1. HEARINGS ON THE DIVISION OF REVENUE BILL
PRESENTATION TO THE SELECT COMMITTEE ON FINANCE
6 MARCH 2006

2. CONTENT Introduction Strategic Priorities
National Department’s share of budget
Social Assistance Function
Conclusion

3. BACKGROUND
Presentation covers two elements: the national Department’s “normal” budget and funds for social assistance.
The Social Assistance Budget now forms part of the national sphere’s share i.t.o. the equitable division of revenue
Social assistance also no longer a conditional grant
Note: Soc Ass funds specifically & exclusively earmarked in the Appropriation Bill

4. BACKGROUND
HIV and AIDS conditional grant has now been incorporated into the provincial equitable share.
Integrated Social Development Grant (previously known as National Food Emergency Grant) is also incorporated into the provincial equitable share.
This allows DoSD & SASSA to focus entirely on the management of the social assistance function.

5. STRATEGIC PRIORITIES
Create enabling environment for social and human capital investment
Promotion of social integration
Social protection initiatives to build capacity of vulnerable groups
Provide comprehensive social security system
Leadership in social development to ensure deepening of social policy discourse and evidence-based decision-making

6. STRATEGIC PRIORITIES
Effective and efficient management of social development programmes in partnership with civil society and other social partners
Good governance
Steering national involvement in African and International frameworks and agreements w.r.t. socio-economic development

7. MTEF ALLOCATIONS-NDoSD
R’000 % increase
2005/
2006/
2007/ /

8. Changes to Baseline Function 2006/07 2007/08 2008/09 R ‘000 R ’000
Grant Admin Integrity -
50 000
Regulatory / Oversight of SASSA
10 000
20 000
30 000
Devolvement of Funds from Public Works
8 678
9 389
10 124
Social Assistance Transfer
Social Assistance Admin
40 000
60 000
HIV and Aids
( )
( )
( )
Integrated Social Development Services
( )
( )
( )
Net Change to Baseline

9. BUDGET COMPARISON

10. MTEF Summary
Year
Normal allocation
R’000
Special Allocation
Total Allocation
2005/2006
2006/2007
2007/2008
2008/2009

11. Earmarked Funds 2005/06 – 2008/09 Project 2005/06 R’000 2006/07
2007/08
2008/09
Voted
Social Assistance Transfers
Admin of Social Assistance
Establishment of SASSA
Grant Administration Integrity
43 370
96 086
Devolution of Public Works Funds -
8 678
9 389
10 124
Disaster Relief
10 000
Emergency Disaster Relief
5 000
Walvis Bay Social Assistance Funds
5 266
5 441
5 713
6 227
Integrated Soc Dev Services
HIV and AIDS
National Development Agency
loveLife Groundbreaker*
36 000
40 000
41 905
Total Special Allocations
TOTAL OPERATIONAL BUDGET

12. 2006/07 FISCAL ARRANGEMENT FOR SOCIAL GRANTS
In terms of the Agency establishment, social assistance function shift to national government w.e.f. 6 March 2006.
Accordingly the social assistance budget will from now onwards form part of the national Dept of Social Development.
In deciding on fiscal arrangements for 2006/07, the state of readiness of SASSA to take over the function needs to be to be taken into account.

13. 2006/07 FISCAL ARRANGEMENT FOR SOCIAL GRANTS
State of readiness includes ability to:
Absorb officials & associated functions currently in national & provincial departments of social development
Coordinate financial reconciliation processes between SASSA headquarters and regions
Manage government funds for distribution to service providers and/or beneficiaries
Operate its administration systems including BAS (payment of internal expenses) and PERSAL (remuneration of SASSA officials) from 1 April 2006.

14. FLOW OF FUNDS Interim Phase
In the interim the current funds flow arrangement for social assistance transfers effectively remains unchanged.
Two types of funds:
Administration component – for general administration and personnel
Social assistance transfers – for social grants transfers and payment contractor’s fees

15. FLOW OF FUNDS Interim Phase
Administration funds will flow from Revenue Fund to SASSA (PMG a/c) via NDoSD (PMG1)
Social assistance funds will flow from NDoSD to Provinces (via the CPD accounts to PMG2 accounts)
Current banking configuration with regard to national-provincial roles will therefore be maintained (Interim arrangement)

16. FLOW OF FUNDS Interim Phase
The envisaged end-state is to transfer social assistance funds directly from NDoSD PMG2 to service providers and/or beneficiaries
Since support staff at SASSA regional offices is not fully in place to administer transfers, provincial departments will provide support on an Agency basis.

17. DIAGRAMATIC PRESENTATION

18. FLOW OF FUNDS End State:Post-interim phase
National Revenue Fund
Vote 18: Department of Social Development
Programme 2:Social assistance Transfers and Administration
Programme 3: Social Security Transfers and Administration
Transfers to Households
PMG2
Programme 3: Social Security Transfers and Administration
Transfers to Departmental Agencies and Accounts
SASSA Account
NDOSD Operations
Programmes 1, 2, 4, 5, 6,
Service Providers
Commercial Banking Accounts
SASSA Operational Expenditure
NDoSD Operational Expenditure
SASSA Operational Expenditure

19. CONCLUSION
The interim arrangements during this transitional period have challenges that require priority attention.
Cooperation between national & provincial departments of Social Development is critical
Capacity of the national department to administer and monitor social grants payments nation-wide is also critical
NT is arranging a joint presentation to Parliament soon on details of this proposal.