2006/07 CONDITIONAL GRANTS AND CAPITAL EXPENDITURE (THIRD QUARTER )

2006/07 CONDITIONAL GRANTS AND CAPITAL EXPENDITURE (THIRD

QUARTER)

Gauteng Treasury12 February, 2006

2

PRESENTATION OUTLINE

• EXPENDITURE STATUS OF THE PROVINCE • EXPENDITURE ON CONDITIONAL GRANTS• SERVICE DELIVERY PER DEPARTMENT • EXPENDITURE ON CAPITAL BUDGET• SERVICE DELIVERY PER DEPARTMENT • EXPENDITURE CHALLENGES • INTERVENTIONS BY TREASURY

3

Purpose

To provide the National Council of Provinces (NCOP) with an overview of Conditional Grant and Capital Expenditures in the Gauteng province during the First Three quarters of the 2006/07 Financial year.

4

EXPENDITURE STATUS IN THE PROVINCE

5

Consolidated Revenue & Expenditure

R ‘(000)

Actual till Main Estimated YTD actual Projected

end of Dec BudgetExpenditure/

Revenue % Budget (Over)/Under

Revenue

Transfers from National

24,075,952

32,105,943

32,105,943 75,0%

Equitable share

17,754,883

23,361,686

23,361,686 76,0%

Conditional grants

6,321,069

8,744,257

8,744,257 72,3%

Provincial Own Revenue

1,513,451

1,758,263

1,926,992 86,1%

Less: Public Office Bearers charges 40,417 40,417

Total Revenue

25, 589,403

33,864,206 33,864,206

Expenditure

Total Expenditure

23,447,558

35,277,864 34,032,935

Surplus/(Deficit)

2,141,845

(1,413,658)

(168,729)

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Revenue Receipts

• A total of R33,864 billion is estimated at the end of the financial year :

• This consists of : • R1,927 billion of own revenue.• R8,744 billion of conditional grants.• R23,362 billion from the equitable shares.

Total revenue of amounting to R25,589 billion was received for the third quarter ending in December, 2006.

7

Expenditure position

• R23,448 billion was spent this quarter

• There is a projected overspending of R168 million as total expenditure is anticipated to exceed estimated revenue.

8

RECEIPTS AND EXPENDITURE ON CONDITIONAL GRANTS

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Conditional Grants Receipts 2006/07

•R 8,937 billion was allocated to the province as conditional grants for 2006/07 financial year .

•R6,321 billion has been received to date

by Departments against R 6,237 billion as per payment schedule.

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CONDITIONAL GRANTS EXPENDITURE

Department

Grant

R’(000)

2006/07(DORA)

2006/07 Adjusted Budget

Expenditure as at 31 December 2006 (3rd quarter)

Projection (Jan-March)

% of Total

Budget spent as

at 31 December 2006

Agriculture

Comprehensive Agricultural Support Programme 6,873

6,873

2,369 1,916

34,5 %

Land Care Programme 3,115 3,115 79 2,5%

Education

Further Education and Training college sector recapitalization 106,000 106,000 106,000 100%

HIV and Aids (Life Skills Education) 20,012 20,012 11,040 8,972 75,0%

National School Nutrition Programme 99,921 99,921 70,413 29,508 70,5%

Health

Comprehensive HIV and Aids 252,695 270,195 287,411 (7,316) 106,4%

Forensic Pathology services 76,752 82,020 35,137 46,883 42,8%

Health Professions Training and Development 554,039 554,039 415,530

138,509 75,0%

Hospital Revitalization 327,525 415,201 229,136186,065 55,2%

National Tertiary Services

1,866,094

1,866,094 1,399,572

466,522 75,0%

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CONDITIONAL GRANTS EXPENDITURE ( Continue )

Department

Grant

R’(000)

2006/07(DORA)

2006/07 Adjusted Budget

Expenditure as at

31 Decembe

r 2006 (3rd

quarter)

Projection (Jan-March)

% of Total Budget

spent as at 31

December 2006

Housing

Integrated Housing and Human Settlement Development

1,757,666

1,839,523

1,273,812 653,854 69,2%

Alexandra Urban Renewal Project 8000 8,000 2,648 5,810 33%

ED, Do H, and DPTRW Provincial Infrastructure 407,745 407,745 218,521 213,200 54%

Sport and Recreation SA

Mass Sport and Recreation Participation Programme 16,820 16,820 2,866 13,954 17%

Transport Gautrain Rapid Rail Link3,241,0

003,241,0

001,756,2

38 54,1%

Total 8,754,6

90 8,936,5

585,808,1

241,760,0

67 65%

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Overall Conditional Grants Performance , 2006/07 (Third Quarter)

• Aggregate Spending Position– R 5,808 billion was spent against the projections of R6,237

billion (under spending of R429,260million )

• Lowest performance : Landcare (R79,000 or 2,1%), Mass Sport and Recreation participation (R2,866 million or 17%), and CASP (R2,3692 million or 34,5%).

• High Performance: FET ( R106,000 million or 100%) , and Comprehensive HIV & AIDS (R287,411 million or 106%).

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Department

Grant

R’(000)

2006/0

7(DORA

)

Transfers from

National((Y-T-D

End Dec)

Spent by

Province as at 31-Dec-06

% of Total Budget Spent as at 31-Dec-06)

Projection

(Jan to Mar

2007)

% Variance

(over)/under

Agricult

ure

Comprehensive Agricultural Support Programme (CASP)

6 873 5 598

2, 369 34,5 1 916 37,7

Land Care Programme (LCP)

3 115 2 492

79

2,5 3 115 (2,5)

Agriculture

Expenditure Analysis• The CASP program had spent 34,5% of the allocated budget of R6,873million by

the end of the third quarter of 2006/07, with R1,916million expected to be spent during the fourth quarter;

• CASP is expected to underspend by 37,7% (R2,588million) during the current financial year

• LCP only spent R79,000 during the first three quarters and is expected to spend R3,115million during the fourth quarter. The program will overspend by 2,5% of its budget allocation.

• R3,115million (in February 2007) to Rand Water for the eradication of alien vegetation in Elandsfontein and Mogale City. A request , was sent t indicate whether this amount has been spent by the implementing agency .

• A financial commitment for Q4 on CASP has been requested to the department.

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EDUCATION

R ‘000 2006/07

Payment Schedule as at 31-Dec-06

Spent by Province as at 31-Dec-06

% of Total Budget

Spent as at 31-Dec-06 Projection

% U/Spend

+/ O/Spend

(-)

FET College Sector Recapitalisation 106,000 106,000 106,000 100.0% - 100.0%

HIV and AIDS (Life Skills Education) 20,012 15,009 11,040 55.2% 8,972 100.0%

National School Nutrition Programme 99,921 74,941 70,413 70.5% 29,508 100.0%

Total 225,933 195,950 187,453 83.0% 38,480 100.0%

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EXPENDITURE ANALYSIS

• HIV/AIDS (Life Skills Education) reflects low spending (55,2%), suggesting that not all funds may be used

• National School Nutrition Programme is just below benchmark 75% of expenditure by end of Q3, may still be fully utilised

• Dept projects to spend entire 2006/07 allocation of conditional grants

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OVERALL EXPENDITURE

• R225,9 million allocated to three grants• Overall expenditure as at end December

R187,4 million • Percentage of grants spent as at end

December 83%• FET College Recapitalisation fully spent

(transferred)• HIV/AIDS Life Skills grant only 55,2%

spent

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HEALTH

R '000 2006/07

Payment Schedule as

at31-Dec-06

Spent by Province as at 31 Dec 06

% of Total Budget Spent

as at 31-Dec-06 Projection

% U/Spend + / O/Spend (-)

Comprehensive HIV and AIDS 252,695 193,897 287,411 113.7%

(7,316) 110.8%

Forensic Pathology Services 76,752 57,564 35,137 45.8%

46,883 106.9%

Health Professions Training and Development 554,039 415,530 415,530 75.0%

138,509 100.0%

Hospital Revitalisation 327,525 267,563 229,136 70.0%

186,065 126.8%

National Tertiary Services 1,866,094 1,399,572

1,399,572 75.0%

466,522 100.0%

Total 3,077,105 2,334,126 2,366,786 76.9% 830,663 103.9%

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EXPENDITURE ANALYSIS

• Comprehensive HIV/AIDS expenditure greatly exceeded allocation, with R287, 4 million spent against R252, 7 million allocated and R193, 9 million received as at 31 December 2006;

• Forensic Pathology Services still reflecting low expenditure, with R35, 1 million spent as at end-December 2006 against allocation of R76, 8 million; despite projections, runs risk of under-expenditure;

• Health Professions Training and Development, Hospital Revitalisation and National Tertiary Services are on track in terms of expenditure.

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HOUSING

Department

Grant

R’000

2006/07

Transfers from Nationa

l (Y-T-D End –SEP)

Spent by

Province

(Y-T-D End –Dec)

% of Total

Budget

spend

% Variance

Housing

Integrated Housing and Human Settlement Development

1,757,6

66 1,273,812

69% 30%

Land Distribution: Alexandra Urban Renewal Project

8,000 8,000 2,648 33% 70%

Financial Performance• 69,2 percent of the Integrated Housing And Human Settlement Development grant has been spent for the last nine months.• 33 percent of the Alexandra Urban Renewal grant was spent during last nine months • Long Environmental Impact Assessment process has delayed the implementation of the project

• The department projects to spend all budget by end of financial year

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Provincial Infrastructure Grant (PIG)

Department

Grant

R’000

2006/07 Paymen

t Schedul

e(Y-T-D End –Dec)

Transfers from Nationa

l(Y-T-D End –Dec)

Spent by

Province

(Y-T-D End –Dec)

% of Total

Budget

spend

Spent &

Projection

% Variance

DoED, DoH &DPTRW

Provincial Infrastructure Grant

407,74

5 138,6

67 218,52

1 54%

213,200

(5.8)

Expenditure Analysis • R 218, 54 million was spent by the participating Departments ( Education, Health and Transport ) during the third quarter;• No transfers were received from national for the first and second; quarter (Due to Non reporting - compliance by departments)

•Transfers from National Treasury were received in December 2006 ( R138,667)•Infrastructure specialist from Gauteng Treasury continue provide support to departments in cleaning the database for infrastructure and populating the Infrastructure reporting model

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SPORTS AND CULTURE

Department

Grant R’000

2006/07

Transf

ers from

National

Spent by

Province

% of Total

Budget

spend

Sport and Recr. SA

Mass Sport and Recreation Participation Programme 16,820 15,096 2,866 18

Expenditure Analysis• Significant under-spending in Sports has been observed this quarter ( 18 %) of the R15million transferred from national;• The low spending is a concern•A financial commitment Report requested by GT for Quarter fours shows that:

•R7,880,624 has been committed to the Siyadlala project• R1,999,626 has already been paid January to service providers •This leaves an amount of R6,074million to be spent during February and March 2007

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DEPARTMENT OF PUBLIC TRANSPORT, ROADS &WORKS

Grant R’000

Adjusted budget

2006/07

Actual by grant

expenditure

% of Total

Budget spend

Infrastructure 163,098 111,305 68%

Gautrain Rapid Rail Link 4,641,000 1,756,238 37,8%

Total 4,804,0981,867,54

3 39%

• Spending on Gautrain remain the same as in Q2 at R1,756 billion and project to spend R2, 885 in the last quarter

• The department has been requested to submit a detailed financial plan for Q4

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RECEIPTS AND EXPENDITURE ON CAPITAL BUDGET

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Capital Budget Receipts

• 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 Adjusted budget for capital transfers amounts to R 6,858 million;

• Total Adjusted budget for payments of capital amounts to R2,618 billion and the largest share goes to the Departments of Health ( R1 billion) and Education( R723 million).

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PAYMENTS FOR CAPITAL ASSETS

DepartmentR’000

Actual Spending to end of Dec 2006

Projection Jan to Mar

2007

Budget Adjusted Budget2006/07

% of Total Budget spend

Education 415,020 388,550 725,679 723,924 57%

Health 730,314 312,117 943,756 1,030,332 71%

Social Development 5,354 6,494 31,489 11,715 46%

Office of the Premier 995 1,995 2,235 3,402 29%

Provincial Legislature 8,061 13,622 17,073 18,032 45%

Economic Development 7,019 928 66,307 16,343 43%

Housing 34,503 27,629 58,371 62,132 56%

Local Government 338 26,807 27,145 27,145 1%

Public Transport, Roads and Works 304,417 241,366 568,051 592,671 56%

Community Safety 992 14,512 20,100 15,534 6%

Agriculture, Conservation and Environment 9,536 9,592 8,069 19,123 50%

Sports and Recreation 22,936 39,244 47,650 62,180 37%

Gauteng Shared Service Centre 20,511 11,441 31,952 31,952 64%

Gauteng Provincial Treasury 2,138 2,270 386 4,408 49%

SUBTOTAL

1,562,1

34 1,096,567 2,548,263

2,618,89

3 60%

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AGREGGATE CAPITAL EXPENDITURE

• R 1,6 billion or 60% percent was expended as at the end of December, with the projected expenditure of R 1,1billion for the fourth quarter.

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LOW SPENDING DEPARTMENTS

• Community Safety (6%) of its total budget • Sports and Culture (37 %);

– No Reason provided

• Office of the Premier ( 29%)– No Reason provided

• Local Government ( 1%)– No reason provided

• Provincial Legislature ( 45%)– No reason provided

• There is Risk of Under spending in this departments

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HIGH SPENDING DEPARTMENTS

• Department of Health ( 71%);– The department is experiencing budget

pressures on capital projects, due to increase in construction costs and fast tracking of projects

• Although some departments project an overspending , but the average spending rate is low (50%)

• Department is projecting an over expenditure (informed to keep their spending within the budget)

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SERVICE DELIVERY

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AGRICULTURE

NO OF PROJECTS

PROGRESS BUDGETR’000

Actual Expenditure as

at End of December 2006 ( Q3)

R’000


6 Below 25 %Started Construction

7,352 1,618 22%

0 25% 0 0 0%

2 50% 96 402 419%

6 75% 1,936 253 13%

2 Retention 7,286 3,958 54%

9 Handed over

6,686 3,748 56%

2 Design stage

1,000 0 0

38 TOTAL 24,356 R9,979 41%

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EDUCATIONNO OF

PROJECTS

PROGRESS

BUDGETR’000


at End of December 2006 ( Q3)

R’000


54 Below 25 %Started Construction

361,676 148,998 44%

10 25% 61,924 21,094 34%

16 50% 55,654 30,438 54%

17 75% 58,579 50,659 84%

75 Retention 26,003 13,459 51%

23 Handed over

3,478 1,653 48%

3 Tendering stage

11,812 2,067 17%

17 Design stage

50,595 142 0.3%

186 Identification stage

1,381 1,895 137%

TOTAL 631,102 270,405 43%

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EDUCATION (Project Type)

PROJECT TYPE

NO OF PROJECTS

BUDGET

R’000

Actual Expenditure as at End of December 2006 ( Q3)

R’000


REHABILITATION

65 23,156 8,412 36%

MAINTENANCE

141 72,807 26,112 35%

NEW 252 539,210 380,492 70%

TOTAL 635,173 415,016 65%

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HEALTH

DESCRIPTION OF PROGRAM

BudgetR’000


R’000


HOSPITAL REVITALIZATION

396,123 295,488

74.6%

PROVINCIALINFRASTRUCTURE GRANT

81,548 81,157

99.5%

INFRASTRUCTURE

GRANT

166,148 253,980

152.96%

TOTALS 643,819 630,625 98%

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HOSPITAL REVILITISATION

• Chris Hani Baragwanath Hospital: new AE&T OPD, pharmacy relocation and demolition– Project is 25% complete.

• Chris Hani Baragwanath Hospital level 1: new 300 bed hospital– Phase I comprising of bulk earthworks and enabling works

and the progress is 30% complete– Phase II tender documentation is ready for

procurement• Germiston Hospital: new 300 bed hospital

– Phase i comprising of earthworks, progress is 65% complete

– Phase ii tender documentation is ready for procurement• Mamelodi Hospital: new 300 bed hospital

– Construction has commenced and the progress is 75%.

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DEPARTMENT OF HOUSINGAlexandra Renewal

Category/Type of Structure

No. of Project

sBudget

Actual Expenditure as at End of December 2006 ( Q3)R’000


New Constructi

on15 96,595 12,303 13

Rehabilitation/

Upgrading27 121,389 83,891 69

Recurrent Maintenan

ce25 32,067 29,954 93

Total Provincia

l Infrastru

cture

78 250,393 126,148 50

36

DEPARTMENT OF HOUSING


No. of Projects

Budget

Actual Expenditure as at End of December 2006 ( Q3)R’000


New Construction

204214,689,61

450,232,148 23

Rehabilitation/

Upgrading1007

656,941,181

308,911,258 47

Recurrent Maintenance

282 11,669,940 40,228,741 345

Total Provincial Infrastructure

1493883,300,7

35399,372,147 45

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ECONOMIC SECTOR (ROADS)


No. of Projec

ts

BudgetR’000

Actual Expenditur

e as at End of

December 2006 ( Q3)R’000


New Construction

(Roads & Infrastructure,

Buildings,ICT)

7 216,428 128,423 59%

Rehabilitation/Upgrading(Rehab. of roads

including resealing)

2 52,046 31,278 60%

Recurrent Maintenance(General

maintenance, Pot-Holes)

35 70,714 34,422 49%

Total Provincial

Infrastructure44 339,188 194,123 57%

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SPORTS AND CULTURE

NO OF PROJECTS

PROGRESS BUDGETR’000


at End of December 2006

( Q3)R’000


4 Below 25%Construction Started

R5,700 0 0%

6 50% Completed R48,000 R36,712 76%

3 75% Completed R2,900 R1,200 41%

11 Identification stage

R2,750 0 0%

1 Feasibility R200 0 0%

1 Retention stage R1,500 0 0%

TOTAL R61,050 R37,912 62%

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SPORTS AND CULTURE (Project Type)PROJECT TYPE NO OF PROJECTS BUDGET

R’000Actual

Expenditure as at End of

December 2006 ( Q3)


REHABILITATION

133 Multi-Purpose

Sport Centre7 Soccer Stadiums

1 Art Centre1 Tennis Stadium

1 Theatre

7,700 500 6,5%

NEW 21 Sports Field

1 Museum

1,500 - 0%

UPGRADING 129 Heritage sites

1 Soccer Stadium

2 Multi-Purpose Sports Centre

51,850 37,412 72%

TOTAL 61,050 37,912 62%

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PUBLIC TRANSPORT ROADS AND WORKS


No. of Project

s

BudgetR’000



New Construction

(Roads,MPCC, Home Based

Care, etc)

51 142,868 127,802 89

Rehabilitation/Upgrading 472 609,703 412,336 68

Recurrent Maintenance 10 228,127 97,472 43

Gautrain 1 3,241,000 1,756,238 54

Total Capital Expenditure

534 4,221,698 2,393,849 57

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Challenges in Implementing

Conditional Grants and Capital Budgets• Absence of Integration in

Infrastructure and Capital projects Planning;

• Absence of Infrastructure Planning and Budgeting Skills;

• Incorrect Data in the IRM (Infrastructure Reporting Model)

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Proposed Intervention by Treasury Intervention

• Infrastructure specialists have been appointed and will focus on monitoring and evaluation of the IRM information to improve reporting on capital projects;

• Treasury would encourage the utilisation of Infrastructure Delivery Improvement Program to help integrate planning , budgeting and reporting cycles;

• Treasury conducted a rigorous analysis of departments projections in Q3 and made recommendation to surrender funds for reallocation in some departments.

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END OF PRESENTATION

THANK YOU

Documents

2006/07 CONDITIONAL GRANTS AND CAPITAL EXPENDITURE (THIRD QUARTER )