PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 11 TH OCTOBER 2005 ____________________________________________________________

2 INTRODUCTION Honourable Chairperson, I would like to thank you for the opportunity to participate in this Public Hearing. As I present the report on our provincial departments’ spending of Conditional Grants, I intend to do so honestly so as to afford Members an opportunity to get an accurate understanding of the situation as it obtains in Limpopo. I shall not attempt to conceal the truth regardless of the image it may portray. To me, this hearing is not only a platform to account on behalf of my department and province, I also regard this as an opportunity to benefit from the advice that Honourable Members of the NCOP may offer to improve our situation. I intend to listen in on the sessions that you will have with my counterparts from sister provinces, so as to draw learnings from their inputs and to adopt best practices.

3 INTRODUCTION Cont… We present this report at a time when our EXCO, led by Premier Sello Moloto, resolved to be impatient with officials who continue to deprive our people of quality services despite the fact that we avail resources to deliver on the mandate we get from the people. The Conditional Grants is a good example of this problem. Such behaviour is highly unacceptable, regardless of the good and valid sounding excuses we always get in the glossy reports that they produce and present to us. I fully understand the obligation that rests on me and my department to permanently uproot such tendencies from within the public service. As a Provincial Treasury, we have to ensure that the planning and implementation of programmes in all departments are linked and improved.

4 INTRODUCTION Cont… Honourable Members may be aware that ours is a new department which is less than one year old. However, we have just finalised and approved our department’s structure on the 14 th September 2005 and will be filling some of the critical vacancies as a matter of extreme urgency. These vacancies include those for Programme Analysts who will be experts in their fields and dedicated to the various departments with the aim to improve expenditure and the general management of their budgets. Further, we are also, through EXCO, exerting pressure on spending agencies to ensure that they close their capacity gaps in order to negate the poor delivery of service and the inherent under-spending it brings.

5 INTRODUCTION Cont… To this end, the MEC for Education for example, agreed to review his department’s structure in order to establish a fully-fledged unit to deal with infra-structure since it is such a critical deliverable for that department and, as this report will show, they always encounter difficulty in meeting their targets. We are convinced that this intervention together with the appointment of Programme Analysts within Provincial Treasury and National Treasury’s Infra-Structure Development Improvement Programme [IDIP] will certainly go a long way in reversing the current challenge of under-spending. Honourable Chairperson, I now present the report:

6 Conditional Grants as at 30 June 2005

7 Reasons for under spending-C Grants Health HIV/AIDS The underspending is as a result of the journal for pharmaceuticals which is not yet finalised i.e. the department appointed a service provider to distribute medicines for the province. These are distributed in bulk, and thereafter the department pass journals to identify spending specifically for HIV/AIDS drugs. Hospital Revitalisation The underspending is as a result of payments that are dependent on stages of construction and will pick up in the second quarter Integrated Nutrition Programme The underspending is as a result of agreements not yet signed with NGO’s. The department assisted NGOs’ to develop business plans in the first quarter and the plans have now been approved.

8 Reasons for under spending-C Grants Social Development HIV/AIDS The underspending is as a result of business plans not approved by the National Department as they were referred back to the provincial department for correction in the first quarter. The plans have been approved and spending will pick up in the second quarter. Social Assistance Admin Grant The underspending is as a result of the delay in filling of posts identified as critical, and also on goods and services as a result of shared items, e.g. Stationery, telephone, water and electricity. South African Social Security Agency is currently housed within the Department of Health and Social Development.

9 Reasons for under spending-C Grants Education HIV/AIDS The underspending is as a result of HIV/AIDS related activities that take place only during school holidays to avoid disruption on learning and teaching at schools. Primary School Nutrition Programme The underspending is due to the delay in submission of invoices by service providers

10 Education CAPEX spending 30 June 2005

11 Health CAPEX spending 30 June 2005

12 Social Dev spending 30 June 2005

13 Reasons for under spending-CAPEX… Education Projects started later than anticipated and this is reflected in the low expenditure patterns over the first quarter. The business plan was reworked and changed to reflect change in new political priorities, e.g. shift away from 4X4 classrooms to more comprehensive schools, etc.

14 Reasons for under spending-CAPEX… Health For some of the projects, contractors were appointed late. For 15 of the main contracts, contractors went on site from the 15 th of July, which negatively affected spending.

15 Reasons for under spending-CAPEX… Health Delays on supply of medical equipment for the hospital projects, orders were issued in April 2005 but to due to delays in delivery, no payments were made for these projects in the 1 st Quarter of 2005/06. Spending on clinics (both new construction and upgrades), health centres and mortuaries was also hampered by delays in the documentation phase of project implementation (e.g. tender evaluations, etc in line with the Construction Industry Development Board (CIDB) guidelines

16 Reasons for under spending-CAPEX which require contractors to be registered and categorised per amount of project that they can undertake). Social Development Disbursements for projects are made on a percentage of completion method, i.e. payments made per stage of construction, in the first quarter, most projects had just started, resulting in low expenditure

17 Intervention strategies-CAPEX… Education The Department of Education engages the Department of Public Works constantly to finalise the business plans for Education (to ensure that by early December, PW has a finalised business plan for implementation). The Department of Education is undertaking project to do a complete school register of needs which will highlight individual school conditions and needs, it will facilitate better planning and channeling of resources with the greatest need. The Department of Education is participating in the Infrastructure Delivery Improvement Programme (IDIP).

18 Intervention strategies-CAPEX… IDIP is aimed at improving infrastructure delivery within provincial departments (run by National and Provincial Treasury, DBSA and CIDB). It has raised awareness regarding weaknesses around human resource issues and infrastructure delivery systems at Education. A capacitation plan for the Department of Education has been prepared to address these.

19 Intervention strategies-CAPEX… Interdepartmental training workshops have also been run on DoRA reporting requirements, project management, etc. Departments are also engaged monthly prior to reporting to ensure that problems are ironed out timeously. Through these intervention measures, there has been an improvement in the quality and timeliness of reporting, there is also increasing emphasis on the analysis of the reported information on the part of departments (which ensures that Treasury receives better reports).

20 Intervention strategies-CAPEX… Health & Social Development To improve the Cash Flow for the rest of 2005/06 financial year, the Department of Health brought forward the appointment of consultants for some of the major projects which were scheduled to start later in order to preempt possible delays, e.g. for Letaba and Maphuta Malatjie Hospitals infrastructure projects.

21 Intervention strategies-CAPEX This will ensure that contractors are on site and projects undertaken before the end of the financial year. The Department of Health & Social Development also participated in the pilot phase of IDIP which produced a capacitation plan to address the shortcomings around capacity which were identified in the department, e.g. setting up a dedicated unit for infrastructure maintenance to look after the provincial health assets to prevent a deterioration in their condition.

22 Monitoring capacity by the department The Provincial Treasury receives monthly conditional grant and capital expenditure reports from departments The reports are presented to the Provincial Technical Committee on Finance, Heads of Department and Executive Council to assess the levels of spending The department has plans to fill critical posts by 1 st December 2005 to enhance monitoring capacity e.g. the appointment of programme analysts who will deal specifically with allocated sectors

23 The End