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 Republic of South Africa, Portfolio Committees have a mandate to legislate, conduct oversight over the Executive and facilitate public participation.


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.




 2.1       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:


  • To contribute to a healthy nation by increasing the number of participants in sport and recreation and development of talent within an integrated development continuum.


  • To assist South African sports people to become winners on and off the field.


  • To raise the profile of sport and recreation through addressing issues of national importance.


  • To streamline the delivery of sport by means of the effective support systems and adequate resources.


  • To contribute to making the school sports programmes the conveyor-belt for sport development and transformation in our country.




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.




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 South Africa as a preferred destination for hosting of major continental and international events. This programme was responsible for the country successfully hosting amongst other major international events, the ICC Women’s Cricket Challenge, Vodacom Challenge and the 123rd International Olympic Committee Session held in Durban in July 2011.


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]:




Per Programme

Final Appropriation

Actual Expenditure


Variance as a % of Final Appropriation













Sport Support Services






Mass Participation





International Liaison and Events





Facilities Coordination





2010 FIFA World Cup






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:


  • Ensuring that stadium authorities and host cities comply with conditional grant requirements for developing stadiums;
  • Providing guidance on and monitoring the rollout of infrastructure projects, such as transport networks, ICT and other support services, municipalities and relevant departments;
  • Coordinating and resolving any problems that may hinder progress in meeting deadlines for delivering infrastructure and using funds to settle the final accounts related to stadium construction (2010 ENE).


For this financial year there had been a dramatic decrease of -560.1 in both real changes in Rands and in nominal change. 




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.



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


  • The Portfolio Committee needed to consistently follow up on the issue of the high vacancy rate, especially at senior management in the Department, as this was a year of job creation declared by the President in his State of the Nation.


  • The Department continuously transfers conditional grants to municipalities, well aware and conscious of the fact that most of the municipalities do not have technical capacity to implement the mass participation programme.


  • The Committee noted that Boxing South Africa had failed to attend the briefing to report on their Annual Performance for the year under review. However the Committee had taken note that the Minister of Sport and Recreation, Department as well as management of BSA were working towards addressing the enormous challenges facing the boxing administration.


  • The overall expenditure of Programme 3: Mass Participation grew by 50.5 percent from 2006/07 to 2010/11 financial year. Notwithstanding this exponential growth in overall expenditure, there was no tangible evidence that leagues and clubs were established in communities.


  • The Committee expressed serious concern over systemic regression on the front of transformation in major sports codes such as rugby, cricket, swimming, athletics etc.


  • The Committee continued to express concern over the fact that the Department had failed to resolve certain prior findings reported in the previous financial year which was still persisting. The Committee noted with concern the continued use of the MIG Fund by municipalities for other purposes for which it was not intended.


  • The Committee further expressed serious concern regarding the virements of MIG-Fund by certain municipalities without obtaining the required approval by the National Treasury to do so.


  • The Committee further noted that a policy decision had been reached in respect of ring-fencing the MIG and allocations be dedicated solely for purposes of building basic sports facilities.


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:  


  • The budget of the Department of Sport and Recreation should be increased in order to address the huge challenge of lack of sports and recreational facilities in poor and rural communities.


  • The National Treasury should look at ways to re-align funding allocated for sports development through Love-Life and engage with the Department of Sport and Recreation to align and synchronise national, provincial and local spheres of government for implementation of mass participation programmes.


  • Audit costs for small entities such as the South African Institute for Drug Free Sport as well as Boxing South Africa should be reviewed in order to reduce the cost burden on their budget allocations.


  • The Special Grant should be established for building of sports facilities given the fact that many municipalities continued to utilize the Municipal Infrastructure Grant (MIG) for other more pressing needs of the communities such as water, sanitation and housing.


  • The transfers of funds to implement building for sports programme should be based on the assessment of Municipalities’ technical capacity and where municipalities were found lacking in capacity, and then the Department should provide necessary assistance.


  • The Department should undertake an impact assessment of the Mass Participation Programme and report the outcome to the Committee.


  • Additional funding should be allocated to sport support services to enable it to provide funding to federations and agencies with a good track record of improving sports facilities and distributing sports equipment to disadvantaged and rural communities, e.g. Sports Trust.


  • The Department of Sport and Recreation should ensure the speedy implementation of the Memorandum of Understanding (MOU) with the Department of Basic Education to advance the school sports programmes.


  • The Department of Sport and Recreation should conduct an impact assessment of transformation in all sports federations and codes and thereafter report the results to the Committee.


  • Notwithstanding the initiative by the Department to fill the current vacancies, the Minister of Sport and Recreation should appoint the new Director General and fill the many vacant posts at senior management as a matter of urgency.


  • The Departments of Trade and Industry and Sport and Recreation should move swiftly with initiatives to amend the National Lotteries Act.




Report to be considered