1. 1 Provincial Treasury Western Cape NCOP Select Committee on Finance Public Hearings Conditional Grants and Capex 2 May 2006

2. 2 Outline Conditional grant allocations Conditional grant transfers Monitoring transfers Expenditure Monitoring expenditure The way forward

3. 3 Conditional Grant Allocations

4. 4 CG Allocations Conditional grant allocations – 2005/06

5. 5 CG Allocations (2)

6. 6 Conditional Grant Transfers

7. 7 CG Transfers Reconciliation of Conditional Grant Payment Schedule

8. 8 CG Transfers (2) Reconciliation of Conditional Grant Payment Schedule

9. 9 Monitoring Transfers

10. 10 Monitoring transfers The Western Cape experienced some problems with the late transfer of Conditional Grant payments in 2005/06 As there is no formalised process for monitoring these transfers, cash management only becomes aware of the intention to withhold transfer on day transfer expected as per payment schedule PT recommended a more formalised process to NT to ensure PT alerted of a national departments intention to withhold funds timeously, this recommendation was subsequently taken up in Practice Note 3 of 2005

11. 11 Monitoring transfers (2) This process requires National Departments to, when giving a receiving officer notice of its intention to withhold funds, send a copy of the notice to National Treasury, who will inform Provincial Treasury of the intended delay National Departments are still failing to comply with DORA 2005 and Practice Note 3 requirements Provincial Treasury subsequently proposed that National Treasury –ensure that transferring departments are aware of conditions placed on them in terms of DORA and Practice Note 3 of 2005; –Explore ways to ensure that transferring departments adhere to the payment schedule and take necessary precautions to ensure that provinces receive funds timeously This recommendation has subsequently been taken up in DORA 2006

12. 12 Expenditure

13. 13 CG Expenditure - Agriculture Agriculture – CG Expenditure as at 31 March 2006

14. 14 CG Expenditure – Agriculture (2) Challenges to overcome –Agriculture disaster management grant Invoices received late from claimants Transfers allocated in adjustments estimate

15. 15 CG Expenditure - Education Education – CG Expenditure as at 31 March 2006

16. 16 CG Expenditure - Health Health – CG Expenditure as at 31 March 2006 Comprehensive HIV and Aids – R10 million over expenditure to be funded through equitable share funds

17. 17 CG Expenditure – Health (2) Challenges to overcome –Hospital revitalisation programme: Slow performance of contractors on various projects Worcester Hospital – a shopping centre is being built in the same area resulting in competing for resources which results in delay in construction Paarl hospital – Delay in the approval of the business plan The Department proposed the purchase of two linear accelerators for Tygerberg Hospital to offset the under expenditure but as no business plan had been approved this was not possible

18. 18 CG Expenditure - Health (3) –Forensic pathology services Voted in the 2005/06 adjustments estimate First tranch received in December Close to R5 million transferred to the Department of Transport and Public Works for the purchase of motor vehicles Expenditure of the remaining funds is dependent on approval by the National Department of Public Works, the National Department of Health and SAPS.

19. 19 CG Expenditure – Local Government and Housing Local Government and Housing – CG Expenditure as at 31 March 2006

20. 20 CG Expenditure – Local Government and Housing (2) Challenges to overcome –Human settlement and redevelopment grant Late approval of projects by the National Department of Housing Payments made on actual delivery –Disaster relief Projected life is 2005/06 as well as 2006/07 Payment made on certified claims only

21. 21 CG Expenditure – Social Development Social Development: CG Expenditure as at 31 March 2006

22. 22 CG Expenditure – Social Development (2) Challenges to overcome –Social Assistance Grants Slower take up of grants than expected

23. 23 CG Expenditure – Transport and Public Works Transport and Public Works: CG Expenditure as at 31 March 2006

24. 24 Challenges to overcome –Provincial infrastructure grant R3,3 million received in adjustments estimate for FET Centre in Oudtshoorn and Elsenburg lecture rooms CG Expenditure – Transport and Public Works

25. 25 CG expenditure – Cultural Affairs and Sport Cultural affairs and sport: CG Expenditure as at 31 March 2006

26. 26 Capital Expenditure Capital expenditure as at 31 March 2006

27. 27 Infrastructure Expenditure Preliminary infrastructure expenditure as at 31 March 2006

28. 28 Infrastructure Expenditure (2) Challenges to overcome –Bottlenecks in the procurement process –Inefficiencies in the link between planning, budgeting and implementation –Capacity constraints Measures instituted –Education front loading –Promotion of earlier planning cycle (IDIP)

29. 29 Monitoring Expenditure

30. 30 Monitoring Provincial Expenditure Monthly reports to NT Quarterly reports to Top Management, Exco and Legislature (SCOF) Quarterly narrative reports to AOs and CFOs Frequent interaction with departments on spending performance and general issues Quarterly meetings between MEC’s for finance, education, health and public works to discuss infrastructure spending and other difficulties Continuous engagements with departments in a co- operative manner to jointly seek solutions

31. 31 The Way Forward

32. 32 The way forward Build on financial and non-financial quarterly reports to Legislature, Exco and Top Management: to better inform engagement with departments Paradigm shifts – for alignment of infrastructure cycle with the budget cycle Legislation needs to be more enabling – conditions result in delay in service delivery There needs to be certainty regarding funding levels and the flow of funding, this is especially relevant for infrastructure spending Ensure the early sign off of business plans Care should be taken to ensure that conditions placed on conditional grants do not impact on service delivery

33. 33 Discussion