Deputy Director-General: Public Finance, Dondo Mogajane - PowerPoint Presentation

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Deputy Director-General: Public Finance, Dondo Mogajane

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Committee

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Appropriations:

Social Grants 2007/08Slide2

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 R24.1mThis 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%.

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Expenditure (R'000)

Final Appropriation

Actual Expenditure

Variance

1.Administration   Current payment138 023137 93786Transfers and subsidies   Payment for capital assets3 3793 1821972. Comprehensive Social Security66 637 33966 661 456 (24 117)Current payment32 46931 3571 112Transfers and subsidies66 604 07466 629 608 (25 534)Payment for capital assets7964913053. Policy Development, Review and Implementation Support for Welfare Services   Current payment87 93160 95826 973Transfers and subsidies101 792100 924868Payment for capital assets2 7538521 9014. Community Development31 72122 5689 153Current payment130 949130 163786Transfers and subsidies   Payment for capital assets8584364225. Strategy and GovernanceCurrent payment89 50068 55820 942Transfers and subsidies1 5871 587 Payment for capital assets3 2762 783493Total67 229 10867 191 40437 704

Table 1: APPROPRIATION PER PROGRAMMEfor the year ended 31 March 2008Slide3

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Expenditure (R'000)

Final Appropriation

Actual Expenditure

Variance

2.1 Social Assistance

 Current payment15 62515 60718Transfers and subsidies15 00014 92278Payment for capital assets319592602.2 Social Insurance   Current payment4 0623 591471Transfers and subsidies   Payment for capital assets181195 (14)2.3 Policy Implementation Support   Current payment1 7321 594138Transfers and subsidies   Payment for capital assets11021892.4 Social Assistance Transfers   Transfers and subsidies62 445 77162 471 939 (26 168)2.5 SASSA   Transfers and subsidies4 072 7474 072 747 2.6 SASSA MIS   Transfers and subsidies70 00070 000 2.7 Contributions and Affiliations   Transfers and subsidies556 5562.8 Administration   Current payment

11 050

10 565

485

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 R24.1mIn 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 SECURITYfor the year ended 31 March 2008

Issue Brief Contd.Slide4

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.

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Issue Brief Contd. (Social Assistance Budget)

Year

CSG

Age-eligibility criteria2002< 7 years2003< 9 years2004< 11 years2005< 14 yearsSlide5

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.

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Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08Child 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)Slide6

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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. Slide7

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 fundingAdditional 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.

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Thank You

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