Budget Vote: briefing by Department

Meeting report

LABOUR PORTFOLIO COMMITTEE
7 May 2002
BUDGET VOTE: BRIEFING BY DEPARTMENT

Acting Chairperson: Ms E Thabethe (ANC)

Documents handed out
Budget Presentation by Department of Labour
Committee Programme [see Appendix]

SUMMARY
The presentation by the Department of Labour listed the main areas of expenditure for the 2002/2003 financial year and discussed the improvements made to the 2002/2003 budget as well as future projections. The discussion on the presentation dealt primarily with the introduction of service delivery allocations and the anticipated roll-overs in the 2002/2003 budget.

The current version of the Committee programme was accepted.

MINUTES
Briefing on Budget Vote
The Acting Chair invited the Director General (DG) of the Department of Labour (the Department), Mr Rams Ramashia, to commence the presentation.

Mr Ramashia listed the main areas of expenditure of the Department's budget, and provided a brief explanation of the key focus of each:
- Administration;
- Occupational Health and Safety of Persons;
- Social Insurance;
- Employment and Skills Development Services;
- Labour Relations;
- Labour Policy;
- Service Delivery (New Programme); and
- Auxiliary and Associated Services.

He called on Mr Chris van der Merwe, Chief Financial Officer in the Department, to brief the Committee on the actual expenditure aspects.

Mr van der Merwe informed Members that the presentation would illustrate a concerted move within the Department from policy development to one of policy implementation. Yet to truly understand and appreciate this shift, the budgetary patterns of the past few financial years first have to be considered.

The slide entitled "Appropriated Expenditure per Programme" indicates that the Department saved R41m in its 2000/2001 budget. That slide also illustrates that "Service Delivery" was not on the cards for that financial year, reinforcing the Department's commitment to "Service Delivery" in the 2002/2003 financial year.

The following slide contains the 2001/2002 annual budget, and indicates a saving of R66m, with the largest saving of R41m stemming from the Administration sector. The slide also indicates that the largest allocation of R259m has gone to "Service Delivery", which again affirms the Department's commitment to policy implementation.

The slide entitled "MTEF Allocations" illustrates the fact that the Department's annual budget has grown in recent years, whereas the Department's annual contribution to the Unemployment Insurance Fund (UIF) has gradually diminished over the same period of time.

The "Budget per Programme" slide indicates that all areas of expenditure have increased, except the administration and auxiliary and associated services sectors. The "Service Delivery" allocation has grown to R303m since the 2001/2002 budget, as the Department is conscious of the fact that it has to make its services available to the public. The Department has deployed officials and personnel to the provincial offices and labour centres in the provinces to facilitate such delivery. The slide also indicates that the UIF contribution has dropped significantly.

The slide entitled "Budget per Standard Item" indicates the evolution of the Department's budget over the past few years, as well as the projected figures for the 2004/2005 financial year. Notable here is the increase in the sub-total from R896m during the 2002/2003 financial year to R1,067m in 2004/2005. It has to be acknowledged that this growth is fairly substantial.

The penultimate slide indicates the growth in Skills Development Levies from R901m in 2000/2001 to R2,950m in 2002/2003, and ultimately to R3,370m by 2004/2005.

Discussion
Mr N Clelland-Stokes (DP) requested more detail regarding "Service Delivery".

Mr Ramashia replied that the Department has undergone some restructuring in effecting the shift to policy implementation, and this entailed the establishment of several business units that deal with various implementation aspects, to facilitate service delivery. These units are funded by the Department to ensure that the Department's legislation is effectively and efficiently implemented, and for this reason these units are spread throughout the provinces.

Secondly, the slide entitled "Budget per Programme" indicates a growth in the "Occupational Health and Safety" allocation from R16m during 2001/2002 to R23m in 2002/2003, yet the following slide shows that this is an increase of only 2%. Is such growth in line with international trends?

Mr Ramashia agreed with Mr Clelland-Stokes that it is a marginal increase, and this is due to the fact that the Department does not foresee any major policy changes in the occupational health and safety environment. The funds that have been allocated to it are not to be used for the implementation of occupational health and safety laws, but rather to deal with certain policy matters, such as the development of regulations.

Mr Clelland-Stokes requested a financial breakdown of the "Service Delivery" programme per business unit, so that Members may have a clear picture of its functioning.

Mr van der Merwe replied that the breakdown is provided under the EME Service Delivery programme.

Mr M Ramodike (UDM) stated that a policy was introduced in 1997 that called for no further roll-overs to be awarded, yet the presentation has indicated that these would have to be made.

Mr Ramashia replied that the Department has no intention to undermine any policy statement made by the Minister of Finance, and the reason for the proposed roll-over is the work done on the Laboria House project. Furthermore, the schedule has begun later than planned, and the Department cannot pay out costs before it has actually incurred expenditure for work to be done as it has to wait for the contractors to complete their work.

Also, before the roll-over took effect the amounts were not on the Department's books, but with the Department of Public Works. Yet that Department has since undergone a policy shift, whereby the relevant State Departments themselves have been allocated to funds to complete their projects. The previous regime is preferred, because the net effect of the savings on the Department's budget now stands at only 0,9%.

Mr N Middleton (IFP) requested clarity on the precise manner in which the roll-over applies to "Personnel" and "Administrative" on the slide entitled "Anticipated Roll-Over".

Mr van der Merwe responded that the third column on that slide, entitled "roll over requested", has no figures, indicating that the roll-overs were actually not requested by the Department.

Mr S Mshudulu (ANC) wished to acknowledge the prudent way in which the Department has spent its funds, and thanked the delegation for the clear presentation.

Mr Ramashia reminded Members that at the same meeting during 2001/2002 the Department was reprimanded by the Committee. The Department has taken those criticisms seriously, and used them to compile the current presentation.

The Acting Chair stated that the real test is the implementation of the allocations, and in this regard this Committee would be able to spend more time fulfilling its oversight role as the Committee has no legislation to process this year or the next. The presentation is a significant improvement from previous years.

Committee Programme
Mr G Oliphant (ANC) suggested that the current programme be retained, and any changes that may arise during the course of the year could be made, as this is only a draft programme.

The Acting Chair agreed.

The meeting was adjourned.

==
Appendix

DRAFT PROGRAMME FOR 2002
PORTFOLIO COMMITTEE ON LABOUR
26 April 2002

Outstanding issues:

Progress report on the Skills Development Programme
Human Resource Development (HRD)
Briefing by Agri - SA on its Annual Report.
Workshop on Labour Market trends

Please note: the programme is subject to change.
For Enquiries: Ms Ntuthu Nonkelela (Committee Secretary)
Tel: (021) 403 - 3661
Fax: (021) 403 - 2725