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Summary of provincial receipts Summary of expenditure by vote & economic classification

PRESENTATION ON eastern cape PROVINCIAL expenditure outcome as at 31/12/2013 select committee on finance 04 February 2014. PRESENTATION OUTLINE. Summary of provincial receipts Summary of expenditure by vote & economic classification Conditional grants performance projected for the year

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Summary of provincial receipts Summary of expenditure by vote & economic classification

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  1. PRESENTATION ON eastern cape PROVINCIAL expenditure outcome as at 31/12/2013 select committee on finance 04 February 2014

  2. PRESENTATION OUTLINE • Summary of provincial receipts • Summary of expenditure by vote & economic classification • Conditional grants performance projected for the year • Infrastructure performance projected for the year • Conclusion

  3. SUMMARY OF PROVINCIAL RECEIPTS • 100% of the Equitable share was received from National • Of the conditional grants, R3.420 million was not received by the province for the Social Sector EPWP Incentive grant for Provinces (R0.390 million) and the Public Works EPWP Incentive grant for Provinces (R3.030 million) due to these departments not submitting the necessary quarterly reports timeously and the current slow spending on these grants

  4. SUMMARY OF PROVINCIAL RECEIPTS (cont’d) • The over collection on own receipts amounts to R181.982 million and is mainly due to the following: • Over collection of interest amounting to R108.165 million by Provincial Planning and Treasury resulting from the slow spending trends by departments; and • Over collection of R10.628 million by Roads and Public Works due to the sale of old machinery that was auctioned off in the Cacadu region • Over collection of R10.493 million by Health is due to over collection on the use of public health facilities by private doctors. There was also an improvement in the collection of patient fees from the Department of Justice (awaiting trial prisoners) as usually claims from this sector are delayed by 5 to 6 months • Over collection of R17.053 million by Rural Development and Agrarian Reform from the sale of biological assets to commercial farmers • Human Settlements over collection of R10.556 million is due to interest earned on trust accounts by administrators (e.g. municipalities) • Transport’s over collection of R15.094 million is attributable to more than anticipated collection on motor vehicle licences

  5. SUMMARY OF PROVINCIAL EXPENDITURE BY VOTE

  6. SUMMARY OF PROVINCIAL EXPENDITURE BY VOTE (cont’d) • Overall the Province spent R44.095 billion or 71.8 per cent of its adjusted budget of R61.375 billion with the projected under expenditure for the financial year amounting to R435.810 million when comparing total spending with the adjusted budget • The following departments are mainly contributing to the projected under spending: • Human Settlement’s, R149.695 million is mainly on the conditional grant due to the poor performance by contractors, contractor cash flow problems, poor planning as well as poor project implementation and management • Health’s, R121.137 million is mainly due to delays in the filling of prioritized vacant posts (in Alfred Nzo, Chris Hani, Joe Gqabi and OR Tambo), delays in the capturing on Persal and payment of the newly recruited Community Health Care Worker’s, slow payment of HR accruals, non-payment of PMDS and delays in the appointment of various clinical specialists • Local Government and Traditional Affairs, R52.844 million is mainly is due to the R40 million that the department will surrender to the Provincial Revenue Fund which was a transfer to the King Sabata Dalindyebo Local Municipality. The amount was meant to finalise MIG projects, however a roll over in this regard was subsequently approved by National, hence the savings • Transport’s , R36.673 million in mainly due to delays in the submission of Proof of Delivery (POD) forms for scholar transport as well as savings due to traffic officers not working overtime as planned

  7. SUMMARY OF PROVINCIAL EXPENDITURE BY VOTE (cont’d) • Roads and Public Works (DRPW), R22.085 million is mainly under CoE due to the delays in the implementation of the annual recruitment plan. The bulk of these posts were only advertised in December 2013 and is anticipated that these posts will be filled by the end of the financial year. • Sport, Recreation, Arts and Culture’s, R24.475 million is due to delays in the transfers to the Buffalo City Metropolitan Municipality for library services, due to the municipality’s dissatisfaction with the transfer amount. The department has engaged with the municipality to resolve the impasse. Failing this attempt the money will be utilised to cover the cost of the newly built Mdantsane Library

  8. SUMMARY OF EXPENDITURE – ECONOMIC CLASSIFICATION • Compensation of Employees is projecting to overspend by R65.678 million mainly due to Education (R236.910 million) due to a budget shortfall as a result of the payment of accruals in respect of temporary educators, substitute educators staff and promotional posts • Notwithstanding the over expenditure, Health is projecting to under spend on CoE due to reasons already provided above

  9. SUMMARY OF EXPENDITURE – ECONOMIC CLASSIFICATION • Goods and services is projecting to underspend by R230.088 million due to the following departments: • Education under expenditure amounts to R131.231 million and is mainly due to delays in the procurement processes for the school furniture. Furthermore, the department intends to realise savings from goods and services and payments for capital assets in order to mitigate the projected over expenditure on CoE • Transportunder expenditure of R37.637 million is due to delays in the submission of Proof of Delivery (POD) forms for scholar transport before payments can be effected • Transfers and Subsidiesis projecting to underspend by R111.906 million mainly due to Human Settlement amounting to R131.943 million resulting from the poor performance by contractors, contractor cash flow problems, poor planning as well as poor project implementation and management • Payments for capital assets isprojecting to underspend by R161.368 million mainly due to Education (R148.234 million) resulting from the delays in the procurement processes between the department and the DRPW (its implementing agent).

  10. CONDITIONAL GRANTS PERFORMANCE FOR THE YEAR (cont’d)

  11. CONDITIONAL GRANTS PERFORMANCE FOR THE YEAR • Overall the Province spent R6.593 billion or 67.6% of its adjusted budget of R9.757 billion for conditional grants with the projected under expenditure for the financial year amounting to R130.147 million

  12. CONDITIONAL GRANTS PERFORMANCE FOR THE YEAR (cont’d) • Human Settlements Development grant is the main contributor with a projected under spending by R150.655 million due to poor performance by contractors, contractor cash flow problems, poor planning as well as poor project implementation and management. • Even though Provincial Roads Maintenance grant is projecting to breakeven at year end, PPT is of the opinion that the department will likely under spend by R272.224 million as it is still in the process of appointing contractors as well as delayed procurement and capacity challenges in the department • The following conditional grants spending is significantly low despite projections to spend all funds by year end: • The likely under spending on Technical Secondary Schools Recapitalisation grant amounts to R13.293 million due to delays in the awarding of tenders for new workshops in technical high schools • The likely under spending on Comprehensive Agricultural Support Grant amounts to R10.102 million. This is mainly due to delays as a result of the changes by the national department on the composition of projects under the grant to favour food security which impacted on the planning and spending of the grant • The likely under spending on Dinaledi Schools grant amounts to R13.293 million due to delays in delivery of mobile science laboratories procured for these schools

  13. INFRASTRUCTURE ADJUSTED BUDGET & EXP(APRIL 01- DEC 2013)

  14. INFRASTRUCTURE PERFORMANCE – 2013/14 YEAR (cont’d) • The Province has spent R5.097 billion (64.3%) of its total adjusted infrastructure budget of R7.927 billion with the projected under spending amounting to R600.661 million • The majority of the budget is allocated to four departments: • Human Settlements (34.4%), DRPW (30.3%), DoE (17.8%) and DoH (14.2%) • The departments of Education, DRPW and Human Settlements are generally underperforming in infrastructure spending in the 2013/14 financial year and Treasury has engaged these departments to determine the blockages. The following key reasons are cited: • Instability in Planning / Skewed projections towards the end of the financial year which is further exacerbated by the Dec/Jan closure of the construction industry • Lack of Contract Management and Project Management capabilities • Late / Delayed closure of projects • The relevant engagements through the Infrastructure governance structures (Technical Sub-Committee, CBC -Sub Committee, CBC and EXCO) has commenced to resolve the bottlenecks in the infrastructure value chain

  15. CONCLUSION • Overall the Province spent R44.095 billion or 71.8 per cent of its adjusted budget of R61.375 billion with the projected under expenditure amounting to R435.810 million. Given the capacity challenges in some of the departments, particularly on infrastructure spending, the under expenditure will likely be more than projected • Province is still continuing to experience poor planning in infrastructure delivery. IDMS has been rolled out to Education and Health and should therefore assist these departments in improving its planning • DRPW is seriously looking at its structure to improve the capacity challenges • Continued poor performance by contractors and cash flow issues: • The small contractor development programme does not seem to yield the desired results and therefore will have to be strengthened • Adherence to the 30 day payment process is assisting in addressing the contractor cash flow problems • Poor project management is being addressed by improving the capacity

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