Public Service Sector Education & Training Authority, Public Administration Leadership & Management Academy: Minister of Higher Education & Department Public Service & Administration briefings

Public Service and Administration, Performance Monitoring and Evaluation

07 September 2010
Chairperson: Ms J Moloi-Moropa(ANC)
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Meeting Summary

The Minister of Public Service and Administration was unable to attend the meeting, but the Department of Public Service and Administration (DPSA) briefed the Committee on the current status of and future plans for the Public Sector Education and Training Authority (PSETA). Its current certificate of establishment would lapse on 31 March 2011. An administrator had been appointed to finalise the business of PSETA by this date. At the moment, PSETA extended training to all national and some provincial government departments and parastatals in areas relating to finance and administration. Its functions were distinguished from those of the DPSA and the Public Administration Leadership and Management Academy (PALAMA). The administration of the Skills Development Act in relation to sector education and training authorities had been transferred to the Minister of Higher Education and Training, with effect from November 2009. However, PSETA would still report on employers to the DPSA. In the financial years from 2007 to 2009 PSETA was plagued by poor record-keeping, absence of key documentation and practically no accounting record and recording systems. No independent review of financial operations was available between 2001 and 2007. The financial records had now been reconstructed, auditors had been appointed, as well as an Internal Audit Committee and financial policies and procedures, as well as operational policies were developed. A forensic audit had revealed that fraud had been perpetrated in 2005 by a Finance Manager in PSETA, who had since been convicted and sentenced. At least R1.4 million was defrauded, and an additional amount of R10.8 million was unaccounted for. Investigations into this were ongoing. A Memorandum of Understanding was signed to deal with the transfer of funds, staff (if they wished to be transferred) and work tools to PSETA from DPSA. This process should be concluded by 1 April 2011. A new Chief Executive Officer and Chief Financial Officer had been appointed, and an administrator was to fulfil the functions of the Board. A task team, comprising officials from the DPSA and the Department of Higher Education and Training (DHET), would be dealing with specific areas and would also feed information through to the re-accreditation process for other SETAs. Agreement had been reached between the Department of Labour, PSETA and the DPSA on allocation of budgets. Funds would be transferred to PSETA on a quarterly basis if it satisfied the requirements.

Members commented that the current developments were positive. They questioned the fraud, whether other convictions had been secured, who had been involved, whether any of the defrauded money could be recovered, and whether systems had been corrected. They were also worried about the effects on training. Members asked for reports giving the total numbers trained, asked if all SETAs would fall under the Public Finance Management Act, questioned what plans were in place to strengthen relationships between the affected departments, and whether there were any legislative amendments were needed. They also questioned whether the payment clauses in the legislation were correct. They asked for clarity on secondment of staff, and benchmarking of outputs, and called for a copy of the forensic audit report.

The Minister of Higher Education and Training also gave his Department’s perspective. He described the key responsibilities of the task team, and stressed that it would guide all stakeholders on how to strengthen skills development across the public service, focusing on the roles of the DPSA and DHET, as well as the two Ministers, and the roles, functions and structure of the PSETA. He suggested that this Committee should meet jointly with the Portfolio Committee on Higher Education and Training to take the matter forward. PSETA must be aligned with the whole sector. Members queried the coordination process, asked how the Department would address the consultancy issues, asked for a report on funding under the Skills Development Funds Act, and noted that there were flaws in sector skills planning, and that there should be a re-examination of the SETAs, perhaps also consideration given to their incorporation into PALAMA. The Department of Higher Education and Training outlined the key issues and agreed that cooperation was needed, and that a training budget must be set. Members were worried about potential bottlenecks due to the dual roles of the two Ministers.

The Public Administration Leadership and Management Academy (PALAMA) outlined its vision and status, concentrating on its Strategic Framework. PALAMA was central to all levels of training. Public service training remained uncoordinated, incoherent and largely outsourced, and the cost recovery model was largely expensive. Ten priorities had been identified and were being piloted. The niche markets and thrust of PALAMA were outlined, and it would be repositioned, would connect with the Executive and would develop a curriculum model, gradually moving away from being a broker of training services. In future, 70% of public service training would be conducted in-house, with the other 30% of training through strategic partnerships. All training providers needed to be certified by PALAMA. There were also discussions on training all public servants under an integrated public service framework. The budget would increase by about R10 million over the next three years. Members asked for explanation on the spending trends, noted that local government was included in the figures and said that training should be centralised within PALAMA.


Meeting report

Reports on the status of the Public Service Sector Education and Training Authority (PSETA)
Department of Public Service and Administration (DPSA) briefing
Mr Kenny Govender, Acting Director-General, Department of Public Service and Administration, apologised that the Minister of Public Service and Administration, Hon Richard Baloyi, was unable to attend the meeting.

Mr Govender reported on the status and role of the Public Service Sector Education and Training Authority (PSETA). It was established in March 2000, and was listed as a public entity under the Public Finance Management Act (PFMA) in February 2001, was delisted in November 2001, and then listed again in April 2006. The PSETA operated as an entity separate from the Department of Public Service and Administration (DPSA or the Department). Its current certificate of establishment would lapse on 31 March 2011 and an Administrator had been appointed to finalise the business of PSETA by this date.

Mr Govender explained that PSETA currently extended training to all government departments and provincial administrations for transverse skills. He said that this would not, for example, include all education and health workers, but would cover skills in finance or administration. PSETA also covered most national departments and all parastatals not falling under another Sector Education Training Authority (SETA) for all areas of skills. At the moment there were twelve parastatals.

Mr Govender clarified the roles of PSETA, the Public Administration Leadership and Management Academy (PALAMA) and the DPSA, and highlighted the important functions of each entity (see attached presentation for full details). He noted that the entities may sign different Memorandums of Understanding with different SETAs in order to fulfill their mandates.

Mr Govender explained the President had transferred the administration of SETA related provisions of the Skills Development Act (SDA) from the Minister of Labour to the Minister of Higher Education and Training, and this was effective from 1 November 2009. The exercise of transfer was completed, and the Minister and the Department of Higher Education and Training (DHET) were now tasked with ensuring that all SETAs, including PSETA, complied with the SDA. This transfer did not change the relationship between PSETA and the DPSA. However, the Minister of Higher Education and Training must now receive reports on the functions, while the DPSA represented the employer component.

Mr Govender reported on the financial status of PSETA for the 2007/08 and 2008/09 financial years. These financial years were characterised by poor record-keeping, absence of key documentation and practically no accounting record and recording system. Prior to the 2007/08 financial year, PSETA had only been subjected to an external audit in 2000/01, and that led to no independent review being available of PSETA’s operations for six years. The process of reconstructing PSETA’s financial records was now back on track and was completed in November 2009. Auditors were appointed in 2010, and the review of the 2009/10 financial statements had commenced. The Audit Committee was appointed in January 2010. Financial policies and procedures were being developed and approved by the PSETA Board; and other operational policies were being developed for approval.

During the review, the Auditor-General had found that PSETA was a victim of fraud by one of its Finance Managers in 2005. The bulk of the fraud occurred in relation to the National Skills Fund (NSF). The person responsible had now been convicted and sentenced. Following the fraud, a Forensic Report was done by PriceWaterhouseCooper (PWC). The PWC report confirmed that at least R1.4 million was defrauded and an additional amount of R10.8 million was unaccounted for. Mr Govender assured the Committee that the investigation work was ongoing and also commented that this amount of money was probably concerned with the bank account of learners. Once the reconciliation of this account had been completed, the DPSA would be able to confirm the details.

A Memorandum of Understanding (MoU) was signed, as part of the process of PSETA becoming independent of the DPSA. The MoU dealt with the transfer of funds, staff and work tools to PSETA. He noted that the DPSA staff who were seconded to PSETA were given a choice whether they wanted to remain DPSA employees, or whether they would transfer to PSETA. This process should be concluded by 1 April 2011.

Mr Govender highlighted the fact that a new Chief Executive Officer was appointed on 1 August 2010 and a new Chief Finance Officer was appointed on 15 August 2010. He noted that the rest of the staff were currently on contract.

Mr Govender again confirmed that PSETA had been placed under administration. He clarified that the role of the administrator would be the governance of PSETA, and that the administrator would not be responsible for the day-to-day work of PSETA. In addition, a task team was set up to deal with two key areas of PSETA, the first relating to its role in relation to other role players, and the second relating to the collaboration between the DHET and DPSA to strengthen skills development and human resource development across the public service. The task team comprised of four officials from both the DHET and DPSA and two officials from National Treasury. He explained that once a key decision was made by the task team, a number of consultative meetings would take place before finalising any decisions. The work of the task team would also feed into the re-accreditation process of other SETAs. This process would be completed by the end of September, in time for the meeting in October at which the National Skills Authority would make decisions about the SETAs.

Mr Govender explained that the wording in the Skills Development Levy Act of 1999 stated that National and Provincial Departments may contribute 1% of their payroll for training and education of its employees. He further explained that in 2001, Cabinet decided that the DPSA must pay 10% of its 1% budget to PSETA.

Mr Govender noted that an understanding between the Department of Labour, PSETA and the DPSA had been reached in terms of the allocation of budgets. Allocations from the NSF would not be transferred via the DPSA to PSETA but instead would be paid directly to PSETA. The operational and administrative budget for PSETA would, however, be provided via a transfer from the DPSA’s budget. The transfer payment from the DPSA’s budget was a requirement of the Public Finance Management Act (PFMA) to ensure effective and transparent systems, controls, policies and procedures. Once PSETA provided written assurance, the DPSA would transfer funds on a quarterly basis.

Discussion
Ms A Dreyer (DA) noted that the PSETA had been in the news for quite some time and most of the reports were negative. However, some good developments had been made by the DPSA.

She questioned whether there had been any other fraud convictions or whether any other officials had been investigated. She asked that they be named. She further asked whether any of the defrauded money could be reclaimed, and asked Mr Govender to explain what processes or steps had been taken to do this.

Ms F Bikani (ANC) asked Mr Govender to highlight any grey areas in terms of the fraud that occurred, and queried whether there had been any effect on the training of public servants. She also asked Mr Govender whether the mistakes in terms of the fraud had been identified by the DPSA and whether there were any areas in the legislation governing finances that could be strengthened or improved.

Mr L Suka (ANC) asked Mr Govender to elaborate on the issue of the outstanding R10.8 million that was unaccounted for, and when this matter would be finalised.

Ms M Mohale (ANC) asked Mr Govender how the DPSA was sure that any of its staff were not involved with the fraud, and that other staff members of PSETA were also not involved.

Mr Govender confirmed that the individual charged with the fraud had been jailed. He also said that a further three suspects were identified, some ended up being given prison sentences, and some of whom received suspended prison sentences. He told the Portfolio Committee that, after going through the financial statements, a flaw was found in the system. Employees were able to go into the system and change the account numbers of the learners to their own or family member’s account numbers, thereby siphoning funds into their accounts. This flaw had now been corrected.

He further confirmed that all bank accounts have subsequently been frozen, and hoped that once the matter had been concluded, the money could be reclaimed. He was not sure of the amounts in the frozen accounts.

Mr Govender also confirmed that there was a negative effect on training in general but that training was still on-going during this period.

Ms Shamira Huluman, Chief Executive Officer, PALAMA, noted that the differences in the balances noted in the presentation had been verified by the Auditor-General. She also confirmed that the Annual Report and the Auditor’s Report were submitted to Parliament on 30 August.

Ms Huluman further confirmed that PALAMA had now purchased PASTEL accounting and payroll software. She confirmed that the Chief Financial Officer had put measures in place to ensure that issues of fraud would be picked up immediately or as soon as reasonably possible. She confirmed the appointment of a Financial Accountant, Financial Officer and Financial Clerk. She noted that the deadline for independence of financial reporting was 21 March 2011, and confirmed that the Board had received a copy of the PWC report. She also confirmed that a lifestyle audit in terms of fraud would be conducted on all staff members.

Ms Bikani requested a report giving the total number of public servants trained, and the accreditation they received during this period.

Ms Bikani also noted that PSETA was administered under the PFMA and questioned whether all SETAs would fall under the Act or whether this was only because PSETA had been placed under administration.

She asked what plans or developments were in place to strengthen the relationship between PALAMA, DPSA and PSETA. She also queried whether there were any legislative amendments in place.

Mr Govender said that the MoU was aimed at strengthening the relationships, systems, policies and systems between PALAMA, DPSA, PSETA and the Auditor-General.

Ms Bikani asked Mr Govender to clarify what clause in the legislation refers to “may pay 1%”and wanted him to clarify whether this was correct, or whether it should be reviewed.

Mr Govender confirmed that the clause was correctly worded.

Ms J Maluleke (ANC) asked whether the staff of the DPSA had a choice to move over to PSETA and whether any staff had been employed in their place.

Mr Suka expressed concern that the staff issues need to be settled soon, as ongoing uncertainty would adversely affect staff.

Mr Govender confirmed that the secondment of staff to the PSETA was a difficult area and difficult period for all staff involved. He confirmed that staff were given a choice. He further confirmed that the DPSA did not have space to accommodate any more staff, but that it would, if necessary, look to alternative Departments to house any staff.

Mr Suka felt that the outputs in the presentation did not clarify anything and wondered whether there were any measures in place against which the Portfolio Committee could benchmark those outputs.

Mr Govender confirmed that the outputs covered in the Operational Plan were covered in the last presentation, and for this reason he had not gone into much detail on these.

Ms Dreyer asked whether the Portfolio Committee could receive a copy of the PWC report. She said that the Committee had asked for copies on a number of previous occasions.

The Chairperson reiterated that the Portfolio Committee members need to be kept informed at all times.

Minister of Higher Education and Training briefing
Hon Dr Blade Nzimande, Minister of Higher Education and Training, also gave a report to the Committee on his Department’s perspective of the PSETA. He stressed the importance of the PSETA, but confirmed that all the role-players now needed to move forward and resolve the ongoing challenges.

He noted that the Skills Development Act (SDA) had established the National Skills Authority (NSA), whose role was to look at the performance of all SETAs. After consultation with the NSA and PSETA, NSA advised that PSETA should be placed under administration. A joint task team was established to take forward all the processes.

Minister Nzimande outlined the key responsibilities of the task team, as having to guide all stakeholders on how to strengthen skills development across the public service. Part of its mandate was also to see how the DPSA and the DHET could collaborate to strengthen skills development and human resource development across the public service.

The task team was also asked to look at the dual role of the Ministers of Higher Education and Training and Public Service and Administration. In addition to this, the task team was asked to look at the roles, functions and structures within PSETA. There was a need to look at these areas because the public sector was critical for skills development and training.

Further to this, the task team was also asked to consider how the PSETA was to be structured differently to other SETAs, its particular relationship with the DPSA and the appointment of the administrator. The administrator’s role would not replace that of the Chief Executive Officer, but the administrator would effectively function as the Board, and would be available to consult with the task team.

The Minister strongly suggested that the Portfolio Committee consider forming a joint committee with the Portfolio Committee on Higher Education and Training to take this matter forward.

Discussion
Ms Dreyer wished the DHET success in taking over PSETA. She also commented that the Portfolio Committee would be watching the outcomes closely.

Ms Bikani queried the co-ordination processes and mentioned that PALAMA was critical to the Portfolio Committee. She also mentioned that the Portfolio Committee did not know who the four representatives from PSETA were.

The Minister told the Portfolio Committee that with its support, all issues would be overcome. He confirmed that the Portfolio Committee had an important role in terms of oversight and hoped that the Committee remained active. He believed that the PSETA could be a huge asset and asked the Committee to consider having a representative from PALAMA.

Ms Bikani asked the Minister to explain to what extent or level the consultancy work was being corrected.

The Minister confirmed that the issue of consultancy was a challenge across all SETAs. He believed that this Portfolio Committee and the Portfolio Committee on Higher Education and Training should give attention to the emerging Skills Development Strategy (SDS). In this way a full range of queries could be answered. He confirmed that the public service was the largest employer in the country and therefore integration was essential.

Ms Bikani asked what was happening about the funds under the Skills Development Funds Act (SDFA), noting that no detailed report on this had been presented. She suggested that a presentation be made to the Portfolio Committee in this regard.

Ms Bikani also felt that there were too many flaws in the Sector Skills Planning. She felt that the work that was being done in the Departments was not being reported on, and that this was an issue that needed to be looked at. She suggested that there must be re-examination of the SETAs and where they were placed, without excluding certain SETAs. She suggested that the SETAs perhaps should be incorporated into PALAMA. She felt that due to the funding flaws, there was no accountability and the Departments used the money for other issues.

The Minister asked Ms Mary Metcalfe, Director-General of the Department of Higher Education and Training to respond.

Ms Metcalfe confirmed that the Department had looked at the vision statements. She believed that her Department needed to get back to the basics and to determine what was intended when the SDA was approved by Parliament. She believed that it was important that employers and employees must collaborate and cooperate in order to develop skills. She also believed that the skills levy was an amazing resource in the coffers of the National Skills Fund (NSF). She suggested that it was up to the employers and employees to sit down and agree on what skills were needed to effectively do the job.

Ms Metcalfe said that it was necessary to establish what this would mean for PSETA. The training needs within the public service were broad and complex. DPSA needed to look at the training needs of all public servants. She confirmed that all government departments should be held accountable for percentages spent on skills development, and that communication in this regard was crucial. The basics had to be agreed upon, between the National and Provincial departments. She suggested that if 1% of Government payroll was to go to NSF, that should be the training budget for the public service. She asked the Portfolio Committee to give her time to sit down with the task team to discuss this issue.

Ms Bikani suggested that a researcher be appointed to assist in doing feasibility research for the Portfolio Committee, and that a debate should be conducted in Parliament.

The Chairperson confirmed that all the issues were substantial ones, and that the Portfolio Committee needed to structure how it would move forward on these. She confirmed that there would be much oversight work for the Committee. She also agreed that collaboration with the Portfolio Committee on Education was needed. She was very concerned about the fact that reports were not reaching the Portfolio Committee, and said that this was an issue that needed to be addressed.

Ms Bikani asked whether there were any legislative amendments needed for the task team.

Members noted that there were none.

Mr L Ramatlakane (COPE) asked what the outlook was in terms of the Board functionality, timeframes and finalization. He also queried whether there would be any legal issues arising from the existing Board.

Minister Nzimande noted that he was not aware of any legal issues, and said that, with the support of the Portfolio Committee, none should arise.

The Minister confirmed that PSETA must be aligned to the entire SETA landscape. He further confirmed that no SETA would be aligned without a proper sector plan. He noted that when an administrator was appointed, the challenges related to the re-licensing of PSETA. The Terms of Reference included strengthening and repositioning.

Mr Suka queried whether there would not be bottlenecks created by the dual roles of the Minister of Higher Education and Training and the Minister of Public Service and Administration. He suggested that there be one reporting line for both.

The Minister confirmed that an extensive proposal was being developed. He noted that this would be shared with the Portfolio Committee and the DPSA and it would then be taken to Cabinet.

Public Administration Leadership and Management Academy (PALAMA): Briefing
Mr Botshabelo Maja, Deputy Director-General, PALAMA, reported back to the Committee on the status quo and overall vision for PALAMA in the public service. Due to time constraints, Mr Maja asked the Portfolio Committee to grant him permission to focus mainly on the Strategic Framework outlined in the presentation.

Mr Maja highlighted the key issues that were raised in 2008, when the Minister took office (see attached document), and said that these were the basis for embarking on the transformation process.

He outlined that the Strategic Framework part of the presentation set out the problem statement, priorities, and repositioning of PALAMA. He stressed the importance of PALAMA being central to all levels of training.

Mr Maja noted that there was still a problem in that public service training remained uncoordinated, incoherent and largely outsourced. He stressed that the training was funded by government, but that the cost recovery model was largely expensive.

In response to the Minister’s query, ten priorities had been identified. These were now being put to trial and piloted across the public service.

Mr Maja went on to describe the niche markets and strategic thrust of PALAMA in the next few years. He outlined the steps to be taken in repositioning PALAMA, with a special focus on the key areas of cadre attributes, connecting with the Executive, resourcing, developing a curriculum model and moving away from being a broker of training services.

Mr Maja said that in future, training would be split in a 70/30 ratio. 70% of public service training would be conducted in-house, using master trainers who were part of the training core of PALAMA as well as government trainers located across government who had been certified by PALAMA. The other 30% of training would be done through strategic partnerships. He stressed that all training providers needed to be certified by PALAMA.

Mr Maja said that further areas to be discussed included how to move forward in ensuring that all public servants were trained under an integrated public service framework. This needed the support of both the DPSA and the DHET.

Mr Maja concluded his presentation by highlighting that the budget would increase by about R10 million over the next three years. He also confirmed that all processes for the last financial year had been finalised.

Discussion
Ms Dreyer asked Mr Maja to explain why, in the bar graph showing Expenditure Trends, there was a steady trend in the Compensation of Employees, yet the bar showing Goods and Services was going down.

Mr Maja responded that Ms Dreyer had correctly observed that the Compensation of Employees was increasing. The reason for this was that the vacancy rate was still high. PALAMA envisioned being relevant within the public service. This trend would level out as PALAMA moved forward.

Mr Kenny Govender further clarified that the Mr Maja’s 2010/11 figures included those for local government.

Ms Bikani asked Mr Maja to explain the placement of Provincial Training and Development Centres. She felt that training should be centralised within PALAMA, as the centralised training structure.

Mr Maja said that if the Strategic Framework was approved, it would have a huge impact for PALAMA. Ms Bikani was correct in saying that PALAMA needed to engage with Provincial centres. Once the framework was approved, there needed to be an agreement on how to move forward on this issue.

Ms Bikani confirmed that Local Government training was an issue that needed to be looked at, and a long-term plan must be implemented.

The Chairperson confirmed that this was a separate issue. She also asked the Portfolio Committee to give special focus to the PALAMA budget.

The meeting was adjourned.



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