The Members of the Select Committee on Finance met to discuss the draft report on the provincial treasuries’ expenditure review for the third and fourth quarter of the 2015/2016 financial year. The draft report was unanimously adopted, with minor technical errors suggested for correction. The recommendations were also dealt with, particularly the expenditure of the Department of Health for legal costs. Recommendations were also made regarding economic development agencies that were an expense to the Treasury, as opposed to creating revenue.
The Chairperson read pages two to ten of the draft report, with which the Members agreed.
The first page of the report dealt with the overall mandate of the Committee, and noted that public hearings had been held with the Finance Members of the Executive Committees (MECs) from all the provinces on May 11, 18, 20 and 25, as well as 16 August, where the fiscal positions, growth, development strategies and overall spending for the third and fourth quarters of 2015/2016 had been discussed. The upcoming pages dealt with an overall economic growth, expenditures, revenue collection and National Treasury findings for all Provinces.
Ms T Motara (ANC, Gauteng) expressed concern over the expenditure on litigation costs indicated on page ten. There was a need for a strategy to curb this expenditure. Litigation costs were a problem in that there was no specific way to budget for them.
The Chairperson reminded Members that observations would be dealt with later on, so they should rather concentrate on the report.
On paragraph 11.2 of the observations, which stated that most provinces had growth and development agencies which were highly dependent on government funding, Ms Motara reminded the Committee of the National Treasury’s report on economic growth development agencies. This had emphasised, amongst other things, that if the agencies were not meeting their targets, they should be closed. It was noted that the agencies were supposed to create money for the provinces as opposed to receiving money from the Treasury.
Paragraphs 11.2 to 11.14 were adopted, with suggested wording changes by Ms Motara in 11.6.
The Chairperson moved to recommendations on page 13 of the report.
In paragraph 12.2, Ms Motara said that economic agencies were an over-arching issue for all provinces, and that a report was needed from all development agencies on how they were adhering to the Treasury’s instructions.
Mr F Essack (DA, Mpumalanga) gave an example of the MEGA development agency in Limpopo, which had not contributed anything to Mpumalanga. He suggested a recommendation that development agencies should produce more value and perform effectively.
Chairman directed Ms Motara to write the recommendation.
Ms Motara agreed to do as requested, and further suggested that the agencies should adhere to a Treasury instruction that stated, “three years from now, plan for a turn-around or plan for a shut down”. The agencies ought to give an update every 12 months.
Mr Essack reminded the Committee of its visit to Limpopo, where agencies had huge portions of the budget allocated, and where the compensation of the directors did not match the deliverables.
Chairperson suggested that there should be a report from all the agencies, with the Treasury present.
Ms Motara emphasised again that Treasury instructions had to be used.
Mr Essack suggested that there should be a time line.
Ms Motara recommended that paragraph 12.1 and 12.2 should be consolidated, and that the wording should be broad.
The Chairperson directed that 12.3 be reworded.
On paragraph 12.4, Ms Motara proposed that revenue collection should not be restricted to the Post Office, but use should be made of intergovernmental services and municipalities at a national level.
Mr Essack expressed concern over high costs being paid for leases, whereas the provinces could buy the property.
Mr L Gaehler (UDM, Eastern Cape) agreed with Mr Essack.
The Committee agreed that a report on leases was needed from the provinces.
Ms Motara proposed that provincial treasuries should seek alternative ways to accrue interest.
Ms Esther Mohube, Committee Content Adviser, suggested that the focus should be on addressing why money was not being spent when it was supposed to be.
Ms Motara said that the Treasury has its own processes for dealing with expenditure, but the reason why money was not being spent should be addressed.
The Committee adopted paragraphs 12.7, 12.8, 12.9 and 12.10 of the report.
The Chairperson suggested that the wording of paragraph 12.11 should be changed to, “Provinces should”.
Paragraphs 12.12 and 12.13 were adopted.
The issue of litigation costs came up again in paragraph 12.14, and it was agreed that state attorneys should take responsibility for ensuring uniformity when dealing with law suits.
Mr Gaehler suggested that alternative ways of handling the law suits should be looked at. The root causes of the problem, such as unskilled medical practitioners, should be addressed as well. If not, it would be an ongoing process.
Ms Motara agreed with Mr Gaehler, and added that the issue of litigation costs should be addressed, not necessarily by this Committee, but by committees such as the Justice Committee.
Mr Essack expressed concern over the system.
The Committee agreed that 12.14 should be left as it was.
Paragraph 12.15 was adopted.
The Chairperson reminded the Committee of the outstanding matter of the Western Cape oversight trip, which would be discussed next week.
Members moved the adoption of the minutes on 21 September 2016.
Ms Motara then gave Members an update on upcoming meetings and said that attendance was important.
The meeting was adjourned.
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