Introduction
The purpose of the Unauthorised Expenditure Authorisation Bill is to enable the Provincial Legislature to authorise expenditure recorded as unauthorised in the provincial accounts. This bill deals with the unauthorised expenditure dating back to the financial years 2000/01 to 2006/07. It should be remembered that the Unauthorised Expenditure Authorisation Act, 2007 dealt with the unauthorised expenditure dating back to 1992/93. There were, however, a number of unauthorised expenditure amounts that were not included in this act as the KwaZulu-Natal Standing Committee on Public Accounts (SCOPA) had not passed resolutions relating to these outstanding amounts.
As such, SCOPA met on 27 August 2009 and again on 6 October 2009 to consider all unauthorised expenditure amounts which had, to date, not been resolved. These meetings dealt with all outstanding matters from 2000/01 to 2006/07. The 2007/08 and 2008/09 financial years are not dealt with in this bill. The provincial exchequer account has a provision to fund the unauthorised expenditure as reflected in the schedule to the bill and which appears in the provincial accounts of the relevant provincial department (vote) referred to in column four of the schedule. The amount of unauthorised expenditure being authorised by means of this bill is R1, 044 044 727 93.
Although the details of this bill are contained in the accompanying explanatory memorandum, I think it would be useful to members to provide a brief summary of the main unauthorised expenditures that were incurred by specific departments.
2000/01 financial year
The total unauthorised expenditure of three departments amounted to R217,625 million, of which the following two were the main contributors:
Vote 6: Provincial Treasury
The unauthorised expenditure amounting to R4,398 million was incurred in 1993/94 and related to the ex-house of delegates: Social welfare. The amount has been approved by the Legislature as per resolution 5(ii) of the seventh report of 1995.
Vote 7: Health
The department incurred unauthorised expenditure amounting to R212,708 million during the 2000/01 financial year. The bulk of the over-expenditure was due to the treatment of the Cholera epidemic in the province, payment of notch advances and the introduction of the senior management system. This vote had a net under-spend in the 2000/01 financial year.
2001/02 financial year
The total unauthorised expenditure of three departments amounted to R341.348 million, of which the Department of Health was the main contributor. The unauthorised expenditure incurred by health in 2001/02 amounted to R302,721 million and was made up of a net over-spend on a number of programmes and included expenditure relating to cholera, the expansion of emergency medical and rescue services into the underserved areas in the province, the roll-out of the prevention of mother to child transmissions of HIV and AIDS programme, as requested by Cabinet, among others.
2002/03 financial year
The total unauthorised expenditure of three departments amounted to R281,729 million, with the Department of Education being the main contributor. The unauthorised expenditure incurred by this department amounted to R281,082 million and was made up of over-expenditure against a number of programmes. The over-expenditure was mainly due to compensation of employees. The department was required to provide educators for the influx of six year olds entering the school system as a result of policy changes allowing this. The demand for substitute educators exceeded the amount budgeted, due to the increased level of illness and also because the number of substitute educator posts was unrealistically low at 320 posts across an educator corps of approximately 70 000. Also, the budget did not provide for the “improved conditions of service” carry-through from the prior year of R66 million.
2004/05 financial year
The aggregated unauthorised expenditure included in the bill for 2004/05 amounted to R12,611 million, in three departments. Some unauthorised expenditure was not authorised by SCOPA and is discussed in more detail here:
Vote 3: Agriculture, Environmental Affairs and Rural Development
The Department of Agriculture, Environmental Affairs and Rural Development incurred over-expenditure of R13,299 million in 2004/05. R3 million of this related to donor funding incorrectly allocated to the budget and subsequently corrected by journal entries. This amount is therefore included in this bill, whereas the balance of R10,299 million was not authorised by SCOPA and becomes a first charge against the department’s vote in terms of Section 34(2) of the PFMA.
2005/06 financial year
The Department of Agriculture, Environmental Affairs and Rural Development incurred over-expenditure of R85.400 million in 2005/06. R8,600 million of this related to the containment of classical swine fever which broke out in the province in 2005/06. This amount is therefore included in this Bill, whereas the balance of R76,800 million was not authorised by SCOPA and becomes a first charge against the department’s vote in terms of Section 34(2) of the PFMA.
2006/07 Financial Year
Eight departments’ unauthorised expenditure, total R182,132 million, was approved by SCOPA and is included in this Bill. The main contributors to this are discussed below:
Vote 5: Education
The unauthorised expenditure of R91,903 million incurred during 2006/07 related to over-expenditure against Programme 2: Public ordinary schools of R64,340 million. The balance of R27,563 million related to a net over-spending on thefts and losses, being the write-off of funds. The Auditor-General advised that it was not permissible to write-off funds if there was no budget to cover this amount. As such, R64,340 million is included in this bill, whereas the balance of R27,563 million becomes a first charge against the department’s vote in terms of Section 34(2) of the PFMA.
Vote 13: Social development
The unauthorised expenditure of R58.778 million incurred during 2006/07 was an amount received in 2003/04 as part of the department’s equitable share. This amount was incorrectly credited to expenditure for child grants, therefore expenditure was understated in 2003/04 and unauthorised expenditure was not incurred.
Vote 7: Health
The unauthorised expenditure of R30,468 million incurred during 2006/07 consisted of a net over-spend against Programme 1: Administration (R5,044 million), Programme 2: Emergency Medical Services (R1.643 million) and Programme 6: Central health services (R23,646 million).
Vote 8: Human Settlements
The unauthorised expenditure of R17,859 million incurred during 2006/07 was a net over-spend on Programme 3: Housing development.
Vote 3: Agriculture, Environmental Affairs and Rural Development
The unauthorised expenditure of R7,700 million incurred during 2006/07 consisted of Programme 1: Administration (R7,500 million) and Programme 2: Agriculture development (R200 000) These amounts had been part of the budget for 2006/07, but had been incorrectly allocated and subsequently corrected by journal entries.
Vote 12: Transport
The unauthorised expenditure of R2,364 million incurred during 2006/07 was made up of over-expenditure against Programme 2: Road infrastructure of R2,164 million and a net over-spend on Thefts and losses of R200 320, being write-offs. The Auditor-General advised that it was not permissible to write-off funds if there was no budget to cover the amount. As such, R2,364 million is included in this bill, whereas the balance of R200 320 becomes a first charge against the department’s vote in terms of Section 34(2) of the PFMA.
Unauthorised expenditure not approved
Apart from the unauthorised expenditure amounts that were not approved, which I have mentioned so far, the Royal Household also has two unauthorised expenditure amounts which were not approved and are therefore not included in this bill. These, as with the others mentioned so far, become a first charge against the department’s vote in terms of Section 34(2) of the PFMA:
* The unauthorised expenditure of R1,218 million incurred in 2005/06 was not approved by SCOPA and is therefore excluded from this bill
* The unauthorised expenditure of R3,538 million incurred in 2006/07 was not approved by SCOPA and is therefore excluded from this bill.
Conclusion
In conclusion, I wish to say that this bill will, if passed, have dealt with all outstanding unauthorised expenditure accounts dating back to 2000/01. The KwaZulu-Natal Unauthorised Expenditure Authorisation Bill, 2009 gives effect to the Resolutions of the Standing Committee on Public Accounts, to authorise the unauthorised expenditure reported by the Auditor-General as well as authorising specific expenditure recorded as unauthorised in the provincial accounts. As mentioned, the amounts not approved by SCOPA become a first charge against departments’ votes according to Section 34(2) of the PFMA.
Lastly, I would like to urge all departments to tighten up on financial administration to prevent future unauthorised expenditure within their votes, both in terms of over-expenditure on programmes within their vote as well as the write-off of Thefts and losses without first ensuring that there is sufficient budget available to process such a transaction.
It is now my privilege to formally table the KwaZulu-Natal Unauthorised Expenditure Authorisation Bill, 2009 for consideration of the house and I am looking forward to the debate on this bill.
Thank you.
Issued by: Department of Finance, KwaZulu-Natal Provincial Government
25 November 2009
