Chairperson, hon members, I present to you the statement on the first quarter report on the nine provincial departments of health, education, arts and culture, as well as public works. The members of the Select Committee on Finance and Appropriations had public hearings with selected national and provincial departments during the period 2 September 2009 to 4 September 2009. The hearings were based on the first quarter provincial budget statements of receipts and payments as published in the relevant sections of the Public Finance Management Act. The focus of the hearings was on conditional grant spending during the first quarter of 2009- 10.
The presentation by National Treasury showed the following: the total conditional grant allocation is R49,03 billion, including Schedule 4 grants, with health taking up the bulk of R5,6 billion. The Treasury report reflected further spending on conditional grant allocation, as at 30 June 2009 for all provinces. It excluded expected conditional grant rollovers from the 2008-09 financial year and spending on general purpose conditional grants like national tertiary services grants, health professions training grants, training and development grants and the municipal infrastructure grant to provinces, as reporting against these grants cannot be separated from the provinces' health and capital budgets.
In the LandCare Programme, which is an agricultural grant, six provinces, which are the Eastern Cape, Free State, Gauteng, Limpopo, Mpumalanga and Western Cape, showed an underspending of below 15%.
All nine provincial departments showed low spending of below 15% in the community library service grant. In education, five provincial departments, namely Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga and the Northern Cape, showed underspending of below 15% in HIV/Aids life skills education grants. Mpumalanga was the only provincial education department that showed poor spending of below 15% in the national school nutrition programme grant, while six provincial departments, namely Free State, Gauteng, KwaZulu- Natal, Limpopo, Northern Cape and Western Cape, showed spending that ranges between 15% and 25%. Within health, two provincial departments, the Eastern Cape and Gauteng, showed an underspending of below 15% in comprehensive HIV/Aids grants. One provincial department, the Eastern Cape, showed an underspending of below 15% in the forensic pathology services grant, while KwaZulu-Natal and Limpopo showed an underspending of below 15% in the hospital revitalisation grant.
The Eastern Cape, Free State, Gauteng, Limpopo, Mpumalanga, North West and Western Cape showed an underspending in the devolution of property rates fund grant. The Eastern Cape, KwaZulu-Natal, Limpopo, Mpumalanga and North West showed low spending of below 15% in the mass sport and recreation participation programme grant. Seven provincial departments, the Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga and Northern Cape, showed low spending of below 15% in the public transport operations grant.
After listening to the presentations by all invited provincial departments on reasons for low spending, the committee came to the following conclusions and recommendations. Firstly, low spending, in some cases, is due to poor planning and there is therefore a need for support to provincial departments by National Treasury, applicable national departments and provincial Treasuries.
Secondly, poor project management and reliance, in some cases, on implementing agencies was also found to be the cause for underspending. The committee recommended that the use of implementing agencies and consultants be reviewed. Thirdly, noncompliance with reporting requirements causes a delay in correct capturing of the accurate data by the relevant stakeholders. The committee recommended that provincial Treasuries, National Treasury and national departments provide assistance where there is a lack of capacity. Fourthly, some departments engage service providers who undercost their services in order to be awarded tenders but terminate their contracts when they experience losses. The committee recommended that the lowest price should not be the only factor but the viability of the service at that price should also be taken into account.
Fifthly, service providers collude to stop their services because of the delay in payments. The committee recommended that departments must observe the 30-day payment rule and also make sure that their business plans ensure that funds are available until the end of the financial year. On the other hand, departments should avoid reliance on few service providers. Again, provincial departments should also use part of their equitable share to topup the conditional grant, as was the case with the provincial department of education in KwaZulu-Natal. Sixthly, noncompliance with procedures for rollover leads to situations where departments lose their unspent conditional grants. The committee recommended that provincial departments should be proactive while other departments should also provide support where there is a need.
Seventhly, with regard to a delay in developing business plans that are inappropriate for effective spending, the committee recommended that departments should take advantage of the multiyear planning as provided for in the Medium-Term Expenditure Framework.
Eighthly, with regard to spending on the library conditional grant and HIV/Aids grant, the committee observed that poor spending is due to nonprioritisation of such services by provincial departments of arts and culture and education. The committee reminded departments that these are amongst the national priorities and should be attended to as such. In some cases, payments that are regarded as spending are transfers to implementing agencies and municipalities. The committee therefore reminded departments, as transferring authorities, to ensure that such transfers translate into spending.
In conclusion, the committee emphasises the fact that poor spending of the allocated funds compromises and causes unnecessary delays in the roll-out of these much-needed services to our deserving people. The committee will continue to monitor the quarterly spending of the conditional grants and, where necessary, do follow-ups on the reported spending to assess the quality of service rendered and ensure that there is value for money spent. I so move, Chair. Thank you. [Applause.]
Debate concluded.
Question put: That the Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Health be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Health accordingly adopted in accordance with section 65 of the Constitution.
Question put: That the Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Education be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Education accordingly adopted in accordance with section 65 of the Constitution.
Question put: That the Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Arts and Culture be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Arts and Culture accordingly adopted in accordance with section 65 of the Constitution.
Question put: That the Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Public Works be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report on First Quarter Spending On Capital Expenditure, Non-Capital Expenditure And Conditional Grants By Provincial Departments Of Public Works accordingly adopted in accordance with section 65 of the Constitution.