Committee Report on Department of Transport & Entities 2011 Strategic Plans & Budget

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23 May 2011
Chairperson: Ms N Bhengu (ANC)
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Meeting Summary

The Committee met to consider the adoption of the Committee’s Draft Report on the 2011/12 – 2013/14 Strategic Plans and budget of the Department of Transport and its entities. The discussions centred on the position of the Road Traffic Management Corporation (RTMC), one of the entities of the Department of Transport (the Department). There had been some serious concerns about the past performance of the entity, and problems around capacity and management had led to the resignation of the Chief Executive Officer. In addition there was currently no functioning board for the entity. This meant that the Committee was not able to consider any strategic plans for the entity, since strategic plans would have to be approved by the board in order to be approved for implementation by the management of an entity. Both the Chairperson and a DA Member had approached the Minister, who was made aware of the problems, and the Committee had asked for a full report. Members debated how the problems should be handled. After discussion, they all agreed that it would not be appropriate, at this stage, to grant the additional funding that the RTMC had requested, although it was clear that one of the problems that had plagued it in the past was related to the lack of sufficient finance to carry out its mandate.

However, other problems were isolated as lack of capacity, lack of strategic governance, and legislative inconsistencies. Members noted that it was possible for shareholders to assume the responsibilities of a board, but that for practical purposes this would be difficult, since the shareholders met only twice a year, and were provincial MECs. Instead, the Committee felt it would be more appropriate to suggest that the Department should consider assuming responsibility for the entity, in order to formulate a turnaround strategy, and that the additional funding should be directed towards this purpose rather than being handed over to the dysfunctional RTMC itself at this stage. At the same time, the Committee would monitor the position and call for reports on how it was planned to turn the entity around, and how this was being done, including the establishment of a new board. The Committee would also note, in its Report, the problems with the RTMC, its recommendations, and the reasons why no strategic plans for the RTMC were approved.

Meeting report

The Chairperson noted that, in view of the forthcoming Budget Vote, it was important to adopt the Committee’s draft Report (the Report) on the 2011/12 – 2013/14 strategic plans and budget of the Department of Transport and its entities.

Mr S Farrow (DA) pointed out that the Road Traffic Management Corporation (RTMC or the Corporation) was operating without a board, which called into question whether it was operating in accordance with the legislation and its mandate. He also asked if the Department of Transport (DOT or the Department) could set up guidelines for the RTMC’s operations.  He emphasised that he was particularly concerned that the Corporation had requested a sum of R92 million for additional funding, and pointed out that it had a history of mismanagement and unnecessary expenditure, as well as concerns about the spending trends recently presented by the RTMC. He asked the Committee to delay the approval of any further funding until such time as the Department had dealt with the matter and the legislative issues had been sorted out.

Mr M De Freitas (DA) agreed with Mr Farrow that the Corporation’s operations were not up to scratch. It was important therefore for the Committee to ask further questions of the board, before considering additional funding for the Corporation.

Ms D Dlakude (ANC) stated that the Chief Executive Officer of the RTMC had, during the last presentation by this entity, stated that the RTMC could not perform its duties because of lack of funding and the necessary resources to deal with its work. She thought that whatever challenges it had, it also lacked the necessary support, and there should not be an automatic denial of the funding that it was requesting. Whilst she agreed that the RTMC should regularise itself, she felt that the additional funding was necessary, in light of its assertions that lack of funding hindered fulfilment of its mandate.

Mr Farrow stated that the Committee had already decided that it should not hear the presentation from both RTMC and Road Traffic Infringement Agency (RTIA) because the Committee needed to scrutinise how they were functioning, and particularly investigate major discrepancies. He did not wish to debate this issue at the moment.

The Chairperson stated that it was important for all Members to have a common understanding and knowledge of the situation in the entities of the Department, in order to formulate a common approach towards how to tackle some of the challenges faced by such entities like RTMC.

Mr Farrow suggested that since there was no board at RTMC, the entity should either be closed, or the Department of Transport should be given the mandate to administer the Corporation. The Committee should also look to the Public Finance Management Act for guidance.

Ms Dlakude objected to the suggestion by Mr Farrow, giving her view that rather than closing down the Corporation, the Committee should call for a report from RTMC.

The Chairperson stated that the relevant legislation already provided that in the absence of a Board of RTMC, the shareholders had the duty of taking decisions that were normally to be taken by the Board, so as to give guidance as to the governance functions and management of RTMC. The Committee needed to deal with the problems. She summarised that at the moment, the Committee had two options. Firstly, it could not support the additional funding requested, until such time as RTMC had demonstrated that it could overcome the challenges facing it. If RTMC did nothing to deal with the problems the Committee should resolve that the Corporation should not get the additional funding requested. The other option was to recommend funding. She asked Members to deliberate on this.

Mr Farrow suggested that the Committee should give the Department the opportunity to administer RTMC’s board and management activities until such time as a solution could be found to the problem.  He agreed with the Chairperson that the shareholders’ committee had the right to provide governance in terms of the Act, but its problem was that it met only twice a year. Because this comprised provincial MECs, and it was difficult to arrange a meeting of these MECs, the board was set up, to attend to the urgent and pressing issues of the Corporation. The other difficulty with the shareholders’ committee was that this Committee could not hold MECs accountable in the same way that it could hold the board accountable. He suggested that there was a need to urgently address the issues of the RTMC by putting it under the care of the Department, with no additional funding to be provided until such time as the Corporation had resolved all its problems and a board was in place. In addition, the Committee should also look very carefully at the provisions of the Public Finance Management Act, which could give guidance to what the Committee could do in the interim.

Ms Dlakude did not agree with Mr Farrow. Using his analogy, she stated that it would do no good to put the RTMC under “care” without also providing the treatment to the problem, by way of funding, to assist it to recover. If the analysis by Mr Farrow had to do with the Minister’s report, then the Committee could request that a report be tabled. However, pending that, it would not be possible not to give the necessary support to RTMC to enable it to get back on its feet.

Ms N Ngele (ANC) concurred with Ms Dlakude that RTMC should be funded, and that funding should be effectively monitored.

Mr N Duma (ANC) did not think Mr Farrow had said that no additional funding should be given to RTMC at all, but rather that there were certain issues that needed to be ironed out within the Corporation before doing so. He proposed that the Committee should request a report that indicated how the challenges of RTMC had been resolved.

The Chairperson felt it was important to give background information about RTMC, so that all Members could understand Mr Farrow’s concerns and approach that had led to his analysis. She informed the Committee that she had received her information about RTMC from whistleblowers, who had identified themselves. She had approached the Minister, in a meeting, in regard to the information she got from those whistleblowers about the problems at RTMC, and this was before the Committee had had any interactions with RTMC. In the following meeting, the Chief Executive and Board of RTMC were set to present the strategic plan of the RTMC. Mr Farrow was not aware of that, when he asked what had been presented. He had written to the Minister, asking if the Minister was aware of the problems at RTMC. It was decided, after the interactions with the Minister, not to engage with the RTMC challenges at that particular time, but rather to allow the Minister to apply his mind to the problems of the Corporation, and then come and brief the Committee on how he was dealing with the problems at RTMC. The Minister advised that there was an investigation which was under way at RTMC, and a report would be finalised on that investigation.

She further explained that the reason why the Committee did not include the RTMC in the presentation by all entities was informed by two issues. Firstly, the Acting Chief Executive Officer (CEO) was attempting to presenting a strategic plan that had not been approved, because there was no Board, and it was had not been seen by the shareholders. For this reason, the Committee could not address such a plan. She noted that a strategic plan should be endorsed or agreed to by a Board of an entity or a governing body, in order that the officials of the entity could implement that strategic plan. That was why committees invited the Chairperson of the Board and the CEO to endorse and implement the plans, as approved by the board, and in the absence of a completed and endorsed plan, the shareholders could not themselves implement what was in the plan. She also reminded the Committee that the strategic plan of RTMC kept on changing in the previous years, because of problems around performance of the Chief Executive Officer and Board, which was one of the reasons why there were currently these problems.

She further noted that in the DOT, there was a branch that dealt with the entities. One of the questions the Committee had asked, in addition to questions while interacting with the Auditor-General, was related to the role of that branch in relation to nurturing the entity, with support also from the Director General to ensure that the DOT’s branch also could function effectively to help the entities to perform better and fulfil their mandate. Even if there were challenges, the Department ought to be able to intervene speedily to resolve such problems.

The Chairperson added that the second issue raised by Mr Farrow was a very valid point. The Committee needed to concentrate on the question of whether the Department had taken over RTMC or if the entity was still running itself. Another reason why RTMC had not been included when considering the strategic plans was that the Committee wished to have a special and separate focused discussion on that entity. She agreed that Mr Farrow had not been suggesting that RTMC did not require funding at all. However, he had highlighted its serious challenges around governance, failure to execute mandates and wasteful or unnecessary expenditure. RTMC was one of the entities called in to answer to the Standing Committee on Public Accounts (SCOPA). Mr Farrow was saying that this Committee should not properly include RTMC in the decision around the strategic plans, without pointing out the serious challenges in the Corporation on which there needed to be a special focus. This Committee should, therefore, include in its report that there were serious challenges in the RTMC, and also state what the Committee would do to ensure the challenges were addressed. Mr Farrow also suggested that the additional funding requested should, instead of being allocated to the entity which already had serious challenges, which probably could not implement any corrective measures, rather be used to fund a turnaround strategy. She asked Mr Farrow to confirm whether this was a correct reflection of what he had suggested.

Mr Farrow agreed that he could not have summarised it better himself. He said the Committee should not simply “take money away”. However, in view of the current state of affairs in the Corporation, and its lack of strategic direction, the Committee should rather stress to the Department that it should assume responsibility for the RTMC. It could not divert funding from the main DOT budget to do this. However, it should take over judicial management of the RTMC until such time as it could properly define its role, mandate, state where it was going, and how it would resolve its current challenges, to be able to move forward. The management of RTMC needed to be brought under the Department. Parliament could not do this, because it was an oversight body and one that provided the necessary legislation to enable the departments to work. However, it was important for the Committee to intervene when it saw that an entity was deviating from its mandate, since Members of Parliament were accountable to the taxpayers for what happened to the State Owned Enterprises.

Ms Ngele stated that she was now happy with what Mr Farrow had said, and this confirmed that in fact Mr Farrow was not simply suggesting that the entity be closed down and not funded.

The Chairperson reiterated that the Committee had taken due note that RTMC had serious challenges and had interacted with the Minister regarding the problem. Therefore it was important for the Committee to prioritise the challenges at RTMC, and get a progress report from the Minister, as well as consider how the Committee could prevent the problem of continuously rewarding an entity that was not performing very well. There was more information in that regard. She suggested that Members should suggest what recommendation should be included in the Report.

Mr Farrow suggested that the Committee should recommend that the Department of Transport should take over the administration of the RTMC, until such time a clearly defined turnaround strategy had been found, a new Board established, and its mandate was clearly defined.

The Chairperson added that there were two challenges at RTMC. These were the capacity problems and allegations of mismanagement, which resulted in the resignation of the CEO, and the absence of the Board. Secondly, there was a legislative issue which impacted negatively on the RTMC’s ability to execute its mandate and sustaining itself. She asked Members to separate the two aspects. The Department and Minister have also confirmed that the problems of capacity and mismanagement, and the problems with the legislation were two separate issues. The Committee must, in order to do its job properly, also point out in its Report that there were legislative factors that contributed to the challenges of RTMC.

She said that the Committee could not recommend something to the Department directly. However, it could request the Department to consider that the Department should take over the administration of the RTMC until aspects around management of the Corporation were addressed. Management could attend to the appointment of the Board and all other challenges faced by the RTMC.

Mr De Freitas (DA) asked if the Report could be considered and adopted at a later meeting. The DA members needed to refer it to the DA caucus for further scrutiny before recommending adoption.

The Chairperson stated that the DA had the right to refer the Report to its caucus, similarly as it had done with the budget, before adoption, but that the Committee needed a conclusion on the matter because the Report would have to be tabled in Parliament in the following week.

Mr M Manana (ANC) agreed that the DA could reserve the right to refer the Report to its caucus. However, he suggested that in the meantime the Report should be passed and adopted by the Committee as a whole.

Mr Farrow stated that provided the Committee Report reflected that the DA still had to refer the Report to the caucus before final adoption, he would not have a problem. If the Report was likely to be passed by this Committee, with the recommendations that DA Members had highlighted, he would be happy to indicate his support.

Members adopted the Report.

The meeting was adjourned.


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