Chairperson, according to section 5 of the Money Bills Amendment Procedure and Related Matters Act, the National Assembly, through its committees, must annually assess the performance of each national department. The purpose of this report is to provide a reflection of the performance of the department and, further, to report and provide an assessment of the financial performance of the department for the first two quarters of this current financial year. In the final analysis, the report provides for observations and recommendations from the Portfolio Committee on Co-operative Governance and Traditional Affairs. The total budget allocation for the department is R48 billion in this financial year, which represent a 9,56% increase from the R41 billion in the past financial year.
There are three programmes that take up a larger share of the budget: these are, governance and intergovernmental relations with R34,2 billion, representing a 6,49% real increase from the previous year; the Disaster Response Management programme which was increased substantially to R293 million in this financial year; and, finally, infrastructure and economic development received R12,3 billion.
Over the medium term, expenditure is expected to increase to R57,1 billion, at an average annual rate of 11%. The substantial increase is due to additional allocations for disaster relief of R1,2 billion for the equitable share over the Medium-Term Expenditure Framework period.
The audit committee concluded that the internal audit controls were not effective in the year under review. Further, the audit committee stated that there was ineffectiveness in the internal controls that was worsened by the nonfunctioning of the internal audit unit of risk management within the department.
The Auditor-General's report states that, in terms of governance, the accounting officer did not ensure that the internal audit unit was adequately resourced and functioned in terms of risk identification and corrective actions. There is also irregular expenditure in the amount of R419 million as stated in note 27.2 of the financial statement. Of this amount, R271 million was a contravention of the supply chain management system according to the Public Finance Management Act and Treasury regulations.
The committee has also noted with concern that R336 000 was paid as interest on legal fees. This amount is recorded as wasteful and fruitless expenditure. This would have been avoided if the department had paid legal fees on time. There would have been no interest incurred.
In terms of procurement and contract management, the Auditor-General revealed that goods and services with a value of between R10 000 and R500 000 were procured without inviting at least three written price quotations from suppliers. That is also a violation of the PFMA.
In total, the underspending amount of R76 million is mainly on the community Public Works programme, which could not finalise all its projects in the year under review.
However, substantial work has been done in so far as fighting corruption is concerned. It is important to recognise that the fight against corruption has been intensified and that several cases were prosecuted, including for the embezzlement of municipal funds. Thirty-eight municipalities around the country are being investigated by the Special Investigating Unit for fraud and corruption. North West tops the list, with all 25 municipalities being investigated, followed by six in the Eastern Cape, five in Mpumalanga, and two in Gauteng.
Despite all this, service delivery is not stagnant. According to recent statistics from the department, progress on national access to basic services is as follows: water 93%, sanitation 70%, electricity 82% and refuse removal 69%. The committee observed that some progress has also been made in the implementation of the Local Government Turnaround Strategy. However, the impact on service delivery around this strategy is not evident at the local level. Therefore, the committee recommends that the department should further capacitate municipalities on how to implement the Local Government Turnaround Strategy to improve service delivery.
In response to the President's call on fighting crime and corruption, the committee observed that the department had established an anti-corruption inspectorate, which is busy with investigations in the provinces and municipalities that I mentioned earlier. The committee observed that 119 programmes and projects of the department targeted and budgeted for for this financial year ... [Time expired.] [Applause.]
There was no debate.
Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.