DEPARTMENT OF TRANSPORT STANDING COMMITTEE ON APPROPRIATIONS 9 SEPTEMBER 2014 Department of Transport Expenditure for Quarter 1 of 2014/15

Expenditure to 30 June 2014: Expenditure per Programme Expenditure per Economic Classification Expenditure per Programme per Economic Classification Details of Transfer Payments Plans to Spend Additional Allocations for Rail Transport Plans for Improving Expenditure for Civil Aviation Implementation of Cost Containment Measures Contents 2

The Department has a total budget of R billion. To date of reporting the department has spent R billion or 30% of the allocated budget. Expenditure per Programme ProgrammeBudgetExpenditureAvailable% Spent R' Administration % 2. Integrated Transport Planning % 3. Rail Transport % 4. Road Transport % 5. Civil Aviation % 6. Maritime Transport % 7. Public Transport % Total Department % 3

Compensation of Employees: Underspent as a result of vacant posts. Goods and Services: Overspending due to eNatis Transfers and Subsidies: Underspent; a second tranche payment of R363 million withheld for Provincial Road Maintenance Grant (PRMG) (North West & Gauteng) due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and an updated Infrastructure Report Management return for May & July Machinery and Equipment: Underspent due to the renovation of the building. Expenditure per Economic Classification Per Economic ClassificationBudgetExpenditureAvailable% Spent R'000 Compensation of Employees % Goods and Services % Transfers & Subsidies % Machinery and Equipment % Total Department % 4

UNDERSPENT Compensation of employees Machinery and equipment Transfers & Subsidies; the first quarterly payment to Higher Education Institutions has not yet been paid due to delays in receiving invoices. Expenditure per Economic Classification: Programme 1 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 AdministrationCompensation of Employees % Goods and Services % Transfers & Subsidies % Machinery and Equipment % Total % 5

UNDERSPENT Compensation of employees Machinery and equipment Goods and Services is under spending due to the delays in the following projects: National Transport Planning databank projects, development of National Freight Logistics Strategy, Multi Modal Transport Planning and Co-ordination Act and Regional Corridor Strategy. Expenditure per Economic Classification: Programme 2 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Integrated Transport Planning Compensation of Employees % Goods and Services % Machinery and Equipment % Total % 6

UNDERSPENT Compensation of employees Goods and Services mainly due to the prioritisation on the establishment of Project Implementation Management Office (PIMO) between the Department and Passenger Rail Agency of South Africa (PRASA) for the Feasibility study on Moloto Rail Corridor, Rail Policy Act and Branchline Strategy. OVERSPENT Machinery and equipment is mainly due to office furniture that were purchased during the renovation of the building for the year. Transfers and subsidies a total amount of R7 693 billion has been paid to PRASA which constitutes 51% of the total budget of PRASA for the year. Expenditure per Economic Classification: Programme 3 7 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Rail Transport Compensation of Employees % Goods and Services % Transfers & Subsidies % Machinery and Equipment % Total %

UNDERSPENT Compensation of Employees Machinery and Equipment Goods and Services was underspent on S’hamba Sonke programme and Road Infrastructure Policy. OVERSPENT Goods and Services was over spent by an amount of R162 million due to the cost of e-Natis maintenance and operations. Transfers and subsidies; the second tranche payment of R363 million withheld for PRMG (North West & Gauteng) due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and an updated IRM’s for May & July Expenditure per Economic Classification: Programme 4 8 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Road Transport Compensation of Employees % Goods and Services ( )339% Transfers & Subsidies % Machinery and Equipment % Total %

UNDERSPENT Compensation of Employees Machinery and equipment Goods and Services is under spent due to delays in the following projects: National Airports Development Plan and the National Civil Aviation Policy. Transfers and subsidies due to payment of foreign membership fees to the African Civil Aviation Organisation, International Civil Aviation Organisation and COSPAS-SARSAT Expenditure per Economic Classification: Programme 5 9 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Civil Aviation Compensation of Employees % Goods and Services % Transfers & Subsidies % Machinery and Equipment % Total %

UNDERSPENT Compensation of Employees Machinery and equipment Goods and Services is due to the delay in the following projects: Maritime Transport Policy and Legislation, Feasibility for undertaking the tug boat and Ratification of African Maritime Charter. OVERSPENT The membership fees to the International Maritime Organisation and the Indian Ocean Memorandum of Understanding were invoiced and paid earlier than what was projected. 10 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Maritime Transport Compensation of Employees % Goods and Services % Transfers & Subsidies % Machinery and Equipment % Total % Expenditure per Economic Classification: Programme 6

UNDERSPENT Compensation of employees Machinery and equipment Goods and services due to delays on the following projects: National Land Transport Amendment Bill, Review of the Rural Transport Strategy, Integrated Public Transport Network and National Learner Transport Policy. Transfers and subsidies due to expenditure for Taxi Recapitalisation: an amount of R66 million has been spent which was journalised in July ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Public Transport Compensation of Employees % Goods and Services % Transfers & Subsidies % Machinery and Equipment % Total % Expenditure per Economic Classification: Programme 7

Transfer Payments (R'000)BudgetExpenditureAvailable% Spent Conditional Grants: Provincial Roads Maintenance % Public Transport Operations % Public Transport Infrastructure and Systems % Public Transport Network Operations % Rural Road Asset Management % Public Corporatios: Passenger Rail Agency of South Africa (PRASA) % Departmental Agencies & Accounts: S.A. National Roads Agency % Road Traffic Management Corporation % Railway Safety Regulator % S.A. Civil Aviation Authority % Ports Regulator of South Africa % Road Traffic Infringements Agency % Maritime Rescue Co-ordination Centre % Transport SETA231- 0% 12 Transfer Payments

Transfer Payments (R'000)BudgetExpenditureAvailable% Spent Other: Taxi scrapping % Non Profit Institutions % South African National Taxi Council % Universities & Technicons % International Organisations % Leave pay and donations % Total % 13 Conditional Grants to Municipalities are paid in the second quarter (01 July) inline with municipal financial year. A total of R7.693 billion has been paid to PRASA which constitutes 51% of its annual budget. The total budget for the Railway Safety Regulator was transferred as per the payment schedule as they receive their permit fees in July onwards. The transfer payments to the South African Civil Aviation Authority and the Marine Rescue Coordination Centre were delayed due to late invoicing and receiving of compliance certificates. Taxi scrapping expenditure will reflect in the next report after the journal been processed. The first quarterly payment to Higher Education Institutions has not yet been paid due to delays in receiving invoices. The membership fees to the International Maritime Organisation and the Indian Ocean Memorandum of Understanding were invoiced and paid earlier than what was projected. Transfer Payments (Continued)

Provincial Road Maintenance Grant (PRMG) 14 ProvinceBudgetTransferSpent by Province R'000 % Eastern Cape % Free State % Gauteng % KwaZulu-Natal % Limpopo % Mpumalanga % North West % Northern Cape % Western Cape % Total % A second tranche payment of R363 million withheld for North West & Gauteng Provinces due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and updated Infrastructure Reporting Models for May & July 2014.

ProvinceBudgetTransferSpent by Province R'000 % Eastern Cape % Free State % Gauteng % KwaZulu-Natal % Limpopo % Mpumalanga % North West % Northern Cape % Western Cape % Total % Public Transport Operations Grant (PTOG) 15

Plans to Spend Additional Allocations for Rail Transport The DOT created capacity in the Rail Transport Branch by employing qualified personnel to manage transfer payments and exercise oversight on both PRASA and the RSR; PRASA has adopted through its approved Corporate Plan, a five (5) point plan to accelerate delivery of infrastructure programmes; A detailed presentation on the various plans put in place by PRASA in consultation with the Department are contained in the attached presentation done on 02 September 2014 to the Portfolio Committee on Transport; The plan covers a five (5) year signalling upgrade programme in Gauteng, KZN and Western Cape Provinces, The accelerated rolling stock programme, infrastructure modernisation and strategy for the deployment of new rolling stock. The plan also covers: asset life cycle management models, five year contracts with rolling stock contractors and the refurbishments of 500 coaches for both commuter and long distances services. 16

Expenditure outcome 2013/14Budget Standard ItemBudgetExpenditureAvailable2014/15growth on R'000 Expenditure Compensation of Employees % Goods and Services % Transfers & Subsidies % Buildings and fixed structures % Machinery and Equipment % Totals % Major savings / under expenditure for 2013/14: Saved R million that was over budgeted for Mthatha airport runway. Saved R344,000 on foreign membership fees. It is expected that Civil Aviation will spend its budget for 2014/15 17 Plans for Improving Expenditure for Civil Aviation

National Treasury Instruction 01 of 2013/14 was effective from 1 January main features: Engagement of consultants subject to: Gap Analysis confirmed that Department does not need the requisite skills and resources in it full time employ A Business Case must be made for the appointment Approval only by Accounting Officer (irrespective of amount) Hourly rates set out in DPSA (Department of Public Service and Administration) Guidelines, SAICA (South African Institute of Chartered Accountants) Guidelines, or rates prescribed by the body regulating the profession of the consultant Restrictions on cost of hotel accommodation, air travel and claims for kilometers travelled (disbursement fees) All contracts must include penalty clauses for poor performance 18 Implementation of Cost Containment Measures

National Treasury Instruction 01 of 2013/14 was effective from 1 January main features: Travel and subsistence: First Class travel not allowed Restrictions on Business Class flights: Only ranks of Directors-General and equivalent or employees with special needs and Deputy Directors-General for flights exceeding five hours. Domestic accommodation restricted to R1,300 per night per person, including dinner, breakfast and parking (Accounting Officer can approve deviations under certain circumstances) Vehicle hire restricted to Group B for employees (Accounting Officer can approve deviations under certain circumstances) Employees travelling for official engagements, I.e. Parliament, are restricted to three, with exceptions depending on certain ranks 19 Implementation of Cost Containment Measures (Continued)

National Treasury Instruction 01 of 2013/14 was effective from 1 January main features: Catering and Events: No catering expenses for internal meetings unless approved by the Accounting Officer. Entertainment allowances limited to R2,000 per annum unless approved by the Accounting Officer. No expenditure on alcoholic beverages except for State Banquets or functions promoting South Africa or its goods and Services. Team building, social functions and year-end events may not be funded from budgets or by suppliers or sponsors. 20 Implementation of Cost Containment Measures (Continued)

Immediate measures – January 2014: All tenders in progress not yet awarded to include cost containment measures: Negotiated with preferred bidders before award; or Cancelled and re-advertised bids Submissions for overseas trips referred back to amend flight bookings to economy class Departmental Circular issued on Procurement matters: All submissions to approve Terms of Reference must be accompanied by a gap analysis and business case Terms of Reference must include penalty clauses, restrictions on disbursement costs (travel and accommodation), and restrictions on hourly rates Accounting Officer to approve appointment of consultants Compliance is overseen by the Bid Adjudication Committee 21 Implementation of Cost Containment Measures (Continued)

General Departmental Circular issued to communicate National Treasury Instruction 01 of 2013/14 Departmental Circular issued on Travel and Accommodation: Restrictions prescribed for: Air travel Domestic accommodation Vehicle hire Number of employees travelling for official engagements to attend to the same matter. Departmental Circular issued on claims for meals and parking: Claims for meals and parking are prohibited if the hotel accommodation rate includes these costs. Compliance to above is overseen by Travel Office and Financial Administration: Travel and Subsistence 22 Implementation of Cost Containment Measures (Continued)

Thank you