PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS ON

PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS ON THE DEPARTMENTAL 2013/14 BUDGET ALLOCATION

OVERVIEW OF THE PRESENTATION The presentation will cover the following: 1. Introduction 2. Summarized Departmental Financial Performance 3. Analysis of the under expenditure 4. Roll –over application to National Treasury 5. 2013/14 Departmental Priorities per Programme 6. Overall 2013/14 MTEF Budget Allocation 7. Budget Allocation per programme and economic classification 8. Transfers and Subsidies in the new baseline 2

1. INTRODUCTION The purpose of the presentation is to brief Standing Committee on Appropriations on the 2013/14 Budget allocation and detailed expenditure report for the financial year ending 31 March 2013. 3

2. SUMMARIZED DEPARTMENTAL FINANCIAL PERFORMANCE Adjusted Appropriation Shifting of Funds Virement Final Actual Appropriation Expenditure Variance Expenditure as % of final appropriation R'000 R'000 % ADMINISTRATION 192, 3 Current payment 7, 80 77 - 9 260 4, - 0 200, 1 86 75 90 Transfers and subsidies Payment for capital assets 780 1, 070 3, 565 160 (1, 20 2) 578 178, 0 11 1, 90 3, 13 22, 1 89. 0% 92. 2% 99. 6% 81 Payment for financial assets 88 - 5 197, 5 05 903 8, 32 - 0 5, - - 903 205, 8 27 183, 6 100. 0% 22, 2189. 2% 13 4 57 19 45, 1 38 8 98. 2% - 5, 973 0. 0% 1 97. 3% 98. 1% 9 92 4, 40 50, 0 78 47 23, 3 05 POLICY, RESEARCH AND KNOWLEDGE MANAGEMENT 43, 4 Current payment Transfers and subsidies Payment for capital assets 87 806 2, 47 (6 93) 49, 2 93 45, 9 113 1, 77 51, 0 - 7 70 - 0) 52 - - 37 - - GOVERNANCE AND INTERGOVERNMENTAL RELATIONS 32, 7 Current payment 32 Transfers and subsidies 37 Payment for capital assets 20 (3, 78 28, 9 38, 079, 1 4 38, 079, 1 38, 111, 8 89 20 (3, 78 - 0) 37, 349, 1 06 - 38, 108, 1 09 5, 6 80. 6% 730, 03 1 98. 1% 20 37, 372, 4 53 6 0. 0% 735, 65 98. 1%

FINANCIAL PERFORMANCE per PROGRAM (cont) Adjusted Shifting of Funds Appropriation R'000 Virement Final Actual Appropriation Expenditure Variance as % of final appropriation % R'000 590 43, 803 37, 604 6, 199 360 510, 389 74, 243 436, 146 Expenditure DISASTER RESPONSE MANAGEMENT 43, 213 Current payment 510, 029 Transfers and subsidies 2, 15 Payment for capital assets 85. 8% 0 555, 392 14. 5% 116 - 2, 26 1, 066 6 556, 458 6 114, 113 442, 345 (10, 934) 44, 093 43, 954 139 230, 096 100. 0% 20. 5% PROV & MUN GOVT SYSTEMS 55, 027 Current payment - 99. 7% 230, 096 Transfers and subsidies Payment for capital assets 5 - 5 285, 178 193 24 24 139 (10, 741) 8 274, 437 8 274, 298 (3, 379) 1, 668, 267 1, 460, 225 208, 042 279 13, 881, 912 13, 879, 441 2, 471 100. 0% 99. 9% INFRA & ECONOMIC DEVELOPMENT 1, 671, 646 Current payment 13, 881, 633 Transfers and subsidies Payment for capital assets 0 15, 553, 429 15 - 87. 5% 100. 0% 1, 586 1, 73 (1, 514) 6 15, 551, 915 6 15, 341, 402 4, 870 70, 820 70, 734 1, 73 210, 513 100. 0% 98. 6% TRADITIONAL AFFAIRS 65, 950 Current payment - 6 36, 192 Transfers and subsidies Payment for capital assets 0 102, 492 54, 855, 178 5 36, 192 35 - 36, 125 35 4, 870 - 0 107, 362 54, 855, 178 9 106, 948 53, 442, 919 7 261 8 414 8 99. 9% 6 99. 8% 25. 4% 99. 6% 1, 412, 259 97. 4%

FINANCIAL PERFORMANCE per ECON CLASSIFICATION (cont) Adjusted Shifting of Funds Final R'000 Expenditure as % of final appropriation Variance Appropriation R'000 Actual Virement R'000 Appropriation Expenditure R'000 % R'000 Current payments Compensation of employees 290, 396 2 374 - 292 770 266, 471 26 299 91. 00% Department of Cooperative Governance 197, 844 2, 340 -460 199, 724 199, 196 528 99. 7% Community Works Program 31, 339 17, 508 13, 831 55. 9% Municipal Infrastructure Support Agent 20, 434 8, 494 11, 940 41. 6% Department of Traditional Affairs 40, 779 34 460 41, 273 0 100. 0% Goods and services 1, 814, 036 (2 374) (2 354) 1, 809, 308 1, 592, 579 216 729 88. 0% Department of Cooperative Governance 195, 087 -2, 340 -6, 764 185, 983 151, 174 34, 809 81. 3% Community Works Program 1, 417, 538 1, 272, 414 145, 124 89. 8% 176, 240 139, 529 36, 711 79. 2% 29, 547 29, 462 85 99. 7% Municipal Infrastructure Support Agent Department of Traditional Affairs 6 25, 171 -34 4, 410

FINANCIAL PERFORMANCE per ECON CLASSIFICATION (cont) Adjusted Shifting of Funds Virement Appropriation R'000 Final Actual Appropriation Expenditure R'000 Expenditure as % of final appropriation Variance % R'000 Transfers & subsidies Provinces & municipalities 52 495 225 51 331 083 1 164 142 97. 8% 100 26 74 26. 0% 37, 873, 396 37, 147, 769 725, 627 98. 1% 230, 096 0 100. 0% 13, 881, 633 13, 879, 162 2, 471 100. 0% Disaster Relief 510, 000 74, 030 435, 970 14. 5% Departmental agencies & accounts 101 315 103 437 101 315 2 122 7. 9% 40, 362 0 100. 0% 28, 848 26, 726 2, 122 92. 6% 34, 227 0 100. 0% Vehicle lisences (Twane mun) Equitable Share Municipal sys improve grant Municipal infrastructure grant 52 495 225 Municipal Demarcation Board 40, 362 SALGA 26, 726 CRL Commission 34, 227 Foreign governments & international organisation Non-profit institutions Households 7 - - - 2 122 2, 122 - - 279 279 - 100. 0% 8 025 - (2 122) 5 903 3 693 2 210 62. 6% 132 782 - 1 260 134 042 133 706 336 99. 7%

FINANCIAL PERFORMANCE per ECON CLASSIFICATION Adjusted Final Shifting of Funds Virement Variance Appropriation R'000 Expenditur e as % of final appropriati on Actual R'000 Appropriation Expenditure R'000 % R'000 Payment for capital assets Machinery & equipment Department of Cooperative Governance 13, 311 0 0 13, 311 12, 890 421 96. 80% 12, 961 -105 -1, 586 11, 270 11, 110 160 98. 6% 105 1, 586 1, 691 0 100. 0% 350 89 261 25. 4% Municipal Infrastructure Support Agent Department of Traditional Affairs Payment for financial assets Total 8 350 88 - 815 903 0 100. 00% 54 855 178 - - 54 855 178 53 442 919 1 412 259 97. 40%

3. ANALYSIS OF THE UNDER EXPENDITURE Overall Expenditure: The total expenditure of the department amounts to R 53, 443 billion representing 97. 4% of the total budget. The under spending of R 1, 412 billion represents 2. 6% of the total budget. Eighty three (83%) of this under expenditure is made up of transfer payments that had to be withheld. Compensation of employees: Final Appropriation: Actual expenditure Variance R 292 770 R 266, 471 R 26, 299 = 9% under-spending. The under expenditure was due to posts that were not filled or filled late in the financial year. The posts are within MISA and CWP. 9

ANALYSIS OF THE UNDER EXPENDITURE (cont) Goods and services: Allocation: Actual expenditure Variance R 1 809 308 R 1 593 579 R 215 729= 11. 9% under-spending The major contributors to the under-spending is CWP (R 46, 979 million) and MISA (R 158, 955 million) This is mainly due to late invoicing by the contracted service providers. 10

ANALYSIS OF THE UNDER EXPENDITURE (cont) Payments of Capital Assets: Allocation: Actual expenditure Variance R 13 311 R 12 890 R 421 = 3. 2% under-spending The under-spending of 3. 2% is due to furniture ordered not yet received and paid at year end. 11

ANALYSIS OF THE UNDER EXPENDITURE (cont) Transfers and subsidies: The following transfers have been paid in full (100%) as the institutions have fulfilled all the conditions and requirements for the transfers: Municipal Improvement System Grant – R 230 mil South African LG Association- R 26 mil Municipal Demarcation Board – R 40 mil CRL Commission – R 34 mil The under expenditure of R 1, 168 billion is due to the following transfers that were not paid or had to be withheld as advised by NT. Municipal Infrastructure Grant- R 2, 471 million Local Government Equitable Share = R 725. 627 million Disaster relief grant = R 435. 970 million (only transferred when disasters have been declared) United Cities of LG in Africa = R 2. 485 million 12 South African Cities Network = R 1. 847 million

ANALYSIS OF THE UNDER EXPENDITURE (cont) Transfers and subsidies: Reasons for non transfers: LG Equitable Share The LG Equitable Share currently reflects an under-spending of R 725. 6 million that had to be withheld as advised by National Treasury as a result of lack of performance by municipalities on other conditional grants. Disaster relief Grant Disaster relief grant reflects an under-spending of R 435. 9 million. The grant is only utilised on the disasters that have been declared and the provinces & municipalities have fully complied with their legislative requirements. United Cities of LG in Africa Transfers to UCLGA have been suspended pending discussions between executive authorities on future arrangements. Municipal Infrastructure Grant National Treasury requested the department to withhold the amount of R 2. 471 13 mil for Bela-Bela municipality.

ANALYSIS OF THE UNDER EXPENDITURE (cont) Transfers and subsidies: Reasons for non transfers (cont) South African Cities Network The SACN under spent with R 1. 8 mainly due to late invoicing by the entity. 14

4. Roll-over application to National Treasury The following funds amounting to R 182, 371 million have been requested as rollover into the 2013/14 financial year: R 123. 8 million on the CWP programme implementation, R 36. 8 million for the MISA contracts R 2. 1 million for SALGA to mediate disputes within UCLGA R 1. 3 million for the NDMC assessments and verification process R 4. 6 million for Office Accommodation, invoices delayed from DPW R 11. 3 million on Equitable Share and R 2. 4 million on MIG withheld for Bela-Bela municipality until further notice from NT. National Treasury is currently considering the application and communicating with the department on matters that require clarification. 15

Departmental Priorities for 2013/14 1. Administration 1. DCo. G will develop the Post Audit Action Plan (PAAP) 2013/14 by the end of September 2013 and implement for purposes of improving audit outcome; 2. The Department will make all transfer payments for the period 2013/14 as per the payment schedule and ensure that all deadlines are met for purposes of fast-tracking implementation at a local level; 3. As part of initiatives to improve internal capacity and capability within the department, we planning to review, and submit a report on the Human Resources Plan to the Department of Public Service and Administration (DPSA) as regulated. The approved plan will be immediately rolled out within the department; 4. Support will be provided to Municipalities and Provinces to develop section 46 and 47 reports. These reports will be used to develop the 2011/12 Section 48 report on performance of local government as required in the Municipal Systems Act; 5. DCo. G will support four identified provinces to develop and implement Performance Management System (PMS) and ensure that core set of local performance indicators are revised for approval; 6. Struggling municipalities will be supported with communication tools by rollout the Communication Strategy. This will support the initiative of promoting and communicating government programmes to communities. The departmental programmes will also be promoted through media engagements; 7. The Department will develop a Donor Coordination Strategy and establish new international partnerships for purposes of improving Regional and international relations; and 8. The Annual Fraud Plan and Annual Risk Management Plan will be revised and implemented in an effort to improve the departmental governance. 16

Policy, Research and Knowledge Management: Priorities for 2013/14 1. To improve work turn-around time, DCo. G planned to ensure 95% availability of key systems like Bas, Persal, Logis, internet, email; 2. We will also implement two identified Knowledge Management Strategy (KMS) intervention focusing on business process automation, this will ensure introduction of proper processes and systems that support implementation of projects; 3. Develop 4 research papers covering governance, service delivery and financial management by 31 March 2014, the papers will form the basis for future policy initiatives that are aimed at improving these identified focus areas; and 4. As a national policy development department, we have established the DCo. G Policy Forum which is aimed at discussing new policy matters, governmentwide initiatives, directives as well as priorities in order to position the department to act and respond accordingly to these initiatives. 17

Governance and Intergovernmental Relations Priorities for 2013/14 1. DCo. G will conduct an assessment of Provincial IGR structures in order to device appropriate intervention to improve functionality; 2. The proposed Intergovernmental, Monitoring, Support and Interventions (IMSI) Bill submitted to Parliament by March 2014; 3. Increase the development and implementation of ward level operational plans from 500 to 2000 wards by 31 March 2014; 4. Provide advice and support to 120 municipalities by way of workshops, training, projects appraisals to improve on MIG expenditure by 31 March 2014; 5. Monitor , assess and report on implementation of credit control and debt collection policy and payment of government debt in 30 identified municipalities; 6. Monitor and assess compliance by 30 municipalities with the MPRA and provide guidance to non-complying municipalities by 31 March 2014; 7. 40 Ethics Committees will be established and officials trained in municipalities across identified provinces; and 8. In order to pin down on corruption a comprehensive reports on allegations of corruption investigated, will be developed to give insight in terms of the intervention that is needed. 18

National Disaster Management Centre Priorities for 2013/14 1. The NDMC plans to develop and review the following legislation: 2. Draft White Paper on Fire Brigade Services Legislation submitted to the Cabinet by 31 March 2014; 3 Disaster Management Amendment Bill submitted to the Cabinet for processing 31 May 2014; 4. Indicative risk and vulnerability profile for drought developed by 31 March 2014 5. The Disaster Management M&E Framework will also be developed by 31 March 2014; and The Centre will also develop a National DM public awareness annual plan aimed at popularising DM to all Stakeholders 19

Provincial and Municipal Government Support Priorities for 2013/14 1. Nine provinces monitored to support municipalities with filling of vacancies in terms of the Municipal Systems Act by 31 March 2014; 2. All identified municipalities will be supported to implement remedial action emanating from the Monitoring the MSA through the roll-out of guidelines; 3. Municipal Demarcation Amendment draft bill developed; 4. Discussion document on Organised Local Government will be developed; 5. Provincial Workshops will be facilitated in nine provinces and 23 districts to improve development planning capacity in municipalities outside metros and secondary by 31 March 2014 on intergovernmental; The department has revived the initiative to support urban development programme, in this regard the Draft Integrated Urban Development Framework (IUDF) will be developed; 6. Provincial policy oversight Section 105 and 106 guidelines developed and for approval by MINMEC 20

Infrastructure and Economic Development Priorities for 2013/14 1. 171 500 of work opportunities provided; 2. 48 numbers of municipalities implementing CWP in at least two wards ; 3. 18 number of municipalities where Clean Communities Programme (CCP) is coordinated and supported ; 4. 4 private sector collaborative partnerships established and support plans developed and implemented to promote economic development by 31 March 2014 5. National Framework for LED reviewed by March 2014 (base document for a new LED Strategy); 6. 50 Municipalities supported to improve on access to free basic services through indigent policies and credible indigent registers by 31 March 2014; and 7. New MIG policy developed to facilitate the improvement in delivery of basic service 21

Overall 2013/14 MTEF ALLOCATION ADDITIONAL FUNDS ALLOCATED TO BASELINE 2013/14 Improvement in conditions of service: Department of Cooperative Governance and Traditional Affairs 4 854 2014/15 2015/16 6 193 10 568 Infrastructure support: Municipal Infrastructure Support Agency 60 000 Department of Traditional Affairs: Good and services: Reprioritisation to Programme 7 Department of Traditional Affairs: Compensation of employees: Reprioritisation to Programme 7 3 000 2 000 2 000 Local Equitable share TOTAL ADJUSTMENTS TO BASELINE (SAVINGS) 651 240 4 561 403 721 433 4 635 971 (321 990 ) (358 940 ) (377 436 ) Department of Cooperative Governance: Goods and services: Reprioritisation of Cooperative Governance: Goods and services: Savings • Department of Traditional Affairs: Goods and services: Savings • Municipal Demarcation Board: Savings • South African Cities Network: Savings • South African Local Government Association: Savings • United Cities and Local Governments of Africa: Savings • Community Work Programme: Savings (5 000 ) (5 462 ) (727 ) (426 ) (58 ) (263 ) (54 ) (310 000 ) (4 000 ) (11 704 ) (1 546 ) (903 ) (124 ) (549 ) (114 ) (340 000 ) (4 000 ) (18 356 ) (2 430 ) (1 416 ) (194 ) (861 ) (179 ) (350 000 ) ADJUSTMENTS TO CONDITIONAL GRANTS (SAVINGS) Grants to Local Government Municipal Disaster Grant: Savings Municipal Systems Improvement Grant: Savings Municipal Infrastructure Grant: Reprioritisation Municipal Infrastructure Grant: Additional allocation • Conditional Grants to Provincial Government Provincial Disaster Grant (299 232 ) (297 332 ) (3 500 ) (2 427 ) (291 405 ) (1 900 ) (1 096 959 ) (1 092 931 ) (7 420 ) (5 146 ) (1 258 976 ) 178 611 (4 028 ) (1 067 319 ) (1 060 999 ) (11 642 ) (8 074 ) (1 272 583 ) 231 300 (6 320 ) • • Department • Conditional 22 - 69 854

ALLOCATION PER PROGRAMME Audited Adjusted Revised Outcome 09/10 Outcome 10/11 Outcome 12/12 Appropriation 12/13 Allocation 13/14 Allocation 14/15 Allocation 15/16 Rand thousand Rand thousand Programmes 179 330 169 532 206 081 197 505 218 975 227 128 233 485 44 949 35 433 37 935 49 293 49 492 52 331 56 806 23 936 814 30 663 678 33 270 754 38 111 889 40 706 726 44 620 802 50 343 264 Disaster Response Management 122 981 283 092 80 658 555 392 585 056 613 506 635 308 Provincial and Municipal Government Systems 209 569 244 499 252 411 285 178 272 067 286 208 296 757 9 111 748 56 243 33 661 634 10 363 377 61 817 41 821 428 12 285 148 88 577 46 221 564 15 553 429 102 492 54 855 178 16 315 219 105 156 58 252 691 17 375 579 111 864 63 287 418 18 266 434 116 852 69 948 906 33 661 634 41 821 428 46 221 564 54 855 178 58 252 691 63 287 418 69 948 906 (139 588) (551 368 ) (534 466 ) 3 191 216 Administration Policy, Research and Knowledge Management Governance and Intergovernmental Relations Infrastructure and Economic Development Traditional Affairs Total for Programmes Direct charge against the National Revenue Fund Total Change to 2012 Budget Estimate 23

ALLOCATION PER ECONOMIC CLASSIFICATION Economic classification Audited Adjusted Revised Outcome 09/10 Outcome 10/11 Outcome 11/12 Appropriation 12/13 Allocation 13/14 Allocation 14/15 Allocation 15/16 Current payments 443 329 588 473 661 061 2 104 432 2 419 871 3 169 060 3 314 887 Compensation of employees 165 709 174 301 234 987 290 396 298 786 316 320 338 305 Salaries and wages 154 259 157 282 212 003 255 178 267 780 284 390 304 356 Social contributions 11 450 17 019 22 984 35 218 31 006 31 930 33 949 Goods and services 277 620 414 172 426 074 1 814 036 2 121 085 2 852 740 2 976 582 33 209 970 41 215 091 45 551 033 52 737 347 55 820 625 60 104 956 66 620 004 8 070 17 592 8 277 13 311 12 195 13 402 14 015 265 272 1 193 88 - - - 33 661 634 41 821 428 46 221 564 54 855 178 58 252 691 63 287 418 69 948 906 Transfers and subsidies Payments for capital assets Payments for financial assets Total economic classification 24

TRANSFERS AND SUBSIDIES IN THE NEW BASELINE 2013 MTEF Allocation MIG MSIG Municipal Disaster Grant Equitable Share CWP MISA SALGA MDB CRL Commission SACN UCLGA Commission for Disputes and Claims NHTL Traditional Affairs Total Operational Budget 25 2013/14 58 252 691 14 352 060 240 307 534 600 40 581 787 1 675 040 262 040 25 999 42 152 32 503 5 786 5 331 12 003 16 650 44 000 57 800 258 452 433 2014/15 63 287 418 14 683 835 252 152 560 952 44 490 145 2 389 840 274 162 26 904 44 230 34 973 6 071 5 594 12 723 18 627 45 541 62 875 749 411 669 2015/16 69 948 906 15 448 070 261 060 580 768 50 207 698 2 505 412 284 013 27 855 45 793 36 582 6 286 5 792 13 308 19 668 47 294 69 489 600 459 306

CONCLUSION THANK YOU 26