ATC121004: Report of the Select Committee on Appropriations on the hearing on the Fourth Quarter Expenditure on the Community Library Services Grant, dated 19 September 2012.

REPORT OF THE SELECT COMMITTEE ON APPROPRIATIONS ON THE HEARING ON THE FOURTH QUARTER EXPENDITURE ON THE COMMUNITY LIBRARY SERVICES GRANT, DATED 19 SEPTEMBER 2012.

1. Introduction

The hearing formed part of the Select Committee on Appropriations’ ongoing interaction with national departments and provinces to monitor their spending patterns on conditional grants allocated to them. A framework for each grant sets out the purpose of the grant, measurable objectives, conditions, allocation criteria, and past performance, among other things. The purpose of the Community Library Services Grant (the grant) is to ensure that urban and rural library services are transformed through a recapitalised programme at provincial level and to mainstream the policy framework for the public library sector. The focus areas for the grant are the following:

· Infrastructure development;

· Information and computer technology;

· Library resources;

· Staff capacity; and

· Visually impaired readers’ needs.

1.1 Terms of reference

The Committee invited the Department of Arts and Culture, the National Treasury, and the provinces of the North West , Mpumalanga and the Eastern Cape to make presentations on the provincial fourth quarter spending on the grant at a meeting on 5 June 2012. Although the provinces of the Eastern Cape and Mpumalanga attended the meeting and briefed the Committee, the North West Province did not respond to the invitation.

2. Briefing by National Treasury

The National Treasury indicated that it would be reporting on the numbers as received from provincial treasuries in terms of Section 32 of the Public Finance Management Act, (Act 1 of 1999). The National Treasury further indicated that it would be receiving pre-audited figures within the same week of appearing before the Committee.

The National Treasury reported that the total adjusted budget for the grant for the 2011/12 financial year had been R616 million and this amount has been transferred to, and spent by, provinces as follows:

Province	Adjusted budget R’000	Preliminary outcome as at 31 March 2012 R’000	Preliminary outcome as % of adjusted budget	% Over-/under-spent on adjusted budget
Eastern Cape	115 011	92 134	80.1%	19.9%
Free State	47 909	46 388	96.8%	3.2%
Gauteng	55 297	54 987	99.4%	0.6%
KwaZulu-Natal	48 971	49 361	100.8%	-0.8%
Limpopo	81 337	50 378	61.9%	38.1%
Mpumalanga	66 497	62 460	93.9%	6.1%
Northern Cape	73 802	73 714	99.9%	0.1%
North West	79 142	59 381	75.0%	25.0%
Western Cape	48 694	48 694	100.0%	0.0%
TOTAL	616 660	537 497	87.2%	12.8%

The National Treasury indicated that all provinces, except for KwaZulu-Natal and the Western Cape , had under-spent during the 2011/12 financial year. The Eastern Cape had accelerated their spending compared to the 2010/11 financial year, with a 91.4 per cent growth in spending. However, the province had still under-spent their allocation by R22.8 million. The North West Province had also improved its spending on the grant from the 2010/11 financial year, but had still under-spent its allocation by 25 per cent.

The National Treasury further reported on performance indicators as follows:

Output indicator	4 th Quarter		Annual
	Target	Actual	Target	Actual
Number of library materials purchased	115 400	114 558	50 000	342 887
Number of libraries provided with new furniture	19	34	89	42
Number of new libraries built	20	10	25	13
Number of libraries upgraded and maintained	61	37	67	51
Number of container libraries established	17	18	29	19

The National Treasury had identified a trend with regard to the above figures which suggested that provinces struggled to move their programmes forward in the first three quarters of the financial year, resulting in a big rush during the final quarter. Examples cited were the fact that out of the 13 libraries provided with new furniture, 10 of them had been achieved in the fourth quarter and, out of the 19 container libraries established for the 2011/12 financial year, 18 of them had been established in the fourth quarter - this pointed to shortcomings in the operational management of departments furniture during the year. This indicated that provinces had not been ready to implement at the start of the financial year.

The National Treasury reported that the following had been identified as key challenges in the implementation of the grant:

· Delays from suppliers with deliveries not being made on time. It was unclear to Treasury whether orders were in fact being placed on time.

· Delays internally in supply chain management. According to.

· Delays emanating from Public Works departments.

· Targets were not credible and were set too high on certain indicators.

· Poor performance by suppliers and ensuing legal action.

3. Briefing by Department of Arts and Culture

In terms of monitoring and evaluation, the Department of Arts and Culture (DAC) reported that it had discussed the progress and challenges with the implementation of grant projects with all nine provinces during four quarterly meetings. In addition, monitoring visits to projects and site visits were conducted regularly. During 2011, the DAC had embarked on a road show to provinces to discuss pertinent issues affecting service delivery.

With regard to the performance of the grant, the DAC reported the following achievements during the 2011/12 financial year:

· 13 new libraries had been completed in six of the nine provinces.

· 51 libraries had been upgraded in eight of the nine provinces.

· Visually impaired services had been established in 28 community libraries in four of the nine provinces.

· A total number of 347 library staff had been appointed and up to 700 library employees’ contracts had been renewed.

· Library staff in the provinces of Mpumalanga (28) and the Free State (16) had received bursaries to study library-related courses.

· New library materials including books, educational toys, DVDs and CDs had been purchased and distributed to community libraries.

· The conversion of the library system had taken place in some community libraries in six of the nine provinces.

· Provinces were prioritising the issue of information and communication technology (ICT) infrastructure and making sure that community libraries had public internet access. Internet connectivity existed in 217 libraries in five of the nine provinces.

The DAC reported that the following challenges had been experienced with the implementation of the grant:

· The job evaluation process for librarians remained unsolved by the Department of Public Service and Administration, despite numerous follow-ups by the DAC.

· Employment of staff on contract was a serious challenge.

· The salary disparities between the three spheres of government continued to create an unstable environment and staff retention and turnover was a serious challenge.

· The policy gaps at local government level led to unsustainability in service delivery. The inability of provinces to fund the total cost of the service remained a challenge for some municipalities.

· The biggest portion of the grant went into infrastructure and provinces had reported serious challenges in terms of the misalignment of infrastructure projects with the Department of Public Works.

· In some provinces, the capacity to manage the grant was a concern.

During an extra-ordinary meeting of the DAC with relevant provincial Heads of Department on 16 February 2012, key infrastructure issues had been highlighted and the following recommendations had emanated from the meeting:

· Provinces were to investigate a single library design, informed by local conditions, for new library buildings.

· Provinces were to investigate the possibility of using alternative implementing agents.

· Provinces were to consider alternative service delivery approaches like mobile libraries and containers of modular structures as short term interventions.

· Project management capacity needed to be established within the provinces.

4. Briefing by Mpumalanga Department of Culture, Sport and Recreation

The Department of Culture, Sport and Recreation (DCSR) of Mpumalanga Province reported that it had under-spent by R3.917 million on their R66.49 million grant allocation in the 2011/12 financial year. They reported the following reasons for the under-spending:

· Slow spending on library infrastructure projects.

· Delays in the submission of invoices by the infrastructure service provider and the implementing agent (IA).

· Late submission of progress certificates by the IA and principal agent.

· Changing of land allocated by municipalities for construction.

In order to address the infrastructure backlog and challenges affecting not only the projects of the DCSR but the province as a whole, a Political and Technical Infrastructure Committee had been established to monitor the roll-out of infrastructure projects in the province. In addition, the Operational Support Team of the DCSR assisted in monitoring library infrastructure projects.

The DCSR had requested a roll-over of the whole unspent amount of R3.917 million, to be used for infrastructure projects in progress and retention (R3.7 million) and for a security system (R1,217 million).

5. Briefing by Eastern Cape Department of Sport, Recreation, Arts and Culture

The Department of Sport, Recreation, Arts and Culture (DSRAC) of the Eastern Cape Province reported that the R115 million allocated to them for the grant in the 2011/12 financial year had, in addition to their original allocation of R80.974 million, also included a R34 million roll-over. The department reported that it had spent R92.137 million by the end of the 2011/12 financial year, resulting in under-expenditure of R22.874 million. The department further reported that it had requested a roll-over for committed funds to the amount of R18.288 million.

The DSRAC reported that the following challenges had impacted on its outcomes:

· Infrastructure projects were awarded by Public Works to emerging contractors who always had cash-flow challenges, affecting completion periods and service delivery.

· Delays in billing by the State Information Technology Agency (SITA) because its invoices come from its head office.

· High turn-over of conditional grant staff, because of the conditions of employment.

The following remedial actions are planned to address the above challenges:

· Projects would be submitted to Public Works timeously so that contractors could start early and finish their work within a financial year.

· Meetings were being held with SITA at national level to decentralise its billing system and at provincial level, meetings were held with local SITA to pressurise them to submit invoices on time.

· Conditional grant staff should be incorporated into the provincial equitable share to ensure sustainability and continuity.

6. Findings

During interaction with the Department of Arts and Culture, the National Treasury and provincial departments of Arts and Culture from the Eastern Cape and Mpumalanga , the Committee made the following findings:

6.1 Delays in the delivery of library infrastructure are being attributed to provincial departments of public works, which are the implementing agents.

6.2 The contractual employment conditions of the grant framework have resulted in high staff turnover as individuals seek more permanent employment opportunities.

6.3 Expenditure performance of the grant is being hampered by the late invoicing from the State Information Technology Agency (SITA).

7. Recommendations

After interaction with the Department of Arts and Culture, the National Treasury and provincial departments of arts and culture from the Eastern Cape and Mpumalanga , the Select Committee on Appropriations recommends the following:

7.1 The provincial departments of Arts and Culture should take the lead and responsibility for the delivery of library infrastructure by better managing its relationship with implementing agents such as the departments of public works. Contract management has to be strengthened in the provincial departments of Arts and Culture.

7.2 The Department of Public Service and Administration should with urgency finalise the conditions of service of librarians to facilitate sustainable library services.

7.3 The State Information Technology Agency (SITA) should resolve its challenges with its billing system and submit invoices on time.

Report to be considered.