ATC130618: Report of Select Committee on Appropriations on Hearing on Third and Fourth Quarter Expenditure Report on Community Library Services Grant for Provinces for 2012/13

NCOP Appropriations

 

 

REPORT OF THE SELECT COMMITTEE ON APPROPRIATIONS ON THE HEARING ON THE THIRD AND FOURTH QUARTER EXPENDITURE REPORT ON THE COMMUNITY LIBRARY SERVICES GRANT FOR PROVINCES FOR THE 2012/13 FINANCIAL YEAR, DATED 18 JUNE 2013
 

 

1. Introduction

 

The purpose of the Community Library Services Grant is to transform urban and rural community library infrastructure, facilities and services (primarily targeting previously disadvantaged communities) through a recapitalised programme at provincial level in support of local government and national initiatives. The key outputs of the Grant include purchasing of library materials, providing library services for the visually impaired, construction of new libraries, upgrading and maintenance of existing libraries and the appointment of new librarians.

 

1.1 Terms of reference

 

Provinces were requested to make oral presentations on the Community Library Services Grant and to take into consideration the following:

  • Data trends in allocations, transfers and actual expenditure on the Grant;
  • Assessment of department’s monitoring capacity for the 2012/13 financial year and indicate under/over-spending and what capacity constraints impacted on these outcomes;
  • Whether monthly reports are received from receiving departments or municipalities, and if not, what the departments are doing in order to ensure compliance with monthly reporting; and
  • Whether the departments deviated from their 2012/13 business plans on the Grant.

 

The Committee invited the Department of Arts and Culture (DoAC) and the National Treasury (NT) to a meeting on 08 May 2013 to report on the provincial third and fourth quarter spending on the Community Library Services Grant. In addition, the following provincial Members of the Executive Council (MECs) and their departments were invited to the meeting to report on their third and fourth quarter spending on the Grant:

 

· Eastern Cape MEC for Sport, Arts and Culture;

· Limpopo MEC for Sport, Arts and Culture;

· North West MEC for Sport, Arts and Culture; and

· KwaZulu-Natal MEC for Sport, Arts and Culture.

 

However, the MECs of Sport, Arts and Culture of KwaZulu-Natal and North West did not attend. The North West MEC sent officials to represent the province. There was no notification that the two MECs were not going to attend.

 

2. Presentations

 

The National Treasury, National Department of Arts and Culture and the provinces of Eastern Cape and Limpopo reported as follows:

 

2.1 Briefing by National Treasury

 

The National Treasury indicated that it would be reporting on the figures as received from all provincial treasuries in terms of Section 32 of the Public Finance Management Act, (Act 1 of 1999). National Treasury further indicated that the report would cover audited figures.

 

The National Treasury reported that the total adjusted budget for the Grant in the 2012/13 financial year had been R615.155 million and this amount had been transferred to, and spent by, provinces as follows:

 

Table: Provincial Community Library Services Grant expenditure as on 31 March 2013

 

 

 

 

 

 

 

 

 

Province

2012/13 adjusted budget

 

 

 

 

 

 

‘000

Projected outcome at 31 December 2012

 

 

 

 

‘000

Actual payments and percentage spent as at 31 December 2012

 

‘000

Projected outcome at 31 March 2013

 

 

 

‘000

Actual payments and percentage as at 31 March 2013

 

 

‘000

Audited over-spending as at 31 March 2013

 

 

‘000

Audited under-spending as at 31 March 2013

 

 

 

‘000

Eastern Cape

 

87 692

71 107

36 979 (42.2%)

65 714

61714 (74.9%)

 

21 978

Free State

 

52 795

52 795

33 234 (62.9%)

 

48 502

48502 (91.95%)

 

4 293

Gauteng

 

56 762

57 772

43 901

(77.9%)

57 462

57462 (101.2%)

(700)

 

KwaZulu-Natal

48 619

48 619

39 799

(81.9)

48 633

48 633 (100%)

(14)

 

Limpopo

 

82 693

82 693

31 303

(37.9)

49 722

49 722 (60.1%)

 

32 971

Mpumalanga

 

72 705

68 822

51 966

(71.5%)

66 983

66 983 (92.1%)

 

5 722

Northern Cape

 

73 026

65 723

48 761

(66.8%)

62 674

62 674 (85.8%)

 

10 352

North West

 

84 734

84 734

42 852

(50.6%)

62 937

62 937

(74.3%)

 

21 797

Western Cape

 

56 129

56 129

41 332

(73.6%)

56 129

56 129

(100%)

 

 

Total:

 

615 155

588 394

370 127 (60.2%)

518 756

518 756 (84.3%)

(714)

97 113

Source: National Treasury 2013

 

 

The National Treasury reported that the Community Library Services Grant was allocated R615.155 million in the 2012/13 financial year. The National Treasury indicated that in the third quarter of the 2012/13 financial year all provinces had spent over 50 per cent of their allocated conditional grant funds, except for the Eastern Cape (R36.979 million) and Limpopo (R31.303 million) who had spent 42 per cent and 37.9 per cent, respectively. The total expenditure by provinces as at the end of the third quarter in the 2012/13 financial year was R370.1 million or 60 per cent.

 

With respect to the fourth quarter expenditure report, the National Treasury reported that, overall, provinces had spent more that 74 per cent (R518.7 million) of their allocated budget. The Province of Limpopo was the lowest performer, having spent only R49.7 million out of R82.6 million allocated to it in the 2012/13 financial year. According to National Treasury, at the end of the fourth quarter in the 2012/13 financial year the provinces of Gauteng and KwaZulu-Natal over-spent their budgets by R700 000 and R14 000 respectively. The National Treasury further reported that a total of R97.1 million (15.7 per cent) was under-spent by six provinces. The provinces that under-spent as at the end of the fourth quarter of the 2012/13 financial year were: Eastern Cape by R21.978 million; Free State by R4.293 million; Limpopo by R32.971 million; Mpumalanga by R5.722 million; Northern Cape by R10.352 million and North West by R21.797 million.

 

On the provincial performance information, National Treasury reported that the provinces had targeted to purchase 177 200 library material items but only managed to purchase 60 116. The National Treasury explained that the Eastern Cape , North West and Limpopo were the main underperforming provinces due to poor planning and significant delays in their supply chain management processes, such as slow tender-adjudication processes leading to the late delivery of materials. The National Treasury added that provinces built five new libraries ( Eastern Cape one, KwaZulu-Natal one and Limpopo three) against a target of three. The National Treasury also reported that provinces provided 32 libraries with new furniture against a target of 39.

 

The National Treasury reported that Gauteng transferred about R29.8 million of the R56.8 million and Western Cape transferred R47.8 million out of its R56.1 million to municipalities. These provinces had signed Service Level Agreements with receiving municipalities and their reporting was relatively good. The National Treasury raised a concerned about this due to the difference in financial years spending reports, because the municipalities’ reports reflect a gap as at the end of the 2012/13 financial year. The municipalities will only report at the end of their financial year with respect to their spending patterns whereas the provinces had already reported their total spending. The National Treasury further reported that the municipalities used most of the funds on operational activities, which are to purchase materials and furniture, and to pay staff.

 

Regarding challenges and deviations that were submitted by provinces, the National Treasury reported that there were delays with respect to submission of invoices for work done by the State Information Technology Agency (SITA) for the Library Information Management System (SLIMS). The National Treasury also reported that staff shortages and lack of adequate skills in Supply Chain Management units delayed the procurement processes. The National Treasury added that inadequate contract management and the appointment of incompetent contractors by provinces to implement infrastructure projects caused delays and also contributed to poor workmanship. Furthermore, the National Treasury reported that the technical and management shortcomings within public works departments, as the implementing agents, contributed to poor project management.

 

2.2 Briefing by Department of Arts and Culture

 

The Department of Arts and Culture (DoAC) reported that it received R615.155 million (R564.574 million plus R50.581 million for roll-overs) for the Community Library Services Grant in the 2012/13 financial year. The DoAC added that the provinces spent R518.756 million of the R564.574 transferred to them as per the 2012 Division of Revenue Act.

 

The DoAC further reported that the provinces of Gauteng and Western Cape transferred funds directly to municipalities for implementation of infrastructure projects. These transfers were reported to be in line with the Community Library Services Conditional Grant Framework which stipulates that provinces may enter into service level agreements with receiving municipalities. However, the DoAC reported that they were aware of the challenges experienced at local government level and had recommended to provinces that infrastructure projects be managed at provincial level.

 

With respect to reporting procedures, the DoAC reported that transferring provinces require all municipalities to submit monthly reports on their project implementation and financial expenditure. The DoAC explained that provinces coordinate monthly meetings with Municipal Library Managers to discuss challenges and issues of concern related to the Grant.

 

2.3 Briefing by Limpopo Department of Sport, Arts and Culture

 

The Limpopo Department of Sport, Arts and Culture (LDoSAC) reported that in the 2012/13 financial year it had received an allocation of R68.822 million plus a roll-over of R13.871 million which made their total allocation R82.693 million. The LDoSAC reported that of the total allocation, R45.061 million was allocated for Library Infrastructure projects. The LDoSAC explained that it spent only R49.722 million and a total of R32.971 million was not spent. The LDoSAC reported that they had applied for R10.896 million capital expenditure roll-over funds for outstanding works in libraries and purchasing of goods and R4.631 million roll-over funds for services.

 

The LDoSAC reported that in the 2012/13 financial year, 12 Community Library Infrastructure projects were implemented and all were reported to be 100 per cent complete. The implemented infrastructure projects were:

  • Ga-Phaahla Library, for which R367 000 was budgeted, but which cost R314 238;
  • Thulamela Library, for which R1.194 million was budgeted, but which cost R967 232;
  • Bakgoma Library, for which R2.467 million was budgeted, but which cost R1.659 million;
  • Rapotokwane Library, for which R1.867 million was budgeted, but which cost R1.129 million;
  • Mutale Library, for which R3.685 million was budgeted, but which cost R1.265 million;
  • Shiluvane Library, for which R1.667 million was budgeted, but which cost R1.393 million;
  • Saselamani Library, for which R5.901 million was budgeted, but which cost R3.959 million;
  • Mulati Library, for which R5.803 million was budgeted, but which cost R4.119 million;
  • Vlakfontein Library, for which R5.6 million was budgeted, but which cost R4.975 million;
  • Musina-Nancefield Library, for which R5.024 million was budgeted, but which cost only R4.175 million;
  • Molepo Library, for which R5.668 million was budgeted, but which cost R3.903 million; and
  • Shongoane Library, for which R5.620 million was budgeted, but which cost R5.569 million.

 

The LDoSAC reported that it under-spent on the Grant’s compensation of employees line item, which was budgeted for at R11.774 million of which the Department only managed to spend R8.535 million as at 31 March 2013. The LDoSAC reported that the recruitment process was not done due to the non-completion of new library projects. The LDoSAC added that since the libraries were complete, all vacant positions had been advertised. The LDoSAC further reported that, of the R23.959 million allocated for goods and services, it managed to spend only R7.621 million or 32 per cent.

 

With regard to capacity constraints which impacted on the Grant’s outcomes, the LDoSAC reported that the Senior Manager for Library Services, the Provincial Librarian and the Infrastructure Manager did not possess the requisite skills and competencies to manage the Grant, libraries and the construction of libraries projects. The LDoSAC added that it was highly reliant on the capacity of the Limpopo Department of Public Works (LDoPW) to implement and monitor infrastructure projects. However, the LDoPW Supply Chain Management Unit did not have capacity to procure other services required for libraries. The LDoSAC further reported that infrastructure projects were not aligned to the Intergovernmental Development Plans of the relevant municipalities as well as the relevant Annual Performance Plans and Strategic Plans of both the LDoPW and the LDoSAC. The LDoSAC also reported that the inability to mediate land disputes between the municipalities and the traditional leadership authority further delayed the construction of certain libraries.

 

With respect to monitoring capacity, the LDoSAC reported that they relied on the National Department of Arts and Culture (NDoAC) personnel to provide oversight on the infrastructure projects. The LDoSAC added that in the 2012/13 financial year an inter-departmental team comprising of Limpopo Provincial Treasury, LDoPW and NDoAC was established and it met weekly. Moreover, a monthly inter-departmental forum on infrastructure projects was convened by the LDoPW. The NDoAC convened quarterly progress meetings. The LDoSAC further reported that weekly visits to libraries were conducted by LDoSAC staff.

 

The LDoSAC reported that after identifying capacity constraints they implemented the following interventions:

· Appointed a competent Senior Manager to head the Supply Chain Management Unit;

· Advertised the positions of Infrastructure Manager, Acquisition Librarian and Information and Communications Technology Specialist;

· Transferred the qualified Senior Manager from the Museum and Heritage Unit to head Library Services and the Librarian from Human Resources Management to Library Services;

· Appointed a General Manager to provide strategic leadership;

· Signed long term contracts (2-3 years) with service providers;

· Directly contracted service providers for maintenance of all libraries;

· The Member of the Executive Council escalated all challenges experienced to the Minister of Public Works; and

· Requested the LDoPW Administrator to appoint the Independent Development Trust (IDT) to assist in the building of the new libraries.

 

 

2.4 Briefing by Eastern Cape Department of Sport, Arts and Culture

 

The Eastern Cape Department of Sport, Arts and Culture (ECDoSAC) reported that in the 2012/13 financial year they had received a total allocation of R87.6 million to transform urban and rural community libraries infrastructure, facilities and services. The ECDoSAC reported that primarily they targeted the previously disadvantaged communities through a recapitalised programme at provincial level in support of local government and national initiatives. The ECDoSAC indicated that they managed to spend R65.7 million (74.9 percent) of the allocated funds and the department has applied for a roll-over of R11.8 million. The (ECDoSAC) argued that a number of issues contributed to their under-spending.

 

These included a delay in awarding a modular libraries tender which was only awarded in February 2013. The delivery of modular material began in May 2013. The ECDoSAC also reported that some projects were cancelled by COEGA Development Corporation, an implementing agent, due to non-performance by the contractors. The ECDoSAC further reported that non-registration of service providers in the provincial database contributed to late issuing of orders to service providers. The ECDoSAC added that some contractors were slow to implement projects due to cash-flow challenges. The construction of four new libraries was delayed due to the issue of land allocation and municipality council resolutions. The contractor of the Mdantsane Library was liquidated and a rescue contractor had to be appointed to finalise the project. The ECDoSAC further reported that the appointment of 48 librarians was delayed due to slow recruitment processes. However 90 per cent of them were appointed with effect from March 2013. The ECDoSAC added that they did not pay SITA for SLIMS due to the non-submission of all invoices.

 

On the constraints experienced, the ECDoSAC reported that COEGA had capacity challenges in implementing infrastructure projects. The agency was over-stretched because other provinces were utilising its services. The ECDoSAC reported that it became aware that the Department of Roads and Public Works had awarded projects to service providers who had cash-flow challenges and had no tax clearance certificates. The ECDoSAC reported that due to a lack of capacity within, a tender was submitted to the Independent Bid Award Committee (IBAC) for adjudication, the IBAC identified technicalities on the functionality of the tender and the Department was forced to re-advertise the tender. The tender was only awarded in February 2013 and the service providers failed to deliver before the end of the 2012/13 financial year. The ECDoSAC reported that the recruitment of conditional grant personnel was treated differently by the Human Resources Unit, and the contractual conditions of employment contributed to the resignation of eleven public librarians and 4 library assistants.

 

With respect to monitoring capacity, the ECDoSAC reported that the Strategic Planning Management Unit ensured that reporting was done according to the business plan, annual performance plan and operational plan, and the reporting was done quarterly and annually. The monthly and quarterly reports were submitted to the National Department of Arts and Culture and quarterly review workshops were held at the national level. The ECDoSAC reported that financial reports were analysed and sent to Provincial and National Treasuries. The ECDoSAC reported that the Grant had a Provincial Co-ordinator, a Manager, an Acquisition Librarian and an Administrative Officer who are responsible for monitoring and evaluation of all Grant projects.

 

The ECDoSAC reported the following achievements:

· Completion of Mount Ayliff library;

· Mdantsane Library was 92 per cent complete as at April 2013;

· 84 out of 145 libraries had been renovated since the inception of the Grant in the 2007/08 financial year;

· 85 libraries were connected to internet and e-mail and an additional 60 were planned to be connected before the end of the 2013/14 financial year;

· Nine container libraries and 11 modular libraries had been distributed to rural areas;

· 107 jobs had been created through appointing librarians in public libraries and qualified staff at the provincial head office. Libraries that had been closed were now operating in normal hours; and

· People with visual disabilities had access to specialised information. Mini-libraries had been established in 21 libraries in all seven districts where special equipment for blind and semi-blind people were provided and they were assisted to access information.

 

The ECDoSAC further reported that even though the provision of library infrastructure was a priority for the Eastern Cape Province , it was not implemented at an acceptable pace. The ECDoSAC added that the implementation of technical projects had been outsourced to government’s implementing agents.

 

 

3. Findings

 

During interactions with the Department of Arts and Culture, National Treasury, and provincial sport, arts and culture departments from the Eastern Cape and Limpopo , the Committee made the following findings:

 

3.1 There is a need for a detailed report on the spending patterns of the Grant since its inception.

 

3.2 The spending reflected by Gauteng and the Western Cape is only an indication of transfers made to municipalities, not necessarily actual spending.

 

3.3 There are a number of weaknesses in supply chain management units in most provinces, leading to poor adjudication processes.

3.4 Some municipalities used the Grant allocations for their operational requirements.

 

 

3.5 Limpopo Province ’s poor spending is due to weaknesses within its supply chain management and the use of the Provincial Department of Public Works, which has been placed under administration, as its implementing agent.

 

3.6 Limpopo Province recorded huge variations in its projected costs and actual costs for library buildings which is an indication of inaccurate projections. An example is Mutale Library, which was budgeted for at R3.685 million but only cost R1.265 million.

 

3.7 Most of the libraries in Limpopo were reported to be 100 per cent complete, but still need some additional work. This cast doubt on their alleged completeness.

 

3.8 There are huge costs variations in the libraries built in Limpopo , ranging from R367 000 to R5 million and this implies such structures are of varying standards.

 

3.9 Some of the completed libraries in Limpopo were projects carried over from the 2011/12 financial year.

 

3.10 Infrastructure service delivery is a huge challenge in the Eastern Cape because the department does not have a technical expert representative in the bid adjudication committee.

 

3.11 The Eastern Cape is struggling to terminate contracts with poor performing service providers, especially COEGA.

 

3.12 The Eastern Cape relies on one official to monitor projects in the whole province.

 

3.13 The National Treasury indicated that some of the provincial plans for the 2013/14 financial year lack credibility, especially that of Limpopo Province .

 

3.14 The figures presented by the National Department of Arts and Culture differed from those presented by the National Treasury. In a letter dated 20 May 2013 the National Department of Arts and Culture explained that the discrepancies in the figures presented was due to the fact that an amount of R700 000 allocated to Gauteng for the Extended Public Works Programme Grant was erroneously included in the Community Library Services Grant .

 

3.15 Some of the libraries in Limpopo were inappropriately built due to irregular supply chain management processes.

 

4. Recommendations

 

After interactions with the Department of Arts and Culture, National Treasury, and provincial sport, arts and culture departments from the Eastern Cape and Limpopo , the Committee recommends the following:

 

4.1 The National Department of Arts and Culture should provide the Committee, within a month of the adoption of this Report by the NCOP, with a detailed report on the performance of the Community Library Services Grant since its inception; in particular the following: Purchasing of library materials, provision of library services for the visually impaired, construction of new libraries, upgrading and maintenance of existing libraries and the appointment of new librarians.

 

4.2 The National Treasury and National Department of Arts and Culture should ensure that expenditure reports in Gauteng and the Western Cape are a true reflection of the actual expenditure, and not only of funds transferred to municipalities.

 

4.3 The provincial departments for arts and culture in Gauteng and the Western Cape should develop monitoring mechanisms for the funds transferred to municipalities.

 

4.4 The use of grants for operational costs by municipalities compromise service delivery. For this reason, Gauteng and the Western Cape provinces should ensure that funds transferred to municipalities are used only for the purposes they are allocated for and not for operational costs.

 

4.5 The National Department of Arts and Culture as well as the National Treasury should support the Limpopo Province to develop capacity within its supply chain management.

 

4.6 The National Department of Arts and Culture should support Limpopo Province in developing standardised structures for libraries to avoid such huge variations.

 

4.7 The National Department of Arts and Culture should support Limpopo to ensure that it develops credible projections for its library buildings.

 

4.8 Limpopo Province should ensure that it reports appropriately with regard to completed libraries.

 

4.9 National Treasury and the National Department of Arts and Culture should ensure that projects that are carried over from the previous financial years are captured appropriately.

 

4.10 The National Department of Arts and Culture should support Eastern Cape with capacity building to ensure the province is able to monitor bid adjudication processes.

 

4.11 The National Department of Arts and Culture, together with National Treasury, should support the Eastern Cape to ensure that the province is able to terminate its contracts with service providers who fail to deliver.

4.12 Eastern Cape should ensure that it has sufficient personnel for monitoring and evaluation of the projects.

 

4.13 The National Department of Arts and Culture should support Limpopo in developing credible plans and further ensure that plans it approves for provinces are credible.

 

 

Report to be considered .

 

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