The Select Committee on Finance was established in terms of section 4(3) of the Money Bills Amendment Procedure and Related Matters Act No.9 of 2009. Among its responsibilities, the Committee is required 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 identifying gaps and strengthening public spending.
In line with its mandate, the Committee held public hearings with the view to interrogate spending by various provincial government departments for Public Works Devolution of Property Rate Funds Grant. The hearings were held on 14 October 2009 and focused particularly on those provincial departments that had under-spent in the first quarter of the 2009/10 financial year.
Seven Provincial Departments (Eastern Cape, Free State, Gauteng, Limpopo, Mpumalanga, North West and Western Cape) showed an under spending in Devolution of Property Rate Funds Grant.
It was further reported that some provinces were projecting to under spend by R165 million, and the Western Cape being the lead province. It was also indicated that the only province that had managed to spend the entire allocation was the Northern Cape. It was also mentioned that the Western Cape had projected an over expenditure of R103 966 million.
Constraints remain the shortage of skilled staff (particularly younger staff) in the planning, design and execution phases in the industry. Funding constraints are causing backlogs in maintenance.
It was reported that they were not aware of the disjuncture between the coding of I E-Works and BAS and would take the matter forward. On the issue of the CFO forum it was mentioned that not all provinces were submitting those reports as agreed, and the names would be forwarded to the committee. It was reported that the province of the Eastern Cape has submitted a detailed report on the capacity constraints that they were having, and the Western Cape has followed but nothing from others.
There is a need to assess the actual needs for the grant and this must also be matched by authentic billing systems by the municipalities. The National Department Public Works to provide the committee with the CFO forum format. 3.2. Eastern Cape
It was reported that the issue of the financial years of the provincial departments and the municipalities still remains a challenge as they are not the same.
It was reported that provinces were not reporting to National Treasury of whether they would experience any short falls and only now indicating that to this meeting, a need to fix the matter together with provincial treasuries. It was reported that National Treasury was aware of the challenges of the province. And that the grant should continue in order to deal with the problems.
It was mentioned that there was a need for the following departments to come on board in order to be able to assist with the grant South African Local Government Association, and Cooperative Governance and Traditional Affairs.
It was reported that municipalities were not coming on board, the issue being that they were not having capacity as they were not able to invoice the department. It was also reported that a plan has been put in place as of September 2009. That is helping municipalities in drafting bills to the department. It was also reported that the department was having a R40 million roll-over from the previous financial year.
The department committed itself that they would be able to spend the allocated amount for the current financial year. It was further reported that the department was having capacity to deal with the grant.
It was reported that the provinces was receiving the grant for the second financial year. It was reported that the department was relying on the utilization of the BAS and E-Works for the payment of the rates and taxes as the national department was having access to monitor in terms of payments.
It was reported that only 18 municipalities had managed to bill the department and the rest have not yet come up with bills. It was also reported that the department was having a problem of the demarcation between municipalities and this has led to receipt of bills that were not belonging to the province.
It was reported that if the province could secure funds for the completion of the compilation of the asset register and fully implement GIAMA, they would be able to deliver on the grant.
The departmental presentation has some gaps and this does not help the Committee to understand the real challenges faced by the department. Further the election and change of political heads had negative impacts on the spending patterns within the department.
The department must provide the Committee with the copy of its improvement plan that they had initiated. The department must take the Committee very serious by first verifying any information before its presentation.
It was reported that the province was the only one still using the old Worker system as compared to the BAS being used by other provinces. It was reported that the department was not making any transfers to any institutions. It was reported that the department had not reported to the National Department on their capacity problems as they were supposed to have done so.
It was reported that the department was providing most support to the provinces. It was also mentioned that the provinces are dealing with municipalities that were not billing the department.
It was reported that there were many challenges with this grant. It was mentioned that there was a need to move quicker for the funds to be on the equitable share. It was also reported that there was a challenge as provinces were not providing the department with reports and later expect to be given the funds for the following quarter.
It was also mentioned that municipalities were not billing the department on time and that results in them making putting interests out of the process. It was further reported that these issues were being discussed at MINMEC level.
It was mentioned that there was a need to extend the grant so as to be able to deal with the challenges faced by provinces as the grant was only meant for a limited time frame.
Some of the challenges for the spending on the grant are failure to bill by municipalities or inaccurate billings by municipalities due to outdated assets registers and capacity constraints within departments. Under spending on this grant will have a negative impact on cash flows within municipalities and this will worsen the level of basic service delivery. The projected over spending are indications that the current allocations are not in line with the current needs. The Committee will continue to monitor the spending patterns on this grant.