objective

Department of Public Works presentation on Devolution of Property Rates

Conditional Fund Grant to Provinces

NCOP Select Committee on Appropriations

12 September 2012

By Acting Director General Ms. M. Fatyela-Lindie

OBJECTIVE

Objective of the NCOP Select Committee on Appropriations

•A report on the Devolution of Property Rates Grant 1st Quarter expenditure for the year 2012/13 financial year

Purpose of the Presentation

•To update and apprise the Select Committee on the 1st Quarter expenditure for the year 2012/13 financial year and provide additional information on the subject matter

NCOP SCOA - 12 SEPTEMBER 2012

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Presentation Outline

1. Introduction & Background2. Budget vs Expenditure3. Devolution of Property Rates Fund Grant Allocation for 2012-

134. Expenditure Report: 1st April – July 20125. Reasons for under expenditure for 2012/136. Intergovernmental task team on Debt7. Debt prior Devolution of Property Rates Fund Grant8. Payment of property rates arrears from 2011 to date9. Challenges Experienced by the Provinces & National Public

Works10. Proposed Way Forward


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INTRODUCTION & BACKGROUND

• Prior to 1994, DPW was deemed the custodian of most state-owned properties and therefore took the responsibility for payment of property rates. This practice continued notwithstanding the separation of ownership of state land between Provincial and National Departments as determined by the Constitution.

• As from the 1st April 2008, the Function to pay property rates on behalf of the Provinces was transferred.

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INTRODUCTION & BACKGROUND

(GIAMA)

• Section 4 (1) (a) of Government Immovable Asset Management Act (GIAMA) stipulates that the National Government is the custodian of all national government immovable assets. Custodian appointments are assigned by the Ministers as per legislation, including the Minister of Public Works, Premiers and MECs to exercise the responsibilities associated with ownership on behalf of national government. These responsibilities include acquisition, management and operation, maintenance and disposals


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INTRODUCTION & BACKGROUND (DORA) …….

• The National Department of Public Works (NDPW) as the Transferring Officer in accordance with Division Of Revenue Act (DORA) is expected to perform the following duties:

• to provide, timeously, guidance and assistance to provincial reporting institutions to enable them to manage their Conditional Grant.

• to monitor and evaluate the performance management information and the performance of provincial reporting authorities

• to timeously address underperformance of provincial reporting (through M&E)

The Department of Public Works is further expected to perform a concurrent mandate as set out in paragraph 7.3 of the National Treasury Framework for Managing Performance Information.

AGSA 2011 – findings:• In line with the requirements of the Act and Conditional Grant

Framework, NDPW must constantly communicate with the Provinces to monitor the performance and expenditure (Oversight role of DPW )


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DEBT - INTERGOVERNMENTAL TASK TEAMStipulation by National Treasury Publication Report on Debt•Section 71 of the Report as at December 2011 showed that Government debt amounts to R3.5 billion.

Action taken on Debt•The Steering Committee comprising of Cooperative Governance and Traditional Leadership (CoGTA), Department of Performance Monitoring and Evaluation (DPME), National Treasury and National Public Works was established to deal with the debt.

Findings on Debt by Task Team•Government debt reported includes property rates arrears prior to the Devolution of Property Rates Fund Grant. •The municipalities submitted invoices on property rates via National Treasury and the debt amounts R 443 million, which NDPW is in a process of verifying before payment can be made.


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Debt before 1st April 2008


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Note:

1.DPW is in the process of verifying and making payments2.Devolution Grant started on 1st April 2008

Province Budget AllocatedDebt per Province as a % of Total Debt

Eastern Cape 24 150 490 5.44

Free State 213 697 780 48.14

Gauteng 12 190 760 2.75

Kwa-Zulu Natal 100 436 943 22.63

Limpopo 24 126 238 5.43

Mpumalanga 7 010 370 1.58

Northern Cape 8 295 586 1.87

North West 7 781 702 1.75

Western Cape 46 223 854 10.41

Total 443 913 723

Kwa-Zulu Natal – Unverified Properties which came as a result of R293 Proclamation


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Free State – Maluti-A-Phofung charging high rates/tariffs

PAYMENT OF DEBT FOR 2011/12 (31 March 2012)


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PROVINCE AMOUNT PAID % of Amounts Paid against Total Debt (R443 913 723)

KZN 51 001 014 11.5

FREE STATE 6 156 910 1.4

NORTHERN CAPE 3 832 544 0.9

LIMPOPO 570 383 0.1

NORTH WEST 1 952 959 0.4

WESTERN CAPE 554 116 0.1

EASTERN CAPE 1 899 000 0.4

TOTAL 65 966 927 14.9

EXPENDITURE ON ARREARS (1ST APRIL 2012 TO DATE)


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Note>The total amount paid from 2011 to date on arrears is R81 677 457.14

PROVINCEEXPENDITURE ON

GOVERNMENT DEBT FROM 1ST APRIL 2012 TO DATE

% OF PAYMENTS FROM 1ST APRIL 2012 TO

DATE

Eastern Cape 2 425 512 15.4

Gauteng 2 074 363 13.2

Northern Cape 4 112 037 26.2

North West 6 035 923 38.4

Western Cape 1 062 696 6.8

Total 15 710 530

BUDGET VS EXPENDITURE FOR PREVIOUS FINANCIAL YEARS

Financial Years Budget Allocated Expenditure Percentage

%

2008 / 09 R 889 325 000

R 686 344 000 77.2%

2009 / 10 R1 486 411 000 R1 177 286 000 79.2%

2010 / 11 R1 985 740 000 R1 618 141 000 81.5%

2011 / 12 R1 928 561 000 R1 867 798 000 96.8%


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The increase in percentages reflects improvements in the invoices received from the various Municipalities

Budgeted Devolution of Property Rates Grant –

2012/13 Province Budget

Allocated (R000’)

1st transfer (29/06/2012)

(R000’)

2nd transfer (28/09/2012)

(R000’)

3rd transfer (07/01/2013)

(R000’)

Eastern Cape

200 825 34 716 156 955 9 154

Free State

231 399 140 000 46 399 45 000

Gauteng 281 469 70 000 150 000 61 469

KwaZulu Natal

551 100 242 637 156 875 151 588

Limpopo 35 399 15 000 15 000 5 399

Mpumalanga

76 870 20 000 48 000 8 870

Northern Cape

43 911 10 000 25 000 8 911

North West

178 185 70 000 78 183 30 002

Western Cape

319 501 190 000 120 000 9 501

Total 1 918 659 792 353 796 412 329 894


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ACTUAL EXPENDITURE - APRIL –JULY 2012 PROVINCE ALLOCATION

(R000’)EXPENDITURE (R000’)

Eastern Cape 200 825 17 543

Free State 231 399 84 802

Gauteng 281 469 49 299

Kwa-Zulu Natal 551 100 13 228

Limpopo 35 399 0

Mpumalanga 76 870 0

Northern Cape 43 911 0

North West 178 185 310

Western Cape 315 501 94 118

Total 1 918 659 259 300


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‘R0’ figures - Invoices not yet received

Challenges Experienced by the Provinces & National Public Works

• Property information that some municipalities use for billing is not credible. Properties that are recorded on the municipal valuation roll and are not appearing on the Deeds search and Departmental Asset Register due to Vesting and Surveying not being finalized.

• Late receipt of invoices from municipalities • Other municipalities do not submit their invoices/schedules at all (e.g

Limpopo: Mogalakwena, North West: Ramotshere-Moila, Northern Cape: Dikgatlong and Joe Morolong


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Challenges Experience by the Provinces & National Public Works

•Some municipal valuation rolls are incomplete.

•Lack of staff capacity in some small municipalities.

•Some municipalities continue to bill rates and taxes and utilities jointly, thus resulting in reconciliation process being done (e.g. City of Cape Town).

•Section 21 schools and R293 townships are encountering challenges on payment of their debt (e.g. Ethekwini Municipality)


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Issues raised by municipalities during a workshop with SALGA and

NDPW– Transformation of local government not

synchronised with national and provincial – e.g. Change in administration

– Fragmented municipal policies in treatment of national and provincial government properties – e.g. (Vested Properties that are not communicated to different spheres of government)


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Operational Challenges experience by some municipalities

• The ability for municipalities to split the bills varies across the country.

• Municipalities unaware of transformation of national and provincial government post elections and changes not effected into billing systems.

• Timing of billing and payments in relation to financial years of government.

• Asset registers not updated within government prescripts and therefore not aligned to municipal property valuation rolls.

• Lack of coordination and alignment of national government in municipal valuation rolls.

• No effective system of communication between National/Provincial and Local Government.


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Proposed Way forward

• Continue to work with National Treasury, SALGA and municipalities on the project to clear the Government debt

• Work with Department of Rural Development and Land Reform to facilitate the vesting of properties and surveying of vacant land.

• Work with Human Settlements and municipalities to facilitate endorsement of housing board properties and R293 townships

• Strengthening of Municipal forums for effective interactions with both National and Provincial Public Works to address intergovernmental debts, billing systems, interest rates among others.

• Completion of Asset Register Enhancement Programmes for both National and Provincial Public Works


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Thank You

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objective

Documents

behalf of national government

national departments

disposalsncop scoa

national treasury framework

expenditure report

quarter expenditure

performance information

minister of public works