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Select Committee on Finance 14 August 2012

GAUTENG PROVINCIAL GOVERNMENT PRELIMINARY OUTCOME FOR 2011/12 AND 2012/13 Q1 PERFORMANCE. Select Committee on Finance 14 August 2012. Presented By: Gauteng Provincial Treasury. Contents. 2011/12 PES and Conditional Grant receipts 2011/12 Expenditure Overview 2011/12 Rollovers

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Select Committee on Finance 14 August 2012

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  1. GAUTENG PROVINCIAL GOVERNMENT PRELIMINARY OUTCOME FOR 2011/12 AND 2012/13 Q1 PERFORMANCE Select Committee on Finance14 August 2012 Presented By: Gauteng Provincial Treasury

  2. Contents • 2011/12 PES and Conditional Grant receipts • 2011/12 Expenditure Overview • 2011/12 Rollovers • 2012/13 Q1 GPG Expenditure Trends • Conclusions

  3. 2011/12 Expenditure Overview • In the 2011/12 financial year, R65.6bn was received by the Province as follows: • Provincial Equitable Share (PES): R50.9bn • Conditional Grants: R14.7bn • All PES and Conditional grant monies were transferred except R9.8m of GDE’s HIV/Aids (Life Skills) Conditional Grant withheld by National Treasury

  4. 2011/12 Expenditure Overview • During 2011/12, ring-fencing of infrastructure grants and conditional grants was strictly enforced to ensure that these were used for intended purposes • As at the end of the financial year there was net under-expenditure of R977.6m (Vote level)as follows: • Infrastructure projects funded from PES (R471m) • Conditional grants (R778.3m) • NGO’s/others (R268.2m) • Goods and Services (R238.2m) • There was also over-expenditure of R730.2m (Economic Classification)in ‘Compensation of Employees’

  5. 2011/12 Expenditure by Vote

  6. 2011/12 Expenditure by Vote • The following departments over-spent their 2011/12 adjusted appropriations: • Health (R426.5m): Of which R884.9m was in ‘Compensation of Employees’ and R558.3m within ‘Goods and Services’, offset by the R627m under-expenditure in the category ‘Payments for Capital Assets’ and the balance in ‘Transfers and Subsidies’ • Marginal over-expenditure of R29 thousand for Sport, Arts, Culture and Recreation

  7. 2011/12 Expenditure by Vote • Significant under-spending was noted for: • Roads and Transport (R573m): Of which R511.4m in ‘Goods and Services’, R75.8m in ‘Payments for Capital Assets’ and offset by R14.6m over-expenditure in ‘Compensation of Employees’ • Education (R315.4m): of which of which R147.7m was in ‘Goods and Services’, R119.1m in ‘Payments for Capital Assets’ (R119.1m) and R15.1m in ‘Compensation of Employees’, R33.5 on ‘Transfers and Subsidies • Local Government and Housing (R130.7m): R63.9m in ‘Compensation of Employees’, R16.7m in ‘Goods and Services’ and R41.6m in ‘Machinery and Equipment’ • Social Development (R99.4m): R57.5m in ‘Goods and Services’, R59m in ‘Transfers and Subsidies’ to non-Profit Institutions (NPIs), offset by R16.6m over-expenditure under ‘Compensation of Employees’

  8. 2011/12 Expenditure by Economic Classification

  9. 2011/12 Conditional Grant Expenditure

  10. 2011/12 Conditional Grant Expenditure

  11. 2011/12 Conditional Grant Expenditure • Conditional grant expenditure of R14.4bn in 2011/12, representing 95% of the R15.2bn adjusted allocation • High under-expenditure within: • Vote 8: Roads and Transport, where only R134.6m of the R566,917 for Provincial Roads Maintenance Grant was spent due to delays in concluding contractual arrangements for the outsourced routine maintenance • Vote5: Education, particularly: • National School Nutrition Programme (NSNP) (R70.8m un der spending) • Technical School Recapitalisation Conditional Grant (R23.5m under spending) • Health Services Branch of Vote 4: Health and Social Development (R146 m), with Hospital Revitalisation Conditional Grant according for R138 m.

  12. 2011/12 Rollovers • Of the 2011/12 pre-audited net under-expenditure of R977.6m, R737.9m was in PES funds, of which R471m was ring-fenced capital expenditure funding, and R778.3m conditional grants • Stringent criteria were applied to rollover requests e.g. surrendering unspent PES funds to PRF, supplying lists of accruals and commitments, invoices awaiting payment, and demonstration by departments that funds requested were allocated to policy outcomes envisaged to have a positive impact on service delivery • R572.1m in conditional grant funding thus motivated to National Treasury for rollover • R390m for continuation of electromechanical works under Vote 4: Health and Social Development, R5.9m for Social Development Branch and R12m for Vote 12: Finance, supported in PES rollovers; all other departments had insufficient cash to surrender to PRF as part of the process

  13. 2012/13 Q1 Expenditure by Vote

  14. 20122/13 Q1 Expenditure by Vote • Of the 2012/13 appropriation of R69.3bn, YTD expenditure stood at R18bn, or 26% • Most GPG department expenditure was significantly lower than or marginally close to the 25% threshold, except for Vote 14: Infrastructure Development, which spent R426.2m (31%) of its 2012/13 budget • Significantly slow spending was seen for: • Vote 7: Local Government and Housing: R649.2m of the R4.7bn 2012/13 allocation • Vote 13: Gauteng Provincial Treasury: R58.6m of the R428.9m allocation spent • Vote 1: Office of the Premier: 44.5m of the R236m 2012/13 budget spent

  15. 2012/13 Q1 Expenditure by Economic Classification

  16. 2012/13 Q1 Expenditure by Economic Classification • Expenditure of R9.3bn on ‘Compensation of Employees’, of which R3.6bn in Vote 4: Health and R4.9bn in Vote 5: Education; most indications are that there will once again be over-expenditure within this line item, particularly for Vote 4: Health, and Vote 5:Education • Relatively high spending of R4.2bn (30%) of the R13.2bn budget within ‘Goods and Services’ reflects the significant number of accruals from 2011/12 • Under ‘Transfers and Subsidies’, R459.7m transferred, mainly Emergency Medical Services (EMS) and Primary Health Care (PHC), the bulk of which were accrued from the 2011/12 financial year • Slow spending in transfers to households (in the form of housing subsidies) in the period under review • Within ‘Payments for Capital Assets, YTD expenditure of R787.7m mainly under ‘Buildings and Other Fixed Structures’ (492.4m) and ‘Machinery and Equipment’ (R202.3m)

  17. 2012/13 Q1 Conditional Grant Expenditure

  18. 2012/13 Q1 Conditional Grant Expenditure

  19. 2012/13 Q1 Conditional Grant Expenditure • R15.6 billion in conditional grant funding, an increase of R311.5 million from the 2011/12 financial year • YTD expenditure of R2.2bn is rather low, and is mainly due to the same difficulties with overall spending that are attributable to the changes in the Standard Chart of Accounts effective from 1 April 2012

  20. 2012/13 Q1 Infrastructure Expenditure

  21. 2012/13 Q1 Infrastructure Expenditure • A total of R8.3bn has been allocated for infrastructure delivery in 2012/13, of which R6bn (73%) is funded by conditional grants and R2.3bn (27%) via the PES • Of the 2012/13 infrastructure budget, the highest allocation is to Vote 7: Local Government and Housing • YTD expenditure of R1.2bn (15%), with the highest spending of R352.3m within Vote 5: Education • No expenditure was reported for Vote 10: Agriculture and Rural Development

  22. Conclusions • Accruals and over-commitments continue to negatively impact on the service delivery targets for 2012/13 financial year. Engagements between Gauteng Provincial Treasury and respective departments has been held to deal with these challenges. • Delays in the payment of invoices – stemming from misallocation of invoices at delivery stage, delays on inter-departmental cash transfers, interface of payment processes within and between departments continue to adversely affect infrastructure delivery programmes • Misallocations on expenditure achieved across various funding sources distort the presented expenditure figures on the Basic Accounting System (BAS) used by all stakeholders to determine expenditure patterns.

  23. Conclusions • The current processes for supply chain management for infrastructure delivery and maintenance apply similar principles used for general goods and services, thereby restricting exploration of alternative procurement and contracting strategies. • The value for money on infrastructure delivery continues to be undermined by both internal and external factors thus compromising the provincial infrastructure delivery targets. • Currently, the lack of skilled personnel internally inhibits efficient management of infrastructure delivery and there is heavy reliance on external service providers. • The Provincial Treasury working with National Treasury is currently rolling the IDMS to fast track on the infrastructure delivery.

  24. THANK YOU

  25. GAUTENG PROVINCIAL GOVERNMENT’S PLANS TO DETER FRAUD AND CORRUPTION Select Committee on Finance14 August 2012 Presented By: Gauteng Department of Finance

  26. PRESENTATION OUTLINE • Purpose • Background • Gauteng Anti-Corruption Strategic Framework (GACSF) • GACSF • Strategic Objectives • Governance Structure • Action plans, and • Achievements

  27. Purpose Present to Parliament’s Select Committee on Finance the Gauteng Department of Finance’s (GDF) plans and systems employed to reduce fraud and corruption in all Gauteng Provincial Departments (GPG).

  28. Background • Tackled the prevalence of fraud and corruption in the Gauteng Provincial Government • Revised the Gauteng Anti-Corruption Strategy which is led by the Office of the Premier, and duly supported by the Forensic Services Unit which is located in the GDF • The Forensic Services Unit provides central fraud prevention and investigations of actual cases within GPG departments

  29. Gauteng Anti-Corruption Strategic Framework • The Gauteng Anti-Corruption Strategic Framework (GACSF) was revised in 2009 and approved by EXCO in 2010 • It was then launched at the 2010 Gauteng Anti-Corruption Summit • The summit passed numerous Anti-Corruption resolutions which were signed by the Provincial Government, Organised Business and Civil Society Representatives

  30. Strategic Objectives The revised GPG’s Anti-Corruption Strategy consists of eight (8) strategic objectives. Each objective has its own key performance indicator, activities, outputs, responsible department and timeframes. These objectives are: • Report corruption, effective follow up and impose maximum penalties • Promote ethical procurement • Build a social compact against corruption • Campaign against corruption and build an ethical public service • Develop and implement sectoral anti-corruption strategies • Fight nepotism • Promote an ethical public service • Manage conflict of interest

  31. Governance Structure • A Provincial Anti-Corruption Coordinating Committee (PACCC) is the governing structure, to whom all GPG departments report • The PACCC in turn reports to the Provincial Anti-Corruption Forum (PACF) which consists of Organised Business, Civil Society Representatives, and GPG Executive Members

  32. Action Plans • Minimum Anti-Corruption Capacity (MACC) audit • MACC Training and Ethics certification • Restriction on supplier database • Publication of sanctions upon conviction • Departmental fraud risk profile drawn – mitigating tasks and responsibilities assigned • Fraud prevention plans developed and maintained for each department. These plans are informed by fraud risk profiles of event risk event

  33. Accomplishments An Anti-fraud awareness DVD was produced which provided clear fraud reporting guidelines, and details of the National Anti-Corruption Hotline • On-line fraud quiz to GPG officials which provides feedback to respondents on their level of fraud risk awareness • Visible Anti-Corruption poster campaign launched in all GPG buildings • Risk management units established in all departments to increase awareness of fraud risk, and to report same accordingly

  34. Accomplishments • Heightened fraud risk awareness achieved • Reduced year on year fraud risk incidents reported • Losses attributed to fraud reduced

  35. Thank You Thank you

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