Treasury paints bleak picture of water dept's finances

2017-06-28 14:26
Water treatment facility outside Cape Town. (Duncan Alfreds, News24)

Water treatment facility outside Cape Town. (Duncan Alfreds, News24)

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Cape Town - There is a misalignment between how the Department of Water and Sanitation plans its budget and how it spends it, MPs have heard.

National Treasury presented before the portfolio committee on water and sanitation on Wednesday on the department's performance under the Public Finance Management Act.

The department had the right to move money around within its own budget, but the magnitude of some of the transfers showed a lack of planning, MPs heard.

Most notably, the Giyani water project had begun with an initial 2016/17 budget of around R140m, but the current budget stood at R912m.

"We see significant variations by what the department planned to do, versus what they actually did," Treasury official Ulrike Britton said.

"When we see these kinds of variations to this magnitude, there is a misalignment between the planning frameworks and the budget.

"That suggests something about how projects are being managed, how contracts are being managed, and how they reconcile this over the period."

The department was allowed to move money around, provided it was not an exclusive area of the budget approved by Parliament, but more could be done in terms of policy.

Bucket eradication system

Another area in which there was overspending was for the bucket toilet eradication system.

The department was allocated R512m at the beginning of the period, but that had been adjusted to R831m, or 162% of the budget spend.

It also still owed contractors R1.5bn in accruals, goods and services, and capital assets from past years.

There was underspending in some areas, specifically in staff payments. This was due to a 21.9% vacancy rate for the 4 397 posts available at the department, in which R100m was underspent.

With regard to "virements", or money that is legally allowed to be transferred from other programmes, R37m had been transferred for goods and services, such as property bills, office equipment and software licences.

This was also concerning to Treasury because it suggested the department did not plan properly for its everyday bills too.

Treasury proposed that the department look at the Auditor General's 2016 recommendations, that the department devise and implement policies to guide operations within some of their grant and municipal structures.

They also did not have a significant plan to deal with reconciliation, when money needed to be moved and recovered justifiably, according to the Auditor General.

'Recommendations not binding'

An inter-ministerial task team, comprising the departments of human settlements and co-operative governance (Cogta), could also be set up to help with the bucket toilet eradication system.

Opposition MPs suggested that the bucket eradication system should be transferred to Cogta.

Democratic Alliance MP Leon Basson asked what else Treasury could do.

"There's not much the Treasury can do. Parliament appropriates the money, not Treasury. We can only deal with some of the financial implications of how the money is spent."

The way in which the PFMA is set up, it is difficult for Treasury to control the way the department is managed. It can only give recommendations, but they are not binding.

Read more on:    cape town  |  sanitation  |  water

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