Pietermaritzburg: Tuesday, 7 December 2011
The mid-term resolutions before us today
demonstrate that our Finance Committee has expanded on its
mandate beyond mere financial oversight to broad issues of good
governance. These resolutions touch on challenges with
investigations into fraud and corruption, disciplinary
procedures, recruitment of public servants, blacklisting of
service providers, and disaster management. I wish to thank the
Chairperson of Finance Committee who has been driving much of
this additional agenda.
Our first concern throughout these mid-term
budget reviews has been about government waste. Much has been
done to address this through the Provincial Recovery Plan. The
Cabinet-approved cost-cutting measures have been critical in
eliminating past overspending on items which are not essential
to service delivery. However, there are still areas where waste
continues unchecked and where cost-cutting measures are plainly
not being implemented.
The provincial Legislature, for one, needs to
apply cost-cutting measures to its money-guzzling public
participation events. At mid-year, it had overspent its budget
for its contentious Sectoral Parliaments by some R2.6-million.
And even more seriously, Department of Education continues to
grossly overspend on communication, consultants, contractors,
office stationery, venues and facilities, and travel and
The overall over-expenditure at mid-year at
Education on these and similar items stands at R285-million and
if the cost-cutting measures had been implemented, this amount
could have gone some way towards off-setting the spending
pressures this department is experiencing as a result of higher
than budgeted for wage increases and the reversed “no work, no
pay” deductions enforced by the recent court ruling.
From the Honourable MEC for Finance, I would
like to know if all instances where cost-cutting measures are
ignored by departments are being reported to the Cabinet, as
they should be, and what action is being taken against
Accounting Officers in the departments that are not implementing
If these cost-cutting measures are here to
stay, as the Hon. MEC for Finance has promised this House
repeatedly, government departments need to handle them more
consistently: Accounting Officers need to be able to quantify
how much they are likely to save as a result of these measures
and whether they have plans in place to redirect these savings
towards service delivery.
Potential efficiency savings in other areas
are also being neglected. Property payments in the Department of
Education alone stood at R88-million at mid-year, while many
government properties this department could be utilising instead
of leased premises lie vacant throughout the province. Here we
need closer cooperation with Public Works who need to deal more
urgently with the challenges associated with the Fixed Asset
Register of government properties across the provincial
Similarly, in the Department of Health, the
previous concerns about uncompetitive prices of laboratory
services charged by the NHLS are now more urgent than ever, as
the NHLS dropped the previous flat rate in favour of charging
for actual services rendered. We argue that this has opened the
door for more of redundant and duplicate testing and potentially
It is regrettable that attempts to renegotiate
the raw deal our Department of Health has got with the NHLS do
not appear to have moved an inch since this issue first appeared
in finance committee resolutions years ago. Our contract with
the NHLS is essentially an underfunded mandate and if this
contract cannot be renegotiated, we should be approaching
National Treasury directly for funding to cover annual
The contract Department of Health has with the
NHLS makes the case for introducing more competition into our
public healthcare more dif......... How can we argue for opening more
procurement to competitive bidding if we are legally prevented
from procuring essential laboratory services from the private
sector at competitive prices? If the current costs charged by
the NHLS are beyond what we can afford, how much more of an
underfunded mandate will they be once we have fully implemented
the National Health Insurance?
It is clear that our province has been
repeatedly short-changed in compensation for managing the
effects of natural disasters. From our discussions with the
stakeholders it seems that the bottleneck is at national level.
While our provincial authorities generally respond to disasters
promptly, their national counterparts take too long with their
verification procedures and, of course, the financial
compensation for disasters from National Treasury comes late and
far short of the actual cost incurred by the province.
Overspending as a result of inadequate
planning and budgeting continues to be a challenge in many
government departments. The Office of the Premier, for one, has
overspent its budget at mid-year by close to R71-million. Some
items of over-expenditure, such as new vehicles or renovations at
the Premier’s Parkside residence, could have easily been foreseen
and budgeted for appropriately.
It is ironic that the Office of the Premier
should boast about the successes of the newly established
Provincial Planning Commission and yet its own departmental
planning and budgeting for the most basic overheads leaves so
much to be desired.
Another initiative spearheaded by the Office
of the Premier, the Youth Ambassadors, is also set to overspend.
We in the Official Opposition have had reservations about this
programme from the very beginning, not least because it was
instituted halfway through the previous financial year and the
initial funding had to be provided through adjustments.
Honourable MEC for Finance, I am sure you will
agree that this is not how new policy initiatives should be
introduced into the provincial budget. The overall cost of the
programme has since more than quadrupled to more than
R80-million with an overspending at mid-year sitting at
R32-million. Despite all this lavish expenditure, we have yet to
see the merits of these Youth Ambassadors on the ground.
Much like the Office of the Premier, this
Legislature does not appear to have planned and budgeted
adequately for all the anticipated work on the very building
where we are sitting today. In this case as in the case of the
Parkside residence, we need to see detailed project lists for
all the necessary renovations.
In contrast to these examples of overspending,
many other departments are projecting to underspend their
budgets at mid-year and some budgets are likely to go unspent by
the time this financial year ends. Low rates of spending are
usually the case with conditional grants, but significant
underspending at mid-year is now also a challenge for the
equitable share expenditure in numerous departments.
Of great concern to us are instances of
underspending on capital projects in the Departments of Public
Works, Arts and Culture, and Sport and Recreation. In the
Department of Education, which is set to overspend heavily on
Compensation of Employees, it is service delivery programmes,
such as Early Childhood Development, that show alarming levels
of underspending. Social Development is also set to underspend
on service delivery at mid-year, but we are hoping that the
recent change in its political leadership will help address some
going concerns, especially with regards to accountability.
Conditional grants, which largely coincide
with the government’s stated service delivery priorities, are
once again being underspent , some of them heavily. We certainly
hope to avoid a repeat of last year’s surrender to National
Treasury of R80-million of the department’s unspent housing
grant for redistribution to other provinces. Again, we hope that
the new political leadership in this depar............ where spending on
conditional grants needs serious improvement is COGTA.
We are told that spending on conditional
grants will catch up towards the end of the financial year.
Quite frankly, we will believe this when we see it. Spending
projections for most conditional grants are routinely
overstated. Two areas where urgent action is needed are project
management and procurement.
I have mentioned that this time round the
Finance Committee focused more than before on measures that are
in place in government to detect fraud and corruption. One area
of concern to the committee is an apparent lack of controls to
prevent such abuse as provision of free medical services by
public hospitals to officials who should be paying for such
services, or recruitment of disgraced public servants by other
departments or other spheres of government.
Another concern is that fraud detection is
done on the assumption that it is unknown to the officials in
charge. However, some recent examples of unethical behaviour
such as the appointment of a person facing serious criminal
charges to head this Legislature’s Supply Chain Management unit
shows that we need greater political will to uproot corruption
if we are to succeed in these endeavours.
I thank you.
078 302 0929