Provincial Conditional Grants Quarter 2 performance: briefing; 2019 First Term Programme

NCOP Appropriations

30 January 2019
Chairperson: Mr C De Beer (ANC; Northern Cape)
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Meeting Summary

Only two of the eighteen grants met the expected expenditure norm of 50% by mid-year.

This is what the Select Committee on Appropriations learnt when it was briefed on the second quarter provincial conditional grant expenditure report for the 2018/19 financial year.  The briefing focused specifically on the expenditure of Schedule 5 Grants.  These were the allocations made to provinces for a specific purpose. The overall grant performance was poor. It was, however, noted there has been an improvement in grant expenditure.

Grant expenditure improved by 2.5% compared to the second quarter in the previous financial year. The Maths, Science and Technology Grant registered an expenditure of 53% (R196.5m was spent from a total allocation of R370.5m), and The National School Nutrition Programme Grant spent 50.5% (R3.4 billion spent out of a total allocation of R6.8 billion). These were the only two grants that met the expected expenditure norm of 50% by mid-year.

Other grants that registered a significant improvement in expenditure from the second quarter of 2018/19 were the Early Childhood Development Grant; Maths, Science and Technology Grant; and National School Nutrition Programme Grant.

It was reported that the Northern Cape registered an under-spending on 12 of the 18 grants reported on quarterly, while the provinces of Limpopo and Gauteng reported under-spending on 11 of the 18 grants. The North West failed to report expenditure under the Human Papillomavirus Vaccine Grant in the first and second quarters of 2018/19. This was seen as non-compliance with legislation, specifically with the Division of Revenue Bill.

At the end of the second quarter of 2018/19, all nine provinces performed poorly and registered significant under-expenditure on a number of grants. Provinces, it was maintained, would have to step up their efforts to ensure grants were spent in full by year-end, and more importantly, the services funded by the grants were delivered to ensure service delivery outputs/outcomes were achieved.

The committee then considered and adopted its first term draft programme. No committee minutes were adopted because the committee did not form a quorum.

Members wanted to understand why two of the eighteen grants met the expected expenditure; wanted to know why year on year growth rate was at 98% yet the Early Childhood Development Grant was performing poorly in terms of expenditure because by mid-year it was supposed to have spent 50% of the budget; and asked why the presentation from the Eastern Cape was going to be held in an outside venue.

Meeting report

Briefing by Committee Researcher

Ms Yolanda Brown, Committee Researcher, briefed the Committee on the overview of the second quarter provincial conditional grant expenditure income outcomes for 2018/19. She stated there were 26 provincial grants, but the presentation covered only 18. Schedule 5 grants were allocations made to provinces for a specific purpose. Expenditure on these grants has been reported throughout the year, whereas grants such as Schedule 4A and 7A were linked to other funding sources. Expenditure was, therefore, reported annually.

By the end of the second quarter, conditional grant expenditure amounted to R24.9 billion of the total available grant funding of R58.0 billion for 2018/19. Grant expenditure improved by 2.5% compared to the second quarter in the previous financial year. The following grants’ expenditure improved significantly from the second quarter of 2018/19:

  • The Early Childhood Development Grant registered an increase of 98%
  • The Maths, Science and Technology Grant increased by 81.4%
  • The National School Nutrition Programme Grant went up by 13.8%

Despite the overall improvement in grant expenditure, the following grants’ expenditure declined when compared with expenditure in the second quarter of 2017/18:

  • The Mass Sport Recreation Participation Programme Grant decreased by 36.7%
  • The ILima/Letsema Project Grant expenditure declined by 30.6%
  • The Land care Programme Grant went down by 19.3%
  • The Human Settlements Development Grant expenditure decreased by 7.4%
  • The Comprehensive Agricultural Support Programme Grant declined by 0.2%

Only 2 of the 18 grants met the expected expenditure norm of 50% by mid-year. The Maths, Science and Technology Grant registered an expenditure of 53% (R196.5m was spent from a total allocation of R370.5m), and The National School Nutrition Programme Grant spent 50.5% (R3.4 billion spent out of a total allocation of R6.8 billion).

The grants that registered the least expenditure (less than 25%) at the end of the second quarter include:

  • The Title Deeds Grant for the 2018/19 amounted to R518.7m of which only R62.3m (12%) was spent by the end of the second quarter
  • The ILima/Letsema Project Grant registered an expenditure of only R124m or 22.4% from a total allocation of R552.4m
  • The Human Papillomavirus Vaccine Grant spent R46.2m or 23.1% out of the 2018/19 allocation of R200m.

Ms Brown reported that the Northern Cape registered under-spending on 12 of the 18 grants reported on quarterly, while the provinces of Limpopo and Gauteng reported under-spending on 11 of the 18 grants. The North West failed to report expenditure under the Human Papillomavirus Vaccine Grant in the first and second quarters of 2018/19. This was seen as non-compliance with legislation, specifically the Division of Revenue Bill.

She concluded by saying at the end of the second quarter of 2018/19, all nine provinces performed poorly and registered significant under-expenditure on a number of grants. Provinces would have to step up their efforts to ensure grants were spent in full by year-end., and more importantly, the services funded by the grants were delivered to ensure service delivery outputs/outcomes were achieved.

Discussion

The Chairperson asked the researcher to get the breakdown of allocations and expenditure of provinces from the National Treasury so that the Committee would be able to engage with the provinces.

Dr D George (DA; Western Cape) wanted to understand why two of the eighteen grants met the expected expenditure.

Ms Brown explained that the National Treasury usually published a quarterly report on 26 grants, but reported only on 18. Schedule 4 and 6 grants were excluded. National Treasury was in control of the allocations when it transferred the allocations according to the submissions made by the provinces. Sometimes the grants did not cover all the required items. The report on this from provinces was always on amounts allocated. National Treasury did not require all this information on a quarterly basis, but only on an annual basis.

Mr M Monakedi (ANC; Limpopo) wanted to know why year on year growth rate was at 98% yet the Early Childhood Development Grant was performing poorly in terms of expenditure because by mid-year it was supposed to have spent 50% of the budget. This meant expenditure did not match performance and National Treasury has not properly managed quarterly expenditure reports.

Ms Brown explained that when you compare this year’s second term expenditure income of R181.4m to R91.3m, you would discover it represented an increase of 98%. That was the rate of expenditure. When you compare the allocation of R490.8m, the expenditure as a percentage of the allocation is 37%. This was low spending compared to the expenditure norm of 50% by mid-year.

Committee’s First Term Programme

Mr Lubabalo Nodada, Committee Secretary, took the members through the document, page by page.

The members agreed in unison to adopt the programme with no amendments.

The Chairperson asked why the presentation from the Eastern Cape was going to be held in an outside venue.

Mr Nodada replied that all committee rooms have been taken or booked, that was why they had to secure an outside venue for the meeting.

The Committee could not adopt minutes because it was not quorating. It was noted it was the first time the researcher has presented quarterly expenditure reports, and it was indicated that some committee meetings would need to be conducted at night because there was limited time during the day, but the committee would need to discuss that first and come with a definite arrangement.

The meeting was adjourned.

 

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