Title: Provincial Treasury Western Cape NCOP Select Committee on Finance Public Hearings Conditional Grants and Capex
1Provincial Treasury Western Cape NCOP Select
Committee on FinancePublic HearingsConditional
Grants and Capex
2Outline
- Conditional grant allocations
- Transfers
- CG cash flow management
- Monitoring transfers
- Division of Revenue Act
- Expenditure
- Monitoring expenditure
- Service delivery agreements
- The way forward
3Conditional Grant Allocations
4CG Allocations
Conditional grant allocations 2005/06
5CG Allocations (2)
6Conditional Grant Transfers
7CG Transfers
Reconciliation of Conditional Grant Payment
Schedule
8CG Transfers (2)
- Health
- Health grants withheld/delayed from time to time.
This includes the National Tertiary Services
Grant and the Health Professions Training and
Development Grant which according to DORA 2005
may not be withheld - Reasons cited by the National Department of
Health include - National Tertiary Services Grant Internal
problems within the National Department of
Health - Health Professions Training and Development
Grant systems were down - Hospital Revitalisation Grant slow spending by
the Provincial department of Health - Hospital Management and Quality Improvement
Grant Provincial Department of Health failed to
submit the required quarterly report
9Conditional Grant - Cash Flow Management
10CG Cash Flow Management
- Conditional Grant transfers mostly received
according to payment schedule issued by National
Treasury - Funds are transferred directly to the exchequer
account - Money transferred to accounts on a regular basis
to cover scheduled payments - Liaise with Provincial and National Departments
if transfers delayed to establish problem - Action with relevant parties to address
accordingly - Continuous follow-up to ensure scheduled transfer
effected
11Monitoring Transfers
12Monitoring transfers
- The Western Cape has experienced some problems
with the late transfer of Conditional Grant
payments in 2005/06 - As there is no formalised process for monitoring
these transfers, cash management only becomes
aware of the intention to withhold transfer on
day transfer expected as per payment schedule - PT recommended a more formalised process to NT to
ensure PT alerted of a national departments
intention to withhold funds timeously, this
recommendation was subsequently taken up in
Practice Note 3 of 2005
13Monitoring transfers (2)
- This process requires National Departments to,
when giving a receiving officer notice of its
intention to withhold funds, send a copy of the
notice to National Treasury, who will inform
Provincial Treasury of the intended delay - National Departments are still failing to comply
with DORA 2005 and Practice Note 3 requirements - Provincial Treasury subsequently proposed that
National Treasury - ensure that transferring departments are aware of
conditions placed on them in terms of DORA and
Practice Note 3 of 2005 - Explore ways to ensure that transferring
departments adhere to the payment schedule and
take necessary precautions to ensure that
provinces receive funds timeously
14Monitoring transfers (3)
- All 2005/06 business plans have been approved and
Service Level Agreements signed - Provincial Treasury in the process of contacting
departments to ensure that business plans for
2006/07 have been submitted to their national
counterparts for approval in accordance with the
conditional grant frameworks.
15Division of Revenue Act
16Division 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 - Administrative burden of negligible grants i.e.
Land Care Grant R2,5 million with numerous
reports required - Cash constraints place upon Province when funds
withheld as commitments exist - Overlapping of measurable outputs
- Conditions of grants limit flexibility
17DORA review process
- Intergovernmental fiscal relations act (Act 97 of
1997) requires National Treasury to consult
provinces and municipalities when drafting DOR
bill - Treasury circular sent to line departments
requesting departmental concerns and
recommendations regarding DORA 2005 to be
considered in DORA 2006. - Meetings were to be scheduled with line
departments where deemed necessary based on
inputs received from departments. - Consolidated input to be sent to National
Treasury, awaiting first draft on DORA 2006 to
make additional comments
18Expenditure
19CG Expenditure - Agriculture
Agriculture CG Expenditure as at 31 December
2005
20CG Expenditure Agriculture (2)
- Challenges to overcome
- Provincial infrastructure (PIG)
- Planning and survey of projects and the approval
of plans by the engineering section is time
consuming and must take place before the tender
process can commence - Difficulties experienced with tender process,
tender applications were referred back by the
tender committee and have to be re submitted - Seasons harvest time of crops during the fourth
quarter leads to increased procurement, repair
and maintenance of capital equipment
21CG Expenditure Agriculture (3)
- Land care grant
- The eradication of invasive plants is seasonal as
they start growing in summer. - Project execution is dependent on farmers who
manage the project and only commences once
farmers have harvested their crops - Comprehensive agriculture support programme
- Lack of community participation and agreement on
projects - Difficulty in getting commitment from communities
when discontinuing a project the process of
finding alternative projects and reallocating
funds is a lengthy process - Seasonal expenditure some projects can only
commence in planting season - Memorandum of agreement between Department and
implementing agents is lengthy this process
must be finalised before transfer payments can be
made -
22CG Expenditure - Education
Education CG Expenditure as at 31 December 2005
23CG Expenditure Education (2)
- Challenges to overcome
- Provincial infrastructure (PIG)
- The Department received additional funds in the
adjustments estimate for projects that will
commence in January 2006 - Inefficient planning processes and delays in
technical tendering processes are being tackled
systematically - National school nutrition programme
- Delay in the submission of claims by service
providers results in slow payment by the
department - Moving forward the Department will transfer funds
directly to schools to allow them to set up
mobile kitchens with the assistance of EMDCs for
the distribution of feeding schemes
24CG Expenditure - Health
Health CG Expenditure as at 31 December 2005
Comprehensive HIV and Aids R10 million over
expenditure to be funded through equitable share
funds
25CG Expenditure Health (2)
- Challenges to overcome
- Provincial infrastructure grant (PIG)
- On site problems
- The late submission of claims
- Journalising of expenditure wrongly classified
- Limited project management capacity to manage
vast number of projects - Hospital management and quality improvement
- The creation of additional posts took longer than
expected
26CG Expenditure - Health (3)
- Hospital revitalisation programme
- Slow performance of contractors on various
projects - Worcester Hospital a shopping centre is being
built in the same area resulting in competing for
resources results in delay in construction - Paarl hospital Delay in the approval of the
business plan - The Department proposed the purchase of two
linear accelerators for Tygerberg Hospital to
offset the under expenditure but as no business
plan had been approved this was not possible - Integrated nutrition programme
- Claims outstanding from the City of Cape Town and
rural regions
27CG Expenditure - Health (4)
- Forensic pathology services
- Voted in the 2005/06 adjustments estimate
- First tranch received in December
- R5 million transferred to the Department of
Transport and Public Works for the purchase of
motor vehicles - Expenditure for the remaining R9,583 million is
dependent on approval by the National Department
of Public Works, the National Department of
Health and SAPS.
28CG Expenditure Local Government and Housing
Local government and Housing CG Expenditure as
at 31 December 2005
29CG Expenditure Local Government and Housing
(2)
- Challenges to overcome
- Human settlement and redevelopment grant
- Tender approval process taking longer than
expected - Maintenance projects that will not be completed
by the end of the financial year - Disaster relief
- Funds will only be transferred in March 2006
30CG Expenditure Social Services
Social services and poverty alleviation CG
Expenditure as at 31 December 2005
31CG Expenditure Social Services (2)
- Challenges to overcome
- Integrated Social Development Services
- Looking at more a integrated way of poverty
alleviation (working together with other
departments and local government) resulted in
delays - Lag between IYM figures and actual spending,
substantial spending has taken place - 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
32CG Expenditure Transport and Public Works
Transport and public works CG Expenditure as at
31 December 2005
The Department has spent 94.4 per cent of the
budgeted amount for the grant as at 31 December
2005. This is above the national spending
benchmark of 75 per cent.
33Capital Expenditure
Capital expenditure as at 31 December 2005
Capital expenditure is within an acceptable range.
34Infrastructure Expenditure
Preliminary infrastructure expenditure as at 31
December 2005
35Infrastructure Expenditure (2)
- Challenges to overcome
- Bottlenecks in the procurement process
- Inefficiencies in the link between planning,
budgeting and implementation - Capacity constraints
36Monitoring Expenditure
37Monitoring Provincial 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 - Quarterly meetings between MECs for finance,
education, health and public works to discuss
infrastructure spending and other difficulties - Continuous engagements with departments in a
co-operative manner to jointly seek solutions
38Monitoring Local Government Expenditure
- 24 municipalities directly and 6 municipalities
indirectly. - S71 of MFMA Monthly reports to PT NT and
quarterly Provincial Legislature. - IYM introduced in municipalities 1 July 2005 to
monitor the budget outcomes. - Various municipal financial systems and capacity
make it difficult for municipalities to comply. - Provide assistance to municipalities which could
enable them to comply. - 11 municipalities submit the full IYM model while
19 municipalities submit a summary version of the
IYM. - Developed a provincial IYM database.
- Discussions with NT access to NT database.
- Currently assessing the IYM and due to submit a
report. - Assessed all municipal revenue and expenditure to
determine the affordability of increases in
Councillor remuneration. - CFO Forum PT with municipalities, quarterly on
financial matters.
39Service Delivery Agreements
40Service Delivery Agreements
- Agreements concluded between implementing agent
(Department of Transport and Public Works) and
client department (Departments of Education and
Health) - Key aspects covered include
- Scope of Delivery
- Roles and responsibilities
- Programme and project control
- Service levels
- Resolution of differences and disputes
41The Way Forward
42The way forward
- Build on financial and non-financial quarterly
reports to Legislature, Exco and Top Management
to better inform engagement with departments - Paradigm shifts for alignment of infrastructure
cycle with the budget cycle - Legislation needs to be more enabling
conditions result in delay in service delivery - There needs to be certainty regarding funding
levels and the flow of funding, this is
especially relevant for infrastructure spending - Ensure the early sign off of business plans
- Care should be taken to ensure that conditions
placed on conditional grants do not impact on
service delivery
43Discussion