Services Sector Education and Training Authority (SSETA); Energy and Water SETA (EWSETA): Strategic Plan 2012

Higher Education, Science and Innovation

16 May 2012
Chairperson: Mr I Malale (ANC)
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Meeting Summary

The Services SETA and the Energy and Water SETA briefed the Committee on their strategic plans and budgets for 2012/13. The presentations reported that both SETA’s had been placed under administration, and this had been followed by periods of stabilisation and recovery.

The chairperson took issue with both SETA’s on the content of their Annual Performance Plans. This resulted in a Committee decision to tell both parties to return with more detailed presentations, and strategic plans that had been signed off by the Minister. 

Services SETA (SSETA)
The SSETA had been placed under administration on 21 June 2011 for a period of six months, and an extension of the six-month period had been granted. The SSETA had for the first time a sector skills monitoring and evaluation framework. Key strategic themes of the plan were the restructuring of the SSETA into six chambers and clustering the 70 Standard Industrial Classification (SIC) coded industries.

Budgeted revenue through levies was anticipated to increase by 19%. A challenge was the amount received in employer grants, currently 20% of income, which the SSETA would like to see increased to 30%.
The Chairperson took issue that the SSETA report did not give details of the placement of workers, how many learnerships it had issued, or how many students it had funded at technikons, colleges and universities.

Members asked what the SSETA’s had done with the money that companies and government had given them, which amounted to close to R1 bn. The Committee wanted to see results and the presentation had not given insight into any results. The Chairperson said that the meeting would be postponed to allow the SSETA to appear with an annual performance plan which should include the programmes of the SSETA and a breakdown of the allocation for each programme.

Energy and Water SETA
(EWSETA)
EWSETA had underperformed, with weak financial management and weak corporate governance, and had been placed under administration on 17 September 2010. The first period had focussed on stabilising EWSETA, followed by a recovery period between December 2010 and March 2011. Since then a new board had been appointed as the accounting authority from 1 April 2011.

A concern in the past had been that EWSETA had focussed more on energy and not enough on water. EWSETA wanted the qualifications it provided be relevant to industry requirements and the low level of language and numeracy skills in the sector should be addressed in order to allow access to additional training.

Members wanted clarity on the administration period and whether the Board was operational. Members said there was no income statement and the financial information reflected that no audit had been completed. Could the SETAs not identify where the electrical SETA had to be placed? Trainees had complained that they did not receive their certificates after undergoing training and it appeared that there was no mechanism within EWSETA to deal with complaints or to sort out inter-SETA issues. W
hat role did EWSETA play in addressing the water crisis? Did EWSETA participate in the provincial energy forum structures? Could EWSETA clarify its risk management strategies? Had service level agreements for this year been signed? Why had there been a drop from 15 to nine per cent in revenue from water levies? What were EWSETA’s plans on working in deep rural areas which needed to be a priority for EWSETA as these areas needed access to clean running water and energy? Members suspected that the numbers in the presentation were a “thumb suck.” What measures were in place regarding Adult Basic Education and Training?

The Chairperson said that EWSETA had to come back with strategic plans approved by the Minister. The Committee would take a strong position on the need by EWSETA to perform. The Committee wanted content on projects and numbers regarding placements in industries and learning institutions.

Meeting report

Services SETA Briefing
Dr
Sihle Moon, Administrator of the Services SETA, briefed the Committee on the strategic plans and budget for 2012/13. The presentation included some background information and a review of the sector skills plan.

The SSETA had been placed under administration on 21June 2011 for a period of six months. In the initial period, senior management and executives had resigned and the SSETA had been embroiled in court battles with the result that there had been no implementation of SSETA programs until the court cases had been settled in July 2011. The SSETA at that stage was of a poor standard and lacking in research. As administrator, Dr Moon had called for an extension of the six-month period and this had been granted. He said that for the first time, the SSETA had a sector skills monitoring and evaluation framework. Key strategic themes of the plan were the restructuring of the SSETA into six chambers and the clustering of the 70 SIC coded industries.

Budgeted revenue through levies was anticipated to increase by 19% although, because of a lack of capacity in the economic analysis of sub sectors, it was not clear by how much the numbers would change. A challenge was the amount received in employer grants, currently 20% of income, which the SSETA would like to see increased to 30%. He said the sector comprised 10% of large and medium companies and 90% of small and micro enterprises and therefore the SSETA had instituted a program to capacitate SME’s to allow the disbursement of funds. Currently, discretionary funds not spent remained and swelled the coffers of the fund, building up reserves. This was not allowed, according to Treasury regulations. The total revenue increase was expected to be three per cent.

Staff costs had increased by 37% even though the executive team had left. The increased cost was due to discretionary funds having been used in the past to pay for regional offices’ staff costs. This had now been shifted to the national office payroll. In addition, some of the executives and senior management had been paid severance packages, leave pay and leave encashments.

Discussion

The Chairperson said that the Committee wanted to hear the SSETA report details on their placement of workers at particular companies, on how many learnerships it had issued and how many students it had funded at technikons, colleges and universities. If the SETAs were there only to disburse funds to companies then there was no need for a SETA. The Minister and the Committee had spoken about this before, but it appeared the SETAs did not hear them and the situation could not continue in this way.


Mr L Bosman (DA) asked what the SSETAs had done with the money that companies and government had given them, which amounted to close to R1 bn. The Committee needed to see results and the presentation had not given insight into any results.

Mr S Makhubele (ANC) asked why the Minister had not signed off on their annual performance plan. He said their plan talked of the poor quality of research and asked whether the SSETA by now had the capacity to do the research.

Ms N Gina (ANC) asked if the SSETA was doing justice to the country. She wanted to see some impact on the life of ordinary people. She proposed that the presentation be shelved until the SSETA returned with a proper presentation.

Mr G Radebe (ANC) seconded the proposal.

The Chairperson said that there were only 50 Further Education and Training (FET) colleges and six university technikons and 7 500 member companies. The SSETA should get the names of people who wanted training and place these people with companies which would get the company grant.
 
Mr K Dikobo (AZAPO) said that the administrator had asked for a six-month extension to put right systems that were not working. He asked what had not been corrected that warranted the six-month extension. What were the fundamental changes in governance and what had influenced the decision to make the changes?

Dr Moon replied that he could respond to all the matters and that the presentation had focussed on 2012/13 not 2011/12.

Mr Makhubele said that the Committee did not see the numbers in the presentation which would serve as a benchmark for the work of the SSETA.

Prof S Mayathula (ANC) supported the call for the postponement to allow the SSETA to prepare the annual performance plan programmes and figures.

Mr Clive Mtshisa, Deputy Director General (DDG): Skills, in the Department of Higher Education and Training, said he noted the comments of the Committee and said that the administrator would package the information. He added that the administrator had done a lot of good work which had had an impact. He said the extension was necessary because of the scope of the work within the SSETA, as well as the work involved in setting up the governance structures.

The Chairperson said that the meeting would be postponed to allow the SSETA to appear with an annual performance plan which included the programmes of the SSETA and a breakdown of the allocation for each programme. The SSETA should not consider appearing if their plans had not been signed off by the Minister.

Energy and Water SETA Briefing
Mr Nkayisa Ngobese, Acting CEO of EWSETA, briefed the Committee on EWSETA’s strategic plans and budget. He said EWSETA had underperformed and had had weak financial management and weak corporate governance and thus was placed under administration on 17 September 2010. The first period focussed on stabilising EWSETA, followed by a recovery period between December 2010 and March 2011. Since then a new board had been appointed as the accounting authority, from 1 April 2011.

A concern in the past had been that EWSETA had focussed more on energy and not enough on water. He said the qualifications provided by EWSETA should be relevant to industry requirements and that the low level of language and numeracy skills in the sector should be addressed so as to allow access to additional training.

EWSETA had signed agreements with the
South African National Apex Co-operative (SANACO) and memorandums of understanding with Further Education and Training colleges (FETs). He said the income levy base derived mainly from the energy sector, which accounted for 91%, while the water sector had dropped from 15% to nine per cent.

Discussion
The Chairperson said that in Mpumalanga people were burning government properties because of water problems. He asked EWSETA to inform the Committee how many learnerships and bursaries were disbursed and what the scarce skills were, that needed to be addressed. He said that where there was an adverse Auditor-General’s report, the CEO and CFO had to follow the law. The Department and the accounting officer, namely the chairman of the board, were responsible for projects.

Mr Bosman wanted clarity on the administration period and whether the board was operational. He said the financial information reflected that no audit had been completed and asked when this would be finalised. He said there was no income statement in the presentation, and this would have provided the Committee with a better picture, He was worried that some sectors had been shifted from SETA to SETA, especially the electrical SETA. Could the SETAs not identify where the electrical SETA had to be placed. He added that electrical companies had been moved to the SETA from a previous SETA but had not been re-registered. Trainees had complained that they did not receive their certificates after undergoing training and it appeared that there was no mechanism within EWSETA to deal with complaints or to sort out inter-SETA issues.

Mr Radebe asked what role EWSETA had played in addressing the water crisis. What criteria were used by EWSETA to differentiate between primary and secondary stakeholders? Did EWSETA participate in the provincial energy forum structures? Could EWSETA clarify its risk management strategies? Had service level agreements for this year been signed?

Mr Makhubele said the strategic plans had not been signed off by the Minister. He wanted to know why there had been a drop from 15 to nine per cent in revenue from water levies.

A member of the Committee asked what EWSETA’s view was on the recognition of prior learning. He said if South Africa did nothing in the remote rural areas it would not succeed in transforming itself. These areas needed to be a priority for EWSETA as these communities needed access to clean running water and energy. What were EWSETA’s plans on this?

Prof Mayathula asked what positives had emanated from EWSETA that he could take back to his constituency. He said that he needed to receive EWSETA’s documents five days before the meeting so as to be prepared. He asked if it was difficult to get agreements with all the FET institutions. He suspected that the numbers in the presentation were a “thumb suck.” What informed these numbers?

Ms Gina asked what measures were in place regarding Adult Basic Education and Training.

Mr Makhubele said the targets given in the plan were given without context.

The Chairperson said
he would call Petrosa and Eskom to the next meeting in connection with learner placements. He hoped that when EWSETA returned they would have contacted technikons, colleges, and universities to identify learners who could be placed. He questioned whether it could be true that South Africa did not know the scarce skills that it needed. He said that EWSETA had to come with strategic plans approved by the Minister.

Mr Senzeni Zokwana, Chairperson of the Board of the EWSETA, said that EWSETA was concerned that companies which trained people needed to take them on board after training. He said it was not just about the training, but about skills having to be transferred. He said he would ensure that EWSETA provided a thorough report. He said the Board was functional and was awaiting the appointment of a CEO.

The Chairperson said t
he Committee would take a strong position on CEO’s and on the need by EWSETA to perform. The Committee wanted content on projects and numbers regarding placements in industries and learning institutions.

Mr Ngobese replied that the drop in the levies from the water sector was because SIC codes had been transferred to another SETA, but these companies would be returning to the EWSETA. They would reply to all other concerns in the adjusted presentation.

The meeting was adjourned.

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