Hon Chairperson, hon members and colleagues, the first quarter report for the financial year, in this case 2010-11, is always a difficult report to deal with, because the expenditure is usually slow. The 2010-11 First Quarter Expenditure Report is no different.
The committee chose 11 departments that had either a very high expenditure or a low expenditure. The reason for calling departments with a too high expenditure was the threat of overspending at the end of the financial year, while slow-spending departments were likely to underspend, though departments tended to pick up once their pattern of expenditure had been brought to their attention.
The expenditure of the first quarter makes a good assessment. However, the expenditure of some departments, such as the Departments of Basic Education, of Higher Education and Training, and of Co-operative Governance and Traditional Affairs, is seasonal. In the case of Cogta, transfers to municipalities are made only at the beginning of July, as the financial year for local government commences at that time.
The 2010-11 first quarter reports reflect that there were challenges in some of the departments, especially the Department of Communications. This department seemed to be experiencing more challenges, as it had spent only about 10% by the end of the first quarter.
Other departments also had their fair share of underspending, as they spent less than 15%. Those departments included, amongst others, the Departments of International Relations and Co-operation, of Energy, and of Rural Development and Land Reform. These departments spent less than 15%, instead of the expected benchmark of 25%. However, this pattern changed as the financial year moved towards its end.
Many departments attributed their low expenditure to high vacancy rates, delays in procurement and the late submission of invoices by the service providers. The departments undertook to improve the situation in the following financial quarters.
The committee proposes that this report be considered. Thank you.
I will now move on to the second report. The third-quarter report is also a good assessment tool, as it precedes the last quarter of the financial year, where expenditure is in many cases abnormal because of the spikes that occur at that time.
This quarterly report will also assist the departments by providing red lights to warn them if any department is underspending or overspending. At the end of the third quarter the expenditure is expected to average 75%, and therefore any department that has spent less than that draws the attention of the committee. Some departments spent even less than 70%, which is a cause for concern to the committee. This kind of expenditure impacts on service delivery, as hon members know.
Once again, the Department of Communications did not do well, as it managed to spend only 45% of its budget. This means that many programmes or projects were not implemented due to various challenges, including unfilled funded vacancies.
The other department that underspent was the Department of Public Works, which has the responsibility for creating job opportunities for the country, though it does this through the provincial departments and local government. This programme continues to experience challenges, as the expenditure is very slow. At the end of the third quarter, the municipalities had been able to spend only 44%, and the provinces had spent 27%. The Department of Public Works and the National Treasury have undertaken to look at a model that could result in improving the expenditure. The Portfolio Committee on Public Works and the Standing Committee on Appropriations will be meeting the two departments on Friday in order to resolve this challenge.
The committee also noticed that the Department of Rural Development and Land Reform was experiencing a high rate of shifting of funds between Land Reform and Restitution because of the nature of their spending, which is skewed towards Restitution. National Treasury and the Department of Rural Development and Land Reform are addressing this matter, as they are also supposed to appear before both the Portfolio Committee on Rural Development and Land Reform and the Portfolio Committee on Appropriations soon.
The committee also invited the Department of Women, Children and People with Disabilities, which has been housed under the Presidency most of the time. The committee is really experiencing some challenges in setting up the department in order to make it fully functional. However, at the end of the fourth quarter, we heard that the department had employed a chief financial officer and that the National Treasury was assisting it.
The department could not compile its section 32 report. Section 32 reports are those quarterly reports that we are referring to. However, after the discussions we are convinced that because of the steps that the department has taken, it will be able to produce subsequent reports.
The committee proposes the adoption of these reports. I thank you, Chairperson. [Applause.]
There was no debate.
Chairperson, I move:
That the Reports be adopted. Motion agreed to.
Report on 2010-2011 First Quarter Expenditure Report accordingly adopted.
Report on Third Quarter Expenditure for 2010-2011 financial year accordingly adopted.