1 Q3 INFRASTRUCTURE AND CONDITIONAL GRANTS PRESENTATION National Council of Provinces 4 th February...

Q3 INFRASTRUCTURE AND CONDITIONAL GRANTS PRESENTATION National Council of Provinces 4th February 2008

PURPOSETo provide the National Council of Provinces (NCOP) with an overview of Conditional Grant and Capital Expenditure performance for Gauteng Province during the Third Quarter of 2007/08Snapshot of detailed Q3 financial and non-financial performance report

CONSOLIDATED VIEW OF GPG INFRASTRUCTURE PAYMENTS

CONSOLIDATED REVIEW OF GPG INFRASTRUCTURE The adjusted 2007/08 infrastructure appropriation for the Province is an amount of approximately R 5.7 billion which equates to approximately 13.8% of the total Provincial budget (R 41,4 billion). This amount excludes an appropriation for Gautrain of which R2,8 billion has been spent

The infrastructure allocation is made up of capital and maintenance. Of the total R5.7 billion infrastructure appropriation, R4.98 billion, (87%) is allocated for capital projects and R752 million, (13%) is allocated towards maintenance projects

As at the end of Quarter 3, R4,1 billion was expended on infrastructure projects in the Province by provincial departments. Of which R3,61 billion was spent on capital projects and R442 million was spent on maintenance projects.

GPG INFRASTRUCTURE BUDGETS 2007/08

Chart1

57305034054673

49785223612625

751981442048

Total Budget 07/08

Actual Q3 Expenditure

GPG Consolidated Infrastructure

Consolidated Payments

Consolidated View of GPG Infrastructure Payments

12345 = 1-(3+4)

R '0002007/08 Adjusted BudgetProjections to end of Q3Actual Expenditure to end of Q3Q4 ProjectionsProjected Outcome

Total Infrastructure5,730,5034,122,5554,054,6731,452,974222,856

Capital4,978,5223,681,3113,612,6251,263,240102,657

Maintenance751,981441,244442,048189,734120,199

Total

Capital as % of Budget87%89%89%87%

Maintenance as % of Budget13%12%12%15%

Total Infrastructure

1234 = (3/1)56 = 1-(3+5)

R '0002007/08 Adjusted BudgetProjections to end of Q3Actual Expenditure to end of Q3Actual Expenditure as % of BudgetQ4 ProjectionsProjected Outcome

Department

Vote 4 Health1,156,383948,940918,53279.4%267,073(29,222)

Vote 5 Education769,023732,294632,91382.3%221,786(85,676)

Vote 6 Social Development94,93132,47319,14420.2%45,27230,515

Vote 7 Housing2,340,3091,710,1311,809,41977.3%481,28249,608

Vote 9 Public Transport, Roads959,538555,453508,59153.0%322,046128,901

Vote 9 Public Works332,67192,552134,36840.4%69,573128,730

Vote 11 Agriculture Cons & Environment6,6401,9911,29019.4%5,3500.0

Vote 12 Sports Arts and Recreation71,00848,72130,41642.8%40,5920.0

TOTAL5,730,5034,122,5554,054,67370.8%1,452,974222,856

Consolidated Payments

00

00

00

Total Budget 07/08

Actual Q3 Expenditure

Consolidated GPG Infrastructure Payments

ALL VOTES

Capital Infrastructure - All Votes

1234 = (3/1)56 = 1-(3+5)


Department

Vote 4 Health884,434770,057716,94681.1%196,198(28,710)

Vote 5 Education628,253633,569544,92486.7%195,271(111,942)


Vote 7 Housing2,329,2721,699,1701,792,89377.0%479,68156,698



Vote 11 Agriculture Cons & Environment5,8031,5111,18720.5%4,6160.0

Vote 12 Sports Arts and Recreation71,00848,72130,41642.8%40,5920.0

TOTAL4,978,5223,681,3113,612,62572.6%1,263,240102,657

Maintenance of Infrastructure - All Votes

1234 = (3/1)56 = 1-(3+5)


Department

Vote 4 Health271,949178,883201,58674.1%70,875(512)

Vote 5 Education140,77098,72587,98962.5%26,51526,266


Vote 7 Housing11,03710,96116,526149.7%1,601(7,090)



Vote 11 Agriculture Cons & Environment83748010312.3%7340.0

Vote 12 Sports Arts and Recreation0000.0

TOTAL751,981441,244442,04858.8%189,734120,199

VOTE 4

Vote 4: Health

12345 = 1-(3+4)


Total Infrastructure1,156,383948,940918,532267,073(29,222)

Capital884,434770,057716,946196,198(28,710)

Maintenance271,949178,883201,58670,875(512)

Total100%82%79%23%



Budget for Vote 4: Health

Hospital Revitalization Grant567,052

Infrastructure Grant to Provinces81,699

Equitable share507,632

Total Budget1,156,383

VOTE 5

Vote 5: Education

12345 = 1-(3+4)


Total Infrastructure769,023732,294632,913221,786(85,676)

Capital628,253633,569544,924195,271(111,942)

Maintenance140,77098,72587,98926,51526,266

Total100%95%82%29%



VOTE 6

Vote 6: Social Development

12345 = 1-(3+4)


Total Infrastructure94,93132,47319,14445,27230,515

Capital69,39211,80114,08637,88817,418

Maintenance25,53920,6725,0587,38413,097

Total100%34%20%48%



Budget for Vote 6: Social Development

Provincial Earmarked Allocations24,708

Equitable share70,223

Total Budget94,931

VOTE 7

Vote 7: Housing

12345 = 1-(3+4)


Total Infrastructure2,340,3091,710,1311,809,419481,28249,608

Capital2,329,2721,699,1701,792,893479,68156,698

Maintenance11,03710,96116,5261,601(7,090)

Total100%73%77%21%



VOTE 9 TRANSPORT

Vote 9: DPTRW - Transport

12345 = 1-(3+4)



Capital689,544438,808383,140254,41751,987

Maintenance269,994116,645125,45167,62976,914

Total100%58%53%34%



VOTE 9 WORKS

Vote 9: PTRW - Works

12345 = 1-(3+4)



Capital300,81677,674129,03354,577117,206

Maintenance31,85514,8785,33514,99611,524

Total100%28%40%21%



VOTE 11

Vote 11: Agriculture

12345 = 1-(3+4)


Total Infrastructure6,6401,9911,2905,3500.0

Capital5,8031,5111,1874,6160.0

Maintenance8374801037340.0

Total100%30%19%81%



VOTE 12

Vote 12: Sports

12345 = 1-(3+4)


Total Infrastructure71,00848,72130,41640,5920.0

Capital71,00848,72130,41640,5920.0

Maintenance0000.0

Total100%69%43%57%



INFRASTRUCTURE EXPENDITURE ANALYSIS: CAPITAL PROJECTS

INFRASTRUCTURE EXPENDITURE ANALYSIS: CAPITAL PROJECTS

As at the end of Q3, R3.61 billion (73%) has been expended by GPG Departments on Capital projects in line with the projections

Of the R 752 million allocated to Maintenance projects by the end of Q3, an amount of R 422,05million (58.8%) was actually expended. The largest contributors to this under expenditure are Social Development and Public Works

The Province projects to spend R1,453 billion in the remaining segment of the 2007/08 financial year, which if achieved will result in an under-expenditure of R223 million (3.9%) of the infrastructure budget

CAPITAL PROJECTSThe highest expenditure in capital projects is reported by Housing at R1,79 billion, and Health at R 716 million. Low rates of spending are reported by Agriculture, (R1,2 billion) and Social Development, (R 14,1 million)

The under expenditure by Agriculture(20,5%) can be attributed to poor project planning. The budget has been reduced to R6,6 million during the adjustment process

The depart of Social Development may under spend by R17,4 million. Low spending is also due to poor project planning which has resulted to surrender of funds

Significant over-expenditure on capital projects is anticipated from the departs of Education and Health. This is due to the fact the department of Education has submitted incorrect projections. The over-expenditure for the DoH is owing to increased costs of the Departments Revitalisation strategy being rolled out this year

INFRASTRUCTURE EXPENDITURE ANALYSIS: MAINTENANCE PROJECTS

MAINTENANCE PROJECTSOf the R441,24 million (58,7%) projected to be spent for Q3, actual spending on maintenance projects undertaken in the Province is reported at R442,05 million (58,8%)

The highest expenditure is reported by the Department of Health The Departments of Agriculture(12,3%), Public Works(16,7%) and Social Development(19,8%) reported the low maintenance expenditure as at the end of Q3

The projected spend for the rest of the year is 25.23% of the overall maintenance budget, which would result in an 16% under expenditure for the 2007/08 year on maintenance projects

The Department of Health projects an over-expenditure of R512 million due to shortfalls in maintenance allocation, however the department has been advised to scale down in order to stay within budget

SECTORAL INFRASTRUCTURE ANALYSIS Department of Health: A province wide programme of modernising, rationalising, and transforming health infrastructure and technology in line with national policy objectives is being rolled out by the depart of Health

At least 15 capital projects new, and existing, have been completed up to the end of Q3, and 23 new projects that have commenced as part of the Revitalization strategy of the Department

Numerous upgrading and rehabilitation projects are ongoing throughout the Province. However only statutory, day-to day maintenance is being undertaken as the need arises. This is due to only 23.3% of the DOH infrastructure budget being allocated to maintenance

Large CAPEX projects completed are: Ann Latsky Nursing College New Admin and Student FacilityBristlecone Clinic New FacilityJohn Doe Clinic New Facility

The rollout of new projects in terms of the Revitalization strategy, could result in the Department reporting a year end over expenditure of at least R29,2 million

SECTORAL INFRASTRUCTURE ANALYSIS Department of Education: In terms of the objectives of the Department of Education, the infrastructure delivery programme seeks to address the current backlogs and lack of basic learner facilities in the various under-serviced areas of the ProvinceThe amount of R628 million has predominantly been expended on rehabilitation and maintenance works for 152 schools, the construction of 162 new projects, including fencing projects for improving school security and to ensure maintenance works where necessary in existing educational facilities and institutions

Department of Public Transport, Roads and Works The major portion of the amount expended by the Department has been expended on projects that are geared towards the:Tarring of existing gravel roadsUpgrading and maintenance of earmarked roads for improvementProvision of lighting on certain routesOperational and expansion works on the major routes, M1, R24, R21, N12,N1 to ensure traffic efficiencies for the 2010 eventProject Managers have been appointed to fast track development and construction on 20 Townships Roads projectsOverall challenges have been experienced in the overall maintenance programme, resulting in the backlogs for routes in need of urgent maintenance Delayed procurement processes has slowed the construction of roads in the 20 townships and contracts were awarded late.

SECTORAL INFRASTRUCTURE ANALYSISDepartment of Social Development Department is in the process of completing construction of a secure rehabilitation facility for delinquent youth at the Jabulani Place of Safety, scheduled for completion in 2008/09ECD Infrastructure Delays experienced during the planning stages with the new implementing agents (municipalities)

Department of Agriculture, Conservation and EnvironmentDepartment has been undertaking ongoing upgrading and maintenance works at existing facilities at provincial nature reserves

Department of Sport, Arts, Culture and RecreationPhase 1 in four stadia has been completedDepartment is currently involved in the second phase of construction at two provincial stadia, HM Pitje and SinabaCompletion is scheduled for the 2008/09 financial year

KEY OBSERVATIONSIt is evident that that weaknesses in infrastructure delivery result from misalignment between budget, planning and cash flow requirements for projects. Departments are struggling to undertake forward planning

Departments delay to finalise lists of projects, some lists are changed during the year as new priorities are identified. Late awarding of contracts to contractors is among other reasons for projected high expenditure in Q4

GT is currently rolling out the Infrastructure Delivery Improvement Programme (IDIP) to departs of SACR and Social Development. IDIP seeks to align the project delivery cycle with the budget cycle

GT noted with concern that whilst some projects are moving at an acceptable pace, other large scale capex projects, are moving at a sluggish pace and are being plagued by operational, procurement and reporting difficulties

GPG notes that well-maintained infrastructure underpins quality of life and economic development. If maintenance is inadequate, social and economic growth in Gauteng will be impeded

KEY OBSERVATIONSIt is clear that there are numerous factors that impact on the expenditure levels of departments during the final stages of the financial year. A pure data analysis on its own cannot identify specific factors influencing spending behaviour and a more detailed analysis of such factors are reviewed monthly at PW-GT-Client meetings

It is instructive to note that an increase in spending during the final stages of the financial year can be expected because payment patterns for capital projects are generally high based on completion of project milestones. Departments would use the first few months of the financial year to initiate the project

GPG departments continue to build and be supported in their efforts by Treasury to build infrastructure capacity to ensure improved monitoring and reporting as they are faced with capacity constraints

Treasury continue its pursuit of ensuring that Departments meet their infrastructure goals and objectives, and assist strengthen thin structures and tighten budgetary leaks

CONDITIONAL GRANTS ANALYSIS

Sheet1

GautengDivision of Revenue Act, 2007 (Act No. 1 of 2007)Government Gazette,20 December 2007Total Available 2007/08Transferred by National (Reported by National)Received by Province (Reported by Provinces)Variance (Transferred by National less Received by Province)Provincial Actual Spending (Reported by Provinces)Actual as a % of total availableAvailable budget less Actual Spending

AGRICULTURE22921022,92118,34118,341017,7675,154

CASP19651019,65115,72515,725015,46779%4,184

Land Care327003,2702,6162,61602,30070%970

0000

SACR46901046,90138,94038,940027,00119,900

Library Services18810018,81014,10914,109013,26671%5,544

Mass Sport and Recreation Participation Programme28091028,09124,83124,831013,73549%14,356

DPTRW3,029,4112,846,7612,846,7610.02,829,478199,933

Gautrain Rapid Rail Link3,029,4110.03,029,4112,846,7612,846,7610.02,829,47893%199,933

0000

EDUCATION00298,555264,308264,3080222,62675,929

FET14050921056161,565161,565161,5650119,38274%42,183

HIV and AIDS22416022,41616,81216,812017,60379%4,813

School Nutrition1145740114,57485,93185,931085,64175%28,933


Sheet1

GautengDivision of Revenue Act, 2007 (Act No. 1 of 2007)Government Gazette,20 December 2007Total Available 2007/08Payment Schedule as at31 December 2007Transferred by National (Reported by National)Variance (Payment Schedule less Transferred by National)Received by Province (Reported by Provinces)Variance (Transferred by National less Received by Province)Provincial Actual Spending (Reported by Provinces)Actual as a % of total availableAvailable Budget less Actual Spending

HEALTH3,600,2242,645,8272,645,8270.02,645,8270.0697,0722,903,152

Comprehensive HIV and AID399,6040.0399,604299,700299,7000.0299,7000.0301,89076%97,714

Forensic Pathology Services83,7498,67992,42862,81262,8120.062,8120.055,47660%36,952

Health Professions Training and Development581,7410.0581,741436,304436,3040.0436,3040.00.00%

Hospital Revitalisation503,28463,768567,052377,464377,4640.0377,4640.0339,70660%227,346

National Tertiary Services1,959,3990.01,959,3991,469,5471,469,5470.01,469,5470.00.00%

0.0

HOUSING2,197,2231,567,9991,567,9990.01,567,9990.01,623,719573,504

Integrated Housing and Human Settlement Development2,197,2230.02,197,2231,567,9991,567,9990.01,567,9990.01,623,71974%573,504

0.0

Infrastructure Grant to Provinces524,2380.0524,238393,180393,1800.0393,1800.00.00%

TOTAL9,719,4736,745,8897,775,356(1,029,467)7,775,3560.05,417,66356%3,777,572

Note: 81% spent against the budget (excluding schedule 4 grants)

CONDITIONAL GRANTS ANALYSISDepartment Of HealthComprehensive HIV/AIDS An amount of R301,890 million (75,5 per cent) was spent as at the end of Q3, as compared to total transfers of R299,700 million by National TreasuryForensic Pathology GrantAs at the end of December, R55,476 million (68 per cent) had been spent3 884 post-morterm operations carried out to the end of Q3257 576 km covered by the 73 FPS vehicles available for transporting bodies in GautengFPS operating with a 90 per cent staff complement (including Forensic Pathologists and Medical Officers)Hospital Revitalisation Grant Hospital Revitalisation had an allocation of R503,3 million for 2007/08, as well as R63,768 million rolled over from the 2006/07 fiscal yearBy the end of Q3, R339,706 million had been expended, representing 66,6 per cent of the total amount available This grant faces undue budgetary pressures, and besides requiring that expenditure be contained within acceptable limits

Department Of Sport, Arts, Culture and RecreationCommunity Library ServicesThe Community Library Services Grant had spent R13, 3 million (70.5%) of the allocated budget of R18,8 million by the end of the third quarter of 2007/08, with R5,5million expected to be spent during the fourth quarter.About 60 per cent of the unspent funds are committed, and 4 per cent to be left unspent at the end of Q4.Community Library ServicesThe MSPP Grant had spent R13, 7 million (49%) of the allocated budget of R28,809 million by the end of the third quarter of 2007/08, with R15, 5 million expected to be spent during the fourth quarterThe committed amount to date is R14, 0 million and it is anticipated that 98 per cent of the budget will be spent and the 2 per cent will be unspent because of late payments


Department of EducationFET Recapitalisation GrantThe FET Recapitalisation Grant for 2007/08 amounted to R140,5 million, and this was increased by rollovers from the 2006/07 financial year amounting to R21,056 million By the end of Q3, R119,382 million (73,9 per cent) had been expended out of total budget of R161,565 million While it is anticipated that the entire amount shall be spent by the end of the 2007/08 fiscal year, challenges faced include:Speeding up of the procurement processes and conversion of commitments to actual expenditureIncreasing the frequency of monitoring per college especially those that are behind in their spending; and Implementation of monthly cash flow projectionsGDE and GT undertake thorough scrutiny of College monthly reports as well as quotations, invoices and financial statements and follow up visits to verify progress as indicated in monthly reports

HIV/AIDS (Life Skill)The HIV/AIDS Conditional Grant, amounting to R22,416 million for the 2007/08 fiscal year, had spent R17,603 million, against total transfers of R16,812 million, approximately 75 per cent of the total 2007/08 allocationGDE has indicated that measures were instituted to ensure that districts use 45 per cent of their budgets before the actual budget allocationThe early start to the programme will also ensure minimal disruptions in delivering the programme

CONDITIONAL GRANT ANALYSIS

National School Nutrition ProgrammeWith an allocation for 2007/08 of R114,574 million, NSNP had by December 31 spent R85,641 million, representing 75 per cent of the total 2007/08 allocationGDE anticipates that the full amount shall be spentPresently 450 310 learners are beneficiaries of this scheme

Department of Public Transport, Roads, & WorksGautrainThe actual expenditure on the Gautrain grant amounted to R2,829 billion against the budget of R3,029 billionThe low expenditure is attributable to the R1,5 billion in foreign transfer payments that does not reflect in the December IYM ( due to strict reporting requirements for the Gautrain payments). Taking this payments into account the actual expenditure could have been at 83,7 per cent. These payments will be visible in the January 2008 expenditure and thus the expenditure is expected to be high during the remaining quarter

DACEThe CASP program had spent R13,8 million (70,1%) of the allocated budget of R19,7million by the end of the third quarter of 2007/08, with R5,9million expected to be spent during the fourth quarter;LandCare Programme spent R2,3 million during the first three quarters and projects to spend R3,3 million during the fourth quarter. The Land Care Program transferred R2,3 million towards the eradication of alien vegetation in Elandsfontein and Mogale City.The CASP program has so far cleared 6479 hectares of alien vegetation against the target of 20 000 ha, the progress has been affected by persistent rains1,191 farmers were trained against an annual target of 2,15019 mentorship programs undertaken against the annual target of 25Over 400 emerging farmers were given advisory support

END OF PRESENTATIONThank you!

1 Q3 INFRASTRUCTURE AND CONDITIONAL GRANTS PRESENTATION National Council of Provinces 4 th February...

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