1. 1 2007/08 Preliminary Expenditure Outcomes Urban Development and Infrastructure Joint Budget Committee 30 May 2008 Mahesh Fakir

2. 2 Scope Preliminary expenditure outcome summary per department General spending trends –Summary last quarter and March spending –Summary vacancy rates on critical posts –Summary virements Detail expenditure outcomes and major issues per department including details on major activities/projects, major current expenditure virements and major underspending /deviations –Department of Transport –Department of Housing –Department of Provincial and Local Government –Department Water Affairs and Forestry –Department of Minerals and Energy –Department of Communications

3. 3 Preliminary expenditure outcomes AvailablePreliminary Deviation Actual 2007/08 Financial year FundsExpenditure(AvailableSpending OutcomeFunds lessas % of Spending)Available R '000 Funds Transport 16 543 932 16 327 644 216 28898.7% Housing 8 982 3588 586 909395 44995.6% Water Affairs and Forestry 5 862 513 5 385 513477 17791.9% Provincial and Local Government 30 036 751 30 028 478 8 273100% Minerals and Energy 2 974 9372 947 37027 56799.1% Communications 1 924 4831 911 77812 70599.3%

4. 4 Percentage Last Quarter and March Spending 4th QuarterMar-07 Transport29.710.1 Housing28.110 Provincial and Local Government38.74.5 Water Affairs and Forestry3214.9 Minerals and Energy28.610.9 Communications45.511.6

5. 5 Summary of vacancy rates DepartmentNumber of PostsFilled PostsVacant PostsVacancy Rate (%) Transport 88353934439 Housing 41931810124.1 Provincial and Local Government 5244408416 Water Affairs and Forestry 15 75212 6313121 Professional = 208 19.8 Minerals and Energy 1395114425118 Communications 46829117737.8

6. 6 Summary of virements DepartmentVirement before & in the Adjustment Estimates R’000 Virement after Adjustment Estimates R’000 Total Virements R’000 % of Total Budget Transport13 30072 04885 3480.5 Housing (per economic classification) 2492119493444140.5 DPLG20 30210 22430 5260.1 DWAF5 00080 11585 1151.45 Minerals and Energy 5 80027 20529 0830.98 Communication10 00016 884268841.4

7. 7 Preliminary expenditure outcomes AvailablePreliminaryDeviationActual 2007/08 Financial yearFundsExpenditure(AvailableSpending OutcomeFunds lessas % of Spending)Available R '000 Funds 1. Administration 189 509 188 033 1 47699.2% 2. Transport Policy, Research and Economic Analysis 29 014 17 585 11 42960.6% 3. Transport Regulation and Accident and Incident Investigation 231 374 201 811 29 56387.2% 4. Integrated Planning and Inter-sphere Co-ordination 5 314 708 5 226 209 88 49998.3% 5. Freight Logistics and Corridor Development 26 381 12 981 13 40049.2% 6. Public Transport 10 557 025 10 514 647 42 37899.6% 7. Public Entity Oversight and Economic Regulation 195 921 166 378 29 54384.9% Total 16 543 932 16 327 644 216 288 98.7% Transport

8. 8 4 th Quarter SpendingTransport

9. 9 Observations and analysis Spending Patterns Last quarter spending 29.7% of total expenditure, 53.3 % current transfers to households ( taxi recapitalisation) 76.2% of total goods and services budget spent in 2007/08 leaving R137 million unspent. 76.7 % of goods and services budget spent on consultants, contractors and special services of which 19.3% was spent in March 2008 Vacancy rates on critical posts Vacancy rate for senior management service is 44.8%, high vacancy rates in Freight Logistics ( 60.7%) and Public Entity Oversight and Economic Regulation (68.4%) have contributed to under-spending in these programmes Virements 9 requests for virements were received Transport

10. 10 Observations and analysis Programmes contributing most to total under-spending is public transport (40.1%) and inter-sphere coordination (19.6%), however spending in both above 98% of total allocation Freight Logistics programme failed to spend 50% of the budget, clarification of role of provincial and local government in the provision of logistics infrastructure and services necessary Policy research and economic analysis spent only 60.6% of budget in 2007/08. Programme plagued by delays in bidding process Public Entity Oversight failed to spend R14 million made available in 2006 for the restructuring of the RAF, Ports Regulator has not been set up to allow funds to flow to the regulator Under-spending on capital assets due to lack of clarity on infrastructure priorities as proposed in the Roads Infrastructure Strategic Framework for South Africa approved by Cabinet in 2006: –R30 million on Sani Pass –R8 million on overload control –R30 million on rural transport strategy Transport

11. 11 Expenditure SummaryHousing

12. 12 Last Quarter ExpenditureHousing

13. 13 Observations and analysis Expenditure in 2007/08 at 95.6% compared to 97.7% in 2006/07 and 99.5% in 2005/06 Programme 2: Housing Policy Research and Planning traditionally lowest spending performance with 56.7% of total spending in programme spent in Q4 Goods and services – March spike 22% in one month Under-expenditure (departmental + provincial (on grant)) –R193 million on Integrated Housing and Human Settlement Development Grant (funds withheld by the Housing dept. in terms of S26 of DoRA) –R180 million to the Social Housing Regulatory Authority (entity not established as Social Housing Bill, 2006 not promulgated) –R445 million on Integrated Housing and Human Settlement Grant transferred to provinces but not spent Western Cape: N2 Gateway – R73 million North West: Various projects – R89 million Free State: Various projects – R79 million Eastern Cape: Various Projects incl. Zanemvula – R161 million Virements- 8 requests for virements Vacancies – 24% overall, SMS: 6% Housing

14. 14 Expenditure Summary DPLG Available funds (R’000) Total Expenditure (R’000)Deviation Prelim. Expenditure Outcome 1. Administration 142 900 142 451 449 99.7% 2. Governance, Policy and Research 39 839 38 780 1 05997.3% 3. Urban and Renewal Development 9 827 8 626 1 201 87.8% 4. Systems and Capacity Building 92 450 89 605 2 84596.9% 5. Free Basic Services and Infrastructure 37 170 34 542 2 62892.9% 6. Provincial and Local Government Transfers 29 629 760 29 626 760 -100.0% 7. Fiscal Transfers 84 805 91 99.9% Total 30 036 751 30 036 478 8 273100.0% Current expenditure 336 179 328 491 7 68897.7% Of which: Compensation of employees 132 366 128 146 4 220 96.8% Goods and Services 203 413 199 954 3 459 98.3% Transfers and subsidies 29 692 145 29 692 146 (1)100.0% Of which: Provincial and Local Government transfers 29 629 762 29 629 760 2 100.1% South African Local Government Association 20 461 - 100.0% Municipal Demarcation Board 20 664 - 100.0% Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities 15 447 - 100.0% National House of Traditional Leaders 9 598 10 573 (975) 110.0% Payments for capital assets 8 427 7 841 586 93.0% Total 30 036 751 30 028 478 8 273 100% DPLG

15. 15 Last Quarter Spending Trends Jan 08Feb 08March 08Total ExpAllocationExpenditure Programme 3 months R'000 % Prog 1: Administration7 66418 40218 56644 632142 90031.2 Prog 2: Governance,Policyand Research2 2033 4569 65615 31539 83938.4 Prog 3: Urban and Rural Development6461 0579512 6549 82727.0 Prog 4: Systems and Capacity Building4 61011 3069 91225 82892 45027.9 Prog 5: Free Basic Services and Infrastructure8862 7328 22011 83837 17031.8 Prog 6: Provincial and Local Government Transfers 721 6939 472 8501 294 71711 489 26029 629 76038.8 Prog 7: Fiscal Transfers16 31212 0113 40931 73284 80537.4 Total754 0149 521 8141 345 43111 621 25930 036 75138.7 Economic Classification Current Payments17 29338 63943 72799 659339 04329.4 Compensation of Employees9 79111 03911 04631 876132 36624.1 Goods and Services7 50227 54832 51767 567203 41333.2 Financial Transactions in assets & liabilities05216421640054.0 Transfer and subsidies to Current Transfers }14 7438 624 7502 1088 641 60120 938 28141.3 Transfers and subsidies to Capital Transfers}721 694858 0091 294 7162 874 4198 754 14032.8 Payments for capital assets2844154 8985 5975 287105.9 Total754 0149 521 8131 345 44911 621 27630 036 75138.7 Economic Classification Current Payments17 29338 63943 72799 659339 04329.4 Transfers and Subsidies (Current & Capital)736 4379 482 7591 296 82411 516 02029 692 42138.8 Payments for capital assets2844154 8985 5975 287105.9 Total754 0149 521 8131 345 44911 621 27630 036 75138.7 DPLG

16. 16 Observations and Analysis Major Over/under spending and deviations  2007/08 spending pattern of 99.97% is higher when compared with the spending pattern for the previous two financial years (99.98% for 2005/06 and 96.8% for 2006/07). Under-spending for 2007/08 amounted R8.273 million  Out of the total allocation of R30.036 billion, R29.629 billion relates to transfers made by the Department to provinces and municipalities for equitable share and MIG Last Quarter Expenditure  The Department made unusually high transfers for equitable share (‘transfers and subsidies to current transfers’) and MIG (‘transfers and subsidies to capital transfers’) during the last quarter resulting in 38.8% expenditure during this period alone  As at the end of March 2008 (3 rd quarter for municipalities) an estimated 80% of MIG funds transferred by the dept had been spent by municipalities Virements  4 Virements were processed during 2007/08 Vacancy Rate  At the end of 2007/08 the department had a vacancy rate of 16% (84 posts)  Of this 16% overall vacancy rate, 40% (39 posts) comprises the “professionally qualified” and “senior management categories” DPLG

17. 17 Expenditure Summary DWAF Available funds (R'000) Total Expenditure (R'000)Deviation 1. Administration 603 014 604 879 (1 865)100.3% 2. Water Resources Management 2 915 512 2 462 514 452 998 84.5% 3. Water Services 1 874 0071 866 926 7 08199.6% 4. Forestry 469 980 451 077 18 90396.0 Total5 862 513 5 385 396 477 117 91.9% Economic Classification: Current expenditure 2 900 770 2 925 592 (24 822)100.9% Of which: Compensation of employees 1 1192 156 1 151 660 40 496 96.6% Goods and Services 1 703 576 1 670 044 33 532 98.0% Transfers and subsidies 2 480 094 2 054 039 426 05582.8% Of which: Water Services Operating Subsidy Grant 622 038 642 025 (19 987) 103.2% Augmentation of Water Trading Account from main account 1 625 908 1 190 161 435 747 73.2% Other 232 148 221 853 11 782 2.26% Payments for capital assets 481 649 405 765 75 88484.2% Total 5 862 513 5 385 396 477 11791.9% DWAF

18. 18 Last Quarter Spending Trends Jan 08Feb 08March 08Total ExpAllocationExpenditure R'000 % Prog 1: Administration42 36054 47280 567177 399603 01429.4 Prog 2: Water Resources Management88 361349 950376 925815 2362 915 51228.0 Prog 3: Water Services224 062163 850364 337752 2491 874 00740.1 Prog 4: Forestry34 70846 08048 476129 264469 98027.5 Total389 491614 352870 3051 874 1485 862 513 32.0 Economic Classification Current Payments195 153241 760480 950917 8632 900 77031.6 Compensation of Employees88 79885 666107 487281 9511 192 156 23.7 Goods and Services106 207155 985372 747634 9391 703 576 37.3 Financial Transactions in assets & liabilities17-1603101671 340 12.5 Other1312694068063 698 21.8 Transfer and subsidies to Current Transfers }163 43686 8986 703257 0731 042 04524.6 Transfers and subsidies to Capital Transfers}2 500226 00097 704326 2041 438 04922.7 Payments for capital assets28 40259 694284 948373 044481 64977.5 Total389 491614 352870 3051 874 1485 862 513 32.0 Economic Classification Current Payments195 153241 760480 950917 8632 900 77031.6 Transfers and Subsidies (Current & Capital)165 936312 898104 047582 8812 480 09423.5 Payments for capital assets28 40259 694284 948373 044481 64977.5 Total389 491614 352869 9451 873 7885 862 513 32.0 DWAF

19. 19 Observations and Analysis Major Over/under spending and deviations  2007/08 spending pattern of 91.9% is lower when compared with the spending pattern for the previous two financial years (94.6% for 2005/06 and 92.4 % for 2006/07), primarily due to the delays experienced with the construction of the De Hoop dam Last Quarter Spending  Expenditure clearly increased progressively month-on-month during the last quarter  The largest area of expenditure related to the ‘schools and clinics’ grant and the ‘bulk infrastructure’ grant Virements  7 Virements were processed during 2007/08 Vacancy rates  At the end of 2007/08 the department had a vacancy rate of 19.8% (3 121 posts)  Of this 35% (899 posts) comprises the “highly skilled supervision” and “senior management categories” –Out of a total of 49 posts for the category engineers and related professionals there are 23 vacant posts –Out of a total of 273 posts for the category civil engineering technicians there are 132 vacant posts –Out of a total of 110 posts for the category geologists, geophysicists, hydrologists there are 53 vacant posts DWAF

20. 20 Expenditure Summary DME

21. 21 Last quarter spending DME

22. 22 Observations and Analysis Preliminary Expenditure Outcome – The department spent R2.95 billion or 99.1 of its allocated budget – All programmes’ spending exceeded 92 per cent of their respective allocated funds, whilst programme 1 over spent – Savings arose from non-spending on compensation of employees and goods and services General Spending Trends – 78 per cent of the department’s budget is transfers and subsidies to entities including Eskom, Necsa, Council for Geosciences, Mintek, NNR, SADPR etc – Between 2005/06 and 2007/08, there has been an overall increase in departmental budget/expenditure at an average annual growth rate of 16.0 per cent from R2 billion to R3 billion. – Spending rate of 99.1 per cent is the highest over the past 3 financial years. – A spike in spending over the last quarter of the FY was in Programme 6, where spending rose by 89.2% from R2,69m in January to R24,83m in February – leading to an overall quarterly spend of 47.8% of the total allocation. Major Activities/ Projects – Integrated National Electrification Programme – Appointment of the Petroleum Controller- establishment of a dedicated Petroleum licensing function Overall under spending – Department under spent by R27.567 million, which is 0.9 per cent of the total allocated budget of R2.97 billion. Vacancy Rate - 17.9% - Major vacancies exist in the Deputy Director and Junior Management categories – i.e. 26.7% and 19.5%, unfilled posts, respectively. DME

23. 23 Expenditure Summary R’000Available fundsTotal ExpenditureDeviationExpenditure as a % of allocation 1.Administration98 35997 56979099.2 2. Strategic Policy Co-ordination, Integration and International Affairs 43 66943 14552498.8 3. Policy Unit64 08154 875920485.6 4. Finance and Shareholder Management 1 621 5931 619 804178999.9 5. Innovative Applications and Research 69 11169 09417100 6.Presidential National Commission27 6702729137998.6 Total1 924 4831 911 77812 70599.3 % Economic Classification Current Expenditure Of which: Compensation of Employees Goods and Services 317 709 103 614 214 030 310 964 97 707 213 912 6745 5 907 838 97.9 94.3 99.6 Transfers and Subsidies Of which: Sentech SABC SAPO ICASA 500 000 239 118 363 800 232 475 500 000 239 118 363 800 226 758 0 5 717 100 97.5 Payments for capital assets8 4728 4702100 % Total1 924 4831 911 77812 70599.3 Communications

24. 24 Last quarter spending Communications

25. 25 Vacancy rates Communications Management LevelPost CountHead Count Minister11 Deputy Minister11 Director General11 Deputy Director General85 Chief Director2520 Director6237 Deputy Director8353 Assistant Director10063 Junior Management13863 Low Level Supervision4947 Grand Total468291

26. 26 Observations and analysis Preliminary Expenditure Outcome – Department spent R1.91 billion or 99.3 of its allocated budget – 5 out of 6 programmes’ spending exceeded 98 per cent of their respective allocated funds – Savings are mainly due to non-spending on compensation of employees and transfer payment not made to SABC Production Programme. General Spending Trends – 84 per cent of the department’s budget is transfers and subsidies to entities comprising Sentech, SABC, SAPO, ICASA, Nemisa, USAASA and USAF – Between 2005/06 and 2007/08, there has been an overall increase in departmental budget/expenditure at an average annual growth rate of 35.9 per cent from R1 billion to R1.9 billion. – Department has spent over 99 per cent of its funds in the past 3 financial years. – A spike in spending occurred in Programme 3, where spending rose by 95.05% in March from R1.54m in February 2008 to R31.14m in March, leading to an overall 61.8% spending on the programme. Programme 4 transferred R578.6m in February as compared to a January spend of R31.8m, this is equivalent to a February spend increasing by 94.5% due to special adjustment for Sentech Major Activities/ Projects – Digital Terrestrial Television migration - switch on 01/11/2008 – The ECA promulgation in 2006, led to ICASA engaging in the License Conversion Project to comply with section 93 of the Act. Overall under spending – Department under spent by R12.705 million, which is 0.66 per cent of the total allocated budget of R1.92 billion. Vacancy rate – 37.7% - Major vacancies exist in the Director and Junior management categories – viz. 40.32% and 54.35% unfilled posts. Communications