ATC140320: Report of the Select Committee on Finance on the 2013/14 Third Quarter Provincial Treasury Budgets and Expenditure, dated 19 March 2014
REPORT OF THE SELECT COMMITTEE ON FINANCE ON
THE 2013/14 THIRD QUARTER PROVINCIAL TREASURY BUDGETS AND
EXPENDITURE, DATED 19 MARCH 2014
The Select Committee on Finance was established in terms of Section 4 (1)
of the Money Bills Amendment Procedure and Related Matters Act, No. 9 of 2009.
In terms of Section 4 (2) of this Act, the Committee has powers and functions
conferred to it by the Constitution, legislation, the standing rules or a
resolution of a House, that include considering and reporting on the national
macro-economic and fiscal policy; amendments to the fiscal framework and
revenue proposals and Bills; actual revenue published by the National Treasury;
and any other related matter set out in this Act.
The mandate of the Committee further strengthens the Committees
function to legislate, conduct oversight over the Executive actions; facilitate
public participation, facilitate international agreements and review matters of
public interest in relation to the National Treasury and its entities, and the
South African Reserve Bank.
Finance Management Act (section 18 (1) (a, b) and section 18 (2) (e and g)
requires that the provincial treasuries must amongst other things, exercise
control over the implementation of the provincial budget; promote and enforce
transparency and effective management in respect of revenue, expenditure,
assets and liabilities of provincial departments and provincial public entities
and may assist the provincial departments and entities in building capacity for
efficient, effective and transparent financial management and must intervene by
taking appropriate steps, which may include the withholding of funds, to
address a serious or persistent material breach of this Act by a department or
Committee through its Strategic Plan took a decision to regularly engage the provincial
treasuries as part of its key priority areas. The Committee continues to
interact with provincial treasuries to ensure financial sustainability and
enhance its oversight role.
During the third quarter of 2013/14, the Committee had
with the Members of the Executive Council (MECs) of Finance from the Eastern
Cape, Northern Cape, North West, Western Cape, Gauteng, Mpumalanga, and Free
State Provinces and the National Treasury. The public hearings were held on 4,
11 and 20 February 2014, in Parliament. The Report captures the presentations
made by the National and Provincial Treasuries on the status of finances and
expenditure as at the third quarter of 2013/14. These presentations largely
cover the provincial revenue composition; quarterly expenditure review, challenges
encountered in implementing the provincial budgets and measures to mitigate
risks identified. The Report then summarises the observations and findings made
by the Committee and makes recommendations.
Briefing by the National Treasury
Overview of third quarter provincial budgets and
below shows that the total adjusted budget allocated to provinces in 2013/14
amounted to R430 billion. On aggregate, the provinces adjusted the allocated
budgets by a total of R9.879 billion in 2013/14. Gauteng, Eastern Cape, North
West and KwaZulu-Natal provinces increased the initial budgets allocated by R3.204
billion, R1.843 billion R1.355 and
R1.056 billion, respectively.
the end of the third quarter of the financial year 2013/14, the provinces had
spent R314.163 billion or 73 per cent of the proportion of total adjusted
provincial budgets. On average, the provinces are projecting to overspend their
adjusted budgets by R3.555 billion by the end of the financial year. Gauteng
and Free State provinces project to overspend by R1.56 billion (2 per cent of
adjusted budget) and R1.33 billion (5 per cent of adjusted budget), respectively.
On the contrary, the Eastern Cape, Limpopo and Western Cape expect to under-spend
by a total of R672 600 million.
reported by the National Treasury, provincial expenditure largely comprises of
compensation of employees (61 per cent), goods and services (20 per cent),
transfers and subsidies (12 per cent) and capital expenditure (7 per cent).
1: Provincial aggregated budgets and expenditure as at 31 December 2013
six items under goods and services are medicine, contractors, property
payments, agency and support or outsourced services, medical supplies,
laboratory services and Learner Teacher Support Material.
At the end
of the third quarter of 2013/14 financial year, the provinces in general were
in a healthier in year fiscal position. None of the provinces utilised
overdraft facilities at the Exchequer level. Mpumalanga Province continued to
have higher balances at the Pay Master General (PMG) level than at the
Provincial Revenue Fund (PRF) level. The Exchequer balances in the Free State
Province were extremely low.
National Treasury assessed the trend of provincial projections from 2009/10
financial year and had come to the conclusion that these projections are not
credible. The general trend is that, during the financial year, the provinces
project to overspend but at the end of the financial year, the outcomes show
under-spending. Provinces had planned to implement cost containment measures, conduct
headcount verifications and roll out of biometric controls and consolidate of Supply
Chain Management (SCM) reforms.
Summary of Provincial Issues Identified by the
At the end of the third quarter of 2013/14, the Eastern Cape Province
had spent R44.1 billion (or 71.8 per cent) of its adjusted budget and was
likely to come within budget at the end of the financial year. The bulk of projected
spending (R436.2 million) was located in the Department of Human Settlements.
The Province expected to under-spend its 2013/14 budget by R65.4 million in compensation
of employees and R226.9 million in respect of goods and services. These
projections were primarily due to
teaching staff challenges in the Department of Education including the
carrying of additional educators as well as human resource accruals paid
during the year and
the LTSM budget in Public
Ordinary Schools. The Province had spent 55.4 per cent of the 2014 adjusted
budget on payments for capital assets, with a projected of R164.9 million. The
bulk of the under-spending was located in the Department of Education
(buildings and other fixed structures) and the Department of Health (machinery
The departments of Health and Education in the Northern Cape Province were
experiencing budget pressures largely due to the filling of unfunded posts,
most of which were in the administration programme. The National Treasury
reported that the main priority for these departments was to address the
recruitment practices and that the Accounting Officers must be held accountable
to specific targets. For the Kimberley Hospital, the Province was expected to
review its financial planning for this facility.
Some public entities in the Province carry out the same function as the
Department of Economic Development e.g. Northern Cape Economic Development
Agency. The National Treasury highlighted that the Department of Economic
Developments monitoring and oversight over these entities were poor and unstructured.
The North West Province continued to under-spend in most departments,
particularly non-social sector departments. These departments only spent
approximately 65 per cent of the adjusted budget at the end of the third
quarter of 2013/14.
The Department of Public Works is the
preferred implementing agent in the Province but had been ineffective. As a
result, poor performance of contractors and delays in implementing key
infrastructure projects had been experienced. Poor planning and budgeting for
maintenance of infrastructure continued to be a challenge.
The National Treasury reported that key cost drivers in the departments
are inadequately managed, particularly in the Department of Health. The Department
continued filling posts despite the funding pressure under the compensation of
employees budget and this may pose risks under the sectors budget. The
Province needed to improve the monitoring and oversight over the activities of the
The Free State Province projected overspending on compensation of
employees in the Department of Education.
The National Treasury emphasised that the
Province must realign its spending plans in line with the demographic
trends reflected in the latest Census.
number of decisions in the Province needed to be better assessed and better
, for example, awarding of bursaries to additional
-specific initiatives within the Roads and Agriculture sectors;
in-sourcing of contract staff;
of additional Cuban doctors and the development of a strategy for
Accruals (unpaid invoices) in the Province had grown from R43 million to
R257 million in the last four years.
Recently, the Province had taken steps to deal with officials involved
in incurring irregular expenditure and financial misconduct, particularly in
the departments of Roads and Human Settlements.
The Gauteng Province was projecting to overspend its 2013/14 adjusted
budget by R1.568 million. The pressure in the Department of Education was on compensation
of employees and related mainly to the appointment of new teachers to
accommodate the growth in the number of learners. The Department of Education
was planning to appoint 1 054 teachers in 2014 but these posts were not funded.
National Treasury had made additional funding (R9.6
billion in 2013 Medium Term Expenditure Framework) available to the Province in
line with the demographic trends highlighted in Census 2011.
Spending pressures in the Department of Health were mainly in medicine,
medical supplies and property payments. The
of the new Zola and
contributed to the pressures and that signaled the lack of life-cycle costing
to assess affordability before the decision to construct a new facility was
The National Treasury emphasised
the Province should carefully monitor and support the implementation
of the Infrastructure Delivery Management System (IDMS), as this initiative was
designed to remedy these challenges.
The preliminary numbers showed that, by the end of the third quarter of
2013/14 financial year, the Mpumalanga Province had spent R25.4 million or 75 per
cent of the adjusted budget of R34 185 million and projecting a pressure of
R764.9 million mainly in the departments of Health, Education and the Office of
the Premier. The Province had projected over-expenditure on core items such as
LTSM and medicine and medical supplies. The National Treasury highlighted that
while the departments might be able to absorb the current pressures, poor
planning and budgeting for these items needed to be addressed while also
The Province was struggling to fill senior and specialised positions and
consequently under-spent on compensation of employees. There was a need for the
Province to ensure alignment between spending and performance, particularly in the
Department of Health with respect to HIV and infrastructure delivery. There was
evidence of waste and inefficiency in certain areas.
At the third quarter of 2013/14, the Western Cape Province was not
reflecting any material overspending risks.
A well-developed personnel management strategy enables the Province to
accurately budget for compensation of employees. The Province maintained
control over the compensation budget and reflected a credible provincial
The Province needed increased focus on funding the Department of
Education in respect of teacher numbers, facilities and LTSM to address some of
the in-migration pressures. The goods and services budget in the Department of Health
compromised transparency as well as the analysis that could be executed.
A Corporate Governance Review and Outlook was introduced to improve
overall governance and to achieve improved audit outcomes. In the 2012/13
financial year, five departments received clean reports and nine departments
received unqualified with matters; there were no qualifications. The Province
is well on its way to realise efficiency savings by
spending on non-core spending items.
The National Treasury had indicated that the social challenges in the
Province such as
and drug abuse are major
obstacles to a safe environment. The challenge for the provincial government
was whether current allocations were sufficient to address this challenge.
The Province had indicated that management
and co-ordination issues will be addressed first before finalising the social
development funding issues.
Total provincial spending in KwaZulu-Natal was on track at the end of
the third quarter, at 75.8 per cent, with projected pressures amounting to
There was a need to improve the
management of personnel in the Department of Education. Compensation of
employees pressures amounted to R427 million as 435 more people were employed
between October and December 2013. The Headcount exercise instituted by the
Provincial Treasury was in the last phase and was expected to assist in
understanding the extent of the problem in the Department.
The Department of Health projected over-expenditure in respect of
. There was also a
high spending on litigation costs (medico-legal claims), which stood at R80.6 million.
The Department of
also contributed to the spending pressures by R113 million, mainly from the
hosting of events.
The Department of
Arts and Culture projected to over-spend due to hosting of various
unfunded events such as the Africa Day Celebration and the KZN youth wind band
(trip to China). This Department was instructed by the Provincial Treasury to
absorb these pressures within its budget through cost-cutting.
National Treasury reported that it was important for the Province to
entities which were doing similar work, such as
the Growth Fund, Small Business Development Agency and
Development Finance Corporation, all of which
support the businesses in the Province
. All these
entities relied on government funding and were not able to sustain
The Province transferred
about R1.2 billion per year to its entities, and this was the highest amount in
Briefing by the Provincial Treasuries
Province reported that
100 per cent of the equitable share was received from national
Of the conditional grants, R3.4 million in respect of the
Social Sector and Public Works Expanded Public Works Programme (EPWP) incentive
grants were not received because the departments did not submit the necessary
quarterly reports on time. The Province over-collected own revenue amounting to
R181.9 million, mainly due to interest earned resulting from the slow spending
departments, sale of old machinery, patient fees, sale of biological assets to
commercial farmers and motor vehicle licence fees.
Overall, the Province spent R44.1 billion or 71.8 per cent of its
adjusted budget of R61.375 billion, with the projected under-expenditure of
R435.8 million. The Department of
Settlements projected to under- spend its adjusted budget by
million due to
poor performance by contractors, contractor cash flow
problems, poor planning as well as poor project implementation and management.
expected to under-spend
by R121 million as a result of delays in the filling of prioritised vacant
posts, payment of the newly recruited Community Health Care Workers, slow
payment of human resource accruals and non-payment of PMDS.
The Department of
Government and Traditional Affairs
was likely to under-spend its
adjusted budget by R52.8 million.
Department intended to surrender R40 million to the Provincial Revenue Fund, a transfer
to the King
Local Municipality that was meant to finalise municipal projects.
The Department of Transport projected to under-spend
R36.7 million mainly due to delays in the submission
of Proof of Delivery forms for scholar transport as well as savings received
from traffic officers not working overtime as planned. The Department of
Roads and Public Works
under-spend by R22.1 million in respect of compensation of employees, following
delays in the implementation of the annual recruitment plan. The Department of
Sport, Recreation, Arts and Culture projected
R245 million due to delays in the transfers to the Buffalo City
Metropolitan Municipality for library services.
The Province projected to over-spend by
in respect of compensation
. This is attributed to a budget shortfall of R236.9 million
in the Department of Education. The shortfall was caused by the payment of
accruals in respect of temporary educators, substitute educators staff and
promotional posts. The Province expected to under-spend the
goods and services budget
by R230.1 million. Of this amount, the Department of
contribute R131.2 million given the delays in the procurement processes for the
The departments of Education, Roads and Public Works and Human
Settlements are generally underperforming in infrastructure spending in the
2013/14 financial year and Treasury has engaged these departments to determine
the blockages. Given the capacity challenges in some of the departments,
particularly on infrastructure spending, the under-expenditure will likely be
more than projected. The
Province is still
continuing to experience poor planning in infrastructure delivery.
The Infrastructure Delivery Management System (IDMS) had been rolled out
to the departments of Education and Health and this process should assist these
departments in improving its planning. The small contractor development
programme does not seem to yield the desired results and therefore will have to
Adherence to the 30 day
payment process is assisting in addressing the contractor cash flow problems. Poor
project management had been addressed by improving the capacity.
The Province had collected own revenue amounting to
83 per cent
of the adjusted budget of
, this represent a
projected over-collection of
7.9 per cent
Actual expenditure on conditional grants amounted to
68 per cent
of the adjusted budget of
, resulting in a projected
net under-spending of
mainly as a result of the Comprehensive Agriculture Support Programme (CASP) and
Health Infrastructure Grants.
Total actual expenditure for the Province amounted to
74.2 per cent
of the adjusted budget
. The Province
projected to over-spend by a net amount of
at the end of the 2013/14 financial year. It was expected that the
additional amount provided for the Roads Maintenance Grant will significantly
Expenditure on compensation of employees stood at
74.3 per cent
of the total budget
. The Province projected over-expenditure of
0.1 per cent
, of which the Departments
of Health and Education projects would over-spend by
the Department of Education relates to additional LTSM that was procured as a
result of the increase in learner numbers.
The medico-legal cases (litigation account to almost
) as well as compensation
of employees without a budget would lead to over-spending in the Department of
The Department established an Emergency
Medical Services college which was operating without a budget.
Provincial own revenue collected amounted to R656.5 million or 79.9 per cent
of the initial budget.
An over-collection of R38.9
million in own revenue was projected.
As at the 31 December 2013, the aggregate provincial spending stood at
73.5 per cent, conditional grants at 73.75 per cent and 51.6 per cent of infrastructure
budget had been spent.
overspending of R213 million mainly relating to the
departments of Health and Education and Training in respect of compensation of
employees. In order to remain within budget,
the provincial departments were requested to
review their spending trends, determine their ability to spend funds allocated
in the current financial year and reprioritise funding for critical areas
without requesting additional funds.
Some departments spending was relatively slow, for example the
departments of Local Government and Traditional Affairs (49.2 per cent), Office
of the Premier (57.9 per cent) and Public Works, Roads and Transport (60 per cent).
The projected provincial overspending was possible in the departments
of Health (R218 million) and Education and Training with (R42 million),
particularly in respect of compensation of employees budgets.
Three departments projected to under-spend their allocated budget,
namely, Agriculture and Rural Development (R36.5 million), Finance (R6 million)
and Social Development (R4.4 million).
The average provincial spending on compensation of employees stood at
76.13 per cent or R12.8 billion of the allocated budget of R16.8 billion. In
aggregate, provincial departments were projecting to overspend their 2013/14
personnel annual budgets by R214 million. This was mainly in the departments of
Health, Education and Training and Economic Development, Environment,
Conservation and Tourism. The Department of Agriculture and Rural Development
projected to under-spend the compensation of employees budget by R6.3 million.
Some of the
challenges identified by the Province were delays and non-compliance with SCM
processes; lack of capacity to monitor and administer grants in the Province; non-compliance
with requirements of the Division of Revenue Act framework in terms of
reporting and planning; and reporting and implementation not aligned with the
business plan targets.
In order to mitigate
these challenges, the Province planned to advertise tenders as early as
possible; register service providers to start on time, provide training and
assist with monitoring. The Province also planned to
Provincial Budget Forum to improve budget planning and execution;
quarterly engagements with departments on the provincial management of
personnel and the compensation of employees and to encourage the appointment of
skilled staff and filling the key vacant positions to improve planning and
total adjusted budget for the financial year 2013/14 amounted to R44.04 billion,
of which R341 million was added during the adjustment process. Provincial own
receipts collected up to 31 December 2013 amounted to R1.8 billion, or
87.2 per cent of the adjusted budget.
The Province is projecting to over-collect on its own revenue budget by
R164 million. The bulk of the Provinces own revenue was derived from Motor
Vehicle License fees, which contributed R810.3 million or 45.4 per
cent to departmental total revenue. The Department of Healths collected own
revenue amounted to R451.7 million.
Provincial expenditure totals R31.8 billion or 72.2 per cent of the
adjusted budget amounting to R44 billion
Under-spending of R61.2 million was projected by the departments of
Health and Transport and Public Works. The Department of Health projected under-spending
of R49.7 million related to infrastructure challenges, which mainly included
longer than expected tender procedures as well as unpredictable weather
conditions. The Department of Transport and Public Works projected under-spending
of R11.5 million relating mainly to the slow filling of posts. The new
structure was approved at the end of October 2013, resulting in delays in the recruitment
on infrastructure amounted to R2.6 billion or 55.2 per cent
against the adjusted budget of R4.7 billion. The weather conditions
experienced in the Province as well as labour challenges within the
construction environment, made it impossible to keep up with the planned rate
of delivery. The Department of Public Works (implementing agent) together with
the departments of Health and Education (client departments) utilised the
period to improve planning to ensure that delivery takes place.
Province had received an equitable share amount of R46 billion and conditional
grants of to R11.9 billion. A total of R3.2 billion was collected from
different provincial own revenue sources. The total provincial budget amounted to
R61.1 billion, which was adjusted upwards by R3.5 billion.
allocations were mainly in respect of
services in the Department of Health
of LTSMs and infrastructure delivery in the Department of Education,
of employees and the extension of the Gauteng on-line contract.
expenditure amounted to R57.4 billion or 72 per cent of
the adjusted budget, in the third quarter of 2013/14 financial year. The
Province projected to over-spend by a net amount of R1.568 billion by the end
of the financial year. Projected over-spending was largely in the Department of
Health (R1.0 billion) in respect of payments for the
Cuban doctoral programmes and re-grading of clerical posts. The Department of
Educations projected over-spending stood at R456 million, due to pressures in
personnel and in goods and services budget.
Other departments that expected to overspend by the end of the financial
year include the
Office of the Premier (R70
million) relating to costs incurred during the state funerals and Roads and
Transport (R18.7 million)
on conditional grants was only at 55 per cent of the allocated funds.
The delivery of infrastructure projects had been
progressing at a slow rate. The Province had been exploring ways to reduce
accruals, as these accruals reduce the buying power of the budget, particularly
in the Department of Health.
The Province had spent R25.4 billion or 75 per cent of the adjusted
budget of R34.185 billion and projecting a pressure of R764.9 million mainly in
the departments of Health, Education and the Office of the Premier.
Storm damage and LTSM in the Department of Education, an emergency
situation that occurred in the
of the Premier and
account in the Department of Health, put pressure on the provincial budget.
Overspending (R252 million at 30 September 2013) on
compensation of employees in the Department
of Health remains a key concern.
team was established to address this challenge and certain items of
expenditures had to be stopped in order to stay within the budget in the 2013/14
financial year. These included
performance bonuses (t
had been advised that no bonuses should be paid until the financial situation
correction of Occupation
Specific Dispensation (OSD) underpayments.
payable to doctors could not be stopped as it
forms part of the conditions of employment.
Department had a challenge in implementing the Nursing OSD during 2007 which
resulted in a number of under- and over-payments. The Department had been
negotiating the correction of the under- and over-payments with the unions and
an agreement was reached that the Department will correct the notches of the
officials who were under-paid as from 1 November 2013.
The procurement of subsidised vehicles
item of expenditure
has a portion that is funded from compensation of employees. The Department had
15 orders issued for new subsidised vehicles but arrangements were made with
the suppliers to supply these vehicles in April 2014 to reduce pressure on the
current compensation bill.
In order to stay within budgets, certain expenditure had to be deferred
to the 2014/15 financial year. The Department acknowledges that this is not the
best solution as this was merely shifting the problem to a later date as all
these expenditures still had to be paid in the 2014/15 financial year. The
Province had started funding the Department very close to the norm of 27 per cent.
The Province will be compelled to provide more funds to the Department of Health
in order to normalise the budget of 2014/15. Currently the projected
overspending has been reduced from R252 million to R3.1 million.
dependent on the implementation of initiatives mentioned above.
It was found that 7 024 personnel were out of adjustment with a huge
financial implication. Posts with a lesser budget are utilised to appoint
officials who earn much higher salaries, putting pressure on the compensation
of employees budget.
Overspending on compensation of employees had been a challenge over a
number of years. At the end of the second quarter of 2013/14 financial year,
the Department of Health projected to over-spend compensation of employees by
R12 million. The Department had employed 92 officials that were not budgeted
for. In order to correct the projected over-expenditure, a moratorium was
placed on filling of posts, all acting allowances were stopped, overtime
paid only in extreme cases, leave discounting
and all employees were encouraged to take leave.
Due to implementation of the measures indicated above, the Department is
no longer projecting to overspend on compensation of employees budget. The
Department is currently projecting under-spending at 31 December 2013 of
approximately R8.8 million.
With regards to the goods and services budget
Department of Health, it was reported on 4 January
2014 that the department expected to overspend the budget by R343 million and
that the bulk of that amount was in the medicine account. Unfortunately, there
were no available funds in the Provincial Revenue Fund that could fund the new
The Provincial Treasury had been monitoring the risk that funds should
not be depleted to a point of not being able to pay the March 2014 salaries in
this Department. The bank statements drawn on 15 February 2014 reflects an overdraft
of R80 million. The Department was cautioned not to take payments to the bank in
an event that cash was not adequate. The medicine account remains a major
At the end of the
third quarter of 2013/14, the Free State Province had spent R20.3 billion or
75.4 per cent of the adjusted provincial budget of R26.9 billion. The Province
projects to over-spend its budget by R1.3 billion or 5 per cent, by the end of
the financial year. Provincial own revenue collected amounted to R603.6 million
or 70 per cent of the adjusted budget of R856.3 million.
Province had developed measures to strengthen monitoring and budget execution.
These measures included reprioritising R80.4 million towards bursaries in the
Department of Education during the adjustment appropriation, of which R79
million from other departments would assist in reducing projected over-expenditure.
Most of the measures proposed by the task team established were cash management
driven. Additional measures included movement of vacant funded posts between
directorates, transfer of excess staff to schools in need, postponement of
filling of vacant posts, centralisation of appointment of temporary educators
as well as headcount of educators and learners with the support of Provincial
to assist the Department of Health included joint implementation of the
turnaround strategy with the Provincial Treasury from May 2013. The objectives
of this strategy are to restore financial sustainability of the Department; to address
inefficiencies in the management of assets and liabilities; to enhance
governance and improve service delivery.
of the initiatives taken by the Department of Health to contain the
compensation of employees budget included reducing the number of interns by
not renewing contracts on expiry, encouraging early retirement of
administrative and support staff, delay in-sourcing of the remaining services
and review of available human resources capacity, merge some clinics to share
personnel resources and costs and fill posts in new hospitals through
redeployment of existing staff.
goods and services budget in the Department of Health had also been under
pressure. The Province devised strategies to, amongst others, eliminate usage
of agency doctors with immediate effect, review major contracts and negotiate,
establish a centralised procurement committee at district and head office for
all institutions, stop procuring pharmaceuticals through a secondary system,
manage medical systems and take stock of and manage medicines and medical
consumables to enable effective distribution of available stock.
Having engaged the National Treasury and seven
provincial treasuries, excluding KwaZulu-Natal and Limpopo, the Select Committee
on Finance observed the following:
key challenge in some provinces is not necessarily lack of finances but management
of finances and the decisions taken;
verification process in most provinces was taking
time to finalise and that remained
a challenge. Based on the preliminary numbers
of employees budget stood
at 60.9 per cent of the 2013/14 total adjusted provincial budget;
budgets that are not credible and unreliable projections remained a challenge
across most provinces and that was compromising government performance. A trend
had been observed in the third quarter of the 2013/14 financial year, that provinces
project over-expenditure but fail to spend adjusted budgets;
over-expenditure in the Free State province was too high compared to the
national average, particularly in the departments of Public Works and
provinces still made use of the Pay Master General (PMG) account and the
Corporation for Public Deposits (CPD) as means of savings for funds that are
meant for service delivery;
provinces made advance payments and transferred funds to entities or
implementing agencies and reported that as money spent. This does not
necessarily mean that money had been spent and services had been delivered;
target setting in some provinces is conservative and planning for aligning financial
and non-financial performance remained poor;
Departments of Education in provinces, particularly the Gauteng and the Western
Cape plan poorly for in-migration of learners each year and are often unprepared
for an increased number of learners from other provinces;
Free State Province redirected funds from other programmes to bursaries. This
may not be sustainable and may compromise the successful implementation of
original plans and projects;
are challenges in the Mpumalanga Province in the departments of Public Works, Education
and Agriculture. The Committee also noted the importance of agriculture and its
potential to create jobs; and
were no measures in place to address the challenges experienced by the
Department of Human Settlements
the Eastern Cape Province. The Eastern Cape Provincial Treasury prioritised assistance
to the departments of Education and Health and focused less on the 11 other provincial
Treasury should ensure that provincial treasuries are well resourced to
effectively execute its oversight role over provincial departments and assist
them to ensure that services are delivered as planned;
treasuries should make use of their powers contained in the Public Finance
Management Act, (No.1 of 1999) to conduct oversight over their provincial
departments; and also effectively utilise the Medium Term Expenditure Committees
(MTEC) processes and interdepartmental meetings to monitor and improve
financial management in departments;
Provincial Treasury in the Free State Province should improve its support to
all the provincial departments, particularly Public Works and Agriculture, to
contain expenditure in the current financial year;
should ensure that their programmes are implemented on time to minimise investment
of unspent funds in savings accounts as that compromises the delivery of
Provincial Treasuries should monitor the transfer of funds to public entities
and implementing agencies to ensure that the budgets spent translate into delivery
should consider reducing the excessive use of
the money spent on consultants could
be used to deliver services;
Treasury and provincial treasuries should fast-track the process of addressing
credibility of projections with provinces to assist the provincial departments
to make informed decisions. Provincial Treasuries should scrutinise departmental
quarterly performance reports to ensure that spending speaks to performance;
departments of Education, particularly
in Gauteng and the Western Cape, should use
past trends and the latest mid-year population information available from
to properly plan for future
in-migration of learners;
Provincial Treasury in the Free State Province should assist the Department of
Education to better manage the bursary allocation process;
Provincial Treasury in Mpumalanga Province should intensify its oversight role
over the provincial departments, particularly, Public Works and Agriculture to
verify and ensure that projects are delivered in line with expenditure
Provincial Treasury in the Eastern Cape should work together with the provincial
and national departments of Human Settlements to address challenges identified.
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