Child Support Grant: Children's Institute briefing; Deputy Minister on Social Development 2008 audit

Meeting report

Children’s Institute: Child Support Grant briefing
Ms Paula Proudlock, Programme Manager: Children’s Institute, addressed the Committee on the Children’s Institute (the Institute) response to the regulations for the Child addressed two aspects of the final regulations for the Child Support Grant (CSG) of 2009, and the Minister’s address of 9 February 2010. She noted that she would concentrate on the extension of the CSG to children up to 18 years of age, and secondly the “condition” in relation to school enrolment and attendance, which was phrased at the moment as a “condition” although the Minister had stated that a new word must be found; it was a condition in the usual sense of the word and could be implemented punitively.

Ms Proudlock said that the draft regulations were designed in a way that would have resulted in children no longer being eligible for the grant between the extension phases. This was what had happened with the first extension made to 14 year olds, in 2003 to 2006.  A cut off birth date of 1 October 1994 was set, but the Institute would have preferred January or April 1994, so that more children could be included. The Minister said the regulations would be amended again to change the cut-off birth date to 31 December 1993, and that children would remain eligible for the grant up to the age of 18. This would cover more children, but would of course require more budget, and the Minister had warned Parliament that tradeoffs would need to be made.

The Finance Minister’s Budget speech showed where tradeoffs were made. The two main children’s’ grants would not be increased to keep up with inflation. The CSG increased by 4%, and the Foster Child Grant (FCG) increased by 4.4%, yet inflation increased by 6.4%. This meant that the caregivers would struggle to meet basic needs because the increased grant could not keep up with their cost of living increases. It also impacted negatively on the required annual inflation increase of the qualifying income threshold, because the threshold included the grant amount and so it would not keep up with the rate of inflation. At the moment a person needed to earn R2 400 as a single parent to qualify for the grant, so if the grant went up to R250 the income threshold would then need to go up to R2 500 per month, which would make more people eligible. Ms Proudlock suggested that the Committee should consider whether the trade-off of not keeping the CSG in line with inflation was acceptable, in relation to how many children would be affected by the changes, and whether, if trade-offs had to be made, whether they should be made from the CSG budget or another budget that did not affect children – in which case there was a need to consider which it should be.

The Institute noted that the proposed regulations had not been promulgated, and had hoped that the Department could advise when this would be done. The South African Social Security Agency (SASSA) informed the Institute that the officials had been informed of the change in birth date, so at a service delivery level children would be coming on to the system even though the law had not been amended.

Ms Proudlock said that draft regulations around school enrolment and attendance were originally quite punitive in that the child or family would be punished by suspending the Child Grant if the child was not in school. This would mean that the most vulnerable children could be deprived of an education and their grant. Most of the children not attending school were children with mild disabilities, where special schools were too far away, and normal schools would not accept them. Other groups of children not in school were those caring for sick parents, children living far from schools and children in rural areas. The Institute was happy that the final regulation had required a social worker to visit the family of a child not in school to find out the reasons, and to support the family.

She said that the regulations noted that a primary care giver had to give proof of school or educational institution enrolment and attendance to SASSA “within one month of approval of a child support grant”. In February the Minister told Parliament that this was not a requirement for eligibility. The Institute asked that this statement by the Minister should be distributed to all SASSA officials to make the position clear.

Ms Proudlock said that the legislation was inconsistent. The South African Schools Act allowed children to leave school at the age of 15, while the CSG regulations said that children from age seven to 18 who were receiving a grant must be enrolled in school. The Institute recommended that Parliament should monitor implementation carefully as the “conditions” were new to South Africa and it could not therefore be predicted how they would impact on children’s access to grants.

The Institute noted that there were challenges. The regulations were not clear in a number of areas but this could be addressed by either re-drafting to make them clearer, or by directives and basic communication being provided by the Department to assist in the interpretation. The communication should be available – but was not yet – for officials, NGOs, and the public.

Ms Proudlock suggested that an exception based reporting system had to be put in place. The Department of Social Development’s (DSD) Chief Operating Officer mentioned that the Department was considering this to make the system work more effectively. This would mean that instead of 8 million caregivers having to submit school reports, which must then be processed, to the Director General every 6 months, the school would rather send lists of absent children, which would be compared to the SOCPEN database to check whether the absentees were receiving the CSG. Most children receiving the CSG were attending school, and it was estimated that about 400 000 were not attending in 2007. Exception- based reporting required the cooperation of the Department of Education and the Department of Social Development.

Ms Lucy Jamieson, Senior Advocacy Coordinator: Children’s Institute, also questioned whether the trade-off referred to by Ms Proudlock was necessary. The CSG kept children in school and protected them from things like the global economic recession. The grant, which was given to the poorest children in the poorest homes, went into hope-building. Most of the expenditure in these households was on food, fuel and transport, and they had been the hardest hit by the economic recession. The estimated cost of increasing the grant by another R5 to keep up with inflation was approximately R600 million. This was not really a huge amount of money, and serious consideration must be given to whether the long-term impact of the grant being below inflation in real terms was worth the trade-off.

Discussion
Mr VV Magagula (ANC) said that the Committee had decided to lobby for the age extension to be moved to January 1994, thus clearly demonstrating the support of Parliament for the Institute’s aim of protecting children. He noted that some children would need a grant from when they were born until they were 18, but this was part of building the nation. He felt that government could not punish a person by taking away his or her grant for non-attendance at school, because of their individual circumstances and he agreed that social workers must find out what the problems were, in order to resolve them.

Ms H Lamoela (DA) said that she would like to reiterate that CSG was not the only help that these children were receiving from the State. Nutritional programmes at school really helped children in rural and remote areas. These children also had free schooling and free transport, although she conceded that for remote rural areas, the Department of Education did need to extend the transport system. On occasion there were also projects for school uniforms which went to the poorest of the poor. Food parcels were distributed on a regular basis, because the grant was sometimes not enough to sustain a family for a month. Subsidised housing also needed to be included in the equation. The indigent policy also assisted people to live. Whilst these were not providing enough for children and their families to have the lives that everyone wanted, they should nonetheless all be considered.

Ms H Makhuba (IFP) noted the Institute’s comment that some challenges were not yet resolved. The Committee had raised these concerns with the Department and would need to monitor the situation.

Ms Proudlock said it was true that Government had other comprehensive package of health, education, nutrition that helped children. In design, this package was really good, but it sometimes failed to reach families at implementation stage. The Institute noted that South Africa was a cash-based economy. In order for families to access the packages provided for them, they had to pay for transport. Without having the cash to pay for such transport they could not access the package, and this was the main reason why the Institute emphasised the need to monitor the CSG, and ensure that families were receiving enough to pay for their transport to access other packages. She agreed that the question of school transport needed more work; families were using the grant money to get places so effectively the children’s transport was not being utilised for the children. The grants really did not stretch very far if they had to pay for food and transport and other needs.

Ms C Dudley (ACDP) wanted to make sure that the Committee understood that the Institute was happy with the new regulations, but that it was worried about the trade off and the inflation increase.

Ms Proudlock said that in general the Institute welcomed the change to regulations for the cutoff date being the 31 December 1993. However, it was concerned about the trade off.

The Chairperson said that it was pleasing that this was a critical presentation. It was important to improve the efficiency of the system and clarify its legal basis. It was necessary to ensure that children moving out of the system did so at the right time, and that those needing to come into it were taken on board.

The Chairperson pointed out that the main problem with the FCG was the high turnover of social workers in this area, which led to a foster care back log. The briefing the Committee had received showed that DSD was dealing with the backlog, but she wanted SASSA to comment on the efficiency issues raised in the presentation, especially the liaison between the Department of Education and SASSA legislation, and how this could be reconciled. The Committee had asked for SASSA to address the Committee about the communication plan, the media campaign and the awareness campaign, to ensure that a single and unified message was conveyed.

Mr Cocako Pakade, Acting Chief Executive Officer, SASSA, said that some of the issues raised with the Committee last time had been covered by the Children’s Institute. There would be benefits to implementing the new regulations. SASSA was looking at verifying the system because if SASSA did get the lists indicated in the regulations, it would also need to be able to verify which children had been paid by DSD, ensure that they were attending school and getting the correct benefits. Information had been sent to all SASSA staff about the new extension date. However, SASSA was a huge institution and it was possible that some staff may still be confused about the new regulations. SASSA would attend to complaints as they were received. The Minister would be engaging MECs around issues concerning the different roles of Departments and the Director General of the National Department would engage with his counterparts in the provinces about dealing with reports. However, SASSA did have registry systems for filing records of all beneficiaries, and they would be able to provide that information to the Department of Social Development and the Department of Education. SASSA would be able to ensure that reports were prepared and was looking at the possibility of interfacing systems to make sure that these were effective, and would be refining them.

Mr Selwyn Jehoma, Deputy Director General, Department of Social Development, said he wanted to clear up what seemed to be a trade off of a significant nature. In the discussions between the National Treasury and the DSD there was an agreement on two issues. The first was the need to look at the efficiencies, to reduce leakage in the system. Lessening the leakages would enable government to look again at the increase in the CSG by mid-year. If the 6.4% rate had been applied, this would have increased the grant by R14, but it would not be possible to use these non-rounded figures because of payment processes in provinces. The intention was to increase the grant by another R10 in October, so that on average the increase for the year would be 6.4%, in line with the rate of inflation. Even though the Minister of Finance has indicated that the increment was moderate, it did not mean that children would be adversely affected by the real decrease in the value of the grant.

Secondly, there was not a trade off between extending the age for the grant, and the figures for the FCG. There were incentives in terms of the high FCG compared to the CSG. Members needed to expect that that the increase in the FCG it would continue to be below inflation. In a very subtle way Government would rather want, in the long term, to get the CSG to increase at a faster rate, so that people did not have to choose between applying for a FCG or CSG. In reality it would slowly begin to close the gap that exists between the two.

Mr Jehoma also said that even though the regulations were not promulgated yet, no child would be adversely affected if application had already been made, as once the regulations were promulgated all those applications already on the system would be dealt with on a retrospective basis. The delays in the promulgation were in part due to the final consultations, and in part to the Minister’s busy schedule, but promulgation was imminent.

Ms Jamieson reminded the Committee that in 2008 the Minister of Finance introduced a base increase to the CSG and promised that inflationary related increases to the grant would be made later, to ensure that the CSG would start to be the real grant of choice rather than the FCG. However, this budget showed that the FCG was more than the CSG, and this would not decrease the gap. The CSG could be seen as a gateway, so that children that were eligible for the CSG also became eligible for a range of other measures, such as the school fee exemption. When the CSG was not increased the means test did not increase either, which meant that less families and less children became eligible for the grant. It then also narrowed the gateway to the other support packages. This was why the Institute felt that it was important for the CSG to keep up with inflation, firstly to keep up with inflation and secondly to be available to at least the same numbers of children who presently received it. The grant of R250 per month did not cover the cost of raising a child, but was the most that could be done to support really poor families. It was important to maintain the impact of that in the long term. The increase mentioned for October was not a firm commitment in the budget speech, and should still be put through as a recommendation.

Briefing by the Department of Social Development (DSD) on progress made on audit issues for 2008/09 financial year
Ms Dorothea Snyman, Acting Chief Financial Officer, Department of Social Development, said the purpose of the presentation was to highlight the progress made with regard to the Audit Outcome for the 2008/09 financial year, in preparation for the new financial year.

DSD had not had qualified audit reports for the past seven years, but in 2008/09 the Auditor-General had noted an emphasis of matter on two issues outside the control of the Department. The first one was the flow of funds. The current flow of funds model for social assistance grants remained in place also for the 2010/11 financial year. SASSA administered funds on behalf of the Department and this was still ongoing, which meant that DSD and SASSA had to work closely together. The Department prepared the annual financial statements in compliance with the directives of the National Treasury.

Other matters related to social relief of distress. During the 2008/09 financial year, SASSA was tasked with the distribution of the Social Relief of Distress (SRD) grant (which consisted of food, food vouchers, school uniforms or cash) to alleviate general poverty. There were some shortcomings in the process of distributing the grant to the intended beneficiaries. There had been progress made on correcting the non compliance with supply chain processes. SASSA was finalising the roll-out of the voucher system and a register was maintained for the issuing of assistance to beneficiaries. Inadequate controls had been identified and a system was now in place so that invoices and till slips were matched to quotations, and procurement took place when beneficiaries were identified. All regions were complying with the procurement prescripts.

Other problems had related to the social assistance of grant debtors, since repayments made by the grant debtors originated from multiple sources, including bank deposits. Numerous cash deposits contained inadequate references which resulted in unallocated receipts not being allocated to debtors accounts. The Department was in consultation with the National Treasury regarding the issue. Some progress had been made on this issue. A process was under way to clear all unallocated receipts, and the bulk would be done before the end of April 2010. SASSA was also administering all social assistance grant debtors on behalf of the Department in accordance with the directive of the National Treasury. There was also a process to determine the recoverability of all outstanding social assistance grant debtors in consultation with all role-players.

Governance had been of concern. There were insufficient human resources in the finance section of the DSD. The Department had improved on the annual action plan, to ensure that all role players submitted their information timeously, and that changes in figures did not delay the final figures. DSD was also ensuring that vacant posts were filled and that there was ongoing capacity building of staff.
Recurring items linked to governance were closing of the Anglo Appeal Fund and the DRC Humanitarian Appeal Fund, which would be done once the new Disaster Relief Bill was approved.

Discrepancies between the Appropriation Statement and the Statement of Performance were mainly due to the late changes to the final figures, but a more detailed and comprehensive action plan was developed to avoid a similar situation. The financial management and administration capacity of the Department was improved. The investigation of irregular expenditure processes had also been reviewed and enhanced to ensure that cases were assessed and dealt with on a continuous basis.

Ms Snyman noted that some financial statements had not been submitted by Non Profit Organisations (NPOs). The administrative section of the DSD was directly responsible. The DSD had now developed an NPO Capacity Building Framework, and given training to Community Development Practitioners to assist with local queries and compliance related to the registration and compliance of NPOs. There was also an online registration system being developed.

Another compliance issues had related to Occupational Health and Safety meetings and appointment of members, which was corrected by appointments now made in writing and more frequent meetings being held.

The previous misallocations to general ledger accounts had been dealt with by staff being trained on the interpretation and application of the new Standard Chart of Account classifications. Misallocations were minimised as far as possible.

The process for administration of receipt and payment of invoices was being improved to ensure creditors were paid within 30 days.

Asset register and physical assets not corresponding was also a recurring issue. DSD was strengthening the capacity of the Asset Management Unit through the filling of vacant posts. Reconciliations of asset movement were also being done regularly. IT asset repair problems were also being rectified, and there was fast-tracking of repair items.

Ms Snyman said that DSD had asked the Department of Public Service and Administration and South African Revenue Services for advice on fringe benefit and expenses claims.

DSD processes around financial reporting systems were being examined, to clear unused or inactive accounts. National Treasury would be consulted to address the system configuration processes.

Discussion
Ms Makhuba said the Auditor General had stated that some documentation critical to grant applications had not always been completed, and she asked why this had happened, and what was done to address it, and to ensure that this did not happen in future.

Mr Bandile Maqetuka, Executive Manager: Customer Services, SASSA, said that SASSA had now developed standardised procedures for SRD grant applications, which were approved and were being implemented. Staff had been trained on interpretation and application of procedures.

Ms P Adams (ANC) asked how regularly reconciliations of asset movements were being done.

Ms Lamoela questioned what percentage of the budget was lost due to the circumstances in which debtors found themselves. She questioned if there were any outstanding financial statements, and asked whether all vacant posts had been filled. She also said that the question of the unused mobile facilities was crucial, since there was a desperate need in rural areas, and the cost of 30 grounded mobile offices being stored, but not used, was affecting the budget.

Mr Mpho Mofokeng, Chief Financial Officer, SASSA, responded that SASSA was finalising its allocated receipts. Decisions would be made, in the case of debtors who could not be traced, what money would be written off, but this had not yet been finalised. He noted that at present there were no mobile units standing idle but all were being moved to the various areas. Previously, satellite costs were provided so that the mobile units could function, but now the officials had to use 3G cards. In terms of the irregular expenditure, he said that three quotations were now required before making a decision on a service provider.

Mr Cocako Pakade elaborated on this. Funding still remained as a major constraint to SASSA’s operations. Last year, SASSA had requested funding for infrastructure issues, including the costs of operating the mobile trucks. Because of the economic climate, the budget was reduced, and no allocations were made. SASSA then decided to send a team to do a cost benefit analysis as to whether the mobile trucks were costing more then the benefit they offered. The outcome was that, whilst there was a significant cost, there was benefit to those in the remotest areas. The units were still needed, but the units did require bandwidth to connect to the database, which they unfortunately did not have. The DSD had decided to continue using the 3G card, even though this might not be very effective in remoter areas, because of the need to continue to process grant applications. SASSA was considering prioritising the mobile units to cater for extended CSG and pension grants.

Ms Dudley said that the relief aid distribution was not being formed in a standard way and that supply chain management was not being adhered to during the procurement of relief aid. She wanted to know what mechanisms were being put in place to ensure that the distribution of relief was standardised across Provinces. There was also a problem in that it was easy to copy the food vouchers.

Mr Mofokeng said that SASSA had received reports on this, and ensured that the voucher system was running better, with better storage and registers, with one copy remaining in the budget book and one being provided to the service provider, to be returned when the shop dispensed the goods and claimed from SASSA.

Ms Bathabile Dlamini, Deputy Minister of Social Development, added that the DSD was looking to use a type of paper that could not be duplicated or changed easily. 

Ms Adams noted that in the last few months South Africa had quite a few floods, but there had not been a uniform disaster response.

Ms Adams enquired why IT repairs were taking so long.

Ms P Xaba (ANC) said that in Newcastle she had observed that some beneficiaries unable to collect their money from pay points in one month apparently could not access this in the following month, and enquired what happened to the benefit.

Mr Mofokeng said that if a person did not come to collect money, it would be rolled over to the next month, but after three months of non-collection, the grant would be frozen until the person provided an explanation and proved that he or she was still eligible.

The Chairperson noted that the Auditor-General had identified irregular expenditure for SASSA, and issues around the drop-in facilities’ service. She asked for comment on this. Some of the contracts under investigation were also not reflected in the progress report. The Committee wanted a commitment from the Department on the recurring items, and in particular whether DSD was confident that the recurrent issues would not again appear but had been properly dealt with. The financial reporting systems would pose problems because of the huge workforce, but she wanted at least to see improvements. She urged the DSD to be honest with the Committee.

Mr Peter Netshipale, Chief Director: NPO and Partnerships, Department of Social Development, assured the Committee that DSD was in discussion with Auditor General about the submission of financial statements by NPOs, and how these were documented. He pointed out that there would always be NPOs who did not submit financial statements. Of the 60 000 NPOs registered, only about 15% were funded, and those not funded might not submit statements. The problem was that the time frame for NPOs to hand in statements was different to that of the Auditor General. This would be discussed again and this would be reflected in the report.

Ms Lamoela enquired what the Department intended to do with the funded NPOs who did not submit financial statements for the past year.

Ms Adams asked what capacity building support the Department was giving to NPOs who were engaged in crucial services for the sector and how frequently the Department interacted with them.

The Chairperson said sometimes NPOS delivered a service on behalf of the Government, which meant that they worked with public funds. She found it problematic if they did not submit their financial statements on time. Another problem was that not all the NPOs had access to a Chartered Accountant, especially in rural areas, but merely had a bookkeeper drawing up the financial statements. She wondered if the DSD could not negotiate that banks, for instance, help with the submission of financial statements.

Ms Bathabile Dlamini, Deputy Minister of Social Development, noted that there were many commercial or social institutions who attended to their own financial statements, but this was something that did need to be looked at. A conscious decision had been taken to empower and mentor community based organisations, to try to circumvent problems where NPOs might not have used the bulk of the money to benefit those communities.  The Committee had suggested that training must be streamlined, and should hold government to its commitment on this.

The Deputy Minister then referred to the mobile units, saying that the outreach programmes had not ceased, and the DSD was still attempting to register those who needed grants. She noted that it was expensive to sustain the mobile trucks, and alternatives were being investigated, although the use of the mobile units would continue until alternatives were found.

In relation to disaster relief, the Deputy Minister noted that a Social Relief bill would be introduced in August, to try to achieve uniformity in responses to disasters, which would also ensure that funds available would be used. In general, the DSD was looking into all measures that could help it account properly and produce a high level of work.

The meeting was adjourned.