ATC240312: Report of the Portfolio Committee on Transport on the 2023/24 Second and Third Quarter Expenditures of the Department of Transport Dated 12 March 2024

Transport

Report of the Portfolio Committee on Transport on the 2023/24 Second and Third Quarter Expenditures of the Department of Transport Dated 12 March 2024

 

The Portfolio Committee on Transport, having considered the expenditures of the Department of Transport for the Second and Third Quarters of the 2023/24 financial year on 27 February 2024, 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 expenditures of the Department of Transport for the Second and Third Quarters of the 2023/24 financial year, as presented to the Committee on 27 February 2024.

 

2.         ANALYSIS OF THE 2023/24 SECOND QUARTER EXPENDITURE OF THE DEPARTMENT OF TRANSPORT

 

For the 2023/24 financial year, the budget of the Department of Transport (“the Department”) sits at R79.6 billion and of this amount, the Department spent R39.3 billion (or 50.2%) against the Second Quarter projection of R40.3 billion.[1] The lower than projected spending was in the Road Transport and Public Transport programmes, comprising R513.8 million and R389.5 million respectively.[2]

 

The Department spent R261.9 million against the Second Quarter projection of R265.9 million for the Compensation of Employees (CoE). It spent R4.1million (or 1.5%) lower than projected mainly because of the delayed filling of vacant posts. By the end of the period under review, the Department had 766 filled posts against a funded establishment of 834 posts. This represents a vacancy rate of 10% (or 83 vacant posts).[3] The vacancy rate remained the same as it was by the end of the First Quarter of 2023/24, although the Department had 81 vacant posts at that time.[4]

 

2.1 Budget expenditure per programme

 

Table 1: 2023/24 Second Quarter Expenditure of the Department of Transport

Programme	Main Appropriation	Available Budget	Q2 Actual Expenditure	Expenditure As % of Available Budget	Q2 Projected Expenditure	Variance from Projected Expenditure	% Variance from Projected Expenditure	Disaster Spending
Administration	516.4	527.3	224.9	42.6%	243.6	18.7	7.7%	0.0
Integrated Transport Planning	89.4	91	48.9	53.7%	38.3	-10.6	-27.6%	0.0
Rail Transport	20 592.9	20 592.9	10 277.3	49.9%	10 297.8	20.5	0.2%	0.0
Road Transport	42 611.1	42 047.3	22 807.8	54.2%	23 321.6	513.8	2.2%	360.3
Civil Aviation Transport	314.5	317.5	159	50.1%	169.5	10.4	6.2%	0.0
Maritime Programme	379.2	263.6	94.2	35.7%	173.1	78.9	45.6%	0.0
Public Transport	15 048.9	14 442.7	5 707.2	39.5%	6 096.7	389.5	6.4%	0.0
Total	79 552.4	78 282.4	39 319.4	50.2%	40 340.6	1 021.3	2.5%	360.3

(Source: National Treasury (2023a))

 

2.1.1 Programme 1: Administration

 

The Administration programme spent R224.9 million (or 42.6%) against a projection of R243.6 million. This translates into a slower than planned spending of R18.7 million (or 7.7%). Spending delays were mainly on Goods and Services on projects pertaining to the document management solution, change management intervention, internal audit on the Provincial Roads Maintenance Grant (PRMG) and “other operational costs”.[5]

 

2.1.2     Programme 2: Integrated Transport Planning

 

In the Integrated Transport Planning programme, the Department spent R48.9 million (or 53.7%) against a projection of R38.3 million. Expenditure was R10.6 million (or 27.6%) higher than planned spending on projects related to:[6]

• The Black Economic Empowerment (BEE) Charter Council;
• The South African Women in Transport empowerment project;
• Travel and subsistence;
• Advertising; and
• Venues and facilities.

 

2.1.3 Programme 3: Rail Transport

 

The Department spent R20.28 billion (or 49.9%) against a projection of R10.30 billion in the Rail Transport programme. Spending was R20.5 million (or 0.2%) lower than projected owing to slower than projected expenditure on:[7]

• The Compensation of Employees (CoE);
• Payment to the Housing Development Agency (HDA) for the relocation of informal settlements on the railway reserve in Cape Town as the service level agreement was under review;
• National Rail Devolution Strategy; and
• The Interim Rail Economic Regulator.

 

2.1.4 Programme 4: Road Transport

 

By the end of the Second Quarter of 2023/24, the Road Transport programme had spent R22.8 billion (or 54.2%) against a projection R23.3 billion. Spending was R513.8 million (or 2.2%) lower than projected due to:[8]

• The Administrative Adjudication of Road Traffic Offences (AARTO) rollout;
• Refurbishment component, as consultations with the Provinces on the PRMG were ongoing; and
• The revision of the payment schedule for the Rural Road Asset Management System (RRAMS) and the Welisizwe Rural Bridges Programme to align it with the Division of Revenue.

 

In addition, the Department reported that the service providers for the Road Transport Legislative Review, Development of the Disaster Road Management Plan and Standards for Audit against South African National Standards had been appointed. Furthermore, the Department maintained that the new Terms of Reference for the programme development for S’hamba Sonke had been developed and advertised, however, spending on these projects remained behind.[9]

 

2.1.5 Programme 5: Civil Aviation Transport

 

In the Civil Aviation Transport programme, the Department’s expenditure stood at R159 million (or 50.1%) against a Second Quarter projection of R169.5 million. Spending was R10.4 million (or 6.2%) lower than projected. The delay in expenditure was largely due to slow spending on Goods and Services for:[10]

• Regional Search and Rescue Conference;
• National Aviation Transformation Strategy; and
• Air Freight Strategy outstanding payments to the non-profit institutions for the Off-Road Rescue Unit and the South African Radio League.

 

2.1.6 Programme 6: Maritime Transport

 

By the end of the period under review, the Department had expended R94.2 million (or 35.7%) against a projection of R173.1 million in the Maritime Transport programme. Spending was R78.9 million (or 45.6%) lower than projected spending on Goods and Services mainly owing to:[11]

• The Tugboats public-private partnership (PPP) unitary payment as the Department was going to revisit the feasibility study for the building to the tugboat; and
• Slow progress on projects such as the World Maritime Day, Maritime Policy and Legislation and the Review of the Merchant Shipping Bill.

 

2.1.7 Programme 7: Public Transport

 

The Department had spent R5.7 billion (or 39.5%) against a projection of R6.1 billion in the Public Transport programme by the end of the Second Quarter of 2023/24. Expenditure was R389.5 million (or 6.4%) lower than projected spending on Transfers and Subsidies due to:[12]

• The revision of the payment schedule for the Public Transport Network Grant (PTNG) to align it with the Division of Revenue payment schedule and less demand on the Taxi Recapitalisation Programme; and
• Lower than projected spending on the CoE and Goods and Services for projects such as the Empowerment of Small Bus Operators, the implementation of the integrated public transport networks (IPTNs) in district municipalities, National Land Transport Act Amendment and the Capacity for Grant Monitoring.

 

2.1.8Disaster Response

 

As of 30 September 2023, the Department had spent R360.3 million on disasters caused by floods in the provinces.[13]

 

 

1. ANALYSIS OF THE 2023/24 THIRD QUARTER EXPENDITURE OF THE DEPARTMENT OF TRANSPORT

 

For the 2023/24 financial year, the budget of the Department sits at R78.3 billion and of this amount, the Department spent R59.4 billion (or 75.9%) against the Third Quarter projection of R58.5 billion.[14] This spending resulted in higher than planned spending of R954.7 million mainly on Transfers and Subsidies (totalling R971 million), and payments for capital assets (totalling R1.1 million).[15] The higher than projected spending on Transfers and Subsidies was mainly due to accelerated transfers to the Passenger Rail Agency of South Africa (PRASA), while that for capital assets was due to higher spending on bulk desktop and laptops purchases.[16]

 

Higher than planned spending for the Third Quarter was recorded in the following programmes and for the following amounts:[17]

• Administration programme (R25.2 million);
• Integrated Transport Planning programme (R6.7 million);
• Rail Transport programme (R902.4 million);
• Road Transport programme (R509.5 million); and
• Maritime Transport programme (R1.2 million).

 

However, the higher than planned spending was partially offset by lower than projected spending on CoE and Goods and Services due to the non-filling of vacant posts and delays in the evaluation of the National Road Safety Strategy and the Development of the Disaster Road Management Plan, respectively.[18]

 

The Department spent R397.7 million against the Third Quarter projection of R408.3 million for the CoE.[19] Spending was R10.6 million (or 2.6%) lower than projected mainly due to the delayed filling of fifty-six (56) vacant posts.[20]

 

For the period under review, the Department reported that it had managed to fill 74 posts, of which 14 were at senior management level, with the remainder across all salary levels.[21] Notwithstanding this, a total of 35 employees left the employ of the Department. The Department has consistently underspent in the preceding Quarters and considering the staff turnover, it is likely to underspend on its CoE budget.[22]

 

3.1       Budget expenditure per programme

 

Table 2: 2023/24 Third Quarter Expenditure of the Department of Transport

Programme R million	Main Appropriation	Adjusted Budget	Available Budget	Q3 Actual Expenditure	Expenditure As % of Available Budget	Q3 Projected Expenditure	Variance from Projected Expenditure	% Variance from Projected Expenditure	Disaster Spending
Administration	516.4	527.3	527.3	414.1	78.5%	388.9	-25.2	-6.5%	00
Integrated Transport Planning	89.4	91	91	76.5	84.1%	69.8	-6.7	-9.6%	0.0
Rail Transport	20 592.9	20 592.9	20 592.9	15 425.4	74.9%	14 523.1	-902.4	-6.2%	0.0
Road Transport	45 611.1	42 047.3	42 047.3	34 022.5	80.9%	33 513	-509.5	-1.5%	510.5
Civil Aviation Transport	314.5	317.5	317.5	235.8	74.3%	238.1	2.3	0.9%	0.0
Maritime Transport	379.2	263.6	263.6	138.8	52.6%	137.6	-1.2	-0.9%	0.0
Public Transport	15 048.9	14 442.7	14 442.7	9 095.2	63%	9 583.3	488.2	5.1%	0.0
Total	79 552.4	78 282.4	78 282.4	59 408.4	75.9%	58 453.7	-954.7	-1.6%	510.5

(Source: National Treasury (2023a))

 

3.1.1     Programme 1: Administration

 

The Administration programme spent R414.1 million against a Quarter projection of R388.9 million. This resulted in higher than projected spending of 6.5% (or R25.2 million). Accelerated expenditure was mainly on Goods and Services for payments made for office accommodation, software licences and communication campaigns. Payments for capital assets also contributed to higher than projected spending due to invoices from the previous financial year for the bulk procurement of desktops and laptops.[23]

 

3.1.2 Programme 2: Integrated Transport Planning

 

In the Integrated Transport Planning programme, the Department spent R76.5 million against a Quarter projection of R69.8 million. Spending was 9.6% (or R6.7 million) higher owing to mainly higher than anticipated spending on projects pertaining to the Black Economic Empowerment (BEE) Charter Council and the South African Network Women in Transport.[24]

 

3.1.3 Programme 3: Rail Transport

 

The Department spent R15.4 billion against a projection of R14.5 billion. Spending was 6.2% (or R902.4 million) more than what was projected. The accelerated expenditure was due to transfers to PRASA for various earmarked allocations, for example, for the Rolling Stock Fleet Renewal Programme, operations and transfers to other capital programmes. However, the programme spent lower than projected on the CoE and Goods and Services on projects such as the National Rail Master Plan, the establishment of the Rail Economic Regulator and the National Devolution Strategy.[25]

 

3.1.4 Programme 4: Road Transport

 

By the end of the Third Quarter of 2023/24, the Road Transport programme had spent R34 billion against a projection of R33.5 billion. Spending was 1.5% (or R509.5 million) higher than projected mainly on Transfers and Subsidies.[26] This was due to Transfers and Subsidies to the South African National Roads Agency Limited (SANRAL) for operations and non-toll network. However, the programme spent less than projected on Goods and Services for projects such as the Evaluation of the National Road Safety Strategy, Programme Development for S’hamba Sonke, the Central Data Repository, the Development of the Disaster Road Management Plan and the Road Transport Legislative Review project.

 

3.1.5 Programme 5: Civil Aviation Transport

 

In the Civil Aviation Transport programme, the Department spent R235.8 million against a Quarter projection of R238.1 million. Spending was 0.9% (or R2.3 million) below projections primarily on Goods and Services and Transfers and Subsidies. On Goods and Services, the lower than projected spending was attributed to delays in projects such as the Regional Search and Rescue, the Development of Regulations Permission for Airports Company South Africa (ACSA) and Air Traffic and Navigation Services (ATNS) which were “awaiting the development of terms of reference”.[27] On Transfers and Subsidies, less funds were paid to international organisations for membership fees, as per the agreements and outstanding payments to the non-profit institutions for the Off-Road Rescue Unit and the South African Radio League.[28]

 

3.1.6 Programme 6: Maritime Transport

 

By the end of the period under review, the Department had spent R138.8 million against a projection of R137.6 million. Spending was 0.9% or (R1.2 million) higher than what had been projected mainly on Goods and Services. This was mainly due to higher payments for the high-level meeting and the workshop which took place during the month of October and November 2023.[29]

 

3.1.7 Programme 7: Public Transport

 

The Department spent 63% (or R9.1 billion) against a projection of R9.6 billion in the Public Transport programme. Spending was 5.1% (or R488.2) below the Third Quarter projection. The programme’s lower than projected spending was on the CoE, Goods and Services, and Transfers and Subsidies.

 

On Goods and Services, lower spending than projected was owing to spending delays on projects such as Capacity on Public Transport Grant Monitoring, the National Land Transport Act Amendment, as well as the implementation of the Integrated Public Transport Network Plans in district municipalities.

 

Slow spending on transfers and subsidies was mainly on the Taxi Recapitalisation Project which is demand-driven, as well as funds withheld on the Public Transport Network Grant (PTNG) conditional grant to Nelson Mandela Bay, Mangaung, eThekwini and Polokwane municipalities. The withholding of funds is to allow for performance review engagements between the Department and the receiving authorities.[30] Finally, lower than projected spending on the CoE was due to the non-filling of 56 vacant posts.[31]

 

3.1.8 Disaster Response

 

By 31 December 2023, the Department had spent R360.3 million on disasters caused by flood damages to provinces for roads infrastructure repairs such as roads, bridges, and related infrastructure.[32]

 

 

4.         COMMITTEE OBSERVATIONS

 

Members made the following observations during discussions:

4.1       There was a concern that the performance objectives of the Department appeared not to be carried over into those of the entities and that there needs to be greater co-ordination between the Department and its entities to align programmes and targets;

4.2       The 22% vacancy rate was a recurring problem and that this could be resolved with proper talent acquisition plans. The Department has consistently underspent in the preceding Quarters and considering the staff turnover, it is likely to underspend on its Compensation of Employees budget for the financial year;

4.3       Members were of view that there should be corrective measures for the late payment of invoices, as it seemed that there were no internal controls to prevent the late payment processes;

4.4       The Department’s report on the number of responses to Parliamentary questions was noted, but the view was that the late submission of these replies effectively meant that they were not responded to as the members who asked these questions would not have access to copies of these late replies;

4.5       Concerns were raised that the Freight Migration Plan would struggle to be implemented while there continues to be inadequate rail infrastructure maintenance and while all corridors were not operational;

4.6       The Committee noted that the timelines for the appointment of the Aviation Safety Investigation Board may not be mindful of the Parliamentary programme framework for 2024, and the possible impact it may have on the appointment process;

4.7       The Committee noted that by the end of the Second Quarter of 2023/24, the Department had spent R39.3 billion (or 50.2%) against the Quarter’s projection of R40.3 billion. With 45.6 % variance from projected expenditure, the Maritime Transport programme was the lowest spending programme of the Department during the period under review. This programme requires closer oversight scrutiny to ensure not only better spending, but that performance targets are not compromised by poor spending.

 

5.         COMMITTEE RECOMMENDATIONS

 

The Committee recommends that the Minister, through the Department, ensure the following:

 

5.1       That the Department provides the Committee with a report on the improvements, if any, to the major port operations since the last engagement with the Department on this matter within 30 days of the adoption of this report by the House;

5.2       That the Department provided the Committee with the report on the implementation of the High-Speed Rail project and whether this is envisioned to be on existing rail lines or whether new rail lines would have to be laid down;

5.3       That the Department revise its timelines for the appointment of the Aviation Safety Investigation Board as the process must also involve Parliament as per the Civil Aviation Amendment Act 22 of 2021;

5.4       That the Department provide the Committee with quarterly reports on the following:

            a) The progress made in filling vacant posts within the Department as well as all of its entities as it applies to Boards, Senior Management and critical posts;

            b) The progress made in disciplinary measures to address the concerns raised with Supply Chain Management non-compliance;

            c) The progress made in resolving and addressing findings made by the Auditor-General of South Africa in the audit of the 2022/23 financial year;

            d) The updated report on matters currently under litigation and outcomes of finalised litigation with copies of court orders issued for or against the Department and its entities.

 

Report to be considered.

 

 

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[1] National Treasury (2023a), p. 145.

[2] National Treasury (2023a), p. 145.

[3] National Treasury (2023a), p. 147.

[4] National Treasury (2023b), p. 148.

[5] National Treasury (2023a), p. 146.

[6] National Treasury (2023a), p. 146.

[7] Ibid.

[8] Ibid.

[9] National Treasury (2023a), p. 146.

[10] Ibid.

[11] National Treasury (2023a), p. 146.

[12] Ibid.

[13] National Treasury (2023a), p. 147.

[14] National Treasury (2023a), p. 144.

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] National Treasury (2023a), p. 146.

[20] Ibid.

[21] Ibid.

[22] Ibid.

[23] National Treasury (2023a), p. 145.

[24] National Treasury (2023a), p. 145.

[25] Ibid.

[26] Ibid.

[27] National Treasury (2023a), p. 146.

[28] Ibid.

[29] Ibid.

[30] National Treasury (2023a), p. 146.

[31] Ibid.

[32] Ibid.