Medium Term Budget Policy Statement: Departmental hearings: Education, Health, Housing & Transport

Meeting report

Departmental Briefings on Medium Term Budget Policy Statement (MTBPS)
Acting Co-Chairperson Ms J Fubbs (ANC) stated that the Committee had previously taken a decision that during the presentations on the Medium Term Budget Policy Statement (MTBPS) the Committee wished to hear about the real challenges facing the Departments, rather than receiving a list of achievements alone.

Co-Chairperson Mr E Sogoni (ANC, Gauteng) apologised for the absence of several Members, due to a clash in meeting times.

Department of Education (DOE): Vote 13: Briefing
Mr Duncan Hindle, Director General, Department of Education, set out the medium term policy priorities of the Department of Education (DOE) as dealing with poverty, through no-fee schools, the National School Nutrition Programme (NSNP) and enhancing rural education, skills development, through further education and training (FET), literacy, adult basic education and training (ABET) and human resource development. It was proud of the National Certificate Vocation (NCV) programmes. There was an increased focus on health and education, particularly through the life skills programme, and many schools were managing drugs and weapons in schools well. It continued with the institutional development, mergers of higher colleges, and the recapitalisation of FET colleges, and clarification of roles and responsibilities of district management systems. The National Curriculum Statement (NCS) was now running right through from Grade R. The Foundations for Learning programme had also been started. Teacher performance was being monitored, and there was continuing improvement on the infrastructure. 

By 2010 the Department was committed to having 1 million children in Grade R. Funding norms for such classes had been approved and gazetted. The Department had achieved universal primary school enrolment and had achieved gender parity. There were currently 1 million learners in grade 11, and until that grade there were not substantial drop-outs. A learner unit tracking system had been introduced to trace progress, and so far 800 schools had been uploaded; all should be uploaded by the end of the next financial year. The new matriculation was to be written from the end of 2008. There were also 400 000 learners who wrote matric on the "second chance" papers, and this would be continued. There were 500 Dinaledi schools operational. There were over 200 000 learners registered in the ABET centres. The Maths Literacy campaign had shown overwhelming success, and National Treasury had allowed the extra costs for this, to fund learning materials in all official languages. Inclusive education was still rather dependent on donor funds. There were around 780 000 learners registered at public higher education institutions. Data on enrolments and graduations were being checked against the plans and output efficiency was being measured, including the foundation programmes provided. Bursaries for student teachers, of about R50 000 each, were available, and about 5 000 were offered at the moment, totalling about R1.7 billion, to about 200 000 students at present. It was important that in this financial year over R300 million had been topped up from previous students who had graduated, and they would pay back their loans into the Fund, by arrangement with the Receiver of Revenue. Over 6 million children were being fed each day under the NSNP.

Mr Hindle noted that three of the Millennium Development Goals pertained to education. The database would ensure that every child born, who was registered on the Department of Home Affairs, would be expected to attend school six years later. The gender parity was much improved. Adult literacy had been lagging behind, with estimates of about 9.4 million illiterate adults. The DOE was targeting about 1.2 million adult learners per year.

Mr Philip Benade, Chief Financial Officer, DOE, tabled the Medium Term Expenditure trends and projections. The adjusted estimates were passed last Thursday. The budget for the year had been R123 billion, and the spending up to the end of September was R67 billion. Many of the provinces were expecting some over-expenditure. A difficult aspect was the Occupation Specific Dispensation (OSD) where some of the Provincial Treasuries had not yet allocated the money, but the national DOE would be visiting all provinces to try to sort out the problems.

In the National Department funds were rolled over to the value of R32 million, for operational purposes, and there was a roll over of R3.3 million in respect of the conditional grant for HIV in Natal. Inflation related adjustments had been made for the NSNP and higher education subsidies. There had been unforeseen and unavoidable expenditure, relating to the NSNP, and disaster management, all of which totalled R891.8 million.

Mr Benade then referred to the budgetary additions announced. There was strong interaction between National Treasury and the DOE, and the final allocation method should be agreed to by end November. An additional R4 billion would be allowed for the NSNP over the next three years. The Department had requested an additional R7 billion to extend the programme to secondary schools. A bid was put in for the new unit for evaluation of school and teacher performance. This had been mentioned by the Minister but no specific amount had been given. There was an indication that around R4.1 billion could be allocated for school infrastructure, such as libraries and school fields and laboratories, but it was unsure how this would apply. There had been a bid of R500 million put in by DOE for recapitalisation of technical high schools and purchase of equipment, but although these were mentioned in the speech, no funding figure was given. There were other bids by the Department of Education, again with no indication whether money would be allocated for them, which were listed (see attached presentation).

Mr Benade then listed the Sector Budget bids that were not agreed for the 2008/9 budget cycle, which included extending the no-fee schools, lowering of educator / learner ratios, Grade R and textbooks.

Mr Hindle said the budget challenges included the infrastructure backlogs. There had been electronic plans, which had helped the Department to assess the funding gaps, which were in excess of R50 billion. Cabinet had directed the DOE to look at innovative funding mechanisms to try to deal with the backlog, even including borrowing. Buildings were still a major concern as was provision of classrooms and schools with adequate sanitation, electricity and so forth. All of these affected the quality of allocations.

The DOE was not convinced that the per capita allocations made for purchase of learning materials, paper and other items, currently standing at R700 per learner, were sufficient. It would continue to motivate for increases, particularly in no-fee schools. The NSNP was a success, and had contributed to greater attendance at schools. The DOE wanted to extend it to all schools and ensure that it was a proper nutrition programme, rather than purely a feeding programme. Learner transport issues were also a continuing challenge for the provinces.

Discussion
Mr G Schneemann (ANC) noted that there would be an increase of expenditure on the NSNP. He asked how all children would be able to get access to the food provided. He was horrified to find out that in the previous year, in Gauteng, there had been an entire group of children that did not get access. This was a critical deficiency, which displayed lack of planning. It was completely unacceptable for this Committee to be told, in an Annual Report, that there had been "a budgetary problem".

Mr Hindle responded that the NSNP should be granted to all learners in quintiles 1, 2 and 3 in primary schools, calculated at R1.50 per learner per day. The DOE was committed to achieving that. Some provinces had added funding to this and had included poor learners in quintile 4 and 5, but singling out some learners could be a social problem. Some provinces were trying also to include high school learners. The bid by the DOE was intended to feed all learners in quintiles 1, 2 and 3 and secondary schools, to an increased figure of R2 per day per learner.  The R4 billion allocated was not quite sufficient but would help. He noted that some provinces had gone for a large agency, which would cover all schools.  Others like the Western Cape, wanted to give schools the money, and there were arguments around SMME development. Some models offered cost efficiency, but the DOE would prefer to see a food garden being established at the school, and cooperative models getting the local mothers involved in feeding and cooking. This, however, carried a risk of unacceptable standards. He appealed that if any Members were aware of schools that were not feeding, or whose quality was poor, to report this to the Department. 

Mr Schneemann said that in the previous week this Committee had been briefed by the Human Sciences Research Council (HSRC), who said that there were still about 2 000 schools without access to water and sanitation. Again, he was horrified to hear of this, and wanted to know how, over the next three years, these schools would get water and sanitation.

Dr D Gumede (ANC) asked if there were minimum standards set, and what these were. Secondly, if they were in place, he wanted to know how many schools were affected, if there were plans to correct the situation, and how much was budgeted over the next three years.

Mr Hindle noted that the HSRC was using the DOE data.

Mr Firoz Patel, Deputy Director General, DOE, agreed that the Department's own data had been able to advise of schools without access to water, sanitation or classrooms. He said that there had been some improvements. The number of overcrowded schools had declined, from 51% in 1996, to 25% last year. The number of schools without water and toilets had also decreased in number, but even one school without water and toilets amounted to one too many. In order to deal with the backlogs, both in terms of conditions (mud schools and insufficient space), and water and sanitation, would require R233 billion, calculated on the minimum level of maintenance. Even when that was spread over a ten year period it was clear that the DOE could not afford it on the current funding and it was not in the budget, despite the fact that the DOE was aware of the need for concerted effort.

Co-Chairperson Mr E Sogoni interjected to say that he did not understand what was being said.

Mr Schneemann wanted to know how exactly the budget was to be used to eradicate that backlog.

Dr Gumede said that, with due respect, his question had related to minimum standards. That meant human resources, infrastructure, plans and budgets. He would like the answer to focus on that.

Co-Chairperson Ms J Fubbs (ANC) said that the Committee wanted to know what the reality was over the three years. Water and health issues related to it were essential. She asked the DOE to avoid denial, and also to avoid suggesting that it would never be possible to achieve the standards. If that attitude had been allowed to reign in the past, South Africa would never have become free. If the Department was saying that this was ultimately impossible, she would like to see that in writing.

Mr Sogoni agreed that the DOE could not suggest that something could “never be achieved”. He asked how constituencies were likely to react to such statements.

Mr Hindle said that, with respect, Mr Patel had not yet finished his response. He had thus far only attempted to set the background to the problem.

Mr Patel then continued that infrastructure budgets moved via the infrastructure grant, and DOE had no control over the infrastructure grants, which were on the provincial budgets. The Council of Education Ministers had just, in its last meeting, approved draft national norms and standards setting out minimum requirements for class sizes, numbers of toilets and so forth. The DOE, taking these norms and the information available, had set itself a target, over ten years, to eradicate the backlogs. R233 million would be required to do so. Funding was one matter; clearly the issue was untenable and so DOE was hoping that Cabinet would provide specific funding approval in terms of the strategy. The norms and standards would be published for public comment, together with a proposal to National Treasury (NT) for coordination and support of school infrastructure. It was also in discussion with NT in terms of the work with provinces. Specifically in respect of water and sanitation, Department of Water Affairs and Forestry (DWAF) had been given R950 million over a three year period to deal with getting water and sanitation to every school that was currently without. There was a three year plan but not all the backlogs would be able to be covered in those three years. From 2010 onwards, there was funding to deal with infrastructure, safety in schools and libraries and laboratories.

Ms R Mashigo (ANC) asked about no-fee schools, and how the different quintiles were assessed. She asked what was in place to remedy the mismatches of funding that had been picked up.

Mr Hindle noted that there were five quintiles. About 60% of schools would be moving into this status and the whole issue of quintiles was under discussion. The determination of quintiles in the current system was based on the census data, and was related to the area in which the school was located. Schools next to each other, that served the same community, should not be in different quintiles, although some assessments may have been adjusted if one school was in a better condition than others. The MECs had been given the discretion to move the funding around, but any school feeling it was in the wrong ranking could address the MEC and call for a move in the rankings. If one school moved down in the rankings, then another must move up, so the irony was that schools were essentially competing to be poorer than each other.

Ms Mashigo noted that there could be a poverty trap for children, because those living particularly in farm areas were unable to attend high schools further away through lack of transport.

Mr Sogoni noted that the Select Committee on Finance had also raised questions, which to date remained unresolved. He agreed that lack of transport had the effect of depriving children of schooling. Even the five-kilometre radius rule was much too large. There was some difficulty about the department that should be responsible, and he wanted an update on this.

Mr Hindle said that the Department of Transport (DOT) had argued that this should be part of a broader public transport system, so that if children were at a bus stop or on the road, they should be collected and taken to school, rather than waiting for specific learner transport. Responsibility should not be an either / or situation, but needed an undertaking by both departments. The DOT might have the money, but DOE could, for instance, identify the learners. There had not been sufficient budgets yet for such transport. For a child to walk five kilometres in a rural area was very different to five kilometres through town, and these issues needed to be explored, as also the possibility of providing bicycles. He agreed that 5 kilometres was too far. He noted that some schools were in addition considering other options, such as in Limpopo, where there had been mergers of smaller schools. A school with only 20 or 30 learners was neither economically nor educationally efficient. Some merged schools were now offering boarding facilities, and whether or not boarding options were ideal, at least they offered the children safe places to sleep, transport home every weekend, three meals a day, and study facilities. Those learners who hitherto had not been able to attend high school should be able to access it through this sort of route. He noted that the DOE regarded the Constitution’s “right to basic education” as meaning 12 years of education.

Mr Sogoni noted that this was the final year of the Further Education and Training College (FET) recapitalisation. He asked if the impact of the money spent had been monitored, and whether the FET Colleges had achieved their intended goals. He also asked if it was correct to halt this kind of funding, for he believed that there was still a need for it, particularly to uplift those schools that had not been properly funded during the apartheid years.

Mr Hindle said the FET Recapitalisation had been a three-year conditional grant, which now had ended. This was not a decision of the DOE. An inter-governmental protocol had been prepared in respect of maintenance and to ensure that the colleges were not under-funded once this ended. The recapitalisation covered 50 colleges and was monitored tightly. The skills development was clear and substantial, the colleges were now modernised and this had been done so they could increase enrolments. They were currently dealing with around 300 000 learners each year, although they would target 1 million in future. DOE believed that they should offer after-hours, part time and weekend tuition. Where any colleges had not utilised their funds, the unused funds would be moved to other colleges. 

Mr Sogoni also stated that a question was raised earlier in the year whether the no-fee schools had received their allocations, yet even last week the Committee was advised that some schools had not been given their money, and were therefore unable to operate. This was an important intervention that must be properly handled.

Mr Hindle said that a revised set of norms and standards had been prepared – and two tranches would now be paid, with one in November to enable the schools to prepare for the January intakes. He asked that if any of the MPs were aware of schools without allocations, then the DOE would demand an explanation from the provincial departments, who were responsible for paying. 

Mr Benade added that when a transfer payment was made, the recipient had to indicate that the money allocated in the past year had been properly accounted for. In many cases the schools not receiving the money had not submitted the necessary reports from the previous year justifying the funding in the current year.

Mr Sogoni said that he had not seen the Annual Report, but also wondered about the impact of the National Student Fund, and whether people were genuinely being assisted in accessing the funding, whether spot checks had been carried out, and whether those in dire poverty were indeed being helped. 

Mr Hindle said that the Annual Report had been tabled to the appropriate Portfolio Committee. There was a means test to qualify for the grant, and it would be fraudulent for someone to get it if he or she did not qualify. Once again he appealed that if Members were aware of problems, they should report them. 

Mr Sogoni questioned the Dinaledi schools, saying that it was a good programme, but that there were disparate standards between these and other schools, and therefore that the programme should be rolled out to all. 

Mr Hindle said that the 500 Dinaledi schools had been identified for special attention, based partially on the numbers of learners doing maths. The word “choices” was used advisedly; either the Department had to decide to assist all schools slowly, but equally, or to invest substantial amounts immediately in some schools that could fast-track students better. The Minister had asked DOE also to look at other disciplines like dance, art and drama, to target these in other specialist schools. It was a question of policy whether to follow the route of specialisation in some schools, or a slow general upliftment across the board. The goal was ultimately to bring all schools up to Dinaledi levels, but how to achieve this was another issue. 

Ms N Mfeketo (ANC) said that she was aware of the budgetary priorities, but the budget was also to follow the strategy of the Department. She would ask questions that were not directly related to the presentation, but which were rather questions of policy. She feared that, looking at the pattern of schools and education, very little had actually changed since 1994. Those schools that had been under funded in the apartheid years were still offering a lower standard of education. She was not even speaking of schools in the deep rural areas, but comparing urban schools from Gugulethu, Manenberg and Bonteheuwel to urban schools in the Southern Suburbs of Cape Town. The fundamental business of the school system was still not happening. Some of the greatest priorities were still reflected in the list of matters where adjustments had not been given or specified. She wondered when matters would be taken as seriously as they deserved. Education was a major area that could save this country, and empower all future citizens. Yet there was more emphasis on other matters. At some stage direct questions must be asked when those children who were born after 1994, who should have benefited under the new policies, would be free of the need to access social grants, subsidy housing, and the poverty trap. This could, to her mind, best be achieved by giving the same quality education that produced the same quality outcomes to every child.

Ms Fubbs expressed strong agreement. Members all agreed on their vision for a development state. She did not believe that this was a developmental framework budget. It was clear that much hard work had gone into it, but that was not the only issue. The DOE clearly had a good idea of policy priorities, and so did Government, but the problems lay with the translation of those priorities into the financial allocations and human resources. “Resources” was not just money. She thought that perhaps the Joint Budget Committee should have invited the Minister who was responsible for policy priorities to speak to it. She said it was an indictment for any Member of Parliament to see the poor quality of learners coming out of schools, and it was pointless to deny that this was happening. She did not believe that the budget should be "tweaked". It must be transformed in total. The job of this Committee was to ensure that an ANC-led government would translate policies to proper impact, to produce learners who would no longer require financial support and subsidies. The goal was not a welfare, but a developmental state.

Ms Fubbs further said that in 1994 MPs were told that incremental budget issues practised by the last government would no longer be used, but instead the zero-based budgeting would look at the backlogs. To her mind, this budget was an incremental budget still. She asked if the DOE was honestly addressing the real priorities. She sought a realistic answer.

Mr Hindle said that the Department was indeed addressing the priorities, but the answer to whether it was doing so to a sufficient extent and at a sufficient pace was in the negative. This was a political debate for which officials could not answer. He reminded Members that the one and five-year plans were presented to the Portfolio Committee on Education on an annual basis. The Department wished to be told if these were incorrect. The DOE had worked in terms of the political mandate given to it.

He said that there had been changes since 1994, as recognised by the Review of Education conducted by the Organisation for Economic Cooperation and Development (OECD). He reminded Members that the National Department was receiving a relatively small slice of the funding as about 80% of the budget went as direct transfers to universities. He commented that the questions were well-placed

There was no further time to interrogate more issues in depth, but the following questions were required to be answered in writing, by the following afternoon, 29 October.

Ms Fubbs asked the Department to explain whether it was confident that the Provincial departments would be able to meet the challenges, and whether DWAF, over the three year period, could eliminate the lack of water and sanitation to schools. 

Mr Sogoni said that part of the DOE’s Annual Report related to vacancies in the National Department, and he asked if the current vacancy rate was 21%, how many were funded vacancies, how many needed to be filled, and how the vacancy rate was impacting upon service delivery.

Mr Schneemann noted also that the Public Service Commission, in a presentation during the previous week, had raised concerns that many of the departments were not working together. He would like to hear how the DOE was working with other departments and also with the municipalities, to try to address these issues.

Mr M Swart (DA) asked if the DOE was doing anything about the security and drug abuse issues at schools, or whether the provinces were dealing with that. 

Department of Health (DOH) Presentation
Mr Yogan Pillay, Acting Director General, DOH, recorded the apologies of Mr Thami Mseleku, Director General, who was attending a World Health Organisation meeting in Dar es Salaam. Mr Pillay noted that there were eight departmental priorities, which were selected by the National Health Council, as sector wide priorities, and which were reflected in the Annual National Health Plan. He indicated that he would set out the progress of these priorities. The first related to strengthening health programmes. He began to outline the key achievements, which he said were consistent with Millennium development Goals 4 and 5. A new National Strategic Plan for the next five years had been drafted for improving Maternal Child and Women's' Health, including immunisation of children, the launch of new vaccines, targeted support to some areas, baby-friendly services, the implementation of the Comprehensive Plan for HIV and AIDS, strengthening of preventative steps and registration of 544 603 patients on Anti Retroviral Therapy (ART), higher than the targets. There had been an intensified campaign against tuberculosis strains, including curbing the impact of multi and extremely drug resistant (MDR and XDR) tuberculosis (TB). Malaria control, the healthy lifestyles programme and non-communicable disease management were also receiving attention, and he presented detailed statistics and reasons (see attached presentation).

At this point Mr Sogoni noted that the presentation was not quite targeting the areas that the Committee wished to address. The information provided so far was too general. He asked the Department to address the adjustments in terms.

Ms Fubbs noted that the Committee really wanted to hear about the challenges. All Members had read the Annual Report, which had set out some of the challenges, and she would like to hear about those and what the Department was doing to address them.

Mr Pillay noted that he had interpreted “progress” to mean achievements. He would then skip much of the slide presentation and focus on the cross-cutting challenges.

Mr Pillay said he would relate these challenges to the eight priority areas that he had already detailed to Members in the first set of slides. Under the strengthening of health programmes, he indicated that HIV and AIDS was one of the biggest contributors to mortality. The National Strategic Plan (NSP) was inter-sectoral. The key challenge was behavioural change, which was the responsibility of society in general and its key institutions. Budget challenges lay around human resources, to achieve universal coverage of patients who were eligible for ARVs and the associated package of services, especially in under-serviced rural areas. The cost of ARVs also presented a challenge, especially when second-line drugs had to be introduced, which were more expensive, and in rising laboratory costs. Under the TB programme, there was progress in decreasing the defaulter and increasing the cure rate. Human resources for nurses, expanding the defaulter teams, community health workers, the costs of MDR and XDR TB drugs (although some funding had been received), and infrastructure to house patients in isolation were all budget challenges.

Mr Pillay noted that the current mortality rates were around 45 deaths per 1 000 live births. The DOH was currently collecting data for 2008 and it seemed that there was not yet progress in decreasing these rates. This could be done by improving the transmission of HIV and AIDS from mother to child, improving vaccine immunisation coverage, improving the social determinants of health, including the education level of mothers, access to clean water and sanitation, some of which were broader mandates than those of the DOH alone.  There was difficulty in determining maternal mortality figures, as Stats SA and Medical Research Council had produced conflicting figures. Improvements were needed in access to contraception, antenatal service coverage, including through clinics, mobile services and community health workers. In instances of obstetric emergencies, ambulances should be accessed within 30 minutes in urban areas and 45 minutes in rural areas, but the DOH was not anywhere close to achieving that.

With regard to improving quality of care, there were national core standards that had been launched in April. So far 27 hospitals had been assessed. Both good practices and management challenges had been found. There was often poor infection control, and many facilities were not yet able to ensure infrastructure that provided good air quality in clinics and hospitals.

In regard to the Integrated NHS there was a system that collected basic data, but there was as yet no National Electronic Patient Record, which meant that the DOH could not track patients between hospitals, cities and provinces. That would require an enormous amount of funding.

With respect to human resources, he noted that over the last three years there had been an increase of 30 000 personnel in the health system, of which at least 8 000 were nurses. However, Business Day yesterday noted that there was still a huge shortage of all human resources, and filling this meant a substantial upswing in the required budgets.

Mr Pillay then moved specifically to discuss the funding that would be required in the 2009 and 2010 budget. In the additional budget there had been requests for additional funding for the Occupation Specific Dispensation (OSD). Another request related to the introduction of the two new vaccines. The DOH wanted to implement the household and management component of childhood illnesses, to improve the National Health System Quality Improvement Programme, to support emergency medical services, both for 2010 events and generally. It wished to strengthen TB control and management, to strengthen existing National Tertiary Services, to improve the allocation for the Training and Development Grant, and to expand the hospital services, primary health care and the Comprehensive Plan for HIV and AIDs.

Mr Gerrit Muller, Chief Financial Officer, DOH, stated that at the end of the last financial year, there was an over run in the Health Sector Human Resource expenditure, largely in the provinces, and of this about R800 000 was due to the OSD, and the other additional staff. There was a further overrun on non-capital expenditure of R600 million, which related to medicines, surgical requirements and fuel and coal for the steam steriliser boilers. There was under spending of Capital expenditure in relation to hospital revitalisation and mortuaries of R1.4 billion.  The DOH had requested R2.5 billion for the OSD, but was allocated R1 billion. The request for HIV and Aids was R1 billion but R0.3 billion was given. For addressing Child Mortality, R350 million was requested but the allocation was R50 million. The conditional grants roll over was R376 million.

Mr Muller referred to what was happening in the provinces, indicating the spending at the end of July 2008 and the projected outcomes. This resulted in R 23.9 billion, which represented 33.9% of budget, as against an ideal of 33.3%. The Western Cape was under spending but three provinces were over spending, to the tune of R5.5 billion. The year on year growth showed 27% between the last and this financial year. A further table was given of personnel expenditure, and here the HR overrun was calculated at about R4.5 billion. The year on year growth was 34%. The improved Conditions of Service could cost about R1.2 billion, and the net overrun for this could be around R3.3 billion. The DOH had hoped for a total additional allocation of R2.8 billion, but had received R1.5 billion.

Mr Muller then tabled the adjustment budget for the provinces, as against the approved budget. The total allocation was R3.04 billion, across the spheres of OSD, the Improvement of Conditions of Service (ICS), goods and services, HIV and Aids, Child Morality (vaccines), and conditional grants. The additional amounts for HR and Goods and Services together amounted to R2.7 billion. However, when deducting the overrun in the provinces, there would be a final likely overrun of R2.8 billion. Seen in perspective, he said that this amounted to about 3% of the total health budget of R72 billion after adjustments.

Mr Muller then moved to the unfunded budget bids. At the time when the wage negotiations took place, it was agreed that nurses would be "first in the queue" as their needs were most acute. There had been a heavy overrun on that. The DOH was sending in auditors to the provinces to verify exactly what had happened, and would have preliminary results from two provinces by the end of the week. However, doctors, dentists, and other workers were also promised an OSD, but DOH received no allocation for this. The percentage growth of the HIV and AIDS allocation did not match the uptake growth on the ART programme. The demand was much higher than the funding. It might be possible to get by in this year, but the growth in demand was too high to be met in the next years. Funding for the hospital revitalisation grant was not sufficient to address the gaps identified for short term interventions. The DOH would have to think of innovative interventions to leverage some money to take this forward. DOH had not received any funding for the long-outstanding Health Information Management System, and although alternatives were being considered, the Auditor General (AG) was becoming more stringent in the requirements for non-financial systems.

Mr Muller noted that many of the budget challenges were systemic challenges. For instance, the OSD allocations were based on the equitable share formula, and he suggested that this should ideally be done on the number of nurses in each province who qualified for the OSD. Provinces doing the most work and having the greatest need in respect of HIV and AIDS should be rewarded the most. National Treasury was amendable to moving to formulas other than the equitable share. Where allocations had been made, they translated to relatively small amounts per province – for instance the child vaccine – and some TB allocations had not ended up in the provincial budgets as reflected. Earmarked funds for provinces from national bid processes sometimes were not used for the intended purposes. There were continuous challenges around retaining the services of health professionals. These challenges resulted in considerable pressure still, although DOH was grateful for the increases that had been granted.

Discussion
Mr Schneemann noted that the Department had spent a great deal of the time talking about the current budget, but had not focused as much on the allocations over the MTEF. He asked for an indication whether those allocations would resolve any of the shortcomings.

Dr Gumede asked if the OSD was accommodated in the three-year budget, noting that most of the presentation had focused on this year's budget.

Mr Muller said that Mr Pillay and he would comment in general on the budgets, but he said that the OSD implementation in this year had been a first trial, and there were problems. The DOH was investigating the issues, and the AG would be providing the results of the audits by Friday this week, so that the DOH could recover the money or see how to improve the processes in the future.

Mr Schneemann said that the HSRC presentation had raised a number of other issues not addressed in this presentation, such as stock management of medicines, medicines left lying in corridors, shortfalls in the numbers of qualified personnel, and the quality of services delivered to patients, some of whom would queue for the entire day, only to be told at the end of the day that they could not be seen and must return the following day. He cited that banks would attend to every customer entering the bank before the doors closed, even if their staff worked overtime, and this type of service delivery should apply in the health sector. Much had to do with the training standards.

Mr Swart asked about improvement of service delivery in the primary health sector, which was transferred from local authorities last year. The mobile health clinics had previously done a wonderful job, but they were now being used for transporting staff, and not for offering services such as family planning and vaccines.

Mr Pillay said that all the reviews done by facilities and external agencies suggested that there were 80% of patients who were happy with services. The DOH needed to address the 20% who were unhappy and improve the quality. A number of initiatives were in place. Gauteng had appointed queue managers. One of the largest stumbling blocks to entry and exit into the system lay in getting the records and management at the pharmacies. DOH was trying to scale up the good aspects, and implement what was working more widely.

Dr Gumede referred to the underspending of R6 million, which was 27%. He noted that the hospitals in his area were complaining about generators not working, or lack of beds and blankets, and machinery that needed to be upgraded, and how the Department was addressing under spending.

Mr Muller noted that much of the under spending in the provinces had come from the Conditional Grant, and these were capital items, where the DOH was in the hands of the DPW. In the case of Mpumalanga there were serious problems, and management had been moved around. The balance of the underspend had come from the infrastructure grant and own funds. This must be seen in context, as around R300 million came from these sources. 

Dr Gumede said that given the numerous problems in hospitals, the lack of an information system was even more damaging, and he asked how the Department could respond to problems in a systematic manner. He noted that manual records and assessments could be done in some areas.

Dr Gumede noted that many of the increases were much higher than the CPIX inflation rates.

Ms Mfeketo acknowledged that one of the challenges was poor infection control. She said that there were direct links to the queue problems raised by Mr Schneemann, as patients were at risk of picking up further infections while waiting at clinics. She urged that the Departmental review must not be academic, but must focus on the real benefits achieved, and how to address the challenges and priorities.

Mr Pillay said that the DOH had commissioned a number of officials external to the Department to assist with the review, which should be complete by 15 November, after which it would be assessed to see what it meant for service delivery. This could be used as the basis for the new administration.

Ms Mashigo asked about HIV and AIDS, noting that the provincial departments had underspent, commenting that a withholding of money at National level must affect delivery at the local level.

Mr Pillay said it seemed that investment in HIV and AIDS did not match the outputs. However, this depended on the benchmarks. The fact that DOH was running the largest HIV programme in the world meant that it was catering to the largest world number of infections. The question was whether it was implementing good quality to those whom it did reach. He noted that the DOH had identified some districts with relatively low rates of HIV and had done research into why this was so. In Venda there was high social cohesion. Managers must use this kind of social data to determine how programmes could best be structured.

Mr Muller said that 23% of funds were not transferred. This related to transfers that the HIV and AIDS unit made to NGOs such as LifeLine, LoveLife and so forth. The DOE, during an earlier presentation, had alluded to the problem of funding of NGOs, which must, in order to qualify for the next transfer, provide records to prove that there was good governance. If not, then the transfers would not be made and that was a specific discipline purposely built in. The transfers in general referred to conditional grants where the National DOE must withhold money if there was not performance by the Provinces.

Ms Mashigo noted the references to addressing TB, and said that the Department had been approached to enlist matriculants to assist it, yet when they made application the programmes were not really up and running. 

Mr Y Wang (ANC) asked how much the project for the Electronic Patient Records would cost. He hoped that the State Information Technology Agency (SITA) was ensuring that the systems were fully compatible and able to give integrated data. He also asked if the private sector hospitals and individual practices would be included, as well as clinics in the rural areas, and how the communication systems would operate, given that some clinics might not have electricity. He asked when it was likely to be fully operational.

Mr Muller noted that the Integrated NHS would be a phased programme over the next three to four years, in which the DOH would study each province to see what was available and how this could be seamlessly linked to achieve a totally integrated system. The price was approximately R1 billion over three years. This system would be able to quantify what was required in each province. He agreed that some had better IT systems than others but each would be looked at individually. 

Mr Pillay said that across the board there was data already being collected, but translation of that into usable management systems had been a challenge. Every user of health services did have a paper-based record. PERSAL and BAS accounting and personnel systems also contained details, along with Department of Labour databases. Management could improve. There was funding for data entry clerks. He noted, in passing, that it had been wondered why some cure rates for TB were so low, until the data was entered, which immediately gave the correct picture. 

Ms Fubbs said that clearly additional funds would make a difference. However, the mortality rates, infant deaths and similar matters did not necessarily require massive injections of funds; although money was important, much could also be achieved by such basics as cleanliness of hospitals. In the Democratic Republic of Congo, patients had to purchase their own drugs as the hospitals were very under-resourced, but they were spotless, and mortality rates had been lowered by instituting basic management controls as  washing of hands, catheter management, managing the waste outside, and other efficiency measures. She therefore asked specifically what efficiency measures had been implemented in an attempt to overcome the shortages of funding. Maternal and infant death rates were of particular concern. She asked why DOH had only reached 50% of the targets for Reach Every District. The publication of treatment and other measures in DOH’s own journals would go far to support its own staff.

Mr Pillay noted that in regard to infection control, the DOH knew what worked and where the challenges lay. He noted that some hospitals simply suffered from lack of budget – for instance GJ Jooste Hospital, although doing some excellent work, was servicing around 3 million people, and simply did not have the space to expand. However, this hospital had good quality of air and was fully signposted with information on infection control, so it did recognise and try to address at least some challenges.

Ms Fubbs noted the percentage of funding for personnel and questioned whether it would not be possible to restructure staffing, so that people who did not have the necessary three year qualification, but who perhaps received targeted shorter training, could be employed to do jobs that did not require nursing skills.

Mr Pillay conceded that nurses and doctors were not always needed, but clerks, porters, and personnel who could give bed baths might be needed. There were new categories of personnel being created in the fields of rehabilitation, assistant pharmacists, clinical associates (three years of training, to assist doctors), and such courses were being offered already at Walter Sisulu University, Pretoria, and Wits. The DOH had also, based on its experience at hospitals in Eastern Cape, found that a number of nurses were attending to non-nursing tasks, and so it had increased the number of porter and clerks, which had relieved the work on nurses. Getting the right balance of non-health and health personnel was critical.

Mr Sogoni also expressed his concern about the child mortality rates and asked specifically whether the resources put in were equating to value for money and whether quality services were being offered. The budget for this Department was far higher than that for other developing countries, yet the output did not seem to match. He asked where the differentials were occurring. He said that the Eastern Cape hospitals were not showing substantial improvements, and he wondered whether there was sufficient monitoring to see where the funding was going.

In answer to the concerns by various Members around mortality rates, Mr Pillay noted that the surveillance systems of the Department were not always up to scratch, as evidenced by media reports before the DOH itself had picked up certain issues. The numbers of child deaths in the first three months of this year had been higher than before. He pointed out, however, that most child deaths occurred in summer, because of the risks associated with diarrhoea and dehydration, which meant there should be greater preventative measures at that time. Many teams were working to try to assess the problems, which included problems in the environment, access to clean water and sanitation, poverty, infant formula being diluted because of lack of funds and primary health care challenges. Each of the challenges was documented and plans were developed for districts and provinces, with 18 high-risk districts being isolated, based on a deprivation index and four health indicators. The DOH had met with the United Nations and bilateral agencies to leverage additional funding and had developed a set of baselines. He pointed out that national averages were hiding much provincial variation. DOH was now aiming to target on a vertical basis. A similar system was in place to try to break the defaulter rate for TB. There were three committees, staffed by qualified professionals outside of the management system, who were to look at infant, neo natal and maternal mortality, review all reported deaths and come up with recommendations. The progress could be assessed shortly once the reports were out, but he commented that any progress in improving these figures was still too slow for his liking.

Mr Sogoni also asked about coordination within the Department of Health, and with other departments, and what was being done to address challenges around sanitation and similar matters. 

Mr Sogoni said that a particular concern was the outsourcing of ambulance services in Eastern Cape, which apparently had caused concern to the National Department of Transport, yet it was still tied in to agreements with Fleet Africa. He asked if that was a realistic situation, as the real cost was to the community.

Mr Muller said that from the national perspective major problems lay in the "blanket embargos" placed on provinces. If there was an embargo on employment of new staff, but the boiler operator resigned, it would be impossible to run a hospital without having a boiler operator, which was already a scarce skill.

Mr Pillay made a general comment to several of these questions not specifically addressed already by himself or Mr Muller.

He noted firstly that Health was a concurrent responsibility, with the exception of ambulances, which was a Provincial responsibility, and municipal health services, which belonged to local government. Municipalities were supposed to fund and ensure the functioning of environmental health, but the exceptions were malaria control, control of hazardous substances and port health services, all of which involved crossing of borders. For this reason it was impossible for the DOH to leverage ambulance services in Eastern Cape, as it could only set norms and standards. This problem was common to many departments having concurrent functions, and it was not made any easier where the provinces received funding through the equitable share, as the only leverage that the National Department had was in approval of business plans.

He commented that the concerns around mortality were real, but health status was affected by a number of factors outside the control of NDOH. Intersectoral collaboration, involvement of families and communities was essential. There would be better outcomes through better coordination, and this was a continuing challenge. DOH was engaged in the Integrated Development Plans (IDP), and institutionally the mechanisms existed, but the difficulties existed in finding excellent people at the front line throughout the hospitals. He noted, in answer to Ms Fubbs, that some excellent hospitals – such as the Church of Scotland Hospital – were exceptionally clean and had managed to attract some of the best staff. Managers must be found for 400 public health hospitals and 4 000 clinics, and such people were hard to source. 

There was management training available, however, and much was donor funded, with Italian and French programmes on hospital management having operated since 1994. DOH was still unable to retain good people who could translate their learning into systematic change. Many who had attended the programmes still found that the skills they had learned could not be implemented within the current systems. Free State and Western Cape did have some excellent examples of integration and management.

Mr Muller then commented in general on health funding. He noted that this had various components, which needed to be assessed in order to see if the growth in the budget was sufficient. These included the past history, the burden of disease in particular areas (HIV and AIDS and TB would put additional demands), and the natural growth of population. He conceded, in answer to Mr Schneemann and Dr Gumede that he had not addressed the future of health funding in the provinces, because he had tried to concentrate more on the challenges. However, the present set of allocations in the country did have some growth built in. The adjustment budget, which he would confirm in writing, provided a further R72 billion. This, together with what was already in the MTEF cycle, would give R81 billion in the current year, with increases of 31%, 12% and 17% year-on-year. The inflation rate was currently high but could drop to around 8%, and if that was so, then 13% would amount to 5% real growth. The DOH was to a large extent dependent on what was happening globally. Much of its materials were imports. Health inflation in terms of materials ran about 1% higher than other inflation rates, because of exchange rate factors. Around 35% of the costs were related to human resources, 30% to materials and 15% to capital investment. A significant injection into human resources would thus alleviate many problems, although he conceded that this was not the only way to improve. He personally believed that training programmes must be enlarged. Well-trained hospital managers could indeed address many problems, and he urged training on this side as well as the clinical side. He urged Members knowing of any stock control problems to let the DOH know of them. He noted that the growth in the health expenditure was largely dependent on the growth in disease, increased demand and inflation. Mr Muller commented on the mention earlier of the 30 000 new jobs in the health sector, of whom 8 000 were nurses. Even calculating these at an average salary of R100 000 per year, this required R3 billion.

Ms Mashigo asked for further information on the nursing colleges, in writing, before Thursday morning.

Co Chairperson Mr Sogoni noted that it was important that the DOH must address the statistics. It was clear that there was much work being done. He noted that a major challenge lay in the lack of accounting properly, which resulted in a withholding of funds, which in turn was affecting service. He thought that there was a need to achieve a better balance so the public was not deprived. He remained concerned about provincially-controlled issues such as ambulances. South Africa was a single country, and there should be set minimum norms and standards being complied with.

Co Chairperson Ms Fubbs thanked the Department for an informative presentation. She asked the DOH to follow up, at a later meeting, on the inadequate resourcing, the data, and the further data. She thanked the presenters for departing from their written presentation and focusing on the core issues. 
 
Department of Housing (DOH) Presentation
Ms J Fubbs (ANC) was the Chairperson for this session.

Mr Clarence Tshitereke, Chief Director: Office of the Director General: Department of Housing presented the Department of Housing (DoH) briefing on the Medium Term Budget Policy Statement. He outlined that the mandate and medium-term policy priorities included the Reconstruction and Development Programme (RDP), the Botshabelo Housing Accord (1994), the white paper on Housing (1994) and the Housing Act (1997), the Millennium Development goals and Section 26 and Schedule 4 of the Constitution.

The progress on measurable objectives was discussed according to the various programmes of  Housing Policy Research and Planning (Programme 2), Housing Delivery Support (Programme 3) and Housing Development Finance (Programme 4). The performance indicators were discussed (see attached presentation).

Generally, Mr Tshitereke reported that the Department was in line with projections.

He then detailed the budget bids for the 2008 MTEF and the approved budget bids. He gave a short review of the status of inadequate housing and the Millennium Development Goals and presented the budgeting challenges as the mismatch between grant fund allocation and Departmental projections, the housing backlog, and insufficient funding for the following: the Housing Development Agency (HDA), the Social Housing Regulatory Authority, Thubelisha Homes, Servcon and occupancy audits. (For full details, see attached presentation)

Discussion
Mr D Gumede commented that the highlighted problems seemed to be based on normal day-to-day tasks and sought clarity on what caused the problems.

Mr Schneemann remarked that it was a pity that the presentation did not focus more on the medium term, so that the Committee could get insight into the Department's planning as to the Medium Term Budget Policy Statement (MTBPS) allocation over the next three years. He would like to see specifically what allocations were planned over the MTEF, and how the Department had planned to use these funds. He was particularly concerned when he looked at the Adjusted Estimates Of National Expenditure (AENE). The allocations over the MTEF had increased significantly and referred specifically to the number of units that the Department planned to complete by the end of the financial year. He asked if the Department had the capacity to spend these allocations, and whether the country would get value for money. He was surprised to see that these issues also were not dealt with in the presentation, and it gave rise to concern about whether the DoH had budgeted adequately for the MTEF period.

Mr Sogoni noted that there were many roll overs, as was apparent from the Annual Report of the DOH, and the Committee's own research. It was clear that one of the challenges of the DoH was staffing. The reports also said that certain projects were not done on policy development due to staffing shortages.

Mr Sogoni said that according to the AENE, there had been R 74 million roll-over on integrated housing. He pointed out that the item on page 153 of the AENE did not expand on allocations to the provinces. He commented of a known case where the Eastern Cape had to send back funds that had been allocated because they failed to spend them. He asked what the R250 million (budgeted for capital under Changes to transfer, subsidies and conditional grants  on page 153 of AENE), was meant to address. Considering these roll overs, he asked why the Department had asked for an adjustment, if it was not even possible to spend the allocated budget.

Mr Itumeleng Kotsoane, Director-General: Department of Housing, responded that the roll-over were reported for the Western Cape and Limpopo. The Western Cape allocation adjustment was due to the N2 Gateway project. In November 2007, the Western Cape provincial housing department had faced the problem of people invading houses in Delft. Over 100 000 units were invaded, so they had to secure eviction orders, property was damaged and they had to clear the properties. These costs had an impact on expenditure. In phase 1 of the N2 Gateway project; the Department had also been involved in court battles. These two unforeseen incidents had resulted in the Western Cape roll-over. In Limpopo, the challenges revolved around the availability of land. This was unexpected, had affected the planning process and resulted in the roll-over.

Mr Kotsoane then explained that the R250 million adjustment was to cover the increasing cost of construction material over the last six to eight months. The cost of the materials had therefore impacted upon the total cost of the construction.

Mr Gumede referred to the Housing Development Agency (HDA) and asked why the DOH was having problems with allocations if this agency had been established.

Mr Kotsoane responded that the Housing Development Agency had not yet been established.

Mr Gumede referred to the report by the Public Service Commission and queried the extent to which the vacancy rate reported in that report had affected service delivery in the DoH.

Mr Kotsoane admitted that there were many challenges arising from the vacancies and it had reduced their ability to deliver on their programmes. Similarly, the provinces had indicated serious problems with vacancies, especially in the area of engineers. The challenge was the same for the municipalities. The built environment in general was experiencing critical skills challenges. He also noted that public investment in major projects like the Gautrain meant that Housing funding was squeezed out.

The Chairperson referred to the performance indicators of the rental housing delivery. She stated that she had expected to see phases in the development programme and did not understand what the figures of 30% and 60% referred to. She remarked that this seemed to be a significant policy redirection, and that the target was to eliminate informal housing settlements by 2014

Mr Kotsoane responded that the Department had raised the issue of the rental stock in Parliament in 2007. The DoH had focused on expanding its rental stock and was, by using this, able to provide rental houses to the increased number of people needing adequate shelter. This was useful because a large proportion of the people needing housing in South Africa were able to afford these rental costs. However, he said that the DOH had begun to see tensions developing relating to the rental stock. He noted that people had now begun paying monies due to the Body Corporate of this rental housing, and the DoH was also embarking on educational programmes to inform communities about rental terms and encourage them to accept the rental terms.

The Chairperson referred to the White Paper referred to in the presentation and asked if the Department had actually published a White Paper on the DoH's challenges. If so, she further requested that the Committee be notified when it was available.

Mr Kotsoane responded that the White Paper referred to was one approved in 1996. This document was still relevant and remained the guiding document, and the Department was still implementing its programmes.

The Chairperson asked the Department to expand on comments regarding training.

The Chairperson also referred to the account of Reconstruction and Development Programme (RDP) housing and addressing the gaps. She stated that the capacity reasons were unacceptable and wanted to know what challenges there were in that direction.

Generally, she remarked that there did not seem to be any new information presented.

Mr Kotsoane responded that there were three key challenges faced by the DoH. These related to the procurement of well-located land, the human resources challenges of finding core skills in civil engineering and project management, and the capacity in the housing environment to spend the allocated funds in time.

Mr Gumede asked whether, if money was set aside for block projects and if these were not completed by the financial year-end, the money would then be rolled over into multi-year projects.

Mr Kotsoane responded that the Department had adopted a new approach and was now working according to project lists.

The Chairperson expressed displeasure at the responses and felt that the key questions had not been adequately answered. She asked Mr Schneemann to repeat his question as this really went to the core of the reason for the MTBPS briefings.

Mr Schneemann duly obliged.

The Chairperson stated the fact that rental was mentioned in the MTBPS meant it would not be finished in the financial year, as the MTBPS concerned allocations over the medium term of the next three years. She asked the Department to please speak to those next three years.

Mr Gumede agreed that the explanation of planning over the medium term was the point of this engagement. The Department needed to have a plan and a budget over all three years of the Medium Term Expenditure Framework (MTEF). This was straightforward management for any institution.

Mr Gumede referred to the occupancy audit, stating that there were no funds to audit approved beneficiaries occupying subsidised houses. He pointed this out as a major concern.

Mr Gumede queried the Housing Development Agency and asked why there was no allocation to the operationalisation of this Agency.

Mr Schneemann remarked that he was under the impression that the HDA was a critical institution and that it would be done this year. He was worried that would cause delay, as in respect of the project next year there was no allocation as yet.

Mr Schneemann noted that the Public Service Commission reported a lack of co-ordination, interaction, planning and budget review between departments. He asked how this could be worked out over the MTEF period, especially considering the planned increases in allocations.

Ms R Mashigo (ANC) raised concerns relating to the quality of housing, and commented that the Department could not leave badly-built housing unattended. She pointed out that much of the housing built was effectively uninhabitable. She wanted to know the impact of attending to these deficiencies upon the adjustments. 

Mr Kotsoane responded that the Department of Housing had identified certain priorities. It had only managed to procure start up financing, in respect of the HDA, as the National Treasury could not give out funds for an organisation that did not exist. The DoH was currently advertising posts and identifying streams of work for task teams to ensure that the HDA would work. It had identified well-located land from parastatals. These plans laid the groundwork for the HDA. The funding issue with the HDA was pointed out on the last side of the presentation.
The Department was increasing rental stock and continued to purchase well-located land. Some housing developments in the past had created problems as they hade been on the periphery of urban areas and hade created fractional settlements. The Social Housing Regulatory Authority (SHRA) was flagged as an issue but the Department planned to increase rental stock going forward.

Mr Kotsoane responded to the queries around the RDP housing, saying that one challenge was that many of the people living in RDP houses did not hold the title deeds, and there was need to do an audit in order to issue the deeds.

The Chairperson stated that there were no details being provided by the Department as to what the money would be spent on and what the figures provided were based on. She asked for a specific indication of where the Department was going in the MTEF, and she asked for an indication of what the Department could not do or could not get.

The Chairperson also referred to the section of the MTBPS concerning conditional grants, noting the successive increases over the MTEF period, and remarked that these increases would be coming through in the rest of the housing spending. These too were significant increases and she asked what plans there were to spend this money, and what Parliament could expect to see from that spending.

The Chairperson suggested that perhaps the Committee could hear from the other representatives from the DoH as to the specifics. She added that she did not know what to report to the House. If the Committee could not get adequate responses, this would be a fruitless expenditure of their oversight time, but that was not something that she wished to have to report. She added that the Joint Budget Committee was a very constructive committee and had to ensure sound effective efficient services to South Africans.

The Chairperson therefore suggested that the DoH should present a more comprehensive MTBPS report to the Committee, and answer the questions, in an afternoon session on the following day, 29 October. She asked other Members for comments or proposals on how to proceed.

Mr Schneemann agreed with the proposal. The DoH had heard the questions, and the representatives should return with more substantial responses. He added that some of the information had been quite helpful.

Other Members agreed to the proposal, and the Department of Housing was asked to return on 29 October 2008.

 
Department of Transport (DOT) Briefing on the MTBPS
Mr Sogoni chaired the briefing session by the Department of Transport.

Mr Dan Pretorius, Chief Financial Officer, Department of Transport, gave a presentation on the Medium Term Budget Policy Statement as it affected the Department of Transport (DoT). The medium term policy priorities were discussed under the subsections of the sector priorities and the Departmental priorities. The progress made in meeting measurable objectives was outlined for the South African Rail Commuters Corporation (SARCC), the South African National Roads Agency Limited (SANRAL), the Road Accident Fund (RAF), the Cross-Border Road Transport Agency (CBRTA), South African Maritime Safety Authority (SAMSA), the South African Civil Aviation Authority (SACAA), Air Traffic and Navigation Services (ATNS), and The Airports Company of South Africa (ACSA), the progress on credit-card driving licences, and the efforts of the Road Traffic Management Corporation (RTMC).

Mr Pretorius then reported the progress on meeting of the Millennium Development Goals. The goals were to eradicate poverty by job creation, ensure environmental stability, and improve economic development by providing access. These had been addressed by the Department in projects that included the Extended Public Works Programme (EPWP), regional roads, secondary strategic roads, the Gauteng freeway improvement scheme and rail branch line revitalisation.

The Department’s medium term expenditure trends were expressed through provincial and national budgets, provincial expenditure (which compared 2008 as against 2007), and local Government expenditure trends. The provincial and national budgets had shown good year-on-year growth (which was reflected more strongly if excluding the Gautrain project and the RAF from the comparisons) over the MTEF. He noted the provincial expenditure trends across the August months of 2007 and 2008, and noted that all the budgets of provinces had grown, and the final expenditure of 150% showed that provinces had done well on spending the budgets. The overall picture was that there was fairly good growth in local expenditure. The increased spending was due to the increased construction from the Public Transport Infrastructure and Systems (PTIS) conditional grants.

The budget additions in the MTBPS were detailed under funds rolled-over, unforeseen and unavoidable expenditure, the RAF, other adjustments and special adjustments (to the RAF). The resulting adjusted budget was R24, 492, 840 billion, as compared to the original budget of R 20, 508, 528 billion. He also reviewed the Departmental budget bids not agreed, the budgeting challenges and the unfunded mandates (see attached presentation).

Discussion
Mr Swart expressed his appreciation at the comprehensive report presented by the Department of Transport.

Mr Swart referred to the bicycles and asked if they were insured or maintained and who was responsible for this.

Ms Angeline Nchabeleng, Chief Director, Operational Department, DoT, responded that the Department had new specifications for the low maintenance and was providing safety features for the bicycles, as they did not currently have a maintenance programme. In the second year after rolling out the bicycles, the Department planned to order spare parts to attend to the bicycles’ for the servicing and repairs. These parts would be fitted by local enterprises, to promote enterprise development in the communities where the bicycles were rolled out. The DoT was in discussions with the Department of Trade and Industry (dti) regarding the costs.

Mr Swart commented on plans to develop the high quality public transport system (the Integrated Rapid Transport System) to fulfill the transport needs of the 2010 World Cup. He asked what agreement had been reached with taxi operators. He was under the impression that these taxi operators were not keen on the project, as they could not get finite details on compensation for their lost earnings.

Mr Gumede referred to the timelines of the projects aimed at supporting the opening of the Tarka Bridge to Cradock, The South African National Roads Agency Limited (SANRAL), and the Gauteng Freeway Improvement Scheme. He queried the status of these project as well as the milestones reached, and whether they were in a position to finish on time.

Ms Nchabeleng responded that the Gauteng Freeway project (between Gauteng and Ekhuruleni) had a toll system under the “user pays” principle. The Department was conducting these projects in a phased incremental approach.

Mr Gumede referred to the allocations for the 2010 World Cup to host provinces such as Mpumalanga, Kwazulu-Natal and Gauteng, and noted that the allocations to the Western Cape and Limpopo were the lowest. He asked what the reason was for this difference and whether these provinces did have the necessary support, based on their different development levels.

Mr Collins Letsoalo, Deputy Director-General (Financial Services), DoT responded that the allocations had been done based upon what the provinces had bid for, and did not have anything to do with the provinces development level.

Ms Nchabeleng added that the 2010 budget for Mbombela (Mpumalanga), in particular, was based on the number of projects that this province had prioritised within the budgetary constraints. For Mbombela there were four projects in various categories.

Mr Gumede responded that he did not see this reflected in the budget.

Ms Marissa Moore, Director: Transport And Housing, National Treasury, responded that provincial road spending was not related to 2010 spending. She also noted that Mpumalanga did under spend on the previous financial year's budget.

Mr Schneemann noted that there was a large sum of money allocated to the bus traffic transport systems and raised the issue of sustainability over the MTEF period, after 2010. He asked how the Department planned to encourage South Africans to use this form of public transport, as presently South Africa was a country of private-car users.

Mr Schneemann also queried the financial stability of the rapid transport systems and the plans made to this end.

Mr J D De Villiers, Principal Transport Economist, DoT, responded that there was a process in establishing demand and that the Department was drawing up operational plans. Most of the networks were in the process of finalisation. Johannesburg was currently the most advanced in the process, and the rest of the cities would follow soon. It was not feasible as yet but it was the intention to have that in place prior to implementation.

Mr Schneemann referred to the security and safety incidents on trains reported by the South African Rail Commuter Corporation (SARCC) and asked if he was correct in deducing that the situation had deteriorated.

Mr Letsoalo responded that in response to the increase in security related incidents, the Department was putting together a railway police unit. The safety issue was real, and this was one of the factors pushing people into using private transport.

Ms Mashigo referred to the Extended Public Works Programme (EPWP) and the challenges noted on up-scaling the programme. She asked for a specification of what those challenges were and how the allocated funds were being utilised.

Ms Nchabeleng responded that there were three Bills in progress regarding the Extended Public Works programme, but that these were set aside.

 Ms Fubbs remarked that South African public transport systems were road-based, and this was not the case in many other countries. She queried the commitment to rail revitalization, saying that it was not in South Africa's interests to continue to have a road based public transport system, but it was rather in its interests to move to a rail-based system. She asked if this was addressed in the MTBPS, and, if not then why not.

Mr Letsoalo responded that the issue with the rail based transport system was one of efficiency and a lack of investment. This created a problem as far as freight was concerned. Freight was currently in preference being transported on the roads. Added considerations were linked to whether this should be done through regulation, and the capacity of Transnet. The problem linked to the rail network was one of maintenance. Road deterioration would also require funding, as it was more costly to rebuild roads. This was one area where he felt the Department should intervene, as it was a very important area.

Ms Fubbs referred to taxi recapitalisation and asked about the scrapping of the taxis.

Ms Fubbs noted the number of accident forms not captured, and added that if the data could not consolidated the results would be distorted. She remarked that other exercises would be fruitless, as they would be based on only 10% of the data.

Ms Fubbs asked if regional road infrastructure was planned, as it was a key component of regional integration.

Ms Fubbs queried skills development in the Department, as she did not see that the skills were being utilised effectively.

Ms Fubbs referred to the high cost of road maintenance and the significant increase in the allocation, and asked how much of the global allocation went to maintenance. She queried if the Department had made progress in repairing roads, instead of incurring higher costs in the rebuilding of roads.

The Chairperson referred to the additional R 2.5 billion allocated to the Road Accident Fund (RAF) and asked what the Department of Transport was planning to do to correct the problems that existed there. She asked specifically what it was that was not working, and queried if the problem was perhaps administrative.

Mr Letsoalo responded that the problem with the RAF was mainly one of funding, as there was no clear adopted model for the funding and the RAF was funded mainly using the fuel levy. There were discussions as to adopting an economic funding model to allow all concerned to really examine the numbers and know exactly what the costs were. The Department was currently in discussions with the National Treasury on this issue.

Mr Sogoni referred to the Disaster Management Fund and asked if the Department was going to budget for more disasters.

Mr Letsoalo added that in respect of Disaster management, the Department must be careful of not “double dipping” – it had to look at every sector individually and co-ordinate the efforts of all the Departments, as this was currently being done at a separate level

Mr Sogoni referred to the mention of the “NATIS system” and asked if that was the same as the “e-NATIS system”.

Mr Letsoalo responded that the initial problems with e-NATIS (the National Traffic Information System) related to capacity, and this had been addressed. The system was now running at 99% of capacity. The issues of the long queues were more an issue of human skills and the Department did need to train more people. He assured the Committee that the Department would respond with data on that system.

Mr Gumede replied that the various departments kept talking about skills, but he felt that this was more an issue of attitudes. He was also of the opinion that there was no accountability or supervision. This was a question of incentives and disincentives, and a correct attitude to work was needed.

Ms Fubbs referred broadly to the budgeting challenges presented, but highlighted in particularly the Gautrain and the decline on rail tonnage. She queried the exact inefficiencies. She felt that the challenges were too generalised to take to the House. It was preferable to get the freight back to being transported by rail and she called for a written response on this issue.

Ms Fubbs referred to the RAF payouts to foreigners in their own currencies. If this was to remain the case, she pointed out that the reality of the 2010 World Cup and the influx of foreigners would pose huge risks and huge potential amount of payouts from the RAF.

Mr Swart added that he would not object if foreigners were excluded entirely from claiming from the RAF.

Mr Swart reiterated his previous question on taxi recapitalisation.

Ms Fubbs asked what the problem was with buying a new taxi-scrapping machine. She recalled previous engagements with the Department where Parliament was told that the scrapping machines had been ordered but there was a delay with getting them imported.

Ms Fubbs concluded that it would be better for the Department to provide a response to this and other questions in writing, as it would be easier for the Department to deal with all the issues in a succinct way.

The Chairperson of this session thanked everyone for their time and efforts. He reiterated that the Department could provide the Committee with written responses to the outstanding questions by Thursday.

The meeting was adjourned.