1st Quarter Conditional Grant and Capital Expenditure for Provincial Departments of Sport: hearings

FINANCE SELECT COMMITTEE
20 September 2006
1^ST QUARTER CONDITIONAL GRANT AND CAPITAL EXPENDITURE FOR PROVINCIAL DEPARTMENTS OF SPORT: HEARINGS

Chairperson: Mr T Ralane (ANC, Free State)

Documents handed out:
Limpopo Department of Sports, Arts and Culture 1^st Quarter Achievements
Limpopo Department of Sports, Arts and Culture Conditional Grant Expenditure 2006/7
Northern Cape Department of Sports, Arts and Culture Presentation
The following documents will be available shortly:
North-West Department of Sport, Arts and Culture Report
Western Cape Department of Sports, Arts and Culture Report
Eastern Cape Department of Sports, Arts and Culture Report
KwaZulu-Natal Department of Sports and Recreation Report

SUMMARY
The Committee was informed by National Treasury that only R370 million of the R1, 7 billion annual conditional grant to provinces for sports and recreation had been spent in the first quarter of the 2006/07 financial year. Some of the underspending provinces were given an opportunity to explain the main reasons for their underspending.

Members felt the underspending was largely due to lack of adequate planning and requested that provincial departments submit business plans at a future meeting. Members also concentrated on who should maintain municipal sports infrastructure and felt greater efforts should be made to improve the working relationship between the Department of Education and Sports and Recreation SA.

MINUTES
National Treasury Presentation
Mr A Philips (Director: Finance) stated that in the first quarter of 2006/07, 7 out of the 9 provinces spent less than 10% of their conditional grants for sport. KwaZulu-Natal and Limpopo are the only two provinces to have spent above 10% in the first quarter. The total annual conditional grant amounted to R1.7 billion but the provinces had spent only R370 million in the first quarter.

Discussion
The Chair argued that the figures provided by Treasury were of great concern and probably called for immediate oversight visits.

Eastern Cape Presentation
Mrs N Abraham-Ntantiso (Member of Executive Council (MEC): Sports and Recreation) said that the Siyadlala Mass Participation Programme and the School Sport Programme were implemented in 43 municipalities in the current financial year. However in the first quarter there was no spending by the provincial department. This was because the implementing agent, the Independent Development Trust (IDT), had not fulfilled their contractual obligations for the previous financial year. The department, in conjunction with the Department of Public Works, decided to terminate the IDT contract and appointed the Coega Development Corporation as the new implementing agent. The projected expenditure for the current financial year amounted to R24.9 million, which has been allocated to various recreational projects around the province.

Discussion
Ms D Robinson (DA, Western Cape) said that she was worried about the lack of planning in the province, and raised the issue of the non-payment of staff.

The MEC argued that the department had plans in place; however they experienced difficulties with procuring co-ordinators. The department has begun working on various projects and have spent with a target in mind; however it was clear that the projected target had not been reached.

The Chair stated that all departments have to sign service level agreements with the Department of Public Works (DPW), whether it is for construction or maintenance. The amount of R24.9 million appeared credible.
 
The MEC assured the Chair that the projected amount of R24.9 million is being invested in existing projects, such as the Bisho Stadium. She stated that the decision to terminate IDT’s contract and appoint Coega was taken in conjunction with DPW.

The Chair asked the MEC to elaborate on the ownership of the Bisho Stadium.

The MEC stated that the stadium was built by the provincial government and handed over to the municipalities. The stadium has also been identified as a 2010 Soccer World Cup base camp.

Mr B Tolo (ANC, Mpumalanga) confirmed that the stadium is a local government asset, but stated that it is impossible to repair a stadium with R24.9 million, as it is was far too little.

The MEC proposed that all provinces should provide a list of stadiums in order to determine who owned them and who provided maintenance services, because there seems to be a contradiction and some confusion.

The Chair stated that R24.9 million was not too little as it could be used elsewhere by the department. He said a detailed list of stadiums would be helpful to the Committee.

Northern Cape Presentation
Mr A Joosmat (Head of Department (HOD): Sports and Recreation) stated that the province’s capital budget was R10 million, which was invested in the ongoing Mayibuye center project. The department spent 80% of the allocated budget during the first quarter and hoped to spend R28 million on the project by the end of the year. Therefore the department projected a shortfall of R18 million, which was largely due to provincial cost containment measures and under-expenditure in previous financial years.

The conditional grant for the current financial year was increased due to the inclusion of the School Sport Mass Participation Programme. The province received R6.2 million, but was only able to spend 7.2% of the MPP conditional grant in the first quarter. The reason for the underspending was largely due to the fact that the department was having trouble procuring sports equipment and was experiencing delays in the appointment of coordinators.

Discussion
Ms Robinson stated that forward planning is needed in the province. She also wanted to know, in light of geological problems, if studies had been undertaken before construction on the project began.

The Chair asked how credible the projected expenditure of R28 million on the Mayibuye center was and how the department would deal with the shortfall.

The HOD assured the Chair that the R28 million was a credible figure. He stated the main reason for the shortfall was due to the cumulative underspending from the previous financial years which has lead to the conclusion of the project.

Western Cape Presentation
Mr M Linde (HOD: Cultural Affairs and Sport) begun by outlining the province’s capital expenditure on library facilities for the current financial year. He stated that the province had allocated funds to aid the construction of new libraries in various municipalities. In terms of sports and recreation, the province was allocated a total of R6.2 million for the financial year of which R5 million was allocated to the MPP and R1.2 million was allocated to the School Sports programme. The department spent around 41.1% of the allocated first quarter budget on school sport, and 65% on the MPP. The reason for under expenditure was largely due to delays in the appointment of administrators, and problems in the procurement of sports equipment.
 
Discussion
Ms Robinson stated that she was glad to hear that the province was doing something about the libraries, but was worried about the operational costs of maintaining the libraries.

The Chair stated that the issue of libraries is one that should be dealt with at a later stage, and argued that it was unacceptable that provinces had difficulty in procuring sports equipment, when there is a large number of sports stores in the country.

The HOD said that he would further investigate the matter.

Ms M Lamoela (DA, Western Cape)] asked for a systematic breakdown of the school sports participation programme and if there is sufficient sports equipment in schools.

Mr Y Carrim (Deputy Director: Cultural Affairs and Sport) assured Ms Lamoela that the department had been providing equipment to schools.

KwaZulu-Natal Presentation
Ms S Khan (HOD: Sports and Recreation) said that the department had been allocated R21.3 million of which R10.7 million was spent on the community MPP and R10.6 million on the School Sports programme. The department however only managed to spend 10.4% of the allocated budget in the first quarter, of which 21% was spent on the MPP and less than 1% on the school sports programme. The reasons for under expenditure were that the School Sports MPP was in the first year of implementation and that too much time had been taken to finalise the business plan which would have enabled the department to identify the relevant schools that would participate in the programme.
 
Discussion
Mr E Sogoni (ANC, Gauteng) stated that the department failed to provide a detailed report; this made it difficult to follow what had been said. In terms of capital expenditure, it was unacceptable that nothing had been spent in the first quarter. The reason for the lack of spending is a lack of planning which is why the provinces are faced with similar delays. Therefore all MECs should provide a detailed business plan at the next Committee hearing.

Mr D Botha (ANC, Limpopo) agreed with the business plan proposal, and stated that it would go a long way in determining what the funds are allocated for.

Mr G Fredericks (Chief Director: Sports and Recreation SA) argued that having a business plan is one thing; implementing it is another. The provinces were not ready for the grants hence the lack of spending. Many of the provinces had junior people responsible for large budgets. Procurement of sporting equipment is a big problem due to the fact that the equipment with the highest quality is more expensive.
Ms A Mchunu (IFP, KwaZulu-Natal) argued that many young men are turning to crime; therefore it was important for the department to work closely with the SA Police Services (SAPS) and Business against Crime in order to empower the youth.
Mr Tolo believed that municipalities were not co-operating and asked whether the Municipal Infrastructure Grant (MIG) could address the issue of sports. It was important that all schools were built with sporting facilities, as sports played a vital role in the enrichment of students.

The Chair stated that all the issues raised were very important and that they needed to be followed up systematically. He also called on the provincial Departments Sports, Culture and Recreation to work closer with the Department of Education. The Chair called on all national departments to meet and discuss the components of the MIG in order to resolve who is responsible for maintaining and upgrading sport infrastructure. He stated that the discussion should focus on whether the Provincial Infrastructure Grant (PIG) should accommodate education as part of supplementary funding.

Mr Tolo stated that the biggest challenge that the Education Department is facing with the PIG is that the grant is sufficient only to build classrooms and not whole schools.

The Chair stated that the Committee would look into this matter and argued that if the PIG is sufficient to build classrooms, then it should also be possible to upgrade sporting facilities with it.

Ms A Moeng (Member of the Gauteng Legislature Finance Committee) lamented that township schools had small school yards, and asked that something be done about this.

The Chair assured Mrs Moeng that the Committee together with the Select Committee on Education and the department would follow up and deal with this issue systematically.

The meeting was adjourned.