Financial and Fiscal Commission Comment on Oversight Visit to Eastern Cape Report Standing Committee of Appropriations 20th October 2010 Financial and Fiscal Commission

1. Overview Challenges faced by the Eastern Cape Province regarding Education and Health Infrastructure Delivery Overview of Education Infrastructure Backlogs Commission views on the termination of Conditional Grants for Water, Sanitation and Electrification of Schools and Clinics

II. Challenges facing the Eastern Cape: Education and Health Infrastructure Backlogs The EC Province continues to have a massive education infrastructure backlog estimated at around R28 billion There have been national interventions in the past to scale up infrastructure delivery in the province (e.g. IDIP, Funds for Mud Structures, Other Delivery Agents) but the challenges continue to persist In the 2010/11 infrastructure plan, the EC Education Dept indicated that at the current rate, it will take: 3 years to eliminate the backlog facilities as per space norms and standards 6 years to upgrade or replace unacceptable structures 5 years to repair existing buildings to serviceable standards The EC Health Department is projecting a budget deficit of R1.7 billion in 2010/11 financial year. Infrastructure delivery and maintenance are most likely to be affected

Source: Dept of Basic Education ASIDI Programme, 2010 III. Education Backlogs: Basic Services & Mud Structures Province Water Sanitation Electricity Fencing Entire Mud Structures Eastern Cape 944 470 879 1153 395 Free State 193 48 221 126 1 Gauteng 4 12 64 KwaZulu Natal 288 71 1155 458 15 Limpopo 237 43 341 Mpumalanga 34 14 207 364 North West 6 28 68 23 Northern Cape 25 18 116 Western Cape 22 2 108 Total 1727 706 2799 2753 412 Source: Dept of Basic Education ASIDI Programme, 2010

IV. Commission views on conditional grants The Commission is of the opinion that conditional grants should be assessed in terms of goals and what they have achieved before they are discontinued or folded into the Equitable Share The Commission is concerned with the discontinuation of the Conditional Grants aimed at eradication Backlogs in Water, Sanitation and Electrification of Schools and Clinics at this stage An assessment of deliverables and targets needs to support the decision The Commission is aware of the initiatives by the Dept of Basic Education to eradicate backlogs through the Accelerated Schools Infrastructure Delivery Initiative (ASIDI)

V. Commission views on conditional grants (cont…) In the past, the Commission recommended that the design of infrastructure related conditional grants should be based on the progressive eradication of infrastructure backlogs Usage of a dedicated conditional grant, which recognises the link between the progressive provision of Constitutionally Mandated Basic Services and the Concomitant Infrastructure Requirement In the 2010/11 Annual Submission on the Division of Revenue, the Commission recommended that increased funding be directed to infrastructure programmes that are linked to basic services including water, sanitation, electricity, education and health.

VI. Commission views on conditional grants (cont…) For funds already in the system, government should improve the quality of targeted outcomes of infrastructure investment towards employment creation and poverty reduction Government should strengthen the link between planning, delivery models and spending, especially within the provincial sphere of government The Commission notes that in general there remains an overlap in the scope of infrastructure related conditional grants (Municipal Infrastructure Grant, Infrastructure Grant to Provinces, EPWP Incentive Grant, Water, Electrification and Sanitation Grants) These need to compliment each other and some consolidated into broader human settlement grants to eradicate backlogs