1. SELECT COMMITTEE ON FINANCE 26 MAY 2006 Hearings on the FFC recommendations DORA 2007/08

2. INTRODUCTION The Department wishes to commend the Financial and Fiscal Commission for its role in the intergovernmental fiscal system; We also wish to acknowledge, yet again the extent of rigour in the analsys by a group of erudite researches at the FFC; The benchmarking was extensive in the area of welfare services

3. Social Security and DORA We wish to express our appreciation for support provided by the FFC in the past, notably in respect of the successes we are now seeing in social security The FFC was amongst the first and only institution sustaining the debate on a national system of social security, and eventually the setting up of an Agency Chair, in the main our input will be a response to the FFC’s recommendations in respect of welfare services, but it will be important for the FFC to note that work on a comprehensive social security continues, and while nothing is said by the FFC on the matter, I will not venture any comments on the topic today

4. Background on Welfare Component Welfare services have largely being underfunded over a prolonged period The key reasons are: The pressure brought to bear by the statutory and rights based nature of social grants; Backlogs, especially in provinces considered rural and poor Limited resources; Coupling of the function with other portfolios, e.g. health; Limited human resource capacity and ongoing migration of professional workers, etc.

5. Social Development Component The work in constructing an explicit social development component is long overdue, in the absence thereof welfare has been relegated to non- priority, discretionary funding We agree with the key recommendation that there should be a Social Development Component in the Provincial Equitable Share formula: (the devil is in the detail) and the rationale provide in section B We also support the proposal to have a conditional grant component for statutory services, however the duration of such an element should be debated

6. The Formula In line with the 2006/07 recommendations by the FFC, the Department has completed work on the setting of norms and standards for the range of welfare services We agree with the FFC, and think it is a pointed observation, that the use of “demand for welfare services” is problematic, and that there is evidence of low political prioritisation of welfare services provision in SA as outlined on page 27

7. Elements of the formula Key questions are posed by the FFC on page 28 and they relate to: What factors need consideration; and Whether the amount warrant a very finely graded and ideal formula It is in the FFC’s responses to these questions, Chair that I think the Department holds different views

8. A graded and ideal formula? Chair, the FFC argues in the opening that the “demand” approach is problematic as this is not expressed through the price system. The FFC then, in the formula chooses elements such as population, poverty and Institutional capacity. The danger of this approach is that the baseline would be used as a point of departure thus perpetuating underfunding In this respect the Department would argue for a supply approach as outlined in the bare minimum of norms and standards for services listed below

9. Norms for welfare services Developmental Social Welfare focuses on the maximisation of human potential and on fostering self-reliance and participation in decision-making Services to be family-orientated, community-based and integrated to the poor and vulnerable groups and those with special needs such as children, youth, older persons, persons with disabilities, women, victims of violence and abuse, persons affected by substance abuse, and those infected with and those affected by HIV and AIDS Services are classified into five broad categories, promotion and prevention, rehabilitation; protection; continuing care and mental health and addiction services

10. INTEGRATED SERVICE DELIVERY MODEL Developmental social welfare service delivery Classification of welfare service delivery Classification in terms of levels of intervention Prevention Early intervention (non-statutory) Statutory intervention/residential/alternative care Reconstruction and aftercare Classification in terms of the nature of services Promotion and prevention services Protection services Rehabilitation services continuing care service Mental health and addiction services

11. INTEGRATED SERVICE DELIVERY MODEL TOWARDS IMPROVED SOCIAL SERVICES [Cont.] Nature and scope of development social welfare services Services to children Services to families Probation services Services to youth Prevention and treatment of substance abuse Services to women Services to older persons Services to people with disabilities Services to those affected/infected by HIV and AIDS Target Groups Children Youth Families Women Older people

12. Should we have a complex formula The second question “Does the amount warrant a very finely graded and ideal formula? Clearly chair, if we want to respond to the the needs and we outline these services, then the rigour of the formula is important and this needs to be expressed in its various components In this regard the Department invites the FFC to work with us going forward to refine the proposed model

13. CONCLUSION The Department welcomes the approach of the FFC to start with the progressive phasing in of the social development services component in the equitable share formula and wish to thank the Deputy Chair, Mr Josie and his team We would like to propose that a working committee be established between the National Department of Social Development, the FFC and the National Treasury to refine the proposed formula.

14. Thank you