Transport Education and Training Authority, Road Accident Fund Annual Reports 2008/09

Meeting report

Transport Education and Training Authority (TETA) 2008/09 Annual Report briefing
Ms Maphofo Matlala, Chief Executive Officer, Transport Education and Training Authority, presented the Annual report 2008/09. The components under this report included an overview of the Transport Education and Training Authority (TETA), its financial and non-financial performance, a two year comparison and a list of the challenges.

Ms Matlala outlined that TETA was established by the Skills Development Act and promoted education, training and development in the transport sector in line with the Skills Development strategy. It operated with a five year renewable strategy; the current one had run from 2005. TETA had direct representation in three provinces, being Gauteng (Head Office), Durban (Provincial Office), Cape Town (Provincial Office), and indirect representation in the remaining six. TETA's vision was to provide skills for sustainable growth, development and equity in the transport sector.

In respect of the non-financial performance Ms Matlala outlined that in the year under review 216 large firms had been assisted through mandatory grant support, and that 1 432 Small Micro and Medium Enterprises (SMMEs) were supported through mandatory and discretionary grants since 2005.She further stated that 10 538 workers participated in various learning programmes including learnerships, skills programmes and apprenticeships, bursaries and internships.

Ms Matlala stated that under financial performance out of a total funding of R358.5 million, R262.6 had been spent. Spending on administration amounted to R39.3 million. TETA’s performance in relation to indicators had improved over this period. The average score for employment equity had improved from 1 to 4 and the score for skills development assistance to non-levy paying enterprises, non-government organisations (NGOs), community based organisations (CBOs) and community -based co-operatives had improved from 2 to 3. Ms Matlala explained that among the constraints that TETA faced was IT infrastructure, but that it had initiated a bid process to procure a provider for integrated IT solutions to remedy this problem. Among the achievements that TETA recorded for the year under review was the unqualified audit opinion given by the Auditor General's office. It had also achieved a 37% increase in mandatory grants paid.

Discussion
Mr M De Freitas (DA) wanted to know what the mandatory grants were and the criteria that was used for these grants.

Ms Matlala responded that the mandatory grant was the 50% refund from the 1% levies paid by companies. This was refunded to companies that submitted a training plan for staff to a SETA by 30 June every year.

Mr De Freitas wanted to know the definition of large firms that was applied.

Ms Matlala answered that categorisation of whether a firm was small or large was determined by the annual turnover of the firm and the number of staff employed.

Mr De Freitas wanted to know what discretionary grants were and the criteria used for these grants.

Ms Matlala responded that discretionary grants were grants given to firms based on the board’s discretion. She explained the beneficiaries were chosen from applications made by firms, and in line with the service level agreement signed by the board with the Ministry.

Mr De Freitas enquired about the kind of support that was given for adult education.

Ms Matlala responded that the support currently involved numeracy and literacy and was done from level one up to level four. She also explained that the idea was to move away from numeracy and literacy skills to providing foundational learning.

Mr De Freitas asked if there was a system of monitoring and evaluation for support that was given.

Ms Matlala replied that contracts were signed with companies who were given grants, which required them to provide reports of proof of training. This was also combined with on the spot checks by TETA.

Mr De Freitas wanted to know whether there was a system to ensure that employment was provided after training given to unemployed learners.

Ms Matlala responded that there was no system in place, but that plans were under way to carry out impact studies and tracer studies to assess if learners had engaged in any form of work.

Mr De Freitas wanted to know the form that road shows took, and if they were in line with some objectives so as to allow the impact to be assessed.

Ms Matlala replied that these involved meeting with stake holders at provincial level, to inform them about the functioning of TETA and receive input on how it could function better.

Mr De Freitas wanted to know if there was an information dissemination campaign for those companies that were paying their 1% levies but were not utilising the services of TETA.

Ms Matlala responded that TETA had a communication strategy that focused on meeting with companies to encourage them to utilise its services.

Ms N Ngele (ANC) suggested that TETA inform more people about their functions to ensure greater benefit for the people.

Ms Matlala replied that TETA was planning a response to that effect and was planning on focusing on rural areas in aspects that had so far been neglected.

Ms Ngele proposed that training for taxi drivers be extended beyond 2010, as the current standards were very poor.

Ms Matlala confirmed that the focus was beyond 2010, although the budget available was not adequate, and so TETA would be carrying out the programme within the Department of Transport (DOT) so that more funds would be provided. She informed Members that the programme on taxi drivers focused on driving skills and changing their customer orientation.

Mr E Lucas (IFP) pointed out that he was pleased to hear that TETA was focusing on apprenticeships, as he believed that this was the correct approach.

Ms Matlala agreed with Mr Lucas and explained that this was one of the areas in which TETA was now focusing.

Mr Lucas wanted to know if long distance drivers were part of the training programme, as there had been a lot of accidents.

A board member of TETA responded that accidents were caused by many factors that were beyond TETA’s control,  but that it was trying its best to train the drivers.

Mr P Poho (COPE) wanted to know how much money was spent on training 500 small, medium and micro enterprises (SMMEs) and how many jobs were created as a result of this.

Ms Matlala replied that TETA had set aside R5 million  and had spent R2.7 million, although she did not have the employment figures as an assessment had not been done.

Mr Poho asked what findings had been revealed from TETA’s risk register.

Ms Busiswe Kubheka, Chief Financial Officer, TETA, replied that the process of risk registering was done with the help of reputable auditors, who reported to the audit committee, which in-turn reported to the board who had internal oversight.

Mr Poho wanted to know who was responsible for the irregular expenditure of about R3 million.

Ms Matlala responded that the irregular expenditure arose from non-adherence to supply chain procedures by the tender committee. She informed the Committee that action was taken against the erring officers, as the Chief Financial Officer’s contract was terminated and the Procurement Officer was dismissed.

Mr L Gaehler (UDM) wanted to know the number of people that benefited from training given to unemployed learners.

Ms Matlala replied that 1 402 learners had benefited throughout the country from training provided by TETA.

Mr Gaehler wanted to know what the impact had been in provinces without TETA representation.

Ms Matlala responded that TETA covered the provinces through general education practitioners, but would ensure that in future there was representation in these areas. She admitted that the process in its current form was not working as should be.

Ms Ngele was happy to note that TETA was also focusing on rural areas.

The Acting Chairperson wanted to know in which provinces TETA had offices.

Ms Matlala responded that in some provinces, the TETA used the offices of the Department of Transport’s unit.

The Acting Chairperson wanted to know if TETA had a quality control team. She commented on some spelling errors in the report.

Ms Matlala responded that there was a Committee that sat to edit the report. She would not have expected there to be any mistakes, and asked that they be indicated to her later.

The Acting Chairperson wanted to know the number of taxi drivers that were trained.

Mr M Kgantsi, Chief Operating Officer, TETA, responded that 4 198 taxi drivers had been trained since 2005 but noted that this was a drop in the ocean as the number of registered taxi drivers was at about 180 000. He pointed out that more needed to be done.

Mr Gaehler wanted to know the challenges that TETA faced.

Ms Matlala replied that the greatest challenge was in the area of the training budget as this was not currently adequate to fulfill TETA’s mandate.

The Acting Chairperson wanted to know the number of staff and vacancies at TETA and if there was an adverse effect arising from the fact that a limit of 10% had been set for the spending on administration.

Ms Matlala replied that TETA had 67 staff members, of whom 10 were on contracts for a specific period. She said that this funding framework was not feasible in practice, within the sector where TETA was operating. TETA had resolved to cut its programmes in the new service level agreement with DOT.

The Acting Chairperson thanked TETA for its presentation, advised TETA to continue to seek solutions for the challenges that it faced and gave assurance that the Committee could assist wherever it could.

Road Accident Fund (RAF) 2008/09 Annual Report briefing
Mr Jacob Modise, Chief Executive Officer, Road Accident Fund, presented the Annual report 2008/09. Mr Modise stated that the Road Accident Fund (RAF) provided compulsory cover to all users of South African roads, be they residents or foreigners, against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa. This cover was in the form of indemnity insurance for persons who caused the accident, as well as personal injury and death insurance to victims of motor vehicle accidents and their families.

Mr Modise highlighted aspects from the financial statement, which revealed an unqualified audit opinion by the Auditor-General. He further stated that the financial statement revealed that RAF was technically insolvent, as its total liabilities exceeded total assets by R39.9 million. He explained that this was because the claims amounts paid out by RAF during the financial year exceeded the fuel levy that it received. Other aspects within the financial statement included fruitless and wasteful expenditure, of R14.9 million. This was due to costs incurred on sheriffs and interest costs, as a result of the delay in the payment of claims expenditure.

Mr Modise explained that RAF had achieved all but one of the items in the performance agreement concluded with the Minister of Transport. It had achieved the development of an implementation plan framework on the Amendment Act and regulations, including risk and internal control management. It had also attained an employment equity ratio of 87%. Mr Modise explained that RAF had processed claims of R23.2 billion in 2009, compared to R15.3 billion in 2008. He also informed the Committee that staff costs had risen from R426 million in 2008 to R534million in 2009. The increase in staff costs was due to payments by way of overtime, due to the backlog of claims. Other achievements included the increase in service points, mainly at hospital level, and the presentation of a new funding model to the National Treasury. The most important challenge that RAF continued to face was the problem of insolvency.

Discussion
Mr Lucas stated that he sympathized with RAF, as most of the money meant for claims was going towards the payment of legal costs.

Mr Modise replied that RAF shared the same views as Mr Lucas. The current scheme was outdated. He stated that seven commissions of enquires had provided solutions, but that the country had been slow in implementing these enquiries.

Mr Lucas asked why RAF was recommending increasing the fuel levy, when people were already paying so much for fuel.

The CEO responded that he agreed that the fuel levy should not be increased, but that funds could be sourced by reducing on expenditure that was directly benefiting claimants, such as money paid to lawyers.
 
Mr Lucas wanted to know what was causing the accidents. He pointed out that resolving this would reduce the number of claims.

Mr Modise agreed with Mr Lucas and stated that this was part of RAF’s mission.

Mr De Freitas wanted to know the stage that the proposed amendments to the legislation had reached.

Mr Kubin Pillay, Deputy Director General, Department of Transport responded that the Amendment Bill was still in the draft stages and still needed to be taken through to the State Law Advisors.

The Acting Chairperson asked what DOT’s deadline for the Bill was, as the delay was affecting RAF’s functioning.

Mr Dillay responded that as soon as the Bill was ready, DOT would request the State Law Advisors to present it to the Committee.

The Acting Chairperson requested a written commitment from DOT on the Bill.

Mr De Freitas wanted to know the reasons why there were some very old claims, and asked when these would be resolved.

Mr Modise responded that the aim of RAF was to settle claims as soon as possible, but when they went to court the process of the court dates and delays had to be completed before claims could be paid.

Mr De Freitas wanted to know the procedure for assessing individuals with claims.

Mr Modise responded that this was done by qualified medical doctors that were trained in this regard. This process of assessment only applied to those claiming general damages.

Mr De Freitas pointed out that claims paid were below the cost of medical expenses.

Mr Modise replied that RAF paid in full for medical costs, loss of earnings, loss of support and funeral costs.

Mr De Freitas wanted to know what definition was applied to qualify an injury as “serious”.

Mr Modise replied that the definition of serious damage was only applied when a person claimed general damages which were over and above the payments provided for claims, and which were related to loss of amenities of life. He explained that medical doctors measured this. The requirement was 30% impairment.

Mr Gaehler asked why ambulances carrying accident victims did not go to the nearest hospital.

Mr Modise replied that there was a flaw in the legislation. If a person was injured and required emergency medical treatment, RAF paid the private sector the equivalent of the private sector rate, but the private hospital would only stabilise the victim. For ongoing medical treatment, hospitals were only compensated at public sector tariff. This had led to the private sector refusing to treat people beyond stabilisation, as their costs would not be recovered from payment provided by RAF.

Mr Lucas was concerned that the use of experts in the process of claiming was disadvantaging the poor.

Mr Modise replied that the scheme was subjective as it required experts to become involved in the process of claiming. However, the new proposal in the new legislation would be aimed at removing this method.
 
Mr J Maake (ANC) wanted to know how the process of modeling was done to establish the future revenue.

Mr Modise replied that this was done by noting the backlog of cases and projecting how many cases would arise in future, and this funding model was then presented to the Treasury.

The Acting Chairperson asked about the status of the advisory committee.

Mr Dillay responded that the term of the board expired in July. When the new Minister had been appointed,  DOT re-advertised the positions. The Minister appointed an advisory committee in line with Section 49(2), as the appointment of the board was awaited.

The Acting Chairperson thanked the members of RAF, and assured them that the Committee had taken note of the challenges that were facing RAF.

The meeting was adjourned.