Communications Department Budget hearing & 1st Quarter 2005 Expenditure Committee Reports: adoption

Meeting report

JOINT BUDGET COMMITTEE
23 August 2005
COMMUNICATIONS DEPARTMENT BUDGET HEARING & FIRST QUARTER 2005 EXPENDITURE COMMITTEE REPORTS: ADOPTION

Chairpersons: Mr N Nene and Mr B Mkhaliphi (ANC)

Documents handed out:
Committee Report: Hearing on Communications Department budget
Committee Report: First Quarter Expenditures (April to June 2005)

SUMMARY
The Committee considered its Committee Reports on the Communications Department budget hearing as well as First Quarter Expenditures of National and Provincial Governments. Minor amendments were made to the report on the spending trends of the Department of Communications. Members repeatedly noted the difficulty in assessing spending trends without having the necessary cash flow projections at hand. The difficulty of obtaining these cash flow projections timeously from departments had been identified as the problem. Both reports were adopted for tabling in the National Assembly.

MINUTES

Committee Report on Communications Department budget hearing
The Committee considered this report. The Department had appeared before the Committee on 22 June 2005 to account for its expenditure trends. Concerns over these trends emanated from the pattern whereby the Department would underspend tremendously throughout the year, and then spend more then half of its budget in the twelfth month. The Department explained that for the 2004/05 financial year this was due to a once-off payment to the Post Office, but did not explain what happened in previous financial years. The Committee concluded that the Department seemed to focus on the prevention of under expenditure rather than on the quality of its spending.

Discussion
Mr B Mkhaliphi (Mpumalanga) noted that the second paragraph of the introduction commenced with, "The Department normally underspends...". He requested that this be changed to reflect that the Department has exhibited the same annual spending pattern over the last three years.

Mr D Botha (Limpopo) noted from the Draft Report that the explanation with regards to the specific purpose of the once-off payment to "revitalise" the Post Office lacked detail, and that no further reports were provided by the Department.

Mr N Nene (ANC) responded that the term "revitalise" was incorrect and should be replaced with "recapitalise". Necessary background information was indeed provided by the Department. There had been a delay in the transfer of rescue funds from National Treasury to the Post Office because of an outstanding Memorandum of Understanding. The once-off payment by the Department had been used towards the operational costs of the Post Office for the interim period. Mr Nene did not rule out further interaction with the Department on the issue, as it had to be ascertained whether actual recapitalisation had taken place in the Post Office.

Mr Mkhaliphi further justified the need for continued engagement with the Department by noting his concern over the 188 vacant posts that still remained after the Department had already filled 352 vacancies in the 2004/05 financial year.

Mr Nene noted Mr Mkhaliphi’s concerns but appealed to Members to confine themselves to issues relating to the adoption of the report.

Ms B Dambuza (ANC) emphasised that the Committee’s work would be much easier if it had the cash flow projections of the Department at hand.

Mr Nene told the Committee that it had received the Department’s cash flow projections, but that it had yet to evaluate the quality of these projections against the Department’s strategic priorities. He expressed concern over the Committee adopting a report that did not contain any specific recommendations to the Department involved.

Mr Mkhaliphi suggested that the report include a section delineating the specific issues that the Committee wanted to engage on with the Department, as well as an implementation plan for such engagement.

Mr Nene recommended that Mr Mkhaliphi’s suggestion be incorporated in the report.

The Committee Report was adopted for tabling in the National Assembly.

Committee Report on First Quarter 2005 Expenditures
The Committee Report noted that in contrast to the expenditure for May (11.13%), national expenditure for April and June were quite low (5% and 7%, respectively). As at 30 June 2005, the lowest spending departments were Provincial and Local Government, Land Affairs, Minerals and Energy, Public Service and Administration, and Statistics South Africa. These entities all only spent between 9% and 15% of their annual budgets. In contrast, the Department of Education had already spent 49.2% of its annual allocation. The Departments of Public Enterprises, Environmental Affairs and Tourism, Social Development and Housing all spent at the rate of between 25% and 32%.

While, at national level, current expenditure has averaged 20%, transfer and capital expenditure averaged 24.9% and 9.7% respectively. At 30 June the Department of Public Enterprises had spent 61.4% of its transfer budget, while the Department of Correctional Services had already exceeded its transfer budget by 40%.

The Provinces had spent an average of 21.94% of their budgets at the end of the first quarter. The North West province was the lowest spender at 17.66%, while the Northern Cape led at 24.94%.

Discussion
Mr Nene again noted the difficulty of assessing the spending patterns of National Departments and Provinces in the absence of cash flow projections. He stated that the Committee experienced great difficulty in obtaining these projections and it was of no use if they arrived the day before the reports had to be adopted, as was currently the case with certain Departments.

Mr Mkhaliphi agreed. He noted that the first quarter spending of the Department of Education was in line with its spending patterns for the previous two financial years. Since the Department spent half of its budget during the first quarter, he thought it useful that it be scrutinised carefully. He surmised that transfers to provinces might be to blame for this spending pattern, but felt that there were also other issues at stake.

Mr Botha proposed the adoption of the report as it stood, as the substance of the report has been scrutinised at length before. Mr Nene agreed that much work had already been done on the report.

The report was adopted for tabling in the National Assembly.

The meeting was adjourned.