Minister & Department Public Service and Administration on 3rd quarter 2012 expenditure

Meeting report

3^rd Quarter Expenditure Report for the 2012/13 Financial Year: Department of Public Service and Administration briefing
Ms Lindiwe Sisulu, Minister of Public Service and Administration, introduced the 3^rd quarter 2012/13 expenditure report for the Department of Public Service and Administration (DPSA or the Department), highlighting that one of the main items that would be discussed related to the vacant posts.

Mr T Nkontwana, Acting Director General, Department of Public Service and Administration, noted that his briefing would cover firstly the expenditure in the 3^rd quarter, and then outline the measures that the Department planned to address the challenges.

He noted that the DPSA faced many problems which were in the nature of “mountains to climb”. Firstly, there was a need to address the outdated, rigid organisational structure of the DPSA. He quipped that the DPSA was also facing a “Bollywood syndrome” with a number of persons in Acting positions over a long period of time. This was linked to the vacancy rate, which was 10.19% as at 31 March 2013. The Department also showed under-expenditure, for a variety of reasons. In the past, management had not shown good capacity to plan, manage and execute projects, and there was a need to address the core business, and create an  efficient, effective and responsive public service.

In the third quarter, the spending pattern showed under-expenditure of R240.13 million, which represented 33.04% of total budget. Mr Nkontwana tabled slides (see attached presentation) showing a breakdown of expenditure per programme. The Human Resources division had spent 65% of its budget, leaving 35% which was unspent. Overall, all the units had spent 74.98%, leaving just over 25% unspent.

A further breakdown was given for spending per economic classification, as at 31 December 2012. Compensation of employees showed actual expenditure of R147,26 million, leaving R79.43 million unspent. For goods and services, the spending was R106.11 million, but the unspent portion of the budget represented 41%. The transfers and subsidies amounted to R230.69 million spent, but 25% unspent.

The presentation went on to discuss the spending for each programme, in the 2012/13 financial year, and the reasons for variance. Programme 1: Administration had spent 60.58% of its R187.149 million allocated budget. Expenditure in  the 1^st quarter was R27.542 million, with spending of R37.87 million in the 2^nd quarter and R47.95 million in the 3^rd quarter. The under spending on the compensation of employees was mainly due to unfilled vacant posts. The under spending on goods and services was mainly due to the fact that Department of Defence had not claimed the three months salaries for the Ministerial staff who were transferred to DPSA. The travelling costs were also lower than expected in this quarter. The internal Information Technology (IT) unit experienced delays in replacing the server and telephone system. The inconsistencies and delays in receiving invoices from Department of Public Works (DPW) led to under-spending on office accommodation.

Programme 2 related to Human Resource Management. This programme had spent 64.93% of its allocated budget of R38.73 million. The average spending was R2.79 million per month. For the first three quarters, the spending was, respectively, R7.15 million, R9.01 million and R8.98 million. The underspending in this programme was attributed largely to the fact that the date for the hosting of the SMS Conference had been moved from October 2012 to March 2013.

Programme 3 related to Labour Relations and Remuneration Management (LRRM), and the spending here was R20.84 million, out of the total allocated budget R28.14 million. The spending was thus more or less in line with the projections for the quarters, and the spending for each quarter was detailed.

Programme 4 showed spending of R7.13 million against the total R29.38 million  budget. The under-spending was attributed to delays experienced in execution of projects such as the review of the Government Wide Enterprise Architecture Framework (GWEAF), the IT Security Standards framework (MISS), and E-government policy. Delays in receiving invoices from State Information Technology Agency (SITA) for the Gateway Call Centre also contributed to the under spending in this branch. The expenditure for each of the first three quarters was set out (see attached presentation for details).

Programme 5 related to the Service Delivery and Organisational Transformation. Here, there had been spending of R35.33 million of the allocated budget of R53.0 million. The under spending in this programme was mainly as a result of the Community Development and Public Participation programmes being shifted to the fourth quarter of the financial year.

Programme 6 related to governance, excluding entities. This branch had spent R33.73 million of its allocated budget of R65.05 million. The low spending in this programme was  due to the delay in the putting into operation of the Special Anti-Corruption unit. Underspending in the Single Public Service sub-programme was attributed to the fact that the legislative review was still currently under way.

Mr Nkontwana then moved to discuss the use of consultants. The total spending on consultants, according to the preliminary expenditure figures for March 2013, was set out. It was explained that spending on consultants represented 9% of the allocated budget for Goods and Services and 9.8% spending in expenditure under goods and services. The major projects were set out, as follows
- CSIR contract for the Geographic accessibility study (SDOT) R2.9 million.
- Last portion of the PriceWaterhouseCoopers project on LRRM 1.9 million
- Amount paid to Markinor for the development of the concept for the Housing Project
- KPMG conducting of performance audit on the health risk managers R1.5 million. 

The total expenditure on consultants for 2011/12 was R16,34 million.

The presentation then highlighted the vacancy rate as at the 3^rd quarter. The total number of posts was 509, which comprised of 462 filled and 47 vacant as 31 December 2012. A “snapshot” was also given on the vacancies over the whole public service. In December 2012, there were 1.18 million filled posts, but 124 147 vacant posts. By March 2013, the figure was at 1.18 million filled posts and 121 193 of vacant pots yet to be filled. These numbers excluded Parliament, Department of Defence and Social Security entities such as South African Social Services Agency (SASSA).

Mr Nkontwana noted what steps the DPSA had taken to try to address the situation. He emphasised the need for strong, decisive leadership at political level, which had now been provided with the appointment of the new Minister. A new organisational structure was developed and was due to be fully implemented in May 2013. It had been resolved, at DPSA level, to fill all vacant posts and conduct an audit of posts additional to the fixed establishment, to contain costs. The Department would approach National Treasury for additional funding for priority projects for 2013/14. The acting appointments would be brought to an end and permanent staff appointed by the end of the first quarter 2013/14. Instead of relying so heavily on consultants, there was also a resolution to use internal capacity as far as possible to deliver on core business, save where there was no capacity or it was under-skilled.

Ms Sisulu, in conclusion, noted that the Director General of the DPSA was presently in the provinces examining the whole question of vacancies, which explained by Mr Nkontwana was at the meeting. The Director General was compiling a full picture of all the funded vacancies.

Discussion
Mr M Swart (DA)  asked if the internal audit unit was functional, and asked what exactly the internal auditors were doing.

Mr Nkontwana responded that the auditors were effective.

Mr Swart asked how the re-organisation of DPSA in May would affect the 47 vacant posts.

Mr Swart questioned what measures the DPSA had taken to redress the situation, and by when it hoped to have solved the issues.

Mr Nkontwana responded by saying that with the new structure, there would be a need to reconsider posts, and fill the vacant posts. One particular area in which people would be hired was office disciplinary issues.
Mr J Gelderblom (ANC) asked if there were any court cases pending.

Mr Nkontwana responded by saying that there were no court cases involving members of this department.

Mr G Snell (ANC) asked about the issue of Heads of Departments (HODs), questioning for how many years they were appointed. He noted that there were conflicting views on that point, as to whether they should be in place for three or five years, and he asked that the DPSA must look into that.

In relation to contract posts, he said that performance monitoring should apply throughout, and if a person was found to be under-performing should be released even before their term of office ended.

The Minister responded that HODs were vulnerable people in the sense that they were appointed on contract, whereas others in the departments were appointed on a permanent basis. The most important factor was the relationship between the Director-General, Head of Departments, and the Minister.

Ms L Yengeni (ANC) asked if the Department could provide clarity on how the numbers were cited

Mr Masilo Makhura, Chief Financial Officer, DPSA, responded by clarifying that the numbers were stated in millions.

Mr L Ramatlakane (COPE) asked for an indication of what was the main contributing factor to the under-spending. He wondered if it had to do with capacity, and noted that there were a number of instances when the DPSA mentioned that dates had been shifted to the fourth quarter. He questioned why it was still taking so long for the Department to fill vacant posts, and questioned why, given that the main aim was to ensure the filling of posts, the process should not be strictly controlled to make it shorter.

Mr Nkontwana responded that the projections were that all vacant positions were supposed to be filled in four months, but the experience in the public sectors was that this was in fact taking longer.

Mr Makhura added that in some instances it was correct that the money would be spent only in the fourth quarter – for instance, when SACU had not been able to become fully functional this affected the spending.

The Chairperson asked about the relationship between the DPSA and the entities. He noted that in some instances it had been said that the reason why positions had not been filled was that there was not sufficient office space, but asked where the responsibility to sort that issue out lay. The Committee did not want to hear about the projects in the fourth quarter but wanted to focus on the 3^rd quarter.

Mr Makhura responded by saying that entities operated separately from the DPSA, and in fact that the DPSA had no control over their spending. He noted that, in regard to the Department of Defence and SITA invoices, letters had been written to the Directors General of each, and that by the final quarter the DPSA had received the invoices for settlement.

Ms Wilson, Chief Director, National Treasury, noted that the Public Leadership and Management Academy (PALAMA) reported directly to National Treasury.

Ms Yengeni asked that the Minister must look into questions of office accommodation and compensation of employees, and stressed that these issues related to proper planning.

The Chairperson thanked the Minister and delegates.

The meeting was adjourned.