Sports, Arts and Culture: 3rd Quarter Spending 2007: Provincial Department briefings

NCOP Finance

11 February 2008
Chairperson: Mr T Ralane (ANC, Free State)
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Meeting Summary

Members of the Committee met with provincial ministers (MECs) and Heads of Departments (HOD) responsible for Sports, Arts, and Culture, in order to discuss third quarter expenditure. National Treasury and the national Department of Arts and Culture also presented. National Treasury noted that even though the rate of spending was encouraging and reflected an improvement over previous financial years, conditional grant spending was still below the provincial total spending average. The provinces outlined capacity problems, funding shortages, non-compliance of municipalities with rules and regulations and inadequate performance monitoring as key challenges.

During the discussions, it was pointed out that
Free State had under spent on many levels, and according to the Division of Revenue Act, it was set to receive a bigger allocation in the next financial year. They identified a lack of proper planning in the Free State. Members felt that the North West provincial priorities should been have been addressed in the equitable share and not through the conditional grant. Many issues were raised with the North West province, and the Committee would investigate these during its visit to the North West.

The Committee would visit Limpopo on 22 February and hold a meeting with the provincial treasury in order to look into capacity constraints. The Department would also be visiting the Eastern Cape and its Department Public Works would be required to be part of the interactions. The Chairperson raised the issue of the Gauteng Soccer Challenge with Gauteng, and asked if it had been budgetted for. He warned the Department of unfunded mandates, and said that the matter would be looked into.
 
Western Cape was told that it was integral to look at Integrated Development Plans in order to avoid wasteful expenditure. The Committee planned to visit some Western Cape municipalities to see if the projects were in line with the Municipal Infrastructure Grant.

Meeting report

 

National Treasury Presentation
Dr Sandra Sooklal, Director: Provincial Budget Analysis, National Treasury, said that four provinces were projecting to overspend on their budgets. Conditional grant budget spending was lower than the total provincial spending average. Even though the rate of spending was encouraging and reflected an improvement over previous financial years, overall conditional grant spending was still below the total provincial spending average.

Free State: Department of
Sport, Arts, Culture presentation
Ms Rachel Sempe, Head of Department, said that some of the key challenges included delays in the recruitment process and contract workers not in place by 1 April but appointed only in the 3rd quarter. Despite the challenges the Department managed to obtain 8 415 new library materials. 35 libraries were also built which were provided with Information Communication Technology giving communities access to electronic information sources and services.



Discussion
Ms D Robinson (DA, Western Cape) asked for clarity on the basis for awarding contracts to SMMEs. Clarity should also be provided on what exactly constituted library material.

Mr E Sogoni (ANC, Gauteng) said that it was government policy to empower small business, and the Committee supported this empowerment. Clarity should be provided on the support structures that had been established for small businesses.

Ms Robinson asked if municipal managers knew anything about library services. There needed to be adequate training for librarians and there also needed to be the right people driving the process.

Mr C Goeieman (ANC, Northern Cape) asked how many libraries existed in the province and comment should be provided on the allocated budget on page 3. There also seemed to be no accountability for funds spent in the first quarter to fourth quarter.

Mr Sogoni said that the Department projected an overspending when the fourth quarter ended and asked if it was a result of poor planning.

Mr Goeieman asked for an indication on the savings that had been made on the compensation directed on other projects.

The Chairperson said that the issue of transfers still remained a challenge for most provinces as they did not equal expenditure. The Committee needed verification that the funds had been spent by the municipalities. The National Treasury presentation showed that Free State was amongst the worst spenders. From where did the projected expenditure come? What compensation were they speaking about when they spoke of savings?

Mr D Botha (ANC, Limpopo) said according to the report, financial dumping was taking place. The Department should provide a list of where the money was committed.

Ms Sempe replied that the library material included books. The Department did not have support structures for SMMEs, but was looking into implementing support structure. On staff appointments, the Department had appointed qualified librarians, however looking at the remuneration of librarians; it seemed as if the librarian salary was very low. The Department therefore had begun to look into ways of improving the salaries and had also planned on implementing decentralised library services. It should be noted that it was not only municipalities that run the libraries, there were also libraries run by provinces. On sports mass participation, there were programmes implemented which were aimed at the elderly, and there was also a new addition to the mass participation programme which was boxing. There were a total of 165 libraries in the provinces, and the Department was trying to make sure that every town in the province had a library. The savings on compensation was due to the unused remuneration for staff that were to be appointed. Therefore the savings on the funds that were set aside for appointments was referred to as savings on compensation. Fourth quarter projections were unavailable as the Department was still in the fourth quarter.
 
The Chairperson said that Ms Sempe’s answer on the savings on compensation was unclear and unconvincing and the Committee would look into it at a later stage.

Ms Robinson said that the Committee still needed to receive clarity on what other library materials were included besides books. The Committee was however very happy to hear that there was an aim to get a library into every town.

Mr Goeieman said that spending and projections were two different things. Clarity should be provided on the slide on remedial materials and on the fast tracking of various projects. The Department planned on reaching out to all its 165 libraries, but have only reach out to 35. The Department should comment on how they planned on reaching at least half of the libraries before year-end of the 31 March. Comment should also be made on whether club development was more than just providing attire.

Mr Botha asked the Department if they were projecting an under or over spending given their business plans. Clarity should be provided on whether the Department provided facilities to the sports clubs and what was done to train coaches.

Ms Robinson stressed that there needed to be an introduction of sports where different sexes could play together. There also needed to be a formation of partnerships with private donors.

Ms Sempe replied that she was unable to submit information on the savings on compensation; however the Department could provide the information in writing later.

The Chairperson told Ms Sempe that she was the accounting officer and she should always have the necessary information.

Ms Sempe responded that the conditional grant for libraries was the first time the Department had received such funding. In terms of club development, the department provided development programmes which focused on facilities and the training of coaches. There were meetings with municipalities to determine the role of municipalities. On access to libraries, the department was looking at issues of accessibility and the Department’s priority at this stage was the rural areas. There were many sports codes in the provinces, however the conditional grant for sports development focused on soccer and netball.

The Chairperson said there was a definition for savings that said that you only save on a programme that you have properly implemented. One needs to have successfully carried out the implementation in order to have made the achievement. The Department had failed to appoint officials, therefore they did not achieve, and therefore there was no saving. The Department had also underspent on many levels, and according to the Division of Revenue Act (DORA), the Department would receive a bigger allocation in the next financial year. There was a lack of proper planning in the Free State and it had to be dealt with accordingly. The National Department should comment on whether they believed Free State would be able to absorb more funds.

Mr N Mashamba, Chief of Staff, Department of Arts and Culture, replied that they highly doubted that.

The Chairperson said that the National Department should coordinate with the Free State and see if they could absorb the funds.

Mr Dan Kgothule, Chairperson: Finance Committee, Free State Provincial Legislature, said Free State had the capacity to spend, and would finish the funds. One also needed to think about whether National Treasury was burdening provinces with an exorbitant amount of funds.

North West Department of Sport, Arts and Culture presentation
Mr Ndleleni Duma, MEC, said that spending total expenditure on grants and allocations in the third quarter amounted to 56% and 47% on capital and maintenance allocations.  The Department was under spending on the library services; however systems were being implemented to deal with the issues. The Department was recruiting library staff on a contractual basis and maintenance activities were on their way. On sport development, the Department had signed service level agreements with the North West Academy of Sports, which would assist in the training of coaches and administrators. The Department was also looking into supporting professional soccer clubs through service level agreements. The Department was also working on improving its monitoring capacity, and an internal audit section had been established.

Discussion
Mr B Mkhalipi (ANC, Mpumalanga) said that the opening comments on page 5 of the presentation, on the under expenditure of library services, cast some doubt on whether the Committee would increase North West’s next budget allocation. Clarity should be provided whether this was the case. On the commitment issue, the MEC was aware of the potential of the commitments rather than real expenditure. Did the same upgrading programmes for libraries apply to sporting facilities? The MEC should comment on whether the ultimate purpose of the grant would be achieved in the province.

Mr Botha said that according to the MEC, the municipalities had faced challenges in the building of facilities. Clarity should be provided on why municipalities were building these instead of Public Works. On club development, the Department should comment on how they planned to monitor the various issues.

Mr Kgothule said that the North West Department should comment on the expenditure of the Siyadlala Mass Participation programme in the fourth quarter and the challenges pertaining to club development.

Mr Goeieman said there seemed to be a contradiction in the presentation in terms of the figures provided. According to the presentation 97% of the budget had been used, yet there seemed to be plenty of untapped talent in the province. The whole issue of supporting professional soccer clubs, most notably those sponsored by Vodacom, was of great concern. The Department should comment on why they spent 3.4% of the budget sponsoring Vodacom teams, when there were seriously undeveloped teams in the province.

Mr Sogoni said that at the end of the third quarter only 35% had been spent yet the Department kept asking for more funds. What was being done to resolve the matter? On cultural maintenance, the MEC said that the Department planned on building state-of-the-art libraries and museums at towns that were very under-developed and should not their priority perhaps be housing provision instead. The Department should comment on what was being done to address the capacity issues relating to planning. Why was library staff appointed only on a contractual basis?

Mr Botha said that it was difficult to understand why club development was so poor when the Department had sports facilities which were well maintained.

Mr Sogoni asked the National Department to comment on the paragraph on page 5 of the presentation. What was the R3.5 million for libraries used for?
 
Mr Duma replied that the Department had always been an appendage of another department and was still formulating its structures. A new way of functioning had been established, and the process of appointing staff in the offices had already been completed. The North West province was one of those provinces which faced huge backlogs in infrastructure development, and there was not a huge budget for infrastructure. The Department had to therefore depend on agencies such as the Lotto in order to build infrastructure. In instances where a big budget was given, the Department would prioritise rural areas.

The Chairperson proposed a meeting between the Department of Public Works and the Department when the Committee visited the North West province

Mr Duma replied that the national and provincial treasury had been requested to look into infrastructure as a whole. As a result an infrastructure committee had been established to look into its infrastructure. The Department tried to promote sports, arts and culture in the province. A second economy could emerge once the mines had gone.

Mr Kgothule said that from his personal experience, the North West had been a model for many provinces. The province excelled in many sporting codes and the Committee should look into the issues of the North West after the Committee’s visit to that province.

Mr Goieieman agreed with Mr Kgothule, and suggested that the debate should be placed on hold until the Committee returned from the North West.

Mr Duma replied that there needed to be a debate with national that looked into the issues pertaining to club development and 2010. There were certain priorities that the Department needed to take which related to economic growth and development of the province. On infrastructure challenges, the Department believed that the challenges could be over come and the picture would be different at the next briefing.

The Chairperson said that the MEC raised a fundamental problem. The provincial priorities should be addressed in the equitable share and not through the conditional grant. There would be a debate on some of the issues raised during the Committee’s visit to the North West.

Limpopo Department of Sport, Arts and Culture
presentation
Ms Deliliwe Nyathikazi, Head of Department, said that some of the challenges the Department faced included the appointment of key staff only late in the financial year. The Department projected an under spending for this financial year, however plans for the next financial year had already been completed. The Department faced major capacity challenges and had a high turnover of staff. In order to rectify the situation, the Department went on an appointment spree in order to gain the best employees. The Department also went to major bookstores in order to purchase quality reading materials for the libraries.

Discussion
The Chairperson said the Committee would be going to Limpopo on 22 February and a meeting would be held with the provincial treasury in order to look into the capacity constraints.

Mr Sogoni asked the Department to provide an organogram to the Committee. Judging by the poor reporting, there seemed to be serious capacity constraints in the Department.

Mr Botha said that a meeting with the Department urgently needed to take place. The MEC
of Sport, Arts and Culture, Ms Joyce Mashamba, should also be present at the meeting as well. The report provided was very poor and did not address any issues.

Eastern Cape
Department of Sport, Recreation, Arts and Culture presentation
Mr Bubele Mfenyana, Head of Department, said that the Department had managed to spend only 15% of the allocated expenditure on community and library services. The Department had implemented a recovery plan which included the improvement of human resources, the procurement of library material, and the appointment of contractors.
 
Discussion

The Chairperson asked whether it was worth the effort to interact with the Eastern Cape

Mr Botha proposed that a similar decision be taken, as that of Limpopo

Mr Kgothule said that the Committee should at least get an indication of the progress that had been made by the Department and what the challenges were.

Ms Robinson added that if the officials had gone to the trouble to appear before the Committee, then they should be given an opportunity to present.

The Chairperson asked the national Department of Arts and Culture to be present when the Committee visited Limpopo and the Eastern Cape. Public Works in the Eastern Cape also needed to be part of the interactions. The issues surrounding the SETAs also needed to be looked into in the Eastern Cape. There was a direct link between learning and libraries, and the issues of learning in the Eastern Cape needed to be urgently addressed.
 

Gauteng
Department of Sport, Arts and Culture presentation
Ms Dawn Robertson, HOD, said that the Department had completed all business plans for its programmes. The business plans provided an outline for the department to effectively utilise funds in order to promote the Mass Sport and Recreation Participation Programme. A whole range of challenges faced the Department in implementing this programme. They included lack of administrative capacity and lack of buy-in from some local government structures relating to infrastructure support. The Department was however signing service level agreements with municipalities, and had business plans in place which would effectively promote the recapitalisation of community libraries.

Discussion

Mr Kgothule said that the challenges facing the Department was as a result of not coming to the party on time. It was noted that in previous years Gauteng was not spending, because it was prioritising on using its own equitable share. Clarity should be provided on what were the main challenges in the local government sector which prevented their implementing the mass participation programmes

Mr Botha asked the Department to explain why for two and a half months the Department spent more than 70% of their budget. Clarity should also be provided on why there was a problem between them and the Department of Public Works

Ms Robertson replied that on in prioritising spending of the equitable share, Gauteng had its own contract workers who were deployed to each of the hubs working along side the contractors. The Department spent a lot of resources in getting the necessary people into the field. The capacity issues lay in the finance and procurement sections. The Department was waiting for an official letter from the National Department of Sports and Recreation that would enable Gauteng to employ people who would track the contract workers.

On the cooperation of municipalities, the challenge occurred at grassroots level. Unless there was a service level agreement signed at the highest level, the challenges would not be addressed. Public Works outsourced the contractors and paid them from their budget. Public Works would then in turn claim back the expenditure from the Department. The delay in payments however occurred as a result of the invoicing processes.

The Chairperson requested that the Department should hand over the list of municipalities that had delayed signing the service level agreements to the Chairperson of the
Sport, Recreation, Arts and Culture Committee in the Guateng Legislature. It would be useful for that committee and the Public Works Committee to look into the legacy challenges facing Public Works. On administrative capacity, the matter would need to be addressed when they dealt with the Division of Revenue Act. The Committee would be monitoring the various challenges with respect to spending, and the reasons behind municipalities refusing to accept books in vernacular languages.

Ms Robertson replied that the reason for the refusal to accept books in vernacular languages was because the Department could not afford to purchase those books during the current financial year, and had requested a rollover for the purchases. 

Mr Sipho Mkhize, Chairperson:
Sport, Recreation, Arts and Culture Committee, Gauteng Provincial Legislature, said that the HOD was correct in raising the particular issues as a challenge. There was regular engagement with the Department, where these issues were being addressed. A committee was formed to focus on the particular issues of Public Works, and also on 2010. It was important to maintain a working relationship with all the relevant stakeholders.

The Chaiperson asked the Department to comment on the Gauteng Soccer Challenge and how it was funded.

Ms Roberson replied that the challenge was an opportunity to host Gauteng’s home teams and develop the strategy of Gauteng as the home of champions. The funding that was used was part of the equitable share for competitive sport.

Mr Mkhize added that it was not wrong for the Department to host the event as they were not using the conditional grant.

The Chairperson asked if the Challenge was budgeted for, if it was in the strategic plan and the area in the equitable share that was compromised. The Department needed to be careful of unfunded mandates.

Mr Mkhize replied that the strategy of home of champions, involved many stakeholders which included the Tourism Department. There was a dedicated team that went out the country to promote sports tourism.

Mr Sogoni said that there needed to be further understanding of the programme, as there might be an area in sports that might have been compromised and people might have been deprived.

The Chairperson said that the Committee would look into the strategy, and whether the strategy was a priority.
 

Ms Robertson assured the Committee that the challenge was a funded mandate and it was part of the Department’s economic strategy.

Western Cape
Department of Cultural Affairs & Sport presentation
Mr Mxolisi Lindie, HOD, noted that they had spent 75.3% of the conditional grant for sports mass participation programmes by the end of the third quarter. The conditional grants were allocated to provinces as per approved and signed business plans. The reason for the under expenditure was a result of the cancellation of training of coaches by national service providers. This had a negative effect on the roll-out plan. The Department had also managed to spend 12 million of the allocated conditional grants to libraries by the end of the third quarter. Service level agreements had been signed with municipalities, in which all municipalities were required to submit monthly reports to the Western Cape library services.
 
Discussion

Mr Sogoni asked why the conditional grant allocation to Cape Town was so high. The issue of transfers was still a heated issue, as the transfers never equalled expenditure. Western Cape also needed to find a better way of reporting expenditure as they were still reporting on second quarter expenditure.

The Chairperson asked if the estimated total expenditure had been checked and verified. The Department also spoke of savings, clarity should be provided on what the savings were. Part of the problem was the issue of giving funds to municipalities that did not have the capacity to do other things. Comment should be provided on why there was overspending on Cape Town, and if it was as a result of unreliable business plans. There was also underspending on the school mass participation programmes, and overspending on the community mass participation programmes.

Mr Lindie replied that the Department did not have enough funds for the capital expenditure, and most of the challenges related to library staffing, especially in the rural areas. Some of the estimated expenditure information received from municipalities had been verified. However not all information could be verified. On the matter of savings, there was an amount that was realised as savings. However they were minimal amounts which would be used to address some of the backlogs. The Department noted the Committee’s comments on the transfers. However the Department was constrained in the monitoring of the grant to sustain libraries. On Cape Town’s over expenditure, the Department had an agreement on how much the City of Cape Town was receiving in terms of the grants. The amount given to Cape Town was within limits, and the city was on track to spend the amount that was allocated to them. On club developments at schools, the Department was fully aware of the risks, and it was something that the Department was looking into. The overspending on community mass participation programmes related to the procurement of sporting equipment that was required for the development of some of the hubs.

The Chairperson pointed out that it was essential to look at Integrated Development Plans (IDPs)  in order to avoid wasteful expenditure. The Committee planned to visit some of the municipalities in the Western Cape in order to see if the projects were in line with the Municipal Infrastructure Grant (MIG).

National Department of Arts and Culture presentation
Mr Graham Duminy, National Archivist, National Department of Arts and Culture, said that the Department had appointed
KPMG and Jacaranda consortium to produce 3 reports on expenditure trends and a proposed funding model. One of the recommendations on the long term funding was a phased folding-in of conditional grant into the equitable share. The recommendation however was subject to the provincial capacity to manage the project

. Therefore approximately 

R1 billion had been allocated for the recapitalisation of libraries. The funds were intended to fill the gap left by dwindling municipal funding. The funds were not intended to enable provincial departments to divert funds elsewhere as they were constitutionally required to spend on libraries for other purposes. The Department felt it was very important to promote a culture of reading and the upgrade of libraries had become a key priority. There was a need to supply literature in all official languages, especially to young readers. The Department therefore had established community library networks in order to create a market for the distribution of indigenous language material.



Discussion

Mr Mkhalipi commented that collapsing the funds for libraries into the equitable share, might result in officials misusing funds meant for libraries.

Mr Sogoni said that some intervention was needed about the poor expenditure by the Eastern Cape

Ms Mchunu said consideration should be given to “tiny tots” and library services needed to be provided for them.

Ms Robinson said she was happy with the interventions that had been made to make libraries a priority.

The Chairperson said that it was important to focus on provincial priorities, and the issue of learning and libraries was a provincial priority. There needed to be a clear audit of what were the intended outcomes of merging the funds for libraries into the equitable share.

Mr Dominy said that the issue of capacity was very important. The Department was recapitalising the libraries, and hopefully there should be some positive results to report on at the next briefing. People needed to be trained for the 21st century and the training had to take place with the latest technology. The Department agreed that there needed to be provision made for smaller children. The Northern Cape had introduced toy libraries, which the Department planned on rolling out to other provinces.

Mr Mashamba said that the element of transfers tended to be misleading. There needed to be some improvement in the reporting on the transfers.

The Chairperson said that the DORA had clear rules and guidelines on the issue of municipal transfers and it also stated the duties of the receiving officers.

The meeting was adjourned.

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