SECOND QUARTER CONDITIONAL GRANTS AND CAPITAL REPORT FOR 2005/06

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SECOND QUARTER CONDITIONAL GRANTS AND CAPITAL
REPORT FOR 2005/06

• Select Committee on Finance
• 16 January 2006

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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

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Conditional grants

• TRANSFERS

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Conditional grants cont.
Dept Grant Total Budget 2005/06 Payment 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 1
Land Care Programme 2,000 900 900 0
EDUCATION       0
HIV and Aids (Life Skills Education) 18,880 9,440 9,440 0
School Nutrition Programme 83,006 41,504 41,504 0
HEALTH       0
Comprehensive HIV and Aids 185,048 91,491 91,491 0
Health Professions Training and Development 554,039 277,020 277,020 0
Hospital Management and Quality Improvement 18,510 9,256 9,256 0
Hospital Revitalization 17,955 8,979 8,979 0
Integrated Nutrition Programme 11,333 6,807 6,807 0
National Tertiary Services 1,760,465 880,230 880,230 0
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Conditional grants cont.
Dept Grant Total Budget 2005/06 Payment 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
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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

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Conditional grants cont.
ACTUAL SPENDING
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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 -192
Land Care Programme 2,000 486 24.30 1,456 1,942 58
EDUCATION            
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 and Quality Improvement 18,510 1,086 5.80 18,510 19,596 -1,086
Hospital Revitalization 17,955 32,838 182.80 63,176 96,014 -78,019
Integrated Nutrition Programme 11,333 5,709 50.30 5,624 11,333
National Tertiary Services 1,760,465 880,230 49.90 880,235 1,760,465
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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 1,694
SOCIAL DEVELOPMENT
HIV and Aids (Community-Based Care) 20,341 19,523 95.90 41,566 61,089 -40,748
Integrated 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 37,722
Social Assistance Transfers Grant 6,454,145 3,189,220 49.40 3,092,219 6,281,439 172,706
SRAC
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
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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 Grants 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

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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

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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 distributions 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

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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

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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 Healths HIV/AIDS grant
  spending
• to the department to be corrected in the next
• report

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Capital Expenditure

• ALLOCATIONS

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Capital Expenditure cont.

• Departmental Allocations (Before adjustment)

Department 2005/06 of total allocation
Health 453,085 10
Education 555,492 13
Transport and Public 642,819 15
Works 642,819 15
Housing 1,524,581 35
Social Development 24,420 1
Finance and Economic 1,190,698 27
Affairs 1,190,698 27
Agriculture , Conservation 5,538 0
and Environment 5,538 0
Sports 12,400 0
Total Infrastructure 4,409,033 100

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

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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

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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

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Capital Expenditure cont.

• ACTUAL SPENDING

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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

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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

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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

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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

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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

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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.

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Capital Expenditure cont.

• Key concerns
• Partial/ Non submission by
• Public Works (Partial)
• Education
• DFEA
• Inaccurate and/or incomplete reports

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Capital Expenditure cont.

• Action by Treasury drafted letters to all HODs
  CFOs
• Detailed Q12 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

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Assessment of departments monitoring capacity

• CFOs 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

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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

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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

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Way Forward

• Continue to monitor spending against budget
• Hold individual meetings with departments showing
  significant underspending and overspending
• Capacitate CFOs office and Treasury in 2006/07
• Facilitate delivery between planning and
  implementing agencies
• Establishment of dedicated ME function within
  Public Finance Unit at Provincial Treasury

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• Thank you!!!