South African Post Office Strategic Plan & Budget 2010

Meeting report

Briefing by South African Post Office on the Strategic Plans and Budget
Ms Vuyo Mhlati, Chairperson of the South African Post Office Board of Directors thanked the Committee for the opportunity to present the strategic plans and budget of the South African Post Office (SAPO).  SAPO was aware of the Committee’s additional requirements for approving the budgets of entities imposed by the Money Bill coming into effect.

Ms Motshoanetsi Lefoka, Group Chief Executive, SAPO, introduced the senior executives of SAPO.

Ms Mhlati gave an overview of the background, the priorities set for 2010 by the Board, the mandate and strategic imperatives, the challenges and the innovation in strategic areas introduced by SAPO (see attached document).

Ms Lefoka briefed the Committee on SAPO’s mission, vision, value statement and the four pillars of the strategic plan, i.e. the corporate strategy, the business strategy, the operational strategy and the support strategy.  The presentation included a summary of the major achievements during 2009/10 and the focus areas for 2010/11.  The main objective of SAPO was meeting its Universal Service Obligations (USO).

The regulatory framework allowed SAPO to implement its mandate in line with the key priorities of Government and Government’s Plan of Action.  A list of the relevant legislation, regulation and international agreements governing SAPO was included.  Further details of the SAPO programmes that were aligned with Government’s priorities as outlined in the President’s 2010 State of the Nation Address were provided.

In terms of the license agreement with the Independent Communications Authority of South Africa (ICASA), SAPO was required to provide one post office per 10,000 of the population residing in a 5 km radius.  The delivery on the license agreement resulted in a target being set to establish 100 new post offices and to relocate another 100 post offices per annum.  Although SAPO had largely achieved the targets, conforming to the license agreement posed some challenges.  The benchmark was applicable to developed, Western nations and did not reflect the reality applicable to South Africa.  The presentation included a map of the country with details of the population, the number of existing post office outlets and the number of additional post offices required in each province in order to meet the current license agreement.  A second map illustrated the alternative scenario if children under the age of ten were excluded from the population and a third map illustrated the scenario if children under the age of 15 were excluded from the population.  SAPO had approached ICASA and presented the alternative proposals with the aim of re-negotiating the requirements of the current license agreement.

An outline of the contribution to community development programmes and the human capital development programmes was presented.  Details of SAPO’s youth development and skills development programmes were provided.  A summary of SAPO’s role in international relations and the organisation’s environmental strategy was included in the presentation.

The challenges for 2010 included a decline in revenue, the reduction of the Government subsidy, the need to amend the funding model, the lack of capacity in information technology and systems, deregulation, the sustainability of USO, human resources, stakeholder management and the implementation of the transformational agenda.  A summary of the critical success factors was provided.

Mr Nick Buick, Chief Financial Officer, SAPO presented the preliminary financial results for the 2009/10 fiscal year.  Expenditure had declined by 2% and revenue had declined by 4%.  Operational profits were expected to decline by 26% to R300 million.  An overview of the austerity measures introduced in response to the global economic downturn was included in the briefing.

The budget for 2010/11 was conservative and was based on an expected overall increase of 7% in revenue and expenditure.  Details of the expected growth in the various revenue streams were included.  The most significant contributor (69%) was mail revenue.  A breakdown of the group revenue and expenditure budget for 2010/11 and the group budget until 2015 was presented.

The group balance sheet and cash flow statement for the fiscal period to 2014/15 was included in the presentation.  The fluctuations in the operating profit margin between 2004/05 and 2010/11 and the profitability ratios between 2005/06 and 2010/11 were illustrated by graphs. 

The Government subsidy to SAPO was in the process of being phased out and would cease in 2012.  The subsidy was applied to funding the cost of the USO and currently represented 40% of SAPO cash revenue.  The accumulated subsidy amounted to R684 million in 2009/10, of which R251 million was allocated to property infrastructure, R250 million to IT infrastructure, R136 million to USO and R47 million to value-added tax (VAT).  Details of the programmes funded by the subsidy were provided.  A table illustrated the subsidy funding allocation, actual expenses and amounts carried over between 2001/02 and 2009/10 as well as the reduced subsidy expected from 2010/11 to 2012/13.  Although SAPO was in a position to fund capital expenditure from other sources of revenue, the phasing out of the subsidy would compromise the ability of SAPO to sustain the license agreement target of delivering 100 additional post offices per annum.

Ms Lefoka concluded the presentation with a summary of the issues requiring the assistance of the Committee, i.e. the passing of the Post Bank Bill, the Post Office Amendment Bill and the postal Services Amendment Bill, providing regulatory support and focus and assisting SAPO to meet its USO mandate.

Briefing by South African Post Office on Utilisation of Labour Brokers
Ms Mhlati responded to the Committee’s request for a briefing by SAPO on the utilisation of the services provided by labour brokers.  She advised that SAPO was concerned over the non-compliance with legislation by labour brokers and consequently reviewed the organisation’s policies and agreements with the labour brokers concerned.  SAPO planned to reduce the extent by which the services of labour brokers were used and to increase the number of temporary employees that were appointed to permanent positions.  At least 70% of the staff complement would be employed on a permanent basis.  The nature of SAPO’s operations required the services of temporary personnel.  The organisation was however clear on which labour brokers would be used and had developed a model for the utilisation of labour broker services.

Ms Lefoka presented the strategic and business requirements of SAPO and explained the various forms of the workforce (see attached document).  Staff turnover statistics were provided.  SAPO currently used the services provided by fourteen labour brokers, of which eight were 100% black-owned.  The agreements with the labour brokers had been reviewed and adherence to the conditions made by SAPO was subject to audit.  Details of the implementation of SAPO’s policies on the deployment of employees were provided.  415 permanent part-time employees were appointed to permanent positions, 239 casual employees were appointed to permanent part-time positions and 850 casual employees were appointed in permanent positions.  SAPO’s policy concerning the filling of vacancies was explained.

The presentation was concluded with a summary of SAPO’s concerns and the corrective action that had been taken.

Discussion
Mr N Van den Berg (DA) observed that SAPO provided an important service to the country.  The presentation had illustrated that there were not enough post offices and a significant number still needed to be established at a substantial cost.  He asked why the subsidy was being phased out over such a short period of time and how SAPO planned to provide services in the rural areas, which was not considered to be profitable.

Ms Lefoka replied that SAPO had redefined what was meant by a “point of access”.  A point of access was not necessarily a physical structure owned by SAPO.  The organisation had implemented a multi-channel strategy, which took into account the types of services required by a specific community.  Alternative channels were considered to provide the services required.  There were two types of costs associated with post offices, i.e. the acquisition and maintenance of physical structures and the operational costs of running the post office.  There were two aspects to the application of the subsidy, i.e. the provision of a physical structure and the provision of services in accordance with the USO.  The USO services had to be continued and SAPO needed to consider alternatives for the funding thereof when the subsidy was discontinued.

Mr Buick explained that the intent of the multi-channel strategy was to reduce the cost of and increase access to services, particularly in rural areas with declining population densities.  The provision of services in these areas was less viable and SAPO needed to consider alternative options to post offices constructed of bricks and mortar at considerable capital cost.  In addition, operational costs needed to be reduced to render the service more viable in the longer term, for example by considering alternative operational methodologies and by reducing the number of hours the service was available to in order to satisfy the demands of the community.  A more viable service could be provided if the SAPO services were available within other businesses operating in the community.

Ms Mhlati pointed out that the issues of deregulation and discontinuing the subsidy had implications for a shift in policy that went beyond the issue of a reduction in the available funding.  The current license agreement requirements were based on the blueprints of developed countries and were in the process of being reviewed in those countries as well.  SAPO remained committed to providing access to post office services and had done extensive research into determining the needs of communities.  SAPO had foreseen that the organisation would become non-compliant with the license agreement and had requested the Minister of Communications to convene a meeting with ICASA to discuss an amendment to the license agreement requirements.  She welcomed the opportunity to raise the issue with the Committee during the briefing.

The Chairperson asked if it was the exclusive prerogative of ICASA to set the licensing conditions and if the Minister was responsible for setting the policy framework.

Ms Mhlati advised that the Department of Communications (DOC) was responsible for setting the policy framework.  ICASA set the targets for conformance to the license agreement.  SAPO had submitted its views to ICASA, particularly concerning the provision for services in the rural areas. SAPO was committed to providing an integrated service to the under-serviced areas of the country, which included other Government services in addition to postal services to the communities situated in these remote areas.

Ms P De Lille (ID) asked if SAPO was making use of labour brokers to carry out the responsibilities of its own Human Resources (HR) department.  She wanted to know how much was spent on payments to labour brokers and what percentage of the wages earned was paid to the temporary employees provided by the labour broker.  She referred to the performance targets set for the delivery of mail and the average time spent in queues and asked what the current performance of SAPO was.  She referred to the comment made during the briefing that SAPO felt that the time for deregulation of the sector was not auspicious and that the monopoly of SAPO needed to be retained.  She asked at what point deregulation would become desirable.  She applauded the austerity measures implemented by SAPO and requested clarity on the amount of R379 million spent on accommodation.  She asked if SAPO was paying dividends out of the profits generated to Government as the shareholder.

Ms Lefoka explained that the service delivery targets were the yardstick by which the performance of the post offices was measured.  On the whole, the targets were being achieved but SAPO wanted to improve performance.  She conceded that the average length of time spent in queues at certain times of the month (for example when social grants were paid) was much longer than the target of seven minutes.  The implementation of improved IT systems would help to achieve improved performance.

Ms Lefoka explained that SAPO felt that deregulation would not aid the delivery of services to the people of South Africa.  It was questionable whether South Africa would be able to meet the standards of other developed countries.  Even Germany was currently reviewing the target set in 2000 of providing one post office per 10,000 people within ten years.  Whoever was granted the license to provide postal services in South Africa would have to comply with the USO requirement.  SAPO currently had a monopoly on processing postal items weighing less than 1 kg and the implications of reducing the weight to 750 g were being considered.  The topic needed to be discussed in more detail.  The objective of the DOC and SAPO was to provide affordable and accessible services to all South Africans.  SAPO’s license was granted in 2002 for a period of 25 years.  The conformance to the license agreements was subject to an annual review by ICASA.  She was unable to say when it would be an appropriate time for deregulation.

Ms Lefoka explained that the expenditure on accommodation referred to the premises of post offices.  SAPO imposed much stricter rules for travel and accommodation of SAPO employees than suggested by Ms De Lille.  She confirmed that SAPO did not pay any dividends to Government and that all profits generated were re-invested in capital expenditure projects that would increase revenue.  SAPO had to remain financially sustainable.

Ms Lefoka advised that the labour broker deducted 8.59% of the wage of the worker as a management fee.  The balance was paid to the worker, less any statutory of voluntary deductions.  Labour brokers were required to comply with the requirements of SAPO contained in the agreements and were subject to stringent auditing to ensure adherence.

Mr Buick advised that SAPO paid a total amount of R400 million to labour brokers during 2009/10.  The expenditure on the premises of SAPO outlets included items such as rental, electricity and other services.

Ms W Newhoudt-Druchen (ANC) asked if the management fee charged by labour brokers continued to be paid if a temporary employee became a permanent SAPO employee.  She requested further explanation of the three maps included in the presentation.

The Chairperson asked for an explanation of the international benchmark applicable to the provision of postal services. He assumed that SAPO wanted ICASA to revise the license requirements and to issue a document to that effect.

Ms Lefoka confirmed that the management fee would no longer be payable to the broker if the worker was employed by SAPO on a permanent basis.  She explained SAPO’s redeployment policy and the policy on the advertising of vacancies again.  The license agreement target of providing one post office per 10,000 people and the two alternative scenarios depicted by the maps in the presentation were explained again.  SAPO had presented the alternative scenarios in a proposal made to ICASA for a review of the licensing conditions.  SAPO had engaged with ICASA on the issue since 2004 but the matter remained unresolved.  ICASA monitored the performance of SAPO in accordance with the targets set in a three-year cycle.

Ms S Tsebe (ANC) thanked the CEO for her personal intervention in ensuring that a community was provided with a post office after having waited for seven years.  Referring to the application of the accumulated subsidy funds, she asked for more information on the amount earmarked for USO delivery.  She noted that SAPO had experienced a decline in revenue and asked if the organisation had sufficient financial and skills capacity to carry out its obligations.  She asked for a further explanation on the differences between the three scenarios depicted by the maps included in the presentation.  She asked if SAPO planned to increase the number of staff in its outlets to cope with the additional numbers of people on social grant payout days.

Ms Lefoka conceded that SAPO did not currently have sufficient skills capacity.  The organisation was focusing on the development of skills in the areas of the IT systems, the retail operations and the financial services offered by the Post Bank.  She pointed out that the provision of an acceptable level of service involved both staff numbers and the level of skill.  Sufficient capacity in the IT area had been a major challenge but SAPO had observed a slowdown in the rate of IT personnel leaving the organisation for better pay elsewhere.  SAPO was aware of the need to capacitate both branch management and branch personnel to provide the full range of consumer services.  SAPO aimed to employ at least 80% of employees on a permanent basis but would continue to require an additional temporary workforce of 300 persons at certain times in the retail outlets to cope with peak demand.

Mr Buick advised that the cost of providing USO services was accurately determined and measured on a monthly basis.  SAPO had identified the need for postal services in rural areas and had agreed a capital expenditure programme with the DOC.  The DOC conducted oversight over SAPO’s provision of USO services as well.

Ms Lefoka explained that alternative options to improve the waiting times in queues were being considered, for example the development of IT systems and an upgrade of enabling tools such as the point of sale system.  She explained the rationale behind the three maps in the presentation once again.

Ms J Kilian (COPE) complimented SAPO on the high standard of the presentation to the Committee.  She felt that the reference to global trends and the potential impact on SAPO was an important point.  She found the risk assessment included in the published strategic plan of interest as well.  She noted that SAPO made a real commitment to adhering to the requirements of the Public Finance Management Act (PFMA) and remarked that it was imperative that entities receiving public funds provided good value for every Rand of funding allocated.

Referring to the three alternative scenarios, Ms Kilian asked for confirmation that SAPO had taken into account that the current population of South Africa was closer to 50 million people.  She suggested that the information gathered by the Independent Electoral Commission (IEC) on population density in South Africa could be useful to SAPO. The population density in certain areas, for example Gauteng, resulted in exceptional high volumes of people requiring service on certain days and she was gratified to note that SAPO was applying creative solutions to carrying out its responsibilities during peak periods.

Ms Kilian noted that the ratio between revenue and cost was a concern and that SAPO proposed diversification as a solution.  She asked for more information on how SAPO planned to diversify.  She observed that Government entities often failed to appreciate the competing nature of capital and operational expenditure and did not make adequate provision for maintenance of existing infrastructure.  She asked if the budget included provision for maintenance of fixed assets and if a balance between capital expenditure and operational expenditure had been taken into account.  She asked if the impact of future operational demands had been taken into account in the budget for staff costs.

Ms Kilian observed that SAPO had taken steps against the possible violation of human rights by labour brokers.  The utilisation of the services of labour brokers however provided many people with jobs and alleviated the burden placed on the SAPO management.  She asked if the additional cost of appointing temporary workers to permanent positions had been factored into the budget.  She asked for confirmation that 1,200 persons retired from SAPO every year.

Ms Lefoka agreed that the information provided by the IEC would be very useful to SAPO as the organisation needed to calculate accurate estimates of the numbers of people requiring services.  She explained that the diversification programme aimed to protect and grow existing sources of revenue as well as introducing new revenue streams.  An example was SAPO’s data management service, which had grown from zero to providing revenue of R100 million per annum.  The data management field had a large growth potential.  SAPO was developing partnerships with Government to increase and maintain the infrastructure that had been invested in.  In addition, SAPO had developed innovative programmes to diversify the services offered, for example the financial services provided by the Post Bank.  She conceded that some of the legacy structures and IT systems required substantial amounts for maintenance and the cost of maintenance needed to be balanced against the cost of replacement.  SAPO was cognisant of the fact that South Africa was a developing economy and the need to provide jobs.  The full automation of the mail delivery system would result in the loss of many jobs and SAPO had opted for the alternative of full mechanisation of the mail system instead.

Ms T Memela-Khambule, Managing Director, Post Bank gave more examples of the range of products and services offered by SAPO.  Many of the recipients of land restitution claims received substantial payouts and the Post Bank was in a position to assist the beneficiaries with advice and products to invest the funds.  Municipal accounts can be paid at post offices and SAPO was assisting many Government Departments in channeling funding to communities.

Mr Buick explained that SAPO had only been profitable for the previous five years.  In the early years, there was little or no money available for investment in fixed assets.  Lately, SAPO was able to invest more in accommodation and the budget for maintenance of the structures was expected to increase by 22%.  The expenditure on IT systems would increase by 15%.  The economic downturn had resulted in a narrowing of the cost/income ratio but SAPO’s profit margin target was 10%, which took into account both capital and operational expenditure requirements.  The profit margin target would not be met during the current year but he was confident that SAPO was in a healthy financial state.

Ms L Mazibuko (DA) noted that the number of post offices required for the sparsely-populated Northern Cape province had been reached.  She asked if population density was taken into account when determining the number of post offices required in an area.  She observed that an amount of R250 million had been set aside for IT infrastructure out of the accumulated subsidy.  She understood that the subsidy had to be applied to the provision of services and asked for an explanation of this item.

Ms Lefoka again explained the two ratios applicable to calculate the number of post offices required.  In sparsely populated areas such as the Northern Cape, the 1/10,000 ratio doesn’t apply as well as the 1/5 km radius ratio.

Mr Buick advised that SAPO expected to receive an additional R300 million to R400 million in subsidies before the scheme is terminated.  The funds received from subsidies were earmarked to address the legacy physical structures and systems.  The IT systems needed to be replaced in order to provide the necessary support for service delivery.  New technology (such as satellite technology) had to be applied to provide connectivity in remote rural areas of the country.

Ms Mazibuko asked if SAPO had a plan to replace the income currently received from the subsidy.

Mr Buick explained that SAPO currently generated approximately R500 million per annum in cash revenue from other sources and was predicting this amount to grow in the future.  SAPO planned to apply the subsidy funding to capital expenditure projects that would allow the organisation to generate revenue in future.  Currently, 60% to 70% of the investments made by SAPO were funded from other sources of revenue.  SAPO was however concerned over the increasing cost of providing the USO services and a funding model for that aspect needed to be developed.

Ms Lefoka reiterate the position of SAPO on the policy and funding of providing the USO services and addressing the backlog inherited from the previous dispensation.

Mr L Mkhize (ANC) wanted to know how the austerity measures introduced by SAPO in response to the economic downturn affected the quality of service delivery.  He asked how many post office outlets were not functional.  He suggested that SAPO submitted a detailed report on the issue of labour brokers and that the Committee engaged the labour sector on further discussions.  He observed that SAPO was attempting to manage labour brokers but he wanted to know what plans were in place should Government decide on a total ban of labour brokers.

Ms Lefoka explained that SAPO retained the delivery of services and the generation of new revenue streams as priorities when considering the cost containment proposals.  Other discretionary expenditure was capped, for example it was not considered necessary for the CEO to travel business class.  The operations requirement was taken into account as well and where necessary, the budget was increased, for example the need to travel to rural areas meant that the budget had to be increased to cover the escalating cost of fuel.  SAPO was actively considering more creative ways of doing business and reducing operational costs that were not detrimental to the delivery of services.  Funds were made available to provide additional services to communities where the business units reported such needs.  Concerning the issue of labour brokers, she reported that the SAPO Board had instructed the executive management to explore innovative solutions and to consider the alternatives to making use of labour brokers.  She suggested that the report on the results of the audits conducted was forwarded to the Committee as soon as it was compiled.

Ms R Morutoa (ANC) complimented the CEO on submitting a detailed and understandable strategic plan.  She asked if SAPO considered the age differences of persons when compiling business units.  She asked if SAPO had managed to expand the number of addresses serviced in informal settlements.

Ms Lefoka expressed appreciation for the guidance provided by the Members of the Committee.  She felt that the business units benefited from “young blood”.  She invited the Committee to spend a day with SAPO.  She advised that SAPO developed people in the disciplines where skills were required.  Informal settlements tended to be on un-proclaimed areas and were subject to removal to proclaimed areas.  Because of the costs involved in establishing retail outlets, the policy of SAPO was to operate only in proclaimed areas.

Ms De Lille requested that the business and operation plans were submitted to the Committee to allow the Members to monitor and assess the performance of SAPO.

Mr Van den Berg requested feedback on the establishment of a SAPO outlet at Toekomsrus, near Randfontein.  A member of the SAPO executive advised that suitable premises had not yet been found.

Mr Sekhopi Malebo, Non-executive Director, SAPO said that a budget adjustment to compensate for the phasing out of the subsidy would be welcomed.

Ms Mhlati thanked the Committee for the support received from the Minister and Deputy Minister of Communications.  SAPO was proud of the strengthening of the balance sheet and the increase in the assets that had been achieved.  She requested the assistance of the Committee in finalising the legislative amendments required.

The Chairperson advised that the Committee was satisfied with the presentation submitted by SAPO and awaited the additional reports on the operational and business plans, the issue of labour brokers and the infrastructure and maintenance requirements of the physical structures.  He asked that SAPO indicated the additional amount required and prepared a sound and rational motivation for the extension of the subsidy for the Committee.  He thanked SAPO for the comprehensive briefing.

The Committee met later in the day with ICASA.

Independent Communications Authority South Africa (ICASA) Strategic Plan & budget 2010/11
Mr Paris Mashile, Chairperson, ICASA Council, introduced the ICASA team to the Committee. He then tabled the Strategic Plan for 2010/11, remarking that the ICASA team had worked this document thoroughly. The ICASA Council had proposed the strategic direction, which had then been interrogated by Executive Management, who made their suggestions as to whether some of the items incorporated in it were feasible and realistic within the resource constraints affecting ICASA. Executive Management had then interacted with a Council sub-Committee in a meeting and a number of matters had been agreed.

Discussion
The Chairperson interrupted Mr Mashile at this point to raise a concern from the Committee. The Committee wished to deal with the status of the documents tabled. In terms of the legislation, the Minister was required to table the strategic plan and budget before Parliament.

The Chairperson had circulated correspondence from the Director General of the Department of Communications (DOC or the Department), who had indicated that the strategic plan had not been signed off by the Minister, and had not in fact been tabled before Parliament. The new Money Bills Amendment Procedure and Related Matters Act (the Money Act) provided, in Section 10(1), that the relevant member of Cabinet had to table updated strategic plans for each Department, public entity or public institution who had to report to the relevant Parliament committee. The advice that the Committee had received from the Legal Section of Parliament was that the requirements of this provision had not been complied with to date.

Mr Mashile responded that ICASA might have misconstrued the new developments and had not kept in tandem with the new requirements. There had been communication between ICASA and the DOC concerning this matter. When he had realised that the strategic plan had not been submitted on time to the DOC, he had immediately conceded that this was so, and had apologised to the DOC. There had been a lot of interchanges between ICASA and the DOC which exacerbated the delay. He had not been fully conscious of the changes that were necessary between the way in which matters were done in the past, and how they were to be done now. He admitted that there was a dereliction of duty on his part, in not keeping up to date with legislative developments and to ensure that things were done appropriately. ICASA had, however, made some attempt to file the documents and had been told that the documents would be tabled before Parliament and to the Committee in terms of the old dispensation and processes. He did not know if that had been accepted by the Committee, or if the documents could not be submitted in this way. He asked the Chairperson for guidance on how to proceed.

The Chairperson asked for Members’ views on the matter before he could make a decision.

Mr N van den Berg (DA) commented that the Democratic Alliance had been greatly concerned about this whole issue when they had realised what was happening. He said his party had the impression that ICASA was not taking Parliament seriously. This was an extremely important document. It also involved taxpayers’ money being spent, and he had had the impression that ICASA was blasé about this matter. He would have expected ICASA, far in advance, to have ascertained what the expected format was for such an important document. Other entities who were also subject to the same rules and conditions had submitted their documents on time, and in the required format. The DA also wanted to express concern that there had not been enough leadership from the Minister of Communications as the political head, and all the administrative people, including the Director General, in the DOC. It was their duty to ensure that ICASA followed the rules.

Advocate J de Lange (ANC) commented that he found it very odd that ICASA had sat through a meeting in which the Committee had told the DOC that it must in future do things differently because of the passing of the Money Act, but this did not seem to have registered in their minds. There had been no response from ICASA to the letter from the Department which clearly indicated that the Deputy President had asked the Ministers to obtain the strategic plans of entities by 3 March 2010. By 12 February 2010, a letter had already been written to ICASA reminding it to submit its strategic plan to the Department. Although he accepted that there had been an apology, the situation was very disappointing, especially when he had thought that ICASA was trying to come to grips with some of the matters that were raised in its meetings with the Committee. The Committee did not have any option in the matter. ICASA had to realise that it would not get the budget approved by Parliament.

Adv de Lange summarised that Section 10(1)(c) was clear. Once Parliament had approved the fiscal framework, as it had done recently, then three things had to happen. One of them, of which clearly ICASA was not aware, was that the relevant member of Cabinet “must” (he stressed that it did not say “may”) table updated strategic plans for each Department, entity or institution which had to be referred to the relevant Committee. This had not happened, and therefore the plan could not be said to have been referred to the Committee. From the letter, the Committee saw that there was a disagreement between ICASA and the Department, and ICASA had indicated that it would decide upon the form and content of the strategic plan. There did not seem to have been a response and ICASA did not seem to have been able to sort out its issues with the Department. He did not know at this stage who was to blame. There was only one course of action – and that was to put ICASA to terms. ICASA must realise that if the Committee’s recommendation was not to approve its strategic plans because the Committee was not satisfied that they had been properly presented, then that was that. This would create a crisis but perhaps it was the way for ICASA to learn.

Advocate de Lange commented in conclusion that Parliament perhaps also needed to take some blame in that there had been a new Act. Perhaps it was time for Parliament to communicate what it expected from the agencies and Departments that visited Committees. This was the first time that Committees would approve budgets, and this was something that they had never done before, although in future they were at least required to provide their recommendations.

Mr S Kholwane (ANC) commented that the reality that the Committee was facing was that there was nothing formally before the Committee on which it could engage, because there was nothing that had been submitted to Parliament. It was not possible for Parliament to flout its own rules. There was no way out of that issue, and there was nothing that Parliament could do about the matter.

Mr Kholwane submitted that he had expected ICASA to talk to the letter from the Department, because the letter clearly indicated the communication between ICASA and the Department. He had thought that in explaining why the strategic plan had not been tabled, ICASA would have been able to engage with the Committee on the letter. He was surprised that the entire body seemed unaware of its responsibility towards the strategic plan, whether or not it had been reminded of this by the Department. However it would be of little use for the Committee to deal with those matters at present, as the fact remained that there were no documents before the Committee to work on. He proposed that ICASA be given time to comply with the law, so that they could move forward from the current impasse. However, when ICASA returned to the Committee it would have to submit a report explaining its failure to comply. This was not a matter that the Committee was going to take lightly

Mr K Zondi (IFP) responded that he concurred with Mr de Lange and the other Members. The Committee was constrained by Parliamentary rules and the law. As Members of the Legislature who had been responsible for promulgating these laws, the least that was expected was that Parliament must follow those rules. As much as the Members had heard the position, and wanted to avoid fruitless expenditure, the supreme consideration was compliance with the new Act.

Ms J Kilian (DA) first wanted to establish from the Committee Secretary whether those entities who had so far tabled their strategic plans had done so in compliance with the new law, in that they had been submitted by the Office of the Minister. She reminded her that this related to the South African Post Office (SAPO) and other entities who had given presentations.

The Parliamentary Researcher responded that they had been tabled and published in the ATC from 3 March 2010.

Ms Kilian asked if there was any specific format in which the strategic plan had to be tabled, as introduced by the new Act, because she had not been able to establish clearly what the format was of the plans that were to be handed in to the Minister for presentation to the Committee.


Ms P de Lille (ID) summed up that all Members were in agreement that the Committee must comply strictly with the legislation. She wondered how ICASA’s legal department had failed to identify this anomaly, especially since the legislation had been discussed since April 2009.  She wanted to request that when the Department brought its strategic plan to the Committee, it must also bring the business and operational plan that underpinned the strategy. The Committee would need to monitor the matters later and had to know how the plans would be implemented.

Ms de Lille also suggested that since the Committee was mindful of the spending of the taxpayers’ money, the wasteful expenditure of having 10 to 15 people travelling to this meeting from Johannesburg had to be considered. She wanted to know who would be accountable for the wasted expenditure, and whether it would be the Department of Communications, or whether the matter would be raised elsewhere.

Ms L Mazibuko (DA) added that she did not disagree with the fact that the law did not allow the Committee not to deal with the strategic plan, because it had not been adequately tabled. However, she cautioned that this could not be used as a tool in whatever battle was being waged between the Department and ICASA. She was uncomfortable that a lot of the criticism expressed here had been reserved for ICASA, without balancing that with the fact that the Department had notified the Committee, by fax, on the day before the Strategic Plan of ICASA was to be interrogated, of its internal conflict with ICASA, apparently using this an excuse for the Department’s own non-compliance and failure to do their duty. She wanted the Committee to be mindful of the Department’s part in this matter.

The Chairperson resolved that ICASA could not go ahead with its presentation of the strategic plan. He proposed that ICASA be given one week to make the necessary arrangements to comply with the law. The Chairperson also suggested to ICASA that it must look at downsizing its delegation, in view of the cost to the taxpayer of sending another huge delegation to Parliament.

Presentation of ICASA organogram
Mr Mashile provided the Committee with an updated report on the relationship between ICASA’s Executive Council and the ICASA Board of Directors, and a detailed breakdown of ICASA’s organogram as had been requested by the Committee.

The meeting was adjourned