Provincial Budgets and Expenditure as at 31 December 2007 2007/08 Financial Year AGRICULTURE 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) 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

Challenges addressed through 2007 AENE NW was impacted more significantly by re-demarcation the sheer magnitude of the “shock” combined with use of incorrect data (number of schools, learners, educators, etc.) resulting in extreme budgetary pressures on NW education Once-off conditional allocation of R250 million allocated to NW Wage agreement is 1.5% higher than what prov budgeted Costs associated with the higher than anticipated wage settlement was allocated to provinces (R1.2bn)

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 R11.7bn (61.4%)

Provincial Aggregated Expenditure (1)

Provincial Aggregated Expenditure (2)

Provincial Social Services (2)

Conditional grants

Conditional Grants (3)

Agriculture Grants (1) Agricultural Disaster Management Grant Objective (Schedule 5 Grant): To provide support and relief from the effects of drought / veldfire, cold spell, hail storm and floods in identified areas within provinces First Nine Months Expenditure: Two provinces have reported spending of R15.7m or 5.0% of the R316m allocation No funds have been transferred Spending: WC 30.1% and KZN 8.6% Service Delivery Outcome: Department / Sector to respond

Agriculture Grants (1) Comprehensive Agricultural Support Programme Grant Objective (Schedule 4 Grant): To expand the provision of agricultural support services. and promote and facilitate agricultural development by targeting beneficiaries of the Land and Agrarian Reform programmes First Nine Months Expenditure: Spending of this grants is subsumed in the spending of a range of programmes and therefore no reporting is required However, provinces reported spending of R185.8m or 43.4% of R428.6m adjusted allocation Transfers received amounted to 74.2% of national allocation Highest spending: GP 70.1% and EC 62.0% Lowest spending: KZN 16.4% and LP 22.6% Service Delivery Outcome: Department / Sector to respond

Agriculture Grants (2) Land Care Programme Grant: Poverty Relief and Infrastructure Development Objective (Schedule 5 Grant): To address the degradation problems of natural/agricultural resources and to improve the socio-economic status and food security of rural communities First Nine Months Expenditure: Provincial Agriculture Depts spent R26.9m or 46.3% of the R58.0m Land Care Programme adjusted allocation Transfers received amounted to 80.0% of national allocation Highest spending: MP 84.3% and EC 74.5% Lowest spending: GP 21.9%, no spending recorded for LP Service Delivery Outcome: Department / Sector to respond

Conditional Grants (5) Spending Rates 5 or more provinces have spent less than 60% of their grant budget for the following grants: Land Care Programme; Community Library Services; HIV and AIDS (Life Skills Education); Forensic Pathology Services; Integrated Housing and Human Settlement Development Although the rate of spending is encouraging and reflects an improvement over previous financial years, overall CG spending (60.4%) still lies below total provincial spending (71.6%)

Conditional Grants (6) Spending Rates