The Budgetary Review and Recommendation Report
of the Portfolio Committee on Sport and Recreation, dated 25 October 2011
The
Portfolio Committee on Sport and Recreation, having assessed the performance of
the Department of Sport and Recreation for the 2010/11 financial year, reports
as follows:
1.
INTRODUCTION
Section
77 of the Constitution stipulates that an Act of Parliament must provide for a
procedure to amend money bills before Parliament. This constitutional provision
gave birth to the Money Bills Amendment Procedure and Related Matters Act (No 9
of 2009). The Act gives Parliament powers to amend money bills and other
legislative proposals submitted by the executive wherever the executive deems
it necessary to do so. The Act therefore makes it obligatory for Parliament to
assess the Department’s budgetary needs and shortfalls against the Department’s
operational efficiency and performance.
Section
5 of the Act compels the National Assembly, through its Committees to submit
budgetary Review and Recommendation Reports (BRRRs) annually on the financial
performance of Department accountable to them. The report must be informed by a
Committee’s interrogation of, amongst others, the medium-term estimates of
national expenditure of each national department, strategic priorities and
measurable objectives, expenditure reports published by National Treasury,
Annual Reports and Financial statements as well as observations made during
oversight visits.
1.1 The role and mandate of
the Portfolio Committee
The role and mandate of the
Committee are as follows:
·
Consider legislation referred to
it
·
Exercise oversight over the
Department of Sport and Recreation and its statutory bodies, namely BSA and SAIDS
·
Consider International Agreements
referred to it
·
Consider the budget vote of the
Department of Sport and Recreation
·
Facilitate public participation in
its processes
·
Consider all matters referred to
it in terms of legislation, the Rules of Parliament or resolutions of the House
In terms of the
Constitution of the
Furthermore,
Section 5 of the Money Bills Amendment Procedures and Related Matters
Act, No 9 of 2009 (the Act) provides that the National Assembly, through its
committees, must annually assess the performance of each national department
and these Committees must annually submit Budgetary Review and Recommendations Reports
for tabling in the National Assembly. These should be considered by the
Committee on Appropriations when it is considering and reporting on the Medium
Term Budget Policy Statement (MTBPS) to the House.
1.2 The role and mandate of
the Department
The Department of Sport and
Recreation is the primary Government institution that is responsible for
formulating and implementing policy on sport and recreation. It reports to and
advises the Minister who, in conjunction with the Cabinet, takes final
responsibility for Government policy. The Department is headed by the
Director-General, who is responsible for ensuring that sport contributes
towards maximising access to sport and recreation and encouraging world-class
performances that improve social cohesion and nation-building.
1.3 Process/method followed
by the Committee in writing the BRR Report
For the period under
review, the Portfolio Committee on Sport and Recreation, in exercising its
oversight role, had interacted with the Department of Sport and Recreation and analyzed
its 2010 to 2014 strategic plan, Quarterly Performance for 1st
Quarter, its 2010/11 Annual
Report, A-G Report, SONA, the 2010/11 Estimates
of the National Expenditure and the Constitution.
2. STRATEGIC
PRIORITIES AND MEASURABLE OBJECTIVES OF THE DEPARTMENT OF SPORT AND RECREATION
2.1 Strategic Priorities of the Department
The Department’s strategic plan seeks to deliver results along five
strategic objectives that include promoting initiatives that increase the
number of participants in sports and recreation, providing assistance to SA
sports people to become winners in international and continental sports
competitions, raising the profile of sports and recreation through
transformation of the sport and recreation sector, and strengthening the
operations and management of the Department.
The following strategic focus areas are critical to the success of the
Department:
2.2 Measurable Objectives of the Department:
2.2.1 Mass Participation Programme
Sport and
Recreation South Africa (SRSA) should continue to pursue initiatives that
increase the number of participants in Sport and Recreation. The Department has
to broaden its focus to the area of recreation and strengthen its relationship
with the Department of Basic Education in the delivery of the school sports
programme. The Department intends to increase the mass participation base
through effective sports promotion programmes and intensive media campaigns.
2.2.2 Sport Development
The Department intends to focus on facilitating the
transition from mass based programmes to high performance through coordinating
and monitoring the important areas of talent identification and development as
well as the delivery of scientific support to national development athletes.
The development programmes would be supported by an effective national athlete
tracking system. There should be regular programme impact assessment at various
provincial spheres to assess the level of club development and talent identification.
Furthermore the Department intends to roll out a national sport facilities
plan. The sports facilities plan would enable the Department to monitor the use
of facilities and ensure proper maintenance thereof.
2.2.3 High Performance
The Department intends to improve working relations
with its key strategic partner in nourishing talent in high performance sport
in our country. Therefore Sascoc becomes the relevant strategic partner of the Department
since its mandate is to deliver in the focus area of high performance. The Department
also intends to improve the country’s international ranking through adequate
scientific support to our athletes.
In general, the Department realised that the above
strategic focus areas needed to be supported by a strong regulatory framework,
adequate financial resources, reliable sports information and functional sports
academies. The Department will continue to work closely with departments such
as Basic Education, Tourism and Health in order to further the spirit of
corporative governance. The Department further intends to finalise the White
Paper on sport and recreation that will set the tone for a blueprint for sports
in the country. The key focus of this policy document would be transformation
of sport and promotion of excellence in sport.
3. ANALYSIS OF STRATEGIC
AND OPERATIONAL PLANS
The activities of the
Department were organized under the following programmes:
3.1 Programme 1: Administration
The Corporate Services
This Unit dealt with the Human
Resources Department and outlined the human resources strategy. This strategy
was inclusive of a clear retention strategy although the Annual Report failed
to indicate the skills retained. The Department had set a target of 2% for
employment of people with disabilities. Therefore the Department had exceeded
its own target in employment equity. The current rate of vacancies as reflected
in the Annual Report had been due to the integration of staff from the Sports
Commission and the Department had about 37 vacancies in the current financial
year. This integration had increased the vacancy rate in the Department.
The Department outlined
that the Audit Unit was not fully staffed and that slowed down performance. Notwithstanding
the above, the Department had not yet met all the employment equity targets as
set out by the Department of Public Service and Administration (DPSA).
The Human Resources Unit
This Unit had put in place
a performance management system and was constantly monitoring it. The employees
of the Department were each entitled to 36 days per leave cycle annually. In
addition, the performance systems and individual agreements were not concluded since
negotiations were still continuing with relevant parties. The Department was
currently developing a succession plan and had submitted its Human Resources
Plan to DPSA. There were three vacant posts within the Senior Management
Services (SMS) of which one candidate must be a woman in accordance with DPSA
equity targets. The Department had been unable to appoint a senior official due
to the vacant post of the Director General not yet being filled since the
passing away of late DG, Mr Vernie Petersen.
3.2 Programme 2: Sport
Support Service
This programme comprised of four sub programmes; namely Sport & Recreation
Services Providers, Club Development, Education and Training and Scientific
Support. It comprised an integrative financial support provided specifically to
Boxing South Africa and SAIDS. Funds were spent on administration, client
support, mass participation, liaison and facilities coordination. The Department
had made progress in supply chain management such as awarding 45% of tenders to
disadvantaged individuals.
3.3 Programme 3: Mass
Participation Programme
The purpose of this programme was to increase the
number of participants in sport and recreation with special emphasis on disadvantaged
and marginalised groups. The programme also transferred conditional grants to
provinces to promote mass participation in communities and schools and
achievements for the current year include among others the following:
•
A
total of 1 856 people were trained as coaches, administrators and facilities
managers
•
0ver 366 athletes were
provided with sport support services
•
Nine provincial school
tournaments were held during this period
3.4 Programme
4: International Liaison and Events
The purpose of this
programme was to coordinate all international and intra-governmental relations
and support the hosting of identified major events.
The measurable
objectives were to assist national federations and other stakeholders in promoting
3.5 Programme
5: Facilities Coordination
The purpose of this
programme was to coordinate the provision and management of sustainable sport
and recreation infrastructure by municipalities. The intention of the programme
was also to oversee the procurement of gymnasium equipment to certain
municipalities as part of government’s drive towards speedy delivery of sports
services.
The measurable objectives
were to contribute towards skills development of facilities managers. The
greater percentage of the allocation to this programme was used for
compensation of employees and purchase of equipment.
4. The Analysis of Departmental Allocations and
Expenditure Reports 2010/11
The Department of Sport and Recreation was allocated an amount of R1.25
billion for the 2010/11 financial year which was 0.7 per cent per cent of the
main budget. The 2010/11 budget was simply divided into five programmes, which is
different to the allocations of the previous year. However, spending slowed in
2008/09 and 2009/10 due to a number of vacant posts not being filled.
Expenditure was expected to increase marginally over the medium term, in line
with projected provisions for inflation. 24.52 per cent was expected to be the
nominal change. The overall essence of this programme was to provide an overall
and centralised support service. This means that administering, guiding and managing
Sport and Recreation was the core business of this programme. According to National Treasury this under- spending had
emanated from the following programmes[1]:
EXPENDITURE
2010/11 PER PROGRAMME
Per Programme |
Final
Appropriation |
Actual
Expenditure |
Variance |
Variance as a
% of Final Appropriation |
|
R’000 |
R’000 |
R’000 |
R’000 |
Administration |
95,168 |
94,815 |
353 |
99.6% |
Sport Support Services |
106,752 |
106,751 |
1 |
100.0% |
Mass Participation |
469,571 |
469,163 |
408 |
99.9% |
International Liaison and Events |
17,204 |
14,504 |
2,700 |
84.3% |
Facilities Coordination |
7,200 |
7,200 |
- |
100.0% |
2010 FIFA World Cup |
559,594 |
559,593 |
1 |
100.0% |
4.1. Administration
Programme 1 had been
allocated R 110 million, which represented an average nominal increase of 24.52
per cent when compared to the 2010/11 financial year. Expenditure had increased
from R 88.9 million in 2010/11 to R110.7 million in 2011/12. In the previous financial
year the percentage of an increase was at an average annual rate of 24 per
cent, mainly due to the merger of the former South African Sports Commission
with Sport and Recreation South Africa in 2007/08. It remained then unclear as
to why this expenditure kept on recurring over the years. Also spending on
compensation of employees grew at an average rate of 33.6 per cent due to this
merger then. However, spending slowed in 2008/09 and 2009/10 due to a number of
vacant posts not being filled. This movement
of fund was done during the adjustment period, though the PFMA allows it but it
is subject to abuse in a number of ways and results in unintended consequences.
4.2
Sport Support Services
Programme 2 had been
allocated 102.1 million, which represented an average nominal increase of
-17.79 per cent when compared to the 2009/10 financial year. The reason was
because this programme increased substantially from R 81.3 million in 2006/07
to R 124.2 million in 2009/10, at an average annual rate of 15.1 per cent. The
42.7 per cent growth in spending in 2009/10 was due to the rollover of R 15
million from 2008/09 for the training of volunteers for the 2010 FIFA World
Cup. The Scientific Support sub-programme allocation was projected to grow at a
much slower average annual rate of 24.3 per cent over the medium term, due to
increase expenditure on consultants to train more athletes through the Sport Science
Institute in preparation for the 2012 Olympics and for research on medical and
scientific interventions. In fact this year the budget for this programme moved
from 104.3 to 158 million, with a nominal increase of 52.06 per cent due to the
above stated reasons. This was a programme that was meant to provide support to
public entities.
4.3 Mass
Participation
Programme 3 grew at an
average annual rate of 45.1 per cent from 2006/07 to 2009/10, mainly due to the
expansion of the mass participation grant and additions to the conditional
grant for school sport projects in 2006/07 and 2010 legacy projects in 2007/08.
This, together with additions for mass mobilisation and the legacy project,
increased the budget for the Community Mass Participation sub-programme by an
average annual rate of 50.5 per cent between 2006/07 and 2009/10. Expenditure
in the sub-programme was expected to grow at the slower average annual rate of
5.4 per cent over the medium term, due to the completion of the 2010 mass
mobilization programme. The school sport sub-programme budget decreased at an
average annual rate of 9.9 per cent over the MTEF period. This was because the
costs of accommodation and transport for learners in national competitions,
previously carried by the national department, would in future be shared by
provincial departments. This shift was evident in the decline in projected
expenditure on venues and facilities from R 25.5 million in 2009/10 to R 4
million in 2010/11 and on transport provided from R 7 million in 2009/10 to R
4.5 million in 2010/11.
4.4 International
Liaison and Events
Programme 4 was meant to
negotiate government to government agreements and managed the ensuing
programmes of cooperation. Spending in this programme was projected to grow to
R 26.8 million at an average annual rate of 42.8 per cent between the 2009/10 periods.
This was due to the addition of promoting sport tourism to sub-programme’s
international sport commitments. This entailed organising hospitality centres
during major events such as the Olympics, Paralympics and All Africa Games as
well as the promotional activities at the 2010 FIFA World Cup. The question was
how these government to government agreements contributed to humanity and peace
building projects. This year the budget moved from 22.2 to 23.0 million, with a
nominal increase of 3.60 per cent and the real change there was -1.14 per cent.
4.5 Facilities
Coordination
Programme 5 was planning and lobbying for the provision of sport and recreation
facilities by municipalities, in accordance with the national sport and
recreation facilities plan last year. There was a sub-programme which was also
involved in overseeing the donor funds received from the German Development Bank,
Kreditanstalt fur Wiederaufbau (KfW), for developing infrastructure associated
with the youth development against violence through sport project. Funding here
was mainly used for compensation of departmental employees and other personnel
related costs. Local authorities and other relevant stakeholders for
constructing and managing facilities were supposedly there to ensure compliance
with national standards. The oversight on the procurement of gymnasium
equipment to selected municipalities as part of a pilot project for further
lobbying for increased funding was central here as the Portfolio Committee was
promised. This year the programme received 8.2 compared to the 6.7 million they
received in 2010/11. This transpired
with a nominal percentage change of 22.39 per cent.
The 2010 FIFA World Cup
Unit dealt with infrastructure related to the 2010 FIFA World Cup and transferred
the 2010 World Cup stadiums development grant to municipalities. As part of the
national consultative technical team, it liaised with FIFA and the South
African local organising committee’s technical committees on stadium
development requirement. These included:
For this financial year
there had been a dramatic decrease of -560.1 in both real changes in
5. ANALYSIS OF ANNUAL REPORT AND AUDITED
FINANCIAL STATEMENTS
5.1 Statement of Financial Performance
Over
the MTEF period, expenditure was projected to decrease at an average annual
rate of 10 per cent, to reach R 915.5 million. In the previous year the very
same total expenditure was projected to decrease at an annual rate of 35 per
cent to R 793.7 million in 2012/13 as the upgrading and construction of
stadiums would have been completed in 2010. In the current year it had been an
offset by additional allocations to the mass sport and recreation participation
conditional grant, which was expected to increase from R 452 million in 2011/12
to R500.7 million in 2013/14; and to sport federations which were expected to
increase expenditure in the Sport Support Services programme by R 104 million,
including savings generated.
5.2. Rollovers during the
financial year under Review
Under Programme of Administration,
an amount of R 1, 110 million was rolled over due to many vacancies not being
filled by the Department. The Public Service Regulation provided that all
vacant posts should be filled within a period of 6 months from the date such
post became vacant.
Whilst under Mass Participation
Programme an amount of R 4, 669 was rolled over by the Department, another bad
reflection was that virement applied in the Department suggested that a lot of
money was spent on the compensation of employees without addressing the vacancy
rate within the Department. The Committee had noted with concern that virements
by the Department had exceeded 8% of their overall Budget Vote.
The Department received the
final VAT Refund reconciliation from the 2010 FIFA World Cup Ticketing Company.
The report was audited as was required by an agreement between the Department
and FIFA. The balance outstanding and payable to FIFA was R 16, 661, 185
million. The Committee had noted with serious concern that the balance payable
to FIFA had not been reflected in the financial statement of the Department.
5.2. Analysis of Auditor General
Opinion: 2010/11 Financial Year
For the financial year
under review, the Department received an unqualified audit report. The
financial statements reflected an amount of R 3, 303, 501 which was incurred as
irregular expenditure of which R 790, 000 related to the prior year and R 2,
513, 501 related to the current year. The irregular expenditure for the current
year was incurred due to non-compliance with supply chain management
regulations as well as non-compliance with the Department’s delegations of
authority as issued in terms of section 44 of the PFMA. There was fruitless and
wasteful expenditure of R 7, 2 million incurred in prior years which related to
double hotel bookings and payment made for a venue that was not used.
The audit report also
pointed to some irregular expenditure of an amount of R38, 4 million which was
incurred without adhering to the internal delegation of
authority and non-compliance with proper tender process. Those were picked up
by the internal controls established by the Department and all cases were
evaluated and condoned by the Accounting Officer during the year. An amount of
R2, 2 million was incurred as fruitless and wasteful expenditure due to double
hotel bookings and payments of venues not utilized.
6. Report from the Committee on Public Accounts
Because the Department had
received an unqualified audit, it was yet to meet with the Committee on Public
Accounts, wherein, recommendations by the Committee would be made. That meeting
is yet to take place.
6.1 The Third Quarter Expenditure Report for
Financial Year, 2010/2011
The
Department reported an overall spending of R159 Million representing 19.84% of
the total annual spending. Compensation for employees accounted for 22% of the
overall expenditure. This resulted in the under-spending of about 3% due to
vacancies of the Director General, Chief Director of MMP, Directors for
Finance, Supply Chain as well as Information Technology (IT).
The
total expenditure for goods and services was R22.67, representing 15.8% of
expenditure on goods and services. The transfer payments expenditure stood at
20.63% whilst payments for capital assets was at 0.65%, mainly because the Department
had not yet procured the gym equipment and office furniture. Only the MMP
conditional grants had been transferred to provinces.
The Mass Participation Programme received a budget allocation of 62%,
Sport Support Services was allocated 20%, Administration received 14%,
International Liaisons & Events received 3% and Facilities Co-ordination
was allocated 1%. In accordance with economic classifications, transfer
payments accounted for 71%, 11% went to earmarked funds, 10% went to employee
compensation, 7% for goods and services whilst 1% accounted for capital assets.
The total expenditure trends were R92 755 in April, R39 350 in May and R27 112
for June 2011. The Department explained that the higher spending during April
2011 was mainly due to transfers made on a quarterly basis to the provinces for
Mass Participation Programme.
The compensation of employees remained steady while goods and services
were R2.8 million in April and increased to R9.7 million in May and R10.08
million in June. With regards to transfers to provinces, R83 million was
transferred in April and R23 million transferred in May because three of the
provinces did not meet the requirements.
Departmental agencies had budget expenditures of only R7 00 000 in April
and R6 00 000 in May and increased to R10 million in June, when transfers were
made to Boxing South Africa and the South African Institute for Drug Free Sport
(SAIDS). None of the R103 million that was allocated to National Federations had
been transferred due to non-compliance issues. Only R39 000 of the R5.6
million allocated for machinery and equipment had been spent as acquisition of
gym equipment had not yet materialised.
8. ANALYSIS
OF QUARTERLY EXPENDITURE REPORTS
To date, the portfolio
committee’s method of work included quarterly evaluation of departmental
spending and performance. This part of the report is therefore based on expenditure
information supplied by National Treasury as well as oversight work done by the
Committee.
Notwithstanding the above,
both the Committee and the Department recognised the urgent need for regular
interactions and quarterly reporting in order to ensure accountability and
improve effective service delivery.
The Department had spent
54% of its allocation for the years, a variance of 6% from its approved
projections to June 2009. The variance was between actual expenditure and the
benchmark for all programmes, except the programme on Facilities Coordination.
In programme 2 the Department
had spent 21.34% or 21.3 million below the projected expenditure to June 2011.
The slow spending was mainly due to the delay in transferring funds to Love Life
and Sport federations. These delays were as a result of these organizations not
providing approved business plans and financial statements, which were required
before transfers were made.
Current
payments:
The Department had spent R
4 million below the projected R 17 million to June 2011. This was due to a
delay in the filling of key positions, including that of the COO. The unfilled
posts had been advertised and were expected to be filled during the course of
the year.
Spending on goods and
services by 30 June was 10.4 million below the projected R 38.2 million, mainly
due to the delay in expenditure on the training of volunteers from the 2010
FIFA World Cup.
Transfer
payments:
The Department transferred
92% of its total budget mainly to provinces and municipalities for the Mass Participation
Programme Conditional Grant, the 2010 FIFA Stadium Development Grant and Host City
Operating Grant. They had transferred 1.5 billion of the projected R 1.7
billion for the first quarter. The slow spending was mainly because the Department
did not receive the drawdown for April from municipalities in time.
9. Observations
10. Conclusion
The
Committee is satisfied with the service delivery performance of the Department.
It is, however, concerned about the consistent recurring matter of emphasis
from the AG Report ranging from internal control, irregular expenditure,
unauthorised expenditure, and insufficient visits to hubs, supply chain
management and mass participation.
The
Department has after many years received an unqualified audit report with
numerous matters of emphasis from the Auditor General. Notwithstanding the
consistent recurring matters, the Committee holds the view that the resources
of the Department are utilised economically.
11. Recommendations
For the
current 2010/11 financial
year the Department of Sport and Recreation had been allocated R2.2 billion and based on the Department’s strategic
plans on the National Sport Plan, the allocation for the MTEF period was
dramatically reduced for the 2010/11 financial year and beyond. The implication
is that those financially struggling stadiums will have to work hard to
financially sustain themselves.
Based on
the analysis of the Department’s budget for the year under review (2010/2011),
the Committee recommends the following:
Report
to be considered