1. 1 2005/06 Fourth Quarter Report on Conditional grants and CAPEX Select Committee on Finance Gauteng Treasury 02 May 2006

2. 2 Content of Presentation  Total spending for 2005/06 FY  Conditional grants spending  CAPEX spending  Challenges moving forward  Provincial Treasury’s Intervention

3. 3 2005/06 total spending Department R thousand Actual spending for Jan - March 2006 % of the Adjusted budget Total spending 2005/06 % of the Adjusted budget Budget 2005/06 Adjustment s Adjusted Budget Total (Over)/Under Adjusted budget Education2,642,78324%10,412,11596%10,360,368447,04210,807,410395,296 Health3,076,30131%9,972,970101%9,257,806582,8349,840,640-132,330 Social Development1,976,09326%7,239,54894%7,541,242122,4237,663,665424,117 Office of the Premier35,28634%104,21599%104,801-54104,747532 Gauteng Legislature35,26631%111,86698%113,0641,033114,0972,231 Finance and Economic Affairs566,97346%1,153,33094%1,685,396-454,4051,230,99177,661 Housing422,02324%1,673,21495%1,647,987116,3081,764,29591,081 Local Government62,86349%128,479100%107,37821,707129,085606 Transport468,07531%1,490,545100%1,445,54842,4591,488,007-2,538 Community Safety26,55315%181,525100%182,218-950181,268-257 Agriculture64,19329%218,57498%228,842-5,597223,2454,671 SRAC99,84151%176,46990%148,06048,228196,28819,819 GSSC265,70742%635,72799%585,36654,514639,8804,153 Total9,741,95628%33,498,57697%33,408,076975,54234,383,618885,042

4. 4 Provincial summary for 2005/06 Provincial aggregate  Total spending equals R33,4b which translates to 97% of the adjusted budget  Net underspending amounts to R885m and represents 3% of adjusted budget  Depts. contributing to underspending incl.  Education – R395m  Social Development – R424m  Housing – R91m  Finance – R71m  Dept showing significant overspending  Health - R132m

5. 5 Provincial summary for 2005/06  Depts. contributing to underspending incl.  Education R395m  Vacant public servants posts not filled  Delays in the implementation Integrated Quality Management System due to current disputes i.e salary progression and incentives  Social Development (R424m)  Saving due to less intake of beneficiaries  Housing (R91m)  Goods delivered late in the financial year.  Finance (R78m)  Claims received late from depts. for GPG Precinct  Unfilled posts due to late approval of the structure  Dept showing significant overspending  Health (R132m)  Early delivery of equipment expected in 06/07

6. 6 2005/06 total conditional grants Dept & GrantTotal budget From National 2005/06 Provincial rollovers Total available Total received from National Variance (Budget less received from National) Total spending 2005/06 Variance (Total available less total spending) % spent DACE Comprehensive Agricultural Support5,727 4,5761,15180% Land Care Programme2,000 2,03737102% EDUCATION HIV and Aids (Life Skills )18,8802,82121,70118,880 22,202-501102% School Nutrition Programme101,124581101,705101,124 91,58010,12590% HEALTH Comprehensive HIV and Aids185,048 207,328-22,280112% Health Professions Training and Development554,039 100% Hospital Management and Quality Improvement18,510 4,34814,16223% Hospital Revitalisation88,955 100% Integrated Nutrition Programme11,333 9,8751,45887% National Tertiary Services1,760,465 100% Forensic Pathology16,944 1,46115,4839%

7. 7 2005/06 total conditional grants Dept & Grant Total Budget from National 2005/06 Provincial rollovers Total available Total received from National Variance (Budget less received from National) Total spending 2005/06 Variance (Total available less total spending) % spent HOUSING Integrated Housing & Human Settlement1,340,6759,0251,349,7001,340,675 1,349,125575100% Human Settlement & Redevelopment4,1303,1697,2994,130 4,5142,78562% Land Distribution (Alex)8,0006,20014,2008,000 14,200 100% NATIONAL TREASURY Provincial Infrastructure369,77710,960380,73792,445277,332250,692130,04566% SOCIAL DEVELOPMENT HIV/aids Community based20,341 100% Integrated Social Development Services27,904 22,1485,75679% Social Assistance Administration350,000 293,94956,05184% Social Assistance Transfers6,454,145 6,156,817297,3286,062,945391,20094% SRAC Mass Sport and Recreation Participation2,670 2,14252880% TOTAL11,340,66732,75611,373,23810,766,007574,66010,766,922606,50195%

8. 8 Provincial summary for 2005/06 Total conditional grants expenditure  Adjusted budget amounts to R11,4b  Includes provincial rollover R32,7m  Total expenditure amounts to R10,7b and translates to 94% of the adjusted budget  Total amount received equals R10,766b instead of R11,340b  Reduced transfers (R297m) due to revised payment schedule for social assistance grant; low number of beneficiaries  Stopping of 3 infrastructure installments (R277m) due to low level of spending on infrastructure, late submission of infrastructure reports and plans and submission of incomplete/inaccurate reports  Province reflects an underspending of R606m or 6% of the adjusted budget

9. 9 Conditional grants spending per dept.  Agriculture, Conservation & Environment Dept manages Land Care and Comprehensive Agricultural Support programme (CASP) Land Care – prevention of degradation of natural resources  Adjusted budget – R2,2m;  Includes provincial rollover of R185,000  Total received from National – R2m  Expenditure amounts to R2,m or 93% of the budget  Reason for underspending  delays in processing the quotations packages by the implementing agents due to noncompliance with specifications

10. 10 Conditional grants spending per dept. CASP – assisting beneficiaries with land reform program  Total Adjusted Budget - R5,7m  Full allocation received as per payment schedule  Spending amounts to R4,5m and translates to 80% of the budget  Reasons for underspending service providers were too slow in implementing the projects due to lack of service level agreements

11. 11 Conditional grants spending per dept cont.  Education  Dept administers two cond. grants i.e HIV/AIDS & School nutrition  HIV/AIDS  Adjusted budget – R21,7m & includes the provincial rollover of 2,8m  Total received from National – R18,90m  Actual spending amounts to R22,2m or 102% of the budget  Reason for overspending  Incorrect allocation to be corrected before financial year closure

12. 12 Conditional grants spending per dept cont.  National School Nutrition  Adjusted budget – R101,7m  Includes the provincial rollover of R581 000  Total amount received from National – R101,1m  Expenditure incurred until March amounts to R91,6m or 90% of the budget  Reason for underspending  Delays in the delivery materials such as containers and kitchen equipment

13. 13 Conditional grants spending per dept cont.  Social Development  Manages four cond. grants i.e HIV/AIDS, Integrated Social Development, Social Assistance Administration and Social Assistance Transfer  HIV/AIDS  Adjusted budget – R20,3m  Total budget received as per payment schedule  Total expenditure R20,3m or 100% of the budget

14. 14 Conditional grants spending per dept cont.  Integrated Social Development  Adjusted budget – R27,9m  Full allocation received  Actual spending amounts to R22,2m & translates to 79% of the budget  Underspending attributed to  Business plan approved in August 2005  Transfers to service providers was reduced due to non-compliance  Social Assistance Administration  Adjusted budget – R350m  Full allocation received  R293m spent as at end of March or 84% of the budget  Reason for underspending  Administration less due to low take up rate of beneficiaries

15. 15 Conditional grants spending per dept cont.  Social Assistance Transfer  Adjusted budget – R6,5b  R6,2b received & less by R297m at year end  Due to revised payment schedule during the year  Total expenditure R6b or 93,9% of the budget or 98% funds received  Reasons for recording a saving  Decrease in the number of applications for grants  Indemnity campaign by national dept  Clean up exercise by province

16. 16 Conditional grants spending per dept cont.  Sports, Recreation, Arts and Culture  Mass Sport and Recreation programme  Adjusted budget – R2,7m  Total received – R2,7m  Total expenditure R2,1m or 80% of the budget  Reason for underspending  Computers and printers in Hubs not delivered on time

17. 17 Conditional grants spending per dept cont.  Health  Responsible for HIV/AIDS, Hospital Management & Quality Improvement, Integrated Nutrition Programme, Hospital Revitalisation, Forensic Pathology Services  HIV/AIDS  Adjusted budget – R185m  Total budget received  Actual expenditure amounts to R207m or 112% of the budget  Overspending due to  Increase in the number of patients requiring ARV’s (target was 25000 and they reached 38000).

18. 18 Conditional grants spending per dept cont.  Hospital Management & Quality Improvement  Adjusted budget – R18,5m  Full allocation received  R4,3m spent & translates to 23% of the budget  Reason for underspending  Business plan approved in November 2005  Revised business plan submitted later but not all projects were approved  Integrated Nutrition Programme  Adjusted budget – R11,3m  Full budget transferred to the province  Spending to date R9,8m or 87% of the budget  Underspending due to  Nutritional supplements ordered and delivered was not according to specifications

19. 19 Conditional grants spending per dept cont.  Hospital Revitalisation  Adjusted budget – R88,9m  Full budget transferred to the province  Full allocation spent i.e 100% of the budget  Forensic Pathology  Adjusted budget – R16,9m  Full budget transferred to the province  Total amount spent R1,5m or 8,6% of the budget  Reason for underspending  Full allocation received during the adjustment  Equipment orders placed but not yet delivered  Process of transferring staff & assets from SAPS has not been finalized

20. 20 Conditional grants spending per dept cont.  Housing  Manages 3 conditional grants, i.e Integrated Housing & Human settlement, Human Settlement and Alexandra Urban Renewal  Integrated Housing & Human settlement  Adjusted budget – R1,3b & includes provincial rollover of R9m  Total received – R1,3b  Total expenditure R1,3b or 100% of the budget

21. 21 Conditional grants spending per dept cont.  Human Settlement  Adjusted budget – R7,3m & includes provincial rollover of R3,2m  Total received – R4,1m  Total expenditure R4,5m or 81% of the budget  Reasons for underspending  Misallocation of expenditure. Pre-final IYM will reflect the corrections (which will translate to 100% expend)  Alexandra Urban Renewal  Adjusted budget – R14,2m & includes provincial rollover of R6,2m  Funds transferred – R8m  Total expenditure R14,2m and translates to 100% of the budget

22. 22 Conditional grants spending per dept cont.  Provincial Infrastructure grant  Receiving depts. are Health, Education and Transport  Adjusted budget amounts to R369m  Only first installment received R92m; last three installments withheld  Total expenditure R250m or 65% of the budget  Health - R73m spent  Education – R38m spent  Transport – R139m spent  Reasons for not receiving the full allocation  low spending on infrastructure, late submission of infrastructure reports and plans and submission of incomplete/inaccurate reports

23. 23 2005/06 total capital spending Department R thousand Actual spending for Jan - March 2006 % of the Adjusted budget Total spending 2005/06 % of the Adjusted budget Budget 2005/06 Adjustments Adjusted Budget Total (Over)/Under Adjusted budget Education 253,81643% 516,27388% 525,492 60,098 585,590 69,317 Health 530,84063% 969,148114% 525,492 383,889 847,096 (122,052) Social Development 2,75921% 10,61780% 15,227 (1,920) 13,307 2,690 Office of the Premier 1,15438% 2,25775% 2,310 690 3,000 743 Gauteng Legislature 4,95531% 14,30191% 13,071 2,675 15,746 1,445 Finance and Economic Affairs 14,41429% 22,24545% 28,903 21,050 49,953 27,708 Housing (58)0% 3,0117% 16,875 25,759 42,634 39,623 Local Government 3,43576% 4,33496% 3,434 1,086 4,520 186 Transport 416,566102% 756,010186% 389,773 17,406 407,179 (348,831) Community Safety 2,80539% 6,74795% 4,305 2,809 7,114 367 Agriculture 5,27045% 16,140137% 10,975 829 11,804 (4,336) SRAC 26,25073% 26,78374% 246 35,861 36,107 9,324 GSSC 46,08973% 73,463117% 11,168 51,631 62,799 (10,664) Total 1,308,29563% 2,421,329116% 1,547,271 601,863 2,086,849 (334,480)

24. 24 Provincial summary for 2005/06 Total capital expenditure  Total spending amounts to R2,4b and represents 116% of the adjusted budget  Report shows an overspending of R334m  Depts. contributing to overspending incl.  Health – R122m  Transport – R344m  Depts. showing an underspending incl.  Education – R69m  Housing – R39m  Finance – R27m

25. 25 Capital spending per dept  Health  Adjusted Budget R847m  Expenditure to date amounts to R969m i.e or 114% of the budget  Reason for overspending  Early delivery of equipment expected in 06/07 FY

26. 26 Capital spending per dept  Education  Total adjusted budget amounts to R585m  Total spending R516m & represents 88% of the budget  Spending during the year was slow due to procurement challenges, but picked up in the last quarter  Increase in spending due  Money transferred to IDT in Feb to build 23 schools  Mobile schools purchased in January  Appointed a project management company to facilitate the process of ensuring that projects are delivered on time  Reasons for underspending  Incorrect allocation of GautengOnline payments under current objective.

27. 27 Capital spending per dept  Transport and Public Works  Adjusted budget – R407m  Spending – R756m or 185% of adjusted budget  Overspending occurred due to  Misallocation of goods and services under capital which is being rectified.

28. 28 Capital spending per dept  Housing  Adjusted budget - R42,6m  Actual expenditure – R3m or 7% of the budget  Reasons for underspending  Misallocation of capitalised compensation under current objective.  Late purchasing of new furniture

29. 29 Capital spending per dept  Social Development  Adjusted budget amounts to R13m  Expenditure at the end of March equals to R10,6m and represents 80% of the budget  Reasons for underspending  Delays in ordering equipment - this is due to lack of proper planning

30. 30 Challenges moving forward  Submission of quarterly reports i.e conditional grant and infrastructure report most times either late/ partial submission/ not submitted Submissions are in most instances incomplete and inaccurate makes comparison between IYM & performance achievements difficult/ impossible  Credibility of departmental projections in IYM  Strengthening of monitoring and evaluation of performance by depts.  Misallocations of expenditure. Depts. Currently passing journals  CFO’s offices not properly capacitated

31. 31 Provincial Treasury’s Intervention  Continue to hold individual meetings with departments showing significant underspending and overspending  Conduct training and address identified gaps  Create a public finance unit that will specifically focus on monitoring the departments spending and evaluating their performance Ensuring value for money and efficiency Detailed analysis & interrogate depts. expenditure Providing guidance and advise depts. on any issues relating to budgets, spending and delivery Identify training needs and provide it where necessary  Financially assist departments to capacitate their CFO’s offices  Introduction of non-compliance strategy

32. 32 THANK YOU!!!