ATC080513: Report Oversight visit to Northern Cape
Report of the Select Committee on Finance on the oversight visit to identified provincial departments and the Sol Plaatjie Municipality, Northern Cape, dated 13 May 2008
The oversight visit took place on Friday, 28 March 2008. A meeting was held with the Sol Plaatjie Municipality and various governments departments. The Committee’s delegation was as follows:
· Hon TS Ralane (Chairperson of the Committee)
· Hon EM Sogoni (Gauteng, ANC)
· Hon GM Goeieman (Northern Cape, ANC)
· Hon BJ Mkhaliphi (Mpumalanga, ANC)
Staff composition was as follows:
· Ms TP Xaso (Committee Secretary)
· Ms NC Chaso (Committee Secretary)
· Ms N Mnyovu (Committee Assistant)
2) Terms of reference
At a meeting held between the Committee and the Provincial Department of Local Government and Housing at Parliament, the Province indicated that it had been promised R100 million by National Treasury. The Department had indicated that it was in need of that funding and the Committee had undertaken to assist in attaining the money. The Committee’s objective in meeting with the Department of Local Government and Housing during this visit was to establish whether it had been able to absorb this additional funding and whether there were any risks of under-spending as a result of that additional funding.
The Committee had also been informed about challenges that related to building materials which had been bought three to four years ago by the Department of Local Government and Housing, but remained unused. Given that this matter impacted negatively on housing delivery in the Province, the Committee undertook to meet with the department concerned and the affected municipality of SolPlaatjie.
The Provincial Department of Health had reported to the Committee that the Provincial Treasury had taken over the Health Department. The Committee had undertaken to follow the matter up in a meeting with both departments. This was one of the reasons for the meeting in Northern Cape.
The Departments of Agriculture and Roads, Transport and Public works were invited to report on their third quarter expenditure of Conditional Grants and Capital Expenditure as well as personnel and non-personnel spending.
National and provincial departments as well as other stakeholders that were invited to the meeting were as follows:
· Department of Provincial and Local Government
· National Treasury
· Provincial Department of Roads, Transport and Public Works
· Provincial Department of Health
· Provincial Department of Agriculture
· Provincial Treasury
· The Homeless Federation
· Provincial National Home Builders Registration C
The Provincial Department of Health was one of the main reasons for the Committee’s visit to the Northern Cape. The Committee expressed its displeasure at the non attendance of the MEC and the Head of Department at the meeting.
Both the provincial Treasury and the provincial Health departments reported that relations between the two had improved. The Committee, however, was not convinced that this was so. On two occasions the Northern Cape Department of Health had reported that they were not able to function as a result of the Provincial Treasury. The reports presented that relations were good were perceived to be making mockery of the Committee’s visit to the province. Poor relations between the two departments had led to hospitals not having medication. Furthermore, the Committee was concerned that the Health Department had not prepared a proper report to form a basis for the discussion, nor had it taken serious the matter on hand.
The Committee further informed the Department of Health that the Public Works Department reported that Health had not signed a Service Level Agreement. Moreover, the Committee still needed to enquire from the Treasuries what had brought about the need for the department to be under administrations.
Provincial Treasury reported that the decision to put Health under administration was made by the Provincial Executive Committee (EXCO). According to the Provincial Treasury, it was the media that reported about a hostile take over and this was said to be the reason for the misunderstanding between the two departments. It further disputed the statement of a hostile takeover.
There was a concern with relating to inconsistency on the part of the Provincial Treasury given that Public Works in the province had been and was still in a worse condition than the Health Department. The appointment of the Chartered Accountant was also a concern and questions were raised as to what the role of the CFO was in such an event.
Local Government and Housing
The department reported that the additional allocation of R100 million had been received and that the money had already been transferred to district municipalities for housing delivery. To this end no risks were anticipated. Those were the Pixley Kaseme, Kgalagadi, Francis Baard and Siyanda district municipalities. The department further reported that monitoring and evaluation plans were already in place to ensure that the money was used appropriately.
The Committee expressed a concern that, as far as it was aware, the only municipality that had been targeted for accreditation as a housing developer was the Sol Plaatjie Municipality and none of those mentioned by the department. The Committee further enquired as to when these municipalities became accredited. According to the Committee no other district municipalities had been targeted for accreditation. Furthermore it noted that housing delivery was the competency of the department not district municipalities. The observation made by the Committee was that money had been dumped on the municipalities by the department. The Committee enquired as to whether there were any houses delivered in the process.
The department responded that there were projects, according to their business plan, that had been waiting for funding. This was the basis on which the additional allocation had been requested. It added that the districts were still in the process of accreditation and that the funds were transferred to municipalities that had made claims. According to the department the transfers were done two weeks prior to the meeting with the Committee. The Sol Plaatjie Municipality, however, disputed having received money from the department.
The Committee expressed a concern at the contradiction in the versions given by the department and the Sol Plaatjie Municipality and sought clarity on the nature of communication lines in regard to transfers of funds.
The Committee raised the matter regarding material that had been bought for the delivery of houses. A group of housing beneficiaries called the Homeless Federation had been present in a visit three years ago during a provincial week wherein decisions were taken with respect to the delivery of houses. Certain promises were made at the time to a parliamentary delegation but nothing had come of them.
The Committee was informed that the project had stopped pending an investigation that was underway with regards to materials that had been bought. It was reported that the Premier had instituted the investigation into the matter. The municipality reported that this was one of the projects that had been stifled by the department who went into agreements with contractors, bypassing the municipality and issuing subsidies.
It was not clear how exactly the department had come up with a list of beneficiaries given that the municipality had been excluded from all processes. It was noted that, under normal circumstances, the indigent list should be with the municipality. To this end the department responded that it had held several meetings with the municipality and other support organisations. The Sol Plaatjie municipality disputed this. It further reported that the current beneficiaries were not eligible to benefit from the project.
Recommendations of the Committee
The Committee recommends as follows:
1. Projects should be in line with the Integrated Development Plans (IDP) and in consultation with the Sol Plaatjie Municipality.
2. The Northern Cape Premier should be asked for the report on the investigation she had instituted.
3. The Mayor of Sol Plaatjie and the Department of Local Government and Housing should assist by expediting availability of the report on the investigation to avoid further delays which were leading to escalated costs.
Roads and Public Works
The Committee noted with concern that there seemed to be a communication problem within the department. A question was posed on the status of a project that related to one mental hospital in the Province. A further question related to the provision of transport to other departments and whether this responsibility lay with the transport department or not. Furthermore the Committee enquired whether the department had any Service Level Agreements with suppliers. Spending as at 31 December was as 57% or over R2 million and now the expense was projected to be 100%. Capacity was another area of concern raised by the Committee.
In responding to these questions the department reported that in consultation with the Provincial Treasury, it had employed people, in terms of the IDP programme, who assist by looking into capacity issues and identifying the role of the department. With regards to the fleet management, it was reported that this service had been outsourced. At the time of the meeting the tendering process was underway.
The Committee was informed that Service Level Agreements (SLA) had been agreed to and the department was in the process of effecting them with the various departments it dealt with. It further reported that the Health department had not signed the SLA while other departments had signed.
The department acknowledged that its expenditure was at 57% by end December and maintained that at the time of the meeting it was at 100%. To justify this leap the department cited that from 14 December to 14 January contractor closed and that invoices were forwarded to the department in January and payments only started to take place then. They added that the maintenance of access roads was also a factor resulting in what appeared to be a March spike.
The department reported that they had approached treasury for money to build the SK road however treasury could not provide the funds. To this end the Committee felt that this was an indication that there had been no prior planning for the project, hence Treasury had no money for it.
A concern was raised with the Provincial Treasury in respect to its allocations towards roads infrastructure which amounted to a mere R199 million coming from the equitable share while the biggest allocation of R257 million came from conditional grants. The Committee noted that the bulk of that R199 million was probably spent on salaries.
Recommendations of the Committee
The Committee recommends as follows:
- A list of all municipalities to which money had been transferred and where access roads had been constructed should be submitted to the Committee;
- Furthermore there should be an indication of how these linked to the Municipal Infrastructure Grant and the Integrated Development Plans and
- This information should be forwarded to the Committee within three weeks after the consideration of the report by the Council..
Department of Agriculture
The department had overspent on CASP and Land Care and it argued that this was not as a result of poor planning on its part. It added that bulk of its spending took place from January because there had been outstanding completion certificates that were required before money could be paid out. Furthermore it reported that the allocations of the conditional grants were based on each project determining how much money it required.
The Committee enquired on how the overspending would be funded and whether there were any programmes that had been compromised to fund the land care programme. The department responded that funding would come from the equitable share and a food security fund. Some of the money came from the hydroponics project in Moreletswa which was under-spending. To this end it was pointed out that the department was compromising issues of food security. The place where the hydroponics structure had been put up had no drainage and alternative location needed to be found. The location had been in an industrial area where there were no community members. It was noted that the project had not been compromised but merely relocated. There were interactions with the Droogfontein beneficiaries with the view to moving the project to their location.
The Sol Plaatjie Municipality reported that the report about the project was different from the information at its disposal. It added that it had not been consulted about the relocation of the said project. The department apologised for not involving the municipality in the project and undertook to improve on this front.
The Committee encouraged the two to finalise the matter and noted that the performance of the department would be closely monitored by the Committee. It was found to be an interesting coincidence that all invoices had come through at the same time. The Committee also pointed out that vandals would always be there hence the need to partner with communities and municipalities.
A question was posed to the Provincial Treasury as to how much would be allocated towards agriculture in the coming year for infrastructure, given that some of its projects were in crops and live stock. Provincial Treasury indicated that the department had been given R8.8 million for the 2008/9 financial year based on their business plan and on the basis of page 108 of the Division of Revenue Act.
Mr Goeieman and the department were tasked to visit some of the projects outlined by the department. It was indicated that in some cases, Mr Goeieman would need to conduct unannounced visits to ascertain whether the projects reported on did exist. His task would be to assess the impact of these projects on the communities within which they existed and the sustainability thereof.
Report to be considered.
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