Department of Science and Technology on Strategic Plans and Budget for the period 2010 to 2013: briefing

Meeting report

Briefing by the Department of Science and Technology (DST)

Mr Derek Hanekom, Deputy Minister of Science and Technology attended the briefing. Dr Thomas Auf der Heyde, Deputy Director-General / Group Executive: International Cooperation and Resources and Acting Director-General, DST extended the apologies of the Director-General, Dr Phil Mjwara.

 

Dr Auf der Heyde presented the Corporate Strategy of the DST for the Medium Term Expenditure Framework period 2010/11 to 2012/13 to the Committee (see attached document). The Department’s strategy was aligned to Government’s Medium Term Strategic Framework, the Ten-Year Innovation Plan introduced in 2007 and the National Research and Development Strategy introduced in 2002.  The strategic overview and key policy developments included the vision and mission, the strategic management framework and the key policy developments since 1996.

 

The principal goals of the DST were the enhancement of South Africa’s knowledge-generation capacity and innovation capacity, the development of human capital, the building of science, technology and innovation infrastructure and the enhancement of the country’s international and regional position.  A summary of the Department’s recent outputs and achievements was provided.  The challenges in implementing some key performance areas included the economic recession, intergovernmental coordination, disparity of the financial and academic year calendars and the drain on resources when new institutions were established.  An overview of the DST’s medium-term priorities and initiatives was included.  A table listing the major objectives, measurement indicators and output targets was provided.  A summary of the Department’s monitoring and evaluation function was presented.  An analysis of the Gross Expenditure on Research and Development (GERD) revealed that the amount spent on research and development as a percentage of GDP had declined from 1.04% in 1991/92 to 0.93% in 2007/08.

 

The estimated expenditure for the 2010/11 financial year amounted to R4.6 billion, increasing to R4.9 billion in 2011/12 and reducing to R4.5 billion in 2012/13.  92% of the funds allocated to the Department were transferred to the public entities that the DST was responsible for and only 8% of the allocation was spent on administration, which was unusual for a developing country such as South Africa.

 

Discussion

The Chairperson thanked the Department for a clear and detailed presentation.  He said that the briefing to the Committee was consistent with the good reports on the DST that had been received from the Auditor-General.

 

Ms M Shinn (DA) noted that the DST had been voted an additional amount of R400 million and planned to save approximately R500 million over the next three years.  She asked what the Department planned to spend the additional R2 billion on.  She wanted to know why the National Treasury had decided to allocate less funding to the Department.

 

Mr P Smith (IFP noted the importance of the contribution of the science and technology sector to South Africa, the African continent and the rest of the world mentioned on page 3 of the presentation document and asked how the effectiveness of the Department and its impact on the economy was measured. He referred to the Ten-Year Innovation Plan (TYIP) depicted on page 7 of the presentation document and noted that energy was included as one of the grand challenges.  No mention was made to the development of alternative energy-generation technology in the presentation and he wanted to know how much funding was allocated to addressing the energy challenge and what role was played by the DST in reducing South Africa’s reliance on coal-fired power stations.  Page 11 of the presentation document referred to the Platinum Development Fund launched by Anglo Platinum.  One of the applications of platinum group metal technologies was batteries and South Africa had recently developed and launched the Jewel electric car.  He asked if the country would take advantage of the platforms for battery technology that were being developed internationally or planned to focus on the local development of battery technology.  He referred to the mention made on page 17 of the development of innovation chains in biotechnology, nanotechnology, the hydrogen economy, Information and Communication Technology (ICT) and advanced manufacturing.  He wanted to know what the potential was and if the programme was linked to other beneficiation programmes.  Page 19 referred to the implementation of the human capital development strategy.  South Africa produced the best mining engineers in the world but a large proportion of the 1800 mining engineers produced every year worked in other disciplines.  There was a substantial demand from other countries for South African-trained engineers. He asked what the retention strategy was for the human capital development programme.  The graph on page 36 indicated that the amount spent on research and development (R&D) exceeded 1% in 1991 but had reduced to 0.93% in 2009.  He understood that the target for R&D was 2% over a ten-year period and he asked if the target would be achieved.

 

Ms M Dunjwa (ANC) complimented the Department on the presentation.  She noted the trout-farming initiatives in the Western Cape and asked if any similar aquaculture initiatives were being introduced in the Eastern Cape Province.  She asked for examples of the health innovations mentioned in the briefing and how the poor households mentioned in the Department’s output targets were identified.

 

Ms P Mocumi asked for more information on the rural quality of life improvement initiatives mentioned on page 11 of the presentation document.  She referred to the challenges in implementing certain key performance areas and asked what interventions were planned by the Department to address these challenges.  She referred to the establishment of a production facility for the abalone project at Hondeklip Bay mentioned on page 22 of the presentation document and wanted to know where other aquaculture projects in the country were located.  She asked for more information concerning the four new health innovation initiatives mentioned on page 26 of the presentation document.  She noted that a target of 4900 bursary awards had been set and she asked if the students receiving bursaries were categorised by race, gender, origin (i.e. from poor, rural areas) and disability.

 

Ms Margorie Pyoos, Deputy Director-General: Socio-Economic Partnerships, DST explained that all Government entities were required by National Treasury to cut down on the amount of expenditure, apply efficiency strategies and slow down the rate of expenditure on projects.  The DST had attempted to dispense with the previous practice of applying an inflation-adjusted growth factor over the MTEF period, without compromising operations.  As 92% of the Department’s allocation was transferred to public entities, it was necessary to negotiate the budget cuts with the entities concerned.  The DST conducted reviews of the funding provided and the results achieved by the various programmes and projects in order to determine the effectiveness of the funds spent.

 

Ms Pyoos said that the development of human capital was retained as a priority and was considered to be an investment.  The effectiveness of the programme was determined by analysing the number of bursaries awarded and the number of graduates.  The success of the research programme was measured against the number of local and international publications, the relevancy of the research undertaken and the contribution made to the level of knowledge.  The impact on commercialisation was determined by reviewing the type and number of patents that had been registered.  World Bank statistics were available on knowledge-based economies.  The DST aimed for South Africa to qualify as a knowledge-based economy and the drafting of the indicators was currently in progress.

 

Ms Pyoos reported that the DST was involved in the development of alternative sources of energy and a number of projects were under way.  The Department was reviewing the objectives concerning the Anglo Platinum Fund and was not sure of the extent of the commitment concerning battery development.  Concerning the issue of value chains and beneficiation, she explained that the Department had developed four platforms for the different types of metals (for example, precious metals, ferrous metals and light metals) and research conducted had revealed that the development of the metals industries lent itself to national implementation.  The by-products of the metals industry allowed for advanced manufacturing initiatives as well, such as fluorspar and chemicals.  Other initiatives of the DST included assisting small, medium and micro enterprises (SMME’s) in the agricultural sector to develop value chains, for example producing tomato juice, which had a higher value than tomatoes produced for the market.  A challenge was meeting the required phyto-sanitary requirements.  Other initiatives concerned the growing of high-value vegetables.  The Department was able to present a full briefing to the Committee on the various socio-economic development projects under way.

 

Ms Pyoos said that the DST aspired to a 2% of GDP spend on R&D, although no formal targets had been set.  She felt that Mr Smith had raised a good point and it would be necessary to draft a ten-year costing plan to achieve the target.  The DST encouraged the private sector to invest in R&D but had found that the smaller engineering companies were unable to benefit from the tax incentives available as the amount of turnover was too low.  The Department was currently in discussion with the National Treasury regarding this matter.  The DST encouraged the development of sustainable human settlements. 

 

In response to the questions concerning the location of socio-economic development projects, Ms Pyoos agreed that tere were many under-serviced areas in the country, particularly where the provision of electricity and water was concerned.  The DST targeted these under-served households and communities, which would benefit from small, off-grid solutions.  A number of pilot programmes had been launched in communities in the Eastern Cape, Limpopo and Mpumalanga provinces to address the communities’ needs for energy to provide lighting, television and fridges.  These amount of energy generated unfortunately was inadequate for cooking purposes as electric stoves required far more energy that can be generated by these alternative solutions.  The aquaculture projects included trout farms in the Western Cape, the commercial farming of abalone in the Western Cape and other marine fishery pilot projects in the Eastern Cape and KwaZulu Natal provinces.  The DST had identified the need to develop hatcheries to provide the fingerlings for the aquaculture industry instead of importing the fingerlings from abroad.  Aquaculture in inland dams posed particular challenges and the Department was working closely with the Department of Water Affairs to find solutions for the fluctuations in water temperature and dam levels.

 

Mr Hanekom explained that the reduced funding available for R&D over the following three years was because the Meerkat project was coming to an end.  The project had required a significant amount of funding but if South Africa was successful in the bid for the Square Kilometre Array (SKA), the country would benefit by 1.5 billion Euros.  He expected the percentage of R&D spend to GDP to continue to fluctuate and the effect of the economic downturn was an increase in the percentage.  He would like to see a steady growth in the R&D percentage.  He was disappointed in the rate at which companies in the private sector had taken advantage of the tax incentives.

 

Dr Auf der Heyde explained that the Department could only control and measure its own outputs and had little or no control over the diffused outcomes and socio-economic impact of the projects after implementation.  It was therefore difficult to link the Department’s outputs, the outcomes and the socio-economic impact of programmes.

 

On Page 14 of the presentation document was a graphic illustration of the South African titanium industry and the establishment of the Titanium Centre of Competence. Titanium was largely an abandoned resource as it occurred mostly in sand dunes in ecologically-sensitive areas.  Titanium was used in the manufacture of aircraft but was a notoriously difficult metal to process.  The processing of titanium was a technological challenge but the DST wanted South Africa to add value by processing the titanium produced rather than exporting the ingots to other countries.

 

Dr Auf der Heyde reported that an inter-ministerial committee was convened and recently submitted the terms of reference for the Jewel electric car to the Minister.  The social-impact projects initiated by the DST did not only benefit small communities but made a significant contribution to the macro-economy of the country as well.  The DST was limited to demonstrating the application of technology in pilot projects but other Government entities were responsible for the large-scale implementation. The Department was justifiably proud of its achievements and he supported Ms Pyoos’ suggestion of a more detailed briefing to the Committee on this subject.

 

Dr Auf der Heyde said that the retention of highly-skilled personnel was a world-wide challenge.  The DST had little control over the phenomenon but was in consultation with the Department of Home Affairs to overcome some of the constraints against the import of scarce skills into the country.  Retention strategies needed to be developed at the institutional rather than the Governmental level.  He was unable to provide more detailed information concerning the four health-related initiatives, which were still in the developmental phase. 

 

In response to the questions concerning the Department’s responses to the challenges identified, Dr Auf der Heyde said that the effects of the economic recession on the key priorities had been identified, entered in the risk register compiled by the DST and the Department’s responses to the risks had been documented.  The challenge of intergovernmental was being addressed by fostering closer working relationships and Ms Pyoos in particular had made much progress in this respect.  The Department considered that the cluster system could be improved upon and he reported that a Cabinet committee was currently involved in a review of the system.  A task team was appointed by the Department to investigate the disparity between the year-end dates and to propose solutions.  The DST remained involved during the process of establishing a new institution and was committed to providing internal support until the new entity was fully operational.  The services of external consultants were only utilised where no internal capacity was available.  The DST was committed to ensure that the bursaries were awarded in accordance with the equitable distribution of the general population.  The National Research Foundation (NRF) distributed the bursaries in accordance with approved policies and targets.  He gave the assurance that all the entities associated with the DST were mindful of the need to address the issues concerning gender, race, impoverished backgrounds and persons with disability.

 

Mr L Mkhize (ANC) understood that the Technology Innovation Agency (TIA) was supposed to have been fully operational by 2010.  He wondered why the target date had been moved to 2013 and what the challenges were.  He found the outputs of the DST difficult to monitor and presumed that the health initiatives mentioned in the briefing were in response to particular challenges in the health sector.  The briefing referred to the establishment of fifteen new businesses but no information on these businesses were provided, which made it difficult for the Members of the Committee to monitor progress and to provide any input.  He asked if the Department anticipated any difficulty in applying the entire budget allocation.

 

The Chairperson was concerned over the lack of coordination concerning the research chairs.  Researchers were expected to balance the demand for publications as well as lodging patents but not enough funding was available for both aspects.  The universities located in the previously disadvantaged areas of the country complained of being sidelined as the researchers were appointed at the top universities only.  He wanted to know what the difference was between Centres of Excellence and Centres of Competence.  There were concerns over the amalgamation of several entities into TIA and the management was feeling threatened and unsure of their future positions in the new Agency and where they would be located.  He wanted to know why the Chief Executive Officer (CEO) of the TIA was in an acting position as he felt that it was necessary to have continuity for the Agency to be properly established.  He asked what progress had been made with the Sumbandila satellite as there had been little progress reported after it was launched.  He said that it would be useful to the Members of the Committee to have the Curriculum Vitae of the incumbents in the executive positions of the DST.

 

Referring to the illustration of the link between the development of the Finnish forestry and information technology industries on page 20 of the presentation document, the Chairperson asked if the DST was involved in similar developments in KwaZulu Natal.  He noted that the target date for the South African National Space Agency (SANSA) to be fully operational was March 2013 but he was under the impression that the agency had already been established.  He asked what the cause was for the delay.

 

The Chairperson said that the Committee had received a request from the University of the Western Cape to make a submission on Indigenous Knowledge Systems, which was one of the programmes of the DST.  He suggested that the DST participated in the briefing as well.

 

Ms Shinn noted that the target date for the appointment of the CEO of TIA was originally set for 30 March 2010 but had been postponed to 30 November 2010.  She wanted to know what had caused the delay and why the process of appointing a CEO for the Agency had taken two years.

 

Ms Dunjwa asked when the DST planned to eliminate the use of external consultants and what the cost was of the services provided to the Department.

 

Mr Smith asked for further clarity on the DST’s ten-year involvement in energy.

 

Dr Auf der Heyde remarked that there were different interpretations of “fully operational”.  In the case of TIA, a Board had been appointed but the Agency could not yet be considered to be fully operational.  The establishment of an institution took up much time and effort, for example it had taken five years before the merger of the institutions of higher education was completed.  The different entities being merged into TIA each had their own employment policies and contracts and it was necessary to consult with all the personnel involved.  The DST was involved in managing the process of aligning policies and introducing new processes, such as access to funding.  In general, the targets set for establishing the TIA had been met but he was unable to answer Ms Shinn’s question concerning the appointment of the CEO as he had not been involved.  He undertook to forward a written response to the Committee.

 

Mr Hanekom suggested that the Committee requested a briefing from TIA.  In his view, the target date of 30 March 2010 for the appointment of the CEO was unrealistic.

 

Dr Auf der Heyde said that the location of certain pilot projects had been identified but others still had to be decided.  The choice of area for a project was informed by the needs of the region and the community and the suitability of the available technology.  The process of identifying suitable sites was ongoing.  In many cases, the DST was approached with proposals from individuals, communities, other Government Departments and Members of Parliament.  Mr Hanekom had submitted a number of suggestions.

 

Responding to the Chairperson’s comments concerning research chairs, Dr Auf der Heyde said that the model and expectations needed to be varied.  One of the constraints were that there were no enough researchers available and it was necessary to deploy new strategic interventions, for example by establishing research chairs in patents and innovation.  The Ministers of Education and Science and Technology had agreed to cooperate and the respective Director-Generals of the two Departments convened on a regular basis to discuss issues concerning research chairs and bursaries.

 

The Chairperson remarked that the retention of science graduates was an important issue.  He commented that many students from poor backgrounds struggled to survive on the small stipends as they were obligated to support their families as well.  He suggested that the Committee arranged a workshop attended by the National Treasury and the other affected Departments in an attempt to find solutions.

 

Dr Auf der Heyde agreed that a coordinated approach was desirable.  He explained that Centres of Excellence conducted more “upstream”, esoteric research while the Centres of Knowledge were more involved in “downstream” types of activities, such as networking with the private sector.  He undertook to forward the CV’s of the DST’s executive personnel to the Committee.  He welcomed a coordinated discussion with the University of the Western Cape and the Committee on the subject of Indigenous Knowledge Systems.

 

Mr Hanekom pointed out that the Department had only presented the highlights during the briefing and would be happy to provide further information to the Committee if required.  He agreed that certain outputs were more difficult to measure than others and some aspects were subject to change over a period of time.  The DST was involved in health initiatives concerning malaria, tele-medicine and HIV/AIDS.  There had been some exciting developments in the field of paleontology as well.  The focus of the DST was on research, development and innovation and the range of projects varied from relatively small enterprises to significant developments, such as the South African Large Telescope (SALT).  The Department’s contribution in the field of energy was at the research level but the DST was also in a position to influence organisations such as SANERI.  The Department provided funding for R&D but was not in a position to implement mainstream roll-outs of projects.  He felt that the targets set for alternative and renewable energy sources could be improved upon.  He advised that other aquaculture projects included yellowtail cages in Port Elizabeth and trout farming in KwaZulu Natal.  He supported the earlier suggestion of briefing the Committee more fully on the many innovative developments that the DST was involved in.

 

The Chairperson said that the DST would have further opportunities to interact with the Committee when submitting the annual reports and the reports to National Treasury.

 

During the meeting, the Chairperson informed the Committee that one of the Members, Ms M Nyama (ANC) had fallen ill and were taken to hospital.  The Members of the Committee extended their wishes for a speedy recovery to Ms Nyama.

 

The meeting was adjourned.