presentation to ncop by the mec limpopo provincial treasury

PRESENTATION TO NCOPBY THE MEC

LIMPOPO PROVINCIAL TREASURY

11TH OCTOBER 2005

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INTRODUCTIONHonourable Chairperson, I would like to thank you for the

opportunity to participate in this Public Hearing. As I present the report on our provincial departments’ spending of Conditional Grants, I intend to do so honestly so as to afford Members an opportunity to get an accurate understanding of the situation as it obtains in Limpopo.

I shall not attempt to conceal the truth regardless of the image it may portray. To me, this hearing is not only a platform to account on behalf of my department and province, I also regard this as an opportunity to benefit from the advice that Honourable Members of the NCOP may offer to improve our situation. I intend to listen in on the sessions that you will have with my counterparts from sister provinces, so as to draw learnings from their inputs and to adopt best practices.

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INTRODUCTION Cont…We present this report at a time when our EXCO, led by

Premier Sello Moloto, resolved to be impatient with officials who continue to deprive our people of quality services despite the fact that we avail resources to deliver on the mandate we get from the people. The Conditional Grants is a good example of this problem. Such behaviour is highly unacceptable, regardless of the good and valid sounding excuses we always get in the glossy reports that they produce and present to us.

I fully understand the obligation that rests on me and my department to permanently uproot such tendencies from within the public service. As a Provincial Treasury, we have to ensure that the planning and implementation of programmes in all departments are linked and improved.

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INTRODUCTION Cont…Honourable Members may be aware that ours is a new

department which is less than one year old. However, we have just finalised and approved our department’s structure on the 14th September 2005 and will be filling some of the critical vacancies as a matter of extreme urgency. These vacancies include those for Programme Analysts who will be experts in their fields and dedicated to the various departments with the aim to improve expenditure and the general management of their budgets.

Further, we are also, through EXCO, exerting pressure on spending agencies to ensure that they close their capacity gaps in order to negate the poor delivery of service and the inherent under-spending it brings.

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INTRODUCTION Cont…To this end, the MEC for Education for example, agreed to review his

department’s structure in order to establish a fully-fledged unit to deal with infra-structure since it is such a critical deliverable for that department and, as this report will show, they always encounter difficulty in meeting their targets.

We are convinced that this intervention together with the appointment of Programme Analysts within Provincial Treasury and National Treasury’s Infra-Structure Development Improvement Programme [IDIP] will certainly go a long way in reversing the current challenge of under-spending.

Honourable Chairperson, I now present the report:

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Conditional Grants as at 30 June 2005

DepartmentDoRA Approved

Payment Schedule

Transfers from National to provinces

Provincial actual

paymentSpent as a %

of budgetR'000 R'000 R'000 R'000 R'000

Education HIV and AIDS (Life skills Education) 20,371 5,093 5,093 1,026 5.04%Primary Schools Nutrition Programme 167,836 41,959 41,959 11,454 6.82%HealthComprehensive HIV and AIDS 125,899 21,759 21,759 12,589 10.00%Hospital Management and Quality Improvement 17,457 4,365 4,365 1,808 10.36%Hospital Revitalization 212,918 53,231 53,231 32,125 15.09%Integrated Nutrition Programme 22,344 5,586 5,586 2,408 10.78%Social DevelopmentSocial Assistence Admin Grant 500,000 124,998 124,998 63,189 12.64%HIV and AIDS (community based care 9,138 5,483 5,483 732 8.01%Social Assistence Transfer Grant 6,814,594 1,866,158 1,866,158 1,641,264 24.08%

Total 7,890,557 2,128,632 2,128,632 1,766,595 22.39%

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Reasons for under spending-C Grants

HealthHIV/AIDS• The underspending is as a result of the journal for pharmaceuticals

which is not yet finalised i.e. the department appointed a service provider to distribute medicines for the province. These are distributed in bulk, and thereafter the department pass journals to identify spending specifically for HIV/AIDS drugs.

Hospital Revitalisation• The underspending is as a result of payments that are dependent

on stages of construction and will pick up in the second quarterIntegrated Nutrition Programme• The underspending is as a result of agreements not yet signed with

NGO’s. The department assisted NGOs’ to develop business plans in the first quarter and the plans have now been approved.

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Social DevelopmentHIV/AIDS• The underspending is as a result of business plans not

approved by the National Department as they were referred back to the provincial department for correction in the first quarter. The plans have been approved and spending will pick up in the second quarter.

Social Assistance Admin Grant• The underspending is as a result of the delay in filling of

posts identified as critical, and also on goods and services as a result of shared items, e.g. Stationery, telephone, water and electricity. South African Social Security Agency is currently housed within the Department of Health and Social Development.

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EducationHIV/AIDS• The underspending is as a result of HIV/AIDS

related activities that take place only during school holidays to avoid disruption on learning and teaching at schools.

Primary School Nutrition Programme• The underspending is due to the delay in

submission of invoices by service providers

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Education CAPEX spending 30 June 2005

Education Data

District Budget - 2005/06

2005/06 : First Quarter spending % Spending

Unspecified 29686 0 0% All (Mainly for Consultants) 78,987 1,443 2% Bohlabela District Municipality 44,344 15,210 34% Capricorn District Municipality 69,265 21,926 32% Greater Sekhukhune Cross Boundary 52,970 14,279 27% Mopani District Municipality 42,692 11,614 27% Vhembe District Municipality 92,198 11,709 13% Waterberg District Municipality 45,767 13,605 30% Grand Total 455,909 89,786 20% Source: Infrastructure Model

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Health CAPEX spending 30 June 2005

Health Data

District Budget 2005/06 : First Quarter % Spending

All 78,997 3,587 5% Bohlabela District Municipality 8,300 0 0% Capricorn District Municipality 44,667 2,280 5% Greater Sekhukhune Cross Boundary 114,664 9,800 9% Mopani District Municipality 105,057 758 1% Vhembe District Municipality 17,500 178 1% Waterberg District Municipality 5,022 702 14% Grand Total 374,207 17,306 5% Source: Infrastructure Model

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Social Dev spending 30 June 2005

Social Development Data

District Budget 2005/06 : First Quarter % Spending

All 29,000 208 0.72% Capricorn District Municipality 750 0 0.00% Greater Sekhukhune Cross Boundary 7,600 0 0.00% Mopani District Municipality 11,400 0 0.00% Vhembe District Municipality 11,400 0 0.00% Grand Total 60,150 208 0.35% Source: Infrastructure Model

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Reasons for under spending-CAPEX…

Education• Projects started later than anticipated and this is

reflected in the low expenditure patterns over the first quarter.

• The business plan was reworked and changed to reflect change in new political priorities, e.g. shift away from 4X4 classrooms to more comprehensive schools, etc.

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Health • For some of the projects, contractors were

appointed late.• For 15 of the main contracts, contractors went

on site from the 15th of July, which negatively affected spending.

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Health• Delays on supply of medical equipment for the

hospital projects, orders were issued in April 2005 but to due to delays in delivery, no payments were made for these projects in the 1st Quarter of 2005/06.

• Spending on clinics (both new construction and upgrades), health centres and mortuaries was also hampered by delays in the documentation phase of project implementation (e.g. tender evaluations, etc in line with the Construction Industry Development Board (CIDB) guidelines

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Reasons for under spending-CAPEX

which require contractors to be registered and categorised per amount of project that they can undertake).

Social Development• Disbursements for projects are made on a

percentage of completion method, i.e. payments made per stage of construction, in the first quarter, most projects had just started, resulting in low expenditure

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Intervention strategies-CAPEX…Education• The Department of Education engages the Department of

Public Works constantly to finalise the business plans for Education (to ensure that by early December, PW has a finalised business plan for implementation).

• The Department of Education is undertaking project to do a complete school register of needs which will highlight individual school conditions and needs, it will facilitate better planning and channeling of resources with the greatest need.

• The Department of Education is participating in the Infrastructure Delivery Improvement Programme (IDIP).

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Intervention strategies-CAPEX…

• IDIP is aimed at improving infrastructure delivery within provincial departments (run by National and Provincial Treasury, DBSA and CIDB).

• It has raised awareness regarding weaknesses around human resource issues and infrastructure delivery systems at Education.

• A capacitation plan for the Department of Education has been prepared to address these.

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Intervention strategies-CAPEX…• Interdepartmental training workshops have also

been run on DoRA reporting requirements, project management, etc.

• Departments are also engaged monthly prior to reporting to ensure that problems are ironed out timeously.

• Through these intervention measures, there has been an improvement in the quality and timeliness of reporting, there is also increasing emphasis on the analysis of the reported information on the part of departments (which ensures that Treasury receives better reports).

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Intervention strategies-CAPEX…

Health & Social Development• To improve the Cash Flow for the rest of

2005/06 financial year, the Department of Health brought forward the appointment of consultants for some of the major projects which were scheduled to start later in order to preempt possible delays, e.g. for Letaba and Maphuta Malatjie Hospitals infrastructure projects.

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Intervention strategies-CAPEX

• This will ensure that contractors are on site and projects undertaken before the end of the financial year.

• The Department of Health & Social Development also participated in the pilot phase of IDIP which produced a capacitation plan to address the shortcomings around capacity which were identified in the department, e.g. setting up a dedicated unit for infrastructure maintenance to look after the provincial health assets to prevent a deterioration in their condition.

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Monitoring capacity by the department

• The Provincial Treasury receives monthly conditional grant and capital expenditure reports from departments

• The reports are presented to the Provincial Technical Committee on Finance, Heads of Department and Executive Council to assess the levels of spending

• The department has plans to fill critical posts by 1st December 2005 to enhance monitoring capacity e.g. the appointment of programme analysts who will deal specifically with allocated sectors

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The End

presentation to ncop by the mec limpopo provincial treasury

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