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This presentation provides an update on the implementation of provincial economic growth and development strategies, revenue and expenditure outcomes, conditional grants, compensation of employees, education and health analysis, capital and infrastructure spending, bank balances, and unauthorised, irregular, and wasteful expenditure.
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PRESENTATION TO THE SELECT COMMITTEE ON FINANCE 31 MAY 2017
Outline • Progress on the Implementation of Provincial Economic Growth and Development Strategies • Revenue and Expenditure Outcome • Conditional Grants • Compensation of Employees • Education & Health Analysis • Capital & Infrastructure Spending • Bank Balances / Cash flow position of the province • Unauthorised, Irregular and Wasteful Expenditure • Annexures
Progress on Implementation of the PGDP • The Province is in the process of formulating a Provincial Growth and Development Plan (PGDP) in line with national policy framework for socio economic planning at a provincial level. • The PGDP aims to provide the strategic framework, sectoral strategies and programmes aimed at a rapid improvement in the quality of life for the poorest people of the Province. • The plan will set out a vision with quantified and sequenced targets in the areas of economic growth, employment creation, poverty eradication and income redistribution till 2030. • The Office of the Premier is the lead department in the development of the Northern Cape Provincial Growth and Development Plan (NCPGDP) and is responsible for the gathering, overall compilation and analysis of information.
Progress on Implementation of the PGDP cont… • The development of the plan is divided into 4 Phases: • The first phase entails the secondment of officials from various sectors as well as the collection of information from various departments, this has been completed. • The second phase which is the diagnostic report is estimated to be completed between July and September 2017. • Third Phase which is Vision 2030 deals with the development of a vision, mission and strategic objectives is set to be completed between October and November 2017. • Fourth Phase entails monitoring and evaluation which will be continuous.
. Preliminary Revenue & Expenditure Outcomes: End March 2017
Analysis per department • Education • Compensation of employees • The over expenditure in the department is mainly under compensation of employees, which has recorded overspending of R123.2 million as a result of an increase in learner numbers which has required the appointment of additional educators in the system. • Goods and Services • The under expenditure of R66.9 million is mainly due to cash flow problems as a result of the overspending on compensation of employees. • Transfers and subsidies • The over expenditure is mainly due to the payment of leave gratuities for officials who left the employ of the department during the financial year. It is difficult to accurately budget for this item as it is difficult to anticipate the resignations with precision. • Health • The department has recorded an under expenditure of R125,2 million, this relates mainly to the underspending on conditional grants. Rollovers have been requested for the unspent conditional grants. • Compensation of employees • The department has overspent on compensation of employees as a result of OSD rank translations, grade progressions and improved qualifications that have been implemented during the financial year.
Analysis per department cont… • Transfers and Subsidies • The overspending is mainly attributed to the transfers to households committed towards the Cuban programme for which no budget was allocated in the current financial year. • Payments for Capital Assets • The under spending is attributable to slow delivery on infrastructure projects including refurbishments and procurement of medical equipment for new infrastructure. Rollovers have been requested for the completion of projects. • Social Development • The department of social development has recorded under expenditure of R47.6 million, which relates mainly to the underspending on the substance abuse treatment grant as a result of a prolonged litigation which delayed the construction of the centre. A roll over has been requested in this regard. • Public Works • The department has underspent with an amount of R3.5 million at the end of the financial year. The department has recorded overspending on payments for capital assets due to the procurement of equipment for EPWP. Virements will be effected to defray the excess expenditure. • Sport, Arts and Culture • The department has underspent with an amount of R22.9 million, this is mainly due to the delays in the construction of libraries in the province as a a result of delays in the acquisition of land and appointment of consultatnts by the implementing agent.
Analysis per department cont… • Agriculture, Land Reform and Rural Development • The underspending in the department is mainly in the CASP and illema conditional grants as a result of the late receipt of invoices from service providers as well as the delay in the verification process of work done at the vaalharts revitalisation project. Rollovers have been requested in this regard.
. Analysis: Education & Health
Infrastructure Expenditure Outcome as at 31 MARCH 2017 • The Provincial Expenditure as at 31 March 2017 amounts to • R 2.536 billion or 91% of the total Provincial Budget of R 2.788 billion. • The Total Infrastructure Conditional Grants to the Province amounts to R 2.470 billion. The province has received to date R 2.422 billion with a total expenditure of R2.330 billion or 94% as at 31 March 2017.
Nature of Investment analysis * Data source for the Nature of investment report is the IRM *The variance on the Total Nature of Investment Budget Report is due to the budget captured for COGHSTA on the IRM
. Bank Balances & Cash Flow Debt/Over Draft
Bank Balances • Net consolidated negative bank balance as at 31 March 2017 amounts to R167,5 million (Standard Bank R3.1 million, CPD (R170, 6 million)), compared to the positive of R111,2 million at 31 March 2016 • The province started utilizing an overdraft facility in the current (2016/17) financial year mainly as a result of the intervention in Department of Health. 32
. Accruals
Accruals and Payables Preliminary 2016/17 Financial Year Accruals: Provincial Total = R983 million of which: Roads and Public Works……………….R631 million: • Rates and taxes – R 389 million (Sol Plaatje is the major contributor of which mental hospital amounts R166 m) • NC Fleet - R 185 million • Goods and services – R 41 million (road maintenance) Health………………………………….R208 million (the payables are not cash backed) • Goods and services R208 million Education……………………………..R 85 million • Goods and services R 45 million • Capital R 35 million • Transfers R 5 million There is a 14% decline when compared to the previous financial year (2015/16)
. Unauthorized, Irregular & Wasteful Expenditure
Irregular Expenditure cont.. . This is mainly due to non-compliance to SCM prescripts; • non- compliance relating to tax clearance certificates, and deviations; • Goods and services procured without inviting competitive bids; • Non-compliance to tender processes by municipalities when appointing contractors for construction of RDP houses on behalf of the province • Department of Education and Department of Health are the major contributors; • Transgressions giving rise to irregular expenditure are mainly non- compliance to Supply chain management processes by the departments
Fruitless and wasteful expenditure • The total fruitless and wasteful expenditure amounts to R128 million of which : • COGHSTA: R64 million for demolition of houses and interest on overdue accounts • Health: R50 million for medico legal claims and interest on overdue accounts
Irregular Expenditure and Fruitless & wasteful cont.. Plans to address the irregular, fruitless and wasteful expenditure: • In the process of appointing panel of consultants to assist with the investigation of the irregular expenditure. • National Treasury is already engaged. (meeting held 24 May to discuss the COGHSTA irregular expenditure)
The Select Committee on Finance is requested to note the following: • The expenditure outcome is preliminary data as at end of March 2017. • The total provincial own receipts collected up to end of March amounts to R341.025 million or 108 percent of the adjusted budget of R314.534 million; • Although Provincial Treasury has over collected with an amount of R42 million, the under collection of in the departments of Transport, Safety and Liaison amounting to R13.9 million and R22.2 million in Health will offset the over collection to a net amount of R26.4 million; of which: • Motor Vehicle Licenses have over collected with an amount of R0.724 million and • Health Patient Fees have under collected with an amount of R22.1 million. • Actual expenditure on conditional grants as at end of March amounts to R3.644 billion or 96 percent of the adjusted budget of R3.814 billion and a net under spending amounting to R170.794 million. • The total consolidated expenditure for the province as at the end of March amounts to R15.172 billion or 98.5 percent of the adjusted budget of R15.409 billion and the province under spent with a net amount of R237.898 million;
. Annexures: Other Departments
