Provincial Budgets and Expenditure as at 31 December 2007 2007/08 Financial Year PUBLIC WORKS, ROADS AND TRANSPORT SCOF (NCOP) Hearings Presented by: Intergovernmental Relations National Treasury February 2008

Broad Observations The presentation covers provincial spending as at 31 December 2007 Based on Section 40(4) PFMA reports (IYM) submitted by PTs Published in Government Gazette on 30 January 2008 Provincial spending is on track with 71.6% or R153.9bn spent of their budgets Projected overspending of R1.4 billion in 6 provinces Includes adjusted budgets National adjustments (R2.8bn) Provincial adjustments (R1.6bn) Total adjustments (R4.4bn) (health – R1.6bn, education – R1.2bn) 4 provinces projecting to overspend education budgets (NW and KZN significantly; GT to underspend) 7 provinces to overspend health budgets (NW projected under-exp of R250m) Low spending rate recorded for social development (original budgets were reduced by R151.5m) R1.2 billion added to cover wage agreement – only R641.7m allocated by provinces Capital – R1.2bn added, however only have capacity to spend close to main budget Spending against budgets on conditional grants is lower than the total provincial spending average

Provincial Adjustments

Key highlights Provinces show a slight decrease in the share of Social Services total budget from 73.8% in 2006/07 to 73.2% in 2007/08 Education remains largest item of budget at 41.9% Health at 28.3% Social Welfare Services only 3.0% of budget Spending in social services sectors: Education at R66.3bn (73.7%) Health at R45.3bn (74.4%) Social Welfare Services at R4.6bn (72.0%) Spending in non-social services sectors: Agriculture at R3.9bn (63.4%) Housing and Local Government at R7.6bn (61.8%) Public Works, Roads and Transport at R16.3bn (66.6%) Sport, Arts and Culture at R1.6bn (65.7%) Personnel spending is at R88.7bn (74.7%) Capital expenditure is at R11.8bn (61.4%)

Provincial Aggregated Expenditure (1)

Payments for Capital Assets Trends (Capital expenditure)

Payments for Capital Assets (1) Provinces have spent R11.8bn or 61.4% of R19.1bn capital adjusted budgets Two provinces projecting to overspend by R20.1m (EC – R18.4m; WC -R1.6m) Seven provinces projecting under expenditure of R666.6m Increase of R1.8bn or 17.7% to comparative spending during last year Low rate of capital spending in MP (48.1%) and GP (52.1%) FS (72.9%) and EC (69.5%) reflects the highest rate of capital spending Largest provincial capital budgets are for public works, roads and transport departments at R7.3bn or 37.9% Spending at R5.0bn or 69.4% compared to R3.5bn spent last year (45.2% increase)

Payments for Capital Assets (2)

Payments for Capital Assets (6) Public Works, Roads and Transport The biggest capital budgets in provinces are in public works, roads and transport departments at 37.9% or R7.3bn of total capital adjusted budget of R19.1bn Spending is at R5.0bn or 69.4% Spending is 45.2% or R1.6bn more than the R3.5bn spent last year over the same period The lowest rate of spending is recorded in NC at 56.4% and GP at 58.0% NW and FS recorded the highest rates of spending at 80.0% and 76.7% respectively

Payments for Capital Assets (7) Public Works, Roads and Transport

Conditional grants

Conditional Grants (1) Flow of Information

Conditional Grants (4)

Important dates and submissions

Publication Dates for Provincial S32 Reports 2007/08 Financial Year: 4th Quarter (as at 31 March 2008) 30 April 2008 1st Quarter (as at 30 June 2008) 30 July 2008 2nd Quarter (as at 30 September 2008) 30 October 2008

Detail on Conditional Grants by Grant Type

National Treasury Grant Infrastructure Grant to Provinces Objective (Schedule 4 Grant): Help accelerate construction. maintenance and rehabilitation of new and existing infrastructure in education. roads. health and agriculture Focus on the application of labour intensive methods in the provision of access roads and maintenance of infrastructure in order to maximise job creation and skills development Gradually increase the labour-intensity of certain specific types of projects over the next six years Enhance capacity to deliver infrastructure First Nine Months Expenditure: Spending of this grants is subsumed in the spending of a range of departments and programmes and therefore no reporting is required Transfers received amounted to 71.1% of national allocation Service Delivery Outcome: Department / Sector to respond

Transport Grant Gautrain Rapid Rail Link Grant Objective (Schedule 5 Grant): National government contribution to the Gauteng Provincial Government for the construction of the Gautrain Rapid Rail network First Nine Months Expenditure: Spending recorded against the conditional grant allocation amounts to R1.6m or 54.4% of the grant allocation. Transfers received amounted to 94.0% of national allocation Service Delivery Outcome: Department / Sector to respond

Public Works Grant Devolution of Property Rates to Provinces Objective This year also sees the introduction of a public works grant, the devolution of property rates grant, to ensure that provinces take over the responsibility of paying property rates and municipal charges of properties that were administered by national government on their behalf. Service Delivery Outcome: The grant is introduced with baselines of R889 million in 2008/09, R997 million in 2009/10 and R1.1 billion in 2010/11. The grant is expected to be phased into the provincial equitable share in five years time

THANK YOU THANK YOU THANK YOU