COGTA BUDGET UNDERSPENDING AS AT THE END OF THE

Transcript:COGTA BUDGET UNDERSPENDING AS AT THE END OF THE:
COGTA BUDGET UNDERSPENDING AS AT THE END OF THE FOURTH QUARTER OF THE 2021/2022 FINANCIAL YEAR, AND ITS OVERALL IMPLICATIONS ON SERVICE DELIVERY AS A MANDATED FUNCTION OF THE DEPARTMENT STANDING COMMITTEE ON APPROPRIATIONS 09 SEPTEMBER 2022 PRESENTATION LAYOUT Introduction and Background. Key areas of underspending: Departmental Expenditure and performance (Excluding grants and Transfers) Local Government Equitable Share (LGES) Municipal Infrastructure Grant (MIG) Municipal Systems Improvement Grant (MSIG) Integrated Urban Development Grant (IUDG) Disaster Management Grants The department’s oversight role on supporting municipalities that are struggling Challenges, failures and successes of the department Concluding remarks and recommendations INTRODUCTION & BACKGROUND On 31 August 2022, the Department of Cooperative Governance and Traditional Affairs received invitation letter from the Chairperson of the Standing Committee on Appropriation (SCOA) inviting the Department to brief the Committee on budget underspending over the past 5 financial years and implications on service delivery as a mandated function of the department. The department was requested make a presentation on the following issues: Summary/ history of the department`s financial and non-financial performance for the past five years (including at the end of the fourth quarter of the 2021/22 financial year); Reasons for underspending and concrete actions that had been taken to address continuous underspending; What the Committee should expect from the department moving forward; Your strategy and plans on economic transformation; Perennial underspending on grants; Issues contributing to municipalities to be under financial distress; The department’s oversight role on supporting municipalities that are struggling; Challenges, failures and successes of the department; and Any other matter that can help the committee to perform its oversight duties. Department Expenditure & performance trends (excluding grants and transfers) Department Expenditure trends – excluding grants and transfers Underspending on compensation of employees and goods and services Compensation: The department had an average annual vacancy rate of 10.3% in the period under review which resulted in underspending on Compensation of employees. This can be attributed to slow recruitment processes and an organizational structure not sufficiently aligned to the Department’s legal mandate. Goods and Services: Goods and services underspending primarily due to budgets not allocated to priorities, poor procurement planning and delays in finalising procurement processes. The Department at the end on the 2021/22 financial year finalized a comprehensive strategic review process. This resulted in a revised operating model and organizational structure of the Department. Following on this the Department adopted a zero-based budgeting approach for