Standing Committee on Appropriations

Friday, 2 September 2011 09h00-13h00

Committee Room V454, Old Assembly Wing

1

CONTEXTCONTEXT The Committee requested the Department along

with the National Treasury to meet with the intention to resolve challenges emanating from the spending trend of the Department .

The departments were also requested to review the budgetary allocation for the Land Restitution Programme.

The Committee also requested the department to provide a plan to improve Restitution and Land Reform expenditure performance.

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Progress Progress The meeting was held with National Treasury The meeting discussed areas of concern regarding the

department expenditure trends, and agreed that funding needs will be provided through the

MTEF process. The project on verification of outstanding claims in the

Regional Land Claims Commission(RLCC) has started, it will be completed by 31 March 2012.Although this project is not yet completed, the

department is in a better position to provide estimates based on the progress made to date for the MTEF.

Pre-MTEC discussions are scheduled for Tuesday 30 August 2011. 33

Approach followed Approach followed The allocation for 2011/2012, allows for finalization

of 360 backlog claims and only 90 new claims. It is expected that in the outer years, the baseline allocation will not be sufficient to settle all targeted claims.

The department requested additional funding for year 1 of the 2012 MTEF period which amounts to R2.3 billion for the Restitution programme, with carry though costs for the period.

This will allow the department to settle approved claims and those claims were offers are already made.

And be able to do further research on the new claims on the outer years. 44

2011 ENE2011 ENE

R’000R’000

ReprioritisationReprioritisation

R’000R’000

MTEF MTEF AdditionalAdditional

R’000R’000

20132013

R’000R’000

20142014

R’000R’000

20152015

R’000R’000

4. Restitution 2,619,922 124,614 2,354,688 5,099,224 4,673,299 4,348,773

5. Land Reform 4,392,209 (1,072,978) -  3,319,231 3,602,349 3,853,531

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Impact on Land Reform

A review of strategic and costing exercises and the 2011 MTEF submission was performed by all programme managers which resulted in a R1 billion reprioritisation from the Land Reform programme. The allocation was made to different programmes

The approval of additional funding for restitution will ensure that no further shifting of funds is done within the Land Reform Programme. It is the last shifting which will normalize the budget of the department for improved service delivery.

Presentation of Financial Presentation of Financial Performance Performance

as at 25 August 2011as at 25 August 2011toto

Standing Committee on Standing Committee on AppropriationsAppropriations

Performance per programmePerformance per programme20112011ENEENE

R’000R’000

Shifting of Shifting of fundsfunds

R’000R’000

Current Current budgetbudget

R’000R’000

SpendingSpending

R’000R’000

BalanceBalance

R’000R’000

% % spentspent

1. Administration 606,104 - 606,104 252,374 353,730 41.6%

2. Geospatial and Cadastral Services 388,104 - 388,104 139,811 248,293 36.0%

3. Rural Development 441,276 - 441,276 139,281 301,995 31.6%

4. Restitution 2,497,293 - 2,497,293 527,789 1,969,504 21.1%

5. Land Reform 4,191,469 - 4,191,469 1,001,617 3,189,852 23.9%

TOTALTOTAL 8,124,246 8,124,246 -- 8,124,246 8,124,246 2,060,8722,060,872 6,063,3746,063,374 25.4%25.4%

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Performance Performance per economic classificationper economic classification

20112011ENEENE

R’000R’000

Shifting of Shifting of fundsfunds

R’000R’000

CurrentCurrentBudgetBudget

R’000R’000

SpendingSpending

R’000R’000

BalanceBalance

R’000R’000

%%spentspent

Compensation of employees 1,395,670 - 1,395,670 402,803 992,867 28.9%

Goods and services 1,128,461 (7,268) 1,121,193 397,643 723,550 35.5%

Interest and rent on landInterest and rent on land -- -- -- 6,987 6,987 (6,987)(6,987) --

Payments for financial assets - - - 10 (10) -

Provincial and local municipalities 46 73 119 86 33 72.3%

Departmental agencies and accounts 2,767,805 - 2,767,805 758,087 2,009,718 27.4%

Public corporations and private entities 1 - 1 - 1 -

Foreign governments and international institutions 1,320 (40) 1,280 1,194 86 93.3%

Non-profit institutions 2,571 - 2,571 643 1,928 25.0%

Households Households 2,793,001 2,793,001 39 39 2,793,040 2,793,040 475,690 475,690 2,317,350 2,317,350 17.0%17.0%

Machinery and equipment 34,624 6,774 41,398 5,073 36,325 12.3%

Software and other intangible assets 747 422 1,169 - 1,169 -

Land and subsoil assetsLand and subsoil assets -- -- -- 12,656 12,656 (12,656)(12,656) -

TOTALTOTAL 8,124,246 8,124,246 -- 8,124,246 8,124,246 2,060,872 2,060,872 6,063,374 6,063,374 25.4%25.4%

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Conclusion Conclusion The Department has taken a strategic decision to

prioritise financial compensation and state land. A focus in the last quarter was to quantify claims on state

land, there is no financial implication on such claimsThe financial compensation are low in amount however

there is a risk of paying fictitious beneficiaries, it is for this reason that control processes has been put in place which sometime may delay implementation.

We are continuously engaging National Treasury on challenges facing the department, and hope that the matters that resulted in continuous shifting of funds will be resolved.

Land restitution is complex, however the department remain committed to settle claims within a reasonable period with the limited resources available. 99

Thank youThank you