Standing Committee on Appropriation Programme 4 th Quarter

Standing Committee on Appropriation Programme 4 th Quarter Financial Performance - 2011/12 Financial year 05 September 2012 Presented by: Acting Director-General Mandisa Fatyela --Lindie DPW Briefing to SCOA – 05 September 2012 1

Presentation Outline 1. Budget outcome for 2011/12 will include: Ø Expenditure summary and programmes Ø Monthly expenditure trend Ø Notes to expenditure Ø Monthly expenditure analysis 2. Infrastructure Performance 3. EPWP Performance DPW Briefing to SCOA – 05 September 2012 2

Preliminary Expenditure Report – Programme summary 2011/12 2010/11 Final Appropriation Actual Expenditure Variance R'000 R’ 000 Exp. % % 819, 135 837, 119 -17, 984 102% 679, 455 - 100% Immovable asset management 5, 426, 628 5, 001, 749 424, 479 92% 5, 203, 722 4, 968, 520 235, 202 95% Expanded public works programme 1, 520, 508 1, 163, 015 357, 493 76% 1, 415, 783 915, 391 500, 392 65% Property and construction industry policy regulation 32, 108 34, 353 -2, 245 107% 39, 021 28, 029 10, 992 72% Auxiliary and associated services 31, 365 25, 201 6, 164 80% 26, 816 24, 139 2, 677 90% 7, 829, 744 7, 061, 436 768, 308 90% 7, 364, 797 6, 615, 534 749, 263 90% Administration Total DPW Briefing to SCOA – 05 September 2012 3

Preliminary Expenditure Report – Economic classification 2011/12 2010/11 Final Appropriation Actual Expenditure Variance R'000 Exp. % Final Appropriation Actual Expenditure Variance % R'000 Exp. % % Current payments Compensation of employees 1, 252, 469 1, 269, 579 -17, 110 101% 1, 112, 717 1, 089, 693 23, 024 98% Goods and services 1, 034, 900 1, 032, 905 1, 995 100% 883, 003 819, 046 63, 957 93% 1, 586 1, 567 19 99% 8, 848 - 100% 4, 010, 396 3, 656, 222 354, 174 91% 3, 788, 130 3, 302, 542 485, 588 87% 1, 436, 745 1, 011, 408 425, 337 70% 1, 375, 982 1, 255, 873 120, 109 91% 84, 948 81, 162 3, 786 96% 139, 023 82, 479 56, 544 59% Software & other intangible assets 6, 639 6, 569 70 99% 2, 258 2, 217 41 98% Payment for financial assets 2, 025 - 54, 836 - 100% 7, 829, 744 7, 061, 437 768, 307 7, 364, 797 6, 615, 534 749, 263 90% Interest and rent on land Transfers & subsidies Payment for capital assets Buildings & other fixed structures Machinery & equipment Total DPW Briefing to SCOA – 05 September 2012 100% 90% 4

Programme 1: Expenditure per economic classification 2011/12 2010/11 Administration Final Appropriation Actual Expenditure Variance R'000 Exp. % Final Appropriation Actual Expenditure Variance % R'000 Exp. % % Current payments Compensation of employees 181, 392 199, 405 -18, 013 110% 169, 058 - 100% Goods and services 587, 949 - 100% 483, 800 - 100% Interest and rent on land 210 - 100% 380 - 100% Transfers & subsidies 594 565 29 95% 2, 366 - 100% 42, 502 - 100% 22, 224 - 100% 6, 488 - 100% 1, 615 - 100% - - 12 12 - 100% 819, 135 837, 119 679, 455 - 100% Payment for capital assets Machinery & equipment Software & other intangible assets Payment for financial assets Total -17, 984 DPW Briefing to SCOA – 05 September 2012 102% 5

Programme 2: Expenditure per economic classification 2011/12 Immovable Asset management 2010/11 Final Appropriation Actual Expenditure Variance Exp. % Final Appropriation Actual Expenditure Variance R'000 % R'000 Exp % % Current payments Compensation of employees 970, 040 970, 320 -280 100% 853, 773 850, 120 3, 653 100% Goods and services 289, 758 293, 973 -3, 966 101% 224, 114 169, 256 54, 858 76% 1, 261 - 100% 3, 969 - 100% 2, 688, 693 2, 688, 774 -81 100% 2, 577, 575 - 100% 1, 436, 745 1, 011, 408 425, 337 70% 1375982 1255873 120, 109 91% 39, 765 35, 966 3, 799 90% 113, 606 57, 065 56, 541 50% 151 81 70 54% 144 103 41 72% - - 54, 559 - 100% 5, 426, 628 5, 001, 749 5, 203, 722 4, 968, 520 235, 202 95% Interest and rent on land Transfers & subsidies Payment for capital assets Infrastructure Machinery & equipment Software & other intangible assets Payment for financial assets Total 424, 879 92% DPW Briefing to SCOA – 05 September 2012 6

Programme 3: Expenditure per economic classification 2011/12 2010/11 Expanded Public Works Programme Final Appropriation Variance Actual Expenditure Final Appropriation Exp % Variance Actual Expenditure Exp % R'000 R'000 % 91, 905 - 100% 79, 174 64, 081 15, 093 81% 124, 287 - 100% 147, 200 144, 812 2, 388 98% 93 93 - 100% 4, 482 - 100% 1, 301, 630 944, 137 357, 493 73% 1, 181, 466 698, 555 482, 911 59% 2, 593 - 100% 2, 962 - 100% - - 0% 499 - 100% 1, 520, 508 1, 163, 015 77% 1, 415, 783 915, 391 500, 392 65% Current payments Compensation of employees Goods and services Interest and rent on land Transfers & subsidies Payment for capital assets Machinery & equipment Software & other intangible assets Total 357, 493 DPW Briefing to SCOA – 05 September 2012 7

Programme 4: Expenditure per economic classification 2011/12 Property and Construction Industry Policy Regulations Final Appropria tion 2010/11 Variance Actual Expenditure Exp. % R'000 Compensation of employees 9, 132 7, 949 1, 264 Goods and services 0, 724 14, 763 Interest and rent on land 22 Transfers & subsidies % Actual Variance Expenditure Final Appropriation Exp. % % R'000 86% 10, 712 6, 434 4, 278 60% 5, 961 71% 19, 079 12, 368 6, 711 65% 3 19 14% 17 17 - 100% 81 9, 512 -9, 431 11890% 8, 982 - 100% 124 101 23 81% 231 228 3 99% - - 0% Payment for financial assets 2, 025 - 100% - - 0% Total 2, 108 34, 353 -2, 245 107% 39, 021 28, 029 Current payments 2 Payment for capital assets Machinery & equipment Software & other intangible assets 3 DPW Briefing to SCOA – 05 September 2012 10, 992 72% 8

Programme 5: Expenditure per economic classification 2011/12 2010/11 Auxiliary and Associated services Final Appropriation Variance Actual Expenditure Exp % R'000 Goods and services 11, 967 - Transfers & subsidies 19, 398 13, 234 6, 164 - - 31, 365 25, 201 % Final Appropriation Variance Actual Expenditure Exp % % R'000 100% 8, 810 - 100% 68% 17, 741 15, 064 2, 677 85% - 265 - 100% 80% 26, 816 24, 139 2, 677 90% Current payments Payment for financial assets Total 6, 164 DPW Briefing to SCOA – 05 September 2012 9

Notes to expenditure - 2011/12 Compensation of employees • Expenditure for the year ended March 2012 is R 1. 270 billion and expenditure is equivalent to 101% of the total allocation of R 1. 253 billion. • Overspending on compensation of employees is R 17 million and overspending is on both Programme 1 and 2. • Overspending in Programme 1 has been disclosed as unauthorised expenditure in the annual report and unauthorised expenditure has been reported to both National Treasury and Office of the Auditor General. DPW Briefing to SCOA – 05 Septemeber 2012 10

Notes to expenditure - 2011/12 Goods and services • Goods and services for the financial year ended March 2012 is R 1. 035 billion and expenditure is equivalent to 100% of the total allocation of R 1. 033 billion. • Programme two is overspending on goods and services and overspending relates to energy efficiency project. • Overspending of goods and services is due to advance payment for payment made to Independent Development Trust (IDT) during 2010/11 financial year with the roll over not being approved by National Treasury. • With the project continuing during 2011/12 financial year expenditure incurred was included with no allocation and therefore leading to overspending. DPW Briefing to SCOA – 05 September 2012 11

Notes to expenditure - 2011/12 Transfers and subsidies • Expenditure on transfers and subsidies for the financial year ended March 2012 is R 3. 656 billion and expenditure is equivalent to 91% of the total allocation of R 4. 010 billion. • Under spending on transfers and subsidies relates conditional grant allocation to provinces and municipalities for EPWP infrastructure. • Programme 4 is over spending on transfers and subsidies and expenditure relate to payment made to Agrement South Africa. DPW Briefing to SCOA – 05 September 2012 12

Notes to expenditure - 2011/12 Payments for capital assets • Capital assets expenditure for the financial year ended March 2012 is R 1. 011 billion and expenditure is equivalent to 71% of the total allocation of R 1. 528 billion. • Under spending on payments for capital assets relate infrastructure with the budget of R 425 million not being spent at the end of the financial year. • Under spending on machinery and equipment is equivalent to 5% (R 3. 9 million) of the total allocation of R 91. 6 million. DPW Briefing to SCOA – 05 September 2012 13

Infrastructure Performance BUDGET CLASSIFICATION EXPENDITURE % EXP END March 468 184 285 295 60% 25 000 11 386 46% 46 000 32 166 70% Land Port of entry 310 000 274 625 89% Inner City Regeneration 122 000 42 058 34% Special and major projects 472 760 365 876 77% 1 443 945 1 011 408 70% Departmental Accessibility Dolomite Grand Total • • • ALLOCATION By end of year R 720 493 048 was committed to Project on Construction (Stage 5 A-7) R 247 630 198 was for Project not issued for implementation (Stage 2 - 3) R 96 721 281 for Projects on Design - Tender stages DPW Briefing to SCOA – 05 September 2012 14

REASONS FOR UNDER EXPENDITURE OF BUDGET – National Treasury Policy Instruction: For the period from May 2011 to July 2011, tender process was interrupted by the NT Circular requesting projects procurement information for concurrence. Three month was lost while awaiting concurrence to advertised. – Planning and registering projects while having money on hand remain problematic. Ideally the building program must be completed prior to requesting funds from National Treasury. – Program Approved (Workshops, Water Operators Program, Horticulture Program at Port of Entries) were not allocated funds from DPW Capital - Suspension of Programs. – Low Expenditure of Allocation by IDT (School Program) affects transfer of Funds – Late issuing of Procurement Instructions in particular for Accessibility Program. Funded PI where confirmed in September 2011 for implementation in same year. – Instability of project leadership at Regional Offices were head of Projects Positions cannot be filled (Pretoria, Mmabatho, and Polokwane) due to lower classification of the Post and Strict Criteria of OSD. DPW Briefing to SCOA – 05 September 2012 15

Performance on the EPWP integrated incentive by Provinces after the 3 rd quarter of the 11/12 financial year reporting (Paid in the 4 th quarter of 11/12) Province Infrastructure Incentive allocation for the 11/12 National financial year (R’ 000) 3 rd Quarter incentive earned for the 11 -12 financial year (R’ 000) Total incentive earned In the 11/12 financial year (R’ 000) Percentage of the 11/12 incentive earned (%) Eastern Cape 30, 431 6, 781 21, 053 69 Free State 10, 606 7, 589 11, 935 113 Gauteng 43, 856 436 1 132, 332 40, 297 149, 521 115 Limpopo 7, 403 13, 739 27, 958 293 Mpumalanga 9, 486 3, 721 13, 971 147 Northern Cape 4, 809 682 757 16 North West 5, 758 0 0 0 22, 587 772 1, 128 5 267, 269 74, 637 226, 759 85 Kwa-Zulu Natal Western Cape Total DPW Briefing to SCOA – 05 September 2012 16

Performance on the EPWP integrated incentive by Municipalities after 3 rd quarter 11 -12 reporting ( Paid in the 4 th quarter 11 -12 ) Province Infrastructure Incentive allocation for the 11/12 National financial year (R’ 000) 3 rd Quarter incentive earned for the 11 -12 financial year (R’ 000) Total incentive earned In the 11/12 financial year (R’ 000) Percentage of the 11/12 incentive earned (%) Eastern Cape 76, 121 21, 262 80, 330 106 Free State 34, 446 8, 034 27, 304 79 Gauteng 227, 663 27, 132 98. 652 43 Kwa-Zulu Natal 127, 982 5, 984 21, 688 17 Limpopo 64, 600 11, 408 41, 110 64 Mpumalanga 33, 767 12, 385 41, 118 122 Northern Cape 47, 764 889 5, 512 12 North West 40, 210 12, 653 34, 146 85 Western Cape 27, 031 17, 893 28, 325 105 679, 583 117, 640 378, 187 56 Total DPW Briefing to SCOA – 05 September 2012 17

Causes of low Incentive draw-down • Poor or under reporting on EPWP work opportunities created on projects. The amount of incentive paid to Public bodies is dependent on reporting by Public bodies. • Low Labour-intensity of projects being implemented by Public bodies. • Poor technical capacity at Public bodies to design and implement projects labour-intensively. DPW Briefing to SCOA – 05 September 2012 18

Measures taken to improve performance • EPWP unit officials and Data Capturers are helping Public bodies collect EPWP information for reporting. • Municipal Officials are being trained in Labour-intensive methods of construction. Over 1, 000 officials had been trained in this regard in the 11/12 financial year. • Public body officials are being trained on reporting, so that they have improved capacity to report. • EPWP incentive grant has been revised from a schedule 8 grant to a schedule 5 and 6 grant for Provincial Departments and Municipalities respectively. 40% of the incentive is being upfront to Public bodies. It enables better planning by Public bodies. DPW Briefing to SCOA – 05 September 2012 19

Thank you DPW Briefing to SCOA – 05 September 2012 20