Introduction
The purpose of the Unauthorised Expenditure Authorisation Bill, 2010 is to enable the provincial legislature to authorise expenditure recorded as unauthorised in the provincial accounts. This bill deals with the unauthorised expenditure for the financial years 2007/08 and 2008/09.
It should be remembered that the Unauthorised Expenditure Authorisation Act, 2009 dealt with the unauthorised expenditure dating back to 2000/01 up to and including 2006/07. The KwaZulu-Natal Standing Committee on Public Accounts (SCOPA) had, however, at that time, not considered the unauthorised expenditure for 2007/08 and 2008/09.
SCOPA met with each of the departments from October 2009, to consider all the remaining unauthorised expenditure amounts and took into account the explanations provided by departments, as well as the availability of funds in the Provincial Revenue Fund.
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 R2 748 912 391.66
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 items of unauthorised expenditure that were incurred by specific departments.
2007/08 financial year
The total unauthorised expenditure of R1.252 billion for this year was caused by seven departments. Except for the unauthorised expenditure in the Royal Household amounting to R1.760 million, all the unauthorised expenditure amounting to R1.251 billion is being authorised in this bill.
The main contributor towards the high unauthorised expenditure is the Department of Health (R1.227 billion). The Department of Health overspent on all its service delivery programmes resulting from the escalating demand for health services and the implementation of the Occupational Safety Dispensation (OSD) for nurses, for which insufficient funds were provided.
2008/09 financial year
The total unauthorised expenditure for 2008/09 amounted to R2.894 billion and was caused by nine departments, of which the Departments of Education, Health and Transport were the main contributors. This bill seeks to authorise R1.498 billion as a direct charge against the Revenue Fund while R1.370 billion will become first charges against the budgets of the various departments, as prescribed in section 34(2) of the Public Finance Management Act.
The unauthorised expenditure of R25.3 million in the Department of Social Development will be considered in 2010/11 upon submission of further motivation and explanations by the department.
Vote five: Education
The unauthorised expenditure of R654.998 million incurred during 2008/09 relates mainly to the underfunding of the first OSD for teachers. An amount of R437.493 million is included in this bill to be a direct charge against the Revenue Fund, whereas the balance of R217.505 million becomes a first charge against the department’s vote in terms of Section 34(2) of the Public Finance Management Act (PFMA).
Vote seven: Health
The unauthorised expenditure of R1.402 billion incurred during 2008/09 consisted of over-spending against the entire department's service delivery programmes due to the escalating demands for health services and the shortfall in the allocation for the continuation cost for the OSD for nurses.
An amount of R644.153 million is included in this bill to be a direct charge against the Revenue Fund, whereas the balance of R758 million becomes a first charge against the department's vote in terms of section 34(2) of the PFMA.
Vote 12: Transport
The unauthorised expenditure of R626.642 million incurred during 2008/09 was mainly due to the withdrawal of funds promised by the Department of Trade and Industry and the appointment of staff to enhance the law enforcement and the extended road safety campaign.
An amount of R255.642 million is included in this bill to be a direct charge against the Revenue Fund, whereas the balance of R370.959 million becomes a first charge against the department’s vote in terms of Section 34(2) of the PFMA.
Vote six: Provincial Treasury
Included in the bill is the authorisation of an amount of R138.383 million in the accounts of Provincial Treasury relating the servicing of the provincial bank overdrafts caused by over-spending by departments.
Unauthorised expenditure not approved
The unauthorised expenditure amounts that were not approved, and are therefore not included in this bill, were mainly due to insufficient funds being available in the Revenue Fund. The Royal Household is the notable exception where the reason for non-approval of the major portion of them unauthorised expenditure is the lack of acceptable explanations presented to the Committee and the lack of disciplinary action taken for the continued over spending.
Conclusion
The KwaZulu-Natal Unauthorised Expenditure Authorisation Bill, 2010 gives effect to the Resolutions of the Standing Committee on Public Accounts, to authorise some of the unauthorised expenditure reported by the Auditor-General in the 2007/08 and 2008/09 annual financial statements of departments, as well as authorising specific expenditure recorded as unauthorised in the provincial accounts. As mentioned, the amounts not approved by SCOPA become first charges against departments' votes in terms of Section 34(2) of the PFMA.
In conclusion, the resolutions of SCOPA and this bill will, if passed, have dealt with all but one (Social Development) outstanding unauthorised expenditure cases. This will give the Provincial Treasury an opportunity to clear the accounts of departments and the Revenue Fund. It will also be of great assistance to the Provincial Treasury in preparing the provincial consolidated financial statements, and for these to be audited as required by section 19(1) of the PFMA and to enforce sound cash management in the province.
Lastly, I would like to take this opportunity to convey my appreciation to the then Chairperson, Mr MA Tarr and the members of SCOPA for their support and dedication in considering these outstanding cases, during this financial year.
It is now my privilege to formally table the KwaZulu-Natal Unauthorised Expenditure Authorisation Bill, 2010 for consideration by the house, and I am looking forward to the debate on this bill.
Thank you.
Source: Provincial Treasury, KwaZulu-Natal Provincial Government
