DEPARTMENT OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS

DEPARTMENT OF DEPARTMENT OF COOPERATIVE GOVERNANCE COOPERATIVE GOVERNANCE

AND TRADITIONAL AFFAIRSAND TRADITIONAL AFFAIRS

PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS

STATE OF EXPENDITURE FOR THE 2013/14

FINANCIAL YEAR AS AT 31 DECEMBER 2013

Presented: Mr M Mtyhuda

11 March 2014

OVERVIEW OF THE PRESENTATIONOVERVIEW OF THE PRESENTATION

• Purpose

• Expenditure analysis as at 31 December 2013

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PURPOSEPURPOSE

The purpose of the presentation is to present to the Portfolio Committee:

•The state of expenditure as at 31 December 2013 (3rd Quarter) for the 2013/14 financial year.

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EXPENDITURE ANALYSIS AS AT 31 DECEMBER 2013EXPENDITURE ANALYSIS AS AT 31 DECEMBER 2013

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COGTA

Per Programme

Adjusted Budget for

2013/14

Expenditure end of

December 2013

Available Budget as at

the end of December

2013

% Spending

R'000 R'000 R'000

1. Administration 219 871 157 680 62 191 71.7%2. Policy, Research & Knowledge Management

52 492 32 174 20 318 61.3%

3. Governance & IGR 40 722 949 28 611 950 12 110 999 70.3%4. National Disaster Management Centre 705 396 189 650 515 746 26.9%5. Provincial & Municipal Governance Systems

281 627 272 204 9 423 96.7%

6. Infrastructure & Economic Development 16 371 416 10 399 523 5 971 893 63.5%7.Traditional Affairs 105 156 80 105 25 051 76.2%Total 58 458 907 39 743 286 18 715 621 68.0%

EXPENDITURE ANALYSIS AS AT 31 DECEMBER 2013 (Cont.)EXPENDITURE ANALYSIS AS AT 31 DECEMBER 2013 (Cont.)

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COGTA Actual for 2013/14

Programme Adjustment Budget

Expenditure end of

December 2013

Available Budget as at

the end of December 2013

% Spending

R'000 R'000 R'0001. Administration 219 871 157 680 62 191 71.7%

Compensation of employees 110 870 79 102 31 768 71.3%

Goods & Services 104 961 75 654 29 307 72.1%

Transfers & Subsidies 100

1949 -1 849 1949.0%

Payment for Capital Assets 3 140

870 2 270 27.7%

Payment for Financial Assets

800

105 695 13.1%


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COGTA Actual for 2013/14Programme Adjustment

BudgetExpenditure

end of December 2013

Available Budget as at the


% Spending

R'000 R'000 R'000

2. Policy, Research & Knowledge Management 52 492 32

174 20 318 61.3%Compensation of employees 21 919 14 455 7 464 65.9%Goods & Services 25 923 14 554 11 369 56.1%

Transfers & Subsidies

- - -

Payment for Capital Assets 4 650 3

165 1 485 68.1%3. Governance & Intergovernmental Relation 40 722 949 28 611 950 12 110 999 70.3%

Compensation of employees 22 346 16 672 5 674 74.6%

Goods & Services 11 305 3

363 7 942 29.7%Transfers & Subsidies 40 689 278 28 591 915 12 097 363 70.3%

South African Local Government Association 25 999 19 499 6 500 75.0%Municipal Demarcation Board 42 152 23 551 18 601 55.9%

South African Cities Network 5 786 5

031 755 87.0%

United Cities & Local Government of Africa 5 331 2

122 3 209 39.8%Equitable Share 40 595 010 28 537 890 12 057 120 70.3%

Households (Ex gratia ex-councillors) 15 000 3

822 11 178 25.5%

Payment for Capital Assets

20 20 0.0%


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COGTA Actual for 2013/14

Programme Adjustment Budget

Expenditure end of

December 2013

Available Budget as at the end of December 2013

% Spending

R'000 R'000 R'000

4. National Disaster Management Centre 705 396 189 650 515 746 26.9%Compensation of employees 19 895 13 876 6 019 69.7%Goods & Services 30 386 9 307 21 079 30.6%

Transfers & Subsidies (Disaster Relief) 652 940 165 416 487 524 25.3%

Payment for Capital Assets 2 175 1 051 1 124 48.3%

5. Provincial & Municipal Government Systems 281 627 272 204 9 423 96.7%Compensation of employees 22 281 17 513 4 768 78.6%Goods & Services 18 939 15 189 3 750 80.2%

Transfers & Subsidies (MSIG) 240 307 239 417 890 99.6%

Payment for Capital Assets 100 85 15 85.0%

6. Infrastructure & Economic Development 14 378 050 9 083 453 5 294 597 63.2%Compensation of employees 14 923 10 406 4 517 69.7%Goods & Services 8 436 5 472 2 964 64.9%

Transfers & Subsidies (MIG) 14 354 531 9 067 197 5 287 334 63.2%Other transfers (commonwealth membership) - 182 -182 -

Payment for Capital Assets 160 196 -36 122.5%


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COGTA Actual for 2013/14Programme Adjustment

BudgetExpenditure




% Spending

R'000 R'000 R'0006.1 Community Works Programme 1 731 326 1 159 403 571 923 67.0%

Compensation of employees 32 828 18 094 14 734 55.1%Goods & Services 1 698 498 1 141 309 557 189 67.2%

6.2 Municipal Infrastructure Support Agency 262 040 156


7. Department of Traditional Affairs 105 156 80


CRL Commission 32 503 24 000 8 503 73.8%

Payment for Capital Assets 350

100 250 28.6%


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OVERALL EXPENDITURE:

The total expenditure of the Department amounts to R39.743 million at the end of December 2013. This amount represents a 68.0 per cent spending rate of the total appropriation of the 2013/14 financial year.

Programme 1: Administration

R’000

Adjusted Budget for 2013/14 FY: R219 871

Actual expenditure (31 December): R157 680

Variance R 62 191 (71.7 per cent)

The Programme reflected a 71.7 per cent spending at the end of December 2013, and the key cost drivers within Programme 1 are the following:

•External Audits. •Operating Leases•Property Payments


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Programme 2: Policy, Research and Knowledge Management R’000

Adjusted Budget for 2013/14 FY: R 52 492Actual expenditure (31 December): R 32 174Variance R 20 318 (61.3 per cent)

PRKM demonstrated a 61.3 per cent spending rate at the end of December 2013.

The main reason for low spending was due to the delays with the migration from Novell to Microsoft and the renewal of SITA license that are paid in February each year.


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Programme 3: Governance & Intergovernmental Relations R’000

Adjusted Budget for 2013/14 FY: R 40 722 949Actual expenditure/transfers (31 December): R 28 611 950Variance R 12 110 999 (70.3 per cent)

The Programme reflected a 70.3 per cent spending rate at the end of December 2013.

The available amount of R12 billion at the end of December 2013 mainly relate to the Local Government Equitable Share for payment to the municipalities in line with the Division of Revenue Act, 2013 (Act 2 of 2013) (DORA) requirements.

The main reason for low spending was due to:

•The delays with the start of some planned projects as a result of consultations with different stakeholders; and

•The offsetting of the LGES in terms of Section 21(4) of DORA in respect of some municipalities in consultation with the National Treasury, which may result in a saving on transfer payments funds allocated to this Programme.


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Programme 4: National Disaster Management Centre R’000Adjusted Budget for 2013/14 FY: R 705 396 Actual expenditure/transfers (31 December): R 189 650Variance R 515 746 (26.9 per cent)


R488 million (94.6 per cent) of the available amount of R516 million at the end of December 2013 relate to the Disaster Relief and Municipal Disaster Recovery Grants.

The main reason for low spending was due to:

•The finalisation of the movement to the new premises and the effect thereof on related services; and

•The uncertain nature of the Disasters.


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Programme 5 Provincial & Municipal Government Systems

R’000Adjusted Budget for 2013/14 FY: R 281 627 Actual expenditure (31 December): R 272 204Variance R 9 423 (96.7 per cent)

The Programme indicated a 96.7 per cent spending rate at the end of December 2013.

The main reason for the higher expenditure related to the acceleration of the completion of existing projects and new priority projects that have been identified for the remainder of the 2013/14 financial year for which virements of funds have been agreed to.


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Programme 6: Infrastructure and Economic Development R’000Adjusted Budget for 2013/14 FY: R16 371 416 Actual expenditure (31 December): R10 399 523Variance R 5 971 893 (63.5 per cent)


R5 287 billion (88.8 per cent) of the available amount of R5 971 billion at the end of December 2013 relate to the Municipal Infrastructure Grant.

The main reason for low spending by this Programme was due to delays in the start of some of the planned projects and the scheduling of the payment of the outstanding funds for the Municipal Infrastructure Grant during March 2014.


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Programme 6.1: Community Work Programme R’000Adjusted Budget for 2013/14 FY: R1 731 326 Actual expenditure (31 December): R1 159 403Variance R 571 923 (67 per cent)

The Community Work Programme reflected a 67 per cent spending rate at the end of December 2013. The Unit received roll-over funds, which is planned to be spend in February and March 2014. The key cost drivers within CWP are the following:

• Wage costs

• Material Cost

•Project Management and Administration costs

The main reason for the low spending by this Programme was due to the municipal sites that were established later in the 2013/14 financial year.


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Programme 6.2: Municipal Infrastructure Support Agency (MISA) R’000Adjusted Budget for 2013/14 FY: R 262 040 Actual expenditure/transfer (31 December): R 156 667Variance R 105 373 (59.8 per cent)

59.8 per cent of the available funds were paid to and in respect of MISA up to the end of December 2013.

The main reason for the slow spending is the progressive operationalisation of MISA, to function independently as a government component.


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Programme 7: Traditional Affairs R’000Adjusted Budget for 2013/14 FY: R 105 156 Actual expenditure (31 December): R 80 105Variance R 25 051 (76.2 per cent)

DTA reflects a 76.2 per cent spending rate at the end of December 2013.

The higher spending rate relate to the increased need for traditional affairs involvement at all levels of government.

EXPENDITURE ANALYSIS AS AT 31 DECEMBER 2013 EXPENDITURE ANALYSIS AS AT 31 DECEMBER 2013 (Economic Classification)(Economic Classification)

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Departmental Economic Classification exclude Transfers

Actual for 2013/14

COGTA Adjustment Budget

Expenditure end of December

2013

Available Budget as at the end of December 2013

% Spending

R'000 R'000 R'000

Compensation of employees 311 182 217 990 93 192 70.1%Department of Cooperative Governance 212 234 152 024 60 210 71.6%Community Works Program 32 828 18 094 14 734 55.1%Municipal Infrastructure Support Agent 21 089 16 186 4 903 76.8%Department of Traditional Affairs 45 031 31 686 13 345 70.4%Goods & Services 2 166 671 1 429 648 737 023 66.0%Department of Cooperative Governance 199 950 123 539 76 411 61.8%Community Works Program 1 698 498 1 141 309 557 189 67.2%Municipal Infrastructure Support Agent 240 951 140 481 100 470 58.3%Department of Traditional Affairs 27 272 24 319 2 953 89.2%Transfers & Subsidies 15 100 5 953 9 147 39.4%Payment for Capital Assets 10 595 5 467 5 128 51.6%Department of Cooperative Governance 10 245 5 367 4 878 52.4%

Department of Traditional Affairs 350 100 250 28.6%

Payment for Financial Assets 800 105 695 13.1%

Total 2 504 348 1 659 163 845 185 66.3%

Add Major Transfers & Subsidies 55 954 559 38 084 123 17 870 436 68.1%

Grand Total 58 458 907 39 743 286 18 715 621 68.0%


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COMPENSATION OF EMPLOYEES: R’000

Adjusted Budget for 2013/14 FY: R 313 182 Actual expenditure (31 December): R 217 990Variance R 93 192 (70.1 per cent)

The compensation of employee expenditure reflected a 70.1 per cent spending rate at the end of December 2013.

The main reason for the lower spending rate is the delays experienced with the finalisation of the performance assessments for senior Managers, filling of priority posts and staff turnover.


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GOODS AND SERVICES: R’000

Adjusted Budget for 2013/14 FY: R 2 166 671 Actual expenditure (31 December): R 1 429 648Variance R 737 023 (66.0 per cent)

Goods and services reflected a 66 per cent spending rate at the end of December 2013 and relates mainly to the following areas:

• The Community Work Programme reflected a 67 per cent spending rate at the end of December 2013. The Unit received roll-over funds, which is scheduled to be spent during February and March 2014;

• MISA reflected a 59.8 per cent spending/transfer rate at the end of December 2013. The lower spending is mainly due to the progressive operationalisation of MISA to function independently as a government component; and

• Delays with the start of some planned projects. The Department has implemented actions to fast track spending on these projects up to the end of the 2013/14 financial year, as far as possible.


PAYMENTS OF CAPITAL ASSETS:

R’000Adjusted Budget for 2013/14 FY: R 10 595

Actual expenditure (31 December): R 5 467

Variance R 5 128 (51.6 per cent)

Payments of capital assets demonstrated a 51.6 per cent spending rate at the end of December 2013.

The main cost drivers under this economic classification for the remainder of the 2013/14 financial year relate to:

• The movement of the National Disaster Management Centre to appropriate office space and the related costs for office equipment and furniture; and

• The payment of the new servers as part of the upgrading and improvement of Information Communication and Technology services in the Department.

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Transfers and subsidies

Actual for 2013/2014 Financial Year

Adjustment Budget

Transferred amount up to

the end of December 2013



% Spending

R'000 R'000 R'000

South African Local Government Association 25 999 19 499 6 500 75.0%

Municipal Demarcation Board 42 152 42 152 0 100.0%

South African Cities Network 5 786 5 031 755 87.0%

UCLGA 5 331 2 122 3 209 39.8%

Local Government Equitable Share 40 595 010 28 537 890 12 057 120 70.3%

Municipal Infrastructure Grant 14 354 531 9 067 197 5 287 334 63.2%

Municipal Systems Improvement Grant 240 307 239 417 890 99.6%

Disaster Relief Fund 534 600 165 416 369 184 30.9%

Municipal Disaster Recovery Fund 118 340 0 118 340 0.0%

CRL Commission 32 503 24 000 8 503 73.8%

Total 55 954 559 38 102 724 17 851 835 68.1%


TRANSFERS AND SUBSIDIES:

R’000Adjusted Budget for 2013/14 FY: R 55 954 559

Actual expenditure/transferred (31 December): R 38 102 724

Variance R 17 851 835 (68.1 per cent)

The Department is projecting that all funds allocated for the Public Entities and Grants to municipalities will be transferred by the end of March 2014, in line with the approved payment schedules.

Underspending is projected on the Disaster Relief Grant and the Local Government Equitable Share mainly due to the uncertainty of disaster events and the offsetting of the Local Government Equitable Share, in line with the DORA regulations.

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THANK YOU!

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DEPARTMENT OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS

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