HEARINGS ON THE DIVISION OF REVENUE BILL PRESENTATION TO THE SELECT COMMITTEE ON FINANCE 6 MARCH 2006

CONTENT Introduction Strategic Priorities National Department’s share of budget Social Assistance Function Conclusion

BACKGROUND Presentation covers two elements: the national Department’s “normal” budget and funds for social assistance. The Social Assistance Budget now forms part of the national sphere’s share i.t.o. the equitable division of revenue Social assistance also no longer a conditional grant Note: Soc Ass funds specifically & exclusively earmarked in the Appropriation Bill

BACKGROUND HIV and AIDS conditional grant has now been incorporated into the provincial equitable share. Integrated Social Development Grant (previously known as National Food Emergency Grant) is also incorporated into the provincial equitable share. This allows DoSD & SASSA to focus entirely on the management of the social assistance function.

STRATEGIC PRIORITIES Create enabling environment for social and human capital investment Promotion of social integration Social protection initiatives to build capacity of vulnerable groups Provide comprehensive social security system Leadership in social development to ensure deepening of social policy discourse and evidence-based decision-making

STRATEGIC PRIORITIES Effective and efficient management of social development programmes in partnership with civil society and other social partners Good governance Steering national involvement in African and International frameworks and agreements w.r.t. socio-economic development

MTEF ALLOCATIONS-NDoSD R’000 % increase 2005/06 56 549 127 2006/07 62 005 460 8.8 2007/08 67 222 108 7.7 2008/09 73 347 351 8.3

Changes to Baseline Function 2006/07 2007/08 2008/09 R ‘000 R ’000 Grant Admin Integrity - 50 000 Regulatory / Oversight of SASSA 10 000 20 000 30 000 Devolvement of Funds from Public Works 8 678 9 389 10 124 Social Assistance Transfer 650 000 800 000 950 000 Social Assistance Admin 40 000 60 000 HIV and Aids (138 854) (142 797) (149 666) Integrated Social Development Services (411 280) (431 844) (452 616) Net Change to Baseline 118 544 344 748 497 842

BUDGET COMPARISON

MTEF Summary Year Normal allocation R’000 Special Allocation Total Allocation 2005/2006 286 250 56 262 877 56 549 127 2006/2007 277 814 61 727 646 62 005 460 2007/2008 305 858 66 916 250 67 222 108 2008/2009 338 320 73 009 031 73 347 351

Earmarked Funds 2005/06 – 2008/09 Project 2005/06 R’000 2006/07 2007/08 2008/09 Voted 56 549 127 62 005 460 67 222 108 73 347 351 Social Assistance Transfers 52 023 313 57 720 109 62 630 058 68 344 762 Admin of Social Assistance 3 382 055 3 584 320 3 774 190 4 130 267 Establishment of SASSA 110 000 135 000 158 250 166 954 Grant Administration Integrity 43 370 96 086 154 487 157 525 Devolution of Public Works Funds - 8 678 9 389 10 124 Disaster Relief 10 000 Emergency Disaster Relief 5 000 Walvis Bay Social Assistance Funds 5 266 5 441 5 713 6 227 Integrated Soc Dev Services 388 000 HIV and AIDS 138 391 National Development Agency 121 482 123 012 129 163 136 267 loveLife Groundbreaker* 36 000 40 000 41 905 Total Special Allocations 56 262 877 61 727 646 66 916 250 73 009 031 TOTAL OPERATIONAL BUDGET 286 250 277 814 305 858 338 320

2006/07 FISCAL ARRANGEMENT FOR SOCIAL GRANTS In terms of the Agency establishment, social assistance function shift to national government w.e.f. 6 March 2006. Accordingly the social assistance budget will from now onwards form part of the national Dept of Social Development. In deciding on fiscal arrangements for 2006/07, the state of readiness of SASSA to take over the function needs to be to be taken into account.

2006/07 FISCAL ARRANGEMENT FOR SOCIAL GRANTS State of readiness includes ability to: Absorb officials & associated functions currently in national & provincial departments of social development Coordinate financial reconciliation processes between SASSA headquarters and regions Manage government funds for distribution to service providers and/or beneficiaries Operate its administration systems including BAS (payment of internal expenses) and PERSAL (remuneration of SASSA officials) from 1 April 2006.

FLOW OF FUNDS Interim Phase In the interim the current funds flow arrangement for social assistance transfers effectively remains unchanged. Two types of funds: Administration component – for general administration and personnel Social assistance transfers – for social grants transfers and payment contractor’s fees

FLOW OF FUNDS Interim Phase Administration funds will flow from Revenue Fund to SASSA (PMG a/c) via NDoSD (PMG1) Social assistance funds will flow from NDoSD to Provinces (via the CPD accounts to PMG2 accounts) Current banking configuration with regard to national-provincial roles will therefore be maintained (Interim arrangement)

FLOW OF FUNDS Interim Phase The envisaged end-state is to transfer social assistance funds directly from NDoSD PMG2 to service providers and/or beneficiaries Since support staff at SASSA regional offices is not fully in place to administer transfers, provincial departments will provide support on an Agency basis.

DIAGRAMATIC PRESENTATION

FLOW OF FUNDS End State:Post-interim phase National Revenue Fund Vote 18: Department of Social Development Programme 2:Social assistance Transfers and Administration Programme 3: Social Security Transfers and Administration Transfers to Households PMG2 Programme 3: Social Security Transfers and Administration Transfers to Departmental Agencies and Accounts SASSA Account NDOSD Operations Programmes 1, 2, 4, 5, 6, Service Providers Commercial Banking Accounts SASSA Operational Expenditure NDoSD Operational Expenditure SASSA Operational Expenditure

CONCLUSION The interim arrangements during this transitional period have challenges that require priority attention. Cooperation between national & provincial departments of Social Development is critical Capacity of the national department to administer and monitor social grants payments nation-wide is also critical NT is arranging a joint presentation to Parliament soon on details of this proposal.