OVERVIEW OF THE PRESENTATION

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

4

2. SUMMARIZED DEPARTMENTAL FINANCIAL PERFORMANCE

Adjusted Appropriation

Shifting of Funds

Virement Final Actual Variance Expenditure

Appropriation Expenditure as % of

final appropriation

R'000 R'000 R'000 R'000 R'000 R'000 %

ADMINISTRATION

Current payment

192,377

-

7,809

200,186

178,075

22,111 89.0%

Transfers and subsidies

260

-

900

1,160

1,070

90 92.2%

Payment for capital assets

4,780

-

(1,202)

3,578

3,565

13 99.6%

Payment for financial assets

88

-

815

903

903

- 100.0%

197,505

-

8,322

205,827

183,613

22,214 89.2%

POLICY, RESEARCH AND KNOWLEDGE MANAGEMENT

Current payment

43,487

-

2,470

45,957

45,119

838 98.2%


-

-

-

-

-

- 0.0%


5,806

-

(693)

5,113

4,973

140 97.3%

49,293

-

1,777

51,070

50,092

978 98.1%

GOVERNANCE AND INTERGOVERNMENTAL RELATIONS

Current payment

32,732

-

(3,780)

28,952

23,347

5,605 80.6%


38,079,137

-

-

38,079,137

37,349,106

730,031 98.1%


20

-

-

20

-

20 0.0%

38,111,889

-

(3,780)

38,108,109

37,372,453

735,656 98.1%

5

FINANCIAL PERFORMANCE per PROGRAM (cont)

Adjusted Appropriation

Shifting of Funds Virement Final Actual Variance ExpenditureAppropriation Expenditure as % of

final appropriation

R'000 R'000 R'000 R'000 R'000 R'000 %DISASTER RESPONSE MANAGEMENT

Current payment

43,213

- 590

43,803

37,604 6,199

85.8%


510,029

- 360

510,389

74,243 436,146

14.5%


2,150

- 116

2,266

2,266

- 100.0% 555,392 -

1,066 556,458 114,113 442,345 20.5%

PROV & MUN GOVT SYSTEMS

Current payment

55,027

- (10,934)

44,093

43,954 139

99.7%


230,096

-

-

230,096

230,096

- 100.0%


55

- 193

248

248

- 100.0% 285,178 -

(10,741) 274,437 274,298 139 99.9%

INFRA & ECONOMIC DEVELOPMENT

Current payment 1,671,646

- (3,379) 1,668,267 1,460,225 208,042

87.5%

Transfers and subsidies 13,881,633

- 279 13,881,912 13,879,441 2,471

100.0%


150

- 1,586

1,736

1,736

- 100.0% 15,553,429 -

(1,514) 15,551,915 15,341,402 210,513 98.6%

TRADITIONAL AFFAIRS

Current payment

65,950

- 4,870

70,820

70,734

86 99.9%


36,192

-

-

36,192

36,125

67 99.8%


350

-

-

350

89 261

25.4% 102,492 -

4,870 107,362 106,948 414 99.6%

54,855,178 -

- 54,855,178 53,442,919 1,412,259 97.4%

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FINANCIAL PERFORMANCE per ECON CLASSIFICATION(cont)

Adjusted Shifting of

Funds Virement

Final Actual

Variance Expenditure as % of final

appropriation

Appropriation Appropriation Expenditure

R'000 R'000 R'000 R'000 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 31,339 17,508 13,831 55.9%

Municipal Infrastructure Support Agent 20,434 20,434 8,494 11,940 41.6%

Department of Traditional Affairs 40,779 34 460 41,273 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 1,417,538 1,272,414 145,124 89.8%

Municipal Infrastructure Support Agent 176,240 176,240 139,529 36,711 79.2%

Department of Traditional Affairs 25,171 -34 4,410 29,547 29,462 85 99.7%

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FINANCIAL PERFORMANCE per ECON CLASSIFICATION (cont)

Adjusted Shifting of

Funds Virement

Final Actual

Variance Expenditure as % of final

appropriation

Appropriation Appropriation Expenditure

R'000 R'000 R'000 R'000 R'000 R'000 %

Transfers & subsidies

Provinces & municipalities 52 495 225 - - 52 495 225 51 331 083 1 164 142 97.8%

Vehicle lisences (Twane mun) 100 100 26 74 26.0%

Equitable Share 37,873,396 37,873,396 37,147,769 725,627 98.1%

Municipal sys improve grant 230,096 230,096 230,096 0 100.0%

Municipal infrastructure grant 13,881,633 13,881,633 13,879,162 2,471 100.0%

Disaster Relief 510,000 510,000 74,030 435,970 14.5%

Departmental agencies & accounts 101 315 - 2 122 103 437 101 315 2 122 7.9%

Municipal Demarcation Board 40,362 40,362 40,362 0 100.0%

SALGA 26,726 2,122 28,848 26,726 2,122 92.6%

CRL Commission 34,227 34,227 34,227 0 100.0%

Foreign governments & international organisation - - 279 279 279 - 100.0%

Non-profit institutions 8 025 - (2 122) 5 903 3 693 2 210 62.6%

Households 132 782 - 1 260 134 042 133 706 336 99.7%

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FINANCIAL PERFORMANCE per ECON CLASSIFICATION

Adjusted

Shifting of Funds

Virement

Final Actual

Variance

Expenditure as % of

final appropriati

on Appropriation Appropriation Expenditure

R'000 R'000 R'000 R'000 R'000 R'000 %


Machinery & equipment 13,311 0 0 13,311 12,890 421 96.80%

Department of Cooperative Governance 12,961 -105 -1,586 11,270 11,110 160 98.6%

Municipal Infrastructure Support Agent 105 1,586 1,691 1,691 0 100.0%

Department of Traditional Affairs 350 350 89 261 25.4%

Payment for financial assets 88 - 815 903 903 0 100.00%

Total 54 855 178 - - 54 855 178 53 442 919 1 412 259 97.40%

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3. ANALYSIS OF THE UNDER EXPENDITURE

Overall Expenditure:The total expenditure of the department amounts to R53,443 billion

representing 97.4% of the total budget. The under spending of R1, 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: R292 770

Actual expenditure R266, 471

Variance R26, 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.

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ANALYSIS OF THE UNDER EXPENDITURE (cont)

Goods and services:

Allocation: R1 809 308

Actual expenditure R1 593 579

Variance R215 729= 11.9% under-spending

The major contributors to the under-spending is CWP (R46,979 million) and MISA (R158, 955 million) This is mainly due to late invoicing by the contracted service providers.

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Payments of Capital Assets:

Allocation: R13 311

Actual expenditure R12 890

Variance 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.

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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- R26 milMunicipal Demarcation Board – R40 milCRL Commission – R34 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 millionLocal Government Equitable Share = R725.627 millionDisaster relief grant = R435.970 million (only transferred when disasters have been declared)United Cities of LG in Africa = R2.485 millionSouth African Cities Network = R1.847 million



Reasons for non transfers:

LG Equitable Share

The LG Equitable Share currently reflects an under-spending of R725.6 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 GrantNational Treasury requested the department to withhold the amount of R2.471 mil for Bela-Bela municipality.13



Reasons for non transfers (cont)

South African Cities Network

The SACN under spent with R1.8 mainly due to late invoicing by the entity.

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4. Roll-over application to National Treasury

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The following funds amounting to R 182,371 million have been requested as roll-over 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 R4.6 million for Office Accommodation, invoices delayed from DPW R11.3 million on Equitable Share and R2.4 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.

1. DCoG 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. DCoG 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.

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1. To improve work turn-around time, DCoG 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 DCoG Policy Forum which is aimed at discussing new policy matters, government-wide initiatives, directives as well as priorities in order to position the department to act and respond accordingly to these initiatives.

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1. DCoG 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.

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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

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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 March2014 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

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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

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ADDITIONAL FUNDS ALLOCATED TO BASELINE 2013/14 2014/15 2015/16

Improvement in conditions of service: Department of Cooperative Governance and Traditional Affairs 4 854 6 193 10 568

Infrastructure support: Municipal Infrastructure Support Agency 60 000 60 000 60 000

Department of Traditional Affairs: Good and services: Reprioritisation to Programme 7 3 000 2 000 2 000

Department of Traditional Affairs: Compensation of employees: Reprioritisation to Programme 7 2 000 2 000 2 000

Local Equitable share - 651 240 4 561 403

TOTAL 69 854 721 433 4 635 971

ADJUSTMENTS TO BASELINE (SAVINGS) (321 990

) (358

940 ) (377 436

)•Department of Cooperative Governance: Goods and services: Reprioritisation

(5 000 )

(4 000 )

(4 000 )

•

Department of Cooperative Governance: Goods and services: Savings (5 462

) (11

704 ) (18 356

)•

Department of Traditional Affairs: Goods and services: Savings (727

) (1

546 ) (2 430

)•

Municipal Demarcation Board: Savings (426

)

(903 ) (1 416

)•

South African Cities Network: Savings (58

)

(124 ) (194

)•

South African Local Government Association: Savings (263

)

(549 ) (861

)•

United Cities and Local Governments of Africa: Savings (54

)

(114 ) (179

)•

Community Work Programme: Savings (310 000

) (340

000 ) (350 000

)

ADJUSTMENTS TO CONDITIONAL GRANTS (SAVINGS) (299 232

) (1 096

959 ) (1 067 319

)

•Conditional Grants to Local Government (297 332

) (1 092

931 ) (1 060 999

)

Municipal Disaster Grant: Savings (3 500

) (7

420 ) (11 642

)

Municipal Systems Improvement Grant: Savings (2 427

) (5

146 ) (8 074

)

Municipal Infrastructure Grant: Reprioritisation (291 405

) (1 258

976 ) (1 272 583

)

Municipal Infrastructure Grant: Additional allocation

- 178

611 231

300

•Conditional Grants to Provincial Government (1 900

) (4

028 ) (6 320

)

Provincial Disaster Grant (1 900

) (4

028 ) (6 320

)

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Audited Outcome

09/10Audited Outcome

10/11Audited Outcome

12/12Adjusted Appropriation

12/13Revised Allocation



15/16

Rand thousand Rand thousand Rand thousand Rand thousand Rand thousand Rand thousand Rand thousandProgrammes

Administration 179 330 169 532 206 081 197 505 218 975 227 128 233 485

Policy, Research and Knowledge Management 44 949 35 433 37 935 49 293 49 492 52 331 56 806

Governance and Intergovernmental Relations 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

Infrastructure and Economic Development 9 111 748 10 363 377 12 285 148 15 553 429 16 315 219 17 375 579 18 266 434Traditional Affairs 56 243 61 817 88 577 102 492 105 156 111 864 116 852Total for Programmes 33 661 634 41 821 428 46 221 564 54 855 178 58 252 691 63 287 418 69 948 906Direct charge against the National Revenue Fund - - - - - - -

Total 33 661 634 41 821 428 46 221 564 54 855 178 58 252 691 63 287 418 69 948 906

Change to 2012 Budget Estimate (139 588) (551 368 ) (534 466 ) 3 191 216

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Economic classification

Audited Outcome 09/10



Adjusted Appropriation 12/13

Revised Allocation 13/14



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

Transfers and subsidies 33 209 970 41 215 091 45 551 033 52 737 347 55 820 625 60 104 956 66 620 004

Payments for capital assets 8 070 17 592 8 277 13 311 12 195 13 402 14 015

Payments for financial assets 265 272 1 193 88 - - -

Total economic classification 33 661 634 41 821 428 46 221 564 54 855 178 58 252 691 63 287 418 69 948 906

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2013/14 2014/15 2015/162013 MTEF Allocation 58 252 691 63 287 418 69 948 906 MIG 14 352 060 14 683 835 15 448 070 MSIG 240 307 252 152 261 060 Municipal Disaster Grant 534 600 560 952 580 768 Equitable Share 40 581 787 44 490 145 50 207 698 CWP 1 675 040 2 389 840 2 505 412 MISA 262 040 274 162 284 013 SALGA 25 999 26 904 27 855 MDB 42 152 44 230 45 793 CRL Commission 32 503 34 973 36 582 SACN 5 786 6 071 6 286 UCLGA 5 331 5 594 5 792 Commission for Disputes and Claims 12 003 12 723 13 308 NHTL 16 650 18 627 19 668 Traditional Affairs 44 000 45 541 47 294Total 57 800 258 62 875 749 69 489 600Operational Budget 452 433 411 669 459 306

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CONCLUSION

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THANK YOU

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OVERVIEW OF THE PRESENTATION

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