Western Cape Adjustments Appropriation Bill: Provincial Treasury

Finance, Economic Opportunities and Tourism (WCPP)

28 November 2022
Chairperson: Ms C Murray (DA)
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Meeting Summary

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The Western Provincial Treasury presented its 2021/22 adjusted budget, and reported that it had surrendered some funds back to the Provincial Revenue Fund. However, the budget adjustment was relatively small, representing less than 1% of the total Vote allocation.

Members expressed worry over the lack of uptake of bursaries, and sought an explanation. They also wondered what the reasons were for the delay in appointing staff. They asked how the budget reduction that would affect goods and services, consultancies and travel-related activities, based on the amount reflected under the supply chain sub-programme.

The Treasury responded that the benefits provided by its bursaries were limited, so bursars who got offers of other bursaries with better benefits preferred to take those up. They explained that the delay in filling certain posts was due to the very specialised skills set needed for the posts which were not easy to find, and took time to re-advertise. The Department also said that there were different reasons for each of the surrenders to the Revenue Fund, including the compensation of employees and the organisational development exercise which was still underway.

The Committee approved the Provincial Treasury’s 2021/22 adjusted budget and recorded the minority view of the ANC and Al Jama-ah, who opposed the Vote.

Meeting report

Opening remarks by Minister

Ms Mireille Winger, Western Cape Minister of Finance, said that the Department was going to present the budget for Vote 3: Provincial Treasury, which showed an overall decrease of R2.79 million from a total budget of R318.8 million. There were some earmarked allocations surrendered back to the Revenue Fund. There were also some shifts between programmes, a few roll-overs, and some increases in the budgets for goods and services as well as capital assets and payment of financial assets. With that broad overview, she said the Provincial Treasury had tabled the budget before the Committee. 

Mr David Savage, Head of Provincial Treasury, said the adjustment was relatively small -- under 1% of the total size of the Vote. The downward adjustment was related to some of the dynamics in compensation of employment (CoE) in terms of hiring, resignations and retirement.  

Discussion

The Chairperson said that due to time constraints, she would invite the Committee to consider Vote 3, which covered pages 37 to 50.

Ms N Nkondlo(ANC) asked the Department to provide the specific figures of the money that had been returned to the provincial revenue fund (PRF) by all the departments, and particularly on CoE. Referring to page 40 of the Vote on sub-programme 2.4, she sought an explanation for the reduction that would affect goods and services, consultancies and travel-related costs, based on the amount reflected under the supply chain sub-programme.

On the earmarked allocation that was surrendered (page 41), she asked the Department to provide background information on how that had happened, and any impact of those particular programmes where the budgets were being shifted to the PRF, and why the funds were being shifted back

Mr A van der Westhuizen (DA) referred to sub-programmes 2.2, 2.4 and 3.3, and pages 40 and 41 regarding the savings due to delays in the appointment of staff. During another meeting, the Committee had been informed that the Office of the Premier was handling the appointment processes, and apparently, that was why that other department was experiencing delays. He asked whether the delays the department was experiencing were also because of the delays from the Premier's office, and whether there was anything that could be done. What kind of delays did the Department expect, and how much worse was it now to fill those posts than had been anticipated?

Mr R Mackenzie (DA) referred to page 39, and asked why the staff did not take up the bursary opportunities. He also wanted to understand the reasons behind the savings due to lack of posts.

He asked for more details on the reduction of transfers to the Western Cape Gambling Board.

Department's response

Mr Savage said that the matter of all the surrenders that had been made back to the PRF across all votes was the subject of a parliamentary question which they were going to provide in as much detail as they had available, which was obviously on the financial side. On the headcount side, the personnel matters would be something they would need to refer to other Votes, where such information could be put together.

In response to Ms Nkondlo’s question on goods and services, he said that consultancy services were an asset management project that they were rolling out district by district, in association with the municipalities in each district. This helped to describe the current state of the asset management systems right across the full scope of what constitutes asset management for each municipality. There were a number of things in the asset management or the infrastructure space to support municipalities, because Treasury was concerned over the persistent low levels of capital expenditure by municipalities. It was not only a matter of spending on new assets, but also on the maintenance, rehabilitation and replacement of assets within the asset management framework. This constituted the rollout of the local government infrastructure delivery management system, but it was the starting point of ensuring that they were responding to the needs of the individual districts.

In response to the question on page 41, he said that there were different reasons for each of the surrenders. For the infrastructure development improvement programme, the reason was related to CoE and the organisational development (OD) exercise that was still underway. The items related to the financial capability grant were funds for which there were insufficient projects.

On the question of the delay in the appointment of staff, other reasons that had led to the delay were that it took a number of months to find a suitable candidate, and thereafter for that candidate to start work. Two factors made this a little bit worse in the current environment. The first was that they were often in the market for very specialised skills, so when they go out to the market in the first instance with an advert, they get many responses but very few candidates who fit the full job description. This often led to the re-advertisement of positions, which led to further delays. The second factor was unexpected retirements or resignations. In his view, he would not place blame on their colleagues in the corporate affairs committee (CAC). He believed that they needed to sort out their own house first, which was what they were trying to do. As such, they had strengthened their relationship with the services that the CAC provided in personnel matters and matters of recruitment. Their predominant problem was accessing specialised skills pools, and in one case, they had an OD exercise. He said they were getting better regarding the historical under-spending and the high level of vacancies.

Mr Steven Kenyon, Chief Director, Local Government: Public Finance, Provincial Treasury, responded on the municipal grants. He explained that at the beginning of the financial year, they had announced that they were consolidating two of the conditional grants that were capacity building suites, and had merged them into a single Western Cape financial management capability grant. This grant was allocated based on the conditions in the grant framework and their engagements with municipalities at the technical and strategic level around budget issues. Those engagements would conclude in June, and then based on what they had asked for, detailed proposals from municipalities were submitted and assessments were done, etc.

There was also a bursary component of the grant which had been reviewed. At the time that the main budget was tabled in March, the funds in that grant were not allocated, following the mentioned processes. The funds had then been allocated. In the last year, they had surrendered a few million rands from the consolidated set of grants. This year, the total amount that had been allocated to municipalities came very close to exactly what was contained in the grant, but after going through the allocation process, one of the municipalities indicated that they would not be able to implement what they had originally said they would, therefore an amount of R417 000 remained unallocated in the grant. They would hopefully find an additional project and allocate it before February.

 

There was an additional amount of 274000 under the same grant that they were not able to allocate to a project out of the R18.7 million that was originally in the grant at the beginning of the financial year. The unallocated funds would be surrendered to the PRF. There was also an amount of R900 000 that was shifted out of that grant to go to the Department’s asset management project, instead of transferring funds to municipalities to implement one by one on asset management projects. The province was funding transversely, as it was more efficient to fund projects transversely.

The other grant was the Western Cape financial recovery services grant, which was available only to municipalities under intervention. In the past, they had had a much larger grant of R5 million. Much of that funding had been moved to the Vote of the Department, where it was used for consultants deployed to very specific time-limited projects to assist municipalities, and provide capacity within Treasury to assist in interventions. They had not yet gazetted a transfer to any individual municipality, but they were assessing proposals for a revenue enhancement scheme in a municipality, and they were hoping they would be able to work with them to transfer the funds by February. However, from the initial assessment of proposals, there was an initial allocation of R2.393 million, but they would not need at least R400 000 of that amount, so they would rather surrender that to the revenue adjustment funds budget than let it go unspent at the end of the financial year.

Ms Naadia Ismail, Chief Director: Strategic and Operational Management Support, Provincial Treasury, responded to the low uptake of the bursary, and said that the external bursary programme covered the full tuition fees and a minimal amount of R3 000 for textbooks. They had found themselves competing with other bodies, such as the National Student Financial Aid Scheme (NSFAS), whose offering was much more attractive. Therefore they lost some of the bursary applicants to them. This was an issue that they were concerned with, and they had so far identified that they needed to review the policy to address the concern and afford opportunities to other categories of youth that may have in the past either earned too much to be eligible for the bursaries, but had to contend with the rising cost of living.

Ms Annamarie Smit, Chief Financial Officer (CFO), Provincial Treasury, said that Treasury transferred money to the Western Cape Gambling Board so that they were able to fund their own budget. They were trying to make them self-sustainable, but when they received the calculations for the transfer, the board had indicated that they needed a specific amount to be transferred. However, due to the increased fees and costs, they had indicated that they required R1.269 million less than the Department had previously made provision for, which was the main reason for the decrease.

Adoption of report on Vote 3

The Chairperson asked Members if they were ready to consider the Committee report on Vote 3 by expressing their support or rejection. 

Ms Nkondlo asked, given the load and time pressures, what the best way of allowing Members who had additional questions would be to get a written response from the Department, and have the responses form part of the report that was calling for support or rejection. She was grappling with how the Committee had to deal with the pressures of time when confronted by these kinds of budget adjustment meetings.

The Chairperson said that the issue of time should be noted under resolutions. It was an area in which they could benefit from procedural guidance. However, if the Members were happy to do so, she would prefer to move on to whether they supported or rejected the Vote.

Mr van der Westhuizen proposed support for the Vote and suggested a report be compiled showing the issues being raised by Ms Nkondlo.

Mr Mackenzie also indicated his support for the Vote.

Mr G Brinkhuis (Al Jama-ah) expressed his minority view not to support the Vote.

Ms Nkondlo also registered the ANC’s minority view not to support the Vote.

The Chairperson asked the secretary to note the changes in the report, and thereafter called for its adoption.

Mr Mackenzie moved for the adoption of the report.

Mr Van der Westhuizen seconded.

The report was adopted.

Committee matters

The Chairperson said that she wanted to discuss the way forward regarding the Copyright Amendment Bill and the Performer’s Protection Amendment Bill. The Committee would commence the public hearings during the cluster visit weeks, from 6 to 10 February. They had multiple locations in various municipalities. She asked Members to finalise the list of mainstream and community papers, and the new community newspapers that the Bill and public hearings would be advertised in. The advert would run from the beginning of January, and the Committee would then decide whether they wanted written or oral submissions ahead of the relevant public hearings, which must be submitted by May. She asked Members to provide feedback on the way forward.

Mr Brinkhuis asked how to go about forwarding the names of the different newspapers for broadcasting the venues.

The Chairperson asked Members to suggest the names of their chosen newspapers via the Committee's Whatsapp group.

The meeting was adjourned.

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