1. DEPARTMENT OF TRANSPORT STANDING COMMITTEE ON APPROPRIATIONS 9 SEPTEMBER 2014 Department of Transport Expenditure for Quarter 1 of 2014/15

2. Expenditure to 30 June 2014: Expenditure per Programme Expenditure per Economic Classification Expenditure per Programme per Economic Classification Details of Transfer Payments Plans to Spend Additional Allocations for Rail Transport Plans for Improving Expenditure for Civil Aviation Implementation of Cost Containment Measures Contents 2

3. The Department has a total budget of R48 727 billion. To date of reporting the department has spent R14 414 billion or 30% of the allocated budget. Expenditure per Programme ProgrammeBudgetExpenditureAvailable% Spent R'000 1. Administration382 860103 315279 54527% 2. Integrated Transport Planning81 18411 61769 56714% 3. Rail Transport15 034 5567 749 4267 285 13052% 4. Road Transport21 645 2875 203 74016 441 54724% 5. Civil Aviation148 27132 126116 14522% 6. Maritime Transport110 58919 83190 75818% 7. Public Transport11 323 7711 294 35210 029 41911% Total Department48 726 51814 414 40734 312 11130% 3

4. Compensation of Employees: Underspent as a result of vacant posts. Goods and Services: Overspending due to eNatis Transfers and Subsidies: Underspent; a second tranche payment of R363 million withheld for Provincial Road Maintenance Grant (PRMG) (North West & Gauteng) due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and an updated Infrastructure Report Management return for May & July 2014. Machinery and Equipment: Underspent due to the renovation of the building. Expenditure per Economic Classification Per Economic ClassificationBudgetExpenditureAvailable% Spent R'000 Compensation of Employees383 38183 756299 62522% Goods and Services584 737286 657298 08049% Transfers & Subsidies47 754 19414 043 18333 711 01129% Machinery and Equipment4 2068113 39519% Total Department48 726 51814 414 40734 312 11130% 4

5. UNDERSPENT Compensation of employees Machinery and equipment Transfers & Subsidies; the first quarterly payment to Higher Education Institutions has not yet been paid due to delays in receiving invoices. Expenditure per Economic Classification: Programme 1 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 AdministrationCompensation of Employees172 80637 204135 60222% Goods and Services196 57265 517131 05533% Transfers & Subsidies11 1829511 0871% Machinery and Equipment2 3004991 80122% Total382 860103 315279 54527% 5

6. UNDERSPENT Compensation of employees Machinery and equipment Goods and Services is under spending due to the delays in the following projects: National Transport Planning databank projects, development of National Freight Logistics Strategy, Multi Modal Transport Planning and Co-ordination Act and Regional Corridor Strategy. Expenditure per Economic Classification: Programme 2 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Integrated Transport Planning Compensation of Employees39 3828 92430 45823% Goods and Services41 5732 43839 1356% Machinery and Equipment2294718221% Total81 18411 40969 77514% 6

7. UNDERSPENT Compensation of employees Goods and Services mainly due to the prioritisation on the establishment of Project Implementation Management Office (PIMO) between the Department and Passenger Rail Agency of South Africa (PRASA) for the Feasibility study on Moloto Rail Corridor, Rail Policy Act and Branchline Strategy. OVERSPENT Machinery and equipment is mainly due to office furniture that were purchased during the renovation of the building for the year. Transfers and subsidies a total amount of R7 693 billion has been paid to PRASA which constitutes 51% of the total budget of PRASA for the year. Expenditure per Economic Classification: Programme 3 7 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Rail Transport Compensation of Employees20 7704 43816 33221% Goods and Services15 90926615 6432% Transfers & Subsidies14 997 8047 744 6507 253 15452% Machinery and Equipment7372199% Total15 034 5567 749 4267 285 13052%

8. UNDERSPENT Compensation of Employees Machinery and Equipment Goods and Services was underspent on S’hamba Sonke programme and Road Infrastructure Policy. OVERSPENT Goods and Services was over spent by an amount of R162 million due to the cost of e-Natis maintenance and operations. Transfers and subsidies; the second tranche payment of R363 million withheld for PRMG (North West & Gauteng) due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and an updated IRM’s for May & July 2014. Expenditure per Economic Classification: Programme 4 8 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Road Transport Compensation of Employees 50 59910 49740 10221% Goods and Services49 058166 081(117 023)339% Transfers & Subsidies21 544 9765 027 08616 517 89023% Machinery and Equipment6547657812% Total21 645 2875 203 74016 441 54724%

9. UNDERSPENT Compensation of Employees Machinery and equipment Goods and Services is under spent due to delays in the following projects: National Airports Development Plan and the National Civil Aviation Policy. Transfers and subsidies due to payment of foreign membership fees to the African Civil Aviation Organisation, International Civil Aviation Organisation and COSPAS-SARSAT Expenditure per Economic Classification: Programme 5 9 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Civil Aviation Compensation of Employees 36 0607 99428 06622% Goods and Services75 58611 81263 77416% Transfers & Subsidies36 19812 28623 91234% Machinery and Equipment427343938% Total148 27132 126116 14522%

10. UNDERSPENT Compensation of Employees Machinery and equipment Goods and Services is due to the delay in the following projects: Maritime Transport Policy and Legislation, Feasibility for undertaking the tug boat and Ratification of African Maritime Charter. OVERSPENT The membership fees to the International Maritime Organisation and the Indian Ocean Memorandum of Understanding were invoiced and paid earlier than what was projected. 10 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Maritime Transport Compensation of Employees 22 1234 72817 39521% Goods and Services69 65110 04959 60214% Transfers & Subsidies18 4684 99813 47027% Machinery and Equipment3475629116% Total110 58919 83190 75818% Expenditure per Economic Classification: Programme 6

11. UNDERSPENT Compensation of employees Machinery and equipment Goods and services due to delays on the following projects: National Land Transport Amendment Bill, Review of the Rural Transport Strategy, Integrated Public Transport Network and National Learner Transport Policy. Transfers and subsidies due to expenditure for Taxi Recapitalisation: an amount of R66 million has been spent which was journalised in July 2014. 11 ProgrammePer Economic Classification BudgetExpenditureAvailable% Spent R'000 Public Transport Compensation of Employees 41 6419 97131 67024% Goods and Services136 38830 494105 89422% Transfers & Subsidies11 145 5661 253 8609 891 70611% Machinery and Equipment1762714915% Total11 323 7711 294 35210 029 41911% Expenditure per Economic Classification: Programme 7

12. Transfer Payments (R'000)BudgetExpenditureAvailable% Spent Conditional Grants: Provincial Roads Maintenance9 361 4982 044 0267 317 47222% Public Transport Operations4 832 7091 250 8603 581 84926% Public Transport Infrastructure and Systems4 968 029- 0% Public Transport Network Operations902 817- 0% Rural Road Asset Management75 223- 0% Public Corporatios: Passenger Rail Agency of South Africa (PRASA)14 946 3007 693 1467 253 15451% Departmental Agencies & Accounts: S.A. National Roads Agency11 916 9472 979 2358 937 71225% Road Traffic Management Corporation176 008- 0% Railway Safety Regulator51 504 0100% S.A. Civil Aviation Authority19 2394 80914 43025% Ports Regulator of South Africa16 8524 21312 63925% Road Traffic Infringements Agency15 3003 82511 47525% Maritime Rescue Co-ordination Centre6 8871 7225 16525% Transport SETA231- 0% 12 Transfer Payments

13. Transfer Payments (R'000)BudgetExpenditureAvailable% Spent Other: Taxi scrapping423 604- 0% Non Profit Institutions1 606- 0% South African National Taxi Council18 4073 00015 40716% Universities & Technicons10 790- 0% International Organisations10 0826 5263 55665% Leave pay and donations161317-156197% Total47 754 19414 043 18333 711 01129% 13 Conditional Grants to Municipalities are paid in the second quarter (01 July) inline with municipal financial year. A total of R7.693 billion has been paid to PRASA which constitutes 51% of its annual budget. The total budget for the Railway Safety Regulator was transferred as per the payment schedule as they receive their permit fees in July onwards. The transfer payments to the South African Civil Aviation Authority and the Marine Rescue Coordination Centre were delayed due to late invoicing and receiving of compliance certificates. Taxi scrapping expenditure will reflect in the next report after the journal been processed. The first quarterly payment to Higher Education Institutions has not yet been paid due to delays in receiving invoices. The membership fees to the International Maritime Organisation and the Indian Ocean Memorandum of Understanding were invoiced and paid earlier than what was projected. Transfer Payments (Continued)

14. Provincial Road Maintenance Grant (PRMG) 14 ProvinceBudgetTransferSpent by Province R'000 % Eastern Cape1 294 279281 682108 75939% Free State1 025 682215 12661 38529% Gauteng514 903104 101139 360134% KwaZulu-Natal1 788 158392 192556 600142% Limpopo1 127 310249 342145 58158% Mpumalanga1 594 840341 858409 136120% North West690 005140 43116 34412% Northern Cape640 472156 05497 68863% Western Cape685 849163 240191 188117% Total9 361 4982 044 0261 726 04184% A second tranche payment of R363 million withheld for North West & Gauteng Provinces due to non-compliance on submitting the Grant Evaluation Report for 2013/14 and updated Infrastructure Reporting Models for May & July 2014.

15. ProvinceBudgetTransferSpent by Province R'000 % Eastern Cape195 28250 960 100% Free State215 90056 60055 31998% Gauteng1 819 854464 100422 52291% KwaZulu-Natal904 783237 100257 607109% Limpopo291 85272 10073 613102% Mpumalanga491 418126 800121 22496% North West90 31823 90018 43277% Northern Cape43 93711 3009 87987% Western Cape779 365208 000189 47391% Total4 832 7091 250 8601 199 02996% Public Transport Operations Grant (PTOG) 15

16. Plans to Spend Additional Allocations for Rail Transport The DOT created capacity in the Rail Transport Branch by employing qualified personnel to manage transfer payments and exercise oversight on both PRASA and the RSR; PRASA has adopted through its approved Corporate Plan, a five (5) point plan to accelerate delivery of infrastructure programmes; A detailed presentation on the various plans put in place by PRASA in consultation with the Department are contained in the attached presentation done on 02 September 2014 to the Portfolio Committee on Transport; The plan covers a five (5) year signalling upgrade programme in Gauteng, KZN and Western Cape Provinces, The accelerated rolling stock programme, infrastructure modernisation and strategy for the deployment of new rolling stock. The plan also covers: asset life cycle management models, five year contracts with rolling stock contractors and the refurbishments of 500 coaches for both commuter and long distances services. 16

17. Expenditure outcome 2013/14Budget Standard ItemBudgetExpenditureAvailable2014/15growth on R'000 Expenditure Compensation of Employees31 27831 276 236 06015.3% Goods and Services171 05274 48996 56375 5861.5% Transfers & Subsidies34 23133 887 34436 1986.8% Buildings and fixed structures8 2008 197 3--100.0% Machinery and Equipment 754 753 1 427-43.3% Totals245 515148 60296 913148 271-0.2% Major savings / under expenditure for 2013/14: Saved R96.562 million that was over budgeted for Mthatha airport runway. Saved R344,000 on foreign membership fees. It is expected that Civil Aviation will spend its budget for 2014/15 17 Plans for Improving Expenditure for Civil Aviation

18. National Treasury Instruction 01 of 2013/14 was effective from 1 January 2014 - main features: Engagement of consultants subject to: Gap Analysis confirmed that Department does not need the requisite skills and resources in it full time employ A Business Case must be made for the appointment Approval only by Accounting Officer (irrespective of amount) Hourly rates set out in DPSA (Department of Public Service and Administration) Guidelines, SAICA (South African Institute of Chartered Accountants) Guidelines, or rates prescribed by the body regulating the profession of the consultant Restrictions on cost of hotel accommodation, air travel and claims for kilometers travelled (disbursement fees) All contracts must include penalty clauses for poor performance 18 Implementation of Cost Containment Measures

19. National Treasury Instruction 01 of 2013/14 was effective from 1 January 2014 - main features: Travel and subsistence: First Class travel not allowed Restrictions on Business Class flights: Only ranks of Directors-General and equivalent or employees with special needs and Deputy Directors-General for flights exceeding five hours. Domestic accommodation restricted to R1,300 per night per person, including dinner, breakfast and parking (Accounting Officer can approve deviations under certain circumstances) Vehicle hire restricted to Group B for employees (Accounting Officer can approve deviations under certain circumstances) Employees travelling for official engagements, I.e. Parliament, are restricted to three, with exceptions depending on certain ranks 19 Implementation of Cost Containment Measures (Continued)

20. National Treasury Instruction 01 of 2013/14 was effective from 1 January 2014 - main features: Catering and Events: No catering expenses for internal meetings unless approved by the Accounting Officer. Entertainment allowances limited to R2,000 per annum unless approved by the Accounting Officer. No expenditure on alcoholic beverages except for State Banquets or functions promoting South Africa or its goods and Services. Team building, social functions and year-end events may not be funded from budgets or by suppliers or sponsors. 20 Implementation of Cost Containment Measures (Continued)

21. Immediate measures – January 2014: All tenders in progress not yet awarded to include cost containment measures: Negotiated with preferred bidders before award; or Cancelled and re-advertised bids Submissions for overseas trips referred back to amend flight bookings to economy class Departmental Circular issued on Procurement matters: All submissions to approve Terms of Reference must be accompanied by a gap analysis and business case Terms of Reference must include penalty clauses, restrictions on disbursement costs (travel and accommodation), and restrictions on hourly rates Accounting Officer to approve appointment of consultants Compliance is overseen by the Bid Adjudication Committee 21 Implementation of Cost Containment Measures (Continued)

22. General Departmental Circular issued to communicate National Treasury Instruction 01 of 2013/14 Departmental Circular issued on Travel and Accommodation: Restrictions prescribed for: Air travel Domestic accommodation Vehicle hire Number of employees travelling for official engagements to attend to the same matter. Departmental Circular issued on claims for meals and parking: Claims for meals and parking are prohibited if the hotel accommodation rate includes these costs. Compliance to above is overseen by Travel Office and Financial Administration: Travel and Subsistence 22 Implementation of Cost Containment Measures (Continued)

23. Thank you