1st Quarter Conditional Grant and Capital Expenditure for Provincial Departments of Agriculture: hearings
NCOP Finance
19 September 2006
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Meeting report
FINANCE SELECT COMMITTEE
19 September 2006
1ST QUARTER CONDITIONAL GRANT AND CAPITAL EXPENDITURE FOR PROVINCIAL
DEPARTMENTS OF AGRICULTURE: HEARINGS
Chairperson: Mr T Ralane (ANC)
(Free State)
Documents handed out:
Limpopo Department of Agriculture Presentation: Part1, Part2 & Part3
Western Province
Department of Agriculture Presentation
Northern Cape
Department of Agriculture Presentation
Eastern Cape Department of Agriculture Presentation: Part1 & Part2
North West
Department of Agriculture Presentation
SUMMARY
National Treasury briefed the Committee on capital expenditure and
conditional grant spending on agriculture in five provinces. Spending figures
for the first quarter of the financial year were largely very low. For example,
the
The Committee raised numerous issues including rollovers, lack of adequate
planning, spending capacity constraints, political will, internal audits in the
provinces, fiscal dumping at the end of the financial year and poor service
delivery.
MINUTES
National Treasury Presentation on 1st Quarter Conditional Grants
spending in Agriculture
National Treasury said that the Eastern Cape capital budget was R2.5
million but they spent just R334 000 in the first quarter. The budget of the
For the conditional grants (CGs), an average of 11.4%
was spent on land care. The
There was an allocation of R300 million for the Comprehensive Agricultural
Support Programme (CASP) of which R33.4 million (11%) had been spent. These
were transfers that were supplemented by the provinces. National Treasury
transferred 8.7% of its allocation and the highest levels of expenditure were
in the
Limpopo Department of Agriculture Presentation on 1st Quarter
Conditional Grants
Member of Executive Council (MEC) D Magadzi said
that they were allocated R52 million for CASP in the 2005/06 year and had spent
100% of it. For this financial year, they were given R50.143 million and had
spent only R5.015 million so far. They were allocated R7.565 million for land
care and had spent R757 000. They were also given R43.767 million for the
Provincial Infrastructure Grant (PIG) but had not spent anything at all yet.
MEC Ms T Joemat-Petterson said that they had huge
rollovers from last year and this compromised their work. On CASP they had a
rollover of R6.7 million and they had spent R4.2 million (63% of the rollover
amount). On land care, the rollover was R1.8 million and 52% had been spent.
There were political problems in their Department of Public Works (where the
MEC and the Head of Department (HOD) had been absent on ‘long leave’) which
affected the spending on the PIG. Now that this situation had been dealt with,
the Department foresaw better co-operation with the Department of Public Works.
They had done “fairly well” on their capital expenditure where they received
R15.7 million for CASP and had spent 10% of it. They were also convinced that
they could spend all of their allocation given their current rate of
expenditure.
In terms of the CG spending versus the cash allocation: on CASP they received
R1.5 million and had spent R5.8 million. This was because money was not flowing
as fast as they would have liked and this affected their spending. They were
working with their Provincial Treasury to sort this out as their spending was
being closely monitored and there had to be synergy between the Department of
Agriculture, Provincial Treasury and the Department of Public Works in the
province.
She was worried about the trends in capital expenditure as there was a risk of
major over-spending. They would have to shift funds to capital expenditure from
other activities. This was made worse by the small budget for capital
expenditure they had to work with.
They had independent monitors who assessed and evaluated their projects to
ensure that they got value for money and that the money was spent for its
intended purposes.
MEC G Nkwinti began by saying that they had a
rollover of R6.2 million for irrigation from last year and this was the only
amount of money they had not spent on CASP. For this year, they had received
R63.254 million (including the rolled-over amount) for CASP. Of this, R5.7
million had been transferred to them and they had spent R2.9 million in the
first quarter.
On land care, R439 000 had been rolled-over from last year meaning that their
total allocation for this year was R7.2 million. Of this, R3.005 million had
been transferred to them and they had spent R1.2 million in the first quarter.
Western Province Department of Agriculture Presentation on 1st
Quarter Conditional Grants
MEC Mr J Dowry said that they agreed with the Treasury’s figures. For CASP,
they had spent R420 000 of a budget of R20.6 million in the first quarter.
However, using last year as a measure, they were on course to spend the full
amount. They had received R3 million for the PIG but had not spent any of it
yet. Their projected spending was R5.56 million and they would make up the
difference by using the equitable share.
They had spent 100% of their drought relief allocation and capital expenditure
stood at 3%. They projected that they would spend the whole amount by the end
of the financial year.
Discussion
Ms D Robinson (DA,
MEC Dowry replied that CASP funds were allocated to projects that were viable
and sustainable. They were involved in the Atlantis area but they could not
help everyone. Often the budget was not big enough to allocate funds to all of
the projects. Unfortunately some would be rejected and this may be the source
of the complaints.
Rev P Mwatshe (ANC,
MEC Joemat-Petterson replied that having too many
projects caused them. Last year they had 18 projects but this year they only
had 12. The distances between areas in the province made it difficult to have
too many projects. Also, contractors sometimes did not meet deadlines and some
had even been blacklisted. They had also decided to begin their tendering and
planning processes earlier and monthly benchmarks and scorecards were being
used.
Mr E Sogoni (ANC,
MEC Nkwinti said that the issue of capacity was a
very serious one in the province. The Department had published a service
delivery improvement plan to set their targets and assess their performance. By
the 21st of October this assessment process would be completed.
Mr C Van Rooyen (ANC,
MEC Joemat-Petterson said that there was political
will as they now reported to the Premier and the Executive Committee monthly
and they reported at a party/political level as well. Capacity was still a
challenge but they had plans to deal with this. For example, some officials
were rotated to supplement and share skills.
Mr D Botha (ANC,
MEC Magadzi said that there was an audit committee in
The Chairperson said that a few Departments in the
In any case, subsection (3)(b) said that Departments could
allocate an amount not more than 1% of their budgets to acquire the capacity.
Thus, there was no reason to claim that there was no capacity. They had the
ability to get it. He said that next quarter he did not want to hear about
capacity problems; instead he wanted to hear what Departments were doing to
alleviate the problem.
Mr P Mogatlhe, the HOD, said that they agreed
with Treasury’s figures and the financial results of the first quarter
indicated an improvement in infrastructure spending. Meetings were held with
officials of the National Department of Agriculture in April on accelerating
expenditure and they were committed to spending their rollover of about R48
million for CASP and the land care grant by the end of September. At present,
expenditure was at R15.3 million (31%).
They had a Provincial Executive Council meeting on infrastructure on the 29th
of August and it was discovered that a decision had not been made by the
National Treasury about rollovers. This meant that the Provincial Treasury was
giving the Department money without central approval and they were unsure if
they were even allowed to do so. This means that if the rollovers were not
approved by the 30th of September they would have to take money from
this year’s allocations. This situation also negatively affected planning as
there was so much uncertainty. They hoped the decision would be made soon.
They had too many projects in the past and many of them were now consolidated.
They then spent money on them according to the Extended Public Works Programme
(EPWP) and this helped accelerate the expenditure.
Discussion
The Chairperson asked how they were going to
spend the R48 million by the end of September when they had only spent R15
million up to the end of June.
Mr Mogatlhe replied that the spending had almost
doubled since then. They had managed to spend about R28 million at the end of
August so they were in a position to spend the whole amount.
Rev Moatshe wanted to know the reasons why Treasury
was withholding their allocation for this financial year.
The Chairperson said that Treasury could withhold funds to a province that did
not have the capacity to spend its budget. It was clear that the province was
going to be unable to spend its whole allocation for this year especially since
it had not yet even spent its rolled over funds. DORA
allowed the Treasury to divert the money to other provinces that did have the
capacity. In this regard, they should use Section 9(3)(b)
to build internal capacity. He then asked if the R48 million was linked to
specific projects. He was sceptical that the province could effectively spend
R20 million in one month.
Mr Mogatlhe replied that the money was to deal with
backlogs from last year. One was a large fencing project and they were
confident that they could spend the whole R48 million given the assurances and
commitments they had received from their service providers. In fact, all of the
remaining money had been committed and the requisite orders had already been
made. To accelerate spending they had improved their supply chain management
systems and the Department made a decision last year that they were no longer
going to transfer any development funds to agencies, including municipalities.
They planned the projects with the municipalities but no funds were actually
transferred to them. The Department spent all of the money.
The Chairperson said that it would be helpful if the Committee visited the province
to see for itself if these projects were being implemented.
The meeting was adjourned.
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