ATC200820: Report of the Portfolio Committee on Transport on the 2019/20 Fourth Quarter Expenditure of the Department of Transport,Dated 18 August 2020

Transport

REPORT OF THE PORTFOLIO COMMITTEE ON TRANSPORT ON THE 2019/20 FOURTH QUARTER EXPENDITURE OF THE DEPARTMENT OF TRANSPORT,DATED 18 AUGUST 2020

 

The Portfolio Committee on Transport, having considered the expenditure of the Department of Transport for the Fourth Quarter of the 2019/20 financial year, reports as follows:

 

1. INTRODUCTION

The prime mandate of the Committee is governed by the Constitution of the Republic of South Africa, 1996 (“the Constitution”), in respect of its legislative and oversight responsibilities as public representatives. It is required to consider legislation referred to it and consider all matters referred to it in terms of the Constitution, the Rules of the National Assembly or resolutions of the House. It is also required to respond to matters referred to it by Government within its mandate. In addition, the Committee is entrusted with considering the budgets, Strategic Plans and Annual Performance Plans of the Department and entities that fall within the transport portfolio. This report provides an overview of the expenditure of the Department of Transport for the Fourth Quarter of the 2019/20 financial year, as presented to the Committee on 2 June 2020.

 

1. analysis and summary of the 2019/20 FOURTH quarter expenditure of the department of transport

 

In 2019/20, the budget allocation of the Department of Transport (“the Department”) stood at R64.2 billion. By the end of the Fourth Quarter of the financial year, the Department had spent R63.7 billion, translating into an underspending of 0.8%. The Department had spent R478.9 million against the available budget of R504.9 million on the Compensation of Employees. This represented an underspending of R26 million or 4.8%, and this was due to the slow filling of vacant senior and critical posts.[1] The Department had 732 filled posts against a funded establishment of 819 posts, indicating a vacancy rate of 10.6% or 87 vacant posts.

 

2.1BUDGET expenditure per programme

 

Table 1: Expenditure per Programme

Programme R’ Million	Main Appropriation	Adjusted Appropriation	Available Budget	Year End Actual Expenditure	Expenditure as % of Available Budget	Underspending	% Underspending
Administration	463	443	413	407	98.5%	6	1.5%
Integrated Transport Planning	169.2	166.2	153.2	64.1	41.8%	89.1	58.2%
Rail Transport	16 573.8	16 573.8	16  563.8	16 560.2	100%	3.6	0.02%
Road Transport	33 018.1	33 073.9	33 295.5	33 286	100%	9.6	0.03%
Civil Aviation Transport	245.1	243.3	224.3	178.8	79.7%	45.6	20.3%
Maritime Transport	136.8	136.8	135.8	132.9	97.9%	2.9	2.1%
Public Transport	13 588.1	13 568.1	13 419.4	13 077.5	97.5%	341.9	2.5%
Total	64 194.2	64 205.1	64 205.1	63 706.5	99.2%	498.6	0.8%

Source: National Treasury (2020).

 

2.1.1     Programme 1: Administration

 

By the end of the Fourth Quarter of 2019/20, the Department had spent R407 million against the available budget of R413 million in the Administration programme. The underspending of R6 million or 1.5% was mainly due to the slow filling of vacant posts, particularly senior posts and delays in the appointment of a service provider for the forensic audit of the Provincial Roads Maintenance Grant (PRMG).[2]

 

2.1.2     Programme 2: Integrated Transport Planning

 

As at the end of the Fourth Quarter of 2019/20, the Department had spent R64.1 million against the available budget of R153.2 million in the Integrated Transport Planning programme. The underspending of R89.1 million or 58.2% was mainly owing to outstanding invoices from Statistics South Africa for the 2018 National Household Travel Survey.[3]

 

2.1.3     Programme 3: Rail Transport

 

The Department had spent R16.563 billion against the available budget of R16.560 billion in the Rail Transport programme. The underspending of R3.6 million or 0.02% was mainly due to delays in projects such as the intervention strategy for the Passenger Rail Agency of South Africa (PRASA) and the establishment of the Interim Rail Economic Regulator. [4]

 

2.1.4     Programme 4: Road Transport

 

Under the Road Transport programme, the Department had spent R33.286 billion against the Fourth Quarter projection of R33.295.5 billion. The underspending of R9.6 million or 0.03% was mainly supposedly owing to delayed procurement for a service provider for the S’hambaSonke programme.[5]

 

2.1.5     Programme 5: Civil Aviation Transport

 

As at the end of the Fourth Quarter of 2019/20, the Department had spent R178.8 million against the projection of R224.3 million in the Civil Aviation Transport programme. The underspending of R45.6 million or 20.3% was mainly due to:[6]

 

• The slow filling of vacant posts;
•  A reduced contract amount for Watch-Keeping Services;
•  The in-sourcing of services related to projects such as the review of aeronautical search and rescue services, as well as the concept paper on an aviation training academy in South Africa.  

 

2.1.6     Programme 6: Maritime Transport

 

By the end of the Fourth Quarter of 2019/20, the Department had spent R132.9 million against the projection of R135.8 million in the Maritime Transport programme. The underspending of R2.9 million or 2.1% was mainly due to the slow filling of vacant posts and delays in projects such as the Review of the Merchant Shipping Bill and the feasibility study on Tug Boat Services.[7]

 

2.1.7     Programme 7: Public Transport

 

The Department had spent R13.1 billion against the 2019/20 Fourth Quarter projection of R13.4 billion in the Public Transport programme. The underspending of R341.9 million or 2.5% was mainly owing to lower than expected demand on the Taxi Recapitalisation Programme (TRP) and the withholding of transfer payments of the Public Transport Network Grant (PTNG) due to non-compliance on the part of Nelson Mandela Bay Municipality.[8] The underspending was also attributed to delays in the appointment of service providers for the monitoring of public transport grants and the implementation of the ShovaKalula bicycle programme.[9]

 

2.1.8     Virements and Shifts of Funds

 

By the end of the Fourth Quarter of 2019/20, the National Treasury had approved the following virements and the shifts of funds:[10]

 

• R2.1 billion shift from capital transfers to PRASA to current transfers in order for the Agency to pay some of its overdue payables such as electricity bills and a court settlement invalidating the dismissal of employees. The shifts of funds were as follows:[11]

 

• R387.4 million from Signalling to Metrorail: Operations;
• R432.6 million from Signalling to Metrorail: Operations; and
• R1.3 billion from Metrorail: Refurbishment of Coaches to Metrorail: Operations.

 

3.ISSUES FOR CONSIDERATION BY THE COMMITTEE

 

3.1        National Household Survey

 

This study was last conducted in 2013 and an updated survey is overdue.[12] The survey is necessary to better inform and direct policy reform, particularly the Public Transport Subsidy Strategy and allocative efficiency in public transport grants. As at 31 March 2020, the total available budget of R73.6 million had not been spent supposedly due to outstanding invoices from Statistics South Africa, the service provider appointed to conduct the survey.[13]

 

 

3.2        Public Transport Grants Monitoring

 

An amount of R40 million (2018/19: R50 million and 2017/18: R30 million) had been earmarked for the Department to strengthen its oversight and monitoring capabilities for public transport grants. However, the spending of the earmarked funds continued to be a challenge for the Department. As had been the case in the previous two financial years, the earmarked funds remained unspent in 2019/20, which is a cause for concern.

 

3.3        Taxi Recapitalisation Programme (TRP)

 

By the end of the Fourth Quarter of 2019/20, the Department had spent R140.4 million against the projection of R414.7 million for the TRP. This represented underspending of R274.3 million or 66.1%. This underspending had persisted despite the appointment of a new service provider to administer the programme and a significant increase in the old taxi vehicle scrapping allowance from R91 100 to R124 000.

 

1. COMMITTEE OBSERVATIONS

Members made the following observations during discussions:

 

4.1        The focus of the Arrive Alive road safety campaign was welcomed, but concern was expressed about the shifting of funds from the Taxi Recapitalisation Programme to the Arrive Alive Campaign.

4.2        The Department was asked about whether the suspension of funds for the Public Transport Network Grant (PTNG) to Nelson Mandela Bay Metropolitan Municipality, as per Section 216 sub section 2 of the Constitution of South Africa 1996, should not have been dealt with in a different manner. 

4.3        Members noted that there were claims that PRASA has been unable to pay its security companies and that it could have been the main reason for vandalism of PRASA infrastructure. 

4.4        It was noted that PRASA intended to operate a limited service on 162km of its railway from 1 July under level 3 of Covid-19 regulations, which was very little compared to the total kilometres railway lines under PRASA.

4.5        It was noted thatthe Department had spent 100% of its budget allocation in the Rail and Road Transport programmes by the end of the Fourth Quarter. Members were of the view that this did not equate to actual service delivery to passengers.

4.6        The savings on watchkeeping services were welcomed.

4.7        It was noted that more than R400 million was spent on the IPTN in Mangaung in the past year and close to R100 million in the last quarter, yet only ten (10) busses were bought and none were operating in the city.

4.8        Concern was expressed about R282 million that was spent on consultants in Mangaung. The Department was askedwhether the use of consultants for projects funded under this grant was monitored to ensure the City and these consultants deliver on their terms of reference.

4.9        Members noted the bilateral progress engagements conducted with all the Integrated Public Transport Networks implementing municipalities.

4.10      The Department was asked to clarify virements of R2 billion from the allocated budget for refurbishment of coaches at Metrorail to the settlement of ESKOM bills and court fees.

4.11      The under expenditure on vacancies across multiple programmes remained a concern and had to be rectified.

 

1.     COMMITTEE RECOMMENDATIONS

 

The Committee recommends that the Minister, through the Department, should, within 30 days of adoption of this report, ensure the following:

 

5.1        That the Department report onthe conditions per the Division of Revenue Act that the Nelson Mandela Bay Municipality had not complied with and whichresulted in the withholding of the payments of the PTNG to the Municipality. In addition, the Department should state whether it made any interventions or offered any guidance with a view to assisting the Nelson Mandela Bay Municipality to comply with the conditions of the DORA pertaining to transfer payments of the PTNG.

5.2        That the Department provide the Committee with a report on actual expenditure to date in each of the 13 IPTN grant recipient cities since the introduction of the project. This report should cover all information on these projects as it relates to the infrastructure, staffing and tools for operation. The Department should further provide the Committee with a report on the outcome of the bilateral engagements with the IPTN grant recipient cities.

5.3        That the Department provide a breakdown of sectors benefitting from the Department’s expenditure on goods and services

5.4        That the Department provide the Committee with timeframes on when the vacancies for senior management positions within the Department as well as its entities would befilled.

5.5        That the Departmentprovide the Committee with a comprehensive briefing on the progress to remedy the findings from the Public Protector’s Report on the illegal conversion of panel vans and on whether this was mainly being done through the implementation of the Revised Taxi Recapitalisation Project.

 

 

Report to be considered.

 

---

[1]National Treasury (2020).

[2]Ibid.

[3]Ibid.

[4]Ibid.

[5]Ibid.

[6]Ibid.

[7]Ibid.

[8]Ibid.

[9]National Treasury (2020).

[10]Ibid.

[11]Ibid.

[12]One of the arguments for the introduction of a single ticket based system for public transport use was that the date that can be captured with the use of such a ticketing system could serve as a virtually live daily travel survey of public transport passenger movement. This would alleviate the current delays in completion of travel surveys and would assist with updated infrastructure and transport route planning.

[13]National Treasury (2020).