Standing Committee on Appropriation Office of the Director-General DEPARTMENT OF PUBLIC WORKS 4th Quarter Performance of 2015/16 and 1st Quarter Performance of 2016/17 for the Department of Public Works Standing Committee on Appropriation Parliament, Cape Town 15th September 2016 Office of the Director-General

Content Content Slide No. Areas of under expenditure - Summary Expenditure per Economic Classification 3 – 4 Performance Information per programme (details in Annexure A and B) 5 Service delivery implications from slow expenditure and implications fro the targets in the NDP 6 – 7 Challenges of the IDT 9

Areas of under expenditure Summary Expenditure per Economic Classification – as at 31st March 2016 (2015/16) Expenditure Economic classification – as at 31st March 2016 – (100% Guideline) As at 31 March 2016 2014/15   Percentage of total budget Annual Appropriation Actual Expenditure as at 31 March 2016 Actual Expenditure – March 2015 % R'000 Current payments Compensation of employees 7% 454 959 435 858 96% 1 591 775 99% Goods and services 372 393 366 035 98% 1 389 442 Transfers and subsidies 85% 5 412 407 5 411 314 100% 2 577 774 Payment for capital assets Infrastructure - 315 914 82% Machinery & equipment / intangible assets 0% 28 060 23 537 84% 104 800 Payments for financial assets 1% 44 403 3 439 Total 6 312 222 6 281 147 6 022 038 The Department spent 99% of the total allocation for 2015/16 and the unspent of 1% relates to: Compensation of employees under spent (4%) due to vacant positions filled in the latter part of the financial year. The under spending relate to EPWP. Goods and services under spent (2%) due to late receipt of invoices and therefore reported as accruals in the financial statements. Machinery and equipment under spent (16%) and the under spent amount is linked to vacancies

Summary Expenditure per Economic Classification - 30 June 2016 Expenditure Economic classification – First Quarter Report – (25% Guideline) For the first quarter ended 30 June 2016 2015/16   Percentage of total budget Annual Appropriation Actual Expenditure as at 30 June 2016 Actual Expenditure – June 2015 % R'000 Current payments Compensation of employees 7% 470 825 118 945 25% 100 895 21% Goods and services 431 297 67 940 16% 79 112 19% Transfers and subsidies 85% 5 588 134 1 536 480 28% 1 683 824 31% Payment for capital assets Machinery & equipment / intangible assets 1% 38 508 6 598 17% 4 612 Total 6 528 765 1 729 963 26% 1 868 453 29% Compensation of employees expenditure of 25% is in line with the guidelines for the first quarter. Goods and services expenditure of 16% is within the spending trend for the first quarter. Not under and over spending projected Transfer and subsidies expenditure of 28% is in line with drawings, and funds will be fully spent at the end of the financial year. Machinery and equipment spending of 16% is within the guidelines for the first quarter.

DPW– 2015/16 and 2016/16 Q1 % Achievement per Programme Of the 38 targets for the Quarter, 21 were achieved (55%) Of the 22 targets for the Quarter, 17 were achieved (77%)

National Development Plan Targets - 2015/16  National priorities NDP Chapter & MTSF National Outcome MTEF Budget Related performance indicators 2015/16 Performance Creating decent employment through inclusive economic growth NDP Chapter 3: Economy and employment New Growth Path : Jobs Driver 4 : Investing in Social Capital MTSF Outcome 4: Decent employment through inclusive economic growth The medium-term budget allocation for EPWP (including compensation of employees and goods and services) is R2 billion. Number of work opportunities as reported in the EPWP reporting system aligned to the EPWP Business Plan (Phase III) 742 179 work opportunities created through the EPWP Phase 3 Creating an inclusive social protection system NDP Chapter 11 : Social protection   MTSF Outcome 13 – An inclusive and responsive social protection system The medium-term budget allocation for EPWP Social Sector Grant is R226 million Creating a skilled and capable workforce to support an inclusive growth path NDP Chapter 9 : Improving education, training and innovation MTSF Outcome 5 - Skilled and capable workforce to support an inclusive growth path. CETA: R50 million (ending March 2016 which is the end of the current commitments on National Skills Development Strategy 111) DPW Young Professional Programme : R45 million (ending 2016/2017) DPW Management Trainees: R16,2 million (ending 2016/2017) DPW Mentorships (Professional Services): R9,6 million (ending 2016/2017 CBE : R23.9 million Number of beneficiaries participating in the DPW skills development programme 1 294 Beneficiaries participating in the DPW Skills Development 90 Young Professionals 700 Interns 319 Learnerships 52 Management Trainees 133 Programme Artisans (Target 1 067 beneficiaries)

National Development Plan Targets - 2016/17  National priorities NDP Chapter & MTSF National Outcome MTEF Budget Related performance indicators Creating decent employment through inclusive economic growth NDP Chapter 3: Economy and employment New Growth Path : Jobs Driver 4 : Investing in Social Capital MTSF Outcome 4: Decent employment through inclusive economic growth The medium-term budget allocation for EPWP (including compensation of employees and goods and services) is R2.3 billion. Number of quarterly reports on Public Employment Programmes (PEPs) within EPWP completed Creating an inclusive social protection system NDP Chapter 11 : Social protection   MTSF Outcome 13 – An inclusive and responsive social protection system The medium-term budget allocation for EPWP Social Sector Grant is R360 million Creating a skilled and capable workforce to support an inclusive growth path NDP Chapter 9 : Improving education, training and innovation MTSF Outcome 5 - Skilled and capable workforce to support an inclusive growth path. CETA funds: R50 mil : 2013/14 – 2016/2017 (end of current commitments on National Skills Development Strategy III) Young Professional Programme : R45m - 2016/2017 Management Trainees - R16,2m : 2016/2017 Mentorships (Professional Services) - R9,6m : 2016/2017 Bursary Scheme – R9.8m: 2016/2017 CBE skills development programme – R40.2 million Number of beneficiaries participating in the DPW skills development programme

IDT CHALLENGES

CHALLENGES OF THE IDT After 11 consecutive unqualified audit opinions, spanning 2002/03 to 2012/13, the IDT received a qualified audit opinion for the 2013/14 financial year followed by a disclaimed opinion in 2014/15 and another disclaimer in 2015/16. Basis of the disclaimer Presentation of material balances of Programme spend and of Programme reserves and liabilities for audit purposes without accurate and complete underlying accounting records. Inadequacy of reconciliations performed on the underlying accounts relating to Management fees, Trade receivables, Impairment of Trade receivables and Provision for doubtful debts. The impact of take-on balances in the project accounting system emanating from the migration process that took place in 2013/14. Vulnerable funding model opening the organisation to the threat of solvency i.e. model highly dependent on business portfolio size, payments by clients, and management fee rates. Prolonged transformation process impacting adversely on staff morale, staff turnover, strategic and operations planning, and organisational performance. Funding from National Treasury was obtained at a level of R50 million for the last three years ending 31 March 2016. The support helped to bridge the transition to self-funding. Considering the vulnerable state of the IDT finances, the continuation of the support for a further two years will strengthen the organisation. Action has been and continue to be taken against responsible officials for transgressions and dereliction of duty. These include action against the former CFO and Acting Executive responsible for Strategy and Corporate Performance both of whom had their services terminated.

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