Division of Revenue Bill: Departments of Agriculture, Sport & Recreation & Arts & Culture

NCOP Finance

05 March 2008
Chairperson: Mr T Ralane (ANC, Free State)
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Meeting Summary

The Departments of Arts and Culture, Agriculture and Sports and Recreation South Africa briefed the Committee as part of the hearings on the Division of Revenue Bill 2008, focusing on allocation to different projects and sectors in financial years 2007/08, 2009/10 and 2010/11.

In most of the departments, there was massive under spending despite evidence of business plans and work plans activities being undertaken. This seemed to contradict the need for funding in most areas. The Department of Arts and Culture noted that Gauteng had not asked for any transfers until June 2008 because it was still using funds from the municipal budget. It presented a budget of R338 million to be transferred quarterly to all nine provinces, and set out the provincial allocations. 

The Department of Agriculture was exemplary in its landcare programme performance comparable to other departmental programmes. This Department tabled a budget of R534 918 million for the CASP programme covering the nine provinces in the 2008/09 financial year. It had also allocated R9793 million as the DORA allocation schedule for 2008/09.

Sports and Recreation South Africa presented its budget of R290 million for the 2008/09 mass participation conditional grant, R105 million for Siyadlala, R 100 million for schools sports mass participation programmes and R85 million for legacy programmes.

Questions from the Committee focused on the reasons for over spending and under expenditure and what the departments planned to do to remedy their problems. The Committee focused on figures and projected expenditure and queried their feasibility and progress. They also asked for explanations and clarifications regarding the achievability of project objectives and meeting intended goals. They furthermore queried the monitoring of transfers and plans, and questioned the implementation challenges.

Meeting report

Division of Revenue Act (DORA) Hearings:
Department of Arts and Culture (DAC): Presentation
The Department of Arts and Culture delegation included Dr Graham Dominy, Chief Director: National Archives, and the Chief Financial Officer (CFO), Mr Dumile Vokwana.

Dr Duminy briefed the Committee on the budgetary summary of the conditional grants, programme purposes, objectives and measures for their main programme areas. He outlined the objectives and measures for each programme area, highlighting the anticipated expenditure projections for the various provinces.

He pointed out that Mpumalanga was expected to receive R42.5 million, Free State R30. 9 million, Gauteng R35.3 million, KwaZulu Natal R26.1 million, Northern Cape, R45.1 million, North West R40.5 million and the Western Cape R31.4 million.  He added that Gauteng had not asked for any transfers in the first quarter and would only receive a double allocation in July as it was currently utilising a roll over from last year. He said the funds were meant to buy library books and restock the national stock.


Discussion
Mr E Sogoni (ANC, Gauteng) wanted to know why Gauteng had not asked for transfers in the first quarters as had other provinces. He commented that its failure was reflective of something wrong with the implementation of these grants. He also queried the one page presentation by the DAC, commenting that it was too short to highlight the programme activities and spending patterns. He asked the Department about its intended remedial actions on the Eastern Cape. He also wondered why the Department continued to transfer funds to provinces that had no capacity.

Mr D Botha (ANC, Limpopo) asked the DAC to highlight problems that provinces were encountering in procuring books for libraries. He questioned the slow nature of the ordering process and wanted to know what was being done to speed up the process. He also deplored the one page presentation as grossly inadequate to give information for planning and approval processes.

Mr Z Kolweni (ANC, North West) expressed concern at the magnitude of under spending in almost all nine provinces. He said this did not augur well with the dire need for these grants on the ground.

The Chairperson commented that the one page presentation was hiding a lot of under spending currently happening in most provinces. He wanted to know what the Department had done to increase the capacity of provinces to absorb. He said the one page could not tell the Committee what had happened in the last quarter of 2007 and first quarter of 2008. He noted that currently funds were being transferred to provinces with no capacity to utilise those resources. He noted that this was tantamount to ‘financial dumping’. He requested the DAC to provide the Committee with the list of provinces that had received these conditional grants.

Mr Botha pointed out that if transfers were made on the basis of sound business plans, it should not be that provinces were failing to utilise the funds based on their work plans.

The Chairperson queried the credibility of the submitted business plans by different provinces.

Mr Sogoni wanted to know what the DAC was doing to address the Eastern Cape problems. He highlighted that the State Information Technology Agency (SITA) had been invited to attend a meeting to address the problem around libraries but failed to attend. He recommended that it must be subpoenaed before the Committee.

Dr Dominy responded that Gauteng had requested transfers only from June 2008, as it was currently using funds from the municipal grants. He said the second quarter covered April to June. On the issue of Eastern Cape he said that numerous visits to the province had been done to address the issue, without success. He added that the DAC was also concerned with the unresolved issue.

He pointed out that plans were already afoot to bring in the National Treasury to send their investigators and support the province with ‘hands on’ staff to address the supply chain management and invoice processing. He promised the Committee that there was light at the end of the tunnel.

The Chairperson expressed concern with the capacity of provinces to roll up the projects. He asked that the Director General should respond to these issues in writing. He said that denial by Dr Dominy on issues of public concern was retrogressive, in light of the need to pass the Division of Revenue Act (DORA) as soon as possible. He bemoaned the level of under spending in almost all provinces and said that was compromising the fight against illiteracy in the country. He added that library work was not seasonal, like agriculture, and wondered why Gauteng had not requested funds. He directed the Department to present the committee with a whole package of information within seven days.

A representative from the National Treasury warned the DAC to desist from promoting what she termed ‘fiscal dumping’ and hoarding books without a needs assessment having been done. She said roll overs were illegal and only acceptable in cases of firm commitments to finish off projects.


Department of Agriculture (DoA): Presentation
The Department of Agriculture delegation included Mr Masiphula Mbongwa (Director General),  Mr Bayete Ndlaleni (Deputy Director-General: Comprehensive Agriculture Support Programme) Mr Bongai Msomi (Director, Land Use and Soil Management)

Mr Masiphula Mbongwa, Director-General, DOA, briefed the Committee on the budgetary summary of the conditional grants, expenditure trends in the last quarter, objectives and allocation criteria of the Comprehensive Agricultural Support Programme (CASP), and Landcare programmes. He outlined the objectives and measures for each programme area, highlighting the anticipated expenditure projections for the various provinces.

He pointed out that the CASP framework included the DORA Schedule 4 grant to supplement equitable share, the DOA initiative to support provincial departments of agriculture to create favourable and conducive environment for emerging farmers, expansion of support services for agriculture development and the provision of support through the six pillars. He added that CASP accounted for 15% of farmer support budget.

He noted that the LandCare framework comprised the DORA Schedule 5, which was a specific purpose grant meant to optimise productivity, sustainable use of natural resources, food security and job creation for better quality of life for all.

Mr Bayete Ndlaleni, Deputy Director General: CASP, presented the comprehensive budget for the CASP programmes, highlighting the steady increase over the years starting at a mere R200 million in 2004/05 to R535 million in the 2008/09 financial year. He added that in the 2007/08 year the budget stood at R415 million. He said the budget was expected to continue on the upward trend until 2010/11 when it would be around R758 million.

He highlighted that the Department used the following criteria to allocate CASP funds: the reach of rural areas of the province, size of redistributed and resettled land, the size of province, past performance and extension recovery norms and standards plus study findings. He set out the spending trends for each of the provinces and noted that Eastern Cape had the largest and Gauteng had the least.

He noted that CASP had made a tremendous impact since its inception, registering 46 500 beneficiaries in 2004/05, 53 200 in 2005/06, 67 400 in 2006/07, and 51 300 in 2007/08. Thus, a total of 218 400 beneficiaries had benefited since inception. In terms of expenditure performance, KZN was lagging behind at 20% and also Limpopo at 40%. However, the success stories were Mpumalanga, with spending at 100%, and Gauteng at 77%. The average spending rate as at January 2008 was at 56%. He added that the major projects under CASP included: Oppermans irrigation project, Allen Water Farmers Association, Tswaraganang irrigation project, Makhotse Mango-Artchar project and the Mosley irrigation project. He noted that about 330 projects had been completed by the end of the third quarter of 2007/08.

He also highlighted that CASP rendered monitoring and support services to provinces in the areas of DORA administration, provincial coordinating teams, DoA specialised monitoring team (DEXCO), inter-governmental 4 x 4 and 10 x 10, Interdepartmental Technical Committee on Agriculture (ITCA) and CASP standing committee.

Mr Bongani Msomi, Director, Landcare, noted that the budget for the Landcare programmes had been increasing steadily and in the 2008/09 the budget is estimated at R9.7 billion. He highlighted that the department used the following criteria to allocate Land Care funds: nodes, land capacity, poverty, soil degradation and size. He said the land care expenditure for 2007/08 showed that the Eastern Cape had over spent at 112%, and North West under spent at 12%. The statistics also showed that most provinces were not spending the funds for the greater part of the year -notably North West, Mpumalanga, Gauteng, Limpopo, Free State and the Eastern Cape. However, the Western Cape was exemplary in that regard, utilising their allocations every month.

He pointed out that measurable outputs for 2008/09 included to promote Junior care through 4502 awareness campaigns and 1404 workshops and training seminars, to promote Veld Care Management through the clearing of 6975 hectares of land, firebreaks, fencing for grazing camps and boundaries, fencing for arable land and bush encroachment clearing, to promote Water Care Management though distilling dams, pipeline construction, irrigation system improvement and waterways construction and to promote Soil Care Management through silt fencing, soil conservation, donga rehabilitation, soil samples and surveys, contour construction, stone collection and bore hole and dams construction.

He also highlighted that Landcare would continue to institute a monitoring mechanism through the DoA Land Care Secretariat, resource auditors and project coordinators, quarterly visits to provinces by DEXCO to verify projects, quarterly visits to provinces by LandCare Secretariat to track performance and provide support and monthly and quarterly reports.


Discussion
Mr Botha wanted to know what the Department was doing to assist low spenders to increase their capacity to absorb. He expressed concern at the inaction of the Department to intervene to address under-spending concerns. He wondered at what stage would the Department involve itself, given that this problem was now perennial. He warned the DoA not to hide the problems by constant reference to unprocessed invoices in the provinces, when in fact there was nothing happening on the ground. He foresaw the trend of under spending recurring again in the last quarter despite previous commitments to address the problem.

The Chairperson concurred that there was no time between now and 1 April to spend a substantial chunk of the budget that was still to be used, and “a magic wand” would be needed to achieve this. It was worrying that under spending was recurring against the backdrop of reported cases of land degradation in most provinces. He questioned the circumstances that warranted over spending in the Eastern Cape.

Mr Kolweni wanted to know whether the Department was satisfied with the quality of business plans it was receiving from provinces. He commented that the ordinary people were not benefiting from these conditional grants.

The Chairperson referred to the visit by the Committee to the Eastern Cape and noted that the attitude of most extension workers there was pathetic. He questioned their dedication to duty. He also said that during their visit they established that people were promised tractors, which were never delivered.

Mr Sogoni noted CASP was a commendable project but queried whether it was achieving its set objectives. He was against a situation where money was being given to provinces without any tangible results to show for it. He added that the continued funding of the projects did not make business sense, given massive evidence of under spending. He questioned the efficacy of the monitoring and evaluation programmes by the DoA.

Ms N Ntwanambi (ANC, Western Cape) wanted to know why the DoA was hopeful that Mpumalanga, that showed only 21% spending, would do well in the future. She questioned why Gauteng had not spent anything between April to November.

The Chairperson raised concern that the subsuming of CASP budget under the equitable share scheme was problem ridden in terms of monitoring and tracking expenditure.

Mr Mbongwa responded that the DoA had never been happy about the quality of business plans they were receiving. He was optimistic that the current state of CASP would be radically reformed once the Land and Agrarian Reform Programme (LARP) was implemented. He said that no province was entitled to higher proportion of CASP funds although they used a formula based approach.

On the question of intervention, he pointed out that currently the Department used a lead-time of six months, after which they instituted sections 125 and 154 of the DORA to address the perceived problems. He said under spending was a problem to the department but also bemoaned spending for the wrong things as equally problematic.

Dr Sizwe
Mkhize, Acting Deputy Director-General, DoA, added that LARP would help the Department to identify problems of CASP within provinces. He noted that business plans were subjected to strict processes and procedures before approval. He added that business plans were approved by November of each year to enable timeous project implementation. He said these were signed by the Minister afterwards.

In regard to the 112% over spending by the Eastern Cape, he said the province had used other funds to finance the shortfall.

The Chairperson noted that over spending was illegal and reflected that the DoA was not strict with business plan assessments.

Dr Mkhize further emphasized that the DoA was satisfied with the business plans, although he noted that after approval, the HODs had the latitude to change certain issues in consultation with the DG.

A representative from the DoA concurred that the country had a weak extension service in terms of soft skills and expertise required. She revealed that, based on their research, plans were in place to address the attitude, visibility and dedication of extensions. She added that based on the Extension Recovery Plan new interventions were in the pipeline to address the extension service. She noted that CASP was meeting its objectives based on the number of beneficiaries. However, she said that CASP would decline with the advent of LARP.

Mr Mbongwa noted that the DoA  put in place a mixture of instruments to enhance their monitoring and evaluation activities. He pointed out that promises made by the DoA would be addressed. He added that they had resisted plans to subsume CASP under equitable shares by provinces. He said his Department would send emissaries to meet with the Committee during its constituency visit period in April.

The Chairperson wanted to know from the Department whether it was agreeable to the passing of DORA in its current state.

Mr Mbongwa responded that the gazetting of the Bill had standardised the operations of the Department although he stated that there were a lot of issues still to be refined. He added that CASP must continue to exist, as it was relevant to community needs despite its setbacks.

A member from the National Treasury wanted to know whether the Department had risk and mitigatory plans in place for KZN. She noted that in the case of the Eastern Cape, capacity had to be aligned with budget to avoid over spending.

Another member from the National Treasury questioned the capacity of the Department to monitor conditional grants and put in place remedial interventions. He also wanted to know whether they had risk plans to cater for natural disasters.

Dr Mkhize said that in their planning DoA assumed that there would be no changes at the leadership level. He cited the under spending in KZN as attributable to changes in key personnel that stifled and delayed projects’ roll out. On the issue of risk plans for natural disasters, he said it was difficult to quantify in financial terms. although the idea was noble.


Department of Sports and Recreation (SRSA): Presentation
Ms Xoliswa Sibeko, Director General, SRSA, briefed the Committee on the budgetary summary of the conditional grants, expenditure of the last and first quarter of the 2008/09 financial year, objectives and measures for their main programme areas. She outlined the various programme area highlighting the anticipated expenditure projections for the various provinces. A budget of R290 million was presented in the 2008/09 for the Mass Participation conditional grant, R105 million for Siyadlala, R 100 million for Schools Sports Mass Participation programmes and R85 million for legacy programmes.

She pointed out that the SRSA was dogged by problems of human resources capacity and under spending. She bemoaned that clubbing of SRSA with other irrelevant portfolios such as Arts and Culture were creating divided attention for the MECs. She noted that dedicated MECs for sports and recreation were welcome to address problems in sports.

She added that on monitoring and evaluation, the SRSA depended on the monthly and quarterly reports from National Treasury. The Department also utilised meetings with HODs and was currently establishing satellite offices in all provinces to build capacity and expertise in monitoring and evaluation.

Mr Makoto Matlala, Chief Financial Officer, SRSA, highlighted the financial projections for various projects in detail starting with mass participation, siyadlala, schools sports and legacy programs. He detailed the budget of R290 million for the 2008/09 financial year.

He noted that the SRSA would use the equitable share formula to calculate allocations for legacy and schools sports programmes. He set out the budgetary figures for the World Cup stadiums (see attached presentation).


Discussion
The Chairperson noted that there was a risk of under spending in all provinces

Mr Sogoni wanted to know the implementation challenges faced by the SRSA. He queried the allocation criteria that allowed rich soccer clubs such as Kaiser Chiefs and Mamelodi Sundowns to benefit at the expense of poor ones. He also wanted to know whether the private sector was allowed to fund sports and recreation. He bemoaned the value of money in conditional grant spending. He asked on the progress of Mbombela Stadium.

The Chairperson wanted to know whether the use of the equitable share formula was not distorting the allocations to provinces. He suggested that the formula was too broad to address equity issues. He called upon the Department to seek advice from experts in the field.

Ms Sibeko responded that the issue of the formula for calculating allocations would be addressed. She said that Mbombela had been placed under section 139. She expressed gratitude at the decision taken by the ANC at its December conference to appoint an MEC for Sports and Recreation. She added that her Department was working on the National Plan on Sports Development.

Dr Bernadus van der Spuy, Director: Strategy, SRSA, said that their monitoring and evaluation was effective given the contribution it had made to enhance feedback with other stakeholders. He noted that there was value for money in sports and recreation. He added that recently the SRSA had drafted a strategic plan giving it focused direction and key programme areas.

Ms Sibeko noted that on the private sector involvement, the Department relied on Sports Federations’ performance in managing sports. She added that as long as Federations had their houses in order, then the private sector would be lured to invest in sports and recreation. She cited Boxing South Africa, which had done well in the past few years.

The Chairperson expressed concern with the manner in which the Department handled letters sent to it by the National Treasury in the third quarter.

Mr Sogoni commented that the issue capacity as highlighted by the DG had to be addressed expeditiously. He commended the recent recruitment of the Risk Manger as a step in the right direction.

Ms Sibeko urged the communities to write in with their recommendations and problems to the SRSA to enhance their operations. She revealed that the Department had set up a Sports Science Department to address health and hygiene issues in sports. She cited the case of Bafana Bafana players who were underweight during the last Afton tournament in Ghana. She added that plans were at an advanced stage to expedite talent identification and placing the talent in established teams such Inter Milan and Fuentes, where the country had signed Memoranda of Understanding. .

The meeting was adjourned.

 

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