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Gordhan warns on underspending

Feb 22 2012 22:25

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Cape Town - Government departments and municipalities not spending their allocated funding will risk losing the allocations, and the relevant officials will be held liable, Finance Minister Pravin Gordhan warned on Wednesday.

"We are aware of several weaknesses in the state’s infrastructure capacity," he told MPs in the National Assembly while tabling the 2012/13 Budget.

In the past, spending had lagged behind plans, Gordhan said.

"Our estimate is that in 2010/11, R178bn was spent out of a planned R260bn, or just 68%.

"We have to do better than that - state enterprises, municipalities, and government departments all need to improve their planning and management of capital projects."

Getting infrastructure delivered on time


In addition to long delays, significant cost over-runs in infrastructure projects had also been experienced.

"So we shall step up the quality of planning, costing, and project management, so that infrastructure is delivered on time, and on budget."

This meant that government departments and municipalities that did not spend, or that under-spent or misspent their allocated funding, would be at risk of losing the allocations.

The relevant officials would also be held liable for such misdemeanours. National Treasury would be pro-actively monitoring the spending of grants to ensure value for money, adherence to Expanded Public Works Programme (EPWP) targets, and implementation of operational and maintenance programmes.

Several measures were in place to improve infrastructure project implementation and build management capacity, Gordhan said.

Project planning, management

Among other things, within state-owned entities, development finance institutions and the private sector, considerable capacity was already mobilised in project planning and management.

The Infrastructure Development Improvement Programme assisted national and provincial departments, focused largely on education and health projects and support for provincial public works departments.

The Construction Industry Development Board had played a key role in developing standards and procedures for government tenders.

A new Cities Support Programme would get under way this year, initially in eight metropolitan authorities, focused on improved spatial planning, public transport systems, and management of infrastructure utilities.

The Municipal Infrastructure Support Agency would also be established this year, focused on rural municipalities that lacked planning capacity.

Special attention for major projects

Technical assistance to municipalities was also provided through the neighbourhood development programme, which supported over 220 projects aimed at catalysing business investment in township partnership projects.

The infrastructure skills development grant supported 150 graduate interns in engineering and spatial planning in 2011/12, and would be extended to a further 43 municipalities over the period ahead.

Special attention would be given to the procurement processes for major infrastructure projects, to ensure both value for money and development of local suppliers and support industries.

Gordhan said training and mentoring programmes had a critical role to play in addressing capacity constraints of departments and municipalities.

"But professionalism, hard work, and commitment to value for money are preconditions for successful project delivery.

"There can be no compromise on the basic principles of sound financial management in ensuring that resources are mobilised efficiently to serve our people.

"A capable state focused on delivery requires a passionate and patriotic public service - without those few individuals whose only desire is to profit from the state," he said.
pravin gordhan  |  budget 2012
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