ATC200715: Report of the Portfolio Committee on Sport, Arts and Culture on the Impact of COVID-19 on the Strategic Plan and Annual Performance Plan of the Department of Sport, Arts and Culture Budget Vote 37: Sport, Arts and Culture, dated (14 July 2020)

Sports, Arts and Culture

Report of the Portfolio Committee on Sport, Arts and Culture on the Impact of COVID-19 on the Strategic Plan and Annual Performance Plan of the Department of Sport, Arts and Culture Budget Vote 37: Sport, Arts and Culture, dated (14 July 2020)

 

The Portfolio Committee on Sport, Arts and Culture having considered Budget Vote 37: Sport, Arts and Culture and the 2020/2021 Annual Performance Plan (APP) of the Department of Sport, Arts and Culture on 20 May 2020, report as follows:

  1. INTRODUCTION

TheAPP is revised during a financial yearunder the following conditions, i.e. (a) Revisions to the SP (if there are significant changes to policy, in the service delivery environment or in the planning methodology) will require revision of the outcomes and related outputs of the APP, (b) Targets changed as a result of the in-year budget adjustment process and must be reflected in a re-tabled APP and Adjusted Estimates of National Expenditure (ENE).On 7 July 2020, the Department of Sport, Arts and Culture presented their Revised Strategic Plan and Annual Performance Plan with proposed allocations and possible adjustments to the Portfolio Committees on Sport, Arts and Culture.Therefore, this Special Adjustment Budget seeks to modify the 2020/21 budget to utilize current baseline allocations to provide for the rapidly changing economic conditions and enable spending on the COVID-19 pandemic.A revised fiscal framework was presented to the Portfolio Committee to account for substantial revenue losses originating from the economic shock of the COVID-19 pandemic and subsequent lockdown that has taken more than hundred (100) days.This Special Adjustment Budget supplements the February 2020 Budget by reallocating resources from programmes or activities that have already been put on hold during the lockdown period, projects where implementation dates could be deferred to the next financial year or projects and spending activities that are not critical to the core service delivery requirements of Departments. Funds are reallocated to services and programmes which are critical in responding to the COVID-19 pandemic. The budget analysis is intended to provide a summary and analysis of the programmes that have received additional allocations from the supplementary budget as well as programmes whose allocations have been revised downward or suspended.

  1. DEPARTMENT OF SPORT, ARTS AND CULTURE’S REPONSE TO COVID-19 PANDEMIC AND LOCKDOWN

 

On 23 March, President Cyril Ramaphosa announced that the national lockdown was to commence on 26 March 2020. While in preparation for the lockdown and the partial closure of the economy, President Ramaphosa had to present a R500 billion stimulus in response to the COVID-19 pandemic on 21 April 2020. All national government departments were now required to change their strategic plans and budget in order to support the programmes dealing with the COVID-19 pandemic.

The Minister of Sport, Arts and Culture gave an overview regarding the work that the Department was doing and the plans to continue to work under the lockdown. He acknowledged that the Department has reprioritized its budget allocation from the first quarter of the 2020/21 financial year to make more than R150 million available to provide much-needed relief to practitioners in the sport, arts and culture (SAC) sector. The plan was to prioritise artists and practitioners who were already booked to perform at some of the cancelled and postponed events funded by the Department.

To safeguard the health of athletes and others involved, most major sporting events at international, regional and national levels have been cancelled or postponed; from marathons to football tournaments, athletics championships, netball to basketball games, handball, rugby, cricket, sailing and more. The Olympics and Paralympics, for the first time in the history of the modern games, have been postponed, and will be held in 2021.

The global market value of the sports industry is estimated at 490 Billion USD (R8.5 Trillion) billions of rand. In the face of COVID-19, millions of jobs are therefore at risk globally, not only for sports professionals but also for those in related retail and sporting services industries connected with leagues and events, which include travel, tourism, infrastructure, transportation, catering and media broadcasting, among others.

Professional athletes are also under pressure to reschedule their training, while trying to stay fit at home, and they risk losing professional sponsors who may not support them as initially agreed. The Department of Sport, Arts and Culture through the Director General (DG) presented a comprehensive report before the Portfolio Committee to support the overview of the Minister.

  1. THE IMPLICATIONS OF THE COVID-19 PANDEMIC ON THE MANDATE OF THE DEPARTMENT OF SPORT, ARTS AND CULTURE.

 

Arts and Culture sector:

  • The Creative and Cultural Industries (CCIs) are one of the fastest growing industries and should be at the centre of national strategic priority to unlock wider economic participation and inclusivity in the mainstream economy.
  • People in cultural occupations make up about 3% of all jobs in South Africa, rising to nearly 7% (1 million jobs) when people working in creative industries support occupations are included.
  • The majority (86%) of those in cultural occupations in South Africa are black (including black Africans, coloured people and people of Indian/Asian origin), although white people are still over-represented when comparing the demographic make-up of the country.
  • The advent of the Covid-19 pandemic means that the Department will be dependent on ICT to function going forward. As such, the ICT unit will have to prioritise the automation of various business processes to ensure that DSAC business units can operate remotely and on-site during the various lockdown levels.
  • Public entities have been brought on board to assist the Department with the implementation of the relief efforts directed to the Creative sector.
  • To this end, funds have been approved for transfer to the National Arts Council, National Film and Video Foundation and Business and Arts South Africa to manage the disbursement of COVID-19 relief funds to beneficiaries on behalf of the Department.

 

Sport and Recreation Sector:

  • The Recreation Development and Sport Promotion Programme is structured in line with the National Sport and Recreation Plan, that is based on the pillars of: Active Nation, Winning Nation, Enabling Environment, and Cross-cutting issues. The programme has an immense value of using sport and recreation to promote social cohesion across society through increased interaction across race and class.
  • In 2020/2021, the programme was allocated R1 460 billion. This budget allocation has however been reduced to R1 099 billion because of the effect of Covid-19.
  • In addition, an amount of R120 million was re-allocated for Covid-19 relief funding both at a national and provincial levels. The relief funding is meant to alleviate the effect of Covid-19 on the affected parties within the sector. This comes in the form of supporting athletes, coaches, and technical personnel, who would have otherwise gained an income if there were no Covid-19 restrictions relating to sport.
  • The criteria for the Relief Fund applied to the following:
  • Loss of Income due to cancelled Events/Projects/ Productions as a result of the National Lockdown,
  • Loss of income for Athletes and Arts-practitioners who were confirmed to participate in events that have been cancelled, and
  • Financial support to digital proposals that provide alternative to conventional presentation platforms.

 

  1. REPRIORITISATION TOWARDS COVID-19 BY THE DEPARTMENT OF SPORT, ARTS AND CULTURE.

The Department of Sport, Arts and Culture has indicated that they have five sites which they will supply with Personal Protective Equipment (PPEs). The R5 million has been reprioritized by the Department within Programme 1: Administration to cover for the COVID-19 procurement of Personal Protective Equipment (PPEs), and funds have been made available from the Travel and Subsistence line item. 

The Department has also reprioritised R130 million. The R62 million has been re-allocated at national level, the Department has set aside R68 million to be transferred to the provinces (i.e. R58 million for Mass Participation Grant and R10 million for Community Library Services Grant). All these funds will be utilised for COVID-19 related transactions. A virements and shifts approval of R120 million has been granted by the National Treasury/Parliament.

  1.  Actual Adjustment Implemented Per Programme

Table 1: Actual Adjustment Implemented Per Programme

Economic Classification

Main Appropriation

Virements

& Shifts

Suspension of funds

Allocation of funds

Adjusted Appropriation

 

R'000

R'000

R’000

R’000

R'000

Administration

451 862

-

(2 500)

-

449 362

Recreation Development& Sport Promotion

1 460 320

-

(480 333)

120 000

1 099 987

Arts & Culture Promotion & Development

1 295 143

-

(225 213)

-

1 069 930

Heritage Promotion & Preservation

2 512 839

-

(387 256)

10 000

2 135 583

Total

5 720 164

-

(1 095 302)

130 000

4 754 862

 

 

  1. Actual Adjustment Implemented Per Economic Classification

Table 2: Actual Adjustment Implemented Per Economic Classification

Economic Classification

Main Appropriation

Virements

& Shifts

Suspension of funds

Allocation of funds

Adjusted Appropriation

 

R'000

R'000

R’000

R’000

R'000

Compensation of Employees

407 765

-

(10 000)

-

397 765

Goods & Services

610 929

(42 000)

(86 855)

-

482 074

Provinces & Municipalities Grant

2 075 710

-

(604 491)

68 000

1 539 219

Dept Agencies &Acc (Cur)

1 640 252

35 000

(82 096)

-

1 593 156

Dept Agencies &Acc (Cap)

219 516

-

(85 017)

-

134 499

Higher Education Institutions (Cur)

6 791

-

-

-

6 791

Foreign Government& International Organisations

5 327

-

-

-

5 327

Non Profit Institutions (Cur)

385 489

30 000

(97 830)

62 000

379 659

Non Profit Institutions (Cap)

14 663

-

(10 239)

-

4 424

Households

31 500

-

(9 671)

-

21 829

Public Corporations (Cur)

112 319

(23 000)

(41 400)

-

47 919

Public Corporations (Cap)

582

-

-

-

582

Heritage Assets (Legacy projects)

197 799

-

(67 703)

-

130 096

Machinery & Equipment

11 522

-

-

-

11 522

Total

5 720 164

-

(1 095 302)

130 000

4 754 862

 

  1. ANALYSIS OF THE REVISED BUDGET ON EACH PROGRAM

The adjusted budget allocation for June for the 2020/21 financial year is R4.75 billion compared to the main allocation of R5.72 billion. This amounts to a total reduction of R965.3 million, or 16.9%, across the four programmes.The Department’s budget will be spent over four major programmes, namely:

 

  • Programme 1 – Administration;
  • Programme 2 – Recreation Development and Sport Promotion;
  • Programme 3 – Arts and Culture Promotion and Development; and
  • Programme 4 – Heritage Promotion and Preservation.

 

Programme One: Administration

Table 3: Administration

Economic Classification

Main Appropriation

Virements& Shifts

Suspension of funds

Allocation of funds

Adjusted Appropriation

 

R'000

R'000

R’000

R’000

R'000

Compensation of Employees

193 235

-

(2 500)

-

190 735

Goods and Services: Office Accommodation

121 964

-

-

-

121 964

Goods and Services

125 041

-

-

-

125 041

Machinery and Equipment

11 522

-

-

-

11 522

Dept Agencies &Acc (Cur)

100

-

-

-

100

Total

451 862

-

(2 500)

-

449 362

 

Programme one of administration had an initial appropriation of R451 million which was adjusted to R449 million. The budget was reduced by R2.5 million which was taken from compensation of employees. Programme 1 however, had the lowest reduction in budget.

 

Programme Two: Recreation Development and Sport Promotion

Table 4: Recreation Development and Sport Promotion

Economic Classification-

Main Appropriation

Virement& Shifts

Suspension of Funds

Allocation of funds

Adjusted Apropriation

 

R'000

R'000

   

R'000

Compensation of Employees

49 829

-

(2 500)

-

47 329

Goods and Services

139 253

(10 000)

(23 374)

-

105 879

Dept Agencies &Acc (Cur)

45 082

-

-

-

45 082

Dept Agencies &Acc (Cap)

219 516

-

(85 017)

-

134 499

Heritage Assets (Legacy Projects)

197 799

-

(67 703)

-

130 096

Households

7 518

-

(1 500)

-

6 018

Non Profit Institutions (Cur)

189 461

10 000

(8 000)

62 000

253 461

Non Profit Institutions (Cap)

14 663

-

(10 239)

-

4 424

Provincial & Local Government

596 617

-

(282 000)

58 000

372 617

Public Corporations (Cap)

582

-

-

-

582

Total

   1 460 320 

    -

(480 333)

120 000

1 099 987 

 

Programme two of recreation development and sport promotion had an initial allocation of R1.46 billion, which was adjusted to R1.1 billion. An amount of R480 million was suspended from the programme. Most of the funds were taken from the provincial and local government transfers. Programme 2 had the highest reduction of the budget, compared to other programmes.

 

Programme three: Arts & Culture Promotion and Development

Table 5: Arts & Culture Promotion and Development

 

Economic Classification

Main Appropriation

Virements& Shifts

Suspension of funds

Allocation of funds

Adjusted Appropriation

 

R'000

R'000

R’000

R’000

R'000

Compensation of Employees

94 903

-

(2 500)

-

92 403

Goods and Services

171 501

(32 000)

(47 216)

-

92 285

Department Agencies

708 892

35 000

(36 096)

-

707 796

Higher Education Institutions (Cur)

6 791

-

-

-

6 791

Foreign Government & International Organizations

3 191

-

-

-

3 191

Non Profit Institutions (Cur)

180 163

20 000

(89  830)

-

110 333

Households

17 383

-

(8 171)

-

9 212

Public Corporations (Cur)

112 319

(23 000)

(41 400)

-

47 919

Total

1 295 143

-

(225 213)

-

1 069 930

 

Programme Three of arts and culture promotion and development had an initial budget allocation of R1.29 billion, which was adjusted to R1.06 billion. An amount of R225 million was suspended under programme 3. Most of the funds were taken from non-profit institutions.

 

Programme Four: Heritage Promotion & Preservation

Table 6:Heritage Promotion & Preservation

Economic Classification

Main Appropriation

Virements& Shifts

Suspension of funds

Allocation of funds

Adjusted Appropriation

 

R'000

R'000

R’000

R’000

R'000

Compensation of Employees

69 798

-

(2 500)

-

67 298

Goods and Services

53 170

-

(16 265)

-

36 905

Dept Agencies &Acc (Cur)

886 178

-

(46 000)

-

840 178

Foreign Govn& International Org

2 136

-

-

-

2 136

Non Profit Institutions (Cur)

15 865

-

-

-

15 865

Households

6 599

-

-

-

6 599

Provinces & Municipalities Grant

1 479 093

-

(322 491)

10 000

1 166 602

Total

2 512 839

-

(387 256)

10 000

2 135 583

 

Programme 4 of heritage promotion and preservation had an initial main appropriation of R2.5 billion, which was adjusted to R2.13 billion. An amount of R387 million was suspended from the programme. Most of the funds were taken from the provincial and municipal grants.

 

Table 7: Overall summary of budget adjustments

R thousand

Downward revisions

Reallocations

2020/21 Total net change

Community libraries: Scaling back on the purchase of library materials, the construction of selected new libraries and the upgrading of selected existing libraries. An amount of R10 million has been reallocated for decontaminating community libraries and purchasing personal protective equipment for staff.

-322 491

10 000

-312 491

Mass participation and sport development grant: Provinces will use funds for cancelled competitions to compensate the sport sector for the loss of earnings due to the restrictions on economic activity.

-282 000

58 000

-224 000

Transfer payments: Mzansi Golden Economy (MGE) and entity transfers will be scaled down. MGE events and calls for proposals for funding of projects have been scaled down due to the restrictions on economic activity, with some events postponed to the fourth quarter. An allocation of R95 million will compensate the arts and culture sector for loss of income due to the restrictions on economic activity.

-209 856

95 000

-114 856

Infrastructure support: The implementation of infrastructure projects at various museums and the National Archives, as well as some legacy projects, has been delayed due to the restrictions on economic activity.

-152 720

-

-152 720

Goods and services: Suspensions relate mainly to travel costs, payment to service providers for digital services for the live screening of artists’ performances and contractors for heritage projects, and the cancellation of events due to the restrictions on economic activity.

-143 855

15 000

-128 855

Transfers to heritage institutions: The operational transfers to museums, the National Heritage Council (NHC), the National Library of South Africa (NLSA) and the South African Heritage Resources Agency (SAHRA) have been reduced. As a result, entities must implement cost-containment measures.

-46 000

-

-46 000

Transfer payments: Scaling down projects resulting in reduced Cultural and Creative Industries Development transfers to households, non-profit institutions and private enterprises due to the restrictions on economic activity, and a reduction in transfers relating to social cohesion projects that have been cancelled.

-28 641

-

-28 641

Recreation Development and Sport Promotion: Various activities suspended, including loveLife programmes due to delays in infrastructure projects at community arts centres, as well as suspensions on goods and services and other transfer payments. An amount of R72 million will compensate the sport sector at a national level for the loss of earnings due to the restrictions on economic activity.

-19 739

72 000

52 261

Compensation of employees: Filling of vacancies suspended until later in the financial year.

-10 000

-

-10 000

Total

  • 1 215 302

250 000

-965 302

Source: National Treasury (2020b), p.94.

 

 

 

  1. COMMITTEE OBSERVATIONS AND FINDINGS

Members raised the following with the Department of Sport, Arts and Culture (DSAC) in respect to the proposed allocations and possible adjustments in respect of the Budget Vote 37: Sport, Arts and Culture:

  1.  Members queried whether the Department has any plans to save sport, arts and culture sector, which was badly affected by lockdown.
  2.  Members were worried that some people did not receive funding and that has pushed them to more financial challenges.
  3.  Members were of the view that, the Department need to start utilizing their own staff members and desist from outsourcing work to service providers.
  4. Members showed concern that the total COVID-19 Relief fund dispersed so far is about R40 million, leaving about R110 million and they wanted the Department to speed up the processes because it was too slow while people were waiting for assistance.
  5.  The Committee noted that it was important that payments of invoices were made within 30 days, and aim to reach a clean financial audit opinion even during COVID-19.
  6. Members were concerned that, most of the small federations were struggling financially and risk bankruptcy in the next few months because the sports and recreation programme has received a 32% budget cut. They wanted the Department to ensure that the smaller federations such as Gymnastics SA survived financially beyond the COVID-19 pandemic.
  7.  Members noted with concern that the response time and communication by the Department was not effective enough, this can be picked up by the complaints on social media that Committee members have been receiving about the Department. 
  8.  Members noted with concern that the highest budget cut occurred in the recreation development and sport promotion programme, indicating that the National professional and recreational sporting events may not happen in 2020. This may lead to more financial challenges for athletes and a possible reduction of participation among the general population in recreational sport and physical activity. This problem is further exacerbated by the closure of fitness centers (gyms) during the lockdown. The following were also noted:
  • Members were concerned that the there was a high risk that the cancellation of sporting; events may lead to athletes losing sponsors and endorsements;
  • Members were of the view that the negative impact of COVID-19 on economic, social and cultural rights was getting worse among vulnerable and marginalized groups and the Department should continue in its effort to mitigate the impact of the pandemic on practitioners and beneficiaries in the sector; and
  • Members showed concern that the special adjustment budget has impacted transfers to heritage institutions, i.e. museums, the National Heritage Council (NHC), the National Library of South Africa (NLSA) and South African Heritage Resources Agency (SAHRA).

 

 

  1. RECOMMENDATIONS

The Committee, having considered the Strategic Plan 2020 – 2025 and the Revised Annual Performance Plan 2020/21 of the Department recommends that the Minister of Sport, Arts and Culture consider the following:

  1.  The Department to make sure that there are proper monitoring and accountability tools in place to ensure that entities that have been entrusted with the allocations and dispersing of relief funds do so timeously and to the correct beneficiaries.
  2.  That the Department should continue to deliver services effectively while using digital solutions even though the sector was people driven where a number of people usually share the same space.
  3.  That the Department plays a strategic role in promoting technological usage by all entities and stakeholders to deliver services during these trying times of the COVID-19 pandemic.
  4.  The Department to fast-track payment to athletes and artists that have not received their relief funds.
  5. The Department should continue engaging South African Sport Confederation and Olympics Committee (SASCOC) in dealing with the issues faced by federations, during and post lockdown.
  6.  The Department to make sure that the COVID-19 relief funding process becomes transparent to the public.
  7.  The Department to reopen the application process for those who have not benefitted in the relief fund.
  8. The Department should ensure that safety precautions are adhered to when teams andathletes are preparing for the return to competitivesport.

 

  1. CONCLUSION

The Portfolio Committee on Sport, Arts and Culture, 2020 proposed Budget Vote 37: Sport, Arts and Culture, recommends that the House adopt the budget adjustment allocations forBudget Vote 37: Sport, Arts, and Culture.

The Democratic Alliance reserved their right to an opinion on the Budget Vote Report and the Economic Freedom Fighters objected to the approval of the Budget Vote Report.

 

Report to be considered.

 

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