REPORT OF THE JOINT BUDGET COMMITTEE ON EXPENDITURE
FOR THE FOURTH QUARTER AND YEAR-TO-DATE
2007/08 FINANCIAL YEAR
DATED 20 JUNE 2008
The Joint Budget Committee (JBC), having considered Government expenditure
for the fourth quarter of the 2007/08 financial year, reports as follows:
INTRODUCTION
National government managed to increase its level of aggregate expenditure as
well as its spending relative to the budget when compared to previous years.
Spending
levels
also
improved
across
all
economic
classifications.
Notwithstanding this improvement, under-expenditure, the shifting of funds and
virements remain evident in certain sectors and departments. Poor planning,
budgeting and financial management continue to hamper effective service
delivery and the efficient use of resources.
Monitoring expenditure is one way through which Parliament can track and
respond to Government performance during the year, and provides an important
starting point for more detailed enquiries into policy outcomes and delivery. The
Joint Budget Committee is mandated to monitor expenditure and report on a
quarterly basis. It does this through a examining the monthly expenditure reports
issued by National Treasury in terms of Section 32 of the Public Finance
Management Act (PFMA). This report examines departments’ expenditure for the
final quarter and complete year, based on the preliminary expenditure estimates,
and makes a number of findings and recommendations.
In keeping with established practice, the Committee held a workshop on
expenditure at the end of the fourth quarter and over the financial year. National
Treasury and selected departments, namely Transport, Home Affairs, Housing
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
1
and Agriculture and Land Affairs, appeared before the Committee. The report
therefore covers expenditure trends generally but has a specific focus on these
departments.
The Committee reaffirms the centrality of the various portfolio and select
committees in detailed budget oversight. Thus the relevant committees were
invited to participate in these proceedings. In this context, the Committee
considers it best practice for the various committees to regularly assess, and
report on, departmental expenditures.
1.
TOTAL EXPENDITURE
According to the Estimates of National Expenditure (ENE) 2007 and Adjusted
Estimates 2007, total expenditure for the 2007/08 year was predicated at R547.5
billion. In the national sphere, this was reduced to R313.2 billion. By the end of
the fourth quarter, national departments spent approximately R308.3 billion or
98.5 per cent of the allocated R313.2 billion1– an under-expenditure of R4.5
billion or 1.5 per cent, compared to R5.4 billion or 2 per cent in 2006/07.
Compared to the previous year, total aggregate expenditure increased by around
R48 billion, while the level of spending relative to the budget grew by 0.3 per
cent.
Departments that recorded the highest under-expenditure for 2007/08 in terms of
percentage deviation from their budgets are highlighted below2. Of note is the
fact that these departments also underspent in 2006/07. In monetary terms,
National Treasury underspent the most, approximately R782 million, followed by
the departments Water Affairs and Forestry and Housing. These departments are
reflected on in the subsequent sections.
1
2
PFMA Section 32 Report
Excluding Direct Charges
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
2
Table 1: Lowest Total Expenditure as a Percent of Budget Allocation
Departments
Total Budget
Total Expenditure
Variance
Percentage Spent
Statistics South Africa
1,157,286
912,030
245,256
78.8%
Public Works
3,759,464
3,404,421
355,043
90.5%
Water Affairs and Forestry
5,862,513
5,389,895
472,618
91.9%
Home Affairs
3,520,898
3,258,569
262,329
92.5%
Housing
R millions
8,928,358
8,598,172
330,186
96%
In terms of the economic classifications, departments spent R88.5 billion, or 97
per cent of the available current budget, R8 billion or 96 per cent of the capital
budget and R211.7 billion or 99 per cent on transfers and subsidies. This again
represents an improvement on 2006/07, when departments spent approximately
95.5 per cent, 107 per cent and 98.8 per cent of their current, capital and transfer
budgets respectively.
As is the case in previous years, quarter-by-quarter spending accelerated during
the year, from R66.7 billion or 22.3 per cent of the budget in the first quarter, to
R86 billion or approximately 27.5 per cent of the adjusted budget in the fourth
quarter. Fourth quarter spending grew by R12.7 billion compared to the previous
year, although the level of spending relative to the budget remained the same. A
review of the final quarter indicates that a high number of departments spent
above 25 per cent of their budgets between January and March – 25 per cent
being a general quarterly benchmark if departments are spending at regular
intervals. Departments that spent well above 25 per cent in the final quarter are
noted below. Excessive spending in the final quarter is of particular concern as it
can be indicative of “fiscal-dumping” and lead to a “March-Spike”. The Committee
consistently seeks explanations for these practices.
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
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Table 2: Vote Highest Expenditure in the Fourth Quarter
Total Budget
Fourth Quarter
Expenditure
Percentage Spent
Communications
1,924
874,0
45.4%
Home Affairs
3,520
1,225,0
34.8%
Defence
26,291
9,015,0
34.2%
Public Enterprises
4,604
1,510
32.7%
Justice and Constitutional Dev.
7,538
2,448,7
32.4%
Correctional Services
R million
11,384
3,329,4
29.2%
Departments
2.
CURRENT EXPENDITURE
Current Expenditure is categorized into two main components, compensation of
employees or personnel expenditure, and goods and services. The total current
budget in the national sphere after the adjustments was R91 billion, an increase
of approximately R10 billion compared to 2006/07. By the end of the fourth
quarter, departments spent R88.5 billion, or 97.2 per cent – an under-expenditure
of approximately R2.5 billion. This is an improvement on 2006/07, when
departments spent R77.5 billion, or 95.5 per cent, of the available budget, with an
under-expenditure of R3.6 billion. As in previous years, however, there were
again a number of virements and shifts3 within current payments during and after
the adjustments budget. Virements and shifts were largely attributed to vacancies
and delays in procurement, which impacted negatively on goods and services.
National Treasury should also consider more stringent monitoring and enquiry
processes before granting additional funding for compensation of employees.
Departments must motivate their ability to fill vacancies within a particular
budgeting cycle before additional funding, over baseline, for compensation is
provided.
3
Virements refer the movement of funds within a programme, whereas shifts refer to the
movement of funds from one programme to another.
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
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Table 3: Total Current Expenditure in National Government
Current Budget 2006/07
Budget
Current Budget 2007/08
Adjustment
Virements
and Shifts
Expenditure
Budget
Adjustment
79,199
(1,893)
77,716
89,968
91,517
81,425
R million
Virements
and Shifts Expenditure
(1,807)
88.538
More than twenty departments underspent for current payments. Departments
that recorded the highest under-expenditure for this category, in terms of
percentage deviation from the allocated budgets, are highlighted below. All these
departments and institutions underspent in 2006/07, although by varying
amounts. Of particular concern is that three of the five departments fall within the
social services. The continued lack of capacity and under-expenditure therefore
has a direct impact on service delivery including poverty alleviation efforts.
Table 4: Lowest Current Expenditure as a Percent of Budget Allocation
Departments
Total Budget
Total Expenditure
Percentage Spent
725,586
512, 4564
67.6
1,062,913
862, 2325
78.2
Social Development
385,375
319,972
83.0
Education
987,512
858, 550
86.5
Health
R thousands
833,193
739, 9086
86.0
Transport
Statistics South Africa
The Department of Transport (DoT) spent R16.2 billion of the available R16.5
billion, an estimated under-expenditure of R281 million, or 1.6 per cent.
Excluding transfers and subsidies, the department spent R515 million of the
available R767 million, an under- expenditure R213 million or 24.4 per cent. Of
this amount R137 million was underspent on goods and services, this despite the
R43 million added to goods and services during the adjustments budget. The
department also spent only R3 million of its adjusted capital budget of R42 million
– see Section 3 below on Capital Expenditure.
4
5
6
Expenditure was R577, 121 according to the updated figures provided by National Treasury
R986, 545 according to the updated figures provided by National Treasury
R328, 734 according to the updated figures provided by National Treasury
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
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In its presentation to the Committee, the department highlighted challenges with
vacancies, weak procurement processes, apparently unpredictable expenditures
(e.g. Transport Month and international events) and the lack of clarity regarding
certain departmental functions. Intergovernmental co-ordination and monitoring
also remain shortcomings. With the need for expanded transport infrastructure it
is important for the department to overcome these challenges within the shortest
possible time. The recorded progress in the filling of certain posts, with a 5 per
cent reduction in the vacancy rate during the year, albeit from a high base, and
the accelerated expenditure for the taxi recapitalisation, with 53.3 per cent of
recapitalisation allowances being paid in the last month of the year, are
nevertheless positive.
Statistics South Africa (StatsSA) spent R912 million of the available R1.1 billion,
an estimated under-expenditure of R245 million, or 17 per cent. Most of this was
under current payments due to vacancies and a lack of human resource
capacity. There were also delays in the finalization of certain projects, including
the Independent Asset Verification and the Internal Audit. Importantly, underexpenditure was recorded despite significant shifts and virements both during
and after the adjustments budget, repeating a trend from 2006/07. StatsSA has a
considerable budget and the Committee believes that more accurate planning is
necessary to avoid excessive under-spending.
The Department of Social Development (DSD) spent R67.0 billion of the
available R67.2 billion, an estimated under-expenditure of R144 million, or 0.2
per cent. Most of the department’s expenditure is for transfers and social grants.
In terms of the current budget of R384 million, however, the department
underspent by approximately R66 million or 17 per cent. This is a marked
decrease from 2006/07 when under-expenditure amounted R15 million, or 5 per
cent. This is a concern given the projected growth in the department’s current
budget: compensation of employees is expected to grow at an annual rate of 14
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
6
per cent over the medium term. Strategies to fast-track appointments and reduce
turnover should therefore be prioritized if the risk of under-spending is to be
reduced to acceptable levels.
The projected growth in the social grants must also be accompanied by more
effective budgeting and reporting systems. The Committee will monitor progress
with these matters, together with the proposed revisions to the social security
system, in the next financial year. The Committee was not satisfied with the lack
of clarity regarding how funds are utilized by the South African Social Security
Agency (SASSA). This is indicative of the Committees concerns regarding
transfer expenditure generally.
With the persistent challenges in the education and health sectors, underspending in the relevant departments is of particular significance. Preliminary
estimates indicate that the national Department of Education (DoE) spent R16.2
billion of the available R16.3 billion, and estimated under-expenditure of R145
million or 0.9 per cent. Of this amount, R129 million was for goods and services
due to the late receipt of invoices by the SITA and other departmental suppliers.
The department also continued to experience challenges with personnel
expenditure and vacancies, with 25 per cent of posts unfilled. In terms of transfer
expenditure on conditional grants, spending improved compared to previous
years although significant under-expenditure was still recorded in the provinces
for the HIV and Aids Grant (Life Skills Education) and the National School
Nutrition Programme Grant (NSNP). These grants provide for critical services,
especially to children from poor households.
The national Department of Health (DoH) spent R12.7 billion of the available R13
billion, an estimated under-expenditure of R328 million or 2.5 per cent. R111
million of this was for good and services, due to delays in the procurement of
condoms because of concerns over quality.
This issue has still not been
resolved. Under-expenditure was also registered at national level for the Hospital
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
7
Revitalization Grant and Forensic Pathology Services Grant, with R62 million and
R105 million withheld respectively. Of the funds transferred, provinces
underspent by R205 million for Hospital Revitalization and R18 million for
Forensic Pathology Services. Related to these expenditures, the Committee has
noted delays in the construction and renovation of certain health facilities such as
the Upington Hospital.
Owing to their critical roles in the economy and previously identified concerns,
the Committee agreed to specifically examine expenditure in the departments of
Agriculture (DoA) and Land Affairs (DoLA). The Committee accordingly invited
these departments to clarify and explain their expenditure and budget-related
processes. The DoA has improved its spending slightly from previous years, from
93.7 per cent in 2006/07 to an estimated 95.9 per cent in 2007/08.
As in
2006/07, however, there was again significant under-spending in Programme 3:
Bio-Security and Disaster Management. The high number of virements and shifts
in current expenditure, and the low spending on a number of conditional grants,
are also matters of serious concern. The Committee expects marked
improvements in these areas in the forthcoming year.
The DoLA spent R5.8 billion of the available R5.9 billion, an under-expenditure of
approximately R30 million. This was reportedly due to protracted negotiations
associated with purchasing of land. Although spending was generally in
accordance with the budget, the considerable virements and the vacancy rate of
27 per cent, which increased to 35 per cent at management level, are of serious
concern. Issues of under-capacity must be addressed if the department is to
meet its delivery targets.
3.
TRANSFER EXPENDITURE
Transfers and subsidies include all unrequited payments made by Government
departments or entities. Both current and capital transfers are included in this
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
8
item. Transfers and subsidies represent the single largest economic classification
and it is therefore imperative that Parliament, and the JBC in particular, is able to
monitor and oversee the manner in which these funds are utilized. There is a
clear danger that the lack of transparency with transfer and subsidy payments,
especially in respect of local government and state entities, can obscure
inefficient spending trends. The Committee will focus on the transfers and
associated reporting practices in future oversight activities.
Total transfer payments in the national sphere after the adjustments were
estimated to reach R213.8 billion. By the end of the fourth quarter, national
departments spent R211.7 billion7 – an under-expenditure of approximately R2.1
billion or 1.8 per cent. Compared to 2006/07, this represents an improvement of
approximately R34 billion in terms of aggregate expenditure, although spending
relative to the budget declined by 0.6 per cent. Departments that recorded the
highest under-expenditure, in terms of percentage deviation from the allocated
budgets, are highlighted below.
Table 5: Lowest Transfer Expenditure as a Percent of Budget Allocation
Departments
Total Budget
Total Expenditure
Percentage Spent
48
3
6.25%
1,301
9078
74.55%
2,439,639
2,051,539
84.09%
666,835
605,279
90.77%
Housing
8,601,112
8,228,563
95.66%
National Treasury
R thousands
17,347,767
16,750,613
96.56%
Independent Complaints Directorate
Statistics South Africa
Department of Water Affairs and For.
Department of Foreign Affairs
Importantly, departments with the highest transfer and subsidy budgets – over
R8 billion – include Provincial and Local Government, National Treasury,
Education, Health, Social Development, Defence, Housing and Transport. In
monetary terms, National Treasury underspent the most, by approximately R643
7
8
Expenditure was R212 billion according to the updated figures provided by National Treasury
R1,046 according to the updated figures provided by National Treasury
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
9
million, followed by the Departments Water Affairs and Forestry by R426 million,
and Housing by R372 million.
National Treasury spent an estimated R18.9 billion of the available budget of
R19.7 billion, an under-expenditure of approximately R782 million – more than
any other department. The great bulk of under-spending, approximately R643
million, occurred in transfers and subsidies, specifically in respect of the transfers
associated with the Neighbourhood Development Partnership Grant, the
Provincial Infrastructure Grant and the African Development Bank. This is a
marked deterioration compared to 2006/07 when around R280 million remained
unspent. With the large amounts allocated, it is important that National Treasury
take all possible measures to assist recipient entities in meeting the conditions
associated with these transfers as unspent funds could have been allocated
elsewhere. Significant under-expenditure was also recorded in current payments
and specifically goods and services.
The Department of Housing (DoH) spent R8.5 billion of the available budget of
R8.8 billion, an under-expenditure of R400 million. According to the department,
in its submission to the Committee, this was due to transfers withheld for the
Integrated Housing and Human Settlement Development Grant and the Social
Housing Regulator. In terms of Integrated Housing and Human Settlement
Development Grant, the department explained that, despite an increase of R105
million during the adjustments, amounts of R500 million and R100 million for the
Eastern Cape and Free State respectively had been withheld due to concerns
over capacity. The R180 million allocated to the Social Housing Regulator had
not been spent as the enabling legislation was still in the process of being
finalized.
Together with these challenges, the Committee also noted the irregular spending
patterns in most of the provinces, and specifically the customary last quarter
spike. The serious backlogs and capacity constraints notwithstanding, these
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
10
trends must be reversed if the projected budget growth in the sector is to be
justified. This necessitates, amongst other things, improved planning as well as
intergovernmental co-ordination and monitoring.
The Department of Water Affairs and Forestry (DWAF) spent R5.4 billion of the
available R5.8 billion, an estimated under-expenditure of R477 million, or 8.1 per
cent. Most of this was attributed to delays in transfers related to the construction
of the De Hoop Dam. This was not the first delay in the construction of this
project, in 2006/07 the department recorded under-expenditure of R300 million
for similar reasons. Although this is a complex project, the Committee remains
concerned about the associated planning, budgeting and contracting. Apart from
transfers, the department’s vacancy rate also remained high at 19.8 per cent with
a large variance between the department’s vacancies and that of the Persal
database.
A substantial portion of transfers is allocated through conditional grants to
provinces, approximately R33 billion. By March 2008, departments had
transferred a total of R32.1 billion, or 98.8 per cent, of the available budget to the
provinces, with health grants making up the bulk at R11.9 billion. Specific grants
that showed a low rate of spending by the provinces included the Agricultural
Disaster Management at 34 per cent, the Land Care Programme Grant at 83.2
per cent, the Community Library Services at 83.8 per cent and the Forensic
Pathology Services and HIV and Aids Grants.
4.
CAPITAL EXPENDITURE
The total current budget in the national sphere after the adjustments was R8.3
billion, an increase of approximately R2.3 billion compared to 2006/07. By the
end of the fourth quarter, departments spent R8 billion or 96 per cent – an underexpenditure of approximately R329 million. Capital spending comprises five main
categories, namely buildings and other fixed assets, machinery and equipment,
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
11
cultivated assets, software and other intangible assets and land and sub-soil
assets.
Capital expenditure accelerated dramatically though the year, from 11 per cent in
the first quarter to approximately 47 per cent in the fourth. Although there may be
legitimate reasons for this, with many departments suggesting that capital
spending is linked to the procurement, which is only finalized late in the year, this
level of expenditure is cause for concern. This is especially problematic given
that departments also spent around 50 per cent of the capital budget during the
last quarter of 2006/07. In addition, as in previous years, capital expenditure
varied dramatically between departments: 12 underspent by 25 per cent or more,
while 5 spent considerably more than their allocations. Such expenditures are
ultimately attributable to poor planning and financial management. Accurate and
detailed departmental strategic planning is important especially in respect of
capital and infrastructure projects due to the associated high risks and hidden
costs.
Departments that recorded the highest under-expenditure for capital payments in
terms of percentage deviation from the allocated budgets are highlighted below.
In monetary terms, the Department of Public Works (DPW) underspent the most,
by approximately R348 million, followed by the Department of Correctional
Services (DCS), and the Department of Home Affairs (DoHA).
Table 6: Lowest Capital Expenditure as a Percent of Budget Allocation
Departments
Total Budget
Total Expenditure
Percentage Spent
42,134
3,238
7.7%
855
110
12.9%
Labour
31,7419
11,07010
34.8%
Housing
11,021
4,950
44.8%
Transport
Arts and Culture
9
R26, 096 according to the updated figures provided by National Treasury
R11, 608 according to the updated figures provided by National Treasury
10
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
12
National Treasury
31,548
14,610
46.3%
Health
43,627
21,181
48.5%
Statistics South Africa
91,842
48,828
53.1%
Education
12,432
7,168
57.6%
Public Works
880,142
530,395
60.4%
Home Affairs
R thousands
353,908
286,28511
80.1%
The Department of Transport (DoT) only spent R3 million of the available R42
million for capital, an under-expenditure of R38 million or 92.3 per cent. This is of
great concern given that the department also underspent on capital by 66 per
cent during 2006/07 (and over-spent in 2005/06). These funds were meant to
support the Sani Pass, overload controls and the Rural Transport Strategy. To
ensure that delivery takes place, National Treasury indicated that it would
reallocate these funds to the relevant provinces and municipalities. The
Committee will not tolerate under-expenditure of this magnitude as it indicates a
cavalier approach to budgeting and a dereliction of duty.
The Department of Public Works (DPW) spent R3.4 billion of the available R3.7
billion, an under-expenditure of approximately R350 million, or 10 per cent.
Although aggregate expenditure increased slightly from the previous year, the
percentage spent relative to the budget is lower. Almost all under-spending
occurred in capital, specifically for the provision of land and accommodation. The
lack of implementation for Repair and Maintenance Programme (RAMP) projects
was a key reason cited for the under-expenditure, highlighting shortcomings with
departmental capacity, planning and monitoring. During its deliberations, the
Committee also noted that many departments experienced difficulties with the
DPW in terms of capital and infrastructure expenditure. With the evident disrepair
of many government properties, and the lack of regular maintenance, it is
imperative that these challenges are resolved.
11
R221.051 according to the updated figures provided by National Treasury
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
13
The Department of Home Affairs (DoHA) spent R3.2 billion of the available R3.5
billion, an under-expenditure of approximately R270 million, or 8 per cent. In its
submissions to the Committee the department indicated that departmental
capacity to spend had increased. This was partially attributable to progress with
the turnaround strategy. The Committee nevertheless noted under-expenditure
in key capital projects, specifically RAMP and HANIS, as an ongoing concern. In
addition, the Committee is aware of persistent planning, budgeting and
management weaknesses, which continue to hamper spending and service
delivery. With the projected growth in the department’s budget, as well as
challenges such as xenophobia and the 2010 World Cup, these weaknesses
must be urgently addressed.
The Department of Correctional Services (DCS) spent R11.2 billion of the
available R11.3 billion, an under-expenditure of R262 million. Of note is the fact
that the department overspent on current and transfer payments, by R53 million,
but underspent on capital by R315 million. This was due to delays in the
construction of Kimberley Correctional Centre. The Committee has previously
expressed concern with the delays in the construction of the facility and the
associated cost escalations. The department is therefore expected to apply
lessons learnt from the construction of the Kimberly facility to ensure that future
projects are not unduly compromised.
5.
FINDINGS
1. National government managed to increase its level of aggregate
expenditure as well as its spending relative to the budget. By the end of
the fourth quarter, national departments spent R308.3 billion or 98.4 per
cent of the adjusted budget of R313.2 billion – an under-expenditure of
R4.5 billion or 1.5 per cent, compared to R5.4 billion or 2 per cent in
2006/07. Notwithstanding challenges, spending levels improved across all
economic classifications.
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
14
2. In reviewing expenditure for the year, the Committee again noted
differences between stated priorities and actual spending. This is evident
from the general acceleration in expenditure through the year – from
R66.7 billion or 22.3 per cent in the first quarter, to R86 billion or 27.5 per
cent of the adjusted budget in the fourth quarter – as well as the continued
virements and shifting of funds between certain line budgets. This is
ultimately indicative of poor planning, implementation and financial
management.
3. As in previous years there were again a number of virements and shifts
within current payments during and after the adjustments budget.
Virements and shifts were largely attributed to vacancies and to delays in
procuring goods and services. The Committee has repeatedly raised the
negative impact of vacancies on the budget and called on departments to
take innovative steps to ensure that funded posts are filled within a
particular budgeting cycle.
4. The Committee has also noted the serious challenges with procurement,
both in respect of goods and services and larger capital acquisitions. As
mentioned in the Third Quarter Expenditure Report, departments must
ensure compliance with the relevant supply chain legislation, policies and
regulations and develop the necessary expertise in procurement.
5. Transfers and subsidies remain the single largest spending category. It is
imperative that Parliament, and the JBC in particular, is able to monitor
and oversee the manner in which funds are utilized. The Committee
requires additional information in this regard, specifically on expenditure
related to concurrent functions and transfers to provincial and local
government, and state entities.
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
15
6. Capital expenditure continued to pose challenges for many departments,
with over 50 per cent of the allocated capital budget spent in the final
quarter. This trend should not be allowed to persist given that capital
spending is pivotal to economic growth and employment creation. The
Committee remains concerned about probable cost escalations in a
number of mega-infrastructure projects. The Committee also noted that
many departments experienced difficulties with the DPW in terms of
capital and infrastructure expenditure.
7. In engaging with expenditure for the fourth quarter and year-ending
2007/08, the Committee agreed to focus on specific departments including
the departments of Transport, Home Affairs, Housing, Agriculture and
Land Affairs. A number of queries arose during the proceedings on which
the Committee requested supplementary written responses. Regrettably,
the departments of Transport, and Housing did not respond within the
specified timeframes.
8. Finally, the Committee is looking forward to an increased level of
qualitative reporting by Government on the budget in the new financial
year, both on expenditure through the implementation of the Quarterly
National
Programme
and
Economic
Classification
Report,
and
performance through the progressive implementation of the Framework for
Managing Performance Information.
6.
RECOMMENDATIONS
Based on its oversight activities and deliberations, the Committee recommends
the following:
1. Under-expenditure and virements due to vacancies and good and services
continue to impact negatively on service delivery and budget outcomes in
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
16
a number of departments. In this regard, the Department of Public
Services and Administration (DPSA) should set specific timeframes for
departments to fill their funded vacant posts as well as reconcile and
maintain the Persal database. The DPSA should closely monitor progress
in this regard. These measures should be implemented during the
2008/09 financial year. National Treasury should also consider more
stringent monitoring and enquiry processes before granting additional
funding for compensation of employees. Departments must motivate their
ability to fill vacancies within a particular budgeting cycle before additional
funding, over baseline, for compensation is provided.
2. In light of the lack of clarity regarding the use of transferred funds,
National Treasury and the relevant departments should further consolidate
reporting systems to ensure that the timing of transfers and expenditure
outcomes, especially to provinces, local government and state entities, are
reflected at national level for the voted amounts.
3. Together with the consolidation of the expenditure reporting practices,
National Treasury should, within the 2008/09 financial year, develop an inyear expenditure report for mega-infrastructure projects, with the purpose
of making such reports available to Parliament and other stakeholders.
National Treasury should present this report to Parliament by the end of
October 2008, for the first six month of the financial year. At the same
time, the DPW should co-ordinate and strengthen its working relations
with other departments to ensure the government infrastructure is
developed and adequately maintained.
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
17
Report to be considered.
---------------------------Hon Ms LL Mabe (NA)
Date:
-----------------------------Hon Mr BJ Mkhaliphi (NCOP)
Date:
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
18
ANNEXURES
FIGURE 1:
CENTRAL GOVERNMENT ADMINISTRATION
160.00%
148.27%
140.00%
EXPENDITURE %
120.00%
100.00%
97.72%
101.21%
100.00% 100.00% 99.99%
103.57%
101.18%
90.77%
94.07%
100.00%
92.40%
90.51%
96.89%
100.39%
99.22%
80.00%
63.48%
60.26%
60.00%
40.00%
20.00%
0.00%
1. The Presidency
2. Parliament
3. Foreign Affairs
CURRENT PAYMENTS
4. Home Affairs
TRANSFERS AND SUBSIDIES
CAPEX
5. Provincial and
Local Government
6. Public Works
CENTRAL GOVERNMENT ADMINISTRATION CLUSTER
102.00%
100.00%
100.00%
"EXPENDITURE %"
98.00%
99.97%
99.72%
97.09%
96.00%
94.00%
92.55%
92.00%
90.56%
90.00%
88.00%
86.00%
84.00%
1. The Presidency
2. Parliament
3. Foreign Affairs
4. Home Affairs
TOTAL EXPENDITURE
5. Provincial and
Local Government
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
6. Public Works
19
FIGURE 2:
200.00%
FINANCIAL AND ADMINISTRATIVE SERVICES
189.95%
188.57%
186.87%
180.00%
160.00%
141.62%
EXPENDITURE %
140.00%
120.00%
100.00%
97.81% 100.05%
107.37%
92.87%
96.56%
96.25%
100.00%
95.51%
99.22% 100.00%
89.35%
78.29% 74.56%
80.00%
60.00%
47.60%
40.00%
20.00%
0.00%
7. Government
Communications and
Information Systems
8. National Treasury
9. Public Service and
Administration
CURRENT PAYMENTS
10. Public Service
Commission
TRANSFERS AND SUBSIDIES
11. SA Management
Develpoment Institute
12. Statistics South
Africa
CAPEX
FINANCIAL AND ADMINISTRATIVE SERVICES CLUSTER
120.00%
"EXPENDITURE %"
100.00%
99.19%
96.04%
96.45%
99.97%
99.99%
78.81%
80.00%
60.00%
40.00%
20.00%
0.00%
7. Government
Communications
and Information
Systems
8. National
Treasury
9. Public Service
and Administration
TOTAL EXPENDITURES
10. Public Service
Commission
11. SA Management
Develpoment
Institute
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
12. Statistics South
Africa
20
120.00%
FIGURE 3 :
113.70%
SOCIAL SERVICES
107.77%
99.93%
100.00%
96.14%
86.53%
"EXPENDITURE %"
100.45%
93.30%
98.57%
87.45%
86.01%
99.51%
99.84%
94.47%
91.63%
83.03%
80.00%
60.00%
47.56%
40.00%
34.88%
20.00%
2.14%
0.00%
13. Arts and Culture
14. Education
15. Health
16. Labour
17. Social Development
18. Sport and Recreation
South Africa
CURRENT PAYMENTS TRANSFERS AND SUBSIDIES CAPEX
SOCIAL SERVICES CLUSTER
100.00%
99.42%
99.63%
99.11%
"EXPENDITURE %"
99.00%
98.64%
98.00%
97.57%
97.00%
96.00%
95.28%
95.00%
94.00%
93.00%
13. Arts and Culture
14. Education
15. Health
TOTAL EXPENDITURES
16. Labour
17. Social
Development
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
18. Sport and
Recreation South
Africa
21
FIGURE 4:
JUSTICE AND PROTECTION SERVICES
180.00%
154.35%
160.00%
"EXPENDITURE %"
140.00%
120.00%
100.00%
128.96%
100.82%
97.94%
92.91%
106.11%
100.60%
101.05%
99.14%
97.01%
97.06%
104.39%
98.25%
79.00%
80.00%
60.00%
40.00%
20.00%
6.25%
0.00%
19. Correctional Services
20. Defence
21. Independent
Complaints Directorate
CURRENT PAYMENTS TRANSFERS AND SUBSIDIES CAPEX
22. Justice and
Constitutional
Development
23. Safety and Security
JUSTICE AND PROTECTIUON SERVICES
100.50%
100.00%
100.00%
"EXPENDITURE %"
100.00%
99.50%
98.90%
99.00%
98.50%
98.00%
97.78%
97.69%
97.50%
97.00%
96.50%
19. Correctional Services
20. Defence
21. Independent Complaints
22. Justice and
Directorate
Constitutional Development
23. Safety and Security
TOTAL EXPENDITURE
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
22
FIGURE 5: ECONOMIC SERVICES AND INFRASTRUCTURE DEVELOPMENT
300.00%
"EXPENDITURE %"
250.00%
242.59%
236.96%
200.00%
162.97%
150.00%
100.00%
133.67%
95.82%
93.41%
100.15%
112.28%
99.88%
98.65%
96.27%
121.59%
95.67%
96.68%
101.83%
99.91%
92.06%
99.29%
98.30%
90.27%
98.16% 99.98%
100.32%
93.94% 97.24%
86.02%
76.15%
99.10%
100.01%
84.09%
87.52%
67.69%
50.00%
7.69%
0.00%
24. A griculture
25.
C o mmunicatio ns
26.
Enviro nmental
A ffairs and
T o urism
27. H o using
28.Land A ffairs
29. M inerals and
Energy
30. P ublic
Enterprises
31. Science and
T echno lo gy
32. T rade and
Industry
33. T ranspo rt
34. Water A ffairs
and F o restry
CURRENT PAYMENTS TRANSFERS AND SUBSIDIES CAPEX
ECONOMIC SERVICES AND INFRASTRUCTURE DEVELOPMENT CLUSTER
102.00%
99.97%
99.94%
100.00%
99.48%
99.32%
99.32%
99.07%
98.30%
98.00%
"EXPENDITURE %"
96.64%
95.93%
95.72%
96.00%
94.00%
91.94%
92.00%
90.00%
88.00%
86.00%
24. A griculture
25.
Co mmunicatio ns
26. Enviro nmental
A ffairs and To urism
27. Ho using
28.Land A ffairs
29. M inerals and
Energy
30. P ublic
Enterprises
31. Science and
Techno lo gy
32. Trade and
Industry
33. Transpo rt
34. Water A ffairs
and Fo restry
TOTAL EXPENDITURES
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
23
Joint Budget Committee: Report on Expenditure for the Fourth Quarter of 2007/08
24