Departments of Social Development and Basic Education underspending between 2011/12 and 2020/21: PBO briefing

Meeting report

The Chairperson welcomed the Committee Members and the officials of the Parliamentary Budget Office (PBO), who had come to brief the Committee on the underspending of the Department of Social Development and Department of Basic Education.

An apology was received from the Minister of Social Development, Ms Lindiwe Zulu, and Mr W Aucamp (DA, Northern Cape).

Government underspending analysis 2011/12 – 2020/2021: PBO Briefing

Dr Dumisani Jantjies, Deputy Director, PBO, said there had been a debate about government departments' capacity to spend their budgets. This was concerning, because the government should spend its budget. The PBO was concerned that underspending would be used to justify reducing government budgets. The annual budget was a key policy tool used by the government to implement strategies, policies and programmes.

Social Development.

Dr Seeraj Mohamed, Deputy Director: Economics, PBO, provided the situational analysis for the Department of Social Development (DSD). Large sections of the South African population were subject to poverty and unemployment. The country had one of the world's most expansive social grant systems -- 47% of the population relied on the monthly grant. Between the years 2011 and 2015, three million people had been pushed into poverty. The number of orphans in South Africa was growing, and there was a cost of living crisis. According to the Household Affordability Index, the household food basket costs more than the minimum wage. Unemployment and poverty have increased social ills such as gender-based violence (GBV), child abuse and substance abuse.

Budget allocations

Ms Lwazikazi Ntinzi, PBO, said that social grant levels had increased in real terms by 5% in the 2023/24 year. She said that the child support grant was below the food poverty line.

Ms Sbusisiwe Sibeko, Finance Analyst, PBO, said that to gather their information, the PBO had used both qualitative and quantitative methods to assess the extent to which there had been underspending in government.

The reasons for national-level government underspending were:

• Supply chain management (SCM) problems 
• Compensation of employees
• Challenges with new programmes
• Delays in project completion
• Delays in invoicing.

Reasons for provincial-level underspending trends were:

• Compensation of employees
• Process delays
• Supply chain management processes
• Delays in project completion.

There had been underspending of the COVID-19 social relief of distress (SRD) grant, but the Department of Social Development had amended the criteria for the grant, and this would allow more people to be eligible for it. R5.5 billion had been shifted away from DSD due to the underspending.

Education

Mr Kagiso Mamabolo, Economic Analyst, PBO, said there had been massive gains in access to education, but there had been a decline in the attendance of children aged between 0 and 4 years, from 36.8% to 28.5%. Children in poorer households were more likely to stay at home with their guardians. Fewer than 50% of grade 1 learners learnt the letters of the alphabet by the end of grade 1.

She said the reasons for underspending were:

• Supply change management problems
• Compensation of employees
• Non-implementation of projects
• Process delays
• Cash flow problems
• Increased efficiency
• Reprioritisation of funds

Dr Mmapula Sekatane, PBO Policy Analyst, Economist, PBO, provided an analysis of the conditional grants. She said that education infrastructure and the national school nutrition programme grants were the largest grants combined. Between the years 2011/12 and 2021/22, learners with severe to profound intellectual disability grants had incurred underspending. This was particularly the case in the Limpopo province.

Concluding remarks

Dr Jantjies said that social grants played an important role in alleviating poverty and inequality in South Africa. In the field of education, most of the problems with underspending could be addressed, and most of them were systematic.

For the full presentation, see the attached document.

Discussion

Mr D Ryder (DA, Gauteng) welcomed the presentation, and said that the PBO was doing a good job. He addressed the social development segment of the presentation, and pointed out that the analysis went only to 2021. 2021 had been an odd year, and there could be some forgiveness for some grants that were not paid out, but other grants needed to be paid. A clear line had to be drawn between what could have been spent and what could not have been spent -- for example, feeding people should have been differentiated from grants like construction grants. He understood that 2021 had been an anomaly.

It was a problem that people were relying more on grants. South Africa did not have a system that was progressive enough so that people could receive a grant and then work their way out of the system. The efficacy of the grants needed to be considered. Some people received social grants when they should not be receiving them. He said that there had been consistent underspending on dignity packages in Gauteng for seven years. This was a big problem, and there was an indication that there would be underspending again. Non-profit organisation (NPO) funding was also a big issue, because there were cuts in April, but this had been reversed. However, it was still very alarming that not all of that money had been reversed. He asked that the PBO increase its monitoring and evaluation of the different departments because of the lack of reliability of the information that had been presented.

Mr M Moletsane (EFF, Free State) asked if there had been an improvement in filling vacant posts. Underspending denied the people of South Africa service delivery. He asked what advice the PBO had for the Department of Social Development to eradicate all the factors contributing to its underspending.  

Mr F du Toit (FF+, North West) asked why not all the provinces in South Africa were mentioned in the presentation. He raised a concern about the spending trends in the North West province. He asked what would replace the SRD grant, since the Minister of Finance had stated recently that South Africa was running out of money.

Ms L Moss (ANC, Western Cape) raised her concern about the overworking of 55 social workers. There was too much work for such a small group of workers. She said this had been a long-standing issue, and asked how it would be resolved. She asked that the Committee be provided with a way forward to address all the reasons for underspending. She mentioned the 2020/21 year, and was concerned that some people had not received their grants. She asked what would be done to address this.

The Chairperson appreciated the work done by the PBO,  and the fact that young women were part of the team. She asked what the solutions to eradicate the challenges of underspending were. She said that continual underspending became a problem for the Committee as an oversight body, because it would lead to lower budget allocations. She was concerned about the reasons provided for underspending, and said that these could not be accepted. It was unacceptable that citizens were not getting services when money was available. She asked that the Committee be provided with a time frame that outlined when issues of underspending would be addressed. The PBO also needed to take these presentations to the sector committees because the presentations would be very helpful to them. She asked if there had been an engagement with the Auditor General (AG).

Social Development's response

Dr Robert McDonald, Head: DSD, Western Cape, asked to correct slide 18. He said that the correct figure was R20 million, not R406 million. The percentage underspent was 0.7%, not 15% as reported.

Mr Fanie Esterhuizen, Chief Financial Officer (CFO), National DSD, said that Cabinet and National Treasury controlled the underspending of the budget. The Department did not have the right to re-use the funds for anything else -- that was up to the Cabinet. He said that only R1 billion was budgeted for operational costs. There was little room to move money around.

Ms Totsie Memela, Chief Executive Officer (CEO), South African Social Security Agency (SASSA), said that the SRD grant that was introduced when COVID-19 started had required that all efforts of the normal SRD grant be redirected. She asked Members to note that there had been a start and stop in the spending of the SRD grant, to make sure that the rollout was stabilised.

Mr Brenton van Vrede, Executive Manager: Grant Operations, SASSA, said that the biggest challenge was the fluctuations of the SRD, because this grant had the biggest underspending. The COVID-19 SRD grant was very difficult because it was implemented under emergency conditions and was implemented quickly, which was why there had been constant fluctuations. There has been stability since 2022. There had been challenges with SASSA’s banking partner, Post Bank, because people had not been able to withdraw their money when they got to automatic teller machines (ATMs) because of technological problems. Post Bank had given an assurance that the technical issues had been fixed. However, this forced SASSA to reconsider the banks that they partnered with.

Basic Education's response

Mr Mathanzima Mweli, Director-General, DBE, said that the Department had strengthened its monitoring of provinces, and was equally concerned about overspending. He agreed that systems and processes delayed service delivery, not a lack of money. Spending on infrastructure had improved over the years, and this was because of monitoring. The HIV and Aids, and Mathematics, Science and Technology (MST) grants had improved monitoring, but internal problems were still provincially. He said the Early Childhood Development (ECD) programme had been going on for only a year. The system was still getting used to the grant, and there had been an improvement in this financial year.

PBO's response

Dr Jantjies welcomed all the questions from Members, and said that the PBO would be happy to work with sector committees. Although not all the provinces had been mentioned in the presentation, the picture was generally the same, but more substantive information would be provided to the Committee. The PBO acknowledged that there would always be a bit of underspending. The system needed to be able to move the money around to make sure that they could solve problems with the money. Filling vacancies was important, as this could provide stability and help departments get work done. The SRD was meant as a critical response, and previous studies had shown how effective the grant had been.

Ms Sibeko said that the numbers in the presentation would be checked, and the PBO would revert to the Committee. Inadequate budget allocations had driven underspending. She agreed that there should be an investment in the people, because this had a regenerative effect.

The PBO acknowledged the underspending problem in Gauteng. Each province had different reasons for underspending. The PBO faced limitations, because they relied on the annual reports they got from provinces. There had not been any follow-ups on what was being done to fill vacant posts in the last year. National Treasury had announced that there had been a freeze in the filling of posts.

Not all provinces had been used in the presentation because they did a sampling, which helped save time.

Dr Sekatane said there was another report being worked on by the PBO for conditional grants, and this could be discussed in depth with the Committee at a later stage.

The Chairperson asked that the PBO revert to the Committee by Friday.

The Chairperson thanked the different departments for their attendance and excused them.

Approval of minutes

The Committee discussed the minutes of 14 June. Mr Y Carrim (ANC) and Ms Moss moved for their adoption.

The meeting was adjourned.