Chairperson, it is an honour and a privilege for me to address hon members on this issue this evening.
First of all, I think we should thank the Auditor-General for compiling this report and, as such, informing South Africa and the public about the disbursement of funds for poverty relief over the past two to three years.
In the report of the Auditor-General concerns were raised about the increasing proportion of underexpenditure by the Department of Welfare since 1996-97. The reported underexpenditure is as follows. In the year 1996-97 it was 43%; in 1997-98 it was 43,3%; and, in the year 1998-99 it was 78,75%.
The bulk of the underexpenditure in 1998-99 was attributed to the Poverty Relief Fund. The Department of Welfare received R203 million in the 1998-99 financial year from the Infrastructure and Development Fund for its Poverty Relief Programme. Prior to the end of the 1998-99 financial year, the Department of Welfare transferred R81 million to the Independent Development Trust, which had been appointed as its disbursement agency. The transferred funds were paid from the suspense account for control purposes as a number of administrative and legal procedures with regard to the individual projects still had to be finalised. The amount transferred to the IDT was therefore not reflected as expenditure in 1998-99. This is what has finally emerged in the report from the department, which was issued probably the day before yesterday.
The Department of Welfare obtained approval from the Department of State Expenditure to roll over R202 950 000 of the poverty relief allocation to the 1999-2000 financial year. The original allocation of R50 million for 1999-2000 was reduced to R40 million. The total amount of funds for poverty relief in 1999-2000 was therefore R242 950 000.
The Department of Welfare received an allocation of R50 million for the year 1997-98. All funds were spent by the end of the financial year. These funds were disbursed directly by the Department of Welfare.
A rapid appraisal of the programme was conducted to identify lessons learnt so as to improve the management of the programme. The IDT was appointed as a disbursement agency in order to address some of the shortcomings of the original programme. The rapid appraisal also pointed to the need to conduct an audit of the programme. A tender was advertised for the audit. The Department of Welfare has recently been informed by the State Tender Board that it will finalise the appointment of an audit company this week. The Department of Welfare will meet with the consultants this week to agree on the audit plan.
The allocation of poverty relief funds has taken place as follows. In the year 1998-99 R203 million was given to the department. Of this, 193 projects have received some assistance, which amounts to R111 583 297. Thirty-eight national projects, including an administrative capacity- building course, received R91 416 703. Of the money that we received this year, that is for 1999-2000, R40 million has been given to nongovernmental organisations who support these projects. The balance of the money that we received for the year 1999-2000 is earmarked for provincial and national projects, and we hope we will be able to give R26 million to the integrated sustainable rural development project under the Deputy President.
The overall expenditure as at 28 February 2000 is as follows. The total amount of funds transferred to the IDT is R205 million. The total amount of funds disbursed by the IDT is R138 437 876. The IDT disbursement as a percentage of funds transferred to the IDT is 76%. The IDT disbursement as a percentage of the R242 950 000 allocated to the Department of Welfare is 57%. That means that, of the R203 million, the IDT has disbursed about 57% since June last year up to now.
Payments are made to projects in tranches of 40%, 50% and 10%. Payment of the first tranche is made on the basis of an approved business plan. Payment of the second tranche is subject to a project assessment. Payment of the third tranche is made on completion of the project. Second-tranche payments to provincial projects has progressed steadily. Second-tranche payments to the 38 national projects have been delayed following the project assessment report. The report recommended that second-tranche payments be withheld in 19 projects and that financial audits be carried out on these projects.
It should be noted that relatively large sums of money have been allocated to national projects. The assessment report noted that while the poverty relief programme has made a good start, the following problems need to be addressed. Firstly, large sums of money are being dispersed without adequate communication with the recipients. Secondly, general expenditure at project level is slow. Thirdly, monitoring and evaluation are not undertaken systematically. Fourthly and lastly, tension between the national and provincial departments undermines the integrity of the programme.
The State Tender Board, on 2 March 2000, approved that the Department of Welfare could use a restricted tender for the auditing of current poverty relief funds. While the audit is expected to focus on national projects, it will include a sample of provincial projects. As the cost of the audit is expected to exceed the Department of Welfare's delegation, the final decision rests with the Tender Board.
An official from the Department of Welfare at national level was arrested and charged in December 1999 with fraud and theft of R200 000 from the poverty relief funds. The matter is being investigated by the Scorpions and the official is in custody awaiting trail. The Department of Welfare has received a draft report on the forensic audit conducted as part of the investigation, which confirms the fraud and theft. There are serious shortcomings in the financial management of the poverty relief programme, and generally on the part of the whole Department of Welfare. Although the department has taken steps to improve the programme, for example designing a monitoring and evaluation system, fundamental problems of poor management will continue to frustrate progress.
The financial audits, while necessary, will only provide a partial picture of the programme. A comprehensive evaluation of the programme within the department will be undertaken to assess the impact of the programme on the poor, and to assess its effectiveness and institutional arrangements. This will continue and contribute to the development of an integrated poverty eradication strategy. Since late last year, the department has been exploring donor support and technical advice for the evaluation.
This is what I have to say. I will now deviate from what has been written here for me. When I came to the department, it was very clear to me from the beginning that there was a fundamental problem. That problem, first of all, concerns the whole issue of the restructuring of the welfare system in this country, and more importantly, the restructuring of the department itself.
Basically, it has not been transformed. It is still the same programme and the same department that served the apartheid regime, except that there have been a few appointments at national level, specifically in the top management echelons. Other than that, all the staff members who were there in 1993 and 1994 have not been moved. Possibly there might have been better people, but because of what is happening amongst the staff members themselves, it has caused some of the best people to leave the department.
I do not think that we have to hide these issues, because these are issues that affect the poorest of the poor. We should be more sensitive in the way in which we deliver services to our people. Millions of people depend mostly on what this Government is able to give them. I am of the opinion that if one deals with the poor, the disabled, with children and with people with Aids, one should be a little more sensitive than we are being at present.
If I had my way, I would not keep quite a large number of those people in the department. As early as August, September last year, it became very clear to me that there was a problem. To a certain extent the problem is a sort of resistance to the concept of change in general. [Interjections.]
I do not want to hide the fact that what mostly held me back was, to a certain extent, the laws and what is generally expected of an employer, in this instance the Government and the department. We should try to instill a sense of duty and patriotism into our public servants so that they will be more sensitive in the way in which they work for our people than they are at present.
If hon members did not know, I am a member of the ANC. The people that voted us into this Government are the poorest of the poor. They are the victims of the lack of response from public servants.
I realised, maybe in September or October last year, that I would be the one standing here accounting to hon members and the public. I therefore tried, from the beginning, to be a little more sensitive and to talk to them carefully. Finally, I had to tell them that it could not work like that, that we could not continue in this manner.
What worries me most is that, if the national department is like that, how much worse is the situation in the provinces? [Interjections.] As hon members know, poverty prevails in the provinces, especially in the rural areas. From the beginning I have gone on record as saying that the welfare system that still exists in this country leaves much to be desired. This system does not reflect the policies of our Government. A complete change is needed, not only mentally, theoretically or otherwise, but generally, including the personnel concerned. We ought to take welfare more seriously than we do at present.
What gets into our newspapers and other media mostly concerns those who have or those who want to have, black empowerment and things like that. The plight of the poverty-stricken in this country has not been reflected as it should have been. All of us move around Cape Town, Johannesburg and all the urban areas, but very few of us ever go to the rural areas. If we do get to those areas, we end up in the towns. There is a very urgent need for services in those areas. As individuals, as citizens and, more importantly, as representatives of our people, we ought to do our best to ensure that we do bring services to our people.
One of the things that worry me most is the services that we as a department have been giving to our people in general. I say this specifically about three other issues, namely the old age grant, the disability grant and, and more importantly, the child support grant. I do not think that we have done our best as a department to serve our people.
More importantly, as far as I am concerned, the department has not shown the urgency it needs to show, specifically in handling issues that concern children, the disabled, the elderly and people with Aids. I have found out what the problem is when we talk about it. They are in the papers, but in the final analysis, when we see how much work we have to do before we are able to bring a simple memorandum before Cabinet, then one starts asking oneself whether we are really paying this money to those individuals. Are they worth the money they are getting? Why can I just not fire them and let them go? However, that is reality. All these other things that one talks about and that one would like to do, one is unable to do.
I think, in principle, we would appeal mostly to the portfolio committee to do its job. That was one of the first things that I did in August and also in September, and in November. I appealed to the portfolio committee to do its job. Honestly, I appealed and I continue to appeal, both here in the NCOP and in the NA in so far as the Department of Welfare is concerned, that it not hold its horses in any manner. It should do everything in its power to put pressure on the department. Most of them think that they will embarrass me. I will not be embarrassed over that. If things are wrong, they are wrong.
In August last year, I gave an order that by the 16th of December everybody should have received their old age or disability grant, so that they would be free to use their money and so that they could spend their Christmas being more at ease because of the money in their pockets. However, by the 14th and 15th of December, 3 000 to 4 000 people had not received their grants. We went on the radio to advertise and tell everybody, and gave a number which is still there. We had to issue orders for staff not to go on their Christmas holidays until that had been resolved. Most of those people came from the Eastern Cape.
In other words, what I am trying to say is that we have these grants. We are all members of Parliament, and the NCOP. We represent a people and where we all come from - whether a member is driving a Mercedes Benz or living in Sandton at present, or whether an hon member lives in Waterkloof - the reality is that the majority of us - speaking for the ANC, because I do not know about the background of others - come from amongst the poor.