ATC121106: Report of the Standing Committee on Appropriations on the Fourth Quarter Expenditure Patterns for the 2011/12 Financial Year, dated 31 October 2012
Standing Committee on Appropriations
REPORT
OF THE STANDING COMMITTEE ON APPROPRIATIONS ON THE FOURTH QUARTER EXPENDITURE PATTERNS
FOR THE 2011/12 FINANCIAL YEAR, DATED 31 OCTOBER 2012
The Standing Committee on
Appropriations, having heard briefings and considered the fourth quarter expenditures
of national departments for the 2011/12 financial year, reports as follows:
1.
Introduction
The Standing Committee on
Appropriations (the Committee) was established in terms of section 4(3) of the
Money Bills Amendment Procedure and Related Matters Act
,No.9
of 2009. The Act requires the Committee to consider and report on spending
issues, and on actual expenditure published by the National Treasury. The
Committee has adopted a tradition of inviting both National Treasury and the
affected departments to account on government spending. This consultative
approach gives the Committee an opportunity to interrogate departments on their
spending with a view to identify and strengthen gaps in public spending. The
Committee is established as a strategic centre to flag issues which might
impact negatively on service delivery through scrutiny of government spending.
As such, the Committee has taken a decision to move swiftly towards balancing
its expenditure monitoring with actual performance.
This report provides a
detailed overview of government spending for the period 1April 2011 to 31 March
2012. It intends to highlight spending patterns of national departments and to
draw the attention of Parliament and the Executive to findings and
recommendations made for improved public spending.
2.
The Review of
the Total Expenditure
The national departments
were allocated an adjusted budget of R505.1 billion for the 2011/12 financial
year which excluded the direct charge of R388 billion. An amount of
R149.7
billion
(29.4per cent) was allocated to current payments (R94.2 billion for
compensation of employees and R54.3 billion for goods and services), R343.3
billion (67.9 per cent) to transfers and subsidies, and R12.1 billion (2.4 per
cent) to capital expenditure.
2.1
The comparison
of overall budgets allocations and expenditure patterns of the three year
period
The overall expenditure at the end of the
fourth quarter of the 2011/12 financial year was R499.5 billion of the adjusted
budget. Total spending by departments has shown a decline from 98.56 per cent
in 2009/10 to 97.70 per cent in 2010/11 and a slight increase to 97.77 per cent
in 2011/12. Therefore, expenditure by departments has not been able to keep up
with the budget increases for the past three years. To improve expenditure, a
closer scrutiny on government spending is required and stricter measures need to
be put in place to strengthen budget implementation and monitoring. There were
indications of a negative (inverse) relationship between budget allocations and
expenditure performance. This had the potential to negatively affect service delivery
and the delivery of overall government priorities such as education, health,
rural development, infrastructure development and job creation. The President of
the
National departments reported total under
expenditure of R11.4 billion as at the end of the 2011/12 financial year. During
this period, the overall under expenditure has increased compared to the past
two financial years, i.e. R6.3 billion in 2009/10,
R9.6 billion in 2010/11 and R11.4 billion by 2011/12.
3.
Spending by
departments at the end of the 2011/12 financial year
National government comprises
of 38 budget votes in total, of which 10 departments were identified to have
reported under or over expenditure. These departments included: the Departments
of Public Works; Basic Education; Communications; Water Affairs; Social Development;
Women; Children and People with Disabilities; Cooperative Governance; South
African Police Service; National Treasury; and Human Settlements. Table 1 below
provides the actual expenditure of the 10 selected departments for the period 1April
2011 to 31 March 2012.
Table
1: Actual expenditure of the 11 selected departments as at 31 March 2012
|
Department Name
|
Adjusted Budget
|
Actual Expenditure 1 Apr
2011 to 31 March 2012
|
|
|
|
|
Expenditure
|
%
|
1
|
Department of Public
Works
|
R7.8 billion
|
R7
billion
|
90.1
|
2
|
Department of Basic
Education
|
R14
billion
|
R12.8
billion
|
91.5
|
3
|
Department of
Communications
|
R2
billion
|
R1.7
billion
|
89.4
|
4
|
Department of Water
Affairs
|
R9
billion
|
R8.2
billion
|
91.3
|
5
|
Department of Social
Development
|
R104.2
billion
|
R103.1
billion
|
98.9
|
6
|
Department of Women,
Children and People with Disabilities
|
R143.1
million
|
R165.8
million
|
115.8
|
7
|
Department of Cooperative
Governance and Traditional Affairs
|
R48.2
billion
|
R46.2
billion
|
95.8
|
8
|
South African Police
Service
|
R58.5
billion
|
R57.9
billion
|
98.9
|
9
|
National Treasury
|
R23.8
billion
|
R21.3
billion
|
89.6
|
10
|
Department of Human
Settlements
|
R22.8
billion
|
R22.5
billion
|
99
|
In light of the above, the
Committee invited the following nine Departments for hearings on the Fourth
Quarter Expenditure for the 2011/12 financial year:
·
National Treasury;
·
Department of Water Affairs;
·
Department of Women, Children and People with
Disabilities;
·
Department of Human Settlements;
·
South African Police Service;
·
Department of Basic Education;
·
Department of Social Development;
·
Department of Public Works; and
·
Department of Communications
3.1
National
Treasury (Vote 10)
National Treasury (the
Department) was allocated an amount of R23.8 billion for the 2011/12 financial
year after adjustment. At the end of the fourth quarter the Department had
spent R21.3 billion or 89.6 per cent which resulted in an under expenditure of
R2.5 billion.
3.1.1
Expenditure per programme
The
Departments budget comprises of ten programmes, i.e. Administration; Economic
Policy, Tax, Financial Regulation and Research; Public Finance and Budget
Management; Asset and Liability Management; Financial System and Accounting;
International Financial Regulations; Civil and Military Pensions, Contributions
to funds and other benefits; Technical Support and Development Finance; Revenue
Administration; and Financial Intelligence and State Security. The Programmes
that contributed to the Departments under expenditure are explained in detail
hereunder.
Technical
Support and Development Finance:
Programme 8 was allocated an amount of R4.6
billion for the 2011/12 financial year. At the end of the fourth quarter the
Department had spent R2.8 billion or 61.6 per cent resulting in an under
expenditure of R2 billion. The main reasons for this under expenditure were as
follows:
·
Delays in the
implementation of the Employment Creation Facilitation Fund (Jobs Fund) as a
result of delays in the signing of the Memorandum of Understanding (
MoU
) with the Development Bank of Southern Africa (DBSA);
and
·
The slow uptake
of new projects by municipalities on the Neighbourhood Development Partnership
Grant (NDPG) and unspent surpluses for the previous financial year.
The other reported reasons
for the under expenditure in the overall allocations were as follows:
·
122 vacant
positions (for specialised skills) mainly due to the Departments inability to
attract suitable skills;
·
Unspent/transferred
funds to the Technical Assistance Trading Entity for the facilitation of public
funds; and
·
Late receipt of
invoices for lease and municipal service claims.
The Committee
expressed concern at the ability of DBSA to effectively implement the roll-out
of the Jobs Fund given that it was involved in other significantly large projects
such as the Accelerated Schools Infrastructure Development Initiative (ASIDI).Furthermore,
the point was made that the Jobs Fund was not properly planned by the
Department which resulted in the high degree of under-expenditure of
R1.8 billion out of a budgetary allocation of R2 billion.
The Committee expressed concern that the overall expenditure of the
Department has regressed in the past three years even though it was supposed to
set an example to other departments given the fact that it was the custodian of
the financial regulation frameworks in the country. The Committee made reference
to the high vacancy rate within the Department which stood at 122 (for
specialised skills) during the period under review and clarity was sought on
how it would be addressed since it impacted negatively on service delivery.
The Committee noted the high vacancy rate of the Department and
expressed concern about its ability to effectively monitor transfer funds to
departments, provinces and municipalities. National Treasury needs to develop
mechanisms to address the high vacancy rate within the Department.
3.2
Department of Water Affairs
For the 2011/12 financial
year, the Department of Water Affairs (the Department) was allocated R9 billion
after adjustments. At the end of the fourth quarter, the Department had spent
R8.2 billion or 91.3 per cent resulting in an under expenditure of
R784 million. The recorded under expenditure occurred in a number of programmes
which are discussed in the following section.
3.2.1
Expenditure per programme
The
Departments budget comprised of
six
programmes, i.e. Administration, Water Sector Management, Water
Infrastructure Management, Regional Implementation and Support, Water Sector
Regulation, and International Water Cooperation. The programmes which have not
performed well are discussed in more detail hereunder.
Administration:
Programme 1 was
allocated R878.3million for the 2011/12 financial year. At the end of the
fourth quarter R781.4 million or 89.9 per cent was spent resulting in an under
expenditure of R96.8 million. The reasons for the under expenditure were as
follows:
·
Delays in filling of vacant posts
and related items such as computers, furniture and other operational costs for
new recruits;
·
Delays in the procurement of video
conference equipment; and
·
Fewer claims received from Members
of the Business Process Review Committee.
Water Sector Management:
Programme
2 was allocated R852.3 million for the 2011/12 financial year.
At the end of the fourth quarter only R511.8
million or
60.1 per cent was spent which resulted in an under expenditure of R340.5
million. The reasons for the under expenditure were as follows:
·
Delays in the awarding of tenders
for the construction of a water treatment plant for the Acid Mine Drainage
project resulting in R250 million that could not be spent; and
·
Delays in the transfer of R18
million to the Rand Water Board;
·
Unfilled vacant posts including Occupation
Specific Dispensation (OSD) posts.
Regional
Implementation and Support:
Programme 4 was allocated an amount of R4.7
billion and spent R4.3 billion or91.6 per cent at the end of the fourth quarter
of the 2011/12 financial year. This resulted in an under expenditure of R398.6
million or 8.4 per cent. The reported under expenditure was due to the
following reasons:
·
Delays in the implementation of water service
projects such as
Nandoni
pipeline,
Hluhluwe
and
Inyaka
because
approval took longer than had been anticipated;
·
Payment of R20 million that could not be made
before the cut-off date for the Moutse Bulk Water Supply;
·
Capacity constraints due to the delays in implementation
of Occupation Specific Dispensation (OSD) posts; and
·
Non-delivery of material for the regional bulk
infrastructure projects.
Water
Sector Regulation:
Programme 5 was allocated an amount of R112.3
million of which R91.1 million or 81.1 per cent was spent at the end of the
fourth quarter. This has resulted in an under expenditure of R21.2 million or
18.8 per cent. The under expenditure was mainly attributed to the non-filling
of vacant posts, including OSD posts.
The Department reported the
following overall challenges which were impacting on its expenditure:
·
Data discrepancies delayed the finalisation of the
comprehensive reserves;
·
The high water levels in the
·
The implementation of OSD was impacting negatively on
the availability of the technical skills required to ensure service delivery
within the programme as critical posts could not be filled.
The department had reported that challenges
experienced with the mining houses have worsened. The department had requested
the intervention of National Treasury in mitigating such challenges and work is
under way in this regard. The Committee expressed concern at the aforementioned
since it was a recurring issue and it was the Committees view that the matter
was long outstanding and needed to be addressed expeditiously. The Department reported
that there was a possibility of funds being shifted within the programmes
during the 2012/13 financial year and that a R200 million roll-over has been
requested in respect of the
Nandoni
Dam project.
The Committee
made reference to the legal processes that were underway regarding the
Nandoni
pipeline project and serious concern was expressed
at the delays in that regard. It was reported that the pipelines relating to
the legal processes were lying above ground level in the
Giyani
region and the quality of the pipeline did not meet the required standard.
With reference to the Acid Mine Drainage
project, the Committee expressed concern at the under expenditure of the
Department thereon since the Minister of Water Affairs indicated that more
funding was needed to address the matter throughout South Africa.
3.3
Department
of Women, Children and People with Disabilities (Vote 8)
The Department of Women,
Children and People with Disabilities (the Department) was allocated an adjusted
amount of R143.1 million for the 2011/12 financial year. At the end of the fourth
quarter the department had spent R165.8 million or 115.8per cent of the
allocation. This resulted in an over expenditure of R22.7 million or 15.9 per
cent. The recorded over expenditure occurred in a number of programmes which are
discussed in the following section.
3.3.1
Expenditure per programme
The
Departments budget is comprised of
four
programmes, i.e. Administration; Women Empowerment and Gender Equality,
Childrens Rights and Responsibilities, and Rights for People with Disabilities.
The programmes that have not performed well are discussed in more detail below.
Administration:
Programme 1 was allocated
an amount of R42.8 million for the 2011/12 financial year. At the end of the
fourth quarter the Department had spent R67.1 million or 156.7 per cent of the
budget. An amount of R35.6 million was allocated towards Compensation of
Employees out of which R59.7 million or 167.5per cent has been spent. Under Goods
and Services an amount of R46 million had been allocated and R55.4 million or
120.4 per cent had been spent during the period under review.
The reasons for
the over expenditure
are
as follows:
·
The department
employed staff outside the approved post establishment.
·
A Research Unit was established but was not
part of the approved organogram, hence it was unfunded;
·
Overspending on
Goods and Services was mainly due to travel and subsistence costs.
Women
Empowerment and Gender Equality:
Programme 2 was allocated an amount of R78.1
million out of which R77.1 million or 98.7 per cent was spent. The under
expenditure which amounted to R975 000 was due to unprocessed invoices as
a result of delayed procurement processes.
Childrens
Rights and Responsibilities:
Programme 3 was allocated an amount ofR10.1
million for the 2011/12 financial year. At the end of the fourth quarter, the
department had spent R12million or 117.9 per cent which resulted in an over
expenditure of R1.8 million. This over expenditure was mainly due to the
appointment of personnel which was not funded or at higher than budgeted
notches.
Rights of the People with Disabilities:
Programme
4, even though the Department has reported over expenditure overall, it should
be noted that this programme has reported under expenditure at the end of the
fourth quarter. This programme was allocated R11.9 million for 2011/12. At the
end of the fourth quarter the department had spent R9.5 million or 79.7 per
cent. This under expenditure was mainly due to vacant posts in this programme.
The Committee raised concerns that during the
previous engagement with the Department, the Minister of Women, Children and
People with Disabilities made reference to investigations that were underway
regarding nepotism in the Department and clarity was sought on progress in that
regard.
The Department reported that mechanisms have been
put in place to monitor its expenditure more effectively and that the issue of
overspending would be addressed. This was of concern to the Committee due to
the fact that the Department had reported the same during the hearings on the
third quarter expenditure report for the 2011/12 financial year. Concern was
expressed at the overspending on compensation of employees and the Committee
expressed dissatisfaction at the excess spending on areas that were not budgeted
for in that regard.
Emphasis was placed on the high expenditure on
travelling, catering and advertisements which were recurring issues that needed
to be addressed. The Committee noted with concern that during its previous
engagements with the Department it was requested that reports be provided on
its organogram, and travelling and catering expenditure, to date the said
information has not been provided.
3.4
Department of Human Settlements (Vote 31)
The
Department of Human Settlements (the Department) was allocated an adjusted amount
of R22.8 billion for the 2011/12 financial year out of which R22.5 billion had
been spent. This amounted to total under expenditure of R228.9 million or 1 per
cent of the available funds during the period under review.
3.4.1
Expenditure per programme
The
Departments budget is comprised of
five programmes: Administration; Housing
Policy, Research and Monitoring; Housing Planning and Delivery Support; Housing
Development Finance; and Strategic Relations and Governance.
The
programmes that contributed to the Departments under expenditure are explained
in detail hereunder.
Administration:
Programme 1 has spent an
amount of R166.8 million against an available budget of R233.1 million
resulting in an under expenditure of R66.4 million. The under expenditure was
mainly due to the change in the mandate of the Special Investigation Unit (SIU)
and the non-utilisation of funds for the lease of additional office
accommodation.
Housing Development Finance:
Programme
4 was allocated an amount of
R22.197 billion out of which R22.105 billion or 99.5 per cent was spent. This
resulted in an under expenditure of R92.2 million which was mainly due to the
following
:
·
Non-filling of vacancies as a result of the
undertaking of a Departmental Turn-Around Strategy; and
·
Unspent funds on the Rural Household Infrastructure
Grant (RHIG).
The Committee sought clarity on whether the
Department had systems in place to monitor the spending and performance on
conditional grants that were transferred to provinces and municipalities. The
Committee made specific reference to the expenditure of provinces on the Housing
Disaster Relief Grant (HDRG). The Committee sought clarity on the inhibiting
factors affecting the implementation of the HDRG and how these could be
addressed.
The Committee expressed concern at the
Departments annual delivery targets of 222 977 serviced sites and top
structures for the 2011/12 financial year. The concern was that it seems as if
the Department was setting unrealistic targets. The department delivered 172 753
serviced sites and top structures out of a target of 222 977 resulting in
the non-delivery of 50 224 serviced sites and top structures. Clarity was
sought on the implications of the said targets which could not be met and how
it would be addressed.
The Committee sought clarity on the expenditure
of 20 per cent (R2.9 billion) of the Human Settlements Development Grant (R14.9
billion) which was earmarked for national priority projects. The Department
undertook to furnish the Committee with a comprehensive report on how and in
which provinces or municipalities the said allocation had been spent.
3.5
South African Police Service (Vote 25)
The South African Police
Service (SAPS) received an adjusted budget allocation of R58.5 billion for the
2011/12 financial year of which R57.9 million or 98.9 per cent had been spent. The
SAPS reported an under expenditure of R617 million or 1.5 per cent. It is to be
noted that the SAPS reported under expenditure for the first time in 2011/12
after achieving 100 per cent expenditure in the previous four financial years. The
recorded under-expenditure occurred in a number of budget items which are
discussed in the following section.
3.5.1
Expenditure per Economic Classification
The budget
of the SAPS is comprised of five programmes, i.e. Administration, Visible
Policing, Detective Services, Crime Intelligence, and Protection and Security
Services. The programmes that contributed to the Departments under expenditure
are explained in detail hereunder.
In terms of economic classification, Goods
and Services was allocated an amount of R12.7 billion of which R11.9 billion or
93.8 per cent had been spent as at the end of the financial year. The under expenditure
on Goods and Services was as a result of the following:
·
Under spending in the Technology Management Service
was due to the slow implementation of modernisation projects;
·
Delays in the completion of new Police Stations;
·
Delays in the procurement process of machinery and
equipment; and
·
Slow spending on Criminal Justice Sector Revamp
projects.
Payments for Capital Asset (CAPEX) was
allocated an amount of R3.0 billion against which R2.9 billion or 99 per cent
had been spent. The reported under expenditure was due to the slow spending on
Buildings and Other Fixed Structures because of the non performing contractors
and changes in the design and scope of the project by the Department of Public
Works. The Department had spent only 71.5 per cent of the R669.9 million funding
allocation earmarked for the construction of Police Stations. This was due to
delays in the clearance of sites and delays in the awarding of contracts to the
contractors to start building police stations.
It should be noted that even though the SAPS
has reported overall under expenditure for 2011/12, over expenditure was noted
in certain programmes and sub programmes which were as follows:
·
R26.8 million or 110.5 per cent spent on Safety and
Security Sector Education and Training Authority (SSSETA);
·
R133.5 million or 172.4 per cent spent on claims
against the State or Civil claims instituted against the Department for
possible compensation;
·
R651.4 million or 4343.3
per cent spent on the Modernisation of the Integrated
Justice System Programme in Programme 1 (IJSP);
·
R265.6 million or 316.1 per cent spent on the Modernisation
of Integrated Justice System Programme in Programme 3 (IJSP); and
·
R12.9 million or 193.8 per cent spent for post-retirement
benefits.
In respect of Payments for Capital Assets
(CAPEX), the Committee sought clarity on the reported SAPS officials who were
benefiting from contracts for the construction of police stations. It was
stated that the matter needed to be investigated and that a comprehensive
report, inclusive of the costs involved, needed to be submitted to the Committee
in that regard. The SAPS responded that there was a status report on the said
allegations that could be
distributed
to members of
the Committee.
The Committee expressed concern at the over
expenditure of civil claims against the State and it was stated that it needed
to be managed more effectively. In addition, concern was expressed at the
significant over expenditure in respect of legal services and the fact that
most of that funding was spent on legal service providers. A report indicating
the costs for legal services that was outsourced over the past five years was
requested from the SAPS. The Department was also requested to provide the
Committee with a report on the suspended police officers with full pay.
The Committee expressed concern at the under
expenditure in respect of the Criminal Justice System (CJS) under which 81 per
cent or R1.49 billion had been spent from a total budgetary allocation of R1.85
billion.
3.6
Department of Basic Education (Vote 15)
The Department of Basic
Education (the Department) was allocated a total adjusted budget of R14 billion
for the 2011/12 financial year. At the end of the fourth quarter, the
Department had spent R12.8 billion or 91.5 per cent resulting in an under
expenditure of R1.2 billion or 8.5 per cent. The slow expenditure was recorded
in a number of programmes which are discussed hereunder.
3.6.1
Expenditure per programme
The Departments budget is
comprised of the following five programmes: Administration; Curriculum Policy,
Support and Monitoring; Teachers, Education Human Resources and Institutional
Development; Planning, Information and Assessment; and Education Enrichment
Services. The programmes under which significant under expenditure was recorded
will be discussed in more detail hereunder.
Curriculum
Policy, Support and Monitoring:
Programme 2 received a budgetary allocation
of R1.8 billion for the 2011/12 financial year. The Department had spent
R1.7 billion or 94.6 per cent of the allocated funding resulting in an under expenditure
of 5.4 per cent at the end of the fourth quarter. The recorded under
expenditure was as a result of the following:
·
Delays with regard to the
procurement of the
Kha
Ri
Gude
Mass Literacy
Campaign learner support material was due to the change of procurement model.
The Learner Teacher Support Material (LTSM) was previously procured through an
Implementing Agent. After concerns were raised by the
Auditor-General which were confirmed by National Treasury on the procurement
process, the Department took over the procurement process;
·
Delays in the submission of
invoices in respect of the Curriculum Review project resulted in the inability
to finalise the processing of payments before the end of the financial year;
·
The final invoices with
regard to the Workbook project were received at the end of the financial year.
External Auditors had to verify the invoices before they could be processed.
This could not be finalised on time; and
·
The withholding of the final
transfer for the Dinaledi Schools conditional grant to Limpopo due to slow
expenditure.
Planning,
Information and Assessment:
Programme 4 was allocated an amount of R6.5
billion for the 2011/12 financial year from which R5.5 billion or 84.2 per cent
has been spent. This resulted in an under expenditure of R1 billion or 15.8 per
cent. The reported reasons for the under expenditure are as follows:
·
The final transfer for the Education Infrastructure
Grant to the
·
The School Infrastructure Backlog Indirect Grant
for the eradication of inappropriate schools and provision of basic services
spending was lower than projected due to capacity challenges among implementing
agents and contractors. This had an impact on the implementation of approved
projects.
·
There was under expenditure on the Systemic
Evaluation project due to the shifting of the Annual National Assessment (ANA)
from February 2012 to September 2012.
·
The National Education Evaluation and Development
Unit (NEEDU) evaluators were appointed during the latter part of the financial
year. The delays in the appointment resulted in under-expenditure on
compensation of employees for the project.
The Committee raised concerns regarding one of
the reasons for under spending provided by the department which was the late
submission of invoices by the service providers. Clarity was sought on at what
stage the Department realised that there were challenges regarding the payment
of the invoices and whether the officials responsible were held accountable.
The Committee noted with concern that the reported under expenditure in some
areas of the Department was due to poor or lack of planning such as the late or
non-delivery of textbooks to schools.
The Committee made reference to the Transfers of
Subsidies economic classification item and clarity was sought on whether there
were mechanisms in place to effectively monitor the effective and efficient
expenditure of grants by provinces. Concern was expressed at the reported under
expenditure of R1.2 billion by the Department and clarity was sought on how
this impacted on the scholars who were supposed to be assisted.
The
Committee made reference to the poor performance of the Dinaledi Schools
conditional grant and concerns were expressed in that regard, especially as it
related to the
3.7
Department of Social Development (Vote
19)
For the 2011/12 financial
year, the Department of Social Development (the Department) was allocated an adjusted
amount of R104.2 billion and had spent
R103.1 billion or 98.9 per cent. The Department therefore reported an under expenditure
of R1.1 billion or 1.1 per cent. However, it is important to indicate that this
Department normally receives the biggest portion of the countrys budget and
therefore slight deviations in expenditure versus the budget are significant.
The biggest portion of the Departments budget (R103.7 billion or 98 per cent) comprised
of transfers and subsidies to the South African Social Security Agency (SASSA).
3.7.1
Expenditure per Economic Classification
The
Departments budget is comprised
of five programmes: Administration; Social
Assistance; Social Security Policy and Administration; Welfare Service Policy
Development and Implementation Support; and Social Policy and Integrated
Service Delivery. The programmes which showed significant under expenditure are
discussed hereunder.
In respect of Compensation of Employees, the
Department was allocated an amount of R276.6 million and has spent R273.5
million or 98.8 per cent. The reasons for this are as follows:
·
Non-filling of vacant posts;
·
The appointments of contractors as opposed to
permanent employees which yielded savings on compensation of employees.
With regard to the allocation for Goods and Services
of R257.7 million, an amount of R249.8 million or 96.9 per cent had been spent.
This was due to the following:
·
Invoices not submitted on time from service
providers after upgrading the boardroom of the Department; and
·
Invoices from the State and Information Technology Authority
(SITA) and other service providers were also not received on time.
With reference to Transfers and Subsidies an
amount of R103.7 billion was allocated during the period under review from
which R102.5 billion or 98.9 per cent had been spent. It is important to note
that the Transfers and Subsidies budget of the Department constitutes 98 per
cent of the overall budget of the Department. The reported under expenditure
was due to the following issues:
·
Transfer payments for Disability Grants were not
100 per cent transferred;
·
Transfer payments for Foster Care Grants were not
100 per cent transferred;
·
Transfers payments for Child Support Grants were
not 100 per cent transferred;
·
Transfer payments for Social Relief Assistance were
not 100 per cent transferred; and
·
Transfer payments to Non Governmental Organisation
(Love life) could not take place due to non compliance with the minimum
standard.
The Payments for Capital Assets (CAPEX) economic
classification item was allocated an amount of R18.5 million of which R17.5
million or 94.5 per cent had been spent. This CAPEX item is where a significant
level of under expenditure (5.5 per cent) had been reported. This under
expenditure was due to the non completion of projects including the procurement
of computer equipment and other computer software.
The Committee made reference to the reported
saving
that was made by the Department due to investigations and interventions on
fraud that were yielding the desired results. Clarity was sought on whether
there were mechanisms in place to clean up the system and make sure that all
the beneficiaries of the social grants did in fact qualify for the grants.
The Committee expressed concern at the usage of
contractors by the Department and clarity was sought on whether the shortage of
social workers in the department has been addressed. Of concern to the
Committee was the amount of funding that was spent on court cases and service
providers.
3.8
Department of Public Works (Vote 7)
The Department of Public
Works (the Department) received an adjusted budget allocation of R7.8 billion
for the 2011/12 financial year. At the end of the fourth quarter, the
Department recorded a total expenditure of R7.0 billion or 90.1 per cent
resulting in an under expenditure of R768 million or 9.8 per cent.
3.8.1
Expenditure per programme
The
Departments budget is comprised
of five programmes: Administration; Immovable Asset
Management; Expanded Public Works Programme; Property and Construction Industry
Policy Regulations; and Auxiliary and Associated Services. This slow spending
occurred as
a
result of the lack of spending on a number of
programmes which are discussed in the following section.
Administration:
As at the end of the
fourth quarter, the total expenditure for Programme 1 amounted to R837.1
million against the adjusted appropriated budget of R777.5 million. This
amounted to an over expenditure of R59.6 million or 7.7 per cent. However,
after taking virements into account in the programme amounting to R41.6
million, the total over expenditure recorded stood at 2.2 per cent.
The Committee expressed concern regarding the overspending on
Compensation of Employees and sought clarity on the reasons for this spending
which
was
not budgeted for.
The Department
indicated that the reported over expenditure in this programme was mainly due
to funding provision made for improved conditions of service for departmental
staff which was not adequately budgeted for as well as appointments that were
made for Property Management Trading Entity and the Compliance Assets and
Quotation Unit in response to Auditor-Generals findings on shortage of skills
in the Department.
Expanded
Public Works Programme (EPWP):
Programme 3 was allocated an adjusted
budget of R1.5 billion of which R1.1 billion or 73.8 per cent had been spent
which resulted in recorded under expenditure of 26.2 per cent. However, after
taking virements amounting to R54.7 million from the programme, the total under
expenditure was reduced to 23.5 per cent. The main reason for the under
expenditure was the lower than anticipated payments for infrastructure
incentives to provinces and municipalities. The reasons for the low draw down
on the incentive grant were reported as follows:
Poor or under reporting on Expanded Public Work Programme
(EPWP) work opportunities created on projects. The amount of incentive paid to
Public bodies is dependent on reporting by Public bodies;
The low labour-intensity of projects being
implemented by Public bodies; and
Poor technical capacity at Public bodies to
design and implement projects intended for labour-intensive jobs.
The reported measures to
improve the above patterns of poor performance and low rates of expenditure
were as follows:
EPWP unit officials and Data Capturers were
helping Public bodies collect EPWP information for reporting.
Municipal officials were being trained in labour-intensive
methods of construction. Over 1,000 officials had been trained in this regard
in the 11/12 financial year.
Public body officials were being trained on
reporting, so that they could have improved capacity to report.
EPWP incentive grant has been revised from a
schedule 8 grant to a schedule 5 and 6 grant for Provincial Departments and
Municipalities respectively.
40 per cent of the incentive was being transferred upfront which enabled better
planning by Public bodies.
In terms of economic classification,
Transfers and Subsidies were allocated an amount of R4 billion of which R3.6
billion or 91.1 per cent had been spent at the end of the period under review.
The under expenditure was due to the following:
·
Lack of spending on the Energy Efficient programme
in government buildings projects (78 per cent);
·
Lack of spending on Expanded Public Works Programme
Incentive Grant (EPWP) for local government in the infrastructure sector (54
per cent); and
·
Lack of spending on Expanded Public Works Programme
Incentive Grant (EPWP) for provinces in the infrastructure sector (88.3 per
cent).
Payments for Capital Assets
was
allocated an amount of R1.5 billion for the 2011/12 financial year. At
the end of the period under review, the Department had only spent R1.0 billion
or 71.9 per cent resulting in an under expenditure of R768.3 million or 9.8 per
cent. This under expenditure was attributed to the following:
·
The lack of implementation of infrastructure
projects due to a lack of expertise (technical expertise);
·
Failure by some provinces and municipalities to
meet quarterly performance targets and inability to design labour intensive
programmes;
·
Slow spending on Common Wealth War Graves project.
The Committee wanted clarity on why the department
was not going out to tender for leases of buildings but instead it negotiated
leases on behalf of other departments. The Committee raised serious concerns at
the delays in the finalization of the asset register.
Concerns were also raised on the recurring under
expenditure on the Expanded Public Works Programme (EPWP) and whether the
department was assisting the municipalities in ensuring that the allocation in
that regard was spent. The issue of the Inner City Regeneration project was
discussed and the Committee requested more information on the progress of the
project. The Committee also expressed its concerns regarding the poor or lack
of payment to local authorities for services to the Department.
3.9
Department
of Communications (Vote 27)
The Department of Communications
(the Department) was allocated an adjusted amount of R2 billion for the 2011/12
financial year. At the end of the fourth quarter the Department had only spent
R1.7 billion or 89.4 per cent. Therefore, the department reported under
expenditure of R211 million or 10.5 per cent. The Departments budget is
comprised of six programmes, namely administration, Information Communication
Technology International Affairs and Trade, Information Communication
Technology Policy Development, Information Communication Technology Enterprise
Development, Information Communication Technology Infrastructure Development
and Presidential National Commission.
The Committee noted that
the Department was initially invited to give a full briefing on its expenditure
trends on 22 August 2012 but postponed the said meeting at the request of the
Director-General: Communications (DG). The reason for the request to postpone
was in order to allow the Department to discuss the expenditure of transferred
funds with its entities. Thereafter the Department requested to brief the
Committee on 4 September 2012. The Department again requested that the meeting
be postponed for the same reasons to which the Committee unanimously disagreed.
The Committee received an apology from the DG for the scheduled meeting on 4
September 2012. The Department was subsequently informed that the DG needed to
attend the meeting; therefore the meeting did not take place.
Serious concerns were
expressed by the Committee at the refusal of the DG to attend its meeting.
4.
Summary of Findings
After deliberations with
the above departments, the Standing Committee on Appropriations made the
following findings:
4.1
Overall, national departments have
reported a total under expenditure of
R11.4 billion as at the end of the 2011/12 financial year. The pattern of under
expenditure has been deteriorating since the 2009/10 financial year. In
particular, reported under expenditure was R6.3 billion in 2009/10, R9.5
billion in 2010/11 and R11.4 billion in 2011/12.The major contributing
departments to the reported under expenditure include National Treasury,
Cooperative Governance, Basic Education, Social Development, Police, Water
Affairs and Public Works. The gap between the budget allocation and spending
performance seems to be widening.
4.2
The National Treasury
recorded a R1.8 billion under expenditure out of budgeted allocation of R2
billion for the Employment Creation Facilitation Fund. This is cause for
concern given the fact that job creation is a strategic priority of government.
The planning of priority programmes should encompass credible funding estimates
for the effective and
timeous
utilisation of
allocated resources.
4.3
National
Treasury has reported to have 122 vacant positions. The problem of vacant posts
permeates broadly the national sphere of government and negatively affects the
effective delivery of government services. National departments continue to
cite the lack of capacity as a major reason for the non-delivery of some of
their core services.
4.4
The Department of Women, Children and
People with Disabilities had recurring over expenditure on Compensation of
Employees, travelling, catering and advertisements. The reported over
expenditure on the above items was largely located under Programme 1: Administration.
4.5
The South African Police
Service recorded an under expenditure of
R617 million. Over expenditure on certain programmes includes R133.5 million or
172.4 per cent spent against R77.4 million on
Civil
claims against the State and R651.4 million or 4343.3 per cent against R14.9
million which was allocated for Integrated Justice System Programme (IJS) which
is a cause for concern.
4.6
There were allegations that
some members of the South African Police Service (SAPS) were benefiting from contracts
for the construction of police stations. The matter is currently under
investigation.
4.7
There was recurring under
expenditure recorded by the Department of Water Affairs in relation to
Nandoni
,
Inyaka
, De Hoop and
Hluhluwe
water projects which is a cause for concern.
4.8
Client departments alleged
that there were persistent delays in the submission of invoices by the Department
of Public Works (DPW) for office accommodations and capital projects.
4.9
There is recurring under
expenditure on the Expanded Public Works Incentive Grant and there are concerns
on whether the Department is able to support provinces and municipalities in
implementing the EPWP programme as well as the effective rollout of the Energy
Efficiency project.
4.10
The Director-General:
Communications failed to appear before the Committee despite being invited on
two occasions to brief it on the Departments expenditure as at the end of the
fourth quarter of the 2011/12 financial year.
5.
Recommendations
In light of the findings
set out in section 4 above, the Standing Committee on Appropriations
recommends
as
follows:
5.1
That national departments ensure that
there are credible plans in place and that systems of expenditure monitoring
are improved upon so as to address the overall levels of under expenditure in
the 2012/13 financial year.
5.2
That the Department of
Public Service Administration (DPSA) ensures that all departments fill the
funded vacant posts. That the DPSA submits quarterly progress reports to the
Committee in this regard.
5.3
That the Minister of Women, Children and
People with Disabilities ensures that the
Department
develops and implements a comprehensive plan addressing
its
over expenditure on Compensation of Employees and
travelling, particularly under Programme 1 (Administration).
5.4
That the Minister of Police
ensures that the South African Police Service expedites the investigation on
the allegations that there were officials benefiting from contracts for the
construction of police stations.
5.5
That the Minister of Police
ensures that civil claims against the State and Integrated Criminal Justice
programme be properly managed so as to prevent future litigations.
5.6
That the Minister of Public
Works ensures that the Department submits invoices on time to client
departments in respect of accommodation and capital projects.
5.7
That the Minister of Public
Works ensures that the Expanded Public Works Programme Incentive Grant and
Energy Efficient projects are successfully implemented and that support is
given to other implementing agencies so as to ensure proper spending patterns.
5.8
That the Minister of Water
Affairs ensures that water capital projects that include the
Nandoni
,
Inyaka
, De Hoop and
Hluhluwe
projects are expedited and finalised so as to
utilise budgetary provisions for this purpose efficiently and ensure service
delivery.
6.
Conclusion
The requested reports by
the Standing Committee on Appropriations as per section 5 above should be
submitted to the National Assembly within 60 days after the adoption of this Report
by the House.
Report to be considered.
Documents
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