The Select Committee was briefed by National Treasury on the appropriation of the provincial conditional grants in the 2019/20 financial year and the first quarter of the 2020/21 financial year. The meeting took place on a virtual platform. The Committee was provided with a summary of provincial grants as at 31 March 2020 as well as the grant expenditures of the first quarter of the 2020/21 financial year across the nine provinces. Members heard that KwaZulu-Natal and the Western Cape Provinces had achieved 100% grant spending.
Treasury raised their concern to Members that the Limpopo and the North West province’s spending data showed their under-performance, and the overall poor performance in the Maths, Science and Technology Grant. Members were alerted to the remarkable overall 98% of HIV and AIDs Life Skill Grant, and the importance of the Comprehensive Agricultural Support Programme (CASP) as it provided assistance to emerging farmers. However Members did not think that spending should be the only factor to assess performance because even in cases like in the Free State province where the province had achieved 88.7% of its spending, it still showed that out of the 73 planned projects, none were completed. Treasury told Members that grant funds for service delivery should be spent on service delivery. They suggested that the Committee not only look at the percentage as the only perimeter for performance, but also examine the outcomes such as in Gauteng and the Free State provinces.
The Committee noticed a lot of movements of money from one project to the other at the end of the 2019/20 financial year and asked how much of the fund had been shifted and for what projects were the shifting of budgets. Members asked for more detail about the Expanded Public Works Programme (EPWP); whether or not National Treasury could be recommended to undertake an analysis on the return on investment of the money spent on EPWP employees; to provide the same type of reports on grant expenditure outcomes but from the 2015/16 financial year; and if Treasury could make a prediction to the Committee on the shrinkage impact on grant payments in the next financial year. They asked ‘Will the amount for grant expenditures also be shrinking as a result of the economic decline’?
Members expressed grave concern over the non-achievement in Ilima/Letsema performance and enquired about the causes of provinces failing to reach their targets and details of the actual interventions in place and the lack of information about the Free State province on the building, upgrade and maintenance of libraries on slide 50. The Committee described the performance of the Eastern Cape and the Free State provinces as ‘shocking’ and ‘unacceptable’ and wanted to know what could be the cause for those provinces’ poor performance and whether or not interventions had been undertaken.
Members questioned Treasury about why it had done nothing to certain provinces because some of the non-performance in some specific provinces has already become a pattern throughout the years, the non-performance in the Department of Arts and Culture being a case in point. The expenditure grant allocated to this Department was comparatively minimal, so it was unacceptable that the expenditure grant still had not been spent in some provinces. One Member said that he cannot and will not listen to under-performance reports in the next financial year again.
Opening remarks by the Chairperson
The Chairperson said that this meeting was convened to discuss the COVID-19 special expenditure. She urged Members to go to their constituencies to share the information from the meeting.
She asked if Members agreed to the meeting agenda. The adoption of the meeting agenda received majority support.
Briefing by National Treasury: Provincial Conditional Grants
Ms Malijeng Ngqaleni, Deputy Director-General (DDG): Intergovernmental Relations, National Treasury, outlined the objectives of the presentation.
Mr Emmanuel Pillay, Director: Provincial Budget, National Treasury, provided a summary of provincial grants as at 31 March 2020 as well as the grant expenditures of the first quarter of the 2020/21 financial year. Across nine provinces, KwaZulu-Natal and the Western Cape had achieved 100% grant spending. Mr Pillay highlighted the concerning situation in the Limpopo and the North West province’s data showed that their spending shows these two provinces are under performing.
A wide range of conditional grants have been outlined. Those grants were the Comprehensive Agricultural Support Programme (CASP) which included Ilima/Letsema and the Land Care Grant.
The Department of Arts and Culture Grant included Basic Education, Maths, Science Technology, Learners with Profound Intellectual Disabilities and the National School Nutrition Programme.
Mr Pillay highlighted the overall poor performance in Maths, Science and Technology Grant. The provinces of the Eastern Cape, the Western Cape and Limpopo had performed very badly. There is a need to boost the training of teachers in those subjects.
Health grants included HIV, TB, Malaria, the Community Outreach Grant, the Health Facility Revitalisation Grant, the National Health Insurance Grant, Health Professions Training and Development Grant and the Human Papillomavirus Vaccine Grant. The overall 98% of HIV and AIDs Life Skill Grant was remarkable.
The Human Settlement Grants consisted of the Human Settlement Development Grant and the Title Deeds Restoration Grant.
The Expanded Public Works Grants consisted of the EPWP Integrated Grant and the EPWP Social Sector Grant.
Of other grants that had been discussed were the Social Development Grant, the Sports Grant, the Roads and Transport Grant and the Provincial Transport Operation Grant.
The Chairperson thanked Mr Pillay for the presentation.
Mr D Ryder (DA, Gauteng) remarked on the importance of the Comprehensive Agricultural Support Programme (CASP) as it provides assistance to emerging farmers. Although the presentation provides information about the programme and uses its spending across provinces as one indicator to measure provinces’ performance, Mr Ryder did not think that spending should be the only factor to assess performance. He said that even in cases like in the Free State where the province has achieved 88.7% of its spending, it still shows that out of the 73 planned projects, none were completed. A similar issue can also be seen in the Gauteng Arts and Culture grant. Gauteng had spent 92.3% of its spending but out of seven of the new libraries, it only built one. Hence, Mr Ryder pointed out this pattern that where province’s percentage for spending is excellent there is no service delivery on the ground. It could be possible that provincial governments had spent the money on other things such as on parties. He said that grant funds for service delivery should be spent on service delivery. He suggested that the Committee not only look at percentage as the only perimeter for performance, it should also examine the outcomes such as in Gauteng and the Free State.
Mr Ryder added that he did not think that the Western Cape’s under-performed was in Maths, Science and Technology subjects as the presentation shows the percentage to be only at 75%. Out of the 22 workshops, the province delivered 32 which should indicate its over-performance.
Mr Ryder noted that there were a lot of movements of money being shifted from one project to the other at the end of the 2019/20 financial year. He wanted to know how much of the fund has been shifted and for what projects were the shifting of budgets.
Mr S Du Toit (FF Plus, North West) wanted more detail about the Expanded Public Works Programme (EPWP). He commented that the spending for the EPWP was quite well across provinces. He asked whether or not the National Treasury could be recommended to undertake an analysis on the return on investment of the money spent on EPWP employees.
Mr Du Toit asked National Treasury to provide the same type of reports on grant expenditure outcomes but from the 2015/16 financial year. He recalled that the North West and Limpopo provinces had a track record of underspending.
Given the economic contraction Mr Du Toit asked if the Treasury could make a prediction to the Committee on the shrinkage impact on grant payments in the next financial year. ‘Will the amount for grant expenditures also be shrinking as a result of the economic decline’?
Mr M Moletsane (EFF, Free State) expressed his grave concern over the non-achievement in Ilima performance. He enquired about the causes of provinces failing to reach their targets and details of the actual interventions in place. He stressed the importance of Ilima/Letsema in alleviating poverty and assisting the previously disadvantaged communities.
He enquired about the lack of information about the Free State Province on the building, upgrade and maintenance of libraries on Slide 50. He needed clarity on whether the Free State Province did not perform or did not spend any money that resulted in the lack of information in this presentation.
Mr Moletsane made reference to Slide 19 of the presentation which outlined the performance of school infrastructure maintenance. He described the performance of the Eastern Cape and the Free State Provinces as shocking and unacceptable. He wanted to know what could be the cause for those provinces’ poor performance and whether or not interventions had been taken.
Mr Z Mkiva (ANC, Eastern Cape) commented on the general trend of non-performance among some expenditure grants and the lack of actions taken to remedy the non-performance. He asked why the National Treasury has not done anything to certain provinces because some of the non-performance in some specific provinces has already become a pattern throughout the years. He named the non-performance in the Department of Arts and Culture. He said that given the expenditure grant allocated to this Department is comparatively minimal, he found it unacceptable that the expenditure grant still had not been spent in some provinces. He expressed his concern as the Department of Arts and Culture is the fibre of society thus he questioned if Treasury had a plan. He said that he cannot and will not listen to under-performance reports in the next financial year again.
The Chairperson enquired about the Ilima/Letsema Grant June 2020 as well as many other grant expenditures. She noted that there was missing information for a lot of provinces as the presentation does not show any figures on how much those provinces had received. She wanted to know whether or not those provinces had received the grant. ‘If Treasury had not received the relevant information, when will the information be available’?
She expressed her frustration at Treasury’s late submission of the presentation documents. The Committee had only received the presentation slides yesterday late in the afternoon. She emphasised the importance for departments to submit presentation documents in advance so that Members could prepare. She warned the Treasury that should the same situation happen again, she might have to close the meeting.
She found Mpumalanga’s 10% of the Health Grant spending totally unacceptable. She expected provinces might have spent them all now given the severity of COVID-19.
She proposed that the National Treasury should submit a report to this Committee on a quarterly basis in order for the Committee to better monitor and oversee the grant spending performance. This would also afford the Committee the opportunity to decide if there was a need to ask the National Treasury or a provincial treasury to come to account.
Mr Y Carrim (ANC, KwaZulu-Natal) said that he understood that Treasury is under considerable pressure under COVID-19. However, he endorsed the Chairperson’s view that it is unacceptable to submit its presentation documents the day before the actual meeting began. He emphasised the importance of Members’ inputs. He suggested the adoption of a more targeted approach to select important appropriation work to come present to the Committee in future.
Ms Ngqaleni apologised forTreasury’s late submission and indicated that it would not happen in future.
She commented on Treasury’s position on monitoring grant expenditure spending in provinces. She said that she had just counted that there were probably up to 40 different types of grants across sectors in the presentation. One of the reasons that Treasury chose to give conditional grants is because the Treasury wants to be much more involved in monitoring grant expenditures. She said that national departments in those responsible policy areas as well as the provincial departments should be accountable for how grant money is being spent. The Deputy Director-General confirmed that National Treasury is concerned with the under spent money in some provinces which is why it was highlighted in the presentation.
The DDG responded to Mr Du Toit’s question around the Expanded Public Works Programme return on investment issue. She said that she thought the money budgeted for the EPWP programme had been spent on important labour-intensive issues such as making sure that grass had been cut and potholes had been filled. But if there is underspending on the EPWP grant expenditure, she agreed that it is an issue for concern and that the issue needed to be examined and interrogated with the relevant departments involved.
The DDG said that she is unable to make a prediction on the exact percentage that grant expenditures would be affected by the economic contraction. Those decisions are still in the process.
The DDG responded to the question around the poor school infrastructure in the Free State. She said that Treasury has been supporting provinces via various programmes to ensure that relevant departments provide service delivery. It is concerning if after all that effort there is still challenges. She pointed out that there is also the need to improve greater communication and work relationships between the Department of Public Works and the relevant department in charge of planning the work such as departments of health or education.
Mr Pillay responded to Mr Ryder’s questions on the indicators. He explained that the National Treasury had selected a few indicators for brevity sake in the presentation. What had just been presented was just one aspect of the performance. It does not show the correlation between the two variables but rather to highlight what the Treasury does to indicate the performance of particular grant expenditure. Mr Pillay said that he could share all the indicators with the Committee so that Members could get a better idea of how the Treasury assesses the performance of grant expenditures.
Mr Pillay commented on the movements of budgets in the 2019/20 financial year. He said that there had been two major movements. One is the R541 million Education Infrastructure Grant (EIG) grants which were re-appropriated to provinces to improve their capacities to deliver services. Those amounts included R184 million from Gauteng, R131 million from the Limpopo province and R225 million from the Northern West province which were then reallocated to Eastern and Northern Cape provinces and Mpumalanga province. The other movement of a budget was the Human Settlement Development Grant. Treasury stopped R293 million from the Free State, Gauteng and Northern Cape provinces and the fund was redirected to the Eastern Cape, KwaZulu-Natal, Mpumalanga and Free State provinces.
Mr Pillay said that with the missing figure for the Library Grant for the Free State province, he would get back to the Committee in writing after he checked the relevant data.
Mr Pillay commented on the poor school maintenance performance in the Eastern Cape province and Limpopo. He said that the issue with the Education Infrastructure Grant was similar with many other infrastructure projects. These issues were usually contractors not delivering services on time, poor workmanship, and etcetera.
Mr Pillay said that the Treasury would now submit quarterly reports to the Committee on grant expenditures.
Ms Ngqaleni said that Treasury would also provide the Committee with the reports that Mr Du Toit had asked for from 2015.
Ms Ngqaleni explained the missing information under receipts for some of the provinces such as the North West and Gauteng provinces. During the beginning the financial year, National Treasury had an issue with the business plans that were submitted by those provinces. As a result, Treasury could not transfer funds to provinces. So the spending funds as shown in those slides were spending funds voted out of the provincial budgets. They did not come from National Treasury.
The Chairperson asked when the municipal grant expenditures could be submitted.
Ms Ngqaleni said that section 71 reports will be provided separately from the provincial grants.
The minutes of meetings of the 02, 11 and 16 September 2020 were adopted without amendments.
The meeting was adjourned.
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