1

Presentation to the Select Committee on Appropriations

Devolution of Property Rate Funds Grant

NATIONAL TREASURY

7 May 2010

2

Public Works, Roads and Transport– Provinces

as at 31 December 2009Table : Provincial Expenditure: Public Works, Roads and Transport as at 31 December 2009

Eastern Cape 4 135 918 4 135 920 3 088 357 74.7% -2 – 0.0% 8.7% 2 891 623 6.8%

Free State1 2 349 505 2 471 384 1 399 898 59.6% -121 879 – -5.2% 10.4% 1 587 280 -11.8%

Gauteng 11 341 995 11 543 026 7 504 442 66.2% -201 031 – -1.8% 16.9% 8 139 148 -7.8%

Kw aZulu-Natal 6 030 423 5 997 899 4 605 205 76.4% – 32 524 0.5% 9.8% 4 057 942 13.5%

Limpopo 3 753 942 3 718 112 2 381 024 63.4% – 35 830 1.0% 9.2% 2 097 486 13.5%

Mpumalanga 2 627 611 2 590 523 1 880 366 71.6% – 37 088 1.4% 10.7% 1 660 531 13.2%

Northern Cape 752 665 752 665 392 806 52.2% – – 0.0% 6.5% 580 510 -32.3%

North West 2 420 730 2 718 243 1 961 733 81.0% -297 513 – -12.3% 12.9% 1 891 079 3.7%

Western Cape 4 170 181 4 170 181 2 615 482 62.7% – – 0.0% 12.0% 1 893 132 38.2%

Total 37 582 970 38 097 953 25 829 313 68.7% -620 425 105 442 -1.4% 11.4% 24 798 731 4.2%

Year-on-year

growth

% (Over)/ under of adjusted budget

% share of PWRT to

total provincial

expenditure

2008/09: Outcome as

at 31 December

2008

Actual payments

as % of adjusted budget

(Over) Under

R thousand

Adjusted budget

Projected outcome

Actual payments as

at 31 December

2009

3

• Spending is at R25.8bn or 68.7% against R37.6bn adjusted budget – 12.4% of total provincial adjusted budgets– Increase of R1bn or 4.2% compared to same period of last year

• WC – 38.2%; KZN and LP – 13.5%

• Projected overspending of R620m in 4 provinces (NW – R297.5m ;GP – R201m)

• Personnel spending at R4.7bn or 73.9% (R6.3bn adjusted budget)– Projected overspending of R195m in 4 provinces (GP – R138.1m;

LP – R29.3m)

• Capital spending at R5.3bn or 68.2%– Projected underspending of R340.1m in 5 provinces • (EC – R133.9m; NC – R103m; FS – R84.9m)– Low rate of capital spending in NC (6.6%) and LP (39.6%)– GP (121%) and NW (88.4%) reflects the highest rate of capital

spending

Public Works, Roads and Transport– Provinces

as at 31 December 2009

4

Public Works, Roads and Transport– Provinces

as at 31 March 2010Table : Provincial Expenditure: Public Works, Roads and Transport as at 31 March 2010

Eastern Cape 4 135 918 4 045 885 4 045 885 97.8% – 90 033 2.2% 122.4% 8.9% 3 773 808 7.2%

Free State1 2 283 137 2 227 869 2 227 869 97.6% – 55 268 2.4% 139.8% 11.9% 1 872 008 19.0%

Gauteng 11 352 995 11 411 875 11 411 875 100.5% -58 880 – -0.5% 503.6% 19.1% 10 483 728 8.9%

Kw aZulu-Natal 6 030 423 5 955 748 5 955 748 98.8% – 74 675 1.2% 114.0% 9.3% 5 756 479 3.5%

Limpopo 3 753 942 3 365 775 3 365 775 89.7% – 388 167 10.3% 149.2% 9.4% 3 030 798 11.1%

Mpumalanga 2 627 611 2 626 716 2 626 716 100.0% – 895 0.0% 177.8% 11.1% 2 176 494 20.7%

Northern Cape 752 665 715 508 715 508 95.1% – 37 157 4.9% 66.9% 8.8% 681 947 4.9%

North West 2 561 367 2 539 565 2 539 565 99.1% – 21 802 0.9% 148.1% 12.5% 2 343 086 8.4%

Western Cape 4 170 181 3 865 315 3 865 315 92.7% – 304 866 7.3% 153.8% 12.8% 2 766 228 39.7%

Total 37 668 239 36 754 256 36 754 256 97.6% -58 880 972 863 2.4% 171.6% 12.0% 32 884 576 11.8%

1. Province includes Community Safety Net 913 983

Year-on-year

growth

% (Over)/ under of adjusted budget

% share of PWRT to

total Capital

expenditure

% share of PWRT to

total provincial

expenditure

2008/09: Outcome as at 31 March

2009

Preliminary outcome as

% of adjusted budget

(Over) Under

R thousand

Adjusted budget

Preliminary outcome

Preliminary outcome as at 31 March

2010

5

• Spending is at R36.8bn or 97.6% against R37.7bn adjusted budget – 12.4% of total provincial adjusted budgets– Increase of R3.9bn or 11.8% compared to same period of last year

• WC – 39.7%; MPU – 20.7% and FS – 19%• Preliminary underspending of R972.9m in 8 provinces

• LP – R388.2m; WC – 304.9m and EC – R90m• Personnel spending at R6.4bn or 101.8% (R6.3bn adjusted budget)

– Preliminary overspending of R195m in 3 provinces (GP – R118.2m; LP – R50m and EC – 27.2 )

• Capital spending at R7.7bn or 99.7%– Preliminary underspending of R309.4m in 4 provinces (WC – R176.5m;

FS – R102.1m and LP – R30.3 )– Low rate of capital spending in FS (87%) and LP (87.2%)– NC (120.9%) and EC (105.5%) reflects the highest rate of capital

spending

Public Works, Roads and Transport– Provinces

as at 31 March 2010

6

CG: Devolution of Property Rate Funds Grant

Table: Devolution of Property Rates Funds Expenditure as at 31 December 2009

Eastern Cape 210 334 210 334 92 149 43.8% – – 0.0% 0.3% 11.0% 46 703 97.3%

Free State 185 104 204 854 134 746 72.8% -19 750 – -10.7% 1.0% 16.0% 22 965 486.7%

Gauteng 401 099 383 872 138 088 34.4% – 17 227 4.3% 0.3% 16.4% 57 835 138.8%

Kw aZulu-Natal 237 382 237 382 216 795 91.3% – – 0.0% 0.5% 25.8% 176 333 22.9%

Limpopo 19 217 – – 0.0% – 19 217 100.0% 0.0% 0.0% 233 -100.0%

Mpumalanga 60 337 51 761 39 358 65.2% – 8 576 14.2% 0.2% 4.7% 15 109 160.5%

Northern Cape 37 298 37 298 30 732 82.4% – – 0.0% 0.5% 3.7% 16 396 87.4%

North West 66 776 66 776 43 276 64.8% – – 0.0% 0.3% 5.1% 47 690 -9.3%

Western Cape 268 864 349 305 145 953 54.3% -80 441 – -29.9% 0.7% 17.4% 127 585 14.4%

Total 1 486 411 1 541 582 841 097 56.6% -100 191 45 020 -3.7% 0.4% 100.0% 510 849 64.6%

R thousand

Adjusted budget

Projected outcome

Actual payments as

at 31 December

2009

Year-on-year

growth

% share of grant to

total provincial

expenditure

% share of grant to

total grant expenditure

2008/09: Outcome as

at 31 Dec 2008

Actual payments

as % of adjusted budget

(Over) Under

% (Over) / under of adjusted budget

7

Devolution of Property Rates Funds Grant

Table: Devolution of Property Rates Funds Grant Expenditure as at 31 March 2010

Eastern Cape 210 334 113 495 113 495 54.0% – 96 839 46.0% 0.3% 9.6% 60 010 89.1%

Free State 185 104 185 094 185 094 100.0% – 10 0.0% 1.0% 15.7% 70 199 163.7%

Gauteng 401 099 228 134 228 134 56.9% – 172 965 43.1% 0.4% 19.4% 81 592 179.6%

Kw aZulu-Natal 237 382 237 205 237 205 99.9% – 177 0.1% 0.4% 20.1% 209 728 13.1%

Limpopo 19 217 7 237 7 237 37.7% – 11 980 62.3% 0.0% 0.6% 6 853 5.6%

Mpumalanga 60 337 51 761 51 761 85.8% – 8 576 14.2% 0.2% 4.4% 28 448 81.9%

Northern Cape 37 298 37 298 37 298 100.0% – – 0.0% 0.5% 3.2% 24 094 54.8%

North West 66 776 66 776 66 776 100.0% – – 0.0% 0.3% 5.7% 58 326 14.5%

Western Cape 268 864 250 286 250 286 93.1% – 18 578 6.9% 0.8% 21.3% 147 094 70.2%

Total 1 486 411 1 177 286 1 177 286 79.2% – 309 125 20.8% 0.4% 100.0% 686 344 71.5%

R thousand

Adjusted budget

Projected outcome

Actual payments as at 31 March

2010

Year-on-year

growth

% share of grant to

total provincial

expenditure

% share of grant to

total grant expenditure

2008/09: Outcome as at 31 March

2009

Actual payments

as % of adjusted budget

(Over) Under

% (Over) / under of adjusted budget

8

Concluding Comments• Provincial public works departments are responsible for the payment of

municipal property rates for all departments in a province. Failure to do this may lead to a termination or disruption of services such as water and electricity

• Outcomes have deteriorated since 2008/09, where under-spending was just over R202m.

• Spending on this grant is highly reliant on the rating and billing capacities of municipalities.

• Poor municipal property management, poor billing systems, late billing, etc. influence negatively on a province’s ability to meet its obligations.

• Provinces with former “homeland” government structures within their jurisdiction are particularly negatively affected, due to the incomplete rating of properties in these areas.

• The budget for this grant was adjusted upwards by R353.2m in 2009/10, due to the under-funding of certain provinces.

• Reasonably accurate baselines going forward are essential before the devolution process can be completed.