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Presentation of the Third Quarter Expenditure Analysis 2009/10

Presentation of the Third Quarter Expenditure Analysis 2009/10. Presented By: Phelelani Dlomo Research Unit. 14 April 2010. Background. Introduction

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Presentation of the Third Quarter Expenditure Analysis 2009/10

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  1. Presentation of the Third Quarter Expenditure Analysis 2009/10 Presented By: Phelelani Dlomo Research Unit 14 April 2010

  2. Background Introduction This analysis provides a detailed overview of government spending for the period 1 April 2009 to 31 December 2009. It intends to highlight and flag out spending pattern of the national departments. It also intends to draw the attention of Parliament and Executive to the findings and recommendations made in order to improve public spending. 1. Legislative Framework The standing committee on Appropriation (SCOA) was established in terms of section 4(3) of the Money Bill Act No.9 of 2009. The Act requires the Committee to: • Consider and report on the spending issues • National Treasury to publish actual expenditure (in terms of section 32 reports) 2. The Review of Total Expenditure The Total allocation amounted to R408.9 billion excluding the direct charge. • R118.7 billion (29.0 per cent) for current payments • R282 billion (68.9 per cent) for transfers and subsidies • R8.1 billion (1.9 per cent) for capital payment (CAPEX)

  3. Analysis of spending per Department in the 2009/10 After government restructuring overall budget comprises 43 budget votes These department has reported different expenditure pattern. This includes the following: • Department of Education being the highest about 91.3 per cent . • Public Service and Administration being the lowest about 61.4 per cent. Table 1: Actual Expenditure for the period 1 April to 31 December 2009

  4. Department of Home Affairs (DHA) DHA was allocated a total budget of R5.2 billion in the 2009/10 financial year after adjustment. The departmental budget consists of four programmes namely: • Administration R1.0 billion • Services to Citizens R1.3 billion • Immigration Services R1.4 billion • Transfers to other agencies R1.1 billion In the overall budget DHA has only spent R3.7 billion (71 per cent) in the third quarter. This is an indication of the under spending. The reasons for under spending • Only R883 million (58.9 per cent) spent in the Immigration Service programme. Due to the delays in the submission of invoices of the WHO AM I ONLINE • Only R885 (65.1 per cent) spent in the Service to Citizens programme. Due to the unspent funds of the Smart Card ID projected Therefore the Department projects an under spending of R102 million (2 per cent) due to the Smart Card project.

  5. Department of Public Works (DPW) DPW was allocated a total budget of R6.0 billion in the 2009/10 after adjustments. DPW consists of four programmes namely: • Administration R688 million • Provision of Land and Accommodation R4.4 billion • National Public Works Programme R884 million • Auxiliary and Associated Services R49.2 million In the overall budget DPW has only spent R3.7 billion (71.1 per cent) in the third quarter. The Reasons for under spending Only R3.3 billion (74.9 per cent) spent in the provision of Land and Accommodation Programme. Due to unpaid invoices for Property Management Entity. Only R518 million (58.6 per cent) spent in the National Public Works programme. Due to non transfer funds to other receiving public bodies Due to the performance threshold not being met by these Bodies. Due to the unspent additional allocation of R91 million.

  6. Department of Public Service and Administration (DPSA) DPSA was allocated a total budget of R429.8 million in the 2009/10 after the adjustments. The department has about seven programmes namely: • Administration R115.3 million • Human Resource Management and Development in Government (HRMDG) R69.9 million • Management of Compensation of Employees R117.3 million • Information and Technology Management (ITMG) R40.1 million • Service Delivery Improvement throughout Gov. R34.3 million • Government for Public Service and Administration R38.4 million • Center of Public Service Innovation R14.2 million • In the overall budget DPSA has only spent R265 million (61.8 per cent) in the third quarter. The Reasons for Under spending Only R27.6 million (39 per cent) spent in the HRMDG programme Due to the unspent transfers to PSETA and Human Resource connects Only R16.6 million (41.4 per cent) spent in the ITMG programme Due to the delays in the Thusong Center Connectivity

  7. Department of Art and Culture (DAC) The Department was allocated a total budget of R2.6 billion in the 2009/10 period after adjustment. The Department is responsible for six programmes namely: Administration R144 million Art and Culture in Society R393 million National Language Services R93.3 million Cultural Development and International Cooperation R214 million Heritage Promotion R1.21 million National Archives R568 million Of this budget the Department has only spent R1.6 billion (62 per cent) in the third quarter of 2009/10. Reasons for under spending Only R601 million (43 per cent) spent in the Heritage Promotion programme. Due to certain transfers which were not yet made e.g capital works for public entities, Iziko Museum, and promotion of heritage. Only R115 million (53.9 per cent) spent for the Cultural Dev. And International Cooperation programme, 24 per cent below the projected. Due to unspent funds for cultural industries, investing in culture and promotion of art and culture programmes.

  8. Department of Education (DOE) The DOE was allocated a total budget of R21.8 billion in the 2009/10 period after adjustments. DOE is responsible for seven programmes namely: • Administration R235 million • System Planning and Monitoring R112.8 million • General Education R850.6 million • Further Education and Training R221.7 million • Social and School Enrichment R2.8 billion • Higher Education R17.5 billion • Auxiliary and Associated Services R32 million In the overall budget DoE has spent R19.9 billion in the third quarter of 2009/10 period. This translates to a huge over spending in the overall budget. Reasons for over spending Due to R17.1 billion (97.9 per cent) which was transferred to higher education institutions. Due to R187.8 million (84 per cent) spent for the Further Education and Training, this include the unexpected cost escalated from the moderators and examiners in the last year.

  9. Department of Health (DoH) DoH was allocated a total budget of R18.4 billion in the 2009/10 period after adjustments. The Department is responsible for six programmes namely: Administration R260 million Strategic Health programme R5.7 billion Health Planning and Monitoring R396.4 million Health Human Resources Management and Development R1.7 billion Health Service R10 billion International Relations and Health Product regulations R90 million DoH has only spent R12.9 billion till the third quarter of 2009/10 period. The Department is projecting an under spending of R385 million in the period under review. Reasons for Under spending Due to the under spending in the Health Services programme due to slow pace in Revitalisation process. Due to the delays in awarding tenders by DPW in some hospitals. Due to the low turnover of claims by constructors. Due to delays in transfers to certain entities because of non submissions of necessary documents.

  10. Department of Transport (DoT) The DoT was allocated a total budget of R24.2 billion in the 2009/10 period after adjustments. The Department is responsible for seven programmes namely: Administration R240 million Transport Policy and Econ. Regulations R50 million Transport Regulation and Accident R403 million Integrated Planning and Inter-sphere Co-ordination R9 billion Transport logistics R26.9 million Public Transport R14.3 billion Public Entity Oversight R182.4 million In the overall budget DoT has spent R19.1 billion (78.8 per cent )till the third quarter of 2009/10. Reasons for over spending Due to the over spending in the arrive alive campaign, Presidential inauguration and electronic Content Management. The dep. spent 85.6 per cent in the Transport Regulation and Accident instead of projected 38.1 per cent.

  11. Department of Cooperative Governance and Traditional Affairs (CoGTA) The department was allocated a total budget of R36.5 billion in the2009/10 period after the adjustments. The Department consists of seven programme namely: Administration R184.3 million Governance, Policy and Research R47.1 million Urban and Rural Development R9.5 million Systems and capacity building R155.4 million Free Basic Services and Infrastructure R39.7 million Provincial and Local Government transfers R35.9 billion Fiscal Transfers R101.9 million In the overall budget Cogta has managed to spend about R25.5 billion (69.9 per cent) in the third quarter of 2009/10 financial year. Cogta has under spend by R1.9 billion (5 per cent) of the projected 27.1 billion. Reasons for under spending Due to the unspent funds for Capacity Building programmes allocated for disaster management. Due to moratorium not yet lifted on the filling of vacant posts. The under spending of R1.8 billion is due to the lack of capacity to municipality to be able to implement infrastructure projects.

  12. Department of Minerals and Energy The Department was allocated R4.7 billion in the 2009/10 period after adjustments. The Departments is responsible for s168even programmes namely: Administration R251.3 million Promotion of Mines Safety and Health R133 million Mineral Regulations R168 million Mineral Policy and Promotion R64.5 million Hydrocarbon and Energy Planning R55.2 million Electricity Nuclear and Clean Energy R339.9 million Associated Services R3.6 billion In the overall budget DME has only spent R3.3 million (71 per cent) in the third quarter of 2009/10. Reasons for under spending Only R141.7 million (47.7 per cent) spent for Electricity, Nuclear and Clean Energy programme. Only R5.6 million (52 per cent) spent for the Renewable Energy Subsidy Scheme. Nothing was spent in the R5 million allocation for Working for Energy programme. Nothing was spent in the R149 million allocated to deal with backlogs of electrification of schools and clinics. However, DME has overspent on CAPEX R12.7 million (113 per cent) was spent instead of the projected R11.2 million.

  13. Department of Agriculture, Forestry and fisheries The Department was allocated a total budget of R3.8 billion in the 2009/10 financial year after adjustment. The Department is responsible for six programmes namely: Administration R414 million Production and Resource Management R331 million Agriculture support services R2 billion Trade and Agricultural Development R76.7 million Food safety and bio security R338.4 million Forestry R579 million In the overall budget the Department has spent only R2.3 billion (61.4 per cent) in the third quarter of the 2009/10 financial year. Reasons for under spending Due to zero expenditure of R579 million allocated for Forestry programme and further info was not provided in this regard. Zero expenditure was reported to a number of sub-programmes under programme 2 which includes outsourced research, Food Bank SA, AgriBEE and perishable products Expert Control Board. Only R146 million was spent for Mafisa which is below the allocated R367 million. No further info was provided in this regard. This remains a concerned since the aim is to uplift the emerging farmers.

  14. Department of Water Affairs The department was allocated R7.8 billion in the 2009/10 financial year after the adjustment and the Forestry function has been shifted to Agriculture with its budget. The Department covers only three programmes namely: Administration R812.5 million Water Resources Management R4.1 billion Water Services R2.8 billion In the overall budget the department has spent only R5 billion (64.7 per cent) in the third quarter of 2009/10. Reasons for under spending Due to R481.5 million was not spent on vacancies and invoices. Due to R286.2 million not spent since the schools and clinics backlogs grant has been reclassified from capital payment to transfer payments. Due to slower spending on some grants such as Bulk infrastructure and Backlog grants in Water and Sanitation in schools and clinics. The Department is further projecting an under spending of R372 million (5 per cent) at the end of the financial year.

  15. Summary of Findings • There is a lack of action on the Committee’s recommendations. This results in the re-occuring findings which includes vacancy rate, delays procurement processes, infrastructure spending and PSETA challenges. • A number of conditional grants have been under utilised. These include Hospital Revitilisation, Rural transport Service, Infrastructure, National Energy Efficiency, MIG, Bulk Infrastructure backlogs in Water and Sanitation at clinics and schools. • Delays in the submissions of business plans and other required documents such as SLA and MOU’s continue to impact on government spending particularly in the area of transfers. • There is also a culture of acting in senior positions which creates instability in the organisation and delays in the signing of invoices e.g Dep.of Art and Culuture. This culture also compromises both performance and financial management in the organisation. • Funds meant to address the socio economic condition are not fully utilised, this includes Mafisa, AgriBEE and Water infrastructure. • Certain important tenders e.g Smart Card, literacy and numeracy workbook are either cancelled or suspended due to irregularities and inefficiencies. This includes one of the five gov. priorities. • DPW has not yet transferred incentive grant to some provinces and municipalities especially those that are still struggling to meet the targeted threshold. However, this grant aims to create labour intensive employment through job creation and skills development programme.

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