Conditional Grants: hearings

Meeting report

FINANCE SELECT COMMITTEE
7 June 2005
CONDITIONAL GRANTS: HEARINGS

Chairperson: Mr T Ralane (ANC) (Free State)

Documents handed out:
PowerPoint presentation by Northern Cape Department of Health
PowerPoint presentation by Gauteng Department of Health
PowerPoint presentation by Free State Department of Health
PowerPoint presentation by Mpumalanga Department of Health and Social Services
PowerPoint presentation by North West Department of Health
PowerPoint presentation by National Treasury

SUMMARY
The Committee was briefed by various provinces on health conditional grants. Most provinces reported major underspending in some grants. The Committee was concerned that underspending was depriving communities of services. The overall spending and budget trends showed a positive growth in the health budget over a seven-year cycle. Over the past three years, there had been an average of 11.4% growth in all provinces. Mpumalanga had averaged growth of 16,7% despite the fact that it was underspending and the North West had averaged growth of 15,7%. Gauteng had experienced the least growth and the underspending was surprising given the low growth.

There was good spending on the HIV/AIDS grant. The Committee would have to investigate if the spending translated into good practical outcomes. It would also have to decide which province to visit for the purposes of seeing the outcomes of the spending patterns to which Treasury had alluded. It already had a sense of what was happening in the education field following hearings in a previous meeting.

The Committee was dissatisfied that neither the MECs nor Heads of Departments from Gauteng and North West Provinces had attended the meeting. There were suggestions that the provinces should not be allowed to present before the Committee in the absence of their leaders.

Provinces had indicated that there had been some delays in the transfer of funds due to non-compliance with the Division of Revenue Act.

MINUTES

National Treasury briefing
The National Treasury was presented by Mr M Blecher (Director). He focused on the health spending trends for the year ended on 31 March 2005. (See document attached). Gauteng had the biggest underspending in that it underspent by R347 million (3.9% of the budget) followed by Mpumalanga who underspent by R122 million (5.1% of the budget). The North West and Mpumalanga Departments had underspent for two years in a row. In 2003/04 the Mpumalanga Department had underspent by R146 million (6.8% of the budget) but was stepping up its expenditure fairly rapidly. The Free State and Kwazulu-Natal provinces had over spent and Treasury was not particularly worried about this.

The overall spending and budget trends showed a positive growth in the health budget over a seven-year cycle. Over the past three years there had been an average of 11,4% growth in all provinces. Mpumalanga had averaged growth of 16,7% despite that it was underspending and the North West had averaged a growth of 15,7%. Gauteng had experienced the least growth and the underspending was surprising given the low growth.

With regard to spending on personnel, there had been underspending of R429 million. The media had reported widely on underspending on health capital. Provinces underspent by R514 million. The biggest underspending occurred in Gauteng (R177m) and Mpumalanga (R160m). The situation was worse because Kwazulu-Natal seemed to suggest that it was not underspending at all but it had experienced several tender problems in their projects. It had returned R178 million to the National Department of Health. There had been encouraging growth in the non-personnel, non-capital (NPNC) expenditure but there was under budgeting by some provinces for NPNC.

Spending on conditional grants had not been very bad. However, most provinces seemed not to know what they were expected to do with the allocation for malaria and cholera prevention. There had been some underspending on the Integrated Nutrition Programme in its current format. It was worrying that spending was fairly low as of end of December 2004 and had suddenly picked up in the last two or three months of the financial year. It was unclear how the money was spent. Spending on the HIV/AIDS grant was fairly good. The problem was that the National Department had delayed several payments because several provinces did not comply with the requirements of the Division of Revenue Act (DORA). For instance, there was R69 million available for the Free State Department and the National Department only transferred R52 million and Mpumalanga had R65 million available but only received R40 million. There was a real problem with regard to performance reporting on this and most of the other grants. Treasury did not have a good sense of what was being achieved by the grants. The monitoring and evaluation systems in provinces were not very strong. There were questions around what funds were being spent on in provinces that had low treatment numbers. Some of the provinces had very few patients on the comprehensive treatment plan but they had claimed that they were spending all their money.

There was also underspending on the Hospital Management grant. The National Department had delayed transfers to provinces due to lack of compliance with DORA. Mpumalanga had received only R12 million out of the R28 million that was available. There was also poor reporting on what the grant was achieving. The Hospital Revitalisation grant required serious attention. There were concerns around slow spending, performance reporting, late submission of business plans and underspending. An amount of R178 million was returned by KwaZulu-Natal following several major tender challenges. There was substantial underspending in Gauteng. Provinces were experiencing problems in terms of shifting to the Revitalisation approach which was meant to be a shift from small projecst to big projects. In some cases projects were taking up to ten years to complete. There was a need to properly manage and fast track the hospital revitalisation projects.

The Chairperson noted that there was good spending on the HIV/AIDS grant. The Committee would have to investigate if the spending translated into good practical outcomes. It would also have to decide which province to visit for the purposes of seeing the outcomes of the spending patterns to which Treasury had alluded. It already had a sense of what was happening in the education field following hearings in a previous meeting.

Free State Department submission
The provincial Department was represented by Mr S Belot (MEC), Mr S Shuping (Acting Head for Health), Dr RD Chapman (Executive Manager: Health Support Cluster), Dr A Schoonwinkel (CFO) and Ms S Khokho (Acting Executive Manager: Clinical Services). Mr Shuping gave the presentation. (See document attached).

Mr Shuping said that according to the detailed analysis of the preliminary outcomes for 2004/05 provincial budgets on health, the nine provincial Departments had spent R40.3 billion of the combined adjusted budget of R40.8 billion. The Free State Department had spent 1.4% more on its adjusted budget. The preliminary outcome had indicated that the Department would over spend its budget by R39 million. The Department had good expenditure in the comprehensive HIV/AIDS, Hospital Management and Quality Improvement, Hospital Revitalisation and Integrated Nutrition Programme grants. The over spending on medicine and consumables had remained under pressure and the over spending on goods and services amounted to R116 million. The over spending on financial transactions in assets and liabilities was due to losses that were not budgeted for. The underspending of R32.3 million on capital projects were due to capital work that was in progress and would continue in 2005/06 and a roll over of these funds had been requested.

Reflecting on the past three years, he said that their big challenges were with the Integrated Nutrition Programme, Provincial Infrastructure and the Hospital Revitalisation grants. The implementation of the Basic Accounting system (BAS) in 2004/05 provided a challenge to manage expenditure. It was hoped that this year the BAS would be used to empower managers to manage budgets and control expenditure better. In future all conditional grants would be spent based on approved business plans. A Programme Manager had been allocated to manage each conditional grant supported by a Managerial accountant to support the monitoring of spending trends. The business plans on conditional grants for 2005/06 had been submitted or already approved.

Discussion
Mr E Sogoni (ANC) (Gauteng) noted that in some cases the transfer of funds had been delayed due to non-compliance with the DORA. He asked Treasury to elaborate on this. The Free State province had not done badly. However, capital expenditure was rather low and there was a need for such expenditure. He asked why capital expenditure was low. He also asked at what level Project Managers were appointed.

Mr Shuping replied that the Department had realised that it was not a question of appointing Programme Managers who would compete with line managers. Programme Managers were appointed at the levels of Deputy Directors or Directors but were under the overall control of the Chief Director.

Mr D Botha (ANC) (Limpopo) said that there was an underspending of 17.6% on the Health Capital allocation and asked if there were specific reasons this. He asked if there was a process to improve the situation. The 3, 8% underspending on health personnel was due to savings from vacant posts. He asked if vacancies did not impact on service delivery.

Mr Shuping replied that the underspending meant that the Department could not fill critical posts. However, the Department was applying the breaks on spending so as to avoid over spending. The actual implication was that the budget had been juggled and spread between the three legs of the Department. The consumable leg of the budget was over stretched and thus the breaks on spending on personnel. It looked like some help from outside would be necessary otherwise the Department would be forced to reduce spending on one leg in order to support another.

Mr Z Kolweni (ANC) (North West) said that the Department had presented a clear and good report. The over spending on the NPNC in terms of the preliminary outcomes should be taken care of in future. He commended the Province for its revenue raising capacity and the monitoring mechanisms it had put in place. This was a very good example of how other provinces should operate.

Mr Shuping replied that it was important to appreciate that the public service was still working on a cash based system. The Department had underspent by R50 million in the previous financial year. The reason for this was that R21 million for medicines was procured during that year but the payment only went through last year. The R37 million over spending should actually be R37 million, minus R21 million.

Mr B Mkhaliphi (ANC) (Mpumalanga) said that it seemed that the Department knew where it wanted to go and had already paved the way forward. He commended the MEC and his team for the good work they had done. It seemed that the Department had not yet taken off in terms of taking over the mortuaries and forensic services that were previously run by the police. He asked what the reasons were for the slow spending on medico-legal services.

Mr Shuping replied that the transfer of mortuaries from the SA Police Services to the Department of Health had not taken place in all provinces. The money that had been given was not for the transfer per se but for provinces to develop plans on how to transfer the services. All provinces were expected to cost the take-over of the project. One of the principles was that provinces would only take over this service when it was fully funded so as to avoid unnecessary pressure on provincial budgets.

Mr M Robertson (ANC) (Eastern Cape) was aware that the hospitals in the Free State had always operated under high standards. This could be the reason why the Department had only spent 90, 56% of the Hospital Revitalisation grant. Under the assessment of monitoring capacity, some provinces seemed to have problems with systems like BAS. He asked what the problems were. It seemed like there was a trend across the provinces of pointing fingers at the Department of Public Works. The Free State, like the Eastern Cape province, had a large rural area. The Eastern Cape had picked up some problems relating to ambulance services in the rural areas. Barkley East and Aliwal North had to get their ambulances from Queenstown which was over 200 kilometres away and this was very bad. He asked if the Free State province had the same problem.

Mr Belot replied that the Department had been trying to bring the response time to emergencies down. This was challenging and it was difficult to say that the Department had sufficient personnel and vehicles. The level of training of personnel was another issue. The Department had a rapid response and passenger service that carried patients from one facility to another. There were also the actual emergency services that were generally known as ambulances. The Department was working on a maximum of between 10 and 15 minutes response time in towns and city areas. It had placed and stationed its services so that they covered a radius of 45 kilometres or 100 000 people. This was not ideal but only what the Department could do given the resources at its disposal.

Mr Chapman replied that three provinces had implemented BAS last year and the Free State was one of them. The implementation of financial systems was part of Treasury’s obligations. The Free State province had experienced problems with regard to payments and orders. This was the reason why the preliminary reports did not show the actual expenditure situation. The system prohibited someone effecting payment for an item that had not been budgeted for. No payments could go through for some of the expenditure items or accounts. Many of the payments had to be put on suspense accounts. It was hoped that things would improve as the province got experienced in the use of the new system.

The Chairperson asked which programmes would be compromised as a result of over spending. He noted that Treasury would deduct the R37 million by which the province had over spent. He asked if this would impact on service delivery in the province.

The Chairperson asked what the implications of the underspending on capital equipment were. He noted that all the provincial Departments within the cluster would have to contribute through savings in order to fund the over spending of the previous year. He thought that this was far fetched because one of the sister Departments (Education) had already underspent. It seemed like there was no proper communication within the cluster. The issue of the building of clinics by municipalities was problematic. In terms of DORA, certain municipalities could be accredited and be allowed to build houses. He asked if local municipalities in the province had the capacity to build quality clinics. He suspected that the majority of them did not have the necessary capacity.

Mr Belot replied that the Department’s expenditure came from consumables like medicines. This was a difficult area because it was difficult to estimate how many people would fall ill at any given time. It was also difficult to over stock because some of the consumables had a defined shelf life. There was a need for a balancing act. The Department had gone over by 1% but had made sure not to compromise service delivery. It would not have made sense to say that the Department was delivering health care services when it was unable to provide medicines. It was for this reason that the Department had taken steps to ensure that consumables were available.

With regard to underspending on capital equipment, he said that the Department had already applied for roll over and the application had been approved. The roll over would be used to complete outstanding work on capital projects. There were factors that spilled over to the next financial year.

Mr Shuping replied that the reason for the underspending on capital projects was more on the infrastructure part of the capital budget. About R10 million was for unfinished clinics that municipalities were contracted to build. With regard to the building of clinics by municipalities, he said that there had been delays in the building of smaller clinics by the Department of Public Works. There were good clinics that had been built by municipalities using their own provision and supply chain management. Last year there were hiccups in that some municipalities could not deliver clinics. The clinics would be completed using the roll over that the Department had requested.

The Department was also capacitating and supporting municipalities to appoint project managers. An amount of R18 million was delayed and rolled over for the procurement of equipment for the trauma unit. The reason for the delay was that the amount was approved in November 2004 and the tender was approved around February or March 2005. The Department could not pay for the delivery of some of the items because they were delivered after the year had ended. Another R5 million was for the orthopaedic and prosthetic unit that was supposed to be transferred to another facility. The tender process was not finalised in time. The Department had since realised the need for better planning.

With regard to the covering of the shortfall of the budget through savings, he said that the Department was referring to departments within itself and not other government Departments.

The Chairperson said that the Department would again be called sometimes in July to come and give the outcomes of the first quarter.

North West Department submission
The North West delegation was composed of Ms T Chababa (Chief Financial Officer) and Dr S Modise (Chief Director: Strategic Health Programmes).

The Chairperson said that the North West province was in the "intensive care unit". He requested the delegation to present before the Committee.

Mr Sogoni lamented that the Head of the Department was not among the delegates.

Ms Chababa apologised on behalf of the MEC. The MEC had been hospitalised over the weekend and released yesterday. He had intended to be present in the meeting. She also apologised on behalf of the Head of Department (HOD) who could not make it due to unforeseen circumstances.

Mr Sogoni said that the presentation by National Treasury had indicated that the North West was one of the provinces that had continuously underspent. He could not understand why the HOD was not present at the meeting. He proposed that the province should not be allowed to present in the absence of the HOD or MEC.

The Chairperson said that the province was in the intensive care unit. He appealed to Members to allow it to present. The Committee would not be able to get information should it dismiss the delegation. He had earlier thought of dismissing them until he discovered that the Chief Financial Officer was in attendance. It was important for the Committee to know the state of affairs in the province. There was nothing the Committee could do about the fact that the MEC had fallen ill, or that the Head of Department could not attend the meeting due to unforeseen circumstances.

Ms Chababa said that she had noted the concerns and would convey them to the MEC. The Department had a budget of R2, 7 billion for the 2004/05 financial year. She confirmed the figures that had been presented by Treasury. The Department had spent 99, 9% of its recurrent budget. It had spent 74% on capital projects and this was the area in relation to which it was in the red. The under expenditure was 2,6% and was mainly on capital expenditure.

The Department had created a post of Conditional Grants Manager for monitoring all the Conditional Grants and the post was filled in November 2004. The Manager was responsible for monitoring expenditure of conditional grants and whether the expenditure complied with the conditions of the DORA and the approved business plans. Financial management capacity at all levels still required strengthening.

Planning in respect of the infrastructure grant had taken longer than expected. There were poor tender responses for some projects and some delays in the appointment of consultants. The Department’s relationship with the Department of Public Works should be improved. Expenditure on the Health Professions Training and Development grant had been satisfactory. The underspending in this respect was due to challenges faced in terms of attracting personnel.

Some funds from the comprehensive HIV/AIDS grant had already been committed to various sub-programmes. The activities had taken longer to complete due to delays in the supply chain management for securing relevant service providers and finalising Service Level Agreements. The National Department had not transferred an amount of R22.8 million and a request for a roll-over had been made. Two out of the three revitalisation hospitals had experienced some delays and this lead to underspending of the Hospital Management and Quality Improvement grant.

The Department also experience delays with regard to the Hospital Revitalisation grant. The tendering process for projects took longer than expected and implementing agents did not adhere to the programme. Expenditure was not good mainly because the Department had a roll over of R34 million from the previous financial year. It was hoped that all committed funds would be spent as planned. The first transfer under the Integrated Nutrition grant was received three months later than scheduled and this impacted badly on the plans of the nutrition programme. The expenditure had been low due to a transition phase for the transfer of the programme to the Department of Education. The roll over in this area was earmarked for paying outstanding accounts. The Department also had a pending court case and did not know how much it would have to pay. Business plans for 2005/06 for all grants had been sent to National Office and had all been approved. The province had already received transfers for April and May.

The Department had spent 92.44% of the medico-legal services grant and this was satisfactory given that a project manager was only appointed in the middle of the financial year. The outstanding amount was for the salary of the project manager.

Discussion
Mr Botha could not ask questions because the HOD was not present in the meeting. Some questions required answers from the HOD. He suggested that the delegation should not be asked any questions. The HOD should be expected to appear before the Committee and answer any questions that it might have.

Mr Mkhaliphi supported the approach suggested by the Member. The delegates did not show the achievements that had been achieved following the appointment of the Grant Manager.

Mr Robertson said that once again fingers had been pointed at the Department of Public Works. There had been a lot of rollovers given to the North West. He wondered if the Department would have the necessary capacity to handle the funds.

Mr Sogoni also felt that it was not desirable to ask questions because the HOD was not present in the meeting.

Mr Kolweni said that the situation in the province left too much to be desired. Members would have liked to pose a lot of questions.

Ms Mchunu asked if the Department had investigated the possibility of training its own staff instead of recruiting more people.

The Chairperson asked Treasury if, instead of using conditional grants, provinces took part of the equitable share and later generalised. He was of the view that provinces used part of their equitable share because they did not want to comply with conditions for grants. He also asked if Treasury had allowed this to happen.

Mr Blecher replied that this could be done if the spending was in line and fulfilled the purpose of the grant.

The Chairperson said that it seemed there was serious negligence within the Department in relation to underspending. The community wanted service delivery but the Department had continually underspent. He did not give the delegates an opportunity to respond to issues raised by Members. The Committee would interact with the leadership of the Department.

Gauteng Department submission
The Department was represented by Ms T Majaja (Chief Financial Officer) and Mr G Cromhout (Director: Financial Management).

Mr Sogoni said that Treasury had indicated that Gauteng was one of the worst performers in this field. He felt that this province should not be allowed to present in the absence of the MEC or HOD.

Ms Majaja said that the HOD had another engagement and could not attend the meeting. She could not explain why the MEC was not in attendance.

The Chairperson appealed for Members to allow the delegates to make their presentation.

Mr Cromhout made the presentation. He outlined the various grants the Department had administered during the 2004/05 financial year. The Department had spent its total budgets for the National Tertiary Services, Health Professions Training and Hospital Management and Quality Improvement grants. There was underspending of R231million during the 2004/05 year in the HIV/AIDS grant. This was artificial and was mainly due to unprocessed journals at year-end. The Department had received approval from the National Department to use R90 million of the Revitalisation grant for the new Pretoria Academic hospital. A request for the roll over of the full amount had been submitted to the Gauteng Treasury.

A total of R8, 8 million from the Infrastructure grant had not been spent during the 2004/05 year. The whole amount was however committed during the year and expenditure would take place in 2005/06. A request for the roll over had been submitted.

Some of the challenges that the Department was facing related to the accuracy and reliability of data. Allocations did not take into account the cross border flow of patients. The range of services that were provided by institutions exceeded the grant allocations.

The Chairperson ruled that no questions would be posed to the delegation.

Northern Cape Department submission
The Department was represented by Ms E Selao (MEC) and Mr D Madyo (Head of Department).

The Chairperson said that the Department was ‘in the intensive care unit’ in relation to underspending in capital spending. Mpumalanga was the worst.

The HOD made the presentation. (See document attached). The conditional grants had increased at a dramatic rate over the years. The main contributors to this increase were the Hospital Revitalisation and Comprehensive HIV & AIDS grants. The decrease for the Integrated Nutrition Programme was because of the Primary School Nutrition component being managed by the Department of Education from 2004/05. The Integrated Nutrition Programme would be phased out in 2006/07. The other grant that showed a dramatic increase of 208% was the National Tertiary Services grant. He felt that the Department had performed well in the financial year because the budget included rollovers from the previous year.

Discussion
Mr Sogoni asked if the provincial Departments of Health were still running the Integrated Nutrition Programme. The programme had been transferred to the Department of Education. It was surprising that provinces were still reporting on the programme. The Department could only spend 66% of the Integrated Nutrion Programme grant. He asked why expenditure was so low given that the province had high unemployment figures and children needed the service. He noted that the Department was doing its own projects maybe due to problems that it was experiencing in dealing with the Department of Public Works. He wondered if this did not compromise certain services on the side of Health. The Department was doing work that was supposed to be done by another Department.

Mr Madyo replied that the Department had not been doing the work of Public Works in its entirety. The National government had provided resources to enable each provincial Health Department to have its own project office. It was difficult to recruit the right people. The Department was lucky to have a person in that office who was an architect by profession. The Department was only providing the necessary support to the work done by Public Works. He encouraged the Committee to visit the province and see what kind of work had been done. Underspending could be attributed to late payment for services rendered, and late submissions of claims by service providers.

He agreed that the Integrated Nutrition Programme was being phased out. Only the Primary Schools Nutrition programme went to the Department of Education. The Department still had nutritionists and dieticians who were doing a lot of policy work. This was the reason why the Treasury had decided that a small amount should remain in the Department and be completely phased out in the future.

The Chairperson said that the MEC for Public Works should have been at the meeting. Both the MECs of Health and Public Works might be called to appear together before the Committee at a later stage.

Mr Kolweni asked if the Department of Public Works had not contributed to the building of the two high-class hospitals that had been built in the provinces. There should be a model on how Departments should co-operate.

Mr Mkhaliphi said that the expenditure by the Department in some cases had amounted to 100% of the budget. Without shifting the goalposts, he asked how it was possible to do this during a financial year. He was concerned that there might have been some juggling of the figures or unusual shifting of timeframes for payment. It was desirable to have such kind of expenditure but the question was whether this was practical considering that there had been some underspending in other areas. The Committee had heard that the funds for medico-legal services could not be spent but the Northern Cape Department had recorded 100% spending in this regard. He wondered how they had managed to do this. Most health facilities were not yet ready to do anything with the funds. He also asked how it was possible to have drought relief projects in the Department of Health.

Mr Madyo replied that drought relief was meant for areas that had been affected by drought. The funding was for the immunization of children and food parcels for vulnerable patients. With regard to the medico-legal services, he said that the Department had received less than R1 million. It had commissioned an audit of the facilities of the medico-legal services under SAPS and used the money to pay for the service. It had employed people on contracts to do the study. The Department could not afford to play with the figures because at the end of the day the books had to be audited. It was important to avoid qualified audit reports or disclaimers. The National Treasury was very strict about the use of conditional grants. It was important not to compare the province with other provinces because they had received large amounts of money. The province was able to spend 100% of its budget because some grants did not fully cover the services for which they had been allocated.

The Chairperson said that the 58% spending on capital was gross negligence. The community wanted service delivery. He asked what the implications for underspending on service delivery were and if there had been any measures adopted to address the issue. He also asked what would happen to the unspent money.

Mr Madyo replied that the underspending on capital was not necessarily an underspending. The roof of a building was the most expensive part of the building. A lot of work had already been done. Major work happened towards the end of a project. It was just a matter of timing because the work had started late. Their Department of Public Works had performed better that other similar Departments in other provinces. Systems that were being used by provinces also made matters worse.

Mr Blecher said that Treasury was fairly pleased with the overall performance of the Northern Cape. It was now the highest spender per capita of any of the provinces. This could have been due to their low population figures. The quality of health care in Kimberly hospital even surpassed that offered in the private sector.

The Chairperson said that the Department should provide the Committee with a list of all projects that were taking place.

Mpumalanga Department submission
The Department was represented by Mr H Verachia (HOD), Mr R Mnisi, Ms P Rossouw and Ms N Masinga.

The Chairperson said that the province was "in the intensive care unit". Mr Verachia agreed.

The HOD apologized on behalf of the MEC who could not attend the meeting due to some engagements he could not postpone. The difficulty inI the province was that Health and Social Services were grouped under one Department and this put a lot of pressure on the MEC’s diary. The problems within the Department should be understood within the context of the breakdown in administration that had been persistent for years prior to 2003. The unspent amount on the budget for conditional grants totaled R70 225 000, an average percentage expenditure of 80% on the 11 conditional grants that were managed by the Department in 2004/05. The percentage expenditure varied from 59% recorded by the Hospital Revitalisation grant to 100% recorded by the Health Professions Training and Development grant.

Spending on the Hospital Management and Quality Improvement grant had decreased due to delayed implementation of the business plans and failure by service providers to deliver services in time for the year-end closure. The percentage expenditure on the capital budget was 64% as updated after year-end book closure. The under expenditure might be attributed to the dissolution of the Mpumalanga Provincial Tender Board at the beginning of the financial year. The appointment of service providers who did not meet the required standards delayed progress on capital projects. The Department had signed Service Level Agreements with the Department of Public Works in order to address some of the challenges it had faced in 2004/05. It would appoint a project manager to focus on the capital revitalisation projects. All business plans for 2005/06 had been submitted to National Treasury.

Discussion
Mr Sogoni said that the Department was in the "intensive care unit". He asked if any significant improvement had been made. He also asked why the Department was unable to spend because funds had been transferred on the basis of approved business plans.

Mr Verachia replied that the Department was trying to turn the situation around. There were many job vacancies across the province and this was making matters worse.

Mr Kolweni said that things were bad in the province. There was no guarantee that any measures to remedy the problems would have the desired effect. The submission was silent on the building of hospitals.

Mr Robertson asked if the shortage of doctors, facilities and resources in hospitals had been addressed.

Mr Verachia replied that the problems remained unsolved but the Department was looking at it. It was important to get all the staff behind the MEC.

The meeting was adjourned