Speech by Gregory David during the debate on the first quarter Expenditure Report of the Joint Budget Committee

21 August 2008

Madam Speaker

Deputy President of the ANC



Honourable Members

The report of the Joint Budget Committee which we are debating today focuses on the expenditure for the period April to June 2008.

This also forms part of the Terms of Reference of the Joint Budget Committee, which was adopted by a resolution of both Houses of Parliament in 2004 at the start of the Third Parliament. Part of the Terms of Reference require that the JBC:

"On a regular basis monitor monthly published actual revenue and expenditure per department, and to ascertain whether they are in line with budget projections."

This report on the First Quarter Expenditure is also the final report of the committee in this the Third Democratic Parliament. Next years report for the First Quarter will be tabled in the Fourth Democratic Parliament.

Total expenditure by departments in this first quarter stands at R 139.2 billion or 23% of the appropriation.

In comparison, in the first quarter in 2007/08, expenditure stood at R 66.7 billion or 22.33%, in the first quarter of 2006/07 expenditure stood at R 55.7 billion or 21.44% and in the first quarter of 2005/06 expenditure stood at R 51.2 billion or 23.14%.

Whilst aggregate expenditure has increased over the period 2005/06 to 2008/09, spending patterns relative to the budget have remained in the 21% to 23% band. At the same time, there has been under expenditure in some of the sub programs.

We have to ask whether in relation to the State of the Nation Address this year, wherein President Mbeki stated that this would be the year of Business Unusual, whether the spending of departments reflects this.

The JBC has not been able to ascertain whether steps have been taken to accelerate not only spending but also actual delivery. If time permitted, the Joint Budget Committee should have required of departments to submit detailed reports of steps undertaken to implement the Presidents instruction of Business Unusual.

In a presentation to the JBC on 1 August 2008, the National Treasury indicated that 4 departments, namely Foreign Affairs, DPSA, Agriculture and Land Affairs, missed their year to date spending benchmark in the first quarter by more than 8%. A further two departments, Communication and Public Enterprises missed their benchmark by 21%.

In the remaining months of this financial year and the Third Democratic Parliament, it is imperative that all Departments focus on accelerating spending in an effective and efficient manner, ensuring that this Government meets its delivery targets.

This will require greater emphasis on planning as well improved inter-departmental planning, budgeting and spending.

A particular concern to the JBC, are the vacant posts which exist and the impact which they have on the delivery of services. It has too often become the norm to budget for posts and then later in the year to shift these funds to other programs in the form of virements.

In the SONA, the President said: "It has been agreed across all spheres of Government that especially the critical vacancies should be filled within six months of such openings emerging. The Department of Public Service and Administration will set up a monitoring system to track the implementation of this decision."

The JBC is not convinced that Departments have clearly identified departmental critical skills and prioritised them accordingly and is therefore of the view that departments should make every effort to fill vacant posts by the end of the second financial quarter, especially those at senior management level. In addition, vacant posts at lower levels must also receive similar attention.

The committee has therefore recommended that all departments should submit an assessment of skills required and a recruitment action plan by the end of September this year. In addition it recommends that the Department of Public Service and Administration should submit a report to Parliament on progress made with the filling of senior posts across government.

The committee is also concerned about the delay in the transfer of funds to State Owned Enterprises. These are attributed to amongst others, delays in the submission of business plans, cash flow projections, service level agreements and compliance documents.

These delays impact on the ability to spend allocated funds efficiently and effectively.

It is important that departments who transfer funds to SOE's ensure that prior to the commencement of the financial year, all the necessary documentation and in particular Service Level Agreements are finalised and submitted.

Emphasis also needs to be placed on the performance and financial sustainability of SOE's. This includes taking measures to improve their overall operations and identifying and reducing potential risks. The JBC is also of the view that measures should be taken to improve risk management in order to reduce situations that could lead to unacceptability high adjustments having to be made.

In some departments, we have seen instances where in certain programs, low or non-expenditure takes place as a result of allocated funds being placed in suspense accounts. This causes a delay in the delivery of prioritised services.

The JBC is concerned when delays in service delivery occur due to a lack of expenditure and intends to exercise greater oversight over this area with the Accountant General in the coming months.

A number of departments have indicated that slow or low expenditure took place as a result of delays in the receipt of invoices.

The Department of Labour shows poor spending on Goods and Services due to delays in submission of invoices by DPW. The Department of Housing has experienced delays in the receipt of invoices from GCIS. The Department of Land Affairs also experienced delays in the receipt of invoices from DPW.

Over the past four years, the work of the JBC has contributed to enhancements in budgetary oversight as well as departmental accountability.

In the early years of the JBC, departments and in fact Portfolio and Select Committees were not entirely sure of what the work of the JBC was.

However, the JBC has improved in its own work and has been able to focus effectively on its mandate and has firmly placed itself on the radar screen of departments.

Departments take the JBC seriously and understand that we will engage and ask probing questions around financial management and the use of state funds.

During this term, we have seen a number of departments implementing recommendations of the JBC. For example, the Department of Housing has established a monitoring and evaluation program which will strengthen the department's ability to monitor and evaluate both the effectiveness and efficiency of the utilisation of state funds in the provision of adequate shelter.

It is through the initiative of the ANC, that such oversight takes place. This demonstrates the seriousness that the ANC places on both oversight and accountability. It is worth noting that there was no such oversight nor accountability or transparency under the previous regime.

The JBC has also made recommendations to National Treasury on changes that it would want to see in some of the reports provided. National Treasury has responded by affecting some of these recommendations which has assisted the JBC in strengthening its oversight and monitoring role.

Of concern has been the poor attendance by many of the Opposition parties in the work of the JBC as well as during the hearings around the MTBPS and the Budget.

This clearly contradicts their claims to be the watchdogs of Parliament. That role has been and continues to be undertaken by the ANC.

The only consistent opposition party has been the DA. In this regard, one must acknowledge the positive and constructive contributions of the Honourable Swart.

On a personal note, it has been a privilege to have been part of the JBC from its inception way back in 2002.

The ANC supports the adoption of this report.

I thank you!