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1 PRESENTATION TO THE SELECT COMMITTEE ON FINANCE ON CONDITIONAL GRANT SPENDING FOR THE PERIOD ENDED 30 JUNE 2008 MPUMALANGA PROVINCIAL TREASURY “Always Stretching Our Arm, to Accelerate Service Delivery”

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PRESENTATION TO THE SELECT COMMITTEE ON FINANCE ON CONDITIONAL GRANT SPENDING FOR THE PERIOD ENDED 30 JUNE 2008. MPUMALANGA PROVINCIAL TREASURY. “Always Stretching Our Arm, to Accelerate Service Delivery”. Conditional Grant Spending as at 30 June 2008. - PowerPoint PPT Presentation

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Page 1: MPUMALANGA PROVINCIAL TREASURY

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PRESENTATION TO THE SELECT COMMITTEE ON FINANCE

ON CONDITIONAL GRANT SPENDING FOR THE PERIOD ENDED 30 JUNE 2008

MPUMALANGA PROVINCIAL TREASURY

“Always Stretching Our Arm, to Accelerate Service Delivery”

Page 2: MPUMALANGA PROVINCIAL TREASURY

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Conditional Grant Spending as at 30 June 2008

Total - National

Allocation

Approved Provincial Payment Schedule (National

allocation)

Transfers from National

Spent by Province as at 30 June

08

Cash available less

Actual spending D-

E

Projected spending at 31

March 2009

Outcome as %

Transfers to province as at 30 June

2008

Outcome as % Budget

as at 30 June 2008

Total - Available

2007/8

Outcome Budget as at

31 March 2008

Outcome as % Budget

as at 31 March 2008

A D E F G H I J K 45,000 8,382 18.6%

53,019 13,255 13,255 545 12,710 52,474 4.11% 1.03% 41,133 41,032 99.8%4,407 441 441 441 4,407 0.00% 0.00% 4,205 4,028 95.8%

39,099 19,550 19,550 19,550 27,170 100.00% 50.00% 47,676 48,271 101.2%13,848 3,462 3,462 4,321 (859) 9,527 124.81% 31.20% 13,010 12,433 95.6%

136,606 34,152 34,152 29,618 4,534 108,440 86.72% 21.68% 108,056 110,504 102.3%151,849 41,454 41,454 19,986 21,468 131,863 48.21% 13.16% 121,190 121,109 99.9%42,003 10,501 10,501 7,348 3,153 52,991 69.97% 17.49% 70,964 37,141 52.3%59,935 14,984 4,545 (4,545) 55,390 0.00% 7.58% 57,081 56,366 98.7%

244,322 32,868 32,868 13,794 19,074 230,528 41.97% 5.65% 107,843 46,289 42.9%66,621 16,656 16,656 12,645 4,011 53,976 75.92% 18.98% 54,995 54,995 100.0%

629,210 170,000 170,000 181,790 (11,790) 484,849 106.94% 28.89% 676,286 652,178 96.4%572,244 143,061 143,061 173,967 (30,906) 443,666 121.60% 30.40% 565,318 466,103 82.4%

Devolution of Property Rate Fund Grant 36,000 36,000 0.00% 0.00%42,926 3,600 3,600 2,778 822 40,147 77.17% 6.47% 22,860 22,573 98.7%21,823 6,823 6,823 5,786 1,037 16,037 84.80% 26.51% 15,954 15,763 98.8%

Total 2,113,912 510,807 495,823 476,673 19,150 1,905,037 20.01% 22.55% 1,951,571 1,697,167 87.0%

CONDITIONAL GRANTS EXPENDITURE AS AT 30 JUNE 2008

Agricultural disaster management grant

Comprehensive agricultural support programme grant

Land care programme grant: poverty relief and infrastructure developmentFurther education and training college sector recapitalisation grantHIV and Aids (life skills education) grant

National school nutrition programme grant

Comprehensive HIV and Aids grant

Forensic pathology services grant

Health professions training and development grant

new grant -no comparativeCommunity library services grant

Mass sport and recreation participation programme grant

Hospital revitalisation grant

National tertiary services grant

Integrated housing and human settlement development Infrastructure grant to provinces

Page 3: MPUMALANGA PROVINCIAL TREASURY

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Conditional Grant Spending as at 31 July 2008

Total - National

Allocation

Transfers from National

Spent by Province as at 31 July 08

Cash available less Actual

spending D-E

Projected spending at 31

March 2009

Outcome as % Budget as at 31 July 2008

Outcome as % Transfers

received as at 31 July 2008

Total - Available 2007/8

Outcome Budget as at

31 Macrh 2008

Outcome as % Budget as at 31 March 2008

A D E F G H H1 I J K 45,000 8,382 18.6%

53,019 34,462 548 33,914 52,471 1.03% 1.59% 41,133 41,032 99.8%4,407 1,983 344 1,639 4,063 7.81% 17.35% 4,205 4,028 95.8%

39,099 19,550 19,550 27,170 50.00% 100.00% 47,676 48,271 101.2%13,848 6,924 6,622 302 7,226 47.82% 95.64% 13,010 12,433 95.6%

136,606 68,304 45,134 23,170 92,924 33.04% 66.08% 108,056 110,504 102.3%151,849 53,083 38,327 14,756 113,522 25.24% 72.20% 121,190 121,109 99.9%42,003 10,501 9,884 617 50,455 23.53% 94.12% 70,964 37,141 52.3%59,935 19,979 11,986 7,993 47,949 20.00% 59.99% 57,081 56,366 98.7%

244,322 65,736 17,149 48,587 227,173 7.02% 26.09% 107,843 46,289 42.9%66,621 22,208 24,049 (1,841) 42,572 36.10% 108.29% 54,995 54,995 100.0%

629,210 221,000 238,141 (17,141) 484,849 37.85% 107.76% 676,286 652,178 96.4%572,244 143,062 228,593 (85,531) 389,040 39.95% 159.79% 579,190 399,065 68.9%36,000 36,000 0.00% 0.00%42,926 18,175 3,405 14,770 40,147 7.93% 18.73% 22,860 22,573 98.7%21,823 17,823 7,651 10,172 14,172 35.06% 42.93% 15,954 15,763 98.8%

Total 2,113,912 702,790 651,383 51,407 1,730,327 30.81% 92.69% 1,965,443 1,630,129 82.9%

Community library services grant

Mass sport and recreation participation programme

Hospital revitalisation grant

National tertiary services grant

Integrated housing and human settlement development Infrastructure grant to provinces

Devolution of Property Rate Fund Grant

National school nutrition programme grant

Comprehensive HIV and Aids grant

Forensic pathology services grant

Health professions training and development grant

Comprehensive agricultural support programme grant

Land care programme grant: poverty relief and infrastructure developmentFurther education and training college sector recapitalisation grantHIV and Aids (life skills education) grant

CONDITIONAL GRANTS EXPENDITURE AS AT 31 JULY 2008

Agricultural disaster management grant

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AGRICULTURE AND LAND ADMINISTRATION

The department of Agriculture and Land Administration continues to be the lowest spender in the province.

No expenditure was recorded on the Land Care grant during the first three months and spending on CASP only at 1 percent

Land care has spent 1 % in July 2008 and CASP only 7%

The low expenditure is due to the following: The department has terminated the services of the implementing

agent Mpumalanga Agricultural Development Corporation (MADC) Infrastructure projects have come to a stand still. A forensic investigation has already commenced

The department is having challenges with procurement processes and a lack of Supply Chain Management systems.

The following set of recommendations were presented at the Executive Council Lekgotla that was held on 20-22 August 2008.

The department must speed up the appointment of an alternative implementation agent so that service delivery is not compromised by the termination of the MADC services.

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AGRICULTURE AND LAND ADMINISTRATION

Reconciliations of funds already transferred and unspent must be surrendered to the Provincial Revenue Fund. Already R13 million will be surrendered.

The department must revisit the projections as the projected break-even in spending is not realistic.

With respect to Infrastructure grant, the department must indicate to the Provincial Treasury how much can be redirected to other departments that have capacity to spend.

A detailed list of projects on which funds have been spent by MADC should form part of the report.

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Number of

Projects

Professional Fees Budget

(R'000)

Construction/Maintenance

Budget(R'000)

Total available(for this

financial year)(R'000)

Actualexpenditure to

date for this financial year

Identified 8 R 360 R 4,160 R 4,520 R 851 Feasibility 1 R 1,211 R 8,877 R 10,088 R - Design 99 R 178,369 R 285,770 R 464,139 R 12,223 Tender 65 R 41,886 R 261,567 R 303,453 R 3,081 Construction started 55 R 34,058 R 283,963 R 318,021 R 53,161 Construction 25% 28 R 25,488 R 162,163 R 187,651 R 40,423 Construction 50% 82 R 30,409 R 245,486 R 275,895 R 69,706 Construction 75% 108 R 36,937 R 251,485 R 288,422 R 155,847 Retention 596 R 6,984 R 83,368 R 90,352 R 34,947 Handed-Over 170 R 198 R 11,523 R 11,721 R 17,075 Canceled 30 R - R 29 R 29 R 29 Status not captured 0 R - R - R - R - Total 1242 R 355,900 R 1,598,391 R 1,954,291 R 387,343

PERCENTAGE

Identified 0.6% 8.0% 92.0% 0.2% 18.8%Feasibility 0.1% 12.0% 88.0% 0.5% -Design 8.0% 38.4% 61.6% 23.7% 2.6%Tender 5.2% 13.8% 86.2% 15.5% 1.0%Construction started 4.4% 10.7% 89.3% 16.3% 16.7%Construction 25% 2.3% 13.6% 86.4% 9.6% 21.5%Construction 50% 6.6% 11.0% 89.0% 14.1% 25.3%Construction 75% 8.7% 12.8% 87.2% 14.8% 54.0%Retention 48.0% 7.7% 92.3% 4.6% 38.7%Handed-Over 13.7% 1.7% 98.3% 0.6% 145.7%Canceled 2.4% - 100.0% 0.0% 100.0%Status not captured - - - - -Total 100.0% 18.2% 81.8% 100.0% 19.8%

National Project Status Report (All Sectors)

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Utilization of the Infrastructure Grant for Department of Education

YEAR 2004/05 2005/06 2006/07 2007/08 2008/09(1ST

Quarter)

R’000 R’000 R’000 R’000 R’000

ALLOCATION 102 068 185 659 181 144 445 976 171 673

EXPENDITURE 30 622 66 153 120 912 199 515 78 138

PERCENTAGE EXPENDITURE

30,0 35,6 66,7 49,8 45,5

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2008/2009 PROJECTS ON PLANNING STAGE (21)

• Spending at end of first quarter -30%

• Spending at 31 July 2008-42%

• Expenditure of 30% has exceeded the benchmark of 25% for the first quarter of the financial year

• The analysis of the expenditure reflects that the funds have been spent on old project that have been in implementation for the past three years.

• This is of concern to the Provincial Treasury and an audit of the payments on old projects has already commenced

• 6 Projects with no scope change, designs and tender documents to be complete 15th August 2008

• 15 Projects with scope change – “a meeting is to be scheduled with between DPW, DoE & Consultants and way forward will emanate on findings and resolutions of the meeting”

• Projects staying long at retention stage

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Utilization of the Infrastructure Grant for Health

YEAR 2004/05 2005/06 2006/07 2007/08 2008/09(1st

Quarter)

R’000 R’000 R’000 R’000 R’000

ALLOCATION 40 553 55 005 46 646 72 790 80 114

EXPENDITURE 25 418 52 683 46 645 63 312 23 301

PERCENTAGE EXPENDITURE

62,7 95,8 100,0 87,0 29,1

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Infrastructure Grant for Health

Infrastructure Programme Management Plan (IPMP) received in December 2007 without scope definition.

Revised IPMP received in April 2008 and scope definition finalized in June 2008.

Serious failures at planning stages Delays in awarding of tenders Slow spending Which then results in withholding of grant by National Treasury Maintenance in hospitals need urgent attention Barberton hospital –operation postponed due to theater equipment

not functioning

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Utilization of the Forensic Pathology Grant

YEAR 2004/05 2005/06 2006/07 2007/08 2008/09(1ST

Quarter)

R’000 R’000 R’000 R’000 R’000

ALLOCATION 0 0 0 47 592 42 003

EXPENDITURE 0 0 0 6 446 9 884

PERCENTAGE EXPENDITURE

0 0 0 13,5 23,5

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Utilization of the Forensic Pathology Grant

Evander – (M2 mortuary 0-249 postmortems-24 shelves) The contract was awarded in June 2008. Site was handed over to

the contractor on 26 June 2008. The department of Health and Social Services has waited since 2006 for the awarding of this contract by the implementing agent Public Works.

Ermelo – (M3 mortuary 250-499 postmoterms-36 shelves) The contract was awarded on 21 September 2007. The estimated

completion date is October 2008.

Middleburg (M3 mortuary 250-499 postmoterms-36 shelves ) The contact was awarded during August 2008. The appointment

letters were only signed by Public Works on Tuesday 26 August 2008. The verification of sites has already commenced. The estimated completion period is February 2009.

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Utilization of the Hospital Revitalization grant

YEAR 2004/05 2005/06 2006/07 2007/08 2008/09(1ST

Quarter)

R’000 R’000 R’000 R’000 R’000

ALLOCATION 68 000 93 000 73 000 107 843 244 322

EXPENDITURE 26 000 74 000 73 000 46 289 17 149

PERCENTAGE EXPENDITURE

38 80 100 42,9 7,02

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Hospital Revitalization grant

Infrastructure Programme Management Plan (IPMP) received in December 2007 without scope definition.

Revised IPMP received in April 2008 and scope definition finalized in June 2008.

Wrong appointments of contactors and consultants by Public Works (appointment of contactors who have failed in previous projects to manage even larger projects –Rob Ferreira )

Lack of proper monitoring of consultants by the Department of Public Works Delays by Public Works in dealing with issues of poor performance by

contractors and consultants Failure by Health to monitor the SLA between Health and Public Works Absence of a dedicated manager for revitalisation projects or a dedicated

infrastructure unit Poor planning by the user Department Budget for 2008/09 not all allocated

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Infrastructure Challenges in the department of Education and Health

Delays in concluding the Key Programme Documents

The Operational Support Teams have expressed concerns over the delays in concluding the programme management and implementation plans for the 2007/08 and 2008/09 financial years.

The Provincial Treasury has initiated discussions on these issues with affected departments and has already engaged the department of Agriculture and Land Administration, Department of Education, Department of Public Works and the department of Health and Social Services.

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Infrastructure Challenges in the department of Education and Health

Lack of forward planning and poor alignment of planning and budgeting cycle for infrastructure projects

Budgets for large multi-year projects are committed to one financial year instead of apportioning the budget in accordance with planned cashflow requirements for the project across the MTEF

Late submission of infrastructure plans to the implementing agents.

Bidding processes too long as the projects are not staggered and thus the evaluation and bid committees are overloaded with a large number of bids.

The risk of placing too much reliance on the OSTs, needs to be carefully managed by the Heads of Departments. The issue of limited capacity of the departments is contributing to this risk through prolonged recruitment processes.

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Infrastructure Challenges

in the department of Education and Health

Timeous and quality reporting on service delivery outcomes Unavailability of land Late or poor planning and ineffective communication

between the Department of Public Works and Client departments

Shortage of internal project managers and project management units

High rate of variation orders Lack of accountability both internally and externally with

regards to project completion and quality reporting

Page 18: MPUMALANGA PROVINCIAL TREASURY

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Provincial TreasuryMonitoring Mechanisms

Monthly reports to the Budget and Finance Committee; Submission of quarterly reports to the Portfolio Committee on Office of

Premier, Finance and Safety and Security; Frequent interaction by Provincial Treasury with departments on

spending performance and general financial management issues; Provincial Infrastructure Committee (PIC) meetings between HOD for

Finance and the seven HODs responsible for Infrastructure delivery departments

Provincial Programme Steering Committee (PPSC) meetings between MEC’s for Finance and the seven MEC’s responsible for Infrastructure delivery departments

PPSC and PIC meetings are viewed as crucial in the provincial infrastructure delivery as they allow a critical interaction on the growth and development of the province through infrastructure delivery.

Site visits are conducted to verify spending against physical progress (this needs to be enhanced as there are limited number of officials who go out on site)

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Provincial Treasury Intervention

Continuous engagements with departments in a co-operative manner to jointly seek solutions;

Seven identified departments are fully participating in the initiative. The impact of the OST support in ensuring that the infrastructure

plans are developed and submitted is evident in that all the infrastructure plans for 2008/09 financial year have been prepared and submitted to the National Treasury in line with the grant framework timeously.

The department of Public Works, Education and Health is supported at a strategic level by the Provincial Technical Assistants teams who have been seconded by the National Treasury.

The intervention was introduced during 2006/07 financial year whereby 1 % was used to provide capacity to all seven infrastructure delivery departments

When the DORA increased the provision for capacity building to 4% , this increased the funds that are available to fund the capacity that is provided to departments.

Intervention done without capacitation plans in place Not yet yielded the desired results (over-reliance, delays in filling of

vacant positions)

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Recommendation

It is recommended that the Select Committee on Finance notes the report on Conditional Grants and Capital Spending for the Mpumalanga Province for the period ended 30 June 2008.

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Thank you!