Boitumelo Babuseng, MPL
DA Provincial Spokesperson on Economic Affairs
The Democratic Alliance welcomes the improvements that have been noted in the provincial audit outcomes for 2013/14. It is good that the department of Social Development managed to maintain its clean audit outcome and that four other entities also received clean audit outcomes. We trust that the clean audits will form part of clean administration which will ultimately see improvements in service delivery.
There still remains areas of grave concern. The AG’s report indicates that, in 2013/14, the provincial government incurred irregular expenditure of R1.7 billion. The main contributors are Health, with
R1.003 billion irregular expenditure, and Education, with irregular expenditure to the tune of R349 million. 97% of the provincial irregular expenditure relates to non-compliance with supply chain management legislation. Departments will give a number of reasons for non-compliance with supply chain management laws. COGHSTA, for example, is likely to blame municipalities for all instances of non-compliance and disregards the housing projects which incur irregular expenditure.
But at some point, heads of departments and MECs need to take responsibility for what is happening under their watch. One of the main reasons for non-compliance is poor contract management. Poor contract management is what gave the province a mental health hospital, originally due to be opened in December 2007 and now only scheduled for opening sometime after May 2015.
Fruitless and wasteful expenditure skyrocketed in 2013/14. Where it stood at R37 million at the end of March 2013, it now stands at R66 million. The main reason for this excessive waste is interest charged on overdue amounts, litigations and claims instituted against the departments for negligence or unfair dismissal as well as rectification of RDP houses. It is extremely worrying to note that Health is the second highest contributor to fruitless and wasteful expenditure as well as being the highest single contributor to irregular expenditure.
It is crucial that expenditure must be managed. We agree fully with the AG who warns that, if officials are allowed to get away with breaking the law, they will continue to do so with impunity. There must be consequences for officials who do not follow the law.
It is therefore very worrying that the recent Adjustment Appropriation Bill gave no way forward to deal with irregular expenditure. At 53% of auditees, no investigation was done to determine if any person was liable for irregular or fruitless expenditure incurred in the 2012/13 year. The MEC for Finance mentioned an instruction note from Treasury as if in passing. This instruction note contains the cost containment measures which were announced by the Minister of Finance in his October 2013 mini-budget. We asked departments questions on this instruction note during the tabling of their annual report. Very few seemed to know what the instruction note contains and what is expected of them. For example, no department seems to have a consultancy reduction plan in place. While the MEC for Finance notes that there is non-compliance with the instruction note, he does not have any plans for improving the compliance by departments.
In the absence of strong leadership and without consequences for poor audit outcomes, departments will continue to incur irregular, fruitless and wasteful expenditure at the cost of service delivery.