2nd Quarter National Expenditure 2006/7 Report: adoption; Committee Annual & Medium Term Budget Policy Statement Reports: postpo

JOINT BUDGET COMMITTEE
17 November 2006
SECOND QUARTER NATIONAL EXPENDITURE 2006/7 REPORT: ADOPTION; COMMITTEE ANNUAL & MEDIUM TERM BUDGET POLICY STATEMENT REPORTS: POSTPONEMENT

Co-Chairpersons: Ms L Mabe (ANC) Mr B Makhaliphi (ANC, Mpumalanga)

Documents handed out:
Final Draft of Report on Second Quarter National Expenditure 2006/2007: Part1 & Part2
Draft Committee 2006 Annual Report
Report on the Medium Terms Budget Policy Statement 2006

SUMMARY
The Final Draft of the Committee’s Report on Second Quarter National Expenditure for the 2006/2007 financial year was adopted in principle, as certain changes still needed to be made to the Report. .

Due to time constraints, the Committee postponed the adoption of both its 2006 Annual Report as well as the Committee’s 2006 Medium Term Budget Policy Statement Report on the Security Cluster briefings. The Reports would be adopted on Monday 27 November 2006.

MINUTE
Report on Second Quarter National Expenditure 2006/2007
Ms J Fubbs (ANC) stressed that the Committee needed confirmation regarding the realignment of public entities’ financial years.

Mr S Dithebe (ANC) commented that the report suggested that there were fewer entities that were accountable to the Department of Communications. Hence the under expenditure recorded for this Department.

Mr A Donaldson (Public Finance Division, National Treasury) responded that he was not aware of any Schedule 3(a) government agencies that had not yet aligned themselves to the same financial years. The transitions had been completed. There was some major state owned enterprises that historically had different financial years. There were tow categories for which financial years were different and this affects some of the cash flows. These included universities, which operate on a calendar year. Financial year issues could not be a major concern. However, there may be information that had come from the financial reports of entities such as the post office, Sentech and SABC that have led to a review or reconsideration of transfers. This should be the concern.

Mr Dithebe suggested that the report should note the Department of Education’s under expenditure. The committee should advise the Department to use its allocated funds to address urgent challenges such as the poor quality of school infrastructure.

Ms Fubbs explained that, although the member raised important concerns, the Committee needed to relate its concerns to trends in the estimates national expenditure (ENE) reports. She acknowledged that the 32 percent expenditure between April and September 2006 was not satisfactory, but reasons for an expected rise in expenditure in the last month of the current financial year could be valid. She requested further clarification from the representative of National Treasury.

Mr Donaldson commented that the national department of Education was not responsible for the construction of new schools nor the provision of learning materials. This was a provincial competency. The timing of increased spending by the Department on the cited goods and services as well as consultants coincided with preparations and the management of national examinations in the further education system. The jump in expenditure in the third quarter of the financial year, could therefore be explained. Lower levels of expenditure during the second quarter of the financial year should also not be a cause of concern as transfers to higher education institutions in the first quarter of each financial year usually resulted in higher levels of expenditure.

Ms Fubbs requested guidance fro the National Treasury regarding the trends in capital expenditure.

Mr Donaldson answered that the Committee should not merely evaluate the trends in the spending of capital budgets, although less than 25 percent of the funds had thus far been spent. These funds were administered by trading agencies such as the South African Rail Commuter Corporation under the oversight of national departments. The Committee needed to investigate whether and how money was spent by these agencies.

Mr G Schneemann (ANC) proposed that the Committee adopt the report with the assurance that the agreed upon changes would be included.

Mr A Ganief (Parliamentary Researcher) and Mr J Russouw (Committee Secretary) pledged that the necessary changes would be made to the document.

The Committee unanimously adopted the report.

Mr Donaldson commented that it was useful to observe how the Committee reviewed expenditure reports. He would investigate how the National Treasury compiled such reports as the Committee needed to have access to information about the entity accounts. The National Treasury needed to look into how they prepare information the Committee used.

Report on Medium Terms Budget Policy Statement (MTBPS) 2006: Security Cluster briefings
Dr P Rabie (DA) proposed that, since Members needed time to review the document as well as develop suggestions, the report be adopted and reviewed in two weeks time.

Mr Schneemann proposed that the Committee meet on 27 November. Most Members had to complete examinations prior to this date.

The Committee expressed unanimous agreement with this suggestion.

Committee Draft 2006 Annual Report
Ms Fubbs commented that the Chairpersons of both the Select and Portfolio Committee’s as well as Ms Mabe and Mr Mkhaliphi needed to develop clarification about the these committees joint responsibility to consider the Appropriation Bill.

The Committee expressed agreement.

Referring to the one of the responsibilities of the Committee, Ms Fubbs commented that in terms of its mandate found in the Terms of reference, it had to submit a report by the end of the financial cycle subsequent to a review of its functions relative to those other committees in respect of the budget process and oversight duties. The Committee needed to make a proposal regarding this matter, as this responsibility had not been addressed.

Due to time constraints, the Committee decided to adopt the Peport at the meeting scheduled for Monday, 27 November 2006.

The meeting was adjourned.