Statistics South Africa on its 2010/11 Annual Report; Committee Report on MTBPS

Meeting report

Introduction
Mr D van Rooyen (ANC) said that the Statistics South Africa (Stats SA) team was one of the best teams in the country under the leadership of Mr Pali Lehohla Statistician-General (SG). He also welcomed Mr Howard Gabriels, Chairperson of the Statistics South Africa Council.

Statistics South Africa (Stats SA) Annual Report 2011/12 briefing
Mr Lehohla said that it was always a pleasure to report to the Committee and the nation on the work that Stats SA had been tasked to do. The content of the presentation had three elements, namely organisational performance, financial performance and an overview of the 2011 population census. In terms of organisational performance, there was trust in statistics through the building of a sustainable organisation. Statistics played a role towards evidence-based decision-making. Society needed basic macro economic and social information to inform decision-making in the public and private sector. Stats SA had taken into consideration the priorities of Government, namely economic growth, price stability, employment, job creation and decent work, health, education, rural development, food security, land reform and life circumstances, job creation and decent work, to mention a few.

In terms of economic growth the developmental outcome was to create decent employment through inclusive economic growth. The output was to deliver statistical information on the primary, secondary, tertiary and transport sectors, statistical information on the financial performance of private and public spending and statistical information about the level of economic activity. The performance indicators were to provide short term indicators, namely publish 12 monthly, two quarterly and two annual series. In addition Stats SA had published quarterly gross domestic product (GDP) estimates reporting on 10 sectors of the economy. Stats SA was said to be maintaining international standards.

In terms of price stability, the developmental outcome was to create decent employment through inclusive economic growth. Stats SA was required to publish the Consumer Price Index (CPI) and the Producer Price Index (PPI). Stats SA had delivered statistical information on consumer price changes and on producer price changes. The CPI was released one week earlier to the delight of the South African Reserve Bank.

Under employment, job creation and decent work, the developmental outcome was to create decent work through inclusive economic growth. Stats SA had managed to deliver statistical information on the labour market and on employment and earnings. The challenge faced was to harmonize the Quarterly Employment Survey (QES) and the Quarterly Labour Force Survey (QLFS). However Stats SA succeeded on placing additional modules on the activities of young people, time use and volunteer work in the QLFS.

With regards to population census 2011 Stats SA managed to deliver statistical information on the size, nature and geographical location of the SA population. Stats SA launched the population census in all nine provinces. There were delays in procurement particularly in district and satellite offices. Furthermore Stats SA ran a mini-test, and a census communication brand was introduced through television (TV), radio and print adverts. An educational phase that targeted hard-to-count groups was launched. There was, however, under expenditure reported on the census project for 2010/11.

Stats SA had an internship programme. A total of 127 students had been absorbed as interns since the 2005/6 financial years. 18 interns had been absorbed in 2010/11 and in 2008/09 and 2009/10 there were 28 and 36 interns respectively.

The SG went on to present the financial information. Stats SA had received an unqualified audit for the fifth consecutive year but with two emphases of matter. There were a number of improvements in the governance and financial management of Stats SA. There was increased processing of the payment of suppliers within 30 days from 76% in 2009/10 to 91% in 2010/11. In addition an integrated monitoring system of the internal and external audit recommendations had been established and Stats SA had managed to roll out an integrated risk management system and a vehicle management system. Stats SA nonetheless faced challenges such as the stability and performance of transversal systems and the capacity and capability of staff.

A brief synopsis was given of the 2010/11 financial statements and the expenditure per programme. For the year 2010/11 the total funds that had been received amounted to R1.9 billion.

In addition a fact sheet of the 2011 census was given. The country was divided into small areas by February 2011. A comprehensive publicity and advocacy program had been launched and it ended in November 2011. Stats SA had opened an additional 74 satellite offices and had printed 20 million questionnaires in all official languages. 109 496 fieldworkers, 26 113 field worker supervisors and 5 199 fieldworker coordinators had been appointed. The SG highlighted that the census was the most successful as compared to those in 1996 and 2001. Data had been collected from 01 October to 31 October. 94 510 fieldworkers had been paid. The census results would be released in November 2012.

In conclusion a developmental path of Stats SA was given. Stats SA had passed through a number of stages namely integration of the state and policy development form 1994-1999. During the period Stats SA had experienced a leadership crisis. The integrity of products was challenged from 2000-2004. During this period Stats SA faced a crisis of autonomy. The advent of corporate governance from 2005-2009 was another phase during which there was a control crisis. Currently Stats SA was in the fourth phase that involved growth through coordination. Stats SA was moving towards institutional continuity and in so doing building a sustainable organisation. There was need to build trust in statistics through building a sustainable organisation.

Mr Gabriels said that the Council was very proud of the work that had happened over the past few months in relation to the census. The work would be accounted for in more detail in 2012. He congratulated the Stats SA team for the 2011 census. A number of major milestones had been reached. Stats SA was able to bring the date of the release of the CPI index forward by a week - that was a testimony to the types of improvement that had been made. In addition Stats SA had received the fifth unqualified audit. Going forward there was need to invest the building of the National Statistical System. There were challenges such interfacing with Government departments that sought advice. Each Government department was supposed to be able to conduct reliable, relevant, timely and official statistics. There were, however, serious challenges of skills and capacity within most departments. There was need to address the challenges in light of the fact that Stats SA was moving into a new period where it was going to be implementing Section 14 of the Statistics Act. There was need for proper succession planning to ensure the continuity of business. The Council was proud of the work that it had done in helping Stats SA. There was a healthy relationship between Stats SA senior management and the Council. He congratulated members of the Stats SA management team on their report.

Discussion
Ms P Adams (ANC) asked when the census cars were going to be retrieved, whether the personnel cost by salary band was a printing error or whether it was the correct amount and whether there were time frames and a strategy to address the skills gap challenge that Stats SA faced. Furthermore she asked how often was Stats SA re-skilling its staff.

Dr Z Luyenge (ANC) appreciated the progressive mechanism used by Stats SA in terms of interacting with the communities, especially poor communities. It was pleasing to come across the most senior officials, especially the SG himself interacting with the communities. He asked whether the decentralization of corporate services went as far as the districts, whether Stats SA had the human resources capacity to respond to the need of the district and what Stats SA was doing to ensure that stakeholder participation was fully maximised, especially with the Departments of Home Affairs and Health. He asked for more clarity on the issue of sustainable jobs and what happened to young people who were absorbed by Stats SA as interns.

Dr D George (DA) asked whether Stats SA was satisfied that it was adequately measuring activities in the informal sector.

Ms Z Dlamini-Dubazana (ANC) congratulated Stats SA. It was very visible during the census. Stats SA had too many donor funds that were not being utilized. She asked whether the agreements between Stats SA and the donor be extended in order for the funds to be fully utilized, why the Population Association was given R100 000 and whether it had utilized the money. In addition she asked which students had been given funds, how many were they and from which communities did they come from. She noted that there were a number of services that had been discontinued. She asked whether a needs analysis had been done before the services had been advertised, whether the procurement processes had been followed, what was the main reason for Stats SA to commission the projects only to discontinue them, and how the R16.4 million fitted into the whole picture. Stats SA was quizzed as to whether it had interacted or engaged with the Auditor-General.

Mr Van Rooyen asked whether the credibility of the statistics and estimates by Stats SA was affected by the statistical quality assessment framework or estimates that came from other institutions, and whether there were other reasons that caused accidents or irregularities that related to vehicles. He also requested Stats SA to furnish the Committee with the details of the investigations that had been conducted on individuals who had caused the irregular expenditure of about R6 million and the response plan to the matters of emphasis that had been raised by the Auditor-General.

The Chairperson was intrigued by the comment on strategic issues by the Chairperson of the Council. Stats SA were supposed to have some comfort that it had built internal capacity over a period of time. The Committee wanted to be comforted that the internal capacities had been addressed.

Mr Van Rooyen asked whether there were any prospects of having a concept document on how to address the lack of capacity.

Mr Lehohla responded that the training of statisticians was challenging in that the Act asked for statisticians to ensure that statistics be of good quality; as such the training was not limited to Stats SA but in actual fact it was broadened to other institutions. Statisticians were very skilled people. However it would be difficult to resolve the situation despite the fact that Stats SA had trained a number of individuals. The environment of statistical production was not learned at university but it was learned on the job. The Chair of the Council was following up with Stats SA with regards to the issue. There was a lot of mobility within the organisation and in the re-skilling of people. However Stats SA was not managing this adequately. It had the capacity to retain all of their interns but it had not retained all of them. There was a lot of work done internally to track interns and absorb them. The problem of getting statisticians in the country would not be resolved entirely. In addition there was a need to move beyond the internship programme. On the issue of job creation and sustainable jobs Stats SA had a staff complement of about 4 000 and 166 000 in the year of the census. Some of the 166 000 had been employed for 30 days and the others for over a period of six months. There was need to absorb some of the 166 000 people. With regards to the informal economy there were several studies on the subject and there were modules that looked at the survey of the employed and the unemployed. There was need to understand more on how the economy functioned. The R 100 000 that was given to the Population Association was not a donation but it was self-interest. Stats SA provided funds in the areas of demography and statistics. The money was spent and it was spent appropriately. The movement of money (virements) was a result of decentralization. Stats SA was obtaining district offices. Accidents were the main source of Stats SA's problems. Stats SA tried to look at the model where people bought their own cars but it was not possible since some of them were blacklisted. It also considered a model where Stats SA co-owned the cars. There was need to explore another model which would reduce the incidence of accidents.

Mr Ashwell Jenneker, Deputy-Director General: Statistics Support Information, Stats SA, responded that the data management and information delivery project was started in Stats SA to improve the quality and the processes within the organisation. There were two areas that Stats SA focused on, namely the standard development and implementation whereby it formed a partnership with the Council for Scientific and Industrial Research (CSIR) and developed standards such as the South African Statistical Quality Assessment Framework. Stats SA realized that standards development was very important. As such it institutionalized this as a division and this was part of how the R16.4 million was used. The second area of focus was the project for technology tools needed to improve the quality of the statistics. Stats SA engaged with suppliers from the private sector. Stats SA took some time to develop the technology tools. It was at this point that the suppliers came with a list of demands. Stats SA consulted its legal team which said that the demands amounted to a repudiation of the contract. Stats SA was forced to terminate the agreement.

Mr Calvin Molongoana, Census Project Director, Stats SA, said that the census cars were supposed to be retrieved according to a standard approach. The majority of the cars would be returned at the end of November.

Ms Celia de Klerk, Executive Manager: Strategy, Stats SA, agreed that there was a typing error on page 142. It was supposed to be permanent. In terms of donors she said that Stats SA was leading a statistical capacity building programme on the continent. Stats SA was funding young statisticians across Africa to participate in a conference. Stats SA was using donor funds to fund these people. Stats SA had to return R63 000 of the total amount that had been allocated. Stats SA could not use the donor funds to do anything else except what Stats SA was told to use them on.

Mr Lehohla responded to the R6 million issue that the AG had picked up by saying that the matter was between Stats SA and the Department of Government Communications (GCIS) and a supplier. At the moment that matter was sub judice and he could not comment much.

Ms Semphete Thobejane, Chief Financial Officer, Stats SA, said that the damages and losses relating to cars were a substantial amount but if one looked at the situation from a historical point of view the problem had decreased. The accounting officer was of the opinion that Stats SA was supposed to minimize the use of hired vehicles. The number of contract staff was reduced because Stats SA did not have enough capacity. The damages sustained were because the people who had been assigned the vehicle were not people who would drive vehicles on a continuous basis because they were unemployed but they had drivers licenses. The terrain to which the drivers were exposed led to accidents. The types of damages seen were undercarriage damages because of the terrain in the rural areas. There were also scratched bumpers. It would be difficult for Stats SA to rid itself of losses through damages. The accounting officer tried to transfer the risk to the drivers but unfortunately not all of them qualified for subsidies because the financial situation of some of the people prevented them for qualifying for the subsidies.

Ms De Klerk said that Stats SA was monitoring the general utilisation of the cars and the speed. At times Stats SA would call the drivers of the cars and remind them that they were being watched. In terms of the irregular expenditure, on the human resources side, Stats SA had mistakenly appointed permanently a staff member who was a foreign national without a permanent residence permit. As such the whole period of appointment was irregular. All interns had been absorbed with the exception of a few. In this financial year Stats SA still had 54 out of the 58 interns they had appointed and the interns would be absorbed depending on their financial performance. Learners who had been given bursaries would be coming into the organisation as interns. In addition a large number of their staff had grown within the organisation and this was as a result of sufficient learning. In addition a number of people were coming back into the organisation.

Mr Lehohla said that the census was successful because people were sent to foreign institutions such as the Institute of Statistical and Applied Economics and a number of them had been deployed at the district offices. These individuals were the only ones who could run the district and provincial offices professionally.

Mr Joe de Beer, Deputy-Director General: Economic Statistics, Stats SA, said that the estimates of economic activity in the informal sector were about 5.5% of the GDP. Stats SA had conducted a labour force survey in which it would ask the income that individuals made and the costs that the individual faced in the running of the business. The bulk of the informal sector was linked to trading activities. Where an individual operated as a trader the value that he added to the economy was only the trade margin.

Mr Lehohla responded that Stats SA had failed to meet the target of quality assessment since this required a lot of capacity. There was need to employ more people who would do this.

Ms De Klerk said that there were a total of 6 362 cars that had been hired. Only 500 cars had been used in the post enumerator survey. 500 cars had been returned. The cars could not be returned all at once because the car hire companies did not have the capacity to take all the cars at once. Stats SA was engaging with all the relevant stakeholders in order to address the issues of internal control that had been raised by the Auditor-General.

Mr Gabriels said that the five-year strategy adopted was simple and straightforward. The strategy revealed that there was an information gap. The demand for information had arisen. As such Stats SA was failing to deliver adequate information to address the demands. There was need to coordinate various institutions of Government to produce more information to meet the increased demand. When the information gap was addressed a skills gap would then arise. The last gap would be the quality gap that also created a skills gap. There was need to give the Government departments a range of different skills in order to prevent the departments from taking Stats SA staff.

Ms Dlamini-Dubazana requested that the strategic plan that Stats SA was going to submit clearly show the measures taken to prevent the irregularities identified by the Auditor-General. On the human resources side a retention strategy should be outlined.

Committee Report on the 2011 Medium Term Budget Policy Statement (MTBPS): deliberations
The Chairperson asked whether there were any comments on the draft report.

Dr George suggested that the National Treasury (NT) needed to present the Committee with a detailed plan on how the it intended to change the spending pattern from current consumption to production spending. There was a lot of consumption spending on the public sector wage bill. Secondly the NT was supposed to presented a detailed plan on the steps to prevent leakages from the public financial system. Thirdly the budget office was supposed to have been established and it was supposed to give the Committee its view on the micro economy. There were problems in the global economy, in particular the European debt crisis. Nobody was sure whether the European debt crisis was going to be resolved properly. As such the macro economic assumptions made by NT could be overstated and result in a lower growth rate. Revenue would decline and there would be lower money in the fiscus. At the same time there would be pressure on expenditure. He recommended that a contingency plan be drafted in the event that the macro economic variables were not resolved as expected.

Ms Dlamini-Dubazana said that the Minister of Finance in his MTBPS indicated the areas on which he would focus, namely counter cyclical issues, debt management and the regeneration of equity. There was need for a detailed plan from management on the issues that had been highlighted.

Mr N Koornhof (COPE) suggested that the Committee echo its recommendation in the Budgetary Review and Recommendation Report (BRRR) that the state wage bill was to go below 40%. He was concerned that the country was going to miss the 3-6% inflation range. He suggested that the Committee recommend that the National Treasury was supposed to remain within the 3-6%.

Mr van Rooyen agreed with Dr George. There was need to address the issue of the inflation rate in the contingency plan and the recommendations. There was need to make a determination as to whether the issues that had been raised were properly covered in the Fiscal Framework Report or whether there was need to repeat the issues again. He believed that there was no need to raise the issues in the Report because they had been covered in the Fiscal Framework Report.

The Chairperson suggested that the Committee repeat the issues and recommendations as already stated in the Fiscal framework Report

Ms Dlamini-Dubazana stressed that NT was supposed to give the Committee a report on how the issues that had been mentioned by the Minister were going to be addressed.

The Chairperson said that on the issue of the sustainability of projections it was important for NT to come back to the Committee and show the Committee how it intended to deal with the issue. There was need to prepare people psychologically without being an alarmist. The South African economy was more exposed to the European economy than the United States economy.

Ms Dlamini-Dubazana suggested that NT put in place some authoritative measures towards Government spending.

The Chairperson suggested that the Members reduce their recommendations to writing and then forward them to the Committee secretary.

The Committee adopted the Report with amendments.

The meeting was adjourned.