Conditional Grant and Capital Expenditure Public Hearings - PowerPoint PPT Presentation

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Conditional Grant and Capital Expenditure Public Hearings

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Conditional grants form 33,1 per cent of Provincial budget in 2005/06 ... burden of negligible grants i.e. Land care grant R2,5 million with numerous reports required ... – PowerPoint PPT presentation

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Title: Conditional Grant and Capital Expenditure Public Hearings


1
Conditional Grant and Capital ExpenditurePublic
Hearings
  • 11 October 2005

2
Outline
  • Receipts
  • Transfers
  • Monitoring transfers
  • Division of Revenue Act
  • Expenditure
  • Monitoring expenditure
  • The way forward

3
Receipts
4
Receipts
  • Conditional grants form 33,1 per cent of
    Provincial budget in 2005/06
  • DORA result in a number of difficulties for
    Province, mainly as a result of withholding of
    grants
  • Withholding mainly results from late submission
    or late approval of business plans in
    contradiction to deadlines given in CG frameworks
  • Implications of withholding funds on provincial
    expenditure and cash flow management results in
    Province having to contain expenditure to match
    receipts

5
Transfers
6
Transfers
Reconciliation of Conditional Grant Payment
Schedule
7
Transfers (2)
  • Health grants
  • No transfers received in April
  • Payment made for NTSG, HPTDG, HRP in May albeit
    late
  • First payment for Comprehensive HIV and Aids
    Grant received in August
  • Housing
  • IHAHSD April transfer received late
  • Human Human settlement and redevelopment grant
    withheld in April, May and June
  • Provincial Infrastructure Grant
  • Transfer due in May, received in June and July
  • Education
  • HIV and Aids (Life Skills Education) Grant due in
    April transferred in May
  • Resultant loss in revenue R3,471 million

8
Monitoring transfers
9
Monitoring transfers
  • No formalised intergovernmental process for
    monitoring transfers
  • Cash management receives transfers only aware
    of intention to withhold transfer on day transfer
    expected as per payment schedule
  • Contact relevant department and resolve situation
  • PT has now recommended more formalised process to
    NT to ensure PT alerted of intention to withhold
    funds timeously (discussed later)

10
Division of Revenue Act
11
Division of Revenue Act
  • Shortcomings in Division of Revenue Process
  • Section 33(2) requires National Departments to
    notify receiving officers of intention to
    withhold transfers, providing opportunity for
    Departments to submit reasons as to why
    allocation should not be withheld
  • No requirement for Provincial Treasuries (PT) to
    be informed while NT only needs to be informed if
    funds are to be withheld for more than 30 days

12
Division of Revenue Act (2)
  • Further shortcomings
  • Administrative burden of negligible grants i.e.
    Land care grant R2,5 million with numerous
    reports required
  • Overlapping of measurable outputs
  • PT forced to approve rollover requests on CG even
    though under spending is imminent
  • Conditions of grants limit flexibility

13
Division of Revenue Act (3)
  • PT submitted a letter to NT recommending that NT
  • Submit monthly reports to PT indicating which CGs
    will be withheld and motivation for withholding
  • Submit revised payment schedules to PT
  • Advise PTs as to when Provincial Departments have
    met requirements of CG frameworks
  • These recommendations have subsequently been
    taken up in a practice note

14
Division of Revenue Act (4)
  • PT has also recommended that PTs should play an
    oversight role in the development of 2006/07
    business plans, thereby ensuring business plans
    are approved timeously thereby ensuring no repeat
    of the problems encountered in 2005/06.
  • Recommended procedure includes
  • National Departments submit schedules for
    completion of business plans, preferred formats
    as well as names of persons responsible for
    drafting business plans to NT
  • NT compiles this information and forwards it to
    relevant PTs
  • National Departments inform their provincial
    counterparts of PTs oversight role

15
Expenditure
16
Expenditure
Agriculture CG Expenditure as at 30 June 2005
  • Reasons for under-expenditure
  • Land Care
  • - Slow start up in spending
  • PIG
  • - Lack of community participation and agreement
    on projects
  • - Prolonged tendering process

17
Expenditure (2)
Education CG Expenditure as at 30 June 2005
  • Reasons for under-expenditure
  • HIV and Aids (Life Skills Education)
  • - Expenditure slow in first quarter and picks up
    in third quarter when learner materials are
    purchased for following school year
  • - Late approval of business plan
  • National School Nutrition Plan
  • - Delay is submission of claims by service
    providers results in slow payment by department
  • PIG
  • - Weather conditions delaying construction
    usually slow in first quarter, gathering steam
    later in the year

18
Expenditure (3)
Health CG Expenditure as at 30 June 2005
  • Reasons for under expenditure
  • Hospital management and quality improvement
  • - Budget split between items was not allocated on
    BAS by 1 April for payments to be made against
    expenditure items
  • Comprehensive HIV and Aids
  • -Late approval of business plan

19
Expenditure (4)
  • Hospital Revitalisation Programme
  • Difficulties with Vredenburg project, part of
    which must go out on tender
  • Delay in approval in Paarl hospital business case
  • PIG
  • Weather conditions delaying construction
    usually slow in first quarter, gathering steam
    later in the year

20
Expenditure (5)
Housing CG Expenditure as at 30 June 2005
  • Reasons for under expenditure
  • Weather conditions delaying construction
    usually slow in first quarter, gathering steam
    later in the year
  • Late submission of claims by municipalities

21
Expenditure (6)
Social services and poverty alleviation CG
Expenditure as at 30 June 2005
  • Reasons for under expenditure
  • HIV and Aids (Community Based Care)
  • - Spending focused on the appraisal of service
    proposals and the consolidation of partnerships,
    spending will pick up once this process is
    complete

22
Expenditure (7)
  • Integrated Social Development Services
  • Previously called Food Emergency Relief Grant
    tender has now been approved spending will
    commence shortly
  • Business plan for Integrated Social Development
    Services Grant has only been approved recently
    which will improve spending in the remainder of
    the financial year
  • Social Assistance Administration
  • Establishment for support services staff for
    SASSA has not been approved by National
    Department of Social Development
  • Social Services pay administrative costs and
    claim back from SASSA spending in second
    quarter will improve

23
Expenditure (8)
Transport and public works CG Expenditure as at
30 June 2005
  • Reasons for under expenditure
  • Weather conditions delaying construction
    usually slow in first quarter, gathering steam
    later in the year

24
Expenditure (9)
Cultural Affairs and Sport CG Expenditure as at
30 June 2005
  • Reasons for under expenditure
  • Most of the events funded by the grant take place
    towards the end of the year
  • Non/late-filling of vacant posts

25
Expenditure (10)
Capital expenditure as at 30 June 2005
  • Reasons for under expenditure
  • Weather conditions delaying construction
    usually slow in first quarter, gathering steam
    later in the year
  • Long Supply Chain Management (SCM) Processes
  • Paradigm shift need to take place in depts -
    start with SCM process in the previous financial
    year as part of the MTEC 3 year budget
    allocations

26
Monitoring Expenditure
27
Monitoring expenditure
  • Monthly reports to NT
  • Quarterly reports to Top Management, Exco and
    Legislature (SCOF)
  • Quarterly narrative reports to AOs and CFOs
  • Frequent interaction with departments on spending
    performance and general issues
  • Trawling exercise allows for shifting of PIG
    funds between departments i.e. from performing to
    non-performing departments

28
The Way Forward
29
The way forward
  • PT will have one day workshop on DORA and CG
    frameworks to streamline DORA in order to enhance
    delivery at provincial level
  • Outcomes to be communicated to NT
  • Financial and non-financial quarterly reports to
    Legislature, Exco and Top Management to inform
    engagement with departments
  • Paradigm shifts need to take place in depts
    regarding SCM process to start earlier as part
    of 3 year allocations.

30
Questions
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