1. EPWP Incentive Grant 4th Quarter 2009/10 performance 18th May 2010

2. 1.0 EPWP incentive background
EPWP incentive was introduced as part of Phase 2 to further enhance the creation of EPWP Full Time Equivalent work opportunities by Public Bodies ( 1 Full Time Equivalent = 230 Person days ). This was after the realization that NDPW had limited authority in Phase 1 to make Public Bodies meet their targets.
R4.2 billion was allocated to NDPW over the MTEF ( 9/10 to 11/12) to pay out the incentive to public bodies and this is expected to grow to at least R 5 billion in the 13/14 financial year. R 5.4 Billion has been allocated over the 10/11 MTEF for the EPWP incentive.
The fiscal incentive was applicable to infrastructure sector and non-state in the 09/10 financial year and has been rolled out to the social and environmental sectors from the 10/11 financial year. 2

3. EPWP Fiscal incentive allocation over 09/10 MTEF
2009/10
R’000
2010/11
2011/12
TOTAL
Provinces
151,419
400,000
800,000
1,352,419
Municipalities
201,748
554,000
1,108,000
1,863,748
Non-State Sector
195,000
359,621
308,740
863,361
Provision for Capacity to NDPW
22,033
33,149
56,000
111,182
Administration provision for intermediary
24,000
21,030
18,360
63,390
594,200
1,367,800
2,291,100
4,254,100 3

4. 2.0 EPWP Fiscal incentive principles
The EPWP incentive is based on paying all public bodies that create work above a minimum threshold for the EPWP target group an incentive of R50 person day of work created. ( Rural Municipalities have no minimum threshold). For the 10/11 financial year, R 60 will be paid for rural municipalities.
Eligible public bodies that want to participate in the incentive will enter into an agreement with DPW
While indicative performance targets and incentive amounts are set for each eligible public body, they will only be able to claim the incentive upon proving that work has been created
Basis for measuring EPWP performance
Number of FTE’s per million Rand of infrastructure budget, taking into account the different portfolios of infrastructure and the rate at which each can contribute to employment creation
Each public body ( apart from rural municipalities) must meet a minimum eligibility threshold before they can start accessing the incentive
The incentive is not paid out for work created below the eligibility threshold, but is paid for all work created above this threshold 4

5. 2.0 EPWP Fiscal Incentive cont’d
Eligibility: In order for provinces and municipalities to become eligible for the incentive they must:
Report to DPW on the EPWP ( 07/08 report used to calculate incentive amounts for the 09/10 financial year).
Meet minimum employment creation targets based on their available budgets
Agreements: Eligible public bodies will enter into agreements with DPW which will specify:
Targets to be met by the public body
Amounts that can be claimed by the public body for reported EPWP work created
Reporting and verification and audit requirements through the EPWP Management Information System
EPWP workers may not be paid less than R50 per day
Appropriation of funds
Eligible public bodies should incorporate the incentive allocation into their budgeting and planning process but take into account that payment by DPW will occur quarterly, after employment has been created 5

6. 3.0 Fiscal incentive for Provinces
The average Full Time Equivalent for the different infrastructure
portfolios ( e.g. Roads, Public Works, Education, Health) was considered in calculating the incentive amounts.
Full incentive amount = ( FTE Target – FTE minimum threshold)
X 230 X 50.
DORA amount = 75% X Full incentive amount.
4 Provinces, Western Cape, Gauteng, Limpopo and Northern Cape did not meet the FTE minimum threshold and were allocated a nominal incentive amount of R 500,000.
Total Incentive allocation to Provinces is R 151 Million. 6

7. EPWP Phase 2 7 FTE PERFORMANCE TARGETS KwaZulu-Natal 84,180
2007/08
EPWP PERFOR-MANCE
PAYMENT THRES-HOLD
FTE PERFORMANCE TARGETS
TOTAL FULL YEAR AMOUNTS
DORA ALLOCATION
2009/10
Indicative allocation (if 100% of target is achieved)
-25% for Q4 for prov
 Infrastructure Only for 09-10
FTE’s 
 FTE’s
(Entire Province)
-50% for Q4 for munis
FISCAL INCENTIVE TO PROVINCES
29,076
31,434
48,794
199,643
151,419
KwaZulu-Natal
11,716
6,791
16,551
112,240
84,180
Western Cape
919
2,003
500
Gauteng
348
2,594
Eastern Cape
7,660
5,836
9,314
39,989
29,992
Mpumalanga
1,407
2,760
3,345
6,730
5,047
Free State
3,967
2,407
5,075
30,678
23,008
Limpopo
1,335
5,208
5,245
417
North West
1,388
2,731
3,565
9,589
7,192
Northern Cape
336
1,103 7

8. 4.0 Fiscal incentive to Municipalities
In order to cater for rural Municipalities in line with comments from the Select Committee on Finance, the following considerations have been considered:
- The FTE target for Metros per million rand of expenditure is 6,
different from 3 considered for other Municipalities.
- The FTE minimum threshold for Rural Municipalities = 0.
- Full incentive = ( FTE Target – FTE minimum threshold) X 230 X 50.
DORA amount = 50% x Full incentive amount. 8

9. 4.0 Fiscal incentive to Municipalities cont’d
68 Municipalities including 6 metros were allocated the incentive for the 09/10 financial year. Total incentive allocation to Municipalities for the 09/10 financial year was R Million, of which R Million was allocated to rural Municipalities and R 54.5 Million to Metros.
126 Municipalities are eligible for the incentive in the 10/11 financial year. Work being done to ensure more municipalities report so that they become eligible for incentive. 9

10. 5.0 EPWP 3rd Quarter 09/10 performance
482,742 work opportunities were reported in all sectors of the Expanded Public Works by the 3rd quarter of the 09/10 financial year. This represented 97% of the 500,000 work opportunity target that had been set by the President in the June 2009 State of the Nation Address.
The target of 550,000 work opportunities that were expected for the 09/10 financial year have been achieved. 10

11. Q3: Work opportunities per sector and province (Overall)
(1 April – 31st December 2009)
Province
Environment & Culture
Infrastructure
Non-state
Social
TOTAL EC
11,438
40,142
12,509
14,716
78,805 FS
3,519
7,103
4,147
11,182
25,951 GP
11,226
53,712
2,413
14,379
81,730
KZN
17,837
68,370
4,236
54,570
145,013 LP
5,658
9,947
2,499
22,927
41,031 MP
3,063
6,982
4,391
18,507
32,943 NC
3,262
9,186
354
5,875
18,677 NW
2,415
8,099
2,598
11,320
24,432 WC
7,622
13,986
562
11,990
34,160
66,040
217,527
33,709
165,466
482,742 11

12. Q4: Work opportunities per sector and province (Overall)
(1 April 2009 – 31st March 2010)
Province
Environment & Culture
Infrastructure
Non-state
Social
TOTAL EC
13,742
47,812
21,410
16,969
99,933 FS
5,194
10,912
7,709
14,652
38,467 GP
18,337
66,782
2,909
20,373
108,401
KZN
26,547
75,288
6,674
63,771
172,280 LP
6,854
14,288
4,487
15,591
41,220 MP
3,551
7,967
10,765
21,266
43,549 NC
4,483
10,252
995
6,937
22,667 NW
3,815
12,562
2,272
18,962
37,611 WC
13,419
17,594
2,818
15,539
49,370
95,942
263,457
60,039
194,060
613,498

13. 5.1 Performance on the EPWP infrastructure Incentive
after the 3rd quarter of the 09/10 financial year
5 out of the 16 Provincial Departments have been paid incentive payments totaling R 53,633 million considering 3rd quarter payment reports. Total payment to Provincial departments considering payments in previous quarters is R116.6 million out of an allocation of R million (77% of Provincial allocation).
47 of the 68 eligible municipalities have been paid their incentive payment of R 78.6 million considering the 3rd quarter report of the 09/10 financial year. Total incentive payment to municipalities after the 3rd quarter is R million out an allocation of R million ( 57% of Municipal allocation).
Total incentive payment to Provincial Departments and Municipalities made for the 09/10 financial year totals R million, out of the total allocation of
R million, representing expenditure of 66% of the allocation for the 09/10 financial year. 12

14. Performance on the EPWP incentive grant by Provinces after 3rd Quarter 09/10 financial year
Incentive allocation for the financial year
(R’000)
Incentive payment after 3rd quarter 09-10
Incentive payment for 3rd quarter 09-10
( R’000)
Eastern Cape
29,992
17,457
15,381
Free State
23,008
Gauteng
500
KwaZulu-Natal
84,180
84,854
35,100
Limpopo
Mpumalanga
5,047
Northern Cape
North West
7,192
Western Cape
14,269
3,152
Total
151,419
116,581
53,633 13

15. Performance on the EPWP incentive grant by municipalities after 3rd Quarter 09/10 financial year
Province
Incentive allocation for the financial year
(R’000)
Incentive payment after 3rd quarter 09-10
Incentive payment for 3rd quarter 09-10
Eastern Cape
53,559
7,818
3,905
Free State
9,073
1,956
1,047
Gauteng
34,881
59,875
51,038
KwaZulu-Natal
39,974
26,102
15,038
Limpopo
18,328
6,140
2,626
Mpumalanga
13,454
2,453
1,468
Northern Cape
15,496
5,769
960
North West
9,694
2,787
1,493
Western Cape
7,289
1,271
708
Total
201,748
114,170
78,644 14

16. 5.2 Performance on the EPWP infrastructure Incentive after the 4th quarter of the 09/10 financial year
8 out of the 16 Provincial Departments will be paid incentive payments totaling R million considering EPWP 4th quarter report for the 09/10 financial year . Total payment to Provincial departments considering payments in previous quarters is R million out of the full incentive allocation of R million for 09/10 reporting ( 85% of the full allocation). This payment includes 4th quarter payment paid in the 10/11 financial year.
36 out of the 68 of the eligible municipalities will receive a total incentive payment of R million considering the 4th quarter report for the 09/10 financial year.
Considering the 4th quarter report ( 3rd quarter for municipalities) 56 of the eligible 68 municipalities will have accessed R million out of the available R million available in the 09/10 municipal financial year ( 69% of the allocation for the municipal financial year). This is comparable to the 75% of allocation expected to be paid after 3 of the 4 quarters in the municipal financial year. 15

17. The EPWP incentive grant is beginning to have the intended performance of encouraging Public bodies to exceed their Full Time Equivalent ( FTE) work opportunity targets. Provincial Departments in KZN, GP, WC and EC have exceeded their targets and have paid extra incentive amounts.
11 of the 68 eligible municipalities in GP, KZN, LP, NW and WC have already exceeded their FTE targets by the 4th quarter of reporting ( 3rd quarter of municipalities) for 09/10.
The number of Municipalities that will access the incentive will increase to 126 municipalities in the 10/11 financial year from the 68 municipalities in the 09/10 financial year. 16

18. Performance on the EPWP incentive grant by Provinces after 4th quarter 09/10 reporting
Full Incentive allocation for the reporting including 4th quarter payment in 10/11
(R’000)
Incentive payment after 4th quarter 09-10
Incentive payment for 4th quarter 09-10
( R’000)
Percentage of 09/10 full incentive paid
(%)
Eastern Cape
39,989
34,789
17,332 87
Free State
30,678
Gauteng
667
2,498
375
KwaZulu-Natal
112,240
115,259
30,269
103
Limpopo
2,617
393
Mpumalanga
6,730
Northern Cape
North West
9,589
Western Cape
15,969
1,700
2395
Total
201,892
171,132
54,551 85 17

19. Performance on the EPWP incentive grant by Municipalities after 4th quarter 09/10 reporting ( 3rd quarter 09/10 for municipalities)
Province
Incentive allocation considering 09/10 municipal financial year
(R’000)
Incentive payment after 4th quarter 09-10
Incentive payment for 4th quarter 09-10
( R’000)
Percentage of 09/10 full incentive paid
(%)
Eastern Cape
80,339
16,778
8,961 21
Free State
13,609
2,093
137 15
Gauteng
52,077
99,081
39,208
190
KwaZulu-Natal
59,962
50,572
24,469 84
Limpopo
27,495
17,358
11,240 63
Mpumalanga
20,181
247 34 12
Northern Cape
23,244
5,801 32 25
North West
14,541
11,581
8,797 80
Western Cape
10,934
1,855
584 17
Total
302,383
207,610
93,463 69 18

20. 6.0 Measures put in place to improve performance on EPWP incentive draw down
Public bodies ( Provincial Departments and Municipalities) are being provided with support to report on EPWP
A partnership with DBSA through the Siyenza Manje programme has been put in place to support municipalities jointly.
Training of officials in Municipalities in Labour-intensive methods of construction is being planned with LG-SETA.
90 data capturers have been employed in this regard
Training on reporting is also being done to Public body officials to enable them to report better on EPWP. 19

21. NEW MTEF Conditional Grants & Specifically & Exclusive Appropriation
2010/11
R’000
2011/12
2012/13
Conditional Grant
EPWP: Infrastructure Grant:
Local Gov
Prov Gov
EPWP: Social Sector
56 637 -
Devolution of Property Rates
Specifically & Exclusively Appropriated
IDT
10 515
9 180
9 602
EPWP Non State Sector 31

22. I thank you 20