1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT & LAND REFORM DATE: 13 APRIL 2011 1 THIRD QUARTER EXPENDITURE REPORT FOR THE 2010-2011 FINANCIAL YEAR VENUE: M514, PARLIAMENT TIME: 09H30

2. Purpose The purpose of this presentation is to brief the Portfolio Committee on Rural Development & Land Reform on the Third Quarter Expenditure Report for 2010-2011. The presentation will provide explanations and reasons for:  The under-spending of R621m or 8.50% against linear target, more especially the 56.65% spent against current payments  The shifting of funds from the Land Reform to Restitution Programme It will also provide progress to date on the plan that was implemented by the Department to address the above under- spending. 2

3. Appropriation for 2010-2011 Per Economic Classification Main Appropriation Roll over Unforeseeable & unavoidable Adjustment Estimate Adjusted Final Appropriation R’000 [A][B][C][D][E] Current payments1,878,1428,26628,100470,4592,384,967 Transfers and subsidies 4,871,603487,461-(478,509)4,880,555 Payments for capital assets 19,809--8,05027,859 Payments for financial assets 1---1 TOTAL6,769,555495,72728,100-7,293,382 3

4. Appropriation for 2010-2011  A total rollover of R495.7m was approved by National Treasury in November 2010.  R487.5m was approved for the Restitution Programme and R8.3m for year-end accruals (good & services not paid by year-end)  A further allocation of R28.1m was made to the Department to cater for salary increases following the public sector wage strike.  An amount of R478.5m was reprioritised during the Adjustment Estimate process from Transfers & Subsidies to augment the following departmental priorities:  R8.1m for ICT infrastructure & furniture for office buildings.  R470.5m for current payments – goods & services 4

5. Appropriation for 2010-2011  The R470.5m current payments for goods & services funded the following departmental priorities:  The newly created components, the establishment & the equipping of newly leased office buildings, including associated ICT infrastructure  Rural Disaster Mitigation & Management and Technology Research & Development in support of the new rural development mandate to implement the Comprehensive Rural Development Programme (CRDP)  Funding of the National Rural Youth Services Corps (NARYSEC)  The Occupational Specific Dispensation (OSD) and Job Evaluation (JE) costs to improve the services of Geospatial, Cadastral and Spatial Planning (specialists services)  Augmentation of the insufficient allocation of office accommodation budget 5

6. 3 rd Quarter Spending for 2010-2011 Spending Per Economic Classification Main Appropriation Adjusted Final Appropriation Third Quarter Spending % Spent against Main Appropriation % Spent against Adjusted Appropriation R’000 [A][B][C][D][E] Current payments 1,878,1422,384,9671,351,05672%56.65% Transfers and subsidies 4,871,6034,880,5553,489,89872%71.51% Payments for capital assets 19,80927,85917, 07186%61.28% Payments for financial assets 11382-- TOTAL6,769,5557,293,3824,858,40771.77%66.61% 6 The linear target for the Third Quarter is 75%. The current payment spending is 72% against the Main Appropriations and 56.7% against the Adjusted Appropriations.

7. Analysis of 3 rd Quarter Performance  Current Payments:  The Department has undergone a restructuring process to align its organisational structure and resources to the new mandate. A moratorium on the filling of vacant posts was put in place which was lifted in January 2011.  The moratorium delayed spending on the compensation of employees and related goods and services expenditure, hence the 56.65% spent in the 3 rd Quarter.  The National Rural Youth Services Corps (NARYSEC) was implemented during September 2010; the planning for the training and activities took place during the 3 rd Quarter, whilst payment is being made during the 4 th Quarter.  Savings from Current Payments will be utilised to augment excessive expenditure in line with section 43 of the PFMA. 7

8. Analysis of 3 rd Quarter Performance  Payment for Capital Assets:  The less than linear target expenditure was attributable to the delay in ICT infrastructure expenditure which was projected for September 2010 but only took place in February 2011 due to delays in finalising the lease agreement for newly leased office buildings with the Department of Public Works.  Total Transfers and Subsidies:  The Restitution Grant budget is already depleted and there are still outstanding court cases to be settled.  In order to prevent the accrual of interest and possible fruitless and wasteful expenditure, savings from other programmes will be used to settle the excessive expenditure in the Restitution Programme. 8

9. Shifting of Funds from Land Reform to Restitution Programme  Restitution budget decreased from R3.6b in 2007-2008 to R2.5b in 2011-2012. The reduction in budget was because the programme had been expected to be completed by 2008.  Sections 38 & 39 of the PFMA place a responsibility on the accounting officer to ensure that effective and appropriate steps are taken to prevent unauthorised expenditure and to ensure that there is effective risk management in place to prevent such from happening.  Given the restitution exposure to date, the Department was compelled to reprioritise an amount of R2b to pay urgent court orders and finalise critical outstanding claims.  The R2b was funded by R1.5b shifted from Land Reform Grants and R0.5b received from the rollover of funds as approved by NT.  The shifting of these funds was requested through section 30 of the PFMA i.e. during National Adjustments Budgets.  Fiscal funding still remains a challenge, particularly for the Restitution Programme. Over the MTEF period the Department has committed itself to finalise restitution claims within the allocated baseline. However, court orders will continue to be a challenge. 9

10. 4 th Quarter Spending for 2010-2011 (as at 24 March 2011) Spending Per Economic Classification Adjusted Final Appropriation Adjusted Appropriation Current Budget Spending to Date 24 March 2011 % Spent against Adjusted Appropri-ation % Spent against Current Budget R’000 [A][B][C][D][E] Current payments 2,384,9672,337,6781,959,29882.2%83.8% Transfers and subsidies 4,880,5554,899,6944,858,98799.6%99.2% Payments for capital assets 27,85956,00929,034146.6%51.8% Payments for financial assets 112,320-- TOTAL7,293,382 6,849,63993.9% 10

11. Progress to Date on Expenditure & Conclusion  The 4 th Quarter Expenditure Report depicts progress to date.  Spending trends have been monitored on a regular basis by the Executive Management Committee of the Department.  Intervention Teams were put in place to improve turnaround times and to reduce red tape in the departmental processes.  As a result, total spending increased from 66.6% in the 3 rd Quarter to 93.9% as at 24 March 2011 (4 th Quarter).  This is already an improvement from the previous year’s actual results which recorded final actual spending of 91.6% for the 2009-2010 financial year.  To prevent the accrual of interest and possible fruitless & wasteful expenditure, savings from other programmes will be utilised to settle the deficit/ over-expenditure in Restitution Programme.  The Department is confident to spend at least 95% of its appropriated final budget in line with the limitation imposed by PFMA in terms of shifting funds post Appropriation Process. 11

12. THANK YOU! 12