1. Provincial Budgets and Expenditure as at 31 January 2008 2007/08 Financial Year
SCOF (NCOP) Workshop
Presented by:
Intergovernmental Relations
National Treasury
27 February 2008

2. Broad Observations
The presentation covers provincial spending as at 31 January 2008
Based on Section 40(4) PFMA reports (IYM) submitted by PTs
Provincial spending is on track with 79.4% or R170.7bn spent of their budgets
Projected overspending of R352.8 million in 4 provinces
Includes adjusted budgets
National adjustments (R2.8bn)
Provincial adjustments (R1.6bn)
Total adjustments (R4.4bn) (health – R1.6bn, education – R1.2bn)
3 provinces projecting to overspend education budgets (FS, NW and WC)
6 provinces to overspend health budgets (NW and NC projected under-exp of R42.4m and 7.2m respectively)
Low spending rate recorded for social development (original budgets were reduced by R151.5m)
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

3. 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
Following 3 meetings between NT and NW, the province is making adjustments to other votes (e.g. social development) within its budget to reduce possible overspending which is mainly in education and to ease the budgetary pressures
Also implementing cost cutting measures
Once-off conditional allocation of R250 million allocated to NW
The recent outbreak of XDR TB in Tugela Ferry and the subsequent detection of XDR TB cases in all provinces, and the increasing number of MCR TB cases, require an urgent intervention
Provinces are currently treating these categories of TB patients at the risk of other health programmes
R400 million was added to the provincial equitable shares
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)

4. National adjustments to PES

5. Provincial Adjustments

6. 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 R72.6bn (80.7%)
Health at R50.6bn (83.2%)
Social Welfare Services at R5.1bn (79.3%)
Spending in non-social services sectors:
Agriculture at R4.4bn (70.9%)
Housing and Local Government at R8.4bn (68.4%)
Public Works, Roads and Transport at R18.6bn (75.8%)
Sport, Arts and Culture at R1.7bn (73.0%)
Personnel spending is at R98.3bn (82.7%)
Capital expenditure is at R12.7bn (66.5%)

7. Provincial Aggregated Expenditure (1)

8. Provincial Aggregated Expenditure (2)

9. Provincial Social Services (1)
Budgets total R157.2bn or 73.2% of total provincial adjusted budgets
Education remains largest item of budget (41.9%)
Health second largest item of budget (28.3%)
Social Welfare Services only 3.0% of budget
A slight decrease of share from 73.8% in 2006/07 to 73.2% in 2007/08
Spending at R128.2bn or 81.6% against R157.2bn adjusted budget
Increase of R17.3bn or 15.6% compared to the previous year’s ten months spending

10. Provincial Social Services (2)

11. Education (1)
Spending at R72.6bn or 80.7% against R89.9bn adjusted budget, projecting to overspend by R278.7m in 3 provinces (mostly personnel)
Increase of R8.5bn or 13.3% compared to the previous year
High rate of education spending in NW (86.2%) and FS (85.0%)
LP (74.9%) and GP (77.7%) reflects the lowest rate of spending in education
Education personnel spending at R57.5bn or 82.0% (R70.1bn adjusted budget)
Goods and services (mostly LSM) at R6.6bn or 67.5% (R9.8bn adjusted budget)
Capital spending somewhat low at R2.5bn or 63.2%
Spending reflects a R149.9m or 5.7% decrease compared to spending last year
Low rate of capital spending in MP (41.4%) and GP (54.4%)
LP (85.9%) and NC (79.4%) reflects the highest rate of capital spending in education

12. Education (2)

13. Education (3) Public Ordinary Schools

14. Education (4) Personnel

15. Education (5) Capital

16. Education (6) Non-Personnel Non-Capital

17. Health (1)
Spending at R50.6bn or 83.2% against R60.8bn adjusted budget
Six provinces projecting to overspend by R1.6bn (KZN, GP, LP, EC, WC, FS) while MP and NW projecting to underspend by R49.5m
NC projecting to break-even
Increase of R7.7bn or 18.0% compared to the previous year
Low rate of health spending in NW (75.0%) and MP (76.9%)
KZN (89.7%) and LP (87.1%) reflects the highest rate of spending in health
Health personnel spending at R28.5bn or 85.9% (R33.1bn adjusted budget)
All provinces except NC projecting to overspend by R1.2bn (KZN, EC, LP, GP, WC, FS)
NC projecting to break-even at the end of the financial year
NPNC spending at R18.2bn or 84.1% of R21.6bn adjusted budget
Capital spending at R3.9bn or 65.3%
Increase of 14.8% compared to spending for the same period last year
Three provinces projecting to overspend by R51.0m while the remaining provinces projecting under expenditure of R401.9m
Low rate of capital spending in MP (38.3%) and NC (45.2%)
EC (84.6%) and FS (78.2%) reflects the highest rate of capital spending in health

18. Health (2)

19. Health (3) Programme Analyses
Prog 2: Provincial District Health Services
Spending at R21.1bn or 84.5% of R25.0bn adjusted budget
Lowest rate of spending in NW (73.9%) and GP (77.1%) and highest in KZN (94.3%) and LP (87.0%)
Prog 4: Provincial Hospital Services
Spending at R12.2bn or 84.2% of R14.5bn adjusted budget
Lowest rate of spending in NW (77.3%) and EC (77.6%) and highest in LP (93.7%) and NC (89.4%)
Prog 5: Central Hospital Services
Spending at R7.9bn or 87.0% of R9.0bn adjusted budget
Lowest rate of spending in NW (77.4%) and WC (82.9%) and highest in KZN (94.9%) and LP (88.1%)

20. Health (4) District health services

21. Health (5) Hospital services

22. Health (6) Central hospital services

23. Health (7) Personnel

24. Health (8) Capital

25. Health (8) Non-Personnel, Non-Capital

26. Social Welfare Services (1)
Social Welfare adjusted budgets at R6.4bn
3.0% of total provincial adjusted budgets
An increase of share to total provincial budgets from 2.9% in 2006/07 to 3.0% in 2007/08
Spending at R5.1bn or 79.3% against R6.4bn adjusted budget
Increase of R1.1bn or 27.6% compared to the previous year spending
Varying degrees of spending with low rate of spending in NW (62.5%) and MP (72.8%)
GP (87.3%) and EC (83.3%) reflects the highest rate of spending
Only EC projecting to overspend by R16.4m while the remaining provinces projecting under expenditure of R183.4m

27. Social Welfare Services (2)

28. Housing and Local Government (1)
Budget of R12.3bn or 5.7% of total provincial adjusted budgets
Spending at R8.4bn or 68.4% against the adjusted budget
Increase of R1.6bn or 23.4% compared to the previous year
Low rate of spending in EC (51.2%) and WC (58.3%)
NC (87.2%) and GP (79.8%) reflects the highest rate of spending
Housing conditional grant spending at R5.5bn or 62.9% (R8.7bn adjusted budget)
An increase of R918.1m or 20.1% compared to the previous year
Low spending in EC (17.4%) and FS (55.7%)
NC (99.3%) and KZN (79.7%) reflects the highest rate of spending

29. Housing and Local Government (2)

30. Housing and Local Government (3) Integrated Housing and Human Settlement Development Grant

31. Personnel (1)
Provincial personnel spending totalled R98.3bn or 82.7% of R118.8bn personnel adjusted budgets
Increase of R12.2bn or 14.2% over comparative spending last year
Includes public service increases effected from 01 July 2007
All provinces except FS and WC projecting to overspend by R1.2bn (FS – R435.5m and WC – R15.5m under expenditure)
KZN (R402.8m), EC (R295.0m), NW (R215.1m),LP (R290.2m), NC (R70.7m), MP (R47.5m) and FS (R14.3m)
Low level of personnel spending in LP (78.9%) and GP (81.4%)
KZN (85.0%) and NC (84.2%) reflects the highest level of personnel spending
Wage agreement is 1.5% higher than what provinces budgeted for
Costs associated with the higher than anticipated wage settlement was allocated to provinces (R1.2bn) through the adjusted budgets

32. Personnel (2)

33. Payments for Capital Assets Trends (Capital expenditure)

34. Payments for Capital Assets (1)
Provinces have spent R12.7bn or 66.5% of R19.1bn capital adjusted budgets
EC the only province projecting to overspend by R11.8m
Remaining provinces projecting under expenditure of R972.0m
Increase of R1.8bn or 16.9% to comparative spending during last year
Low rate of capital spending in MP (51.6%) and GP (56.4%)
FS (79.0%) and EC (75.3%) reflects the highest rate of capital spending
Largest provincial capital budgets are for public works, roads and transport departments at R7.3bn or 37.9%
Spending at R5.5bn or 75.4% compared to R3.8bn spent last year (44.5% increase)

35. Payments for Capital Assets (2)

36. Payments for Capital Assets (3) Education & Health
Education capital spending low at R2.5bn or 63.2%
A decrease of R149.9m or 5.7% compared to spending last year
Low rate of education capital spending in MP (41.4%) and GP (54.4%)
LP (85.9%) and NC (79.4%) reflects the highest rate of capital spending in education
Health capital spending at R3.9bn or 65.3%
Increase of 14.8% compared to spending for the same period last year
Three provinces projecting to overspend by R51.0m while the remaining provinces projecting under expenditure of R401.9m
Low rate of health capital spending in MP (38.3%) and NC (45.2%)
EC (84.6%) and FS (78.2%) reflects the highest rate of capital spending in health

37. Payments for Capital Assets (4) Education

38. Payments for Capital Assets (5) Health

39. Payments for Capital Assets (6) Public Works, Roads and Transport
The biggest capital budgets in provinces are in public works, roads and transport departments at 37.9% or R7.3bn of total capital adjusted budget of R19.1bn
Spending is at R5.5bn or 75.4%
Spending is 44.5% or R1.7bn more than the R3.8bn spent last year over the same period
The lowest rate of spending is recorded in NC at 63.0% and LP at 63.5%
NW and EC recorded the highest rates of spending at 85.0% and 81.4% respectively

40. Payments for Capital Assets (7) Public Works, Roads and Transport

41. Provincial forecasting trends

42. Provincial Forecasting Trends (2004/05 - 2007/08)

43. Conditional grants

44. Conditional Grants (1) Flow of Information

45. Conditional Grants (2)
CG adjusted budgets total R33.5 billion with health making up the bulk of R11.9 billion (including provincial roll-overs)
Excludes spending on general purpose CGs (Schedule 4 grants) such as the National Tertiary Services and Infrastructure grant to provinces
In terms of 2007 Division of Revenue Act (Section 10(5)(c))
Total adjusted budget, excluding Schedule 4 grants, is R19.6 billion against spending of 71.8% or R14.1bn
Specific grants that show low rates of spending include:
Agricultural Disaster Management (14.3%)
Community Library Services (48.3%)
Land Care Programme (52.0%)
Forensic Pathology Services (57.0%)
HIV and AIDS (Life Skills Education) (58.1%)

46. Conditional Grants (3)

47. Conditional Grants (4)

48. Conditional Grants (5) Spending Rates
5 or more provinces have spent less than 70% of their grant budget for the following grants:
Land Care Programme;
Community Library Services;
HIV and AIDS (Life Skills Education);
Forensic Pathology Services;
Hospital Revitalisation;
Integrated Housing and Human Settlement Development and;
Mass Sport and Recreation Participation Programme
Although the rate of spending is encouraging and reflects an improvement over previous financial years, overall CG spending (71.8%) still lies below total provincial spending (79.4%)

49. Conditional Grants (6) Spending Rates

50. Important dates and submissions

51. Publication Dates for Provincial S32 Reports
2007/08 Financial Year:
4th Quarter (as at 31 March 2008) 30 April 2008
2008/09 Financial Year:
1st Quarter (as at 30 June 2008) 30 July 2008
2nd Quarter (as at 30 September 2008) 30 October 2008

52. Detail on Conditional Grants by Grant Type

53. 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 Ten Months Expenditure:
Five provinces have reported spending of R45.3m or 14.3% of the R316m adjusted allocation
No funds have been transferred
Highest Spending: WC 51.0% and NC 37.3%
MP 11.0% KZN 8.6% and FS 3.3%
Service Delivery Outcome:
Department / Sector to respond

54. 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 Ten 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 R204.7m or 47.8% of R428.6m adjusted allocation
Transfers received amounted to 90.9% of national allocation
Highest spending: GP 86.9% and EC 68.6%
Lowest spending: KZN 16.9% and LP 23.5%
Service Delivery Outcome:
Department / Sector to respond

55. 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 Ten Months Expenditure:
Provincial Agriculture Depts spent R30.2m or 52.0% of the R58.0m Land Care Programme adjusted allocation
Transfers received amounted to 100.0% of national allocation
Highest spending: EC 75.1% and FS 73.5%
Lowest spending: KZN 27.0% and GP 30.0%
Service Delivery Outcome:
Department / Sector to respond

56. Arts and Culture Grant Community Library Services
Objective (Schedule 5 Grant):
To enable communities to gain access to knowledge and information that will improve their social, economic and political situation
First Ten Months Expenditure:
Arts and Culture spent R87.0m or 48.3% of the R180.0m community library services allocation
Transfers received amounted to 90.7% of national allocation
Highest spending: GP 79.9% and KZN 73.5%
Lowest spending: LP 15.0% and EC 18.9%
Service Delivery Outcome:
Department / Sector to respond

57. Education Grants (1) Further Education and Training College Sector Recapitalisation Grant
Objective (Schedule 5 Grant):
To recapitalise the 50 public FET Colleges to improve their capacity to contribute to skills development training in the country
First Ten Months Expenditure:
FET College Sector Recap grant reflects transfers to colleges
R618.5m or 96.7% of the R631.1m has been transferred to the colleges
Service Delivery Outcome:
Department / Sector to respond

58. Education Grants (2) HIV and Aids Grant (Life Skills Education)
Objective (Schedule 5 Grant):
To coordinate and support the structured integration of life skills and HIV and Aids programmes across all learning areas in the school curriculum
To ensure access to an appropriate and effective. integrated system of prevention. care and support for children infected and affected by HIV and Aids
To deliver life skills, sexuality and HIV and Aids education programmes in primary and secondary schools
First Ten Months Expenditure:
Education spent R96.7m or 58.1% of the R166.4m adjusted allocation
Transfers received amounted to 90.7% of national allocation
Highest spending: FS 87.4% and NC 84.2%
Lowest spending: KZN 39.1% and LP 48.0%
Service Delivery Outcome:
Department / Sector to respond

59. Education Grants (3) National School Nutrition Programme Grant
Objective (Schedule 5 Grant):
To contribute to enhanced learning capacity through school feeding
First Ten Months Expenditure:
Education spent R995.6m or 76.5% of the R1.3bn adjusted allocation
Transfers received amounted to 100% of national allocation
Highest spending: FS 105.2% and NC 103.2%
Lowest spending: EC 67.3% and KZN 69.4%
Service Delivery Outcome:
Department / Sector to respond

60. Health Grants (1) Comprehensive HIV and Aids Grant
Objective (Schedule 5 Grant):
To enable the health sector to develop an effective response to HIV and Aids
Support implementation of the National Operational Plan for Comprehensive HIV and Aids Treatment and Care
First Ten Months Expenditure:
Health spent R1.8bn or 88.0% of the R2.0bn adjusted allocation
Transfers received amounted to 83.8% of national allocation
Highest spending: KZN 100.0% and NC 99.0%
Lowest spending: WC 76.5% and FS 78.1%
Service Delivery Outcome:
Department / Sector to respond

61. Health Grants (2) Forensic Pathology Services Grant
Objective (Schedule 5 Grant):
To provide for the transitional activities required to transfer the Medico-Legal Mortuaries from SAPS to Health
To initiate the development and provision of a comprehensive Forensic Pathology Service to ensure impartial professional evidence for the criminal justice system concerning death due to unnatural causes
First Ten Months Expenditure:
Health spent R460.5m or 57.0% of the R808.3m adjusted allocation
Transfers received amounted to 60.9% of national allocation
Highest spending: FS 88.9% and EC 84.6%
Lowest spending: MP 35.3% and KZN 40.6%
Service Delivery Outcome:
Department / Sector to respond

62. Health Grants (3) Health Professions Training and Development Grant
Objective (Schedule 4 Grant):
Support provinces to fund costs associated with training of health professionals
Development and recruitment of medical specialists in under-served provinces
Support and strengthen undergraduate and post graduate teaching and training processes in health facilities
Enable shifting of teaching activities from central hospital to regional and district hospitals
First Ten Months Expenditure:
Spending of this grants is subsumed in the spending of a range of programmes and therefore no reporting is required
However, spent R1.3bn or 80.0% of the R1.6bn allocation
Transfers received amounted to 83.3% of national allocation
Highest spending: FS 108.0% and KZN 86.1%
Lowest spending: NC 9.2% and EC 60.6%
Service Delivery Outcome:
Department / Sector to respond

63. Health Grants (4) Hospital Revitalisation Grant
Objective (Schedule 5 Grant):
To provide funding to enable provinces to plan, manage, modernise, rationalise and transform the infrastructure, health technology, monitoring and evaluation of hospitals in line with national policy objectives
To transform hospital management and improve quality of care in line with national policy
First Ten Months Expenditure:
Health spent R1.3bn or 61.9% of the R2.2bn adjusted allocation
Transfers received amounted to 85.2% of national allocation
Highest spending: WC 87.2% and LP 80.6%
Lowest spending: MP 29.4% and KZN 45.0%
Service Delivery Outcome:
Department / Sector to respond

64. Health Grants (5) National Tertiary Services Grant
Objective (Schedule 4 Grant):
To compensate provinces for the supra-provincial nature of tertiary services provision and spill over effects
To provide strategic funding to enable provinces to plan. modernise. rationalise and transform the tertiary hospital service delivery platform in line with national policy objectives including improving access and equity
First Ten Months Expenditure:
Spending of this grants is subsumed in the spending of a range of programmes and therefore no reporting is required
However, spent R4.4bn or 82.9% of the R5.3bn allocation
Transfers received amounted to 83.3% of national allocation
Highest spending: KZN 94.8% and FS 90.7%
Lowest spending: NC 36.4% and EC 64.1%
Service Delivery Outcome:
Department / Sector to respond

65. Housing Grant Integrated Housing and Human Settlement Development Grant
Objective (Schedule 5 Grant):
To finance the implementation of National Housing programmes
To facilitate the establishment of habitable. stable and sustainable human settlements in which all citizens will have access to selected social and economic amenities
Progressive eradication of informal settlements on a phased basis through formalisation of informal settlements by 2014
First Ten Months Expenditure:
Housing spent R5.5bn or 62.9% of the R8.7bn adjusted allocation
Transfers received amounted to 77.2% of national allocation
Highest spending: KZN 79.7% and GP 68.0%
Lowest spending: EC 26.0% and NC 56.3%
Service Delivery Outcome:
Department / Sector to respond

66. National Treasury Grant Infrastructure Grant to Provinces
Objective (Schedule 4 Grant):
Help accelerate construction. maintenance and rehabilitation of new and existing infrastructure in education. roads. health and agriculture
Focus on the application of labour intensive methods in the provision of access roads and maintenance of infrastructure in order to maximise job creation and skills development
Gradually increase the labour-intensity of certain specific types of projects over the next six years
Enhance capacity to deliver infrastructure
First Ten Months Expenditure:
Spending of this grants is subsumed in the spending of a range of departments and programmes and therefore no reporting is required
Transfers received amounted to 73.9% of national allocation
Service Delivery Outcome:
Department / Sector to respond

67. National Treasury Grant Transitional Grant to North West
Objective (Schedule 4 Grant):
To help mitigate the budget pressures the province of North West experienced on the current year budget
First Ten Months Expenditure:
Once-off allocation to the North West Province
No funds have been transferred
Spending on grant amounts to R210.6m or 84.2% of R250m allocation
Service Delivery Outcome:
Department / Sector to respond

68. Sport and Recreation SA Grant Mass Sport and Recreation Participation Programme Grant
Objective (Schedule 5 Grant):
Promotion of mass participation within schools through the development of selected number of sport codes. the empowerment of educators. and volunteers to manage and implement in conjunction with provincial departments responsible for Sport and Recreation and Education
Promotion of mass participation within disadvantaged communities through a number of selected activities, the empowerment of communities. and volunteers to manage these activities in conjunction with provincial departments of Sport and Recreation and Sports and Recreation federations
First Ten Months Expenditure:
Sport and Recreation spent R134.7m or 68.2% of the R197.9m adjusted allocation
Transfers received amounted to 84.2% of national allocation
Highest spending: NW 82.5% and FS 76.6%
Lowest spending: LP 53.9% and NC 56.7%
Service Delivery Outcome:
Department / Sector to respond

69. Transport Grant Gautrain Rapid Rail Link Grant
Objective (Schedule 5 Grant):
National government contribution to the Gauteng Provincial Government for the construction of the Gautrain Rapid Rail network
First Ten Months Expenditure:
Spending recorded against the conditional grant allocation amounts to R3.0m or 99.2% of the grant allocation.
Transfers received amounted to 100.0% of national allocation
Service Delivery Outcome:
Department / Sector to respond

70. THANK YOU THANK YOU
THANK YOU