ATC141029: Budgetary Review and Recommendation Report of the Portfolio Committee on Sport and Recreation, on the performance of the Department of Sport and Recreation, Boxing South Africa and the South African Institute for Drug-free Sport for the 2013/2014 financial year, dated 21 October 2014

Sports, Arts and Culture

The following report replaces the Report of the Portfolio Committee on Sport and Recreation, which was published in the Announcements, Tablings and Committee Reports date 24 October 2014 on page 1734.

The Budgetary Review and Recommendation Report of the Portfolio Committee on Sport and Recreation, on the performance of the Department of Sport and Recreation, Boxing South Africa and the South African Institute for Drug-free Sport for the 2013/2014 financial year, dated 21 October 2014

The Portfolio Committee on Sport and Recreation, having considered the performance of the Department of Sport and Recreation, its entities and submission to National Treasury for the medium term period of the Department, reports as follows:

1. Introduction

1.1 The Role and Mandate of the Portfolio Committee is to:

· Consider legislation referred to it

· Exercise oversight over the Department of Sport and Recreation and its statutory bodies, namely Boxing South Africa and South African Institute for Drug-free Sport

· Consider International Agreements referred to it

· Consider the Budget Vote of the Department of Sport and Recreation

· Facilitate public participation in its processes

· Consider all matters referred to it in terms of legislation, the Rules of Parliament and resolutions of the House

In terms of the Constitution of the Republic of South Africa, 1996, Portfolio Committees have a mandate to legislate, conduct oversight over the Executive and facilitate public participation.

1.2 The role and mandate of the Department

The Department of Sport and Recreation is the primary government institution responsible for formulating and implementing policy on sport and recreation. It reports to and advises the Minister who, in conjunction with Cabinet, takes final responsibility for Government policy. The Department is headed by the Director-General, who is responsible for ensuring that sport contributes towards maximising access to sport and recreation and encouraging world-class performance which strengthens social cohesion and nation-building.

1.3 Purpose of the BRR Report

The Money Bills Procedure and Related Matters Amendment Act, Act 9 of 2009, sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department. In October of each year portfolio committees must compile Budgetary Review and Recommendation Reports (BRRRs) that assess service delivery performance given available resources and evaluate the effective and efficient use and future allocation of resources, and may make recommendations on future use of resources. The BRRRs serve as source documents for the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS). The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.

1.4 Method

For the period under review, the Portfolio Committee on Sport and Recreation, in exercising its oversight role, interacted with the Department of Sport and Recreation and analysed its 2014-2019 Strategic Plan, the June 2014 State of the Nation (SONA) address and the 2014/15 Estimates of National Expenditure.

To date the Portfolio Committee has held meetings with SRSA, the South African Sport Confederation and Olympic Committee (SASCOC), National Lottery, South African Football Association (SAFA), Athletics South Africa (ASA), Boxing South Africa (BSA), Department of Planning, Monitoring and Evaluation and the Local Organising Committee for AFCON 2013 and CHAN 2014.

The Committee also visited SAIDS offices, attended the national lottery Indaba, attended the Workshop of SAIDS in the implementation of the WADA Codeand held its strategic planning workshop.

2. Overview of the key policy focus areas

2.1 Key Government policy documents

The BRR Report has been informed by such documents as the SONA 2014, in which it was indicated that, during the 2013/14 financial year, there was a need for all departments to align their strategic plans with the National Development Plan. As a result, the Committee, in its oversight function, needed to ensure that the department’s strategic plans were aligned. The Medium Term Strategic Framework (2014-2019) is also a key policy document that has been taken into consideration wherein Sport and Recreation South Africa is responsible for delivering Outcome 12(b), which seeks to create an empowered, fair and inclusive citizenship .

South African sport has been operating without any defined Sport System over many years, and the Department has, since 2011, developed a National Sport and Recreation Plan (NSRP), which is a roadmap of South African sport, the first of its kind since 1994. The 2014-19 Strategic Plan that the Department has presented, has been taken into consideration. The targets of the NSRP have also been included in the 2014/15 Annual Performance Plans that the department has presented during the year. The NSRP has been implemented for the first time in the 2013/14 financial year and will inform the projection and targets of the department.

The Department is playing a leading rolein the development and implementation of United Nations (UN) policies related to sport for development and peace.

United Nations Educational, Scientific and Cultural Organisation (UNESCO): Governments have accordingly drafted, pursuant to the WADA Code, an International Convention under the auspices of UNESCO to allow formal recognition of WADA and the Code. International Anti-Doping Arrangement (IADA) has evolved into a unique and effective organisation, committed to combating the practice of doping in sport. The IADA has developed into aneffective partnership between governments and their respective national anti-doping organisations (NADOs).

White Paper on Sport and Recreation for the Republic of South Africa: The White Paperp rovides the national policy direction (the “what”), and formed the basis for the development of the Government’s first ever NSRP, (the “how”) nurturing a vibrant sports system that encourages the growth and development of the sports sector and the equitable delivery of sport to all to ensure that South Africa is both an active and a winning nation

2.2 Outcome-based Approach

The following are the strategic outcome oriented goals of the department over the medium term:

  • increase citizens’ access to sport and recreation activities annually by 5% by 2016
  • oversee the transformation of the sport and recreation sector where 80% of the recognised National Federations should meet the transformation targets by 2016
  • ensure that more athletes achieve international success as a result of the support provided high-performance interventions.
  • develop enabling mechanisms to support the delivery of sport and recreation established and sustainable by 2016

· increase the perception of sport being recognised by the South African population as contributing to nation building by 5% in 2016

  • Sport and Recreation used as a strategic tool to contribute directly to all five government priorities and a minimum of four global priorities by 2016.
  • Implement internal processes and procedures to ensure that SRSA annually receives an unqualified audit report and an MPAT rating of 4 within 5 years.

2.1. Overview of revised Strategic Plan and Annual Performance Plans

The 2014-15 Annual Performance Plan (APP) is the operational tool that expresses the ideals of the 5-year Strategic Plan of the department. This document aims to assist the Committee to ensure that the departmental plans are an integral part of the NSRP to ensure that it attains the objectives and goals as indicated in the 2014-2019 Strategic Plan. In the main the APP provides the rationale expression of the five critical pillars of the NSRP, which are: An active nation, a winning nation, an enabling environment, transversal issues and sport as a tool. The 2014-15 APP was tabled with no updates incorporated on the situational analysis of the performance delivery and organisational environments. It is worth noting that there are no changes to the SRSA legislative mandates as it is reflected in their 2014-2019 Strategic Plan.

However in the current financial year, 2014/15, there were changes to the names of the programmes of the department. These changes were effected as a result of the adoption and implementation of the NSRP in the2014 Medium Term Expenditure Framework period, which sought to integrate the strategic decisions. As a result, National Treasury has approved the 2014/15 budget structure as it is aligned to the legislative and the NSRP-approved mandates. These changes have necessitated a strategic realignment of programmes by the department. It is therefore important to note that the changes have affected the historical review of programmes, due to the incorporation of new programmes and movement of other programmes to the directorates.

The committee has analysed the 2014/15 APP and the 2014-2019 Strategic plan that the department tabled based on how it intends to achieve the goals and what it has been doing to improve on its performance. There are departmental flagship programmes to increase the citizens access to sport and recreation activities includes Big walk, National School Sport championship, Indigenous games and the National Youth camp, will be rolled out for three years.

The additional mandate of the South African Institute of Drug-free Sport (SAIDS) has necessitated an increase in funding and this public entity during the 2014/15 financial year. Additional funding of R3.6 million has been secured for SAIDS in the 2014/15 MTEF period, R4.2 million for 2015/16 and R5.5 million in 2016/17. This is to ensure that SAIDS is able to comply with WADA code. Nothing has been added extra for Boxing SA, despite the request to get an extra funding.

Table 1: SRSA 2014-15 budget per programme

Programme

Audited Average Expenditure

Adjusted Appropriation

Medium Term Expenditure Estimate

R million

2010/11 to 2012/13

2013/14

2014/15

2015/16

Administration

90.8

100.3

124.9

131.3

137.1

Active Nation

500.8

539.5

592.3

615.2

642.5

Winning Nation

45.5

292.5

228.8

91.3

96.1

Sport Support

48.2

117.5

118.2

122.2

129.1

Infrastructure Support

7.2

4.3

9.3

10.4

11.0

2010 FIFA World Cup Unit

559.6

_

_

_

_

Total

1,252.0

1,054.1

1,073.5

970.4

1,015.8

The total allocation of budget for the 2014-15 financial year amounted to R970.4 million, down from R1 073.5 billion which was appropriated during the 2013-14 financial year. This budget will rise to R1 015.8 billion in the 2015/16 financial year, showing an increase of R45.4 million or just 4.4%. This difference between the 2014/15 and 2013/14 financial years is a result of the additional R160.9 million for hosting the African Nations Championship during the 2013/14 MTEF period. This budget does not yet reflect the total approved costs of the NSRP which has been estimated to be R10 billion, if it were to be fully implemented. As such, whilst parliament has approved the implementation of the National Sport and Recreation Plan, the NSRP still remains largely an unfunded mandate.

The major part of the departmental budget allocation was meant for the Active Nation programme. This programme attends to the provincial transfers of the Division of Revenue Act (DORA) grant. During the process of conducting its oversight function, the committee should engage with the provinces to ensure that the funds are spent wisely for the purpose of developing sport.

In its presentation on the 2014-2019 Strategic plan, the department has highlighted its intention to amend the legislation, this is indicated also in the 2014/15 APP, however it should be noted that the current government legislative programme has not indicated any legislation coming from the Department of Sport and Recreation during this financial year. It will be important for the department to ensure that it provides the committee with the full and accurate update of the timeframes within which it intends to complete this process.

During the 2013/14 MTEF the department allocated extra R3.6 million to SAIDS to increase its budget to R14 million up from the R13.1 million it was provided in 2012/13 MTEF period. SAIDS also managed to receive an additional R18 million grant from the National Lottery to enable it host both the WADA World Conference on Doping in Sport, in Johannesburg in November 2013 and the International Conference on Sport Law and Anti-doping for decision-makers in South Africa and Africa in the same year.

Boxing SA has continued to face some challenges which made it difficult to achieve most of its objectives. These challenges ranged from the paralysis of the board, this happened after resignations of board members and the passing of one member. The suspension of the CEO also did not make things any easier. Whilst a CFO was appointed during the course of the year, there was a slight improvement in the ratios like net profit, current assets and return on assets, this largely due to increases in revenue generation and decreases in expenditure.

3. Overview of key developments in the organisational and service delivery environments of the Department for 2013/14 and 2014/15 MTEF cycle.

Strategic Goal 1: Increase citizens’ access to sport and recreation activities annually by 5% by 2016

Table: Number of citizens with access to Sport and Recreation activities

2012/13

2013/14

2013/14

2014/15

Target

Actual

Target

Actual

Accumulate total

Expected Outcome

Citizens having access to sport and recreation activities

42000

8 653

25000

25 038

61 694

27 000

The Committee’s previous BRR report indicated that during the 2012/13 financial year the department was not able to achieve its goal on increasing the number of sport promotion projects; it declined from 28 008 participants in 2011-12 when there was 42000 targeted for the year to 8 653 participants in 2012-13. There was a 70% (19355) decline of participants who were being given access to participate in Sport and Recreationactivities in the 2012/13 financial year. The 2014-15 Annual Performance Plan indicates a target of 9150 participants in the promotional campaigns. This means that the department is anticipating an increase of about 500 participants during the 2014/15 MTEF period. With the addition of programmes like Cycle for Life, the additional sporting codes in the Golden Games and the additional recruitment of Ground-breakers for Love-life, notwithstanding an increase in budget allocation from R592.3m in 2013-14 to R615.2m in 2014-15, it should be expected that the number of participants should increase far beyond the set standards.

The 2012-13 Annual Report of SRSA indicated that 1 277 653 citizens gained access to sport and recreation opportunities through the conditional grant to provinces. Whilst the 2010-11 annual report indicated that the number of participants was 5.08 million, which was partly due to the 2010 FIFA World Cup mobilisation. It is concerningthat there is a decline of participants in sport and recreation as this implies ineffective execution of the transformation mandate of increasing access and opportunities for all South Africans in Sport and Recreation. It is expected that the changes and realignment of departmental programmes will provide a bigger pool of sport and recreation participants.

Strategic Goal 2: To oversee the transformation of the sport and recreation sector where 80% of the recognised National Federations should meet the transformation targets by 2016

Table: National Federations assisted during 2012-16 MTEF period

2012/13

2013/14

2014/15

2015/16

Target

Actual

Target

Actual

Expected Outcome

Expected outcome

NFs meeting transformation targets

60

68

60

68

60

60

Source: 2014/15 SRSA Annual Performance Plan

As per the latest available list provided by SASCOC there isapproximately 76 affiliated federations. During the 2012/13 financial year the department managed to assist 68 (89%) sporting federations which was an increase from 54 (71%) that were assisted in 2011/12. The 2013/14 report shows that the department managed to assist 68 National federations, indicating a 113% achievement from the target of 60 federations. During the 2014/15 financial year the department intends to assist 60 national federations. The indicator for this goal stipulates that the measure of performance is a percentage of these recognised federations that would have met the transformation targets; the goal is to see 80% of the federation achieving the targets by 2019. It should be noted that the number of the federations being assisted will reduce, this will imply thatthe federations that will not be included in this year’s budget will struggle to survive once again because there will beless budget and their programmes may not grow.

The 2014 report of the Eminent Persons Group on Transformation in Sport, has highlighted that transformation is not only limited to the quota system but should be applied multi-dimensionallyto include: progress to peak performance, changing demographic profiles, institutional governance, skills and capability development, employment equity and preferential procurement. The transformation scorecard for all federations is based on measuring these dimensions and SASCOC will assist to monitor and evaluate the federation’s performance in this regard.

Strategic Goal 3: To ensure that more athletes achieve international success by 10% in 2016

Table: Athletes assisted by means of Scientific Support

2012/13

2013/14

2014/15

2015/16

Actual

Actual

Expected performance

Expected performance

Support to athletes assisted by means of scientific support

90

58

40

0

(Phase out)

Ministerial Sport Bursary

-

28

40

45

Source: 2014/15 SRSA Annual Performance Plan

The introduction of the Ministerial Sport Bursary programme in the 2014/15 financial year is aimed at ensuring that athlete’s career is given a multidimensional support and resources are channelled strategically to provide the necessary scientific support through institutions that have the infrastructure. The new programme managed to assist up to 28 athletes during the 2013/14 financial year. The old programme of residential support was ceased in December 2013. During the 2012/13 financial year 90 athletes from the old programme were supported and in the 2014/15 financial year only 58 athletes were still remaining in the athletes support programme.

The 2013/14 annual report indicates that 71 athletes were withdrawn from the programme after their contracts lapsed, leaving only 58 athletes and coaches in the programme. The 2014/15 Annual Performance Plan indicated that there were only 40 athletes who continue to be supported in this programme. The new Ministerial Sport Bursary programme aims at providing 40 athletes with the support during the 2014/15 financial year. The budget for the 2014/15 has been reduced to R91.3 million, from the R228.8 million that was allocated in the 2013/14 year. The reduction comes as a result of there not being any major event that would require additional funds.

There is a need to establish a baseline to determine how many athletes have attained the international success. The department will have to furnish the Portfolio Committee with the concrete plans and provide clear targets of how the programme will unfold.

Strategic Goal 4: develop the enabling mechanisms to support the delivery of sport and recreation established and sustainable by 2016

The intended outputs for the 2014/15 financial year, as established in the 2014-2019 strategic plan are to establish the norms and standards for facilities and to complete the national facility audit. SRSA has set a target of completing an audit of facilities in all the 9 provinces during the 2014/15 financial year. The usage of the 15% of MIG funds intended for the building of sport and recreation facilities in rural areas will be continued to be monitored. However since the implementation of this agreement has been gazetted in May 2011, little progress has been seen in this regard.

In the 2013/14 financial year the department continued with the audit of facilities, although in the report is not clear how far the process is and how many facilities have been audited in how many provinces. The Director General reported that they have stopped to implement the Geographic Information System, which was supposed to be completed by the end of last financial year due to the huge financial burden it may have on the departmental budget. Alternative means of conducting this data collection activity should be sought and the department should prioritise this as a matter of urgency, as it has implications on the National facilities plan and the NSRP.

The department has been engaging SALGA around the possibility of transferring the ring-fenced grant from MIG to the budget of SRSA. Whilst the 2013/14 annual report indicates that progress had been made in this discussion, a speedy resolution is needed. A thorough plan would be needed to ensure that SRSA can properly monitor and has the capacity to administer the MIG conditional grant. The plan is important in order to ensure that SRSA continues providing support to the municipalities with planning and implementation of the municipal sport and recreation facilities and consequently monitoring of the municipalities’ performance and compliance with conditions applicable to the sector.

Sport Trust plays a key role in the Ministerial outreach programme of building facilities in rural areas. In the 2013/14 financial year three facilities in Carolina, Tlagameng and Mabopane that were built through this programme. During the term of the 4 th parliament, the Portfolio Committee, paid a visit to the facility in Carolina and was satisfied with the status and type of the facility built.

The NSRP clearly states that 3% of the Mass Participation and development conditional grant should be allocated to help the provinces with the establishment of Provincial Sport Councils. The 2013/14 annual report indicates that this allocation was increased to 4% since the provincial sports councils are at different levels of structuring, operation and governance. Whilst this output has been left to SASCOC to monitor, allocations to provinces should have a measure of how funds have been allocated to sport councils. An effort should be made to avoid delays in transferring funds to provinces.

Strategic Goal 5: Sport and Recreation used as a strategic tool to contribute directly to all five government priorities and two United Nations priorities by 2016.

The department has repackaged and expanded the Sport for Social Change programme, which should catalyse change in the environment, HIV and AIDS a programmes for sport against crime. These are goals that contribute to the Government priorities of Goal 12(b) and the, which seeks build “ an empowered, fair, and inclusive citizenship ” and promote social cohesion. The programmes that are meant to assist in this regard are strategically linked to the other programmes of the department, these may require the department to monitor any change or progress that take place over time.

The 2014/15 APP indicates that the department will continue to lead the country in playing a role in matters of global importance within UNESCO, UN Sport for Peace and Development International Working Group (SDP IWG), IADA and WADA. South Africa holds the chairmanship of the board of SDP IWG. It also holds the Secretariat of the African Union Sport Council Sport Development Region Five. Strategic partnerships with IBSA and BRICS, which will be strengthened through participation in joint projects aimed for the preparation of 2014 and 2018 FIFA World Cups. For the 2014/15 financial year, the department has promised to cut down on cost of international travel by reducing the number of delegates.

The South African contribution in the international sphere is notable in the 2013/14 report and should be commended. It will also be important that the Committee be briefed and provided with the country’s report on theseimportant international forums. This will help the committee to conduct proper oversight of the programmes that are implemented for these agreements in terms of the importance and the benefits of these agreements.

Strategic Goal 6: Implement internal processes and procedures to ensure that SRSA annually receives an unqualified audit report.

In its previous year the Portfolio Committee raised a concern regarding the findings of the Auditor General in the 2012/13 MTEF period and has been engaging both the department and AG for progress regarding the implementation of the intervention measures that were proposed. During the 2013/14 MTEF, the Auditor General conducted an audit in two programmes, Sport Support Services and Mass Participation, and could not raise any material findings about the reliability and usefulness of the performance information. This is a huge improvement from what had been happening in these two programmes in the 2011/12 and 2012/13 financial years. The Portfolio Committee would like to commend the department on this achievement and emphasise the need for maintaining good governance and clean audit, this will ensure that SRSA is in compliant with the legislation.

SRSA received an unqualified audit report during the 2012/13 MTEF period and had set a plan to attend to the recommendations contained in the AG management letter to address some of the key issues that have been raised. The 2012/13 AG report had indicated that the department is not consistent in complying with their predetermined objectives, where the information received could not be measured and was not useful. In addition to this the information received could not be found to be reliable since the performance information on Sport Support Services and Mass Participation was incorrect, due to management’s inability to develop standard operating procedures for accurate recording of actual achievements. This indicator had also received a qualified report from the AG in the 2011/12 MTEF period, showing that the department had not done anything to improve the situation. However the 2013/14 MTEF period has indicated that there is an improvement, SRSA had improved on the management of performance information.

SAIDS

The introduction of the new WADA code, which will be implemented at the beginning of 2015, will increase the activities and workload of SAIDS. This will require that SAIDSassesses the possibilities of building a small infrastructure that will support the new code requirements of processing doping intelligence information. Implementing the code there will be an impact on the organisational operations, which has necessitated the need to review the job descriptions in order to develop this new organisational structure. The new structure will be implemented in 2015.

Education is an important role that SAIDS plays and during 2013/14 MTEF 16 education officers were appointed in 7 provinces, excluding provinces like Mpumalanga and North West. This expansion of staff will have an impact on the entity’s outreach programmes and there is a need for SAIDS to review its current model on education and outreach, so that it can be effective and efficient. In the 2013/14 financial yeara number of education seminars were held including Regional Anti-doping, one training for doping control officers, a total of 49 workshops held and 24 outreach programmes. These included an international symposium on international sports law and anti-doping.

Boxing SA

Boxing SA managed to hold a stakeholders Indaba in the last financial year with the intention of reviewing the legislative mandate of Boxing and reorganising the sustainable systems to improve the entity’s revenue, the broadcasting and the welfare of Boxing SA licences amongst other things. A CFO was appointed to improve and tighten the governance structure of Boxing SA. Some of the strategic goals achieved include the provision of training for boxers in partnership with CATHSETA. A total of 84 fights were staged across different categories, 110 new boxers passed their sparring, thirteen (13) of which were females and there were up to 906 licensees, 43 of which were females.

The visit by one of greatest boxers, Floyd Mayweather to promote boxing programmes, was one of the highlights of the year. South Africans continued to do well in the international bounds, Hekkie Budler (Mini flyweight) and Simphiwe Vetyeka (featherweight).

Boxing SA continued to be marred by some governance challenges during the 2013/14 MTEF period. The board became paralysed in November after one of the members passed on and a replacement was not immediately appointed by the minister. However in May 2014, during the 2014/15 MTEF the new board was appointed by the minister. The Board had suspended CEO and appointed an acting CEO who is also currently on suspension.

4. Overview and assessment of financiaL AND SERVICE DELIVERY performance

4.1. Overview of Vote allocation and spending (2010/11 - 2015/16)

Table: New Programmes for 2014/1

Programme

Audited Average Expenditure

Adjusted Appropriation

Expenditure Total Average (%)

Medium Term Expenditure Estimate

R million

2010/11 to 2012/13

2013/14

2010/11 to 2013/14

2014/15

2015/16

Administration

90.8

100.3

124.9

131.3

131.3

137.1

Active Nation

500.8

539.5

592.3

615.2

615.2

642.5

Winning Nation

45.5

292.5

228.8

91.3

91.3

96.1

Sport Support

48.2

117.5

118.2

122.2

122.2

129.1

Infrastructure Support

7.2

4.3

9.3

10.4

10.4

11.0

2010 FIFA World Cup Unit

559.6

_

_

_

_

_

Total

1,252.0

1,054.1

1,073.5

970.4

970.4

1 015.8

Source: ENE 2014

The total allocation of budget for the 2014-15 financial year amounted to R970.4 million, down from R1 073.5 million in the 2013-14 financial year. Expenditure increased from R848.4 million in 2012/13 to R1.07 billion during the 2013/14 financial year due to the additional allocation of R160.9 million over the MTEF period, of which R120 million was allocated to the three host cities of the African Nations Championship (CHAN) in January 2014. During the 2014/15 MTEF period the allocations will increase by R3 million, and by R4.7 million in the 2015/16 MTEF period. This budget does not yet reflect the total approved costs of the NSRP which has been estimated to be R10 billion, if it were to be fully implemented.

During the 2013/14 MTEF the main cost drivers were Mass Participation Programme which accounted for R 573.2 million (53.4%) of the actual expenditure and Sport Support Services R219.9 million (20.4%). Of the R 573.2 million of the Mass Participation Programme, R497.5 million (87%), is transferred to provinces. Transfers to federations and other entities like lovelife, Sport Trust, Boxing SA and SAIDS also accounted R160.3 million (72.8%) of the actual expenditure of the Sport Support Services. In conducting its oversight function, the committee will engage with the provinces to ensure that the funds are spent wisely for the purpose of developing sport. Whilst the federation should be closely monitored on the implementation of the grant framework signed with the department across two tiers, guaranteed funding, intended for administration and conditional funding, which is essentially meant for addressing matters related to governance, transformation and performance.

The 2014/15 Annual performance and the 2014-2019 Strategic Plan indicated that programmes have been renamed and other sub-programmes shifted in order to align to the mandate of the NSRP. Notable changes include name changes to the current structure, Programme 1 still remains that of Administration, Programme 2 is now Active Nation, previously Sport Support Services, Programme 3 is called Winning Nation, previously Mass Participation, Programme 4, Sport Support previously International Liaison and Events and Programme 5: Infrastructure Support, it was previously called Facilities Coordination.

Changes effected include the following, Programme 1: Administration consists of 6 sub-programmes down from 7 sub-programmes of the old structure. Of note is the establishment of the offices of DDG: Corporate, previously Chief Director; Corporate Services and DDG: Sport and Recreation Service which was previously office of the COO. The strategic support sub-programme has been separated to provide a separate executive support, meaning the functions have been reduced and the Strategic Stakeholder management function has been expanded.

Programme 2 changed the name to Active nation to meet the needs of the NSRP and consists of 5 sub-programmes, up from 3 in the old structure. The names of the sub-programmes also changed accordingly. New sub-programmes include the Active Nation and the Provincial Sport Support and Coordination.

The changes in Programme 3, Winning Nation, sees the establishment of two new sub-programmes out of 4 that it has. These new sub-programmes are Winning nation and Recognition system.

Under Programme 4: Sport Support consists of 3 sub-programmes down from 5 which were in the previous structure. This programme hadits name changed and the functions were expanded especially under the sub-programme of Sport and Recreation services to include Transformation, Sport Administration Support House, financial resources, Sport and the environment, Domestic competitions, International competitions, Geopolitical Sport boundaries, Sport councils and Athletes and technical officiating support amongst other service. One important change is the fact that Club development will no longer be a sub-programme but will move to part of programme 2.

The notable changes in Programme 5: Infrastructure Support, include the establishment of the 3 sub-programmes, up from 2 due to the introduction of the new sub-programme called Infrastructure support. Its mandate will also expand to meet the needs of the NSRP. The department has to ensure that the MIG will be managed under the sub-programme of Sport and Recreation Facility Management.

It is important to also note that the in the 2014/15 Annual Performance Plan of the department, themajor part of its budget, R615.5 million (63%) allocation has beenallocated to the Active Nation Programme. A total of R698.8 million (72%) will be transferred to provinces, the entities, and non-profit institutions.Only R269.5 million (27%) is meant for departmental current payments and operations. The capital assets budget is R2.2 million (0.2%), which is meant for office equipment and software and other intangible assets. The trend will continue in the next financial year. This indicates that there is no budget for the building of sport facilities or sport infrastructure, an indication that SRSA does not have a mandate to build sport infrastructure but should work closely with municipalities to influence and coordinate the function of building facilities through the Municipal Infrastructure Grant (MIG) and the Urban Settlement Development Grant (USDG).

In the past the Department had an establishment of 206 funded posts. However as a result of the newly established structure, there are currently 239 funded posts. The number of filled posts decreased from 180 in 2008/09 to 171 in 2011/12 due to the closing of the 2010 FIFA World Cup unit in the 2010/11 financial year. At the end of 2013/14 MTEF period there were 162 filled posts with 77 posts vacant, this includes the 17 newly added posts whilst 15 staff members left the department in the same period. The Portfolio Committee has always recommended that the vacant posts be filled as a matter of urgency in the past three financial years, but there has not been much improvement in this regard. A moratorium that the department put on filling the vacancies in 2012/13 due to the restructuring had been the reason posts were not filled and internal training that was provided to staff for internal recruitment has not yielded positive results. In 2013/14 MTEF posts were to be filled, however there has been a deviation due to internal staff not meeting the requirements. Progress should be shared on the Department’s intention to work towards a full staff complement.

The following table illustrates the budget allocation for 2013/14 and budget estimates for 2014/15 and 2015/16, with further details per programme. The Department is tasked with managing a total budget of R 1.063 billion. The following table sets out the ratios of the programmes in relation to the total appropriated funds for the Department.

PUBLIC ENTITIES

Table: Expenditure trends of the public entities

Programme

Audited Average Expenditure

Audited expenditure

Medium Term Expenditure Estimate

R million

2011/12 to 2012/13

2013/14

2014/15

2015/16

Boxing SA

10 112

6 897

6 552

7 945

South African Institute for Drug Free Sport

11 604

15 876

14 024

14 895

Total

21 716

22 773

20 576

22 840

The additional allocations were due to improved conditions of service for Boxing South Africa and the South African Institute for Drug-free Sport, increased operational costs for Boxing South Africa, internal audit functions, the debt of Boxing South Africa, spending on consultants and preparation of athletes for the Olympics and Paralympics (ENE 2013 ).

4.2 Financial performance 2013/14

Table: 2013/14 expenditure trends per programme

Programme

Audited Outcome

Expenditure Total

Adjusted Appropriation

Medium Term Expenditure Estimate

R million

2012/13

2013/14

2014/15

2015/16

Administration

100.3

114.5

131.3

137.1

Sport and Recreation Service Providers

213.9

219.9

91.3

96.1

Mass Participation

506.9

573.2

615.2

642.5

International liaison and events

229.6

160.6

122.2

129.1

Facilities Coordination

3.2

4.5

10.4

11.0

Total

1,054.0

1,073.0

970.4

1 015.8

Programme 1: Administration

The expenditure under this programme grew from R100.3million in 2012/13 to R114.5 million in 2013/14 MTEF period. Expenditure on the compensation of employees amounted to R56.2 million (49%) and the goods and services accounted for R57.1 million (49.8%). The adjusted appropriation was R62.1 million which went down to R56.5 million after the virements were done. There was a virement of R5.6 million (9%) out of the compensation of employees (R56.2m), this is more than the allowed threshold of 8% for virements. This meant that the corporate service sub-programme had an excessive virements of up to R7 million (15%) of its total expenditure out of the current payments. The virements for office accommodation amounted to R2.4 million (12%) of the total expenditure on accommodation.

The variance occurred as a result of the vacant posts not filled and accommodation costs that were not used due to delays to move to new premises. There was a general increase in expenditure on compensation of employees from R53.3 million in 2012/13 to R56.2 largely due to the filling of vacancies in senior management posts such as Information Technology and Supply Chain Management, as well as new posts that were created as a result of restructuring in the Ministry.

The 2014/15 first quarter expenditure report indicates that the operational expenditure was R22.7 million, which was largely on the compensation of employees and goods and services. This expenditure has decreased by R12 million (34.5%) when compared to the same period last, this has been so because of low spending on goods and services.

Programme 2: Sport Support Services

Expenditure under this programme grew from R213.9 million in 2012/13 to R219.9 million in 2013/14 MTEF period. Key sub-programmes include: Programme management, sport and recreation service providers, club development, education and scientific support. The club development model is being revised in line with National Sport and Recreation Plan, as a result there was a virement of funds in the current payments of this programme of about R1.9 million (90%). The department managed to spend 100% of its allocated budget in this programme. During the year under review the department managed to assist 68 National federations, up from 63 in 2012/13,who complied with the minimum qualification requirements to receive funding.

Expenditure in the scientific support sub-programme increased significantly in 2013/14 to support high performance institutes to train athletes more intensively. A total amount of R4.9 million was a virement into the scientific support sub-programme, increasing the total expenditure to R51.5 million. Furthermore, a transfer to the South African Sport Confederation and Olympic Committee was introduced in 2012/13 to support high performance sport. In 2013/14 due to lack of cooperation from SASCOC, no reports were received from SASCOC. The DG should provide the report regarding the intervention to follow-up on this matter.

The roll-out of the new club development system will continue in phases, of the two provinces currently being piloted, the Mopani region in Limpopo showed more progress. A club smart-kit tool has been developed.

A total of R160.3 million (73%) was spent on transfers to non-profit institutions (Federations) within the sport and recreation service providers sub-programme. A closer observation of the expenditures to these non-profit institutions indicates that SRSA transferred R36 million to LOC CHAN 2014, R33.6 million to Lovelife, R 12.2 million to SASCOC and R22.9 million to Sports Trust. At the same time other federations received additional funds after adjustments were done, these include an additional R3 million allocated to SAFA, R4.7 million was added to SARU, R9.7 million to Sport Trust and R4.3 million to SASCOC.

Programme 3: Mass Participation

The Mass Participation programme is the largest programme of the Department, with a total expenditure of R573.2million in 2013/14 MTEF period, up from R506.9million from 2012/13. This sub-programme promotes sustainable participation of people who had been previously excluded, strengthening of school sport through the training of coaches, developing school sport by monitoring service level agreements with federations and the identification of talent. Key sub-programmes include:

  • Programme Management
  • Community Mass Participation
  • School Sport.

During the year under review the department had planned to assist 4 000 schools participate in the sport leagues, which would have increased from the 15 662 schools that were assisted in 2012/13. However due to the lack of cooperation with CATHSETA and SASCOC to provide school sport training, this target was never achieved.

The main cost drivers of this programme, is the transfers to provinces, which amounted to R497.5 million (86.7%) in 2013/14 up from R469.6 million provided in 2012/13. There was a roll-over amount of R18.1 million by four provinces, which was transferred to them during 2013/14 financial. Three of those provinces went to over spend, with Mpumalanga over spending by R53.6 million (120%) from the R44.7 million that they received. The other province that over-spent was the Eastern Cape, which spent R65.3 million (107%) from the R61.3 million they received.

The budget of School sport sub-programme increased significantly from R12.1 million in 2011/12 to R42.6 million 2012/13, and this increase is in line with the increase in the number of schools supported to participate in schools leagues

Mass participation programme was the biggest beneficiary of the virement allocation, receiving a total of R16.7 million largely from administration program (R10.2 million), Facilities coordination (R4.4 million) and International liaison and events programmes (R3 million). It should be noted that the largest virement came from facilities coordination R4.4 (47%), of the total allocation in this programme. National Treasury can only allow 8% of virements within programmes.

Some of the service delivery performance in the Mass Participation programme:

- 25038 people were provided with sport and recreation opportunities

- 1100 people participated in the National Indigenous Games

- 8000 people took part in the Big Walk programme nationally

- 2500 Young people attended the Youth camp

- 8000 learners took part in the National School Sport Championship

Programme 4: International Liaison

This programme manages international exchange programmes, supports travel arrangements for sports people and encourages the staging of major sports events and the promotion of sports tourism. Key sub-programmes include:

  • International Liaison
  • Major events

During the 2013/14 MTEF period there was a R160.7 million (100 %) spending of the budget allocated to the programme. The expenditure had been reduced from R229.6 million of 2012/13 MTEF period. About R156 million (97%) of the expense was transferred to municipalities for hosting CHAN 2014 tournament. LOC CHAN spent R36 million and R120 million was a direct transfer to the City of Cape Town (R63 million), Mangaung (R28.5 million and Polokwane (R28.5 million).

Some of the service delivery performance in the International liaison and Events programme:

- SRSA provided technical assistance to Lesotho regarding COSAFA U/20 Youth Championship

- Bilateral consultation were held with Jamaica and Bulgaria

- Implemented a bilateral agreement that was signed with Cuba for students studying for a Physical Education degree in Cuba

- Supported 14 multilateral agreements

- Assisted Tennis SA to host 2013 Soweto Open

- Hosted the 4 th WADA World conference on Anti-doping

- Hosted the 2014 CHAN

- Supported the launch of Kagiso Dikgacoi Foundation in London (UK)


Programme 5: Facilities Coordination

This programme was established to facilitate the provision and management of sustainable sport and recreation facilities. To achieve this purpose National Treasury had made an allocation of R4.87 million in the 2012/13 MTEF period and this was increased to R9.2 million in 2013/14. The final appropriated statement indicates that there was a virement amount of R4.4 million (47%) that was moved out of the programme leaving a balance of R4.5 million that was spent in this programme. This far exceeded the treasury threshold of 8%.

The bulk of this allocation, R2.4 million, went to planning and advocacy sub-programmes whilst the remainder of R1.9 million was allocated to the technical support sub-programme. There is no indication of where the funds were transferred to, however as indicated earlier the Mass participation programme was the beneficiary of the virement funds from all the programmes. Up to R2 million (45.6%) of the expenditure in this programme went to the compensation of employees and the other amount, R2.5 million (55.5%) on goods and services.

There were delays experiences in the completion of the Sport for change programme. The scope of the GIS changed, the Department has not completed developing the database on Sport and Recreation facilities information due to the delay in the approval of the classification framework.

PUBLIC ENTITIES

South African Institute for Drug-Free Sport.

The Auditor-General has again provided an unqualified audit opinion with regard to the South African Institute for Drug-free sport financial statements. This shows a consistency of good financial performance by the entity. SAIDS budget allocation increased slightly from R13.2 million allocated in 2012/13 to R14.7 million over the 2013/14 MTEF period. The allocation has been increased to R14.8 million in 2014/15 MTEF period.

In the financial year under review, the budget of the agency increased substantially due to the R18 million grant that was received from the National Lotteries Board.

The Auditor General has again made an emphasis on the lack of evidence regarding the procurement of goods and services below R500 000 without obtaining the required price quotation. There is still lack of consideration of the PFMA when it comes to taking effective steps to prevent irregular spending in the entity. As a result there was an over expenditure of R182 000, although this is still better than the over-expenditure of R1.4 million incurred during the 2012/13 financial year. Whilst the statement on financial performance indicates clearly the revenue and expenses incurred, the explanatory notes on the deficit, do not show the revenue received from the National Lotteries Board, which could have had an impact on the deficit. It is accounted for separately though under revenue received.

Administrative programme expenses increased by 17% from R5.2 million in 2012/13 to R6.1 million in 2013/14, this was largely due to payroll cost of R2.8 million (46%) which increased from R2.3 million in 2012/13. There was a decline in expenses of the Education programme, from R2.1 million in 2012/13 to R1.7 million in 2013/14. There objectives were delivered with less resources in this programme thus resulting in efficient use of resources.

The international projects costs increased substantially from R321 000 in 2012/13 to R14 million in 2013/14 due to hosting the 4 th WADA World conference on Anti-doping. The Corporate services expenses also increased substantially from R689 000 in 2012/13 to R1.2 million in 2013/14 due to increased board activities and the hosting of the Sport law Conference and the increased spending in travelling and accommodation, from R91 000 in 2012/13 to R209 000 in 2013/14.

Doping control programme has a 12% increase in spending, from R8.2 million of 2012/13 to R9.2 million in 2013/14. This increase was largely due to the increased activity especially the high costs of blood testing. Another reason for the increase was due to travelling, accommodation and the reimbursement of the newly recruited DCO, which increased from R2.1 million in 2012/13 to R3.1 million in 2013/14. The courier costs increased by 26% from R690 000 in 2012/13 to R870 000 in 2013/14.

The entity is technically insolvent based on their current assets and current liabilities, the ratio is at 0.68, meaning that it may be difficult for the entity to pay short-term liabilities, particularly if there could be a significant delay in converting inventory into cash. The current inventory amounts to R395 000, which is also insignificant to make up for the potential insolvency.

The committee would like to emphasise the need to adhere to supply chain management procedures in order to curb irregular expenditure. This is in line with the matters raised by the AG, as a result SAIDS will have to develop and implement policies and plans to address this irregular expenditure.

Boxing South Africa

In the last financial year the AG had given Boxing SA an unqualified audit opinion. The situation regressed during the 2013/14 financial year, where the AGSA could not express an opinion regarding the entities compliance with legislation and internal control. The AGSA also found that there were significant misstatements on material targets and these could not be reliable when compared to the supporting information and documentation. As a result there were no material findings raised on the usefulness and reliability of the reported performance information for Programme 3, Marketing, Branding, Communication and Events co-ordination.

Boxing SA had been allocated R9.1 million in the 2013/14 MTEF period and this was increased to R10.1 million in 2014/15 MTEF. There three programmes that the entity manages, it programme 1 governance and administration with three sub-programmes, Programme 2; Compliance and Enforcement with three sub-programmes and Programme 3, Marketing, Branding, Communication and Events co-ordination comprising also of three sub-programmes. As indicated earlier Programme 1 had challenges of board meeting due to resignations and the death of a member, the board could not quorate. However during the 2013/14 MTEF period the entity incurred an over expenditure of R7.9 million from the budget of R6.9 million largely due to legal fees. The salary bill accounted for R3.77 million (47.7%) of the total expenditure in this programme.

There was also an over expenditure of R2.3 million in Programme 2 from the budget of R2.1 million that had been allocated, this was largely due to the training and skills development provided to 39 boxers, 4 less than the planned target. The initial budget allocated for this line item was R12 000 but went up to R271 000 for a target of 43 boxers. It is clear that management did not adequately budget for this activity resulting in this over-expenditure. Programme 3 was never budgeted for and hence no activity took place in this programme. The entity still faces litigation, which has been identified as a contingent liability in the current year.

Table on irregular expenditure on Boxing South Africa

Entity

2011/12

2012/13

Total Accumulated 2012/13

2013/14

Boxing SA

714 944

101 767

1 537 019

924 312

Source: Boxing SA Annual report 2013/14

The Auditor General established that Boxing SA had irregularly spent R924 212 during the year under review due to their failure to comply with supply chain management regulations. The entity has reversed the gains made during the 2012/13 where they were able to reduce irregular expenditure from R714 944 in 2011/12 toR101 767 in 2012/13. The accumulated irregular expenditure wasR1.53 million at the end of 2012/13 financial year

4.3 MTEF 2014/15 Allocations

National Treasury has indicated that the country’s current fiscal position does not allow any room by making additional funding available, however there still has to be progress towards creating an inclusive economic growth and job creation amid the tough fiscal environment. This will require new priorities and an expansion of existing programmes through reprioritisation within the existing budget. As a result of this, there are difficult choices that have to be made in choosing between spending priorities and in deciding on the sequence of programme implementation. Due to the budgetary constraints, departments are required to efficiently manage the costs pressures related to changes in the inflation rate, exchange rate or any other factors affecting input prices.

During the 2012/13 financial year expenditure spending focus over the MTEF period was expected to continue promoting mass participation, mainly through the mass sport and recreation participation grant, and on the development of sport at various levels by supporting school sport, club development and sport federations, including hubs. Whilst the overall expenditure has been on the decline between 2010/11 and 2013/14, following the completion of the 2010 FIFA World Cup projects, it is expected to decrease further from R1.1 billion to R970.4 million in 2013/14 and 2014/15 respectively due to the once-off allocation of R158.5 million in 2013/14 for the African Nations Championship. Whilst the National Sport and Recreation Plan is being implemented, the budget allocation has not considered the cost implications for its implementation.

The 2014/15 budget projects an increase in the expenditure of compensation of employees, from R85.9 million to R103 million in 2013/14 and 2014/15 consecutively. This is an indication that SRSA plans to fill the vacancies, mainly between levels 7 and 10. There were 42 vacant posts in November 2013. One other expense that will increase is the spending on lease agreement, where the department intends to move to new premises to accommodate the bigger staff complement. The Auditor General had observed in the previous financial years that the department’s performance was affected by the high number of vacancies. The increase funding allocated for compensation of employees, will require the department to take serious steps in fulfilling this task.

Additional funding of R3.6 million has been secured for SAIDS in the 2014/15 MTEF period, R4.2 million for 2015/16 and R5.5 million in 2016/17. This is to ensure that SAIDS is able to comply with the World Anti-Doping Code (WADA Code). Nothing has been added extra for Boxing SA, despite the request for additional funding.

Table 1: SRSA 2014-15 budget per programme

Programme

Audited Average Expenditure

Adjusted Appropriation

Expenditure Total Average (%)

Medium Term Expenditure Estimate

R million

2010/11 to 2012/13

2013/14

2010/11 to 2013/14

2014/15

Administration

90.8

100.3

124.9

9.5%

131.3

Active Nation

500.8

539.5

592.3

51.8%

615.2

Winning Nation

45.5

292.5

228.8

16.1%

91.3

Sport Support

48.2

117.5

118.2

8.7%

122.2

Infrastructure Support

7.2

4.3

9.3

0.5%

10.4

2010 FIFA World Cup Unit

559.6

_

_

_

_

Total

1,252.0

1,054.1

1,073.5

91%

970.4

National Treasury (2014)

Administration

The spending focus over the medium term will be on increasing participation in school sport and developing sport clubs as well as sporting hubs within communities. The main areas of expenditure will therefore be the Active Nation program, which consist mainly of transfers of the mass participation and development grant to provinces, and the sport support programme from which transfers to sport federations are made. This expenditure accounts for the dominance of transfers and subsidies in the departmental expenditure.

The need to provide the necessary oversight in relation to actual use of these transfers funds accounts for the growth in expenditure on travel and subsistence over the MTEF period. Overall expenditure decreased between 2010/11 and 2013/14, following the completion of the 2010 FIFA World Cup projects, and was expected to decrease further between 2013/14 and 2014/15, from R 1.1 billion to R 970.4 million, due to the once-off allocation of R 158.8 million in 2013/14 Africa Nations Championship. There were 42 vacant posts in November 2013, mainly between levels 7 and 10 and the Department should fill these over the medium term and these have since increased to 77 vacant posts in the current financial year due to the new structure. With the increased expenditure on the compensation of employees over the MTEF period, it is expected that the department will fill the vacant posts as a matter of urgency. Spending on operating leases is also projected to grow, due to the Department’s planned move to new premises in 2013/14 to accommodate the bigger staff complement.

In future the spending focus over medium term will be on providing corporate and other support services to the Department, which accounts for the dominance of corporate services subprogram, and providing for the Department’s accommodation needs. Thus, the most significant items of expenditure in the programme are compensation of employees, travel and subsistence. The lease for office accommodation constitutes 7 per cent of the budget between 2010/11 and 2013/14 and is expected to increase over the medium term after the Department’s expected move to new premises at the end of 2013/14. Spending on consultants is equivalent to 1.7 per cent of expenditure on compensation of employees in 2012/13. Consultants mainly provide legal and audio visual services and conduct external auditing investigations.

Active Nation

The objective of this programme is to improve the well-being of the nation by stimulating lifelong participation in active recreation, through facilitating the delivery of at least 3 programs. The spending focus over medium term on this programme will be on promoting mass participation in sport and recreation through the mass participation and sport development conditional grant, which supports school sport, club development, sporting hubs, sport academies and sport councils and accounts for dominance of expenditure on transfers to provinces in the program. An average of 85 per cent of the program’s total allocation over the medium term will be spent on the grant in the provincial sport support and coordination subprograms. The management and oversight exercised by the Department in respect of the grant partially accounts for the increased expenditure on travel and subsistence, which falls under the community sport and school sport subprograms.

School sport remains a priority for the Department as it is the bedrock for sport development in the country, as reflected in the growth in expenditure in the school sport sub-programme over the MTEF period. The main activity in this sub-programme is the South African national school sport championship. Staged annually, the event explains the relative significance of expenditure on travel and subsistence and venues and facilities within expenditure on goods and services. The decreases in expenditure in this sub-programme in 2013/14 were due to the once–off shifting of funds to the community sport sub-programme for the Nelson Mandela Sport and Culture Day. The programme had a funded establishment of 23, with 1 vacancy, at the end of November 2013. It is expected that all the vacant posts will be filled during the 2014/15 MTEF period. In addition contract positions set to be created in 2014/15 to assist provinces in implementing their respective school sport programs account for the growth in expenditure on compensation of employees over the medium term.

Winning Nation

The purpose of this; is to support the development of elite athletes. One of the crucial objectives of this programme is to contribute to the nation building by financially supporting; monitoring and evaluating the services delivered by the South African Sports Confederation and Olympic Committee (SASCOC) in preparing and delivering South African teams for participation and selected international multi-sport code events on an ongoing basis. The newly established sub-programme of Winning nation, the other newly introduced sub-programme is the Ministerial Sport Bursary Programme, which replaces the Scientific Support. This programme has ceased to support 31 athletes in December 2013 and will continue to support 40 in 2014/15 until its complete phase out by the end of the financial year. Scientific support will help coordinate talent scouting using school sport competitions as a tool.

The spending focus over the medium term will be on providing scientific support to athletes as reflected by the additional allocation of R13.3 million for the transfer to the South African Institute for Drug-Free Sport. The additional funds are to assist the institute in ensuring that South Africa complies with the World Anti-Doping Agency (WADA) code which will be implemented in the beginning of 2015.

Expenditure on contracts in the scientific support sub-programme grew significantly from 2010/11 to 2013/14, due to the Department intensifying support for the elite athletes through high performance centres in preparation for major events over this period, including the 2012 Olympic Games. The fluctuations in the transfers to non-profit institutions are due to once-off allocations of R 84 million in 2012/13 African Cup of Nations, and R36 million in 2013/14 for the 2014 African Nations Championship (CHAN). As a result, spending in the major events sub-programme fluctuates between 2010/11 and 2013/14.

The recognition systems sub-programme was introduced in 2011/12. Expenditure has fluctuated (R17.1m in 2012/13, to R21.9 in 2013/14 and down to R18.8m in 2014/15 MTEF period) in this sub-programme from inception, mainly due to financial incentives paid to athletes for their achievement at international events in 2011/12 and 2013/14. These payments were made through transfers to the South African Sports Confederation and Olympic Committee and are reflected under transfers to non-profit institutions. As part of the Cabinet-approved budget reductions, the recognition systems sub-programme expenditure will be reduced by R 3.4 million over the medium term. The impact of this reduction on service delivery will be minimised as private sector donors are brought in to augment funding for the recognition of performances.

The number of personnel in this programme is expected to increase from 17 in 2013/14 to 23 in 2016/17. This accounts for the increase in expenditure on compensation of employees over the medium term as vacant posts are filled to provide the capacity required to support the implementation of the newly endorsed national sport and recreation plan. The Department delayed filling these posts to ensure that the new organisational structure would be aligned with this plan.

Sport Support

The purpose of this; is to develop and maintain an integrated support system to enhance the delivery of sport and recreation. The objective of this programme is to contribute towards uniting the country by supporting 60 national sports federations and other non-governmental organisations that offer sport and recreation opportunities to all South Africans in 2014/15. The spending focus over medium term will be on supporting recognised sport federations through transfers to non-profit institutions in the sport and recreation service providers’ subprogram. These transfers constitute 83.6 per cent of the program’s allocation over the medium term and will ensure that 60 sport federations are supported in each year of the MTEF period.

The Sport and Recreation Service Providers sub-programme is part of the existing structure, however in line with the NSRP, there will be an expansion of its functions to include, Transformation, Sport Administration, Sport House, Financial resources, Sport and Environment, Domestic competitions, international competition, Ethical environment, Geopolitical Sport boundaries, Sport Councils, Athlete Coach and Technical Officiating support, including transfers to National federations, Sport Trust and Boxing SA. Its budget will grow from R111.7 million to R117.9 million in 2013/14 and 2014/15 MTEF periods. The increased mandate will put pressure on the resources of the department and thus require a thorough plan of activities to be undertaken within the limited resources.

The international liaison sub-programme is projected to have a negative average annual growth over the medium term due to the implementation of efficiency measures in international travel, which include smaller delegations being sent to international events.

The number of personnel in this programme is expected to increase from 6 posts in 2013 to 9 funded posts in 2016/17. This accounts for the growth in expenditure on compensation of employees over the MTEF period as the Department fills vacant posts that will provide the capacity required to support the implementation of the newly endorsed national sport and recreation plan. The Department delayed filling these posts to ensure that the new organizational structures would be aligned with this plan.

Infrastructure Support

The purpose of this is to regulate and manage the provision of sport and recreation facilities. The objective of this programme is to improve levels of participation in sport and recreation by facilitating the provision of adequate and well maintained facilities. The spending focus over the medium term will be on providing 18 outdoor gyms to rural areas that have no sport facilities; completing the national facilities audit; and compiling a national facilities plan. This planned expenditure is reflected in the sport and recreation facility management sub-programme, which constitute 49.5 per cent of total programme expenditure over the medium term. The provision of outdoor gyms to rural areas also explains the expenditure on contractors across the seven-year period.

The newly created sub-programme of infrastructure support is intended to manage the delegated administrative and financial responsibilities, and coordinates all monitoring and evaluation functions. There was only 1 staff member in 2013/14 in this sub-programme and it has been a budget of R2 million during the 2014/15 MTEF period. Whilst the other two sub-programmes have just been expanded to meet objectives of the NSRP, the name change from Technical Support to Sport and Recreation facility management sub-programme, has expanded this function to include the MIG management function.

Expenditure in this sub-programme is expected to increase over the medium term, following the lower than expected spending in 2013/14, which was the result of unexpected delays in the delivery of the outdoor facilities and delays in conducting the facilities audit. The number of personnel in this programme is expected to increase from 5 posts in 2013/14 to 9 posts in 2016/17. This accounts for the growth in compensation of employees over the MTEF as the Department fills the vacant posts that will provide the capacity required to support the implementation of the newly endorsed national sport and recreation plan. The Department delayed filling these posts to ensure that the new organizational structure would be aligned with this plan.


ENTITIES BUDGET ANALYSIS

Table 2: Budget of entities of department.

Programme

Audited Average Expenditure

Adjusted Appropriation

Medium Term Expenditure Estimate

R million

2010/11 to 2012/13

2013/14

2014/15

Boxing SA

16 486

9 055

9 181

10 190

SAIDS

Boxing SA: 2014/15 Annual Performance Plan

Boxing SA

The budget allocated for the 2014/15 MTEF period is R10.1 million, which will see R6.4 million (60% of total allocation) being allocated for the compensation of employees. The development programme and administration of Boxing SA will always be hampered by the limitation of the resources. Boxing SA spending over the medium term is to ensure that key divisions like finance and fund raising divisions are adequately capacitated. The focus on 2013/14 was on settling the outstanding debt and filling of key positions. Spending on consultants will reduce as a result of employing the Chief Financial Officer.

SAIDS

Only the 2013-2018 strategic plan was tabled for SAIDS and no APP has been referred to the committee. However during the 2013/14 budget review it had been noted that SAIDS’s allocated budget would rise from R14 million in 2013/14 to R14.8 million in 2014/15 MTEF periods. This is a slight increase from the R13.2 million which was allocated in 2012/13 MTEF period.

4.4 Concluding comments on financial and service delivery performance

SRSA is continuing to implement the NSRP, though largely still an unfunded mandate and have so far managed to implement 42% of the mandate of the NSRP and are others have been reviewed for future implementation. A phased-in approach has been designed to ensure that various aspects can be implemented on an incremental basis. SRSA cost this plan and in the initial Medium Term Expenditure Framework period it requires approximately R10b for the 1st year reducing to R7.8b by the 2nd year and stabilizing at R4b annually to roll-out and implement the entire plan for the 20 year life cycle of this plan.

Up to 53.5% (R573 million) of departmental allocation is meant for mass participation, whose major flagship programme is school sport. The implementation of school sport programme takes place in provinces, hence up to 87% (R496 million) is transferred to provinces. Training of teachers could not take place during the 2013/14 MTEF due to lack of cooperation between CATHSETA and SASCOC. It will important that the Department improves its work and approach on this programme to ensure that it meets its predetermined objectives.

The renaming and alignment of programmes to respond to the objectives of the NSRP has been noted and has increase the mandate of SRSA to include new programmes, like the Ministerial Sports Bursary scheme, the Transformation agenda, the creation of new sub-programme that will assist with the implementation of MIG.

There is an urgent need for the department to fill all the vacant posts, especially now that the intention to fill the posts from within has failed and the mandate has expanded as result of the alignment to the NSRP. There are 77 vacant positions and only 15 people left the department in the past financial year.

Compliance of the federations with the departmental funding grant framework is essential in order for the federations to qualify for the transfer. The implementation of the Transformation scorecard is will assist the Department to monitor the pace of transformation within the federations. This tool will add more pressure on the federations to comply with the framework in order to receive funding.

It is important that the department should plan properly so as to avoid unnecessary shift of funds from one programme to another, as seen in the increase of more R15.6 million shifted to the Mass Participation Programme. Whilst this is allowed, it will be important to adhere to the required threshold of 8% virements. The International Liaison and events had seen up to 47% (R4.4 million) as virements during the 2013/14.

There is need for SRSA to make follow-up with SASCOC regarding the its reports on how funds were spent.

Monitoring of provincial allocations remains a big concern especially where there seems to be over-spending or even under spending of the grant. SRSA has been previously encouraged to develop proper monitoring and evaluation systems. The Committee should ensure that it strengthens oversight and monitor how provinces spent their allocated funds.

The AGSA has made an observation regarding the financial status of SAIDS and found that it is technically financially insolvent. This is situation is a concerning and there is a need to find a way to turn it around. There continues to be irregular spending within the entity, without adhering to the PFMA, the entity needs to take effective steps to prevent the reoccurrence of this problem. The activities of the entity increased during the 2013/14 due to the increased blood testing they conducted and the amount of educational workshops provided across all provinces. Doping control officers were appointed to assist with the education and testing programmes within the 7 provinces. Mpumalanga and North West province are the only two provinces which currently do not have dope control officers.

Boxing SA continues to be faced with challenges again this year, the AGSA could not express an opinion regarding the entities compliance with legislation and internal control. The irregular expenditure was more than last year’s rising to R924 312 in 2013/14. This added to the accumulated irregular expenditure of 2012/13 which was above R1.5 million. The board could not have it meeting due to there being no quorum as a result of the resignations of members and the sudden death of another member.

5. Finance and Service delivery performance assessment

The Department had managed to spend 99% (R1.07 billion) of its allocated funds (R1.07 billion), and achieved a clean audit from AGSA. The Department was able to successfully implement 17% of the outputs of the NSRP, and a further 42% still a work in progress. A challenge still remains the funding of the NSRP and may delay the implementation of a further 41% of outputs if additional funding is not secured.

SRSA managed to fill some vacancies in senior management posts such as Directors of Finance, Information Technology and Supply Chain Management and this increased the expenditure on the compensation of employees. The vacancies continues to grow as a result of the restructuring process conducted and up to 77 posts are vacant whilst 15 people left the department during the 2013/14 financial year.

The largest portion of expenditure of the department still remains the Mass participation programme and these funds are largely transferred to provinces for the implementation of the project. School sport programme remains the flagship of the departmental programmes. The department has stopped the Club development programme and initiated a new system of supporting clubs, after piloting the project in two province. A new club development toolkit has been developed as a result. It will be important that the plan and the budget for the new system be presented to the Portfolio Committee.

The movement of funds within programmes remains a concern for the Committee, this indicates a lack of proper planning for the department, especially where the funds that are transferred exceed the required limit as set out by the National Treasury. The facilities coordination programme had huge, R4.4 million (47%) that were transferred. The main beneficiary of these funds was the mass participation programme.

The increased load of work to SAIDS as a result of adopting a new WADA code for anti-doping will require extra resources from the entity to be able to implement it fully. Whilst there is largely a concern about the financial status of the entity, it remains a priority that the entity should fully comply with the PFMA regulations in its activities for procurement.

Boxing SA has a huge challenge of governance which should be address by the newly appointed board as a matter of urgency. More than 60% of it expenditure is spent on the compensation of employees thus making it impossible for it to implement its programmes. There are still litigation cases pending and the matter of the CEO should be resolved speedily to bring stability to the entity.

6. COMMITTEES Observations and response

· Technical issues

The existing Memorandum of Understanding with the Department of Basic Education has not been properly implemented and further deliberations are needed in order for it to yield more positive results. It will important to ensure that there is progress in this regard since it will have an implication on the full implementation of the NSRP, which prioritises school sport as a flagship programme.

Further discussions with SRSA and COGTA are needed in relation to find a solution around the use of the 15% Municipal Infrastructure Grant (MIG) for building of sport and recreation facilities. The budget of the department does not accommodate the building of facilities but caters for the implementation of sport programmes. The facility coordination programme has been restructured to ensure that it accommodates the coordination function of MIG usage by municipalities.

The mandate of Boxing SA to perform its function is also exacerbated by the fact that the regulations for the South African Boxing Act of 2001 were never written. The entity has not been able to attract sponsorships due to the litigations it has been having and they have also not been able to acquire the broadcasting rights for all its tournaments due to the same reason. This has reduced the revenue stream of Boxing South Africa and has caused it to depend largely on funding from the National Treasury.

· Service delivery performance

Whilst SRSA continues with the implementation of the National Sport and Recreation Plan, it should be noted that this programme has not been fully funded. In order to ensure that the NSRP achieves its objectives, the Committee has encouraged that the minister should keep it posted with regard to the engagements with the National Treasury.

The implementation of the NSRP requires many departments to cooperate and assist with the rolling out of specific task. The Portfolio Committee has observed that this may require that there be an inter-ministerial committee that will be tasked with coordination of the these tasks.

There were no teacher’s training that took place however the department managed to spend all its budget on mass participation and hosted the national school sport championship.

There are vacancies that must still be filled to support the department. The vacancies have accumulated as a result of the newly adopted structure which has increased the number of posts. The department should prioritise filling the important positions and review the need for the positions that have not been filled.

The inability of the department to meet some of these targets affects its target and outputs for the next financial year and should be avoided at all costs.

Boxing SA needs to improve their performance on how they use the little financial resources they are provided with, so that they can be able to request more financial assistance to advance some of their programmes. The Portfolio Committee would appreciate that there be strict time-frames given to the new board of Boxing SA to enable them to bring about a meaningful turnaround to the operations of the entity.

The department had taken a decision to discontinue the Club Development programme and had instead decided to pilot a new model of Club development in two provinces, Limpopo and Kwazulu-Natal. The Portfolio Committee has noted that there is still a need to provide support to all the talented athletes and community clubs who may not necessarily meet the requirements to enter in universities after their school playing years.

The Committee has noted that SAIDS is not in a position to generate its own revenue due to the nature of its business but spends the money that is being allocated to it. As a result there is a need for the entity to review its spending patterns such that it can increase funding on programmes and perhaps spend less on capital.

· Financial performance including funding proposals

The Portfolio has taken note of the National Treasury concern regarding the country’s current fiscal position which does not allow any room of making additional funding available, however there still has to be progress towards creating an inclusive economic growth and job creation amid the tough fiscal environment. Due to the budgetary constraints, departments are required to efficiently manage the costs pressures related to changes in the inflation rate, exchange rate or any other factors affecting input prices. As a result the Portfolio Committee will urge the department to continue implementing the NSRP by prioritising, whilst other means of funding this mandate will be sought.

There is a greater need to ensure that deserving federations are being supported financially and that the transformation scorecard is implemented and adhered to by those federations. All federations are expected to adhere to the established grant framework for them to comply with the requirement to be assisted with the funding. The nomination of the federation of the year allows the federation to receive an extra allocation of R10 million in that financial year, to enable it to deliver its programmes.

There is a need to monitor the provincial transfers and their alignment to the NSRP. This is intended to ensure that the provincial programmes are aligned to the national programmes and are pursuing the funded mandate.

The Committee will continue to support the Department in its endeavour with the National Treasury to find a solution in relation to the transfer of the 15% allocation of the MIG to be administered by the SRSA.

The department has been funding Sport trust, whose mandate is to build multi-purpose facilities within the rural communities. During the 2013/14 financial Sport Trust was allocated just over R30 million by the department, to help amongst other things, with the Ministerial Outreach programme to build sport facilities and provide sport equipment in rural areas. The department should ensure that the Sport Trust is properly managed and accountable for the funds that they have been appropriated.

7. Summary of reporting requests

Reporting matter

Action required

Timeframe

SASCOC report on 2013/14 financial statements for transferred funds

Briefing

Written Plan

February 2015

Club development strategy

Written

Briefing

February 2015

Filling of vacant posts

Written

At the next quarterly meeting

(January-March 2015)

Progress report on the facility audit that was initiated in 2012.

Written
Brief

March 2015

Geographical Information System, The National Facilities Plan and the updated norms and standards

Briefing

Written report of National Facilities audit and plan

At the next quarterly meeting

(January-March 2015)

Revise the financial implications of using the Geographic Information System

Briefing

March 2015

SRSA monitoring tool for usage of 3% allocated for sport councils

Briefing

At the next quarterly meeting (March 2015)

Action plans to address findings by the AG in relation to SAIDS and Boxing SA

Written report

April 2015

Progress regarding cooperation with DBE on School Sport

Written

January 2015

Plans to improve coordination of training with CATHSETA

Written

April 2015

The list of athletes and schools currently being assisted through the Ministerial Sport Bursary programme

Written

January 2015

Baseline study to determine how many athletes who have been supported through Athletes support programme have attained the international success.

Written

April 2015

SAIDS should report on the newly revised organisational structure which will include operations of the newly adopted WADA code

Written

February 2015

Reporting matter

Action required

Timeframe

Sport Trust should brief the committee on its activities

Presentation

January-March 2015

Minister to inform the committee on engagement with the National Treasury on funding for NSRP

Brief

March 2015

In next meeting Boxing SA, SANABO should be invited

Presentation

March 2015

3 Recommendations

Based on the analysis of the Department’s budget and the entities for the year under review (2013/14), the Committee recommends that the Minister for Sport and Recreation should:

1. Continue to persuade the National treasury through innovative ways to fund the full implementation of the NSRP.

2. Prioritise that all the important vacancies are filled as contained in the establishment and review the need for those that have not been filled.

3. Develop the framework and strengthen the monitoring mechanism of how provinces use the DORA funds in line with the priorities of the NSRP as approved by the National treasury

4. Continue to lobby the National Treasury for a transfer of the 15% MIG funds and the USDG intended to build sport and recreation facilities back under the control of the department so that it can facilitate the building of sport facilities with the municipalities.

5. ensure that the facility count be completed as a matter of urgency in order to develop a proper national sport facility plan by the end of the 2014/15 financial year.

6. Ensure that the entities implement the recommendations of the AGSA and are able to avoid the irregular expenditure by April 2015.

7. Develop the norms and standards that will encourage federations to comply with the corporate governance issue and make provision for corrective measures for those who are not complying. This is to ensure that federations are self-sustainable in the long term.

8. ensure that internal controls within the public entities is strengthened to achieve good corporate governance and compliance to the legislative framework that governs the use of public funds.

9. Ensure that litigations that surrounds Boxing South Africa are resolved in order to enable it to generate revenue through broadcasting and sanctioning of fights with promoters.

10. ensure that the all amendments to the legislative framework of the entities are resolved in the current financial year.

4 Appreciation

The Committee was very satisfied with the service delivery performance of the Department with just a concern on the efficient usage of the resources to achieve the stated goals. There is concern regarding the management of Boxing SA and oversight over SAIDS regarding compliance with the treasury regulations around the PFMA.

As we express our gratitude, we wish to acknowledge the contribution made by the Members of the Portfolio Committee of Sport and Recreation, support staff, SRSA and all its entities, National Federations including members of the public.

Report to be considered .

Documents

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