1. 1 2007/08 Preliminary Expenditure Outcomes Economic Services Joint Budget Committee 30 May 2008

2. 2 SCOPE: ECONOMIC SERVICES Preliminary expenditure outcome: Summary for Economic Services –Table Budget available vs. Actual Expenditure –Summary Vacancy rates on critical posts –Summary Virements Detail expenditure outcomes per department –Department of Agriculture –Department of Land Affairs –Department of Environmental Affairs & Tourism –Department of Public Enterprises –Department of Science & Technology –Department of Trade & Industry

3. 3 Preliminary expenditure outcome Summary per department

4. 4 Summary: Last quarter spending trends 1 Month = 8% 1 Quarter = 25%

5. 5 Economic Services underspending

6. 6 Summary: Virements on expenditure

7. 7 Summary: Vacancy rates on Approved Establishment

8. 8 Detail Expenditure Outcomes and Major Issues Per Department Per department detail expenditure outcomes and major issues: (1) Major projects (2) Observations and Analysis - Explanations on major current expenditure virements and major underspending /deviations (3) Details on Actual spending vs. Budget Table 1 (4) Last quarter spending Table 2 For: Department of Agriculture - VOTE 23 Department of Land Affairs - VOTE 27 Department of Environmental Affairs & Tourism - VOTE 25 Department of Public Enterprises - VOTE 30 Department of Science & Technology - VOTE 31 Department of Trade & Industry – VOTE 32

9. 9 Department of Agriculture Table 1: Actual spending vs. Budget

10. 10 Department of Agriculture Table 2: Last quarter spending

11. 11 Department of Agriculture Observations and Analysis Preliminary Expenditure Outcome: – The Department has spent 95.6% which is an improvement from 06/07 financial year's expenditure of 93.7% – Expenditure on transfers and subsidies for February increased by 154% from January’s amount of R130m due to transfers of R250m for Agricultural Disaster. Transfers and subsidies: Total Transfers as percentage of available funds: 72.7% Virements – R77.04 m was shifted from current expenditure to: Transfers and subsidies (R41.854m) Payment to capital assets (R35.186m) Major underspending/deviations – Agriculture Vote underspent by R141.182m or 4.1% of the allocated budget – Prog 3, Bio-Security and Disaster Management: underspent by R98. 231m due to unprocessed claims for the compensation of farmers whose pigs were culled during Classical Swine Fever Campaign. – Prog 1, Administration: underspent by R26.580m due to planned project driven by Dept of Public Works that could not be carried out as planned.

12. 12 Department of Agriculture Major Projects Major Activities/Projects: - Land bank (R700m) – recapitalization - ARC (R488m) – Parliamentary Grant - CASP ( R415m) - Targeted 80 000 emerging farmers in 9 Provinces. - Agric Disaster(R300m)- Relief to 2 688 farmers: fires, drought, hailstorm, cold spell - MAFISA (R250m)- Micro Loans to 1 990 farmers eg for poultry, farming inputs, equipment. - AgriBEE (R50m) - 8 projects (empowerment deals) - Land Care (R46.7m) - soil conservation, alien plants control, employing 674 303 people

13. 13 Department of Land Affairs Table 1: Actual spending vs. Budget AvailablePreliminaryDeviationActual 2007/08 Financial yearFundsExpenditure(AvailableSpending OutcomeFunds lessas % of Spending)Available R '000 Funds Programmes: 1. Administration 426 554 424 993 1 56199.6% 2. Surveys and Mapping 98 085 97 257 82899.2% 3. Cadastral Surveys 137 937 137 617 32099.8% 4. Restitution 3 638 611 3 638 465 146100.0% 5. Land Reform 1 593 471 1 571 073 22 39898.6% 6. Spatial Planning and Information 22 018 21 836 18299.2% 7. Auxiliary and Associated Services 11 593 6 256 5 33754.0% Total 5 928 269 5 897 497 30 772 99.5% Economic Classification: Current expenditure 1 151 557 1 145 586 5 97199.5% Compensation of employees 479 286 476 092 3 19499.3% Goods and Services 672 271 665 661 6 61099.0% Transfers and subsidies, Of which: 3 854 936 3 832 849 22 08799.4% Restitution Grants 3 246 764 3 333 531 (86 767)102.7% Land Reform Grants 504 774 481 693 23 08195.4% Payments for capital assets 921 776 919 062 2 71499.7% Total 5 928 269 5 897 497 30 77299.5%

14. 14 Department of Land Affairs Table 2: Last quarter spending Last Quarter Spending Trends Jan 08Feb 08March 08Total ExpAllocationExpenditure Programme 3 months R'000 % Prog 1: Administration25 28849 57665 134139 998439 03931.9 Prog 2: Surveys and Mapping4 98213 93110 38429 297100 62129.1 Prog 3: Cadastral Surveys11 83213 69917 81243 343142 35230.4 Prog 4: Restitution226 976279 257254 970761 2033 643 37620.9 Prog 5: Land Reform156 153194 789266 935617 8771 568 58239.4 Prog 6: Spatial Planning and Information2 2482 3425 2969 88621 70645.5 Prog 7: Auxillary and Associated Services532041 4141 67112 59313.3 Special Programme: Thefts and Losses942351 8152 1440#DIV/0! Total427 626554 033623 7601 605 4195 928 26927.1 Economic Classification Current Payments84 306127 924167 298379 5281 151 55733.0 Compensation of Employees41 91441 61844 584128 116479 28626.7 Goods and Services42 20286 103120 148248 453672 27137.0 Transfer and subsidies to Current Transfers }2 234-4304 8016 6051614540.9 Transfers and subsidies to Capital Transfers}221 981298 280296 129816 3903 838 79121.3 Payments for capital assets119 105128 259155 532402 896921 77643.7 Total427 626554 033623 7601 605 4195 928 26927.1 Economic Classification Current Payments84 306127 924167 298379 5281 151 55733.0 Transfers and Subsidies (Current & Capital)224 215297 850300 930822 9953 854 93621.3 Payments for capital assets119 105128 259155 532402 896921 77643.7 Total427 626554 033623 7601 605 4195 928 26927.1

15. 15 Department of Land Affairs Observations and Analysis Preliminary Expenditure Outcome – Department spent R5.8b or 99.5% of allocated budget – Expenditure improved as a result of increases in Transfers in Restitution Transfers and Subsides – Transfers of R3.8b amounted to 64% of Department budget, of which: Prog 4: Restitution - Restitution Grants of R3.3b amounted to 56% of department budget Prog 5: Land Reform - Land Reform Grants of R481m amounted to 8.1% of Department budget Major Current Expenditure Virements – Total Virements of R523m amounted to 8.83% of Department budget, of which: Prog 5: Land Reform - Reprioritisation of R505m (50%) in Land Reform Grants shifted to Land Acquisition Capital (PLAS) to accelerate land reform

16. 16 Department of Land Affairs Observations and Analysis(2) Vacancy rate – Department vacancy rate equals 27.3%, of which: SMS vacancy rate 35.6% Non-SMS vacancy rate 27.2% Major underspending/deviations – Department underspent by R30.7m or 0.5% of allocated budget, of which: Prog 5: Land Reform - Underspent by R22.3m or 1.4% of Programme budget – Underspending possibly due to negotiations delays Prog 7: Auxiliary and Associated Services underspent by R5.3m or 46% of Programme budget

17. 17 Department of Land Affairs Major Projects Major Activities/Projects – Prog 4: Restitution - Finalisation of remaining 4 911 complex restitution claims Transfers - Restitution Grants of R3.3b amounted to 91% of Programme budget and 56% of Department budget Service Delivery - 432 226ha restituted – Prog 5: Land Reform - Land Redistribution – Projects include LRAD and PLAS Transfers – Land Reform Grants of R481m amounted to 30% of Programme budget and 8.1% of Department budget Land Acquisition Capital - PLAS acquisitions of R843m amounted to 53% of Programme budget and 14% of Department budget Service Delivery - 340 880ha redistributed and 169 818ha acquired through PLAS

18. 18 Environmental Affairs & Tourism – Table 1: Actual spending vs. Budget DEAT R'000Available funds Total ExpenditureDeviation 1. Administration 192 957 193 299 (342)100.2% 2. Environmental Quality and Protection 241 409 241 488 (79)100.0% 3. Marine and Coastal Management 349 307 349 268 39100.0% 4. Tourism 612 448 612 451 (3)100.0% 5. Biodiversity and Conservation 359 908 359 809 99100.0% 6. Sector Services and International Relations 1 034 492 1 032 441 2 05199.8% Total 2 790 521 2 788 756 1 765 99.9% Economic Classification: Current expenditure 665 330 663 917 1 41399.8% Of which: Compensation of employees 342 114 342 195 (81)100.0% Goods and Services 323 007 321 513 1 49499.5% Transfers and subsidies 2 114 693 2 114 491 202100.0% Of which: South African Tourism 516 996 517 556 (560)100.1% Expanded Public Works Programme 650 679 -100.0% SA National Parks 364 356 -100.0% SA Weather Services 180 112 -100.0% Marine Living Resources Fund 147 812 -100.0% Payments for capital assets 10 498 10 348 15098.6% Total 2 790 521 2 788 756 1 76599.9%

19. 19 Environmental Affairs & Tourism Table 2: Last quarter spending

20. 20 Environmental Affairs & Tourism Observations and Analysis Preliminary Expenditure Outcome –Department spent R2.79 billion or 99.9% of allocated budget –Saving mainly on goods and services –Since 2006/07 the department has spent 99.9% of its allocated funds General Spending trends –75.8% of department’s spending on transfers mainly to public entities and EPWP –12.3% on compensation of employees –11.5% on goods and services Major Current Expenditure Virements –The department shifted 0.3% of its allocated funds after the Adjustment Estimate, this was mainly to fund expanded public works programme projects under Programme 6: Social Responsibility and Projects as well as to fund payment for capital assets (mainly equipment for newly appointed staff)

21. 21 Environmental Affairs & Tourism Major Projects  Major Activities/Projects –EPWP focuses mainly on the following areas; coastal development, tourism infrastructure and tourism product development, waste management, biodiversity and conservation and Working for Wetlands. –During the Adjustment Estimate an additional R200 million was rolled over for this programme. R170 million was allocated for transfer payments and R30 million for doing feasibility studies related to projects. –After the Adjustment Estimate the department shifted a further R8.775 million to pay for projects.

22. 22 Department of Public Enterprises Table 1: Actual spending vs. Budget AvailablePreliminaryDeviationActual 2007/08 Financial yearFundsExpenditure(AvailableSpending OutcomeFunds lessas % of Spending)Available R '000 Funds Programmes: 1. Administration 66,332 66,281 5199.9% 2. Energy, Broadband Infrastructure and Mining Enterprises 85,985 85,984 1100.0% 3. Legal, Governance and Risk 21,094 21,077 1799.9% 4. Manufacturing Enterprises 3,664,031 3,662,997 1,034100.0% 5. Transport Enterprises 752,130 752,128 2100.0% 6. Joint Project Facility 15,517 15,516 1100.0% Total 4,605,089 4,603,983 1,106 100.0% Economic Classification: Current expenditure 126,589 126,565 24100.0% Of which: Compensation of employees 56,001 55,998 3100.0% Goods and Services 70,561 70,541 20100.0% Transfers and subsidies 4,474,993 4,473,912 1,081100.0% Of which: Denel 1,155,000 1,153,968 1,03299.9% SAA 744,400 -100.0% Pebble Bed Modular Reactor 2,502,273 -100.0% Payments for capital assets 3,507 3,506 1100.0% Total 4,605,089 4,603,983 1,106100.0%

23. 23 Department of Public Enterprises Table 2: Last quarter spending

24. 24 Department of Public Enterprises Observations and Analysis Preliminary Expenditure Outcome – Department spent R4.6 billion (99,99% or 100%) of allocated budget General Spending trends – Transfer payments were the largest expenditure item and amounted to 97.2 % of the total budget. Major Current Expenditure Virements – The total virements were mainly effected from compensation of employees to fund over-expenditure under goods and services and payments for capital assets (computer equipment) amounting to R2.5 million. Major under spending/deviations – Under spending amounted to R1.106 million or 0.02% of the total budget due to mainly over provision of the Denel indemnity claim. – Programme 4: Manufacturing Enterprises under spent the most i.e. by R1.038 million in respect of the transfer payment to Denel (indemnity claim)

25. 25 Department of Public Enterprises Major Projects Major Activities/Projects – South African Airways: R744 million was allocated as transfer for restructuring of staff (Labour costs) in line with short term intervention strategy. – Denel: Support Denel’s turnaround strategy, transfers of R933 million for further capitalisation and R222 million for payment of indemnity guaranteed. – PBMR: Transfer payments totaling R2.5 billion for Operational expenses as well as major contracts.

26. 26 Department of Science & Technology Table 1: Actual spending vs. Budget

27. 27 Department of Science & Technology Table 2: Last quarter spending

28. 28 Department of Science & Technology Observations and Analysis Preliminary Expenditure Outcome  R3.127 billion or 99.5 % of appropriated funds  R16.9 million savings mainly on transfers and subsidies Spending on major items  93 per cent on transfers and subsidies  6.8 per cent on current expenditure  0.2 per cent on payments for capital assets Virements  0.99 per cent shifted from transfers and subsidies to current payments and payments for capital in the AENE  1 per cent shifted from current expenditure to transfers and subsidies & payments capital expenditure after the AENE

29. 29 Department of Science & Technology Major Projects Major activities/projects  Completion of the experimental development model (XDM) a prototype dish - MeerKAT  Launching of the International Centre for Genetic Engineering & Biotechnology  Finalisation of the design of SANReN by Infraco and Neotel at the CSIR

30. 30 Department of Trade & Industry Table 1: Actual spending vs. Budget

31. 31 Department of Trade & Industry Table 2: Last quarter spending

32. 32 Department of Trade & Industry Observations and Analysis Major Virements – Virements to a total amount of R104.587 million or 1.9 % were effected of which 15 were approved by NT – Mainly effected from Goods and Services under various Programmes to fund over expenditure under 1. Transfer payments such as World Trade Organisation, UNIDO, OPCW and Trade and SEDA. 2. Compensation of Employees under Programme 6 (Trade & Investment South Africa)

33. 33 Department of Trade & Industry Observations and Analysis(2) Preliminary Expenditure Outcome – Department spent R5.3 billion or 96.6% of allocated funds. – This is mainly as a result of the increased expenditure in respect of - claims paid out to Small & Medium Enterprise Development Programme (SMEDP), recapitalisation of the National Empowerment Fund (NEF), Coega Industrial Development Zone for infrastructure investment, and Critical Infrastructure Programme (CIP) for the development of infrastructure in respect of the ALCAN aluminium smelter project. – 4 out of 7 programmes’ expenditure exceeded 95% of their respective allocated budgets General Spending trends – Main spending Programmes were Programme 3 (Enterprise & Industry Development) mainly policy development and 5 (The Enterprise Organisation) mainly incentive schemes. Increased expenditure mainly related to SMEDP, National Empowerment Fund, Coega IDZ and the Critical Infrastructure Programme

34. 34 Department of Trade & Industry Observations and Analysis(3) Major underspending/deviations – Department underspent by R184.2 million or 3.4% of total allocated budget – Programme 1: Administration underspent by R18.0 million or 5.5% due to Goods & Services (Consultancy Services) and capital assets – Programme 5: The Enterprise Organisation underspent by R140 million or 5.2% mainly on incentive schemes such as BPO, Staple Food Fortification, Co- operatives and CIP. – Programme 7: Marketing underspent the most by R6.1 million or 9% mainly on Goods & Services (Advertising campaigns, Publications and Consultancy Services) – Payments for Capital Assets amounting to R12.9 million or 34.9% underspent due to Computer equipment not delivered and the IT Disaster Recovery System – project not completed – Goods and Services underspent by R53.3 million or 11.9% under various programmes which mainly related to Consultancy Services

35. 35 Department of Trade & Industry Major Projects Major Activities/Projects –Policies presented on the National Industrial Policy Framework and the Industrial Policy Action Plan – New Enterprise Investment Programme that will replace the previous Small Medium Enterprise Development Programme which will also be grants mainly to the Manufacturing and Tourism Sectors – Customised Sector Programmes including the review of the MIDP – Policies developed for Sector Development Programmes which include the priority sectors such as Clothing & Textiles, Agro- processing, Automotive Assembly, Chemicals, Pharmaceuticals, etc.