Training by National Treasury on the interrogation of Strategic Plans & Annual Performance Plans of Department of Public Works and its Entities

Meeting report

Opening Remarks
The Chairperson welcomed everyone to the meeting. Thereafter she stated that Ms A Dreyer (DA) would not attend the meeting and had sent an apology.

The Chairperson noted that there was a report on State Owned Entities (SOEs) in the files given to Members over the weekend. The report must be submitted to the House by 8 March 2012 and was produced by herself, the whip and the support staff. The report focused on 3 entities – Independent Development Trust (IDT), Council for Built Environment (CBE) and the Construction Industry Development Board (CIDB).

The Chairperson further noted that the Committee would consider the Northern Cape oversight visit report as well as several outstanding minutes as part of the agenda for the day.

Lastly, she noted that the Committee had invited the National Treasury to assist Members with regard to the dynamics relating to the budgetary processes especially on issues that were crucial to the Committee.

Presentation by National Treasury on Interrogation of Strategic Plans and Annual Performance Plans of the Department of Public Works and its Entities
Mr George Tembo, Director: Public Finance, National Treasury thanked the Committee for the opportunity to present to it. He informed Members that his presentation would be based on the document tabled in the Committee – the Framework for Strategic Plans (SPs) and Annual Performance Plans (APPs) which was produced by the Treasury. The document was in line with the Government Wide Monitoring and Evaluation Framework (GWM&E) which placed the responsibility of managing information on the Treasury. In line with that responsibility there were a number of frameworks that the Treasury had produced. In 2007 the Treasury had produced the Framework for Managing Programme Performance Information and in 2010 the New Framework for Strategic Plans and Annual Performance Plans was produced.

The 2007 document outlined key concepts that could be used to define, collect, report and used performance information in the public sector. It clarified definitions and standards for performance information in support of regular audits. The New Framework for SP and APPs guided what should be contained in those reports put together by departments. It was also informed by existing policies, plans and budget consideration. When departments prepared planning documents both frameworks should be used.

Mr Tembo noted the aim of the framework was to guide what should be in the SP and APP taking into consideration the existing policies, plans and the budget. It was not aimed at guiding on how to develop policy and how long term planning processes should be done. It should indicate that components of such policies and plans to be implemented over a 5-year period. It was developed to improve the quality of accountability documents particularly performance information. It was there to align planning, budgeting, implementation, monitoring and evaluation and, reporting – in line with the GWM&E. The framework was not prescriptive - templates could be customised. The Treasury regulations indicated what was prescribed. The document was developed in collaboration with the National Planning Commission, Department of Public Monitoring and Evaluation (DPME), and the Auditor-General (AG).

Mr Tembo noted that the strategic plans should be a 5 year plan aligned to broader Government strategies which were ideally aligned to the electoral cycle. They should ideally not be changed over the 5 year period unless there were significant policy changes relating to the mandate or the service delivery environment. The amendments could be made where a new plan could be tabled in the next tabling period by way of an annexure to the APP. The SP did not replace the need for long-term planning or other more specific plans – it should be used to prioritise and plan the progressive implementation of its other plans. Its focus would be on strategically important issues including a strategic overview, vision, mission, values and the strategic goals over a five-year period. It also had to include strategic objectives, resource implications and the risks and links to other plans e.g. long-term infrastructure plan, conditional grants, review of public entities, public private partnerships.

Mr Tembo noted that the APPs were aimed at linking the plans, budgets and the performance of an institution. They presented programme performance indicators and targets in order to achieve goals and objectives over Medium Term Expenditure Framework (MTEF). The quarterly performance reports would be expected based on the quarterly targets set in the APPs. The APPs would be informed by Annual Reports (AR).

Mr Tembo mentioned that the goals identify areas of institutional performance that were critical to the achievement of the mission. They should relate to the national priorities for the sector, cluster, and be realistic and achievable. They should ideally be written as a statement of intent that was specific, measurable, achievable, relevant and time-bound (SMART). They enabled assessment of whether impact had been made. The formulation of strategic outcome oriented goals was a new requirement - to distinguish between strategic goals and strategic objectives. They should be future orientated and indicate where a department/entity ultimately wanted to be with its service delivery/performance – high level.

In relation to performance indicators Mr Tembo stated that there were core set of programme performance indicators and targets in the APP of Department/Entity to track its on-going performance. There was an internal comprehensive list of indicators but the list of core was in the budget documents and the SP. For the concurrent function departments and those with entities, it was important:  to be careful in selecting core indicators and report on what the national department was responsible for and had control over i.e. its specific functions. Could reflect outputs of the provinces and entities in its strategic plan but only set targets for own functions, even if its oversight role, and avoid data challenges. Ensure consistency of indicators in all documents i.e. SP, APP, AR and budget documents.
 
Mr Tembo noted that the targets were only applicable in the APP but not the SP. The baseline and targets should be expressed in terms of numbers and if a percentage was used, then the absolute numbers should be presented as well. The baseline should be the current level of performance and targets for strategic objective and programme performance indicator. Where appropriate, the annual targets for the budget year needed to be broken into quarterly targets.

The purpose of the quarterly performance reports was to report on overall progress made with the implementation of the department’s performance plan both on a quarterly and on annual basis. The Quarterly Performance Reporting could be viewed as an enabling mechanism that allowed Accounting Officers to track progress against what had been planned and what was actually achieved with regards to service delivery outputs. The Treasury Regulation 5.3.1 – Quarterly Results should be tabled at the Executive Authority each quarter. Quarterly results leaded to the Annual Results which reflected in Annual Reports. The new Framework for Strategic Plans and Annual Performance Plans included a template for quarterly reporting that departments could use.

Mr Tembo emphasised that provincial departments should submit a copy of their quarterly performance reports to National Treasury within 30 days after end of each quarter. The quarterly performance report for the fourth quarter should report on the department’s performance against all programme performance indicators – both those for which quarterly targets and annual targets were set. Because of weaknesses in many departments’ management systems, institutions should in the interim revise their reported numbers for a given quarter in the following quarterly performance report. 
The National departments would only start submitting quarterly performance reports to National Treasury in 2011/12.

With regard to the formal requirement for end-year reporting Mr Tembo concluded that the annual report was the ultimate accountability document in government aligned with other planning documents. It provided information to legislatures so they could exercise proper oversight – linked to what was originally planned in annual performance plans. It recorded, reported and evaluated the past year’s performance in terms of legislative oversight role, performance (non-financial data), financial statements (Auditors Report), and human resource data. It published information so that civil society could engage with government meaningfully. It contained guideline documents: ‘Guidelines for Annual Reporting’.

Discussion
Ms P Ngwenya-Mabila (ANC) commended the presentation. She asked if during the in-year monitoring and quarterly reporting by the Department what interventions did National Treasury make before the end of the financial year in cases where the Department was spending less of its budget.

In addition, Ms Ngwenya-Mabila asked to what extent the shifting of funds from one programme to another could be done. The shifting had limitations as per Public Finance Management Act (PFMA) rules.

Mr K Sithole (IFP) thanked the presenter for the presentation. He asked whether National Treasury had any strategy or system to track and/or monitor the National Departments because the Department of Public Works was in a chaos.

Ms N Ngcengwane (ANC) thanked the presenter for the presentation but was concerned that the SP should be aligned to all spheres of government and the 5-year cycle of elections which meant that the local government elections were ignored.

She also asked what Treasury was doing with regard to the concepts of the strategic objectives which the Department was presenting to the Committee each and every financial year without the desired results.

Ms C Madlopha (ANC) noted that the reason the Extended Public Works Programme (EPWP) was failing in terms of the SP of the Department was because it was not part of the Integrated Development Plans (IDPs) in the municipalities. It was also not part of the performance contracts and there were no protocol signs with the municipalities. She asked if the developing of the SP included all three spheres of Government who really monitored the EPWP because municipalities were not taken on board in those programmes.

Mr M Swathe (DA) thanked the presenter for the presentation. He asked whether the Department was being advised by Treasury in terms of the strategic objectives prior the presentation made to the Committee because it seemed the very same things that were outlined in that presentation document were the things the Department should have done to avoid finding itself in a corner. The issue was related to the issue of capacity to deliver by the Department because the challenge was that if it could not have those strategic objectives it could not achieve what was actually written in the SP.

He asked whether the quarterly reports were aligned to the APP because it seemed the Department was not achieving what it should achieve.

Mr P Mnguni (COPE) appreciated the report but commented that it came at the tail-end of the financial year for the Committee to exercise proper oversight. Since the current Minister tabled a turnaround strategic plan and linked that with the presentation document adopted by that Committee from the former Minister, how were they going to ensure that they implemented that information to the letter?

Ms Ngcengwane asked what had happened to the National Youth Service Project that had been budgeted for since 2009 because Treasury was supposed to have controls in terms of the budget given to the Department.

The Chairperson noted in the previous financial year the Department’s annual plan had an erratum because proper consultation was not done when Department was compiling the annual plan. She asked how sure they were that that annual plan with an erratum attached was going to be implemented because it was not in the real document. She asked what Treasury did if the annual plan was incomplete all units were not consulted and compiled without proper consultation.

She also asked what Treasury was doing if a department had no monitoring system, what was Treasury’s role?

Mr Tembo responded that the Treasury brought its concern to the attention of the Department when it failed to spend on intended strategic objectives. National Treasury provided outside support to the Department and sometimes wrote to the Director-General or the Minister depending on the nature of the matter, how serious it was and at which level it should be discussed. But if the problem had not been attended to and it was leading to under spending of funds then it became necessary to begin to ask whether money should not be shifted to another place. Basically, National Treasury would try to provide the assistance that was required to make sure that resources were spent effectively.

Mr Tembo agreed that there was under spending on the EPWP overtime and every year there was a review that involved National Treasury. Ultimately, the proposal for upfront funding had been accepted and was currently a reality partly because of the views that had been taken place. But within the EPWP itself there were certain projects that were performing better than others, for example, the Working on Fire had been doing very well. It made sense to give the Working on Fire more money from within the EPWP within the year whilst they were trying to build the capacity that was required in the long term to enable for instance, the infrastructure sector at provincial level, to absorb funding more effectively while creating capacity, money to move to Working on Fire meanwhile.

Ms Mdlopha asked if the Treasury had seen the Department was not performing as planned did it proposed a policy change since the design of the model was from Treasury.

Mr Tembo responded that Treasuty was flexible. For instance, the Working on Fire used to be on the budget of DPW and the decision was taken to move it to the Department Cooperative Governance and Traditional Affairs where it would be better managed.

Mr Tembo stated that the shifting of funds should take place within the PFMA guidelines and rules because Treasury wanted to avoid a situation where departments were not planning. Those rules did provide controlling shifts that arose from failure to plan.

Mr Tembo indicated that Treasury did have a system to track and monitor departments. Specifically, the DPMA had been set up to monitor and evaluate the performance of al government departments. Treasury had a specific mandate in relation to the financial side together with the non financial side as well. The DPMA was still setting itself up since it was a new department, the extent of monitoring and evaluation was not at a desired level yet but it was working together with Treasury.

Tembo advised that the Department should conduct reflection on things that were important in its sector at the national, provincial and local levels, and the extent to which its strategic plan could try to deal with challenges that were in the other spheres of Government as well where the Department had a mandate to do so. There would be instances where there was a need to work together and for someone to take leadership, for instance, the Government Immovable Asset Management Act (GIAMA) provided the National Department of Public Works certain responsibilities that were in accord with the powers of Provincial Public Works Departments. The National Department of Public Works strategic plans should be as far as possible in line with what was allowed in terms of its mandate taking into account what happened in other spheres of government.

Mr Tembo addressed the question of what Treasury was doing about the asset register of the Department. He replied that the first thing the Department had to be clear about was that the asset register was something it could not do without. Treasury had asked the Department to take that very seriously so as to develop a business case. There should be a collaborated effort from all 3 spheres of Government to develop the asset register. And there should be a business case so that there was a plan that was costed and funded. Treasury had provided funding for the development of that business case. The funding was provided in the previous financial year in the amount of about R30m so that the Department could come up with the plan. Once the plan was fully costed the Treasury would look for resources for identifying all the property that belonged to the state and make sure it was in the name of the state.

Mr Tembo stated that the Department was advised by the Budget Office with developing its strategic objectives. The Department could approach Treasury if there was a need for additional funds.

Mr Tembo noted that the APP was a new concept but going forward it needed to be aligned with the quarterly report. The quarterly reports needed to inform what actually came out or was contained in the annual reports.

On the question of how one should align the turnaround strategy announced by the Minister to the APPs and SP, Mr Tembo stated that as already mentioned the Department had to make a decision in consultation with the relevant stakeholders whether such a plan would be best articulated in the annexures of further plans since they were already inside the cycle.

Mr Tembo assured the Committee that he would find out about the question concerning the National Youth Service in terms of what had happen to its budget.

The Chairperson thanked Mr Tembo for the presentation. It had helped to clear up some of the issues and enhance her understanding of some of the technical issues involved in the budgetary matters.

Report on State Owned Entities
The Chairperson tabled the report for consideration.

Ms Madlopha moved for adoption of the report.

Mr Sithole seconded the move.

The report was adopted by the Committee with no amendments.

Report on Oversight Visit to the Northern Cape
The Chairperson tabled the report for consideration.

Ms N November (ANC) moved for the adoption of the report.

M Mnguni seconded the move.

The Committee adopted the report with amendments with no amendments..

Committee Minutes of 15 November 2011
Ms N Madlala (ANC) moved for adoption of minutes.

Mr Mnguni seconded the move.

The minutes were adopted by the Committee with no amendments..

Minutes of 8 February 2012
Ms November moved for the adoption of the report.

Mr Swathe seconded the move.

The minutes were adopted by the Committee with no amendments..

Minutes of 14 February 2012
The Committee agreed to defer the minutes because it was not clear what was reflected in some of the issues of the minutes.

Minutes of 21 February 2012
Ms Ngcengwane proposed for the adoption of minutes.

Mr Sithole seconded the proposal.

The Committee adopted the minutes with no amendments..

The Chairpersons thanked Members for their participation.

The meeting was adjourned