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NWPG Expenditure as at 31 December 2013 Presentation to Select Committee on Finance

NWPG Expenditure as at 31 December 2013 Presentation to Select Committee on Finance 04 February 2014. Slide 1. Presentation Outline. Actual Expenditure as at 31 December 2013 Provincial Spending Compensation of Employees Spending on Conditional Grants

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NWPG Expenditure as at 31 December 2013 Presentation to Select Committee on Finance

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  1. NWPG Expenditure as at 31 December 2013 Presentation to Select Committee on Finance 04 February 2014 Slide 1

  2. Presentation Outline • Actual Expenditure as at 31 December 2013 • Provincial Spending • Compensation of Employees • Spending on Conditional Grants • Spending on Infrastructure Budgets (Excl. C/Grants) • Spending details per Department • Provincial Own Revenue • Intervention Measures • Conclusion Slide 2

  3. Actual Provincial Spending per Department at 31 Dec 13 The data shows that as at 31 December 2013, provincial departments have spent 73.53 percent or R22.1 billion of the R30 billion provincial annual budgets. It further shows that the expenditure percentage shares against the budget increased with 4.67 percent, from 68.86 percent in 2012/13 to 73.53 percent for the current financial year. Slide 3

  4. Actual Provincial Spending per Department at 31 Dec 13 • Whilst there is an improvement in spending, some departments are still lagging behind with spending of 60 percent and below compared to the norm of 75 percent. These departments include Local Government & Traditional Affairs (49.17 percent) and Office of the Premier (57.90 percent) and Public Works, Roads & Transport (60 percent). • The projected provincial overspending as at 31 December 2013, is primarily registered by the Departments of Health with R218 million and Education & Training with R42 million mainly in respect of their budgets on Compensation of Employees. • Three departments project to underspend their allocated budget, namely the Departments of Agriculture & Rural Development with R36.5 million, Finance with R6 million and Social Development with R4.4 million. • Given the R1.5 billion appropriated adjustment to the provincial budget and the fact that December and January were quiet months for spending, there is a high probability that the provincial departments’ spending will normalize by the end of February 2014. Slide 4

  5. Actual Provincial Spending per Economic Classification • Spending is mainly registered under Compensation of Employees (CoE) at 76.13, followed by Transfer Payments with 73.69 percent and Goods & Services with 70.47 percent. • The comparative increase in spending as compared to the same period last year is across all economic classifications in particular on Land & Buildings (+23.62%) and Goods & Services (+8.99%). Slide 5

  6. Compensation of Employees (CoE) Spending as at 31 Dec 13 • The average provincial spending on Compensation of Employees (CoE) is 76.13 percent or R12.8 billion of the allocated budget of R16.8 billion as at 31 December 2013. This is a percentage share increase of 1.65 percent when compared to same period last year when expenditure of 74.48 percent or R11.4 billion was recorded. Slide 6

  7. Compensation of Employees (CoE) Spending as at 31 Dec 13 In aggregate, provincial departments are projecting to overspend their 2013/14 personnel annual budgets by R214 million as at 31 December 2013. This is mainly in the departments of Health, Education & Training and Economic Development, Environment, Conservation & Tourism. However, the department of Agriculture & Rural Development projects to underspend the COE with R6.3 million. Some pressures, in particular on CoE, are highlighted by the In-year Management reports in terms of projections in going forward and needs to be addressed. Departments were advised that they must through reprioritization of their entire budget cover any further shortfalls that may arise after implementation of the additional funding from National and the province during their adjusted estimates process. Slide 7

  8. Compensation of Employees Share of Provincial Budget The Compensation of Employees (CoE) share of provincial budget decreased from 57.46 percent in April 2013 to 55.95 percent as at December 2013. Slide 8

  9. Spending on Conditional Grants • The 2013/14 budget for conditional grants is R5.3 billion (inclusive of the R289 million approved conditional grant rollovers and R66 million additional funds) with the rate of expenditure amounting to 73.75 percent or R3.9 billion and summarized per department as follows: - Slide 9

  10. Spending on Conditional Grants • The provincial spending on conditional grants averages at 73.75 percent and is an increase of 13.71 percent when compared to the same period last year where expenditure was 60.04 percent. However, the aggregate spending is still 1.25 percent or R66.8 million below the estimated target of 75 percent as at 31 December 2013. • Specific grants that show low rates of spending (50 percent and less) include Technical Secondary Schools Recapitalization (27.62 percent); Dinaledi School Grant (34.40 percent); Comprehensive Agricultural Support Programme (48.25 percent) and Mass Sport and Recreation Participation Programme (50.19 percent). • Conditional Grant funds not transferred to the province by 31 December 2013 as a result of the low spending trends amounts to R1.2 million and relates to the following departments. Slide 10

  11. Conditional Grants: Challenges and remedial actions Slide 11

  12. Spending on Infrastructure Funds (Excluding C/Grants) • The provincial infrastructure budget, inclusive of the adjustment of R603 million for approved rollovers and additional funds, amounts to R1.7 billion with 51.56 percent expenditure as at 31 December 2013. • The provincial spending on infrastructure funds averages at 51.56 percent and is an increase of 25.49 percent when compared to the same period last year where expenditure was 26.07 percent. However, the aggregate spending is still 23.44 percent or R414 million below the estimated target of 75 percent as at 31 December 2013. Slide 12

  13. NWPG Expenditure as at 31 December 2013 per Provincial Department Slide 13

  14. Office of the Premier Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R208 million or 57.90 percent. This spending trend is 17.10 percent below the estimated mark of 75 percent. Slide 14

  15. Provincial legislature Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R147 million or 61.84 percent. This spending trend is 13.16 percent below the estimated mark of 75 percent. Slide 15

  16. Health Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R6.4 billion or 78.25 percent. This spending is 3.25 percent above the estimated mark of 75 percent and the department projects to overspend with R218 million. Slide 16

  17. Health – C/Grants Spending at 31 Dec 13 • The 2013/14 budget for conditional grants is R1.7 billion (inclusive of the R55.6 million approved conditional grant rollovers) with the rate of expenditure amounting to 79.24 percent or R1.4 billion, which is an increase of 17.72 percent increase when compared to the same period last year when expenditure was at 61.52 percent. • The departmental spending on conditional grants is on track, however, the spending on the National Health Insurance Grant of 61.93 percent is below par and the department was urged to address any challenges that may slow down on improving expenditure. Slide 17

  18. Health - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, inclusive of the approved rollovers, amounts to R484 million with spending of 93.11 percent or R450 million. • This spending is a 59.04 percent increase when compared to the same period last year when 34.07 percent spending was recorded. • Spending on some infrastructure programmes (Health Routine Maintenance and Community Health Centres) are below the estimated target of 75 percent as at 31 December 2013. Slide 18

  19. Sport, Arts and Culture (DSAC) Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R314 million or 61.36 percent. This spending trend is 13.64 percent below the estimated mark of 75 percent. Slide 19

  20. DSAC – C/Grants Spending at 31 Dec 13 • The 2013/14 budget for conditional grants is R112 million (inclusive of the R5.8 million approved conditional grant rollovers) with the rate of expenditure amounting to 53.42 percent or R60 million. • Spending has increased with 6.37 percent when compared to the same period last year when expenditure was at 47.05 percent. • The departmental spending on all conditional grants below is below par and the department was urged to address any challenges that may slow down on improving expenditure trends. Slide 20

  21. DSAC - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, inclusive of the approved rollovers, amounts to R72 million with 24.74 percent expenditure. This is an increase of 10.37 percent when compared to the 14.37 percent spending for the same period last year. • Spending on most infrastructure programmes are below the estimated target of 75 percent as at 31 December 2013, with no spending recorded in respect of the Museums, Artificial Turfs and Erection of Statues. Slide 21

  22. Public Safety Branch Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R316 million or 68.44 percent. This spending trend is 6.56 percent below the estimated mark of 75 percent. Slide 22

  23. Public Safety - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, amounts to R12.5 million with zero expenditure as at 31 December 2013 . Slide 23

  24. Economic Dev., Environment. Conservation & Tourism (DEDECT) Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R405 million or 72.87 percent. This spending trend is 2.13 percent below the estimated mark of 75 percent. Slide 24

  25. DEDECT - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, amounts to R31 million with 49.06 percent spending. This is an increase in spending of 10.67 percent when compared to the previous year when spending was at 38.39 percent. Slide 25

  26. Finance Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R274 million or 66.57 percent. This spending is 8.43 percent below the estimated mark of 75 percent and the department projects to underspend with R6 million. Slide 26

  27. Education Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R8.9 billion or 77.50 percent. This spending trend is 2.5 percent above the estimated mark of 75 percent and the department further projects to overspend with R42 million. Slide 27

  28. Education – C/Grants Spending at 31 Dec 13 • The 2013/14 budget for conditional grants is R1.1 billion (inclusive of the R80.6 million adjustment to conditional grants) with the rate of expenditure being 70.12 percent or R759 million. This is an increase in spending of 5.56 percent when compared to the same period last year. • Spending on all conditional grants, apart from the National School Nutrition Grant, are all below the estimated 75 percent mark at this stage. The spending on the Technical Secondary Schools Recapitalization Grant of 27.62 percent and the Dinaledi School Grant of 34.40 percent are the lowest and the department was urged to address any challenges that may slow down on improving expenditure. Slide 28

  29. Education - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, inclusive of the approved rollovers, amounts to R80 million with 69.61 percent expenditure as at 31 December 2013. • The spending has increased with 57.05 percent when compared to the same period last year when expenditure was at 12.56 percent. • Spending on the School Building Programme Maintenance is below the estimated target of 75 percent as at 31 December 2013. Spending on the Full Service Schools Infrastructure at 84.08 percent is high and the department should put precautionary measures in place to prevent overspending. Slide 29

  30. Local Government and Traditional Affairs (DLGTA) Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R301 million or 49.17 percent. This spending trend is 25.83 percent below the estimated mark of 75 percent. Slide 30

  31. DLGTA - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, amounts to R288.7 million with 25.40 percent spending as at 31 December 2013. • The spending has increased with 5.92 percent when compared to the same period last year when expenditure was at 19.48 percent. • The spending on respect of the Bucket Replacement/ Water & Sanitation Programme is the lowest at this stage, however the department was advised to fast-track the implementation of the programme. Slide 31

  32. Public Works, Roads and Transport (DPWRT) Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R2.3 billion or 60.47 percent. This spending trend is 14.53 percent below the estimated mark of 75 percent. Slide 32

  33. DPWRT – C/Grants Spending at 31 Dec 13 • The 2013/14 budget for conditional grants is R907 million (inclusive of the R165 million adjustment to conditional grants) with the rate of expenditure amounting to 61.90 percent or R561 million. • This is an increase in spending of 32.86 percent when compared to the same period in the previous year when spending was at 29.04 percent. • Spending on all conditional grants, apart from the EPWP Grant, are below par and the department was urged to address any challenges that may slow down on improving expenditure. Slide 33

  34. DPWRT - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget inclusive of the approved rollovers amounts to R744.6 million with 36.21 percent expenditure, which is an increase of 10.03 percent when compared to 26.18 percent spending for the same period last year. • The average spending on the infrastructure programmes within the Public Works Sector is at 26.34 percent as at 31 December 2013, with zero spending recorded in respect of the Projects such as War on Poverty and to build internal Technical Capacity within the department as well as low spending on Road Infrastructure. Slide 34

  35. Social Development Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R761 million or 71.81 percent. This spending is 3.19 percent below the estimated mark of 75 percent and the department projects to underspend with R4.4 million. Slide 35

  36. Social Development – C/Grants Spending at 31 Dec 13 • The 2013/14 budget for conditional grants is R16.4 million with the rate of expenditure amounting to 69.11 percent or R11.3 million. • This is an increase in spending of 9.17 percent when compared to the same period in the previous year when spending was at 59.94 percent. • The departmental spending on conditional grants below the estimated mark of 75 percent and the department was urged to address any challenges that may slow down on improving expenditure as the department underspent last year on this grant with R2.8 million. Slide 36

  37. Social Development - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, inclusive of the approved rollovers, amounts to R29.3 million with 30.20 percent expenditure as at 31 December 2013. • Apart from the funds allocated to address Maintenance, spending on all other infrastructure programmes are below the estimated target of 75 percent, with no spending being incurred in respect of the Taung Inpatient Treatment Centre and the Vryburg Victim Empowerment Centre. Slide 37

  38. Agriculture and Rural Development Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R570 million or 64.17 percent. This spending trend is 10.83 percent below the estimated mark of 75 percent and the department projects to underspend with R36.5 million. Slide 38

  39. DARD – C/Grants Spending at 31 Dec 13 • The 2013/14 budget for conditional grants is R269 million (inclusive of the R45 million adjustment to conditional grants) with the rate of expenditure amounting to 46.79 percent or R126 million and summarized per grant as follows: - • Spending on all conditional grants, apart from the Illima/Letsema Grant, are below par and the department is urged to address any challenges that may slow down on improving expenditure. • The department states the reason for underspending of R36 million due to the delay in the appointment of extension officers for CASP and the provision of retention funds for the infrastructure projects. CASP only spent 48.25 percent as at 31/12/2013. Slide 39

  40. DARD - Infrastructure Spending at 31 Dec 13 • The department’s infrastructure budget, inclusive of the approved rollovers, amounts to R24 million with 81.16 percent expenditure as at 31 December 2013. • This is an increase in spending of 61.16 percent when compared to the same period in the previous year when spending was at 20 percent. • Spending is above target and the department was advised to monitor the spending performances to prevent overspending. Slide 40

  41. Human Settlements Branch Spending at 31 Dec 13 • The December 2013 in-year monitoring report reflects the department’s spending of R1.2 billion or 80.11 percent. This spending trend is 5.11 percent above the estimated mark of 75 percent. Slide 41

  42. Humans Settlements – C/Grants Spending at 31 Dec 13 • The 2013/14 budget for conditional grants is R1.2 billion with the rate of expenditure amounting to 85.85 percent or R1.1 billion. • This is an increase in spending of 8.24 percent when compared to the same period in the previous year when spending was at 77.61 percent. • No spending is recorded in respect of the EPWP grant and the department was urged to address any challenges that may slow down on improving expenditure Slide 42

  43. NWPG Provincial Own Revenue as at 31 December 2013 per Provincial Department Slide 43

  44. Provincial Own Revenue As at 31 Dec 13 • The Actual Provincial Revenue collected as at 31 December 2013 amounts to R656.5 million or 79.87 percent, which is 4.87 above the estimated 75 percent mark. • At this stage an over collection in Provincial Own revenue is projected to the tune of R38.9 million. Slide 44

  45. Provincial Own Revenue As at 31 Dec 13 • The following provides the detail in Revenue categories in which over collection of Revenue is mainly with regards to Interest and Sales of Goods & Services. Slide 45

  46. Intervention Measures • In an attempt to deal with the challenges that impede proper facilitation of the budget planning, monitoring and implementation in 2013/14, the Provincial Treasury found it imperative to initiate and to steer the following interventions: • Establish the Provincial Budget Forum which will aim to improve budget planning and execution by creating a platform to share challenges and identifying best practices and procedures to improve the quality and comprehensiveness of the EPRE and ultimately improve government spending; • Improve the credibility of the Medium Term Fiscal Framework and the scope of practical economic impact analysis coupled with the refinement of expenditure management; • Conduct Quarterly engagements with departments on the provincial management of personnel and the compensation of employees in particular regarding the growth in numbers in non-critical area (support and administration); recruiting staff without sufficient funds in the budget, which is unacceptable and to encourage the appointment of skilled staff and filling the key vacant positions to improve planning and financial skills. Slide 46

  47. Intervention Measures • In an attempt to deal with the challenges that impede proper facilitation of the budget planning, monitoring and implementation in 2013/14, the Provincial Treasury found it imperative to initiate and to steer the following interventions: • Procure the services of TA’s to assist with the implementation of the IDMS in the 4 municipal Districts as well as 3 TA’s in poor performing provincial departments. • Support the Department of Public Works, Roads and Transport to ensure that the R10 m that was allocated for Infrastructure capacity building will enable them to perform their implementing role as custodian of assets. • Continue with the roll out of the IDMS HR Capacity building programme to ensure that sufficient capacity is build to plan and implement Infrastructure in the province. • Strengthen financial control and monitoring, thus ensuring the budget allocated is well spent and the value for money initiative is attained. • Support the Provincial Treasury Supply Chain Unit to ensure the roll out of the new Treasury regulations in terms of the construction procurement for the delivery and maintenance of Infrastructure. Slide 47

  48. Conclusion It is recommended that the Select Committee: - Note The aggregate provincial spending of 73.53 percent, conditional grants of 73.75 percent and infrastructure with 51.56 percent spending as at 31 December 2013. That the projected overspending of R213 million mainly relates to Departments of Health, Education & Training mainly in respect of Compensation of Employees. That although the critical spending pressures have been addressed due to the R1.5 billion adjustment to the provincial budget; it is envisaged that based on the spending trends there will be an overall underspending for the 2013/14 financial year. Departments were requested to review their spending trends with the aim of remaining within budget, determining their ability to absorb and spend funds in the current financial year and reprioritize funding for critical areas without requesting for additional funds. Overspending on the allocated budget is against the PFMA and the Accounting Officers were urged not to commit their department to any liability for which funds have not been appropriated. Slide 48

  49. Conclusion It is recommended that the Select Committee: - Note 5) Departments must not to incur expenditure that was not budgeted for or attract any unauthorized or irregular expenditure. Where these practices occur, departments should not hesitate to take the appropriate disciplinary action. 6) Departments must, through reprioritization of their entire budget cover any further shortfalls that may arise after implementation of the additional funding from National and the province during the adjusted estimates process. 7) Provincial departments must spend and remain within their approved budget allocations given the R1.5 billion adjustment to the provincial budget that addresses their critical budget pressures. 8) Where the departments are unable to spend their budgets, these funds should be surrendered to the provincial revenue fund for consideration to be redirected to address key provincial programmes in support of government priorities during this financial year. Slide 49

  50. THANK YOU! Slide 50

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