Finance Select Committee Oversight Visits to Northern Cape, Eastern Cape, Mpumalanga and Limpopo

NCOP Finance

13 May 2008
Chairperson: Mr T Ralane (ANC)
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Meeting Summary

The Committee adopted their reports on their oversight visits to the Northern Cape, Eastern Cape, Limpopo and Mpumalanga.

In their discussions on the Northern Cape report, Members debated their recommendation that no projects should be done without ensuring alignment with Integrated Development Plans. Some members felt that this would create problems in future, since very few provinces actually aligned their work to these plans. Others felt that it was important to set a standard and not let provinces get away with non-compliance.

With regard to the Eastern Cape report, Members focused on the issue of community housing. One of the problems identified was that emerging contractors lacked the necessary capacity to ensure that work was done properly. Members could not understand the underspending on certain items, especially given the fact that only 36 out of the province’s 118 operating libraries received conditional grants.

Referring to the Limpopo report, Members focused their discussions on the lack of collaboration between the Departments of Agriculture, and Roads and Transport. They also were concerned about the high salaries paid to Roads Agency Limpopo employees, as opposed to those paid to employees of the Department of Roads and Transport.

In their discussions on the Mpumalanga report, Members expressed concern that certain districts were poaching staff from municipalities. Instead of building capacity in municipalities, they were focusing on building empires at district level. Members also expressed concern about inaccurate information provided to the Committee by certain municipalities.

Meeting report

Adoption of Report of Committee Oversight Tour to Northern Cape
The Chair proposed the inclusion of general recommendations for Portfolio and Select Committees. These could be used to monitor the situation across all sectors. This could be placed just before the “Conclusion” on page 5. These recommendations would include determining: (1) quality of spending, (2) value for money, (3) whether projects exist, (4) sustainablility of projects and (5) impact of projects on communities. There was a need for the Select and Portfolio Committees to work jointly on this.

Mr Sogoni said that since all reports emanated from provinces, reports should be sent directly to Provincial Legislatures after the Select Committee had drafted proper recommendations.

Mr Sogoni said that the report should mention the reason Provincial Treasury had taken over the responsibility for the Department of Health in that province. The Committee had reached conclusions regarding this situation.

Mr Goeieman said that there needed to be some indication in the report as to what Treasury’s viewpoint was. The Committee had made certain recommendations, but these were not reflected in the report. In addition the Committee had been of the opinion that peer bodies could not exercise oversight over each other. The Committee had also made recommendations on pensions and newspapers and none of these issues were reflected. A chartered accountant had been appointed to do the work and the Chief Financial Officer’s (CFO)’s role had been spelled out. All these issues must be included in the report or the Committee would not be able to engage on them when they did a follow-up in future.

The Chair said that, as part of the process, Mr Goeieman should make a statement to the Committee on behalf of this province.

Mr Goeieman agreed.

The Committee adopted the Report.

Adoption of Committee Report on Oversight Tour to Eastern Cape 21 to 22 February 2008
Mr Sogoni welcomed the fact that statements would be made on behalf of each province, but said that it would have been useful to have the province present at the Committee meeting. He however understood that there were time constraints.

Mr Robertson said that he was not sure whether the MECs of Housing for Eastern Cape and KZN had met to discuss these issues. He explained that from the Eastern Cape point of view there had been a shortage of money for Matatiele municipality. This would be discussed with KZN to obtain some agreement.

The Chair said that the issue of community housing had also arisen. This had been a funding problem.

Mr Z Kolweni said that if small contractors got the work and received no mentorship, it could result in shoddy work.

Mr Robertson pointed out that the larger contractors were too busy with bigger projects (like those involving the preparations for the 2010 World Cup) to get involved with this type of work.

Ms Robinson asked for feedback requested by the Committee regarding investigations on the NHBRC in the Eastern Cape.

The Chair said that a meeting would be held with the NHBRC to report back on this. They would focus on current projects not yet registered. It would be useful for each province to do a presentation, which included information on how many of their projects were unregistered. The meeting should include all nine provinces and national representatives.

The Chair said that the Eastern Cape province had 118 libraries and only 36 received conditional grants. That statement was true.

Mr Robertson argued that this conflicted with what was said the previous week. He did not believe the statement to be true. He referred to the information as “wishy-washy”.

The Chair said that this did not explain the underspending. He was concerned as to what informed their business plans.

Mr Robertson agreed, saying that the province could not provide information on how many operational libraries there were and it had been clear that they had not done their homework. However this could be further engaged with when the Committee visited the Eastern Cape.

The Chair asked if the Recommendation omitted anything.

Mr Sogoni said that it was incomplete as it did not reflect that the Committee undertook to discuss the issue of electricity distribution in the area with Eskom.

The Committee adopted the Report.

Adoption of Committee Report on Oversight Tour to Limpopo, 22 February 2008
The Chair said that the lack of collaboration between the departments had been a very big problem in that area. In fact the Department of Roads and Transport had not even been aware that the Department of Agriculture was building roads.

Mr D Botha (ANC- Limpopo Province) added that they could not even say what types of roads were being built, that is whether they were farm roads or private roads.

Mr Botha said that the Road Agency Limpopo (RAL) was paying their staff very high salaries.

Mr Sogoni said that RAL was paying salaries far in excess of those paid by the Department of Roads and Transport.

Mr Botha said that RAL had a staff of 40 people but received 70% of the budget, while the Department of Roads and Transport had 2000 employees, but received 30%.

The Chair pointed out that this issue should be discussed between the Department of Provincial and Local Government, Roads and Agriculture. They should draft proposals to the Financial and Fiscal Commission (FFC) requesting more funding. Treasury had warned that they were contravening the Division of Revenue Act.

The Chair referred to expenditure saying clinics in Limpopo were paying their nurses far higher salaries than hospitals were paying in Gauteng.

The Chair referred to the baseline allocation, which had increased to 25,9%, but said that there would be ongoing debate until it reached the required 26,5%. The Chair however expressed concern that Provincial Treasury and DOH officials were unable to get along and resolve issues. Thus, while the respective MECs were talking, the officials were not.

Mr Botha referred to the problem of the DOH overdraft and the fact that they were forced to hold back on payment to service providers due to lack of funds. The Committee had suggested that they speak to the National DOH since the Provincial Treasury would not be assisting on this matter.  This was because National DOH owed the money to the province. However this did not mean that the Provincial Treasury should not be part of the discussions with the National DOH regarding the overdraft. The National Department had indicated that they would be meeting with the province to discuss this, but it was unclear whether this meeting had taken place.

The Chair referred to the last bullet point under “Recommendations” and asked what top-slicing meant in this case.

Mr Botha replied that it meant that funds were made available for the Premier’s office, electricity and water. This resulted in the Department itself suffering.

Mr Sogoni said that the Committee had to assist the Provincial Treasury in dealing with this matter.

Mr Botha asked if the Provincial Committee Chairpersons, as well as the DOH could be invited when these issues were discussed.

The Chair said that that they were always invited, but did not send apologies. However one must bear in mind that they too had their own programmes, which could not be changed simply to suit this Committee.

Mr Goeieman said that MECs too should be invited. He also proposed that the present exercise should be undertaken during the last hour of Members’ tours to the various provinces.

The Committee adopted the Report.

Committee Report: Oversight Tour to Mpumalanga Municipalities 18 & 19 March 2008
The Chair said that he had been informed that the district was poaching the staff of the Msukaligwa Municipality. Districts were developing a big brother mentality which had to be nipped in the bud. The districts were focusing on building capacity, even though their focus was not service delivery. The Committee should perhaps examine the salary bills of these districts.

Mr Botha added that when the Committee had interacted with the province, he had learned that the district had ten engineers, while the municipality had none. Districts were building empires while they were supposed to be building the capacity of municipalities. In addition, they were keeping money, which was meant for municipalities, in their accounts for about six months before releasing it. This was done in order to accumulate the interest in their own accounts.

The Chair said that they would have to discuss that matter with Treasury.

Mr Sogoni said that in order to present a fancy report to the Committee, the district would say that there were ten engineers, when these people were in fact engineering technicians. In addition it was evident that districts supposed to be supporting municipalities, were in fact competing with these municipalities.

Mr Sogoni said that people wanted to give glamorous reports, which however contained inaccurate information. The Committee should find a way to deal with this.

The Chair said that that was the reason other bodies which had information of the relevant issues, were invited to these presentations as well. This acted as a deterrent against people providing inaccurate information, as its accuracy could be verified by others present.

Mr Sogoni complained that provinces were becoming lax in adhering to the requirements of the Municipal Finance Management Act (MFMA).

Mr Mkhaliphi said that the Department of Local Government had a greater hand in the drafting of more recent reports.

Mr Sogoni referred to the Steve Tshwete Municipality and said that municipalities often took unfunded mandates upon themselves.

The Chair added that this municipality was also providing 10kl of water for free, whereas the norm was 6kl.

Mr Sogoni r said that if a municipality were to assist with housing delivery, it was necessary for the Provincial Department of Housing to talk to this municipality about this issue.

The Chair said that children had to walk long distances to get to school, which contributed greatly to the high dropout rate. By not addressing this, government would be violating the constitutional right of children to education.

The Committee adopted the Report.

Mr Sogoni said that it was important to inform Provincial Committees of upcoming meetings well ahead of time, as this would increase the probability of their attendance. It was important that they were aware of what the Select Committee was doing.

The Chair said that the three Provincial Departments of Education were supposed to present on that day, but they had informed the Committee that they were busy with important meetings with National Treasury. It issue of learner support had to be dealt with, given the underspending in this area. The Committee would ask the various provinces to identify problematic learner support issues within their schools. It would be important to involve the Departments of Education, Social Development, Treasury and the FFC. He believed that allocations to Early Childhood Development (ECD) should be in the form of conditional grants. It was also necessary to do an audit of all the registered ECD centres. With regard to the high incidence of deaths in certain municipalities, the Chair suspected that many of these were due to malnourishment and undernourishment.

Mr Songoni suggested that when the invitation was issued to the Eastern Cape municipalities, it should include an instruction that their report should include issues of school nutrition and outstanding payments to service providers.

The Chair agreed and reminded Members that the Committee was responding to issues identified by National Treasury.

The Chair adjourned the meeting.


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