Appropriation Bill 2008: National Treasury Briefing; Roads, Transport & Public Works: Fourth Quarter Spending: Provincial Department briefings

NCOP Finance

17 June 2008
Chairperson: Mr T Ralane (ANC, Free State)
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Meeting Summary

The Head of the Budget Office of National Treasury briefed the Department on the 2008 Appropriation Bill.

Members asked questions about the provision made for the salaries of judges and teachers, the phasing-in of the lower qualifying age of 60 for men for the Old Age Grants and the investment in public transport and transport infrastructure.

The Bill was adopted by the Committee, without amendments.

Senior officials from the Departments of Roads, Transport and Public Works from the Eastern Cape, North-West, Northern Cape, Free State, KwaZulu Natal and Limpopo provinces briefed the Committee on the provinces’ grant allocations and expenditure on roads and transport infrastructure for the 2007/08 financial year.  Submissions were not made by Gauteng and Mpumalanga and the briefing by the Western Cape was curtailed due to time constraints.

The major challenge faced by all the provinces was inadequate funding for road infrastructure maintenance and the construction of new roads.  All provinces reported an increase in maintenance backlogs, the cost of road construction and materials, the number of road users and damage caused to roads by overloaded trucks.  The Free State reported on the progress made in repaying the R358.8 million over-spent during 2006/07.  Limpopo was the only province that made use of an agency to carry out transport infrastructure programs but reported problems with under-spending by the agency.  All provinces spent 98% - 100% of their budgets.

Members asked questions about the management of escalating costs, the monitoring of performance, public transport initiatives, progress on specific projects, the transfer of roads to SANRAL, the transfer of funds to district municipalities, the development of capacity within the departments, the impact of roads on the provincial integrated development plans, progress made with the Extended Public Works Program projects and the status of the 2010 road infrastructure projects.  Members were particularly concerned about the Road Agency Limpopo’s lack of delivery and divergent priorities.  Provinces were requested to submit written reports to the Committee on major problem areas.

Meeting report

Appropriation Bill 2008: National Treasury briefing
Mr Kuben Naidoo (Head: Budget Office, National Treasury) briefed the Committee on the 2008 Appropriation Bill (see attached document).

The Bill provided for the appropriation of funds from the National Revenue Fund for social services (37%), economic services and infrastructure (34%), justice and protection services (18%), financial and administrative services (6%) and central Government administration (5%).

Social security reforms included the extension of the Child Support Grant (CSG) to age 15, increasing the CSG by 7.5%, phasing in the qualifying age for men for the Old Age Grant (OAG) and increasing the OAG by 8%.  The additional cost amounted to R12 billion over three years.

Details of the funds allocated to infrastructure, economic and administrative services, social services, justice and crime prevention, provincial priorities and local government priorities were provided.

Discussion
Mr D Botha (ANC, Limpopo) asked if provision was made for salary increases for judges.

Mr Naidoo replied in the affirmative.

Ms D Robinson (DA, Western Cape) asked what provision was made for salary increases for teachers.  She said that many queries were received about the lower qualifying age for men for the OAG.

Mr Naidoo replied that an additional R2 billion was budgeted for salaries for teachers.  He advised that the Teachers Union had approved the career path model.  Occupational-specific remuneration will be implemented in July 2008 and will be backdated to July 2007.  Although the salaries for qualified teachers were acceptable, the profession offered no career path and no incentives for mathematics and science teachers.  Performance monitoring was not done but the Department of Education (DOE) was in the process of introducing evaluations of teachers.  The DOE was committed to recruiting and retaining more teachers.

Mr Naidoo said that the phasing-in of the qualifying age of 60 for men for the OAG was made clear in the Minister of Finance’s announcement.  He said that the South African Social Services Agency (SASSA) was now legally empowered to carry out its responsibilities.

Ms Robinson said that many expatriate teachers wanted to return to South Africa but cannot afford to do so because of the relatively low salaries.  She asked what can be done to encourage people with scarce skills to return to the country.

The Chairperson said that was a matter of commitment.  He asked for further details of the investment in buses, taxi recaptilisation and Public Works.  He said that the provinces complained over insufficient funding for roads and asked if their requirements were met by the provision made.  He asked for details of the infrastructure projects in the Eastern Cape.

Mr Naidoo said that National Treasury agreed that teachers’ remuneration should take into account the subjects taught and the individual teacher’s performance.  Some resistance was experienced from the DOE but progress was being made.  He explained that the provision for Public Works, roads and transport increased from R11 billion to R14 billion from 2007 to 2008.  In previous years, the appropriation remained flat but was now increasing.  National Treasury requested provinces to budget for the maintenance of roads in the first instance, thereafter for new projects.  He said that little infrastructure existed in poor areas and there was a need for more balance.  National Treasury worked with the relevant Departments to ensure that sufficient funds were available for adequate maintenance of existing infrastructure.  He said that National Treasury was requested to issue norms and standards for maintenance of infrastructure but considered engineers to be better qualified to develop such standards.  He was concerned that Government was not spending enough on the maintenance of its assets.

The Bill was approved by the Committee, without amendments.  Mr Botha proposed the adoption of the Bill and Ms Robinson seconded the motion.

Eastern Cape Department of Transport presentation
Mr Thobile Mhlahlo (MEC: Roads and Transport, Eastern Cape Province) briefed the Committee on the province’s report on conditional grants and capital expenditure for the 2007/08 financial year (see attached document).

Details of the province’s expenditure on transport programs and projects were provided.  The Eastern Cape spent a total of R2.3 million (100% of budget) on the transport program.  The presentation included a summary of the management and monitoring mechanisms in place, the Extended Public Works Program (EPWP) social indicators, the results of completed projects, the challenges faced by the province and the 2008/09 to 2010/11 budget allocation.  Not all planned projects were initiated because of a lack of available funding.

Discussion
Ms Robinson requested further details of the new technology applied by the province in the development of the roads.  She asked for details in the Eastern Cape’s proposed maritime strategy.

Mr Botha noted that payments to contractors increased by 40% and that one of the challenges faced by the province were the escalating cost of road construction.  Another challenge was the lack of adequate funding for roads.  He asked how the province planned to manage the risk of over-spending by contractors.

Mr M Goeieman (ANC, Northern Cape) asked how the Eastern Cape managed to spend exactly 100% of its budget.  He noted that the Hankey/Patensie, Kirkwood/Addo, Uitenhage/Witklip and East Coast Resorts roads were 0% completed but incurred expenditure of between R2.5 to R3.9 million each.  He asked what the current status was of the construction of the Xuka bridge.

Mr E Sogoni (ANC, Gauteng) asked if commuters made less use of taxis as a result of the increased number of buses purchased by the province.

Mr Mhlahlo advised that there were no tensions in the taxi industry as a result of the recapitalisation program.  The allowance paid to transport passengers to King Williamstown was being scrapped.  A problem was experienced in Mbizana where buses belonging to a black-owned company were set alight.  He said that the road network was under pressure because of the increased number of trucks on the roads.  The province’s priority was to provide commuter services in the first instance, followed by commercial traffic.

In response to Ms Robinson’s question, Mr Mhlahlo explained that the maritime strategy was to link the ports of Port Elizabeth, East London, Koega and Port St Johns by sea and relieve the pressure on the road network.  The motor industry in Port Elizabeth and East London could use boats to move cargo between the two ports.  A maritime section was established within the Department.

Mr Mhlahlo said that systems were put in place to ensure service delivery.  The province had obtained agreement from Government to transfer additional funds to roads.  The province collaborated with the South African National Roads Agency Limited (SANRAL) in the maintenance of the road network.

Mr Mbulelo Peterson (Chief Director: Roads and Transport, Eastern Cape DPLG) explained that the maintenance requirements of the gravel roads in the province was monitored for the last three to four years.  The cost of the traditional materials used in the construction and maintenance of gravel roads was escalating and the source of the gravel used was being depleted.  The new technology applied involved the use of clay and stabilisers available in the market for the construction of gravel roads.

Mr Peterson explained that cost savings were achieved by carrying out the work themselves rather than sub-contracting out.  This allowed the province to develop adequate capacity and provided opportunity for practical training as well.  He said that the roads mentioned by Mr Goeieman were still in the design phase.  Although construction had commenced, the road will only be considered completed once it was opened for traffic.  He confirmed that the Xuka bridge was completed.

The Chairperson advised that the Committee planned to visit the Eastern Cape.  He said that, two years ago, the Province owed R2 billion but now appeared to be on a sound financial footing.  He referred to the Department of Transport’s (DOT) presentation to the Committee on 17 June 2008 where it was stated that provinces resisted the transfer of roads to SANRAL at no cost to the province.  The DOT undertook to provide the Committee with a list of the provinces involved.  He was reluctant to accept the lack of funding for road construction and maintenance as an excuse as the transfer of roads to SANRAL was an opportunity to save funds.

Mr Sogoni asked what was being done in the province about learner transport to schools

The Chairperson advised that the Departments of Transport and Education were dealing with the issue of learner transport.

Mr Goeieman asked for clarity on roads that were at the design phase.

Mr Peterson explained that the designs for the roads were completed.  All the roads mentioned were situated near Port Elizabeth and were part of the 2010 transport program.

Mr Mhlahlo advised that the province was working on the R72 and planned to toll the road.  The province worked with SANRAL on this project.  He said that the R61 was transferred to SANRAL but necessary maintenance of the road was not being carried out.  A further six roads were commissioned but SANRAL failed to carry out the work.  He welcomed the Committee’s intended visit to the Eastern Cape.

North West Department of Transport presentation
Mr F Vilakazi (MEC: Roads and Transport, North West Province) briefed the Committee on the province’s conditional grants and capital expenditure (see attached document).

The presentation included details of the road network in the province, the road infrastructure plan for 2007/08, the conditional and roads infrastructure grants, the 2007/08 budget and actual expenditure, the monitoring capacity of the department, the achievements for the year, the challenges and capacity constraints and the funding requirements to 2010/11.

The major challenge was the lack of available funding for road maintenance.  As a result, the roads in the province were in poor condition.  The province had transferred three roads to SANRAL but was skeptical over the agency’s ability to implement the transfers.  Completion of the access roads to the 2010 FIFA Soccer World Cup stadiums was a priority.

Discussion
The Chairperson asked how the Municipal Infrastructure Grant (MIG) funds were applied by the municipalities.  He said that provincial funds were compromised if the province assisted municipalities with funding for infrastructure projects.

Mr Vilakazi replied that funding for the construction of the Nelson Mandela Road was provided by both the Local Government and the province.

The Chairperson asked where the R451 million in conditional grant shown in the presentation came from (see page 21 of the attached document).

Mr Vilakazi replied that the funding was provided by National Treasury.

The Chairperson asked if the funds were from the Provincial Infrastructure Grant (PIG) or the province’s equitable share.  He presumed the funds were from the equitable share as a conditional grant was not possible in this context. He noted the increase in the budget allocation for 2009/10.

Mr Botha noticed a change in the spending trends of the province.  He had sympathy for the province over the state of the roads in the province.  He said that there were many poor municipalities in the North West and someone had to step in to improve infrastructure.  He complimented the province for its interventions.

Mr Goeieman remarked that it took SANRAL five years to act on enlarging the N12 road.  He said that the road between Taung and Mafikeng was very narrow and asked if this was considered to be a problem for the 2010 road targets.

Mr Vilakazi replied that the focus was on the roads around Rustenburg, which was a host city for the 2010 FIFA World Cup.  An additional amount of R787 million was required and a request for the extra funding was submitted to National Treasury.  He said that the Taung/Mafikeng road was resurfaced in 2008 and it was planned to enlarge the road in 2009.  He agreed that SANRAL was slow in acting on the N12.

The Chairperson requested that the province’s Treasury respond to the queries raised by the Committee on the source of the amounts reflected in the budget.

[PMG note: The response from by Ms M Ngqaleni (Chief Director, National Treasury) was inaudible]

Mr Vilakazi said that although some progress was made, the province was faced with increasing backlogs in road maintenance.  He expected the situation to worsen as a result of the continued inadequate funding.  The province required three times the amounts allocated in order to meet the delivery requirements.  He said that there was an increase in the number of road users and the transport of cargo had moved from rail to roads.  He said an urgent review of the national funding for roads must be undertaken.  A more detailed asset register was in the process of being compiled and gave a clearer indication of the R6 billion required to clear the maintenance backlog.

The Chairperson requested officials from the province to be available for Committee visits over weekends.

Northern Cape Department of Transport presentation
Mr K Motusi (MEC: Transport, Roads and Public Works, Northern Cape Province) and Mr M Selemela (Head of Department: Transport Roads and Public Works, Northern Cape Province) briefed the Committee on the province’s allocation and expenditure for the 2007/08 financial year (see attached document).

Details of the background, expenditure for 2007/08, conditional grant allocation, capital expenditure on infrastructure, major capital projects, the monitoring of agencies and projects and the budgeted allocation per program were provided.

The province carried out all its own projects and did not make use of agencies.  Agreements were made with district municipalities to carry out routine maintenance of gravel roads.  The budgeted amount was R551.1 million and a total of R540.6 million (98%) was spent.

Discussion
Mr Botha remarked that the variance of R10.5 million was not a saving but an under-spent amount.  He asked what the reasons were for under-spending and whether the amount would be rolled over to the following year.

Mr Goeieman requested further information on the additional funding of R31.2 million received in November 2007 and what the money was spent on.  He asked for an indication on how much was transferred to district municipalities and whether the municipalities were held accountable for the application of the funds.

Mr Motusi replied that the additional funding was for the construction of a conference centre, roads for the Square Kilometer Array (SKA) project and a taxi rank.  He said that a request to roll over the under-spent amount of R10.5 million was submitted to National Treasury.

Mr Selemela explained that the Department’s monitoring unit was responsible for monitoring and evaluating progress on projects undertaken by the district municipalities.  There were five district municipalities in the province who undertook routine maintenance of the province’s gravel roads.  Service level agreements with the district municipalities included the stipulation that the municipal manager reported to the Head of Department on the application of the funds provided, on a regular basis.

The Chairperson asked if the province lacked the capacity to carry out the necessary work.

Mr Selemela said that the province wanted to return the responsibility for all road maintenance to the provincial Department and was in the process of developing a strategy to achieve this goal.  The district municipalities acted as agencies of the provincial authority in this regard.  He said that careful consideration had to be given to the employees of the municipalities, who were doing the work.  The provincial Department was concerned that the municipalities applied less funds for roads than for other purposes.

The Chairperson requested a written report on the agreements with the five district municipalities, the funds allocated, the performance and the available capacity of each municipality.

Mr Motusi said that the province had 22000 km gravel and 38000 km tarred roads, requiring large amounts of funding for maintenance.  He said that the development of rail transport facilities was important to reduce the number of trucks using the road network.  A rail development plan was submitted to and approved by Cabinet.  Further projects included the Upington airport, warehousing in De Aar and making application for the Kimberly airport to become an ad-hoc port of entry.

Ms Ngqaleni said that one of the challenges were provinces’ reporting on progress made with the Integrated Development Plans (IDP).  She wanted to know what percentage of the budget was allocated to district municipalities.  She noted that the agreements with the municipalities were for a period of five years and asked if the province was under any obligation to renew the agreements or to continue to provide funding.

Mr Goeieman asked what progress was being made with renovations to and the reopening of the De Aar and Upington stations.

Mr Motusi replied that the upgrade of the Upington station was recently announced.  In the case of De Aar, it made sense that the warehouses were situated there because of the town’s central location.  He explained that the first phase of the Belmont/Douglas rail line was completed but an amount of R55 million was required to complete the project.  The province provided R5 million and the DOT allocated R10 million.  National Treasury however stopped the transfer of the balance of R40 million and the province was unable to complete the project.

Mr Selemela advised that a total of R54 million was transferred to district municipalities in terms of the memoranda of understanding with the municipalities.  He said that the province provided funding for the EPWP projects, access roads and the fencing of roads through development areas.

Ms Marissa Moore (Director: Transport and Housing, National Treasury) said that funding for the Belmont/Douglas rail line came from the funds provided for poverty alleviation.  She said that National Treasury was still awaiting the plans for the branch line network from the DOT and Transnet.  National Treasury withdrew the funding as it thought it unfair that poverty alleviation funds were used to cross-subsidise Transnet.

The Chairperson asked Ms Moore to submit a written report to the Committee on the matter.

Free State Province Department of Transport presentation
Mr S Mohai (MEC: Public Works, Roads and Transport, Free State Province) and Mr M Msibi (HOD: Public Works, Roads and Transport, Free State Province) briefed the Committee on the province’s budget and expenditure for the 2007/08 financial year (see attached document).

The Department over-spent its budget for 2006/07 by R358.8 million and was instructed by the Provincial Public Accounts Committee (PROPAC) to repay the money in 2008/07 to National Treasury from cash savings and under-spending.  The Department managed to repay R162.4 million at the end of the 2007/08 financial year.

The presentation included the reasons for the over-spending in the previous year, subsequent arrangements for repayment, details of the 2006/07 budget and expenditure and the steps taken to curtail spending in 2007/08.

The province lost the Esterhuyzen court case, at a cost of R24 million paid in compensation to date.  All transport-related work was done by the provincial department and no funds were transferred to municipalities or agencies.  The major challenge remained insufficient funding for the maintenance of the infrastructure in the province.

Discussion
Mr Goeieman and Mr Botha were impressed with the province’s management of the available funds and the measures taken to overcome the consequences of the overspending in the previous year.

Mr Goeieman said that stray animals on roads were very dangerous.  He suggested that the province lobbied for a rail link to De Aar and considered providing trucking facilities and a weigh bridge similar to those at Beaufort West.

Mr Botha commented on the problems caused by overloaded trucks and said that the fines imposed were ineffective.

Ms Ngqaleni asked how the province mobilised its capacity.  She wanted to know what lessons were learnt by the province as a result of the over-spending.  She asked what progress was made with the EPWP projects.

Mr Mohai replied that the Department was increasing its capacity but the retention of engineers remained a challenge.  He said that the Department’s increased capacity to spend the allocated funds highlighted the constraints of under-funding.  Models to deal with overloaded trucks were in the process of being developed.  He said that the Department prioritised the EPWP programs.  The Department won an award for the Qwa-Qwa road, 27 learnerships were trained and involvement in more projects developed the capacity of contractors.  Service delivery improved and the Department now focused on improving the quality of the delivery.

Ms Robinson commented on the bad state of repair of the roads in Bloemfontein.

The Chairperson referred to the provisions made in the Appropriation Bill for buses, taxis and EPWP.  He requested that provincial budgets included provision for public transport and public works programs.

Mr Mohai was concerned over the inability of one of the Free State host cities to spend the funds provided for the 2010 FIFA World Cup infrastructure requirements.  The province had the capacity to assist but National Treasury insisted on providing funding to the host city only.

Ms Moore agreed that discussions between National Treasury and the provincial Departments of Transport needed to be held.  The host city concerned only spent 6.8% of the funding provided by the third quarter.  She pointed out that host cities were not prevented from entering into service level agreements with provincial departments to implement the projects.

The Chairperson said that discussions needed to involve all the stakeholders in order to find solutions to the issue of under-performance.

Mr Msibi confirmed that the provincial Department was engaging with National Treasury on the matter.  He said that the issue was the allocation of funds and its application.  A mechanism needed to be found where the province can intervene.  The constraints imposed by the direct funding to host cities needed to be relaxed or the funding will be lost to the province.

The Chairperson requested that a written report on the issue of host-city funding was submitted to the Committee.

KwaZulu Natal Department of Transport presentation
Mr Chris Hlabisa (HOD: Transport, Department of Transport, KwaZulu Natal Province) briefed the Committee on the province’s budget and expenditure for the 2007/08 financial year (see attached document).

Details of the road network in the province, the budget and expenditure trends, the condition of the provincial road infrastructure, the backlog in road infrastructure maintenance, the maintenance program in place, the expenditure on infrastructure, the projects of national importance, the EPWP programs, the challenges faced by the Department and the proposed solutions and recommendations were included.

The total budget for 2007/08 amounted to R2.5 billion.  Major challenges included the difficult terrain in the province, the replacement of Armco pipes, overloaded trucks causing damage to roads, the increase in vehicle traffic, the encroachment of water and electricity services on the road reserves, the equity of the road network and the inadequate funding available for transport infrastructure construction and maintenance.  The Department recommended that funding was made available to address the poverty prevalent in the province.

Discussion
Ms Ngqaleni requested details of the progress made on the EPWP programs.  She asked for clarity on the difference between the infrastructure and total budget amounts reflected on page 10 of the presentation.

The Chairperson asked for further details on the Sani Pass and John Ross Highway projects.  He wanted to know what happened to the national commitment for these two projects.

Ms Moore advised that National Treasury had not seen any spending on the Sani Pass project.  There appeared to be a problem with the service level agreement between the province and the DOT with regard to the invoices.  She understood that the road had already been built by the province.

Mr Hlabisa explained that the provincial Department of Transport met with the DOT on a monthly basis.  A memorandum of understanding was signed with the DOT and funding of R25 million was made available to start the project.  Work commenced but the invoices submitted by the province were not honoured.

The Chairperson requested that all the relevant documents and agreements concerning Sani Pass and the John Ross Highway were traced and that a report was submitted to the Committee within 30 days.

Limpopo Department of Transport presentation
Ms M Makibelo (Head of Department: Roads and Transport, Limpopo Province) briefed the Committee on the capital expenditure and conditional grant allocation of the province for the 2007/08 financial year (see attached document).

Limpopo was the only province that made use of an agency and transferred 80% of available funding to the Road Agency Limpopo (RAL).  However, funds transferred to RAL were not being spent.  R88 million was transferred to RAL during the year but R8 million was not spent.  During the year, the members of the RAL Board resigned and no activity took place for a period of two to three months.

The presentation included a comparison of the workforce of RAL and the Department (see page 6 of the attached document).  RAL employed 41 and the Department 28 skilled personnel in management, professional and technical positions.

The major challenges faced by the Department were continued under-funding for infrastructure and persistent backlogs in road maintenance and construction programs.

Discussion
The Chairperson said that the Department had an executive problem as it was not in control of the agency.

Mr Botha recalled that RAL was established some years ago by the Department of Public Works and approved by EXCO.  Over time, RAL grew into a monster.  He asked who RAL reported to as the agency did not report to the Head of Department, who was the responsible accounting officer.  He asked whether the unspent funds transferred to RAL constituted fraud as the agency retained the funds in their account but did not deliver the agreed service.  He sympathised with the Department as it had the political accountability but was not in charge of RAL..  He was surprised to see that RAL had built a new office building and assumed that the agency intended to stay and to grow even bigger.  He said that the workforce comparison indicated that the Department was significantly smaller than RAL and it appeared that salaries at the agency were higher than those paid by the Department.  He proposed that the Committee discussed the matter with the provincial MEC and the Premier.

Mr Goeieman said that Mr Botha’s suggestion would be difficult to implement as a contractual agreement with RAL existed.  Challenging the contract would be an expensive process.  He suggested that the presentation by the Department was not proceeded with as the Department clearly could only report on what was reported to it and was unable to make any decisions.  The Department transferred 80% of its funding to RAL, employed less staff and was clearly in the minority.  The intention was not for an agency to implement the Department’s core mandate and the Committee needed to discuss alternative interventions.  He suggested that the Committee obtained legal advice before contemplating a serious intervention.  He asked when the contract would expire.  The agency was not accountable to Parliament and the Committee cannot carry out its oversight responsibilities even though RAL under-spent the funds transferred.

Ms Robinson agreed that the issue of RAL was a serious matter that cannot be ignored.  Action needed to be taken as the Committee cannot allow the Department to be held hostage by an agency.  She said that RAL must be held accountable for spending public funds.

Ms Moore advised that discussions were held on the transfer of the R33 road to Lephalale to SANRAL.  The R33 was the access road to the Eskom power station at Lephalale.  She said that the issue was whether RAL delivered the required services as there was still a need to transfer roads to SANRAL.

The Chairperson said that SANRAL was adding value whilst RAL was not.  The Department had the responsibility for delivery but transferred its core mandate to RAL.  There were issues of efficiency, economy, effectiveness, accountability and governance.  He said there was something wrong when the agency paid higher salaries than the Department as this led to the poaching of staff.  If the term of the Board expired, everything came to a standstill.  It was critical that the Department was able to carry out its responsibilities.  The province needed to be satisfied that the agency can carry out its responsibilities.

The Chairperson requested that the Department investigated its own ability to develop sufficient capacity to carry out the work that was being done by RAL.  Consideration needed to be given to the issues of accountability, the gap in delivery when the RAL Board’s term expired, where the funding was held and governance.  He said that the RAL Act was going to be amended and suggested this matter was dealt with as well.  He requested that a report was submitted to the Committee.

Ms Makibelo replied that there was a political issue as well.  She was unsure of the details of the agreement with RAL.  She said that consideration needed to be given to applying different models to ensure improved service delivery from RAL.  She noted the models used by the other provinces but was concerned over the cost implications.

The Chairperson asked how RAL was dealt with in the context of the IDP deliverables.

Ms Ngqaleni said that the issues of governance and accountability of RAL were raised by National Treasury in the past.  She said that there were 2500 road maintenance personnel employed by the province but RAL was tasked with maintaining roads as well.  She noted that both the Department and RAL were involved in EPWP programs.  She said that an amount of R79 million was spent on office accommodation.  She said that RAL was supposed to generate revenue but had failed to do so.

The Chairperson said that RAL appeared to be funded by transfers of grants out of public funds.  He suggested that the Department left the issue of politics to the Committee.  He said that the application of the Public Finance Management Act (PFMA) was considered to be a critical issue and ways needed to be found to deal with the matter.

Western Cape Department of Transport presentation
Due to time constraints, the presentation of the Western Cape Province was taken as read and was not discussed. 

No presentations were made by the Gauteng and Mpumalanga provinces.

The meeting was adjourned.

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