added that the poor collection of fees for water services contributed to the debt along with households who cannot afford the water.

Ms Mahlangu remarked that she was not happy with the information presented by the municipality. She reiterated that the committee had sent the municipality a letter specifically requesting certain information. They had not even attempted to provide that information. She instructed the representatives to provide the Committee with the requested information on the very next day. She also asked whether they owe any monies to the Auditor General.

Mr Mofokeng apologized for the misunderstanding and promised to supply the information by the next day. He was under the impression that they were asked to motivate the conditional grants. He added that they did not owe any audit fees to the Auditor General.

Department of Health
Director-General Ayanda Ntsaluba, Mr G Muller (Chief Financial Officer), Dr Selebu and Dr G. De Klerk (Deputy Director Nutrition) represented the department. See documents for presentation.

Discussion
The Chair remarked that she welcomed steps to provide more doctors for rural areas.

Mr Ralane referred the Director-General to the Government Gazette No 24339 where it states that Free State did not spend any of its Hospital Management and Quality Improvement Grant. He commented that there was under-spending across the provinces. This was despite the fact that there had been an increase in the Hospital Revitalization Grants.

Ms Botha (DP) commented that she came from the Northern Free State and she could not see any signs of delivery there of the Integratory Nutrition Programme for schools. Where some schools did receive food, the schools did not approve of its quality as it consisted mainly of cookies and drinks. Not one school had received food as set out in the four menus that the department had prescribed. She expressed her concern.

M Thabe (ANC) also enquired about the reasons for the under-spending.

Mr Ralane asked what the role of the national department is in monies owed by the provincial departments. He mentioned that the Nelson Mandela Metropole owes around R60 million.

Ms Mahlangu asked if the national department was aware of this debt. Did the Hospital Revitalization Grant cover all hospitals or just some? Lastly, did the Department owe any audit fees to the Auditor General?

Director General Ntsaluba replied that they do not owe any money to the Auditor General. He said that they take notice of the money owed by the Nelson Mandela Metropole but there was not much that the national department could do. Provinces use grants differently according to their needs. The approach the national department took was to let each province decide what to do with its equitable share. That way the money is easier to spend which combats under spending.

Dr Ntsaluba emphasized that they are aware of some of the problems with the Integratory Nutrition Scheme. They have a team working with the Department of Education and are looking at the possible involvement of school governing bodies. They believe they will be more successful this way.

He commented that the Hospital Revitalization Grant do not target health centres. They were only for hospitals. The Infrastructure Grant would be used for health care centres. None of the money for the grants would go to municipalities.

He noted that they hold a monthly meeting of all the chief financial officers where they discuss under-spending and other matters. They are working on this as matter of urgency. The stringent conditions of the grants had made it difficult to spend them. However they have reached an agreement with Treasury on more flexible conditions.

Dr Selebu reported that he had held discussions with all of the provinces recently on under-spending. The Hospital Management and Quality Improvement Grant is a transitional grant. Certain provinces, he mentioned the Eastern Cape, had infrastructure and capacity problems which made spending very difficult.

Dr De Klerk agreed that the quality of the food was not very good. He explained that they are reliant on existing tenders but these tenders are close to ending. He emphasized that a new round of tenders will provide food from the four menus. The Director-General added that it was a Cabinet decision to involve local women in providing food for the school children. They are working along with the Education Department on this project although the Department of Health carries the responsibility.

Mr Makoela (ANC) asked if there was a plan in place to have local government responsible for primary health care.

Dr Ntsaluba replied that the Constitution mandates the provinces with primary health care. Municipal services currently do not include all the facets of primary health care. He supported local government taking over of the responsibility of delivering this service. They are starting projects in the bigger metropoles that have the capacity. He added that they might have to look at amending the Constitution in the future.

The Chair congratulated the Department on a great improvement from previous years. She asked what role the Department had played in the setting up of the "stringent" conditions of the grant.

The Director-General replied that they had been consulted. The issue is more about the oversight over the use of the grants than the conditions themselves. He stressed that the oversight relationship between government institutions need to be improved.

Appendix 1:

Friday, 28 February 2003

Mr D Nkosi

Executive Mayor of Ekurhuleni Municipality

Dear Sir / Madam

Re: Invitation to Public Hearings on Division of Revenue


The Select Committee on Finance will host public hearings on the Division of Revenue from the Monday, 10 March 2003 to Thursday, 13 March 2003. The purpose of this is to look at the issue of Conditional Grants which include: assessment and performance of grants during the previous financial year, outputs of grants, the flow; timing and size of grants, capacity of National and Provincial Departments to facilitate the management and smooth running of grants and to provide a business plan as to reflect output measures and related matters connected herewith.

The Chairperson of the Select Committee on Finance, Ms Mahlangu, Q D, request that the Municipal Manager attend the hearings on either of the following dates: Tuesday, 11 March (09:00 - 17:00); Wednesday, 12 March (09:00 - 17:00); Thursday, 13 March 2003 (09:00 - 17:00) in Parliament to participate in the discussions via submission.

Please forward a written confirmation of your attendance to Henry Eksteen at fax no: (021) 462 2141 or via e-mail at heksteen@parliament.gov.za by no later then, Friday, 07 March 2003. As soon as the budget is tabled, documentation is obtainable from the National Treasury website - www.treasury.gov.za.

A detailed programme will be is forthcoming based on your response.

Should you have any inquiries, please do not hesitate to contact Henry Eksteen at (021) 403 3716 or John Russouw at 403 3758/9 or fax 462 2141.

Yours sincerely

Ms Q D Mahlangu

Chairperson: Select Committee on Finance

CC. Mr P Maseko

Municipal Manager

 

Appendix 2:

Friday, 28 February 2003

Minister of Education

Dear Sir

Re: Invitation to Public Hearings on Division of Revenue

The Select Committee on Finance will host public hearings on the Division of Revenue from the Monday, 10 March 2003 to Thursday, 13 March 2003 as it form an important component of intergovernmental transfers, and are vital in ensuring attainment of specific national policy priorities and programmes.

As you would be aware, over the last three years, a number of reforms have been introduced in relation to the administration of conditional grants, with the view of enhancing their effectiveness as means of facilitating improved delivery at sub-national level. Notably, provinces and local government now receive three-year allocations for conditional grants and a framework for each grant setting out the purpose of the grant, measurable objectives, conditions, allocation criteria, past performance, amongst other things.

You are invited to address the committee on all the conditional grants administered by your department via oral submission given that your Department administers a significant proportion of conditional grants, in preparation for the hearings, could you kindly furnish the Committee with the following:

  1. A detailed exposition on the formula and criteria used for allocating each grant for 2002/03, 2004/05 and 2005/06, and the extent to which these comply with section 214 of the Constitution. In particular, how the allocation mechanism take into account each of the factors set out in section 214(2) (a) to (j). Please also furnish all statistical data used for the formula, and indicate the source of all such statistical data. All departments should note that this information is critical for the committee to assess whether your department is in compliance with the criteria outlined in sections 214(2)(a) to (j) of the Constitution, stating which criteria may not be applicable, and for those that are applicable, how the grant gives effect to that criterion.
  2. Data on trends in allocations, transfers and actual expenditure of all your Department's conditional grants. An analysis of the actual allocations by province and municipality, including the per head allocation for that grant (using the population numbers per municipality published in Appendix E7 of the 2003 Division of Revenue Bill, or for provinces, the population data in Annexure E as used for the provincial equitable share formula).
  3. A brief assessment on your Department's monitoring capacity and past performance, for both the current year 2002/03 and the past year (2001/01). Please indicate how your Department monitors compliance every month by provincial and/or local governments as required by the 2002 Division of Revenue Act, including the conditions pertaining to the grant, as set out in the framework for the grant. Please indicate whether your department ensures that it does receive the monthly reports required from receiving departments or municipalities, and if not, what you department is doing to ensure compliance. Where non-compliance occurred in 2001/02, explain steps taken to ensure full compliance in the current financial year (2002/03), and indicate whether there is evidence of improvement. In instances where the Auditor-General has a qualified your audit due to a conditional grant, we would like you to explain the steps your Department is taking to address the A-G's concerns.
  4. Quantitative and qualitative indicators/information on performance of conditional grants administered by your department for the 2001/02 financial year, using the ones set out in the framework for the grant as a point of departure. In particular, a focus on the non-financial performance indicators used by your department.
  5. A motivation for why this grant should continue to be a conditional grant, and not part of the equitable share or an unconditional grant.

The Chairperson of the Select Committee on Finance, Ms Mahlangu, Q D, request that the Director General of Education attend the hearings on either of the following dates: Tuesday, 11 March (09:00 - 17:00); Wednesday, 12 March (09:00 - 17:00); Thursday, 13 March 2003 (09:00 - 17:00) in Parliament to participate in the discussions via submission.

Please forward a written confirmation of your attendance to Henry Eksteen at fax no: (021) 462 2141 or via e-mail at heksteen@parliament.gov.za by no later then, Friday, 07 March 2003. As soon as the budget is tabled, documentation is obtainable from the National Treasury website - www.treasury.gov.za.

A detailed programme will be is forthcoming based on your response.

Should you have any inquiries, please do not hesitate to contact Henry Eksteen at (021) 403 3716 or John Russouw at 403 3758/9 or fax 462 2141.

Yours sincerely

 

Ms Q D Mahlangu

Chairperson: Select Committee on Finance

CC. Mr T Mseleku

Director General of Education


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