2006/07 conditional grants and capital expenditure (second quarter ) gauteng treasury 20 november,...
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2006/07 CONDITIONAL GRANTS AND CAPITAL EXPENDITURE (SECOND
QUARTER)
Gauteng Treasury20 November, 2006
PRESENTATION OUTLINE
• Financial Performance of the Province• Conditional Grants Allocation and
Expenditure• Conditional Grants Expenditure and Service
Delivery Per Program • Capital Budget Allocation and Expenditure• Challenges in Implementing Conditional
Grants • Interventions by Treasury
Purpose
To provide the National Council of Provinces (NCOP) an overview of Conditional Grant and Capital Expenditure performance for the Gauteng province during the second quarter of 2006/07 Financial year.
Consolidated Revenue & Expenditure
R thousand
Actual until Main Estimated YTD actual
exp/rev Projected
end of Sep BudgetExpenditure/
Revenue % Budget (Over)/Under
Revenue
Transfers from National
14,725,411 32,105,943
32,105,943 45.87%
Equitable share
12,148,078
23,361,686
23,361,686 52.00%
Conditional grants
2,577,333
8,744,257
8,744,257 29.47%
Provincial Own Revenue
1,032,853 1,758,263
1,950,791 58.74%
(192,528)
Less: Public Office Bearers charges 40,417 40,417
Total Revenue
15,758,264
33,823 ,789
34,016,317 46.59%
(192,528)
Expenditure
Total Expenditure
14,468,131
34,459,739
35,525,078 41.99%
1,065,339
Surplus/(Deficit)
1,290,133
(635,950)
(1,508,761)
(872,811)
Revenue Position
• A total of R34,016 billion is estimated at the end of the financial year :
• This consist of : • R1,951 billion of own revenue.• R8,744 billion of conditional grants.• R23,362 billion from the equitable shares.
• Predicted over collection of own revenue amounts to R192,6 million (driven by motor vehicle licences and casino taxes)
• A Total revenue of R7,466 billion was received for the second quarter ending in September, 2006. (R15.758 billion cumulative)
Expenditure position
• R7,999 billion was spend this quarter (R14.468 billion cumulative)
• There is a projected overspending of R1,065 billion
• The department of health is the primary driver of over-expenditure (projecting an over expenditure of R971,5million).
Conditional Grants Receipts 2006/07
• R 8,744 billion was allocated to the province as conditional grants for 2006/07 financial year .
• R2,6 billion has been received to date
• R401,2 million was received from National Departments during the month September against R809,4 million as per payment schedule.
• Instalments for infrastructure grant was with-held by National Treasury due to reporting compliance problems by some departments.
• All funds will be released during the third quarter after a series of discussions with National Treasury
Conditional grant expenditure, 2006/07
Department
Grant 2006/07(DORA)
Payment Schedule
(Y-T-D Sep End
Sep)
Transfers from
National((Y-T-D End
Sep)
Spent by Province(Y-T-D
End Sep)
% of Total
Budget spend(Y-T-D
End Sep)
Spent & Projectio
n
% Varian
ce
Agriculture
Comprehensive Agricultural Support Programme
6,873 3,094
3,193
2,179
31.7
6,484 5.7
Land Care Programme
3,115
1,4021,402
21
0.01
3,136 (0.7)
Education
Further Education and Training college sector recapitalization 106,000 53,000 53,000 53,000 50.0 77,749 26.7
HIV and Aids (Life Skills Education)
20,012
10,006 10,006
4,457
22.2
20,455 (2.2)
National School Nutrition Programme
99,921
49,961 49,961
35,889
35.9
91,931 8.0
Health
Comprehensive HIV and Aids
252,695
126,348 126,348 122,395 48.4
252,695 -
Forensic Pathology services 76,752 38,376 38,376 16,592 21.6 76,752 -
Health Professions Training and Development
554,039
277,020 277,020
277,020
51.0
554,039 -
Hospital Revitalization
327,525
163,762 168,762
168,165
51.3
438,321 (33.8)
National Tertiary Services
1,866,094
933,048 933,048
933,048
50.0
1,866,094 -
Conditional grant expenditure, 2006/07 ( Continue )
Department
Grant 2006/07(DORA)
Payment Schedule
(Y-T-D Sep End
Sep)
Transf
ers from
National
((Y-T-D End
Sep)
Spent by Province
(Y-T-D End Sep)
% of Total Budg
et spen
d(Y-T-
D End
Sep)
Spent &
Projection
% Variance
Housing
Integrated Housing and Human Settlement Development
1,757,666
911,295
911,29
5
768,739 43.7
1,757,66
6 -
Alexandra Urban Renewal Project
8,000
8,000 2,000
25
8,000 -
ED, Do H, and DPTRW
Provincial Infrastructure
407,745
203,872 143,425 35.2
431,427 (5.8)
Sport and Recreation SA
Mass Sport and Recreation Participation Programme
16,820
12,056 9,922
1,129 6.7
16,820 -
TransportGautrain Rapid Rail Link 3,241,000 512,552 - 0
3,241,000
100.0
Total
8,744,257
3,303,792 2,577,
333 2,526,059 28.9
9,035,3
56 36.0
Overall Conditional Grants Performance , 2006/07 (Second Quarter)
• Aggregate Spending Position– R 2,526,059 billion was spent against the projections of
R3,067,240 billion (under spending of R541,161 million or 36 %)
– The Gautrain Rapid Rail Link accounts for 97 % of the projected under spending.
– If Gautrain is excluded, the overall under spending will be 1. 1 % .
• Lowest performance : Landcare (R21,000 or 0.01%), Mass Sport and Recreation participation (R1,129 million or 6.7%), Life skills education (R4,457 million or 22.2%) and Forensic Pathology Services (R16,592 million or 21.6%).
• High Performance FET ( R53,000 million or 50%) , PTD (R277,020 million or 51%), Hospital Revitalisation ( R168,165million or 51.3%) and National Tertiary Grants ( R933,048 million or 50%).
Conditional Grants Performance , 2006/07
(Agriculture)Department
Grant 2006/0
7(DORA)
Payme
nt Sched
ule(Y-T-D
Sep End
Sep)
Transf
ers from National
((Y-T-D End Sep)
Spent by
Province
(Y-T-D End
Sep)
% of Total Budg
et spen
d(Y-T-D End Sep)
Spent &
Projection
% Variance
Agriculture
Comprehensive Agricultural Support Programme
6,873 3,094
3,193
2,179
31.7
6,484 5.7
Land Care Programme
3,115
1,402
1,402
21 0.01
3,136 (0.7)
Financial Performance• Both Grants show slow expenditure , more worrying is LCP;• There is risk of under spending;• The variances can be attributed to delays in the procurement process
Service Delivery•Limited service delivery information •THE Procurement process has been completed • Treasury has appointed infrastructure specialists to monitor and assist departments to accelerate spending and quality of service delivery
Conditional Grants Performance , 2006/07 ( Education)
Department Conditional Grant R’000
2006/07
Payment Schedule
Spent by Province
% of Total budget spend
Projection
Spent & Projection
% U/spend +/O/spend (-)
Education
Further Education and training college sector recapitalization 106,000 53,000 53,000 50.0 24,479 77,749 26.7%
HIV and Aids (Life Skills Education) Grant
20,012
10,006
4,457
22.2
15,998
20,455 (2.2%)
National School Nutrition Programmer Grant
99,921
49,961
35,889
35.9
56,042
91,931 8.0%
Financial and Service Delivery Performance
Financial Performance • Low Spending is observed on Life Skills Education program , but
projects an overspending of 2.2%. ThIS is attributed to delay in processing payments for services already provided
• NSNP projects to underspend by 8% - Attributed to BAS technical problems
• High spending performance of FET ( 50%) , ensure achievement of targets
Service Delivery• Life Skills education
• 599 educators have been trained• 1237 learners have been trained on life skills• 16 Learners trained on health and wellness
• National School Nutrition Programme• 1143 new learners identified for the nutrition program • 47 schools participated • Reached 98% of needy learners
• Further Education and training college sector – No Information
Conditional Grants Performance , 2006/07 -
HealthDepartment
Conditional Grant R’000
2006/07
Payment Schedule (Y-T-D End –SEP)
Spent by Province (Y-T-D End –SEP)
% of Total budget spend (Y-T-D End –SEP)
Projection
Spent & Projection
% U/spend +/O/spend (-)
Health
Comprehensive HIV and Aids Grant
252,695
126,348
122,395
48.4
130,300
252,695 0.0%
Forensic Pathology services 76,752 38,376 16,592 21.6 60,160 76,752 0.0%
Health Professions Training and Development Grant
554,039
277,020
277,020
51.0
277,019
554,039 0.0%
Hospital Revitalization Grant
327,525
163,762
168,165
51.3
270,156
438,321 (33.8%)
National Tertiary Services Grant
1,866,094
933,048
933,048
50.0
933,046
1,866,094 0.0%
Financial and Service Delivery Performance (Health)
Financial performance• Low spending on Forensic Pathology services ( 21.6%, this attributed
to the delay in transfer of other functions from the SAPS and there is risk of Under spending)
• Hospital Revitalisation program projects an over-expenditure of R110,8 million
Service Delivery• Comprehensive HIV/Aids - 50,777 patients are on ART
» All PHC With MOUs are offering PMTCT (100%) • Forensic Pathology Services - The transfer process was completed in
July» Filling of medical staff is 88% completed.
• Health Professions Training and Development• Nursing Graduates(1247), Emergency care staff (12) , nursing
students ( 4018)• Hospital Revitalization – Report available from DoH• National Tertiary - Detailed report available from Department of Health
Conditional Grants Performance , 2006/07
(Housing)Departme
nt Grant
2006/07
Payment
Schedule
((Y-T-D End –SEP)
Transfers from Nationa
l (Y-T-D End –SEP)
Spent by
Province
(Y-T-D End –SEP)
% of Total
Budget
spend
Spent &
Projection
% Variance
Housing
Integrated Housing and Human Settlement Development
1,757,66
6
911,295
911,295
768,739
43.7
1,757,6
66 -
Land Distribution: Alexandra Urban Renewal Project
8,000
2,000 8,000 2,000
25
8,000
100.0Financial Performance
• 43,7 percent of the DORA allocation for 2006/07 has been spent on the Integrated Housing And Human Settlement Development programme• Projects to spend all budget by end of financial year• Expenditure on the Alexandra Urban Renewal Project ( 25% ) .Service Delivery
•No Information
Conditional Grants Performance , 2006/07 ( Provincial Infrastructure
Grant (PIG)Department
Grant 2006/07 Paymen
t Schedul
e(Y-T-D End –SEP)
Transfers from Nationa
l(Y-T-D End –SEP)
Spent by
Province
(Y-T-D End –SEP)
% of Total
Budget
spend
Spent &
Projection
% Variance
DoED, DoH &DPTRW
Provincial Infrastructure Grant
407,745
203,872 143,425 35.2
431,427
(5.8)
Financial Performance • R 143, 4 million was spent by the participating Dept’s ( Educ, Health, Transport) during the 2nd Q• No transfers were received from National for the 1st & 2nd Q (Due to Non reporting -compliance by departments)
• Treasury provided support to departments in cleaning the database for infrastructure and populating the Infrastructure reporting model • R 136, 595 million released in quarter three and a total amount of R 238,531 million is still withheld by NT due to non reporting compliance.
Service Delivery • Detailed IRM models and reports available • GT is also in the process of strengthening the CFO offices.• Infrastructure specialists have been appointed to monitor and strengthen service delivery
Conditional Grants Performance , 2006/07
( Sports and Culture)
Department
Grant 2006/07
Payme
nt Schedu
le
Transf
ers from
National
Spent by
Province
% of Total
Budget
spend
Spent &
Projection
% Variance
Sport and Recreation SA
Mass Sport and Recreation Participation Programme
16,820
12,056 9,922
1,129 6.7
16,820 -
Financial Information• Significant under-spending in Sports has been observed this quarter ( 6.7%);• Reason for variances can be ascribed to in adequate capacity to drive the programme;• Department Projects to spend the entire allocation by the financial year end.
Service Delivery • no information
Department of Public Transport, Roads &Works
Department
Grant Allocati
on 2006/07
Payment Schedule
Transfers from
National
Actual by grant
expendi
ture
% of Total
Budget spend
Spent &
Projection
% Varian
ce
Transport
Gautrain Rapid Rail Link
3,241,000 512,552
3,241,000 100.0
• No spending recorded on Gautrain this quarter;
• Construction began in October and spending is expected increase in the next quarter.
Capital Budget Receipts 2006/07
• Capital programme includes payments for capital assets within departments and Capital Transfers.
• Capital transfers includes housing programmes and special infrastructure development projects (to accelerate economic growth)
• Total capital budget allocation amounts R9,322 billion of which the department of Public Transport, Roads and Works account for 55,9 %, Housing (21%), Health(10,1%) and Education (9,3%).
Capital Allocation and expenditure ( 2006/07)
DepartmentBudget 2006/07 Q2 Spending
Accumulated Expenditure 2006/07 Variance
Percentage
R’000 R’000 R’000 R’000 %
Education 870,679 95,595 203,484 667,195
23
Health 943,756 232, 269 482,648 461,108
51
Social Development 31,489 4415 4,440 27,049
14
Office of the Premier
2,235 234 1,305 930
58
Provincial Legislature 17,073 932, 2,855 14,218
17
Finance and Economic Affairs 145,538 82,684 83,346 62,192
57
Housing 1,955,384 499,399 809,167 1,146,217
41
Local Government 27,145 12 179 26,966
1
Public Transport Roads and Works 5,209,051 506,487 1,055,610 4,153,441
20
Community Safety 20,100 593 780 19,320
4
Agriculture, Conservation and Environment 8,069 2,171 8,521 -452 106
Sports and Recreation 59,919 18,451 18,545 41,374
31
Gauteng Shared Service Centre 31,952 6,677 19,916 12,036
62
Gauteng Provincial Treasury 386 618 641 -255 166
SUBTOTAL 9,322,776 1,217,336 2,691,437
6,631,339
29
Capital expenditure performance
• R2,691 billion or 29 percent has been as of the end of September, against the projection of R4,661billion or 50 percent
Low Capital Spending departments
• DPTRW 20% of its total budget ( R5,2billion)– Low spending in DPTRW is attributed to a delay in the sign-off of the financial
implications of the Gautrain project .
• Social Development (23%);
• Community Safety ( 4%)
• Local Government ( 1%)
• Provincial Legislature
• Education ( 23%)
• Risk of Under spending in these departments
High CAPEX performance
• Department of Health ( 51%) – Including PIG and Hospitalisation grants expenditure;– The department is experiencing budget pressures on
Infrastructure projects, due to increase in construction costs and fast tracking of projects
• Department of Agriculture ( 106%)– Over spending is attributed to refurbishment of office
space, acquisition of office equipment for the additional staff.
• Gauteng Treasury (166%) – Due restructuring and expansion.
• funds have already been shifted during the adjustment budget to cover shortfall in the capital budget
Challenges: Conditional Grants and CAPEX
• Conditional grants spending is general low ( 29 percent).
• Capital expenditure needs to be accelerated;• Risk of Under spending in both CAPEX and
Conditional Grants;• Missing of Variance explanation and proposed
corrective measures from departments reports;• Efforts to obtain comprehensive information from
departments proves to be difficult;• Failure to submit service delivery performance
information by some departments;• Risks associated with overspending by the
Department of Health; • Risks associated with March Spike.
Proposed Interventions by Gauteng Treasury
• Appointment of infrastructure specialists to monitor and strengthen capacity to spend and increased service delivery of infrastructure and other capital projects;
• Developed an improved reporting format;
• Treasury officials will be discussing expenditure projections with departments in order to prevent March spike;
• Comprehensive 3rd Q analysis to inform credibility of projections and actual expenditure. This will inform potential to relocate funds between departments / priorities.
End of Presentation
Thank You