Sector Education & Training Authorities: Local Government: Strategic Plans 2010/11

Meeting report

Chairperson’s opening Remarks
The Chairperson stated that the meeting would focus on the Local Government Sector Education Training Authority (SETA) budget and strategic plans, Strength Weaknesses Opportunities and Threats (SWOT) analysis, provincial allocation and plans to reduce unemployment among young people. He pointed out that the President had given a strong mandate around the issue of unemployment and the unemployable and this fell under the SETA’s area of focus. He also stated that there was a sequence of SETAs being engaged. He also noted the overlap between this SETA and other SETAs.

Councillor Sakkies Somyo, Chairman of the Local Government Sector Education Training Authority, agreed with the Chairperson on the issue of overlap. He stated that matters that related to water were not within the scope of the Local Government Sector Education Training Authority. He stated that since it worked within the scope of municipalities, in terms of coverage, the Local Government Sector Education Training Authority would assist or fund initiatives that related to water. He pointed out that one of the things that challenged it was the issue of policing at the local government level and that was a function that related to policy at the national level in terms of National Security. He said that the other issue was how to enforce funds at the municipal level so that the Local Government Sector Education Training Authority could make sure that the levies that were provided for would be used appropriately.

Local Government SETA (SETA) briefing
Ms Ntombenhle Nkosi, Chief Executive Officer, Local Government SETA started by pointing out that the presentation was structured in terms of the request that had been made by the Committee. She began her presentation by stating that the SETA was mandated by the Skills Development Act (Act) to develop the sector skills plan which determined the work that SETA did. She pointed out that it was from this sector skills plan that the SETA had identified skills that were scarce and critical in their sector and then SETA would use the sector skills plan to implement the skills the sector needed. She stated that SETA would promote learnerships and register learnership agreements. She went on to highlight the fact that the local government SETA was accredited by the South Africans Qualification Authority, (SAQA), as an Education Training and Quality Assurer (ETQA). She went on to state that SETA disbursed grants as part of its mandate and that the SETA implemented a national skills development strategy. She highlighted that a budget report and a financial statement would also be submitted to the Director-General according to the Public Finance Management Act (PFMA). She added that they had to submit plans and reports on the implementation of the sector skills plan and the service delivery agreement. As a Local Government SETA she pointed out that the SETA had a scope of coverage on which they worked accordingly and this was covered in terms of the Standard Interpretation Classification Code SICC to which it was restricted to the following - metropolitan municipalities, local municipalities, district municipalities, municipal entities which implemented the requirements of municipalities, organised local government which was represented by South African Local Government Association (SALGA), and traditional leaders and traditional councillors.

Ms Nkosi said that there were so many needs that arose from municipalities. She pointed out that when the SETA took its sector skills plan it would identify areas of focus which it then worked on to implement skills needs within the municipality. She pointed out that it had identified infrastructure and service delivery as one of the areas of focus and this area dealt with artisan training and technical skills needed in the municipality so that the municipalities were able to deliver the services needed. She pointed out that another area of focus was financial viability, an area which covered skills needed for municipal finance, especially as regulated by National Treasury. She stated that the SETA also looked at community based participation and planning and this involved training of the community especially around the area of ward community. The SETA also looked at management and leadership an area which involved training of councillors and municipality officials at a higher level so that they would receive management and leadership skills needed in the municipality. Another area of focus was Adult Basic Education Training (ABET) but she highlighted the fact that there was still quite a need in this sector and this was a challenge. She acknowledged that the SETA needed to focus a bit more on this area. The other area of focus was workplace training systems which involved training committees and local labour forum members.

Ms Nkosi went on to present the SETA budget. She stated that the total revenue of the SETA was R286 million but the figures had been revised to R308 million since the SETA did not have adequate information when the budget was prepared in September 2009. She stated that the administration levy was 10% and this included salaries and rent and normal operational costs and this was R34 million. With regards to the mandatory grant levy income of R171 million she highlighted the fact that this money would then be returned to employers, which were municipalities, in terms of mandatory grants. This was done on submission of a work place skills plan by the municipality in which the municipality had to state how it intended to train people and also on the municipalities’ previous year annual training reports. The discretionary grant levy income was used in critical projects and any other special skills needed in the sector which had been identified through the sector skills plan and the work place skills plan, (WSP), which had been submitted by the municipalities. She stated that investment income was income which came from the SETA’s bank accounts and this money would then go back to the discretionary levy grant to be used for special projects in the SETA. She stated the total expenses were R303 million and this included the administration expenses. She went on to highlight the fact that SETA was not allowed to spend more than it had received.

Discussion
The Chairperson asked what mandatory grants were?

Ms Nkosi responded that the SETA paid mandatory grants based on work place skills plan (WSP) and annual training reports received from municipalities. She stated that out of the 283 municipalities 274 had submitted a workplace skills plan.

The Chairperson asked whether there had been any assessment done over the past six months on the quality of the impact to ensure that the money was being used for training.

Ms Janet Davies, Skills Development Manager, Local Government SETA, responded that SETA had reports which were readily available and the CEO had them on her laptop. The SETA would leave them behind for the Committee. She pointed out that SETA did annual evaluations of all work place skills plans, which were submitted via municipalities and those reports gave a detailed breakdown. She mentioned that the SETA was currently doing an analysis of the WSP submitted for 30 June. She stated that the SETA found that most of the training done by municipalities was not in the municipal key performance areas. This fell within the non priority training and thus did not assist municipalities in achieving their objectives or to perform municipal functions. She stated that the SETA was picking up on accounting issues because of the way National Treasury had prescribed the annual financial statements for municipalities to be done. She highlighted the fact that the mandatory grant was reflected by most municipalities as income, which meant that it went into the municipalities’ general operational budgets and was thus not ear marked for training; hence it would be difficult for the Auditor General or the SETA to track back and identify how the money was spent. She stated that that was a problem which was faced by most SETAs because of the set up of financial accounts. She pointed out that this issue had been raised with the National Treasury so that municipalities would reflect mandatory grants not as income but as skills development grants, in which case it could be tracked. She also pointed out that the SETA had disbursed R1billion in the last 10 years.

The Chairperson asked what local governance was in terms of the assessment being done. He also asked what the SETA and its management had done or not done, and what it intended to do to address this issue.

Ms Nkosi responded by saying that SETA faced difficulties in terms of the current Act since it did not have a mandate. She stated that the SETA had gone as far as visiting municipalities and checking from the finance side. She stated that when the money went into the municipalities it went to the Chief Financial Officer (CFO) and the Skills Development Facilitators (SDF) would then struggle to get that money back into training, because the SDF was not in the proper position to influence where the money went. She also stated that municipalities also under paid levies. She pointed out that SETA also went to the financial officers’ conference and tried to influence the financial people so that they would understand skills development and the fact that the money SETA paid to municipalities was for skills development and not for municipalities to clear deficits. She stated that SETA did not have a mandate to get into the municipality.

Ms W Nelson (ANC) asked whether mandatory grants were paid out based on WSP or actual training that was done.

Ms Davies replied that mandatory grants were paid out on basis of WSP which was what the current regulation said. Furthermore she stated that the current regulation was very limited in terms that SETA could attach to the mandatory grant. She pointed out that what local government SETA did to leverage or direct training in municipalities was that they would give a discretionary grant to a municipality for training in any of the strategic focus areas. She also stated that training must be linked to the achievement of IDP objective and thus training should assist a municipality to achieve its strategy.

Ms N Vukuza (COPE), wanted clarification on the issue of mandatory grants. She stated that mandatory grants were reflected by municipalities as income and thus did not go where they were supposed to go. She then asked whether it fair to say that there was a high rate of submission from the municipalities, when in actual fact it seemed as if municipalities were gunning for income rather than implementing their strategic plans. She stated that what SETA claimed as success or an achievement was not success at all. She stated that this was an abnormal situation and SETA was treating an abnormal situation as normal. She pointed out that this was unacceptable.

Mr S Makhubele (ANC) stated that he did not agree with what was being said. He drew the attention of Members to a document which dealt with training so that he could strengthen his point. He stated that municipalities that had done much training had been those with financial muscles. He pointed out that smaller municipalities were not be able to conduct training since they did not have financial muscles, thus the SETA should get its facts correct.

The Chairperson said that Members sought a deeper understanding from SETA and its management on its quality assessment on the WSP, in the context of the training provided and where the money eventually landed.

Mr Somyo stated that they should consider the fact that the grant was split into two (i) mandatory and (ii) discretionary grants which gave leverage in terms of control.  He stated that with regards to the issue of mandatory grant it came with a risk because it was a forward supply and the supply drive placed them in a risk which was not regulated and in a sense this would then give the SETA a measure of control. He accepted the fact that there were municipalities which would consider themselves to be in a skills drive and thus would do so and achieve better results. He stated that a grant should be viewed as a risk which needed SETA to intervene so that the skills funds would remain skills funds and this was so especially since the funds can not be directed anywhere else. He stated that it was difficult for SETA to enforce how the mandatory grant had been spent.

The Chairperson stated that he had heard that the majority of the WSP was in terms of the mandatory grant and the way it was implemented; there was an issue there to the extent that the SETA requested that they go to National Treasury. He stated that he had not heard the issue that a few municipalities were in financial difficulties and stated that it was not the problem in this context and thus did not want to make an assumption. He also stated that he had detected NSF allocations in the provinces going to operations rather than being spent for the intended purpose.

Mr W James, (DA), stated that SETA needed a regulation so that management of municipalities would act accordingly such that SETA could make sure that the money was properly spent on skills development and this regulation should come from the Department of higher education and training. He went on to state that to the extent that there was dereliction of duty on the part of management there should be better regulation in developing managements capacity.

Mr A Mponthane, (IFP), stated that municipalities were struggling. He stated that he did not see this skills development happening from the area he came from. He went on to ask whether all municipalities received money for training.

Ms Davies responded by saying that there were currently five municipalities that were not compliant and would not get funds. Port St Johns was one of them. She stated that the other four municipalities were in the Northern Cape. She highlighted the fact that all other municipalities were complying and did have training funds at their disposal.

Mr Hoon, Director, Department of Higher Education and Training, stated that the Act provided for leverage to manage the approval for the submission of the WSP, especially Section 10(1) (b) which stated that the SETA must approve the WSP in terms of the sector skills plan; therefore the WSP should be in line so there was leverage for the SETA to ensure compliance before it approved.

The Chairperson asked whether Mr Hoon was saying that there was no need to go to the National Treasury.

Mr Hoon responded that that there was no need to go to the Treasury.

The Chairperson stated that there was a situation in South Africa where this has happened several times thus there seemed to be changing names for the same issue. He asked Mr Hoon whether this issue could be addressed.

Mr Hoon stated that it could be done.

The Chairperson asked to hear from the SETA on the opinion it had been given.

Ms Davies stated that that was not the advice that it had received from the attorneys or the Auditor-General.

Mr K Dikobo, (ANC), noted that he was not impressed by the response from the officials. He pointed out that he would agree with them if it was a SETA wide problem. He asked why this situation was only peculiar to the Local Government SETA only.

Ms T Kubayi (ANC) stated that she agreed with Mr Dikgobo. She questioned how SETA paid the municipalities every year when in actual fact the municipalities were not accounting for the money they were given by SETA. She stated that what SETA needed to assist them with were specifics. She pointed out that in the interim if it had checks and balances between the Annual Training Report and WSP it should be able to enforce the way in which municipalities spent their grants. She agreed that there was a gap but she did not believe that SETA was toothless.

The Chairperson asked whether the Committee could get a synopsis or the legal opinion the SETA had received. He also asked whether by law SETA was instructed to transfer money even if SETA saw these problems. He stated that it would want to avoid regulatory and legal changes where this was possible. He also requested that the documents SETA referred to earlier on be submitted to the Committee.

Ms Nkosi went on to summarise SETA’s strategic plans, and said that R60 million had been allocated for artisan training for 1 000 learners. She stated that SETA had memorandum of understanding (MoU) and project agreements with a number of governmental departments and entities, for example, the Department of Public Works (DPW), Development Bank of South Africa (DBSA) and the National Treasury. She highlighted the fact that SETA had done more than it had budgeted for.

The Chairperson congratulated the SETA on this.

Ms Nkosi went on to present the achievements they had made as a SETA pointing out that 600 councillors had been trained in various programmes, 3 700 learners had been trained on ward committee programmes and that there was a 95 % submission of WSP by municipalities. She also did a SWOT analysis.
Mr Mpontshane asked if the blanks and the zeros in the presentation meant that nothing had been done.

Ms Davies stated that the blanks indicated projects that had not been completed. She further added that, where there were zeros, no training had been done and this was in spite of municipalities having received the mandatory grant. She stated that the SETA did not want to present an incorrect picture that training was not being conducted. She stated that training was being conducted by the municipalities but it was not in priority areas and thus it did not contribute to the municipalities - thus the zeros and blanks in the presentation.

Ms Nkosi went on to present the SETA’s plans to reduce the high unemployment rate. She stated that the SETA was planning to train 1 000 learners so that they could be placed in municipalities.

The Chairperson stated that this was a very important SETA and two of the Members had been part of the ad hoc committee on service delivery and thus had a wealth of experience.

Mr Makhubela pointed out that there was no mention of economic development. He stated that the skills development facilities were supposed to be placed correctly. He further asked how the SETA had dealt with the issue of RPL. He asked how the WSP was approved when not in line with the priority areas.

Ms Kubayi wanted to know if there was a way to get lessons learned and transferred to other municipalities that were not doing very well.

Ms Mushwana, (ANC), questioned the weakness and lack of commitment by stakeholders. She stated that they needed to find a plan or way forward to change. She raised the issue about the training of this councillors stating that this would come as a result of the request from the municipalities. She asked whether there was a way so for SETA so that they would not wait for municipalities to apply. She asked whether the strategic plan page 7 was informed by data or whether they just put an amount.

The Chairperson stated that the issues raised by Mr Makhubela were strategic matters.

Mr Somyo stated that matter had been handled. He also stated that some of the issues that were raised sought to drive them in a particular direction.

The Chairperson requested that the following be dealt with. Firstly he requested that the documents referred to by the SETA be submitted. Secondly he requested information on the issue of harmonization between departments. Thirdly he asked that the SETA deal with the RPL and SDF issues and with the overall skills strategy.

The meeting was adjourned.