NORTH WEST PROVINCE PUBLIC HEARING ON CONDITIONAL GRANTS

NORTH WEST PROVINCE PUBLIC HEARING ON CONDITIONAL GRANTS AND INFRASTRUCTURE SPENDING AS AT 31 DECEMBER 2005 MAUREEN MODISELLE MEC FOR FINANCE

INTRODUCTION n n n Conditional grants are allocated for a three-year period but change annually Division of Revenue Act only available on 1 April each year Additional conditional grants gazetted only in December each year

CUMALATIVE CONDITIONAL GRANT SPENDING (Schedule A 1 and A 2) Department Health Education Local Government Social Development Transport & Roads Sport, Arts & Culture Agriculture TOTAL 1 st 2 nd 3 rd Quarter % % % 9, 1% 16, 6% 21, 7% 6, 3% 18, 2% 7, 6% 0% 8, 7% 31, 9% 34, 6% 40, 6% 43, 1% 47. 1% 18, 4% 0% 41, 4% 54, 9% 62% 79, 3% 65, 7% 63, 6% 40, 3% 1. 2% 65, 6%

CUMALATIVE INFRASTRUCTURE SPENDING (Schedule B 1 and B 2) Department Premier Legislature Health Sport, Arts & Culture Economic Development Education Local Government Transport & Roads Public Works Social Development Agriculture TOTAL 1 st Quarter % 2 nd Quarter % 3 rd Quarter % 0% 26, 4% 12, 4% 6, 3% 0% 15, 6% 24, 5% 14, 8% 4, 7% 0% 0% 15, 7% 0% 34, 5% 23, 8% 11, 3% 12, 1% 46, 9% 42. 1% 39, 9% 27, 6% 0% 0% 35, 2% 59, 9% 35, 1% 51, 3% 46, 7% 15, 8% 72, 0% 80, 7% 61, 4% 54, 7% 13, 1% 0, 8% 62, 7%

CAPACITY CHALLENGES n Departments are still lacking necessary capacity in: – Planning – Inability of infrastructure departments to retain professionals – Project Management n Provincial treasury to create unit to assist departments with capacity building

MONITORING CAPACITY Directorate monitors spending including infrastructure and conditional grants n Quarterly expenditure reports discussed with departments n Monitoring supported at the highest level n Provincial treasury has no legislative powers over under-spending n

DEPARTMENT OF HEALTH n Conditional Grants (R 424 million): – Expenditure increased from 9, 1% after first quarter to 59, 9% after third quarter – Under-expenditure expected n Infrastructure (R 219 million): – Expenditure increased from 12, 4% after first quarter to 51, 3% after third quarter – Under-expenditure expected

DEPARTMENT OF EDUCATION n Conditional Grants (R 267 million): – Expenditure increased from 16, 6% after first quarter to 62% after third quarter – Possible under-expenditure due to additional allocation of R 17 million n Infrastructure (R 269 million): – Expenditure increased from 15, 6% after first quarter to 72% after third quarter – No under-expenditure expected

DEPARTMENT OF LOCAL GOVERNMENT & HOUSING n Conditional Grants (R 640 million): – Expenditure increased from 21, 7% after first quarter to 79, 3% after third quarter – No under-expenditure expected n Infrastructure (R 689 million): – Expenditure increased from 24, 5% after first quarter to 80, 7% after third quarter – No under-expenditure expected

DEPARTMENT OF SOCIAL DEVELOPMENT n Conditional Grants (R 4, 782 billion): – Mainly Social Pensions Grant – Expenditure increased from 6, 3% after first quarter to 65, 7% after third quarter – Under-expenditure expected n Infrastructure (R 31 million): – No expenditure in first two quarters – 13, 1% spent in third quarter – No under-expenditure expected

DEPARTMENT OF TRANSPORT & ROADS n n Conditional Grants (R 164 million): – Infrastructure Grant – Expenditure increased from 18, 2% after first quarter to 63, 6% after third quarter – No under-expenditure expected Infrastructure (R 448 million): – Includes conditional grant – Includes new allocation of R 16 million for EPWP road projects – Expenditure increased from 14. 8% after first quarter to 61, 4% after third quarter – No under-expenditure expected

DEPARTMENT OF SPORT, ARTS AND CULTURE n Conditional Grant (R 3 million): – Expenditure increased from 7, 6% after first quarter to 40, 3% after third quarter – Department might under-spend n Infrastructure (R 16 million): – Spending only started in second quarter – Expenditure for first three quarters 47% – Department might under-spend

DEPARTMENT OF AGRICULTURE, CONSERVATION & ENVIRONMENT n Conditional Grant (R 55 million): – Additional grant of R 16 million for Disaster Management included – Previously used public entity as implementing agent – Public entity under forensic investigation – Department has no capacity to spend – Only 1, 2% spent during first three quarters – Little spending will take place for the rest of the year

DEPARTMENT OF AGRICULTURE, CONSERVATION & ENVIRONMENT n Infrastructure (R 91 million): – Previously used public entity as implementing agent – Department has no capacity to spend – Only 0, 8% spent during first three quarters – Little spending will take place for the rest of the year

OFFICE OF THE PREMIER n Infrastructure (R 4 million): – No spending during the first two quarters – Spending during the third quarter 59, 9% – No under-spending expected due to small budgeted amount

OFFICE OF THE LEGISLATURE n Infrastructure (R 11 million): – Completion of extensions to Legislature’s Building – Spending during the first three quarters is 35, 1% – Balance for retention monies – No under-spending expected

DEPARTMENT OF PUBLIC WORKS n Infrastructure (R 189 million): – Implementation of most projects only started in second quarter – Spending during the first three quarters is 54, 7% – No under-spending expected

ANALYSIS BY THE PROVINCIAL TREASURY n n n There is a need to improve cooperation between line-function departments and their agent (Public Works) Lack of sufficient planning and project management capacity in departments Provincial treasury to intervene to assist in capacity building Intervention at highest level assisted to improve departments’ performance Improvement in spending by departments compared to previous financial year

ANALYSIS BY THE PROVINCIAL TREASURY The late publishing of the Division of Revenue Act delays spending in first quarter n Quality and quantity of spending can still improve n

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