Committee Oversight visits to Limpopo and Mpumalanga: adoption of reports, and of minutes

Standing Committee on Appropriations

22 November 2011
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Minutes of Committee meetings held on 11 October 2011 at 10h00, 12 October 2011, 26 October 2011, 1 November 2011, 8 November 2011, 9 November 2011, 15 November 2011, 16 November 2011, and 18 November 2011 were all adopted. The Minutes of the meeting held on 11 October 2011 at 14h00 were adopted with amendments.

The Committee then considered the draft oversight report on the visit to Limpopo and Mpumalanga and decided that it should stand over for adoption until the Members who had attended that visit were present, and certain follow-ups had been done on how the internal construction unit was operating in the Department of Water Affairs. Members also suggested that it might be necessary to arrange a meeting with that Department and National Treasury in the new year. There were concerns as to whether the correct committees were in place to consider tenders and whether the correct procurement procedures were followed.

The Chairperson tabled a letter from the Department of Public Works in connection with a meeting with stakeholders to agree on a model and the Committee noted a change in direction, which would broadly allow for money to be given upfront to enable some municipalities to start working on issues. The Committee had been trying to achieve better spending on the grants. It was noted that this was likely to be implemented at the beginning of the new financial year.

The Chairperson discussed the details of its forthcoming study tour to Canada and the USA, to study the Congress and appropriation procedures. It was agreed that the Chairperson, Mr Ramatlakane and Mr Snell be mandated to compile the programme.

Members finally discussed whether they wished to hold meetings with departments to discuss the second quarter expenditure, and, after a number of suggestions were made, agreed that the Research Unit would compile a report based on the report from National Treasury and circulate it to Members, but it would be more likely that departments would be called in after the Third Quarter reports.

Meeting report

Adoption of Minutes from previous meetings
The Chairperson tabled the Minutes of 11 October 2011 at 10h00, 11 October 2011 at 14:00, 12 October 2011, 26 October 2011, 1 November 2011, 8 November 2011, 9 November 2011, 15 November 2011, 16 November 2011  and 18 November 2011.

In respect of the Minutes of 11 October 2011 at 10h00, the Chairperson noted that a letter had been received from the Department of Public Works, regarding information around their meeting with stakeholders to agree on a model.

In respect of the Minutes of the meeting on 1 November 2011, Members agreed that the Committee must follow up whether any response was received from National Treasury explaining how all programmes of the Department of Tourism could have been incorrectly classified.

All these minutes were adopted. The minutes of the meeting on 11 October 2011 at 14h00 were adopted with amendments.

Committee’s Draft report on oversight visit to Limpopo and Mpumalanga
Ms R Mashigo (ANC) queried the underlined areas in the Committee’s Report.

The Chairperson explained that those were responses received, but since these responses were not final, they were still subject to change.

Mr M Swart (DA) said that as he and others were not present at that oversight visit, they would not be able to vote for adoption of the report. He suggested that other Members read through the Report and should rather be adopted when those Members who did take part in the visit were present to vote.

Mr G Snell (DA) wished to focus on the findings.

The Chairperson was not happy with the first sentence of 4.1. The Committee found that the relevant department’s internal construction unit was used a means of circumventing procurement procedures. At the time of the visit, internal structures or committees that were meant to implement procurement policies were not in place. That was a very serious observation. More clarity was required. These were the people who were attending to multiple functions.

Mr L Ramatlakane (COPE) suggested that this paragraph should go on to explain that the people mentioned were both providers and receivers, which the procurement policy did not allow for. The unit did the design internally and then paid themselves, and in that process also decided who would be appointed as the contractors.

Mr Snell said that the Committee was told that the work was done in-house but in fact there was not the required capacity, so most of the work ended up being outsourced.

The Chairperson said there was a need to follow up to clarify how that internal construction unit was working.

Mr Swart suggested that it should be stressed in the Committee Report that the unit did not follow the prescripts of the Public Finance Management Act (PFMA).

Mr Phelelani Dlomo, Committee Researcher, Parliamentary Research Unit, said that according to the PFMA the Department must have various committees during the tender process, including a bid committee, and an adjudication committee but those structures were not in place.

The Chairperson proposed that the report should not be adopted at this meeting, since the Department of Water Affairs and National Treasury must first be asked to clarify the situation.

Mr Ramatlakane agreed postponing the adoption of the Report, but felt that the Department of Water Affairs (the Department) and Treasury should not influence the Report unless they were part of the team. The report was essentially setting out what the Committee found.

Ms Mashigo concurred. She thought it had been wrong to contact them on the last occasion, as she agreed that the oversight report should set out what the Committee observed for itself.

The Chairperson asked Members to go through the report and prepare to make input at a later meeting.

Mr Dlomo proposed that a call should be made to the Department early next year to clarify some of the issues that came up during the site visit. The Department, together with Treasury, was given an assignment to establish those committees with time frames and to procure, using the budget, so that it could ensure efficiency and effectiveness in that department.

The Chairperson agreed that the Committee should study the report, and, if necessary, the Department and National Treasury could be invited to the Committee, as part of a separate process.

Letter from Department of Public Works
The Chairperson circulated to Members a letter from the Department of Public Works (DPW), containing information on a that it had held with stakeholders to agree on a model. The last paragraph said that broad consensus had been reached, and meetings had been held between the DPW, National Treasury, and Local Government.

The Chairperson asked what consensus had been reached. The meeting of 11 October referred to Schedule 8, but DPW was now speaking of moving from Schedule 8 to Schedule 5, which would allow it to give money up front to an entity, to enable certain municipalities to start working. The Chairperson assumed that the other national department involved would be the Department of Cooperative Governance and Traditional Affairs (COGTA). However, it was necessary to look at whether the desired goals could be achieved. The reason that the Committee had invited DPW to speak to it, and had gone through this process, was to try to ensure that the spending was improved. That was supposedly the reason for the proposal to move from Schedule 8 to Schedule 5 grants.

He suggested that the Committee should note the letter and see what would happen. The DPW had said the process could only be implemented at the beginning of the new financial year. That meant that the Division of Revenue Act should reflect that agreement.

Study tour to the United States and Canada
The Chairperson noted that at the last meeting it was reported that Canada had agreed in principle to receive the Committee at the end of January. A response had also been received from the United States of America, agreeing to the dates, in principle.

He outlined that a number of matters should be noted. The week of 23 to 27 January was the second week of the new session, which was a particularly busy time for Congress, especially for those working in appropriations. Congress would be convened in that week. Although the US House would convene from Monday to Wednesday of that week, it was not due to convene on Thursday and Friday as the Democrats would be having a retreat. The Senate was also not likely to convene, and would hold a similar retreat. That meant that Thursday and Friday were not available to hold meetings. However, it was probably enough to hold two days of meetings.

It was therefore suggested that the delegation from this Committee could consider arriving in Washington on Sunday 11 February, after holding meetings in Canada from 6 to 10 February. However, he cautioned that snow and blizzards could affect their travel.

The study tour would focus on the United States Congress and Appropriation processes. The US Congress had a complex system, and the appropriations processes were even more complex. Preparation should be done in South Africa, before leaving for the USA, and the group could be supplied with briefing documents and other material for self-study. The US consulate in Cape Town could be contacted to provide a briefing to the group, but this should be done in good time, with the briefings to take place before the holiday season. When the group arrived in Washington, a further briefing should take place on the subject matter.  

Mr Ramatlakane stressed that it was important for the group to be back in time for the opening of the South African Parliament on Thursday 9 February. He thought that two days would not be sufficient and the group would need three days. He noted that the arrangements in Canada could be made for 30 January to 3 February and suggested that the Washington visit should be from 5 to 7 February. There was a need to have a clear programme.

Members discussed the matter, and decided that it be left to the Chairperson, Mr Ramatlakane and Mr Snell to formulate the programme.

The Chairperson added that the Committee must get the briefing from the Consulate before recess.

Ms R Mashigo (ANC) was under the impression that all the Members of the Committee would be going.

The Chairperson said the House Chair had agreed that preference should be given to full time Members.

Mr Ramatlakane also added that those attending would need to be given sufficient notice to hand in their passports.

The Chairperson said that the Committee was a Standing Committee that did oversight, monitoring and evaluation. The team would try to come up with a programme for the Embassy.

Other business
The Chairperson noted that the Portfolio Committee on Rural Development and Land Reform had invited the National Youth Development Agency (NYDA) to be present at a meeting, to discuss youth empowerment programmes, and he suggested that Members from this Committee may wish to attend.

He also noted that the Standing Committee on Public Accounts was meeting that week, and said that it had been claimed by the Department of Basic Education (DBE), on the previous day, that the cost of building schools had trebled to R100 million, and he questioned whether this was correct, especially in rural areas where land was not so expensive. He suggested that this Committee should arrange consultations with the DBE, and possibly also the Development Bank of Southern Africa on this. This was given as a reason why only seven out of fifteen planned schools were built. Yesterday, during a response to questions by the Minister, it was claimed that schools would be completed by 15 March, but that did not seem to correlate with information placed before this Committee.

Mr Snell noted that he had researched that issue and said that tenders for some schools had not been awarded yet, but some were in the region of R30 to R33 million. He also pointed out that the suppliers of windows, trusses and bricks would be closed in December, and that was why it was so important to interrogate this.

Mr Ramatlakane stressed that research was important, and the DBE should be asked to give the required information. He suggested that the Committee should do a surprise oversight visit to a sample site, as he believed officials were not telling the truth to the Ministers.  

The Chairperson said it would be important to speak to the project managers, as well as the Development Bank.

Ms Mashigo noted that after the recess, it would be useful to hold another strategic plan workshop, and also to assess its alignment and evaluate its achievement against that of the previous year. This was a very important Committee and Members worked very hard. However, the Committee had not always considered what precisely its impact had been in terms of the government mandate and goals.

The Chairperson thought that this was a good suggestion.

Mr Snell suggested that it might be possible to do this before the end of the year.

Mr Ramatlakane commented that he agreed a strategic workshop may be useful, but perhaps work on the assessment could start earlier.

Ms T Xaso, Committee Secretary, informed the Committee that an email had been received from National Treasury. The Second Quarter Expenditure Report was on the agenda. The Committee would need to give direction on that.

The Chairperson said the Second Quarter Adjustment Report was very important but the adjustment came with raw figures, and although it would be useful to get that information, he did not think that this Committee should start inviting other departments now. The Third Quarter Report would give a better indication of the spending and it would be easier, from that, for the Committee to monitor the spikes in spending.

Mr Ramatlakane noted, in respect of the Treasury Report, that the information should be made available. Last year the Research Unit wrote a memorandum based on a similar report, and he thought that when the Committee met in the new year, it would be useful to have a draft memorandum from the Research Unit made available for analysis and evaluation by this Committee.

Ms Mashigo suggested a different approach. She would like to have input into the Mid Term Budget
Policy Statement (MTBPS) from officials. That would assist the Committee in its analysis, because the same information in the second term expenditure report and the MTBPS should appear.

Dr P Rabie (DA) agreed that it was very important that the Research Unit should analyse National Treasury’s report, but said that it could only be to the benefit of Members if the Second Term expenditure report was circulated now for Members to study. He thought that it would be necessary to devote an entire meeting to that report, as it could help the Committee in its analysis of shortcomings in particular departments.

The Chairperson said that the Research Unit could be commissioned to do that work, but said that the departments that were not spending properly now were likely to be doing so again at the end of the third quarter. He thought that shortage of time prevented the Committee from doing full justice to departments who were invited. The report would assist, but he wondered whether the Committee also wanted to invite other departments. He was not sure whether a research report would assist the Committee in doing much at this stage.

Mr Ramatlakane agreed that a meeting was needed to discuss the performance, though it might not be necessary to hold hearings. Some departments had reported up to October and beyond. He thought a report could be compiled for the second quarter, but they could perhaps be invited to a hearing in the third quarter.

The Chairperson asked whether Members would like another meeting with National Treasury.

Mr Ramatlakane said it would not do any harm for National Treasury to come and clarify certain issues, at the beginning of next ear.

The Chairperson thanked Members for their hard work during a hectic and tiring year. He did not expect to have to call any other meetings, unless there was an urgent need. He wished Members a well-deserved rest.

The meeting was adjourned.


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