Gauteng increases spending on infrastructure budgets

MEDIA STATEMENT

FOR IMMEDIATE RELEASE
TO ALL MEDIA HOUSES
01 SEPTEMBER 2016

Gauteng MEC for Finance Ms. Barbara Creecy today welcomed the sustained improvement of 97% and 98% spending on infrastructure and conditional grants by Gauteng Departments as at the end of the 2015/16 financial year.

Speaking at the Gauteng Provincial Legislature Finance Committee during the tabling of the GPG-wide financial statements for the past year, the MEC noted that since 2014 there has been a sustained improvement in the Province’s ability to spend on its infrastructure budget particularly in the areas of construction of new health facilities, refurbishment of schools and building of new roads and other public infrastructure.

“Improvements in this area are significant because they assist us to fasttrack the much needed provision of public facilities and contribute to our job creation objectives,” said the MEC.

“These improvements are attributable to us allocating money for projects that were ready for implementation to avoid, amongst other things, cost escalations associated with delays. We also implemented the infrastructure delivery improvement programme which entailed bringing in a team of professionals including engineers and construction specialists to assist Departments to enhance efficiencies in the delivery of infrastructure,” she said

Referring to recent media reports on underspending in the Department of Health, the MEC noted that while on paper the Department did not spend 2% of its budget in the previous year, this does not mean that resources were returned to the Provincial Treasury.

“The under expenditure is an accounting entry more than an actual under expenditure. The under-expenditure within the Department of Health is a result of accrued expenditure from prior financial years. The accruals result in a mismatch between cash and budget and reflect on the Basic Accounting System as under-expenditure,” she said.

The Department of Health is constitutionally bound to provide services to all citizens including patients from other provinces when they come to Gauteng hospitals. This leads to additional expenditure for medicines and other consumables but it does not mean that the money is wasted or that it has not been spent on the health needs of the province.

“Nevertheless, the current level of accruals across Provincial Government is too high. Accruals not only pose a threat to the overall financial health of the Provincial Government but they also have the potential to undermine the current buying power of Departments in the face of increasing demand for education and health care as a result of in-migration into the province. It is for this reason we are prioritizing measures to contain accruals,” said the MEC.

Year-end accruals by Departments are receiving attention from Provincial Treasury. Health, Education, Human Settlements and Infrastructure Development have agreed to institute measures to ensure that they reduce accruals within the course of the current financial year.

These includes, eliminating the issuing of manual purchase orders in all departments affected by accruals to ensure that spending is done within the approved budgets. Furthermore during the course of the year, the budgets of these departments will have to prioritise existing accruals and commitments, and discipline in the utilisation of the remaining funds will be enforced.

The MEC also said significant progress is being made in support of the Township Economy Revitalisation (TER) Strategy. In 2015/16 financial year, the provincial government surpassed the 12% target for procurement from township enterprises, to reach an actual procurement of 14.1% or R6, 8-billion. The major part of the spending was in commodities such as maintenance, security services, and medical and food supplies across the five development corridors of Gauteng.

Furthermore as at end March 2016, 5 679 township-based suppliers had been registered on the database, through outreach programmes such as Ntirhisano Roadshows and Qondis’ Ishishini Lakho campaigns. This has increased the pool of suppliers available to do business with government. We have also partnered with FNB and the South African Supplier Diversity Council to train suppliers especially those that are registered on the database but have not yet had the opportunity to do business with the government.

With regard to spending on the allocated budget for the first quarter of the current financial year, the MEC praised provincial departments for overall spending of R34.4-billion or thirty three percent.

Commenting on current underspending in Human Settlements and Roads and Transport, the MEC said Provincial Treasury is working with both departments to improve their expenditure. To date both Departments have exceeded 30% of their budget. Treasury will continue to work with them to speed up procurement and submission of invoices.

Ends

John Sukazi
MEC Spokesperson
083-772-4885
john.sukazi@gauteng.gov.za

For media releases, speeches and news visit the Gauteng Provincial Government’s portal at www.gautengonline.gov.za

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