Intergovernmental Fiscal Review 2007: Departments of Health, Social Development and Education

FINANCE SELECT COMMITTEE
17 October 2007
INTERGOVERNMENTAL FISCAL REVIEW 2007: DEPARTMENTS OF HEALTH, SOCIAL DEVELOPMENT AND EDUCATION

Chairperson: Mr T Ralane (ANC, Free State)

Documents handed out:
Provincial Budgets and Expenditure Review: Chapter 2: Education
Provincial Budgets and Expenditure Review: Chapter 3: Health
Provincial Budgets and Expenditure Review: Chapter 4: Social Development
National Department of Health: Presentation to Select Committee on Finance
National Department of Education: Presentation to Select Committee on Finance
National Department of Social Development: Presentation to Select Committee on Finance

Relevant Documents:
Provincial Budgets and Expenditure Review 2003/4 - 2009/10 (Book)

Audio recording of meeting [Part 1]&[Part 2]

SUMMARY
The Committee continued with hearings on the Intergovernmental Fiscal Review for 2007,  dealing with the Departments of Health, Social Development and Education. For all three sessions the committee first heard a brief overview from the National Treasury, then a presentation from the National Department and finally opened the reports up for discussion. Where needed, representatives from the provincial departments were called upon to account for discrepancies and to answer questions.

The Deputy Minister for Social Development was present at the meeting.

During the Health presentation and discussion there was disagreement over whether or not there was an HIV/Aids crisis; questions surrounding over- and under-expenditure, and discussion concerning the inequality of budgeting between the provinces. Representatives from Free State, Eastern Cape and Mpumalanga outlined the challenges facing their respective situations. A general conclusion was that the current budgetary allocation was not nearly enough to cope with the need for health services.

With regard to Social Development, the Treasury highlighted the inequality in funding and the great shortage of human resources within the sector, though they noted that funding was set to continue growing. The discussion from the members centred upon Victim Empowerment programmes, Early Development Centres and the funding and monitoring of Non-Profit Organisations. Representatives from Mpumalanga were present and responded to queries concerning the low per capita expenditure.

During the Education presentation, the Treasury noted that although education spending compared to Gross Domestic Product was comparable internationally, there was concern that it had repeatedly received less of the budget. Topics covered in the discussion related to the equity share, contestations surrounding quintile 1 and 2 zoning and no-fee schools, pass rates, capital expenditure and under expenditure. Provincial representatives from Gauteng were present and were queried about empty schools and the high educator-learner rate; Free State explained about the contextual problems facing farm and rural schools; Eastern Cape addressed the low university exemption pass rate, and KwaZulu Natal spoke about per capita expenditure and computer centres.

MINUTES
Fiscal Review: Department of Health
Mr Mark Bletcher, Director Social Services, National Treasury, gave a brief overview on the Health expenditure that drew upon data from the Provincial Budgets and Expenditure Review. He noted that health sector funding had experienced strong growth comparable to global trends. However, this growth was uneven as it was especially strong in some areas (such as HIV/Aids, Primary Health Care and Emergency Medical Services) but slow in others (such as hospitals). Concerning the numbers of health care professionals, there had been a growth of 24 000 workers. His conclusion was that the health budget had grown strongly, however this had not yet been seen to translate into improvements in outcomes.
 
Mr Gerrit Muller, CFO, National Department of Health (NDOH) noted that the Department did not dispute the numbers of the Treasury, but had a different interpretation of them. An increase in health spending was needed to fund an increase in the demand for health. Although the report only showed four provinces that overspent (Free State, Gauteng, Limpopo and the Northern Cape) technically there were more provinces that overspent, but it was not obvious as the expenditures had occurred in other periods, or were reclassified in other areas.

The Chair interrupted the presentation to ask which provinces they were.

Mr Muller said that his Financial Officers had these details.

The Chair asked that the Financial Officers inform the Committee of the facts as soon as possible.

Mr Muller continued by showing that the Health overrun was in fact closer to one billion Rand, because the demand was bigger than the growth. The predicted average growth in expenditure (as a percentage of provincial spending) was getting less and less, and that was of concern. Mr Muller also highlighted the variances between the provinces, and that Gauteng was still below the average both times. There were concerns in Limpopo, Mpumalanga, Northern Cape and North-West about their capacity to spend, but above all the growth was choppy. That made the planning and implementation of a seamless national health programme difficult. Mr Muller’s conclusion was that growth was slow where there was overspending, and it was problematic when the growth dropped below inflation and population growth figures. These problems were exacerbated by internal and external population migrations and health crises that appeared with diseases such as HIV/Aids and the new strains of TB. In conclusion, the Department of Health was of the opinion that the public health sector was under-funded.

Discussion
The Chairperson agreed that there were different interpretations, and that the first one that came to his mind was on the Department’s slide 4 where they said there was a crisis with HIV/Aids and TB. He said that this was a huge interpretation variance, and they needed to return to the notion of a “crisis”.

Ms D Robinson (DA, Western Cape) asserted that she was glad to have it publicly acknowledged by the Department that there was an Aids crisis. She also told of a recent visit to Groote Schuur hospital in the Western Cape where they were cutting the number of beds. She found this to be a problem not just as it affected health care, but fewer beds also affected the training of the doctors. TB was a major problem, especially with the new strains. If there were fewer beds, then there was not adequate provision for the specialised care needed for the TB sufferers, and more and more people would return to their community and infect others. There was a need for adequate funding for health services.
 
The Chairperson informed Ms Robinson that this session was not one where they could ask for more money.

Dr Yogan Pillay, DDG: Strategic Planning, National Department of Health, explained that the 90 bed cut in Groote Schuur was in fact a relocation of those beds to community district hospitals, where they would be better used.

Mr M Goeieman (ANC, Northern Cape) complained that the Chairperson had let Ms Robinson make a third presentation in the meeting that was politicising, instead of dealing with proposals. He said that there was no Aids or health crisis and he did not want to be part of a meeting that said there was a crisis.

The Chairperson asked about the alarming vacancy rates of 40% that were mentioned. He wanted to know which areas these were in, and the provinces involved.

Dr Pillay responded that the vacancies were in all provinces in all categories. The hope was that the recent Occupational Specific Dispensation programme would go some way to attracting staff from the private sector and overseas.

Mr E Sogoni (ANC, Gauteng) spoke about the 313 Anti Retroviral (ARV) sites in the country. He saw this as a growth in right direction, but wondered if this was enough for 264 000 patients, and whether the Department intended to grow the number of sites to be able to reach everyone. Mr Sogoni also highlighted the TB problem. Even though there was growth in the sector, TB was a curable disease, and as such a 53% cure rate was too low.

Mr Sogoni asked about the contradiction between a growth in budget yet not in services. He wanted to know why that was the case, and if the Department was employing qualified people.

Mr Sogoni commented on another issue he felt was not raised. Although there was a fair number of staff in the Emergency Management Services (EMS), he knew that there were provinces with serious paramedic shortages and wanted an explanation as to why that was so. He was unsure as to whether the National or Provincial Departments could respond to this question.

Mr Muller spoke to all three of Mr Sogoni’s questions by informing Mr Sogoni that these expenditures and figures reflected what happened in the past. There had been growth in the TB sector and EMS training, though they had not yet seen the results (by way of outcomes) of these actions. As to staff shortages, the Department was also waiting to see the results of the recent Occupational Specific Dispensations that had been allocated for needed qualifications.

Dr Pillay also responded to Mr Sogoni’s question about the TB cure rate, which he agreed was very bad. The latest TB figures reflected 700 people infected for every 100 000. The World Health Organisation (WHO) stipulated that a rate over 350 was bad. However, the good news was that the TB cure rate had improved and 11 districts had excellent cure rates.

The Chairperson wanted to know the source of these figures.

Dr Pillay replied that they were figures that the Department was compiling for the WHO and that the National Treasury figures in the presentation were based on 2005 health figures.

The Chairperson requested that the Health Department provide the new figures directly to the Committee, not just to the WHO when they were finished compiling, as it was imperative that this country had the correct data.

Mr B Mkhaliphi (ANC, Mpumalanga) looked at the data concerning hospital admissions and noted that they had peaked a year ago and then dropped off. This was contrary to the assertion that hospitals were currently overloaded, and he sought clarification on this matter.

Mr M Qwase (ANC, Eastern Cape) also queried the drop in patients that was shown in slide 19. He remarked that this may have been a question of resources, as people rather went to larger district and tertiary hospitals for access, as the primary care service was not good.

Mr M Robertson (ANC, Eastern Cape) added his concern as to the source of the data. He repeated his point made last year, maintaining that when someone was sick they were not to be turned away. He saw that there were serious budget constraints, but also was concerned when people from neighbouring countries came to South Africa and used resources that should be directed to South Africans. He cited the example of Lesotho.

Mr Kenneth Brown, Chief Director, Intergovernmental Policy& Planning, National Treasury, referred the Committee to the slide that mentioned that the low supervision rate of nurse-run clinics in some provinces may have resulted in incomplete data, and therefore the numbers were misleading.

The Chairperson noted that if the problem was incomplete data, then that lay with the Committee, as they needed to ensure that there were correct monitoring facilities in place so that the staff could deliver services with the correct information. There were many questions surrounding the financial data, growth in funding, backlogs and over/under spending in the provinces:

Mr Goeieman noted that in the Western Cape, the previous under spending meant that the question was about the capacity to spend. He wanted to ask what the Department was doing about spending.

The Chairperson agreed, noting that in slide four the Western Cape had underspent by R57 million. There was therefore no justification for bemoaning the cut in budget.

Mr Robertson mentioned that his province had underspent by R80 million. He had a question about the shortage of trained staff in hospitals. One hospital had a 55% shortage of nursing staff and he was sure that with R80 million remaining that problem could surely be addressed. He also noted that the Eastern Cape Health Department had not paid the company that delivered medicines, so hospitals had to use their own money and petrol to drive all the way to the depot.

The Chairperson spoke concerning specific provinces. He noted Free State’s overspending of R92 million and wanted to know what had been done in the Free State to address the problem for the current year, and what the risks there would be. He raised a similar question to the North-West concerning their R137 million under spending.
 
Mr Qwase asked the Department officials to clarify the backlog with current funding, especially as there were questions of inequity between provinces.

Mr Mkhaliphi stated that for the provinces whose funding growth was below budget, it was not responsible to complain of underfunding, as the provinces needed to look at their own budget growth.

The Chairperson also referred to the fiscal data, especially the contradictions, in the presentations. He wanted an accurate spending total as the National Treasury claimed over R379 million in overspending, yet the National Health Department’s figure was R736 million.

He repeated his question during the presentation concerning the Department’s accusation that these figures were artificial. The Department mentioned that there were provinces that “engineered overspending because of the draconian clauses of PFMA”. He wanted to know which “draconian laws” they were, and how and where the engineering manifested itself. He also asked what the National Department was doing about such “engineering”.

The Chair also asked as to who was responsible for the inequity in funding, and the uneven growth. He called on the National Treasury to respond to the numerous financial questions.

Mr Brown explained that the differing totals depended on how one added the data up when analysing it. If one added up the provinces that overspent (Northern Cape, Limpopo etc) the total was close to the R700 million the Department mentioned. However, this was not the correct total, as they still needed to subtract the under spending provinces. When this was done, the net effect was R370- million or so.

Dr Pillay responded to the financial questions about equity and growth. His preliminary comment was that it was very clear from both presentations that the Health sector was not a homogenous situation, as there was a lot of variation between the National budget, and the practice in provinces. He explained that if one looked at the National Health Act and the white paper on the Health System, the intention was to create national norms and standards. However, there were significant differences between the provinces. For instance, in the city of Cape Town the amount per capita spent on patients was R300 per person, yet some cities in Mpumalanga spent R50 per person on primary health care. There would therefore be different outputs if there were different inputs. He explained these differences by the fact that the Constitution made provision that provincial treasuries funded provincial departments, so they divided the funds up between the various departments as they saw fit. One solution to this inequality was to have a normative national approach to every person, such as to  stipulate that all people were to get R300 primary care per year. However, if the National Department did that, the current allocation of R60 billion would be totally inadequate, so in effect, with the current funding, it was unaffordable to have the same health care throughout the country. Dr Pillay also added that a second challenge for equity was the private health sector that only took care of 7 million people, yet spent 5% of GDP. This in itself was a huge inequality.

With regards to Mr Qwase’s question about backlog, Dr Pillay responded that the real costs to perform and fund all the needs, such as to clear the backlog, were much higher than the budget. Concerning the increased budget, yet decreased output, Dr Pillay said that medical inflation ran on average 2 to-3% higher than traditional Consumer Price Index inflation. The reality was that almost all the medical equipment and a large portion of drugs were imported, resulting in high costs that were increasing all the time.

Mr Muller also spoke in response to the collection of financial questions. To explain the inequity in per capita health funding trends per province he explained that according to the fiscal policies of the country the provincial treasuries allocated the health funds. It was out of the Department’s hands, although they welcomed growth rates of higher than the norm for the provinces that were currently below the norm. They needed to guard from the growth rates dipping below what was required. For example, the 3.5% growth in Gauteng meant that demand for health services had outstripped the allocation of budget. The growth rate took into account the expenditure that had occurred, and as expenditure was not equal among provinces, so the rates too would vary.

Mr Sogoni thought that the national Department set the benchmark with regard to per capita spending. He did not understand how provincial departments would allow themselves to receive an allocation that was less than the required national average. He wanted to know why this was accepted.

The Chairperson noted that there was a similar problem mentioned with the Department of Roads in its briefing. He suggested that the Committee needed to monitor the division of funds in the provinces next year, and make sure that it was done properly. He was going to raise these same questions with the provincial treasuries themselves. He also asked the Department to find some way of creating a benchmark, so that they could judge everyone on the basis of that benchmark.

The Chairperson then called upon the various provincial representatives present to speak to the questions that were raised. Contributions followed from the Free State, Eastern Cape and Mpumalanga.

Mr Sakhiwo Belot, MEC Health, Free State,  wanted to concur with the National Treasury’s presentation that captured the situation that there was a demand for health services that outstripped availability. This was the reason for their problem of over-expenditure. The burden of disease meant that the average length of stay (even in district hospitals) was longer. Even though it was correct that the patient figures had dropped since the peak in 2001, those that were coming to hospital were requiring higher levels of care than previously. He maintained that no patients were ever turned away. Concerning Mr Robinson’s point about cross-border patients, he noted that it was common knowledge that many people from other countries were using South African residential addresses to obtain health care. The latest half year statistics for primary health care patients indicated that their numbers had grown significantly.

Prof Pax Ramela, HOD: Health, Free State, referred to slide 27 of the Department’s presentation that captured the essence of the problem in the Free State, namely chronic underfunding. The provincial department experienced R90 to R100 million underfunding on an annual basis which, coupled with the extra costs and increase in patients, raised many challenges. Concerning MDR-TB, the Free State had many patients of which only a few were hospitalised, as they were under massive pressure to fund their TB projects. Because of the over-expenditure last year, this year the Department had started with R92 million less in their budget. They predicted a R60 million overspending this year, so they had to find R150 million to save. Despite the increasing demands, the only way they could save this amount was to defer the purchase of equipment, as well as defer surgery and mainly work with emergency and acute patients. Another method was to drive down the levels of stock. However, if they were successful in all these cost-cutting measures, they may only save R50 or 60 million. They were under serious pressure to still pay back the R90 million. He added that the patients looking for primary health care were much sicker than before, and the National Health Laboratory Service and complicated blood tests had pushed hospital costs up 30 to 40%. Prof Ramela’s conclusion was that there were many challenges on many fronts.

The Chair then called upon the Eastern Cape Department of Health to account for the R80 million under spending.

A representative of the Eastern Cape Department of Health responded that the Department had been allocated R400 million from the Treasury only in January 2007 and had two months within which to spend the money. The Department used R30 million to assist with an audit, and some of it for backlogs. R30 million earmarked for a document centre was not used as the document centre was not set up yet. A final R57 million was related to forensic pathology expenses.

The Chairperson disagreed and said that the January payment was an adjustment payment because there was something wrong with their budgeting. If not, it was financial dumping and the problem was that provincial treasuries would sometimes sit with monies and then dump them. He asked for the details to be put in writing so that the Committee could deal with the treasuries.

Mr Sogoni suggested that the response from the Eastern Cape came within two days.

Mr Brown said that he would contact the National Treasury and get the information to verify the claim.

Mr Sogoni asked about the Eastern Cape’s forensic pathology expenses and wondered about the forensic pathology grants of the National Department, and whether the infrastructure was in place. He said that the legislation was introduced in 2004 but up until now had not been used.

The Chairperson  asked Mr Sogoni not to deal with the specific grants now, but rather wait for Mr Brown to give them the information.

Mr Brown later advised the Chairperson that he had contacted his office and found out that there was no adjustment for the Eastern Cape in January. There were only adjustments for Limpopo and Gauteng.

Mr Brown referred to page 146 of the Review to put the Eastern Cape spending in context. He said that the main overspending lay in current payments, and there was a small under spending in capital assets. The bulk of the under-spending was in transfers to other Departments.

The Chairperson noted that the actual problem was then within the provinces, not with the National Department.

Dr Tlou Confidence Moloko, HOD: Health and Social Development, Mpumalanga, was not sure of the basis of the concern as their expenditure last year was in the region of 99%. Currently they were at about 44% with a number of decisions that had been taken concerning procurement of furniture, computers and so forth  that would increase the spending. The absence of annual procurement plans had created situations where individuals were asking for vehicles that were more fashionable than practical, but they had corrected that through the CFO with proper procurement plans that were not wasteful. Dr Moloko concluded by stating that he was confident the Department could spend.

The Chairperson chose not to question their Northern Cape Health HOD, but said they would rather wait until they met again in November.

Mr Muller drew the committee’s attention to slide 7 and 10 that documented under-and over-expenditure. He said that HODs were to try to get as close to the budget as possible, but if there was a difference, it was preferable for the variance to be under, rather than over, the budget. Although the gross under-expenditure of R300 million sounded a lot, in terms of the total context the under-expenditure was actually less than 1%.

Fiscal Review: Department of Social Development (DSD)
The Chairperson welcomed the Deputy Minister of Social Development, Hon Jean Swanson-Jacobs,  to the meeting.

Ms Julia De Bruyn, CD: Social Services, National Treasury, led the presentation to the Committee. Looking at programme spending as a whole, she highlighted the variations between the provinces. She also made it clear that it was the Provincial Executives who decided on how much money to allocate, not the National or Departmental Treasuries. She showed the inequalities in services to older persons to be a legacy problem from pre-1994 South Africa. The services to children were unequal, and there were concerns about the number of social workers which hampered service delivery. There were however some positive developments and funding looked set to continue to grow.

Hon Jean Swanson-Jacobs, Deputy Minister of Social Welfare, greeted the Committee noted that the Department’s presentation confirmed that of the National Treasury, with a few extra clarifications giving their perspective.

Ms Vuyelwa Nhlapo, DDG: Integrated Development, DSD, read through the Department’s presentation. At the Chairperson’s request she skipped the Provincial Expenditure Report and moved directly to challenges the Department faced. She concluded the presentation by noting the positive developments from the restructuring of the social development sector, the growth in funding, and the unanticipated negative impact on human resources that arose with the shifting of the social security function to the national government.

Ms Swanson-Jacobs agreed with the unanticipated problem of a substantial migration of staff to the newly created South African Social Security Agency (SASSA).

Mr Zane Dangor, Chief Operations Officer, DSD,  added that there were social services staff who migrated to SASSA, in addition to social security staff. He mentioned that there were some innovative projects coming up to address the shortages of human resources, and also wished to emphasise the importance of accountability. The Department had agreed on sector priorities and had regular meetings concerning them. This was leading to the seamless approach to services that the National Treasury spoke of.

Discussion
The Chairperson informed Ms Nhlapo that the areas he had asked her not to read in the presentation would be dealt with in November when the Committee met with the provinces.

Mr Sogoni noted that mention was made of Victim Empowerment Programmes (VEPs). He said it was very important and wondered why it was that there were some provinces that did not have any VE sectors.

Ms Nhlapo answered by saying that the provinces would respond to the individual reasons, but currently 90% of victim empowerment work was done through partnerships with Non-Governmental Organisations (NGOs). This also explained the transfer of funds to the NGOs.

Mr Dangor said that VEPs were mainly responsive measures and that the Department should rather look at preventative methods. This meant supporting the NGOs that were doing the work, such as the gender equity players. If they did not begin to support these NGOs then problems would arise especially around violence to women and children.

The Chairperson queried the Department’s actions in outsourcing such a serious responsibility and not building the capacity in-house.

Ms Nhlapo said that at a national level there was a programme to build the capacity but there was not the staff capacity at the provincial levels to do this. However, she said there was a plan to deal with long term capacity.

Mr Sogoni asked about the transfer of funds to Non-Profit Organisations (NPOs). He wanted to know how the Department measured, monitored and evaluated the work of these NPOs.

Ms Nhlapo responded to Mr Sogoni by stating that the NPOs were governed by the NPO Act.

Mr Mkhaliphi mentioned that two years ago certain provinces had to create NPOs and NGOs where none existed, and help them get set up. He wanted to know about the present situation, if there were organisations the Department was using to assist in service delivery, and what the state of accountability was.

Ms Nhlapo advised that the NGOs were at different levels. Some still needed to be assisted and some of the delays in transferring funds were due to these different levels. She conceded that the Department was not monitoring and evaluating the 43 000 registered NPOs as they were meant to. This was a big challenge and the Department needed to strengthen the NPO directorate that dealt with it.

Mr Dangor informed the meeting that they had set up a chief directorate, and had monitored SASSA since its establishment. This would be extended to other programmes too.

Mr Sogoni asked about the recent disbursements made by the National Development Agency (NDA) where R110 million was awarded to 95 projects. He wanted to know if this was grant funding, and how it benefited the poor.

Mr Dangor replied that the R110 million went to the NGOs under the assumption that they ran projects and had the capacity to help the poor. He said that they needed to analyse what was best as the more money that went to intermediaries that managed projects, the less there was for people on the ground who needed the money.

The Chairperson said that they urgently needed to do that analysis as the NDA had under performed.

Mr Sogoni added that he was worried that if these monies went to NPOs the benefits were not going to the people. He informed the meeting that on their oversight visits they had realised that when the Department announced that there was money, people would form NPOs just to get finances. The question was whether they were really rendering services.

Mr Dangor answered that when it came to service delivery they could challenge the NPOs that got NDA awards, as they could see if they were indeed doing work.

Ms Dorothea Snyman, CD: Financial Planning and Monitoring, DSD, spoke concerning NPO governance and said that this was where delays of funding came about. They needed to ensure that the NPOs had the proper structures in place before they transferred funds. Although this resulted in the delays, this also gave them approved business plans against which the organisations could be held accountable.

Mr Sogoni referred to the disparities in distribution of homes for the elderly. He asked if there was provision in the budget to ensure an increase in homes overall. He also questioned the oversupply in the Northern Cape.

Ms Nhlapo replied that DSD was currently researching the needs of older persons. Once that was complete they would assess the current old age homes and see if the number was sufficient. They may realise there was no need to build more homes, but presently there was no way to assess that.

Mr Mkhaliphi asked about the bursaries given out, and whether sufficient track was being kept of the recipients to make sure they were employed in the field when they graduated.

Ms Nhlapo affirmed that DSD did indeed keep track. The Department worked closely with provincial departments ensuring they got progress reports of students. They also had a forum to meet with the Universities themselves to plan for the student’s practical service and work out employment with the Department. She added that one of the challenges was that there were social workers working in NGOs. DSD wondered how it could they assist those NGOs to build the capacities of social workers, instead of just focussing on state social workers. With regard to the morale and support of social workers, Ms Nhlapo said that DSD had undertaken a study looking at working conditions of social workers. The outcome showed a number of challenges and the Department was developing various programmes to respond to the findings.

Ms A Mchunu (IFP, KwaZulu Natal) wanted to reiterate the importance of giving family support where there were needs. She noted that the option of starting ECDs in homes had previously been mooted and wanted to know if that was still the case. If so, she wanted to know how large a centre had to be, or what the distance between ECDs had to be to validate starting one.

Mr Sogoni also enquired about the services to children. He wanted to know if there was proper information on how ECDs should be set up. Concerning the Eastern Cape, he wondered why it had so many ECDs and whether people knew that they were supposed to register their sites.

Ms Nhlapo clarified the regulations surrounding ECD centres. When she had given the number of one centre per 450 children, she had not meant that there needed to be 450 children in each centre. She stated that they needed to accelerate ECD registration so as to reduce the 1:450 rate. Ordinary houses could be ECDs, if they complied with the norms and standards.

There were also a number of technical and fiscal data questions that were province-specific.

Mr Sogoni referred to page 7 of the Treasury’s report concerning homes for the aged. Limpopo only had 8 homes yet the per capita distribution was R44 million. He wanted to know if that was what was spent on the homes and why they had the highest expenditure with the least number of homes.

The Chairperson noted that in the North West the administration costs were very high. He wondered what they were paying for and whether there was some norm and standard to use to judge the costs. He further added that Mpumalanga had the least spending on administration and wondered if they had a plan to address that problem. Looking at per capita spending, Mpumalanga was the lowest all the way to 2010 and he asked again for some norm to impose.

Mr Sogoni referred to page 2 of the Treasury’s report and asked why the North West had such a huge under-expenditure, having only spent 87% of their budget.

The Chairperson asked if there was a common basket across the provinces.

Dr Moloko responded concerning his province. When SASSA was formed 24 months ago they also suffered a lot of losses and the component that was left had no human resources or foundation. However, with the new service delivery model being implemented, they had come some way and made an audit of the services provided.

Concerning the questions asked of the National Department, Dr Moloko said that they spent 15% on administration. They could not say if it was ideal, but could give details in writing about where the administration money went. He added that to compare expenditure with the public and private sector most of the money should go to service delivery. At the start of the year they had a 514-strong staff complement and they ended with 904. Doubling the staff was good, but they still had to analyse where the appointments had been so that the expenditure would be commensurate with the services delivered.

The Chairperson noted that neither the Eastern Cape nor the Free State were present. He then asked for a last word from the Department.

Mr Dangor admitted that they had not developed a clear mandate for service delivery.

Ms Snyman agreed that they needed to discuss what appropriate norms and standards would be for administration and service delivery.

Hon Swanson-Jacobs added that they had to take into account the fact that welfare services received a small part of the Department of Social Development’s budget. One of the unintended consequences of moving SASSA out was that all they could now do was deliver on social services. In this regard there was backlog but also some improvement.

The Chair thanked the delegation, noting that they had been very visible as a Department in Parliament recently. He asked them to investigate the trend in Mpumalanga and North-West of 15% of the budget going to research, as well as the way money was given to NGOs. He noted in conclusion that there was still no national policy on poverty eradication as a country. There seemed to be many pockets, but it lacked a co-ordinating system.. 

Fiscal Review: Department of Education (DOE)
The Chairperson called upon the Department of Treasury to take the meeting through an analysis of the spending of the Education Department.

Mr Kenneth Brown led the Committee through the National Treasury’s presentation and drew upon data from the Provincial Budgets and Expenditure Review. He explained the importance of education and mentioned that spending on education was currently 5.4% of GDP, which was comparable internationally. There were remarkable successes in terms of access to education, and the benefit of no-fee schools were also beginning to filter through. However, relative to inputs, the outputs and quality of education remained a concern.

Mr Firoz Patel, Deputy Director General, Department of Education, noted that the Treasury’s review was succinct and welcome. He wished to raise some concerns. not about the report, but concerning the outcome of the reports with regard to legacy. Wherever there had been growth in the government, the growth in funding had gone to areas other than education. He showed that the problem with spending depended on the province. The conclusion was that there was in fact no equity.

After the presentation, Mr Patel showed a few in-depth analysis slides that elaborated on the poverty level and looked again at whether the equitable share was in fact equitable. The Chairperson asked that these graphs be printed out and made available to the Committee as soon as possible.

Discussion
The Chair noted that these presentations were useful in that they had showed that within the equitable share there had been under-budgeting. They had seen this with Roads and Transport, and Health, and now again in Education. He wondered as to its implications. The question that the Treasury raised was whether the provinces prioritised education. He asserted that Parliament needed to find a way of engaging with the executive committees of the provincial treasurers about this. Each provincial executive committee needed to account as to why they felt they needed to stop prioritising these three Departments.
 
Mr D Botha (ANC, Limpopo) noted the allocation for school libraries, laboratories and fields on page 3 of the Treasury’s report. His province had received R22 million but not spent a cent. They also had spent 83% on the budget on personnel, yet there was still a 1:35 educator to learner ratio. He wondered how they could reduce the large portion that went to personnel.

Mr Sogoni picked up on Mr Botha’s question about personnel expenditure comprising 83%, as it only left 17% for other expenditure. He asked if that was the trend they wished to keep, and how they ensured that schools had the required learning materials.

The Chairperson noted that if capital spending was only 17% then the building of new schools would not happen either. This was a big problem and he was not sure what plans there were to address personnel spending versus capital spending.

Mr Patel said that one could only give a guideline of a percentage amount if the whole amount was first sufficient. The previous limit of using 80% for teachers had expired, and a limit could actually work against them if the budget increased. He said that though the Department required norms and standards, they had not solved the problem between hard and soft norms. The current norms and standards were targets used to measure performance and delivery.

Mr Sogoni raised a question that had not been previously addressed, that of the security of schools. In Gauteng the Department spent a lot of money putting computers into schools, yet they were stolen the next night. He complained that there was no budget for security for these necessary items, and that the Department had taken a decision that they were not involved with the issue of security for the schools at night.

Mr Patel agreed that if there was no money for security then they could not protect the computers. However, they needed to make sure the resources were there, and that may mean finding other means of getting computers for the schools, such as partnering with local entrepreneurs.

Mr Botha raised an important issue surrounding no-fee schools and quintile ratings. There were occasions where a no-fee school was only a few kilometres from a fee school, so everyone migrated rather to the no-fee school.

Mr Qwase also spoke about no-fee schools and quintile ratings. He made mention of the areas that were not identified as Quintile 1 or 2 and therefore left out of no-fee schools, yet felt they should be Q1 or Q2. The Committee had recommended that the Department should budget for areas that were “contested areas” and also required no-fee schools.

Mr Patel answered that no-fee schools were an issue of management but also of data. They had an equitable parameter where they took the best data possible (census data) and then used it to gauge the correct quintile rating. They needed to test the issue of those absurdities where one school was rated Q1 and another Q3 in the same community. He added however, that it was not just their responsibility as the Department, and that often people in the community were better at spotting the absurdities and informing the Department. Sometimes the data was not absolute in telling them what was poverty, as it happened that schools that were declared no-fee schools had told the Department that in fact they did have money.

Mr Qwase brought up the topic of schools that were so small so as to only be entitled to a few teachers. This allocation did not take into account the numbers of grades, streams and learning areas in the school, and as a result the schools were forced to appoint on their own school governing body (SGB) educators to cover all the areas. He hoped that the laws and standards in the Education Laws Amendment Bill would address this

Mr Patel replied that the example where a school was forced to appoint SGB posts was illegal. If a school was allocated posts, then those posts must be filled. He added that the post provisioning formula was being re-looked at in a form that spoke not as a percentage of expenditure but rather according to class size ratio. He asked about multi-grade one person schools and wondered whether the answer was to close them all down, provide transport to a larger school, or to resource that school and teacher to teach multi-grades. As the majority of South Africa was rural, these were important questions.

Mr Qwase asked if the Department had budgeted for the financial implications of the Education Laws Amendment Bill.

Mr Patel mentioned the current Children’s Bill, and noted that the advocating of norms and standards was a long and involved process that still had to be done. Whether these would be hard or soft norms would also affect their impact on the Department and its budgeting.

Mr Qwase noted the talk around “infrastructure” and the difference between the building of classrooms and the building of schools. He wanted to know why the Department was not building schools.

The Chairperson responded to Mr Qwase that there were some provinces that had chosen to build soccer stadiums and airports rather than schools. He then called upon the various provincial representatives to respond to the discussion.

Mr Motseki Monnane, CFO, Free State Department of Education, stated that when one looked at the teacher learner ratio it seemed rather favourable, however the contextual situation was that there were about 300 farm schools with one teacher per farm school. This was different to 500 children and many teachers in a normal school, and the quality of education where one teacher taught all the subjects was not very good. He remarked that the trend in pass rates was not the only indicator of outcomes. The Department had used a special holistic intervention programme that had helped increase pass results and since they had abandoned this programme the rates had dipped once more.

The Chairperson thanked Mr Monnane for the interesting questions he had raised such as how to approach the education budget for farm schools where there was one teacher, and how to ensure a quality education in those situations. He suggested a strong plea to the Department not ever to budget for the situation where one educator should have to teach several subjects. He agreed that the prevalence of rural schools was exacerbating the problem.

Mr Sogoni asked what was being done by the Eastern Cape to achieve university passes, as the data showed that they were not doing well.

The Acting Superintendent General from Eastern Cape Department of Education responded to Mr Sogoni’s question, as well as to the general discussion. His first remark was that the Department in his province was planning to build schools and not just classrooms. His second remark explained that as they declared Q1 and Q2 areas as no-fee schools, the communities would contest their quintile number. Those who contested were in Q3 areas and in the public mind their contestation was justified. To answer this the Department had said that schools in quintile 3 should have voluntary school fees. Concerning personnel, he added that for the budget proposal they wanted to propose a minimum number of teachers per school to properly handle the curriculum, irrespective of the number of learners. He admitted that the number of schools that were small and spread far away was a challenge.

In response to Mr Sogoni’s question, the Eastern Cape representative mentioned that they were prioritising Maths and Science &Technology. In the last year and a half they had advertised posts for these subjects, as the goal was one maths and science teacher in each school. He indicated that there was a shortage of maths teachers, and that even the higher institutions were not focussed on the production of maths teachers. English was also a problem in the Eastern Cape, and this affected all the other subjects. He concluded by informing the Committee that they had a turn-around plan that would hopefully work and address some of the issues raised in the report.

The Chair asked KwaZulu Natal about page 9 of the National Treasury report that showed they were below average on per-learner spending. He asked for the reason behind this statistic.

Dr Reginald Lubisi, Superintendent-General, KZN Department of Education, answered that it was hard to give reasons as to why they saw such a low per capital expenditure. It had to do with the equitable share as well as with the budget allocation within provinces. When they realised there were shortages they had to find creative ways to overcome it. His Department was dealing with the questions surrounding consolidating small and rural schools, though there were also political implications of consolidating. They were engaging with the traditional local communities and their leadership in this regard. He also noted that in KwaZulu Natal they had made a decision that there would be no one-teacher schools, and the minimum was at least two teachers. Mr Lubisi concluded that they had tried to provide access to education, and that it was a key issue for them.

The Chair called upon the Gauteng Department of Education to respond to the conversation, specifically to the allegations of empty schools.

Mr D Charee, Acting DDG: Gauteng Department of Education, explained the particular situation of the province. He highlighted that Gauteng had one of the highest learner to educator ratios, and the highest density of 860 learners per school compared to a national average in the 400s. This was due to the 84 000 learners that migrated into Gauteng’s informal settlements and need education. They were under pressure having to bus 50 000 learners to get them to schools as they could not build schools in the informal settlements until they were properly declared as settlements. There was also legislation stating that the Department could not bus school children more than 15 kilometres. The majority of the empty schools were in Soweto and Mr Charee explained this as an historical problem from pre-apartheid times that was contingent on the demographics of the specific areas. Until the population changed, they could not use the schools in that zone, as there were no children there. In Johannesburg South and the inner city there was an influx of new residents, but the Department had given away or sold their land in those communities years ago when the residents first moved out. This problem of migration and pressure resulted in average class sizes of beyond 40, and in some schools teachers even had to “time-share” classrooms. Mr Charee noted that the provincial allocation for capital expenditure has not increased at all in the last ten years, and this was a problem.

The Chairperson mentioned to Mr Charee that the Department was under performing and Parliament was concerned to stop that under performance. That was the reason why they did not receive extra funds. He asked him to first speak to the under spending they had incurred in the last financial year.

Mr Charee informed the meeting that Gauteng was now on track with capital expenses and that 52 schools would be delivered in January. This was the single largest reception of schools at any one time. Mr Charee also mentioned that security was a big problem in Gauteng, and they had addressed it within the ambit of personnel. His Department had altered the budget so that  20% of the computers and technology budget was to go towards security of these facilities. Concerning no-fee schools, he agreed with Mr Patel when he indicated that they used Statistics South Africa data, not the quality of the school. In Gauteng wards were too large to be homogenous, and they had to use “sub-place” levels to determine quintiles. The problem was that sub-places could be separated by a fence, and then the problem of no-fee and normal schools being close to each other was again created.

The Chairperson asked the National Department and Treasury for their final thoughts.

Mr Patel admitted that outcomes were an issue, and that the “Non performance means no money” argument was not something the Treasury could win. If a Department did not deliver the full item requested, then it was impossible to ask for the full outcomes. He advised that this was an area where calculated risks needed to be taken. Concerning the variance in per capita spending, he stated that it was not necessary that all provinces were to be the same as this was not efficient. The data did reflect inequalities, but they needed to analyse it further to see where the inequalities really were.

Mr Brown explained to the meeting what an equitable share was. Seeing that the economy was growing and that last year the Education Department under spent its budget, he appealed that this Department shift their thinking from asking for more money rather to talking about outcomes and results. He noted that provincial education departments were not articulating their needs and budgets well to the Treasury and that was a flaw in the system that needed to be fixed. However, Mr Brown raised a cautionary remark concerning the linking of capacity to allocation. Contrary to the early views of the Committee, he said that it was difficult to link the two and say “first show us that you can spend, and then we will give you more money”. The Departments would be able to do that with regard to personnel, but regarding other expenses, such as buildings, it would not work to say that they should build the schools before getting the money. He agreed with Mr Patel, and cautioned against such an approach.

The Chairperson thanked Mr Brown for his passion and commitment and noted that last year similar issues of omissions from Education Departments’ budgets were brought to the fore by the National Treasury.

The meeting was adjourned.