Budgetary Review and Recommendation Report Workshop for Mining Portfolio Committee

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Mineral Resources and Energy

13 October 2010
Chairperson: Mr F Gona (ANC)
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Meeting Summary

The Committee heard a briefing on the format of the budgetary review and recommendation reports as provided for in Section 5 of the Money Bills Amendment Procedures and Related Matters Act of 2009. Concerns raised by Members included the inability of Parliament to instruct the executive to take certain steps that would remedy the situation of underperformance. Some felt that parliamentary committee recommendations on what steps should be taken were not effective in making changes in the Departments. Also raised was the move to shift funds from an under-spending department to another department that had the capacity to use the funds.

The Committee programme for the final session of 2010 was outlined. The Chairperson spoke about a possible upcoming study tour to Chile and Bolivia to learn how funds from their mineral wealth were distributed and to examine state intervention in strategic businesses. An invitation would be extended to trade unions, Alexkor and the Chamber of Mines to accompany them. The support of the Chilean President and his people for the miners trapped underground was praised.

Meeting report

The Chairperson asked the opinion of the Secretary regarding a quorum, because some Members of the Committee had not yet arrived at the meeting. The Committee could not make a decision or adopt a report. The Committee Secretary mentioned that Ms B Tinto (ANC), Ms N Mathibela (ANC) and Ms L Moss (ANC) were attending a Portfolio Committee on Energy meeting. Mr C Gololo (ANC) had given apologies and Mr H Schmidt (DA) was in a Judicial Services Commission meeting.

Committee Programme
The Chairperson went through the programme for this session:
The Department would unpack its Annual Report on 19 October 2010. The Annual Report was a combined document for both the Departments of Energy and of Mineral Resources, but the Committee would receive a Committee specific briefing document.
Alexkor, Transhex and Namaqua Mining would be presenting on 27 October 2010.
On 29 October 2010 the Committee would be going on an oversight trip to Piketberg in the Western Cape.
The State Diamond Trader had serious challenges. The Committee would meet with them on 3 November.
On 10 November the Department would provide an appraisal of the new Mining Charter. The Charter had elicited some rumblings in the public domain.
From 17 to 19 November the Committee would be holding public hearings on small scale mining.
In the last week of November the Committee would be going on an oversight trip to Kimberly.
On 17-21 January the Committee would go on a fact finding mission/study tour to Chile and Bolivia. On that trip the Committee would meet government ministers, organized labour, mining and parliamentary committees relevant to mining, the Chamber of Mines and Treasury, to learn how funds from their mineral wealth were distributed. The Committee would also look at policies of state intervention in strategic businesses, and their successes and failures in Bolivia and Chile.

Mr E Marais (DA) said that he was not sure whether this trip had been approved.

The Chairperson explained that the Secretary would update Members about preparations for the trip at a later stage once approval had been given.

In reply to Mr M Sonto (ANC) asking who would accompany them on the trip to Bolivia and Chile, the Chair said that they had extended an invitation to the trade unions, Alexkor and the Chamber of Mines.

The Chairperson noted that the Committee Programme would be adopted on 19 October. He mentioned the Chilean miners that were trapped underground for 69 days, and praised the Chilean President and his people for the support they had shown. During the recent mining accident in South Africa where miners were trapped, there was not that kind of support as shown by the Chileans. He said that the Committee would engage the Chamber of Mines on that issue. The Chilean situation demonstrated the strong respect that was bestowed on the people who generated wealth for their nation.

Budgetary Review and Recommendation Report Workshop
Mr Mkhethwa Mkhize, Acting Unit Manager, Committee Section, spoke about the role of the Committee with regard to Section 5 of the Money Bills Amendment Procedures and Related Matters Act of 2009:

Procedure prior to introduction of the national budget
5. (1) The National Assembly, through its committees, must annually assess the performance of each national department, with reference to the following:
(a) The medium term estimates of expenditure of each national department, its strategic priorities and measurable objectives, as tabled in the National Assembly with the national budget;
(b) prevailing strategic plans;
(c) the expenditure report relating to such department published by the National Treasury in terms of section 32 of the Public Finance Management Act;
(d) the financial statements and annual report of such department;
(e) the reports of the Committee on Public Accounts relating to a department; and
(f) any other information requested by or presented to a House or Parliament.
(2) Committees must annually submit budgetary review and recommendation reports for tabling in the National Assembly for each department.
(3) A budgetary review and recommendation report—
(a) must provide an assessment of the department’s service delivery performance given available resources;
(b) must provide an assessment on the effectiveness and efficiency of the departments use and forward allocation of available resources; and
(c) may include recommendations on the forward use of resources.
(4) A committee reporting to the National Assembly in terms of this section must submit its budgetary and recommendation report after the adoption of the Appropriation Bill and prior to the adoption of the reports on the Medium Term Budget Policy Statement.
(5) Any budgetary review and recommendation report must be submitted to the Minister and the member of Cabinet responsible for the vote to which the report applies after its adoption by the National Assembly and prior to the adoption of the reports on the Medium Term Budget Policy Statement.
(6) Additional budgetary and recommendation reports may be submitted at the discretion of a committee.

Mr Mkhize presented a template of a typical Budgetary Review and Recommendation Report. In this report, he suggested one would mention the mandate of the Department including its vision and mission statement. The Department’s priorities and objectives would be obtained from the Department’s strategic plan and measurable objectives. One would then provide an analysis of the Department’s prevailing strategic and operational plans as well as its Section 32 expenditure reports. This would be followed by an analysis of the Department annual report and financial statements. The Committee should consider performance assessment reports by the Standing Committee on Public Accounts. It also had the option of considering sources of information other than the annual report, such as the State of the Nation Address and reports of the National Planning Commission and the
Ministry in The Presidency: Performance Monitoring, Evaluation and Administration in The Presidency. After a thorough analysis of all these documents, one should summarise the key findings in a coherent and logical format. The conclusion should look at the extent to which the objectives had been met. The Committee could then recommend practical actions that had to be taken and set timeframes.

Mr Marais said that the concept of ‘fruitless and wasteful expenditure’ should not exist at all. All senior management in the Department should forfeit their bonuses when they had under-performed. The Committee could recommend bonuses should be withheld for management if they were not doing their job.

Mr Mkhize explained that bonuses were meant to be incentives; in the private sector board members were the ones who made decisions about bonuses.

The Chairperson said that the separation of powers stated that Parliament as the legislative arm of the government could not tell the Department to pay or not to pay bonuses. Doing so would be overstepping boundaries. Parliament did not have such recourse when Departments did not perform according to standards.

Mr Mkhize explained that the Public Finance Management Act was clear on who had to do what. The adopted recommendations should be made resolutions by the Department. He agreed with Mr Marais that the Committee could make recommendations that bonuses should be withheld. The separation of powers limited the role of the Committee in influencing the Department.

Ms J Ngele (ANC) asked about the implications of shifting funds from an under-spending department to another.
Mr Mkhize replied that the question should be posed to the Appropriations Committee.

Mr Sonto said that the executive was exploiting the loophole of separation of powers. Parliament was supposed to exercise oversight on the executive. The Committee could not demand but only recommend. Committees could be compared to toothless dogs due to the limited powers they had; he felt that Committees had a right to point out departments that were under-performing.

Mr Mkhize explained that recommendations could be forwarded to the Minister, but the Committee should be diplomatic when doing so, to respect the separation of powers.

Mr Marais said that the Director General and the Minister of the Department should have a good relationship so that the Committee recommendations could be conveyed. If the Minister could not do that, then an individual Member had the right to raise this point during a House sitting. He said that he was deeply disturbed by the departments that kept on having rollovers as they were a sign of incompetence.

The Chairperson said that the supreme law of the land was bound by the Westminster system; there were some countries that were not using that system, where Committees were able to tell the executive what to do. The Committee could continue the discussion at a later stage.

The meeting was adjourned.


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