1. Deputy Director-General: Public Finance, Dondo Mogajane Select Committee on Appropriations: Social Grants 2007/08

2. Issue Brief In 2007/08 DSD under-spent by R 37.7 m. However, there was over-spending against the Comprehensive Social Security Programme of R24.1m This was driven by over spending on social grants. DSD over-spent their social assistance budget (R62.45 billion) by R26 million in 2007/08. This amounts to 0.04%. 2 Expenditure (R'000) Final Appropriation Actual ExpenditureVariance 1.Administration Current payment138 023137 93786 Transfers and subsidies Payment for capital assets3 3793 182197 2. Comprehensive Social Security66 637 33966 661 456 (24 117) Current payment32 46931 3571 112 Transfers and subsidies66 604 07466 629 608 (25 534) Payment for capital assets796491305 3. Policy Development, Review and Implementation Support for Welfare Services Current payment87 93160 95826 973 Transfers and subsidies101 792100 924868 Payment for capital assets2 7538521 901 4. Community Development31 72122 5689 153 Current payment130 949130 163786 Transfers and subsidies Payment for capital assets858436422 5. Strategy and Governance Current payment89 50068 55820 942 Transfers and subsidies1 587 Payment for capital assets3 2762 783493 Total67 229 10867 191 40437 704 Table 1: APPROPRIATION PER PROGRAMME for the year ended 31 March 2008

3. 3 Expenditure (R'000) Final Appropriation Actual ExpenditureVariance 2.1 Social Assistance Current payment15 62515 60718 Transfers and subsidies15 00014 92278 Payment for capital assets31959260 2.2 Social Insurance Current payment4 0623 591471 Transfers and subsidies Payment for capital assets181195 (14) 2.3 Policy Implementation Support Current payment1 7321 594138 Transfers and subsidies Payment for capital assets1102189 2.4 Social Assistance Transfers Transfers and subsidies62 445 77162 471 939 (26 168) 2.5 SASSA Transfers and subsidies4 072 747 2.6 SASSA MIS Transfers and subsidies70 000 2.7 Contributions and Affiliations Transfers and subsidies556 2.8 Administration Current payment11 05010 565485 Transfers and subsidies Payment for capital assets186216 (30) Total66 637 33966 661 456 (24 117) Due to under-spending in other sub- programmes in Programme 2, the total under-spending amounts to R24.1m In 2007/08, the Social Assistance Transfers allocation was specifically and exclusively appropriated through the Appropriation Act 2007/08. Due to this classification, virement rules could not be applied to reduce the social grant overspending. Therefore, even though there was a overall under-spending against the vote budget, and an over-spending of R24.12mn against the Programme 2 budget, the amount classified as unauthorised expenditure for 2007/08 is R26.17mn. DETAIL PER PROGRAMME 2: COMPREHENSIVE SECURITY for the year ended 31 March 2008 Issue Brief Contd.

4. Overspending in the social assistance budget was under the Old Age, Foster Care, Care Dependency and the Child Support Grant. Of these, the main driver of over-spending was the Child Support Grant (CSG). This can be attributed to CSG’s age extension policy. In 2005/06, the CSG age-eligibility was extended from 11 year olds up until 14 years old. Hence, between 2004/05 and 2005/06, the CSG eligible population grew by 2.9 million. This led to large fluctuations and unpredictability in CSG beneficiary numbers. 2.2 mn additional CSG beneficiaries came onto the system over the course of 2005/06 and 2006/07. 4 Issue Brief Contd. (Social Assistance Budget) Year CSG Age- eligibility criteria 2002< 7 years 2003< 9 years 2004< 11 years 2005< 14 years

5. In 2007/08, an additional 360 thousand CSG beneficiaries came onto the system. The CSG take-up rate in 2007/08 was 82%; highest since 2004/05 till 2012/13. The CSG take-up rate in the previous year, 2006/07, was 78.6% and in the subsequent year, 2008/09, declined to 80.1%. Thus, in terms of CSG take-up, 2007/08 was an anomaly of a year. Further, there were large fluctuations in reported CSG beneficiaries (Source Feb 2008 IYM), leading to uncertainty on year-end CSG numbers. Additionally, R166million was back-paid to Eastern Cape and Free State in April 2007. 5 Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08 Child Support Grant Beneficiaries 7 809 265 7 761 287 8 056 775 7 944 655 7 949 222 7 976 415 8 039 735 8 090 257 8 128 260 8 103 712 7 778 863 8 196 000 Issue Brief Contd. (Social Assistance Budget)

6. 6 The social grants programme is demand driven. Behavioural aspect of the programme makes it unpredictable. Apart from behaviour related to take up of social grants, accumulation of back pay, application complexities and external risks all need to be factored into projections. Variation of 1% in such a model is generally acceptable. Over-spending of R26 million against a budget of R63 billion in 2007/08 is a 0.04% variation. Issue Brief Contd.

7. Recommendation: This overspend cannot directly be related to any negligence or lack of oversight and thus cannot be recovered from any person. Approval be granted in terms of section 34 (1) of the PFMA to authorise the over expenditure as a direct charge against the National Revenue Fund (NRF). This be approved with funding Additional systems now in place: The three main stakeholders; SASSA, DSD and NT, each run their own independent projections to monitor social grants expenditure. Quarterly projection meetings held between SASSA, DSD and NT. Monthly model updates Quarterly Expenditure Reports Adjustment factor incorporated into model, to try and accommodate non- demographic driven factors such as back pay and other administrative complexities. 7

8. Thank You 8