SECOND QUARTER CONDITIONAL GRANTS AND CAPITAL REPORT FOR 2005/06

Select Committee on Finance 16 January 2006

Contents Conditional grants

Transfers Actual spending

Capital Expenditure Allocations Actual spending

Assessment of department monitoring capacity Reporting by departments Submission of conditional grants business plans

Conditional grants

TRANSFERS

Conditional grants cont. Dept & Grant Total Budget

2005/06Payment

Schedule as at end of Sept

Transfers received as at

end of Sept

Variance (Payment

schedule less transfers received)

DACE        

Comprehensive Agricultural Support 5,727 2,577 2,578 1Land Care Programme 2,000 900 900 0EDUCATION       0HIV and Aids (Life Skills Education) 18,880 9,440 9,440 0School Nutrition Programme 83,006 41,504 41,504 0HEALTH       0Comprehensive HIV and Aids 185,048 91,491 91,491 0Health Professions Training and Development 554,039 277,020 277,020 0Hospital Management and Quality Improvement 18,510 9,256 9,256 0Hospital Revitalization 17,955 8,979 8,979 0Integrated Nutrition Programme 11,333 6,807 6,807 0National Tertiary Services 1,760,465 880,230 880,230 0

Conditional grants cont. Dept & Grant Total Budget

2005/06Payment Schedule as

at end of Sept

Transfers received as at end of

Sept

Variance (Payment schedule

less transfers received)

HOUSING        

Integrated Housing and Human

Settlement 1,340,675 611,900 611,900 0

Human Settlement and Redevelopment 4,130 910 910 0

Land Distribution (Alex) 8,000  0 0 0

NATIONAL TREASURY       0

Provincial Infrastructure 369,777 184,888 92,444 92,444

SOCIAL DEVELOPMENT       0

HIV and Aids (Community-Based

Care) 20,341 18,306 18,306 0

Integrated Social Development Services 27,904 13,952 13,952 0

Social Assistance Administration 350,000 175,002 175,002 0

Social Assistance Transfers Grant 6,454,145 3,322,568 3,322,568 0

SRAC       0

Mass Sport and Recreation Participation 2,670 2,127 2,127 0

TOTAL 11,234,605 5,657,857 5,565,414 92,443

Conditional grants cont. Installment for infrastructure grant

was not received due to Non-submission of plans for 2006

MTEF by Education, Health, Finance Non-submission of 2nd quarter report

by Education, Finance Inaccurate and incomplete reports

Conditional grants cont.

ACTUAL SPENDING

Conditional grants cont. Dept & Grant Total

Available

2005/06

Spent by Province

by end of

Sept

% budget spend end

of Sept

Projection Spent & Projection

Variance

DACE            

Comprehensive Agricultural Support 5,727 1,602 27.90% 4,317 5,919 -192Land Care Programme 2,000 486 24.30% 1,456 1,942 58EDUCATION            HIV and Aids (Life Skills Education) 18,880 3,065 16.20% 15,815 18,880

School Nutrition Programme 83,006 36,706 44.20% 46,300 83,006

HEALTH            Comprehensive HIV and Aids 185,048 113,505 61.30% 71,543 185,048

Health Professions Training and Development 554,039 277,020 50.00% 277,019 554,039

Hospital Management andQuality Improvement 18,510 1,086 5.80% 18,510 19,596 -1,086Hospital Revitalization 17,955 32,838 182.80% 63,176 96,014 -78,019Integrated Nutrition Programme 11,333 5,709 50.30% 5,624 11,333

National Tertiary Services 1,760,46

5 880,230 49.90% 880,235 1,760,465

Conditional grants cont.Dept & Grant Total

Available 2005/06

Spent by Province by end of Sept

% budget spend end

of Sept

Projection

Spent & Projection

Variance

HOUSING            

Integrated Housing and Human Settlement 1,340,675 628,979 46.90% 1,082,296 1,711,275 -370,600

Human Settlement and Redevelopment 4,130 1,091 26.40% 3,039 4,130

Land Distribution (Alex) 8,000 - 0.00% 8,000 8,000 NATIONAL TREASURY            Provincial Infrastructure 369,777 107,860 29.10% 260,223 368,083 1,694SOCIAL DEVELOPMENT

HIV and Aids (Community-Based Care) 20,341 19,523 95.90% 41,566 61,089 -40,748Integrated Social Development Services 27,904 12,537 44.90% 15,367 27,904  Social Assistance Administration 350,000 111,196 31.80% 201,082 312,278 37,722Social Assistance Transfers Grant 6,454,145 3,189,220 49.40% 3,092,219 6,281,439 172,706SRAC

Mass Sport and Recreation Participation 2,670 282 10.60% 2,388 2,670

TOTAL 11,234,605 5,422,935 48.30% 6,090,175 11,513,110 -278,505

Conditional grants cont. Overall the province has spent 48,3% of the available budget

for Conditional Grants as at the end of Q2.

DACE spending low on both grants Comprehensive Agricultural Support Grant’s no Q1 expenditure

due to delays in the receipt of quotations for irrigation system, provision of bore holes and fencing foe supported emerging farmers

Land Care Programme low spend due to the finalisation of 2004/05 projects incl. effects of planning for 2005/06 projects

Education School nutrition grant programme grant-44% spent after the

second quarter HIV/AIDS-Life Skills grant-16% spent due to late distribution of

budgets to district offices

Conditional grants cont. Health

Hospital management and improvement grant-5,8% spent (awaiting approval of business plans from National Health)

All other grants spending is on track Hospital revitalisation grant (allocation for 2005/06

drastically reduced) – has already overspent after the second quarter

Projected over expenditure on revitalisation projects estimated at R78m, (partially defrayed by rollover of R22,8m)

Received R71m for Revitalisation from National during the adjustment

Conditional grants cont. Housing

Integrated housing grant spent 47%, Human settlement grant spent 26% in context

comprehensive plan - merger of grants; grant funding remaining commitments

Land distribution’s 0% expenditure emanates from prolonged planning activities from the first quarter for the acquisition of land for the Alex low cost housing initiative, expenditure is projected to effect during third quarter

Conditional grants cont. Overall provincial infrastructure grant

spending is at 29% Transport spent 29% (R43,5m) of budget (R147,9m) and

project to under spend by R12,4m Health spent 56% (R41m) of budget (R84,7m); projected

over spending of R10,8m Education spending at 16% of budget although

projections show that entire budget will be spent

Conditional grants cont. Social Development

Other grants spending is on par except for the Social assistance administration grant-32% spent

The Social assistance grant spending influenced by the indemnity campaign launched by the National Minister of Social Development that resulted in the cancellation of more than 7,000 cases of fraudulent beneficiaries in Gauteng alone.

HIV/AIDS grant shows 95% expenditure due to the incorrect allocation of Health’s HIV/AIDS grant spendingto the department; to be corrected in the next report

Capital ExpenditureALLOCATIONS

Capital Expenditure cont.Departmental Allocations (Before adjustment)

* Includes Gautrain ( (R900m), Blue IQ projects (R146m) and Cradle of Humankind and Dinokeng (R144m)

Department 2005/06 % of total allocation

Health 453,085 10%

Education 555,492 13%

Transport and Public 642,819 15%Works

Housing 1,524,581 35%

Social Development 24,420 1%

Finance and Economic 1,190,698 27%Affairs *

Agriculture , Conservation 5,538 0%and Environment

Sports 12,400 0%

Total Infrastructure 4,409,033 100%

Capital Expenditure cont.Some of the changes during Adjustment includes

Health Funds to purchase equipment for Pretoria Academic Hospital

(R270m) Maintenance backlog (R70m) for maintenance and

rehabilitation of health facilities Revitalization projects (R23m) Medical Equipment was delivered late (R29m)

Education Capex rollover of R60m due to pay contractors after the

completion of the 3 months retention period

Capital Expenditure cont. Transport and Public Works

Funds suspended from Dace and Social development for various projects (R22m)

Finance and Economic Affairs Gautrain budget reduced by R300 to fund pressures in the

social sector Dinokeng and Cradle of Humankind reduced by R58m

Housing Housing fund, Alex and Human settlement conditional grants

(R18m) to accommodate capital projects in progress Kliptown project R75m

Capital Expenditure cont.

ACTUAL SPENDING

Capital Expenditure cont.Compliance PLANS: Formats of the IDIP plans which all departments are expected to

comply with have been given to departments; however, DFEA & Sports submitted plan in Jan 06 Housing initially indicated that they do not consider building houses as

infrastructure therefore no plan was submitted We continue to follow up with the aforementioned departments to ensure

their final strategic plans include these infrastructure plans.

INFRASTRUCTURE REPORTING: 8 departments contribute in the provincial infrastructure: DFEA, Health,

Educ, SocDev, Housing, DPTRW, DACE & SRAC No report submitted by DFEA & Education submitted Q2 in Dec 05 However, NT reported material gaps in the information provided (Q1 & Q2) Expect information to be complete for Q3 report

Capital Expenditure cont. Health Infrastructure spend till end Dec 2005

Maintenance – 62,2% spent Infrastructure grant – 76,1% spent Provincial Infrastructure – 67,8% spent Revitalization grant – 84,6% spent

Dept indicate spending on track i.t.o allocation Measures to accelerate infrast. delivery

Appointment of project manager to increase capacity to monitor, manager & expedite

Management meetings on cash flow management Dedicated revitalization project managers to strengthen manage

capacity Early Warning System for routine reporting

Capital Expenditure cont.

Measures to accelerate infrast. Delivery Flagship projects identified for special attention SLA with health institutions Closer cooperation and communication implemented for

user requirements

Capital Expenditure cont. Education Infrastructure spend till end Nov R174m

Maintenance - R53m Schools – R75m GautengOnline R46m

Projected spend till year end R267m Measures to accelerate infrast. Delivery

Turnkey approach - advertised 45 schools in Nov grouped in clusters

Response not good – few contractors submitted tenders & prices very high

Re- advertised tender for 22 schools and tender closes in Jan Use IDT to build 23 schools and tender closes in Jan Appoint a project management company in Jan to facilitate the

process of ensuring that projects are delivered on time

Capital Expenditure cont. Transport and Public Works Infrastructure spend as at the end of Sept R195m

Maintenance R109,3m Upgrade R86m Public Works portion was not submitted

Measures to accelerate infrast. Delivery Developed a supplier database to assist in evaluating the

capacity and expertise of contractors

Developed a programme to improve technical capacity of contractors on site

Capital Expenditure cont. Housing The budget for Conditional Grant (Capex) is R1,340 billion

2005/06; Spending as at 30 November 2005 is R834m The Projected Spending Dec 2005 to March 2006 is R876m. Estimated over expenditure amounts to R370 million There is a huge projected expenditure for the month of March

amounting to R344 million. Continued 3rd quarter monitoring to validate credibility of

spending.

Capital Expenditure cont. Key concerns

Partial/ Non submission by: Public Works (Partial) Education DFEA

Inaccurate and/or incomplete reports

Capital Expenditure cont. Action by Treasury – drafted letters to all

HODs & CFOs: Detailed Q1&2 trend analysis on revenue (incl. CG) and

expenditure Highlighted key spending concerns Requested departments to clarify issues of concern Requested departments to formulate remedial plans for

low spending areas Reported spending to Exco; Premier

requested remedial plans from each HOD of low spending dept

Key interventions to be implemented included in previous slides

Assessment of departments monitoring capacity

CFO’s offices not properly capacitated – delay in submissions of reports, incomplete reports

Fiscal management unit responsible for monitoring has increased its capacity

Will continue to increase its capacity in the coming financial year

Reporting by departments

Receive monthly reports from departments Submit to National Treasury Submit quarterly reports to National Treasury and

the Legislature Provide feedback to departments on a quarterly

basis Presented 2nd quarterly report at the 2nd budget

Lekgotla Premier had discussions with the Departments on

the 2nd quarter report

Business plans for conditional grants

Business plans are submitted by departments directly to National Departments

Approval of plans are done by the relevant national department

Way Forward

Continue to monitor spending against budget Hold individual meetings with departments showing

significant underspending and overspending Capacitate CFO’s office and Treasury in 2006/07 Facilitate delivery between planning and

implementing agencies Establishment of dedicated M&E function within

Public Finance Unit at Provincial Treasury

Thank you!!!