PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY

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PRESENTATION TO NCOPBY THE MEC LIMPOPO
PROVINCIAL TREASURY
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• 11TH OCTOBER 2005

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INTRODUCTION

• Honourable 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
  departments 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 departments 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 Treasurys
  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
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Reasons for under spending-C Grants

• Health
• HIV/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 quarter
• Integrated Nutrition Programme
• The underspending is as a result of agreements
  not yet signed with NGOs. The department
  assisted NGOs to develop business plans in the
  first quarter and the plans have now been
  approved.

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Reasons for under spending-C Grants

• Social Development
• HIV/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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Reasons for under spending-C Grants

• Education
• HIV/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
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Health CAPEX spending 30 June 2005
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Social Dev spending 30 June 2005
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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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Reasons for under spending-CAPEX

• 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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Reasons for under spending-CAPEX

• 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