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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
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.
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.
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.
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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