1. 1 Outcome of Conditional Grants & Capital Expenditure as at 30 November 2005 [Section 40(4) of PFMA] Select Committee on Finance National Council of Provinces Presented by: Chris Adams Intergovernmental Relations National Treasury 18 January 2006

2. 2 National Treasury’s Role National Treasury dev. Culture of publishing information Assessing credibility of prov. Budgets Ensure that each treasury prepares quarterly reports for its cabinet or exco. NT prepares a consolidated quarterly report for all provinces.

3. 3 Key highlights Presentation covers provincial spending for the first 8 months (1 April to 30 November 2005) of 2005/06 financial year Spending is at R136bn (62,1%) of adjusted budget (R219,2bn) The highest rate of spending is in KZN (63,2%); NC and MPU (63,1%) Lowest in FS & GT (60,8%)

4. 4 Provincial Aggregated Expenditure

5. 5 Key highlights Spending in social services sectors: - Education at R46,7bn (64,6%) - Health at R29,4bn (62,3%) - Social Development R37,4bn (62,8%) Personnel spending at R63,3bn (65,4%) Capital expenditure is at R6,6bn (47,2%)

6. 6 Provincial Aggregated Expenditure

7. 7 Social services adjusted budgets at R178,9bn - 81,6% of total provincial budgets (education, health, social development) Provinces have spent R113,5bn or 63,4% –R12,3bn or 12,1 % more compared to last year Spending accounts for 83,4% of total provincial spending –Education at 34,3%, –Health at 21,6% –Social Development at 27,5% NC (65,2%), KZN (64,7%) records the highest rate of spending while FS (62%) and GT (62,1%) the lowest Social Services

8. 8

9. 9 Social Development Spending is at R37,4bn or 62,8% against R59,5bn adjusted budget –Increase of R3,8bn or 11,4% compared to the previous year –Lowest rate of spending in FS (58,2%) and GT (60%) –KZN (65,2%) and LIM (64,8%) reflects the highest rate of spending Sector is projecting to underspend by R972m 2 provinces project to overspend – KZN R244,1m and LIM R79,4m Projected underspending linked to key initiatives to address weaknesses in the grant administration system: –investigation and prosecution of fraudulent activities –comprehensive review of all temporary disability grants –implementation of systems that provides updates on key indicators for how the programme is being administered, including early warning indicators –piloting, finalising and implementing a new disability assessment tool

10. 10 Social Development

11. 11 Programme Analyses Prog 2 – Social Assistance Grant -Spending at R34,9bn or 63,5% of R54,9bn adjusted budget. -Lowest rate of spending in NC (57,8%) and highest in KZN (66,4%) -Projects to underspend at R861m. Prog 4 & 5 reflect lowest rate of spending: -Prog 4: Development and Support Services - Spending at R337m or 33,2% of R1,02bn adjusted budget. -Prog 5: Population Development and Demographic Trends – Spending at R12,4m or 48,6% of R25,5m adjusted budget Prog 1 – Welfare Admin. – 59,4% Prog 3 – Soc Welfare Services – 60,9%

12. 12 Provincial Social Grants (Programme 2)

13. 13 Social Grants - Beneficiary Numbers

14. 14 Social Grants - Payments

15. 15 Provincial personnel spending totalled R63,3bn or 65,4% of R96,7bn personnel adjusted budgets –Increase of 9,1% or R5,3bn over comparative spending last year Projecting to overspend by R223,6m Lowest level of personnel spending in GT (63,4%) and WC (63,6%) LIM (68,5%) and NW (66%) reflects the highest level of personnel spending Soc Dev personnel spending at R1,2bn or 56,5% of R2,2bn adjusted budget. Personnel

16. 16 Personnel

17. 17 Payments for Capital Assets Trends (Capital Expenditure)

18. 18 Provinces have spent R6,6bn or 47,2% of R13,9bn adjusted capital budgets –Increase of R1,5bn or 30% to comparative spending during last year Lowest rate of capital spending in LIM (36,4%) and FS(38,4%) EC (58%) and MPU (57,8%) reflects the highest rate of capital spending Soc Dev capital budget is spending at R79,7m or 22,3% of adjusted budget of R356m Payments for Capital Assets

19. 19 Payments for Capital Assets

20. 20 Conditional Grants

21. 21 Conditional Grants – Flow of Info

22. 22 Conditional Grants Conditional grant allocations total R74,6bn (2005 DoRA) –Social assistance grants making up the bulk at R55,9bn or 75% –Transfers from Nat Depts. amounts to R36,8bn and spending is at R35,2bn or 63,4% of budget. Reported expenditure excludes Schedule 4 grants such as the Integrated Social Development Services Grant and others like NTS Grant and Provincial Infrastructure grant These grants are included in “general” provincial expenditure Specific grants that show low spending: - Social Assistance Admin (51,5%)

23. 23 Conditional Grants

24. 24 Conditional Grants - continued

25. 25 Conditional Grants 3 or more provinces have spent less than 50% for the following grants: –Social Assistance Administration : FS, GT, LIM, MP and WC –HIV & AIDS : FS, KZN and WC –EC, NC and NW are only provinces that did not spend lower than 50% Only 3 provinces reflect spending above 50% against the DORA for any of the Soc. Dev. grants: GT, MP, and LIM.

26. 26 Conditional Grants

27. 27 Important dates and submissions

28. 28 2005/06 Financial Year: –3 rd Quarter (as at 31 December 2005) 30 January 2006 –4 th Quarter (as at 31 March 2006) 28 April 2006 Publication Dates for Provincial S32 Reports

29. 29 Practice Note 3 of 2005 (issued with effect from 01 August 2005): –National departments administering conditional grants are required to table QPRs (including both financial and non-financial information) with the SCOF in the NCOP at the end of each quarter in line with the requirements of Sections 19(1)(c) and 21(2)(d) of the Act, Grant Frameworks and Treasury Regulation 5.3 –Departments are required to provide the NT with copies of the reports tabled at SCOF in NCOP. The quarterly reports for each quarter should be tabled by the dates provided –The dates are as follows: Third Quarter:07 February 2006 Fourth Quarter:08 May 2006 Proposed Dates for QPRs

30. 30 Detail on Conditional Grants by Grant Type

31. 31 Social Development Grants Social Assistance Administration Grant Objective (Schedule 5 Grant): –To fund the administration of social assistance grants 8 month Expenditure: –Social Development spent R1 743 m or 51,5% of the R3 382 m allocation –Transfers amounted to 66,7% –Highest: NC 60,5%; KZN 59,5%; and EC 55,1% –Lowest: FS 42,9%; GT 43,5% and MPU 44,2% Service Delivery Outcome: –Department / Sector to respond

32. 32 Social Development Grants Social Assistance Transfers Grant Objective (Schedule 5 Grant): –To fund social assistance transfer payments to eligible beneficiaries 8 month Expenditure: –Social Development spent R33 409m or 64,2% of the R52 023m allocation –Transfers amounted to 69,3% –Highest: MPU 71,2%; LIM 66,7% and NW 65,9% –Lowest: FS 59,5%; GT 60,1% and NC 62,9% Service Delivery Outcome: –Department / Sector to respond

33. 33 Social Development Grants HIV and Aids Grant (Community-Based Care) Objectives (Schedule 5 Grant): –To provide social welfare services to orphans and vulnerable children who are infected by HIV and Aids, within family and community context, in partnership with non profit making organizations (NGOs, CBOs and other community organisations) –To develop and support institutional structures and professionals, community workers and child and youth care workers through targeted training programmes in order to ensure effective delivery of services 8 month Expenditure: –Social Development spent R85,1 m or 61,5% of the R138,4 m allocation –Transfers amounted to 90% –Highest: GT 100,9%; MPU 80,3% and LIM 72% –Lowest: FS 35,7%; KZN 37,3% and WC 41,9% Service Delivery Outcome: –Department / Sector to respond

34. 34 Social Development Grants Integrated Social Development Services Grant Objective (Schedule 4 Grant): –To enable provinces to support and provide appropriate social welfare services and development interventions, and for immediate and appropriate short-term relief to vulnerable individuals and households who are not eligible and not receiving any from of assistance 8 month Expenditure: –Spending of this grants is subsumed in the spending of a range of programmes and therefore no reporting is required –Social Development spent R93,3 m or 24,1% of the R388 m allocation –Transfers amounted to 52,6% –Highest: MPU 98,3% and FS 83,5% –Lowest: LIM and KZN 0%; WC 0,3%; Service Delivery Outcome: –Department / Sector to respond

35. 35 THANK YOU THANK YOU