Appropriation Bill [B1-2013]: approval of Bill and Committee Report, National Youth Development Agency 4th quarter 2012/13 performance briefing postponed

Standing Committee on Appropriations

12 June 2013
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

Consideration and Adoption of Committee’s Second Draft Report on the 2013 Appropriation Bill
The Committee continued with its deliberations, started on the previous day, leading to the adoption of the Committee’s draft Report on the 2013 Appropriation Bill. In relation to the findings and observations, there were some suggestions for amended wording, but no substantive changes were made and the wording accepted was aimed at making the document more readily understandable. When going through the recommendations, a decision was made to consolidate the different recommendations for the different departments that dealt with the foremost critical issues of vacancies, municipalities, capacity of departments and use of consultants. Members discussed the monitoring roles of the National Treasury and of the Auditor-General, and pondered how National Treasury could continue to allocate funding without monitoring how departments had spent money in the past. However, the role of the portfolio committees in monitoring this aspect and passing on information to National Treasury was noted. Finally, the Committee approved the amended Report and noted its recommendation that the National Assembly adopt the 2013 Appropriation Bill, without amendments.

The Committee was due to take a briefing from the National Youth Development Agency (NYDA) on its fourth quarter of 2012/13 expenditure and performance. Although the Deputy Minister of the Department of Performance Monitoring and Evaluation was in attendance, together with officials from the NYDA, there was no representation from any executive members of the Board, nor were any written apologies tabled from the Board. The Chief Executive Officer was not well and was unable to attend. In view of the lack of representation from the new Board, the Committee unanimously decided to postpone the presentation of the quarterly report, noting that they wished the good relationships with the Board, started at the previous meeting, to continue, but the Public Finance Management Act was quite clear on the responsibilities of the Accounting Officer. The Deputy Minister apologised for any inconvenience, but fully understood the Committee’s position. He assured the Committee that there was no intention to undermine or disrespect the dignity of the Committee. The briefing was postponed until Friday 21 June 2013.

Meeting report

2013 Appropriations Bill : Committee draft Report: Continuation of Committee deliberations and adoption
The Chairperson asked Members to start commenting on the Findings and Observations section of the report, specifically point 5.2 and asked for a more detailed explanation of this statement. 

Mr M Swart (DA) said that poor and under-resourced municipalities could not readily respond to incidents of disaster, due to the lack of urgency in making payments by the Department of Cooperative Governance and Traditional Affairs (COGTA). The statement was duly amended to reflected Mr Swart’s views.

Members agreed upon Points 5.3 and 5.4 under the same heading. The Committee Secretary pointed out that 5.5 was a repetition of a section of 5.1, so it was deleted from the report.

The Chairperson asked for clarification on Point 5.6.

Mr Swart replied that the statement was correct, because 43% of the revenue collected nationally was transferred to provinces.  Once that money had been paid out, there were no guarantees that the money would be properly appropriated to meet national priorities or public objectives.

The Chairperson stated that, according to the report of the Auditor-General (AG), there was a high rate of employment of consultants across government, and not only for implementation of infrastructure.  Statement 5.7 was thus amended to apply to all government departments.

The Chairperson said that it was easier for those who were part of the hearings to follow, and asked if 5.8 could be amended to make it more clearly to everybody present.  The statement was amended by naming the stakeholders in the water delivery sector.

Points 5.9 and 5.10 were agreed upon, although the Chairperson said that there was a need to clarify these observations so that they could be made more understandable to everybody.

The Chairperson said, in relation to point 5.11, that it was understood that the funds referred to by the Nuclear Energy Corporation of South Africa (NECSA) were R1.6 billion. He felt that this Report should rather state what NECSA was doing with the money, as opposed to what it was not doing. 

The Committee Secretary replied that there were a number of things listed.

The Chairperson stated that the money was for setting up infrastructure to do investigations and there should be a broad or generalised name for this aspect. When the Committee Secretary suggested using the generic term “research”, the statement was duly amended by Members.

The Chairperson asked the Committee then to turn to the recommendations section. He noted that point. 6.1.1 was in the Appropriations Act, and could be deleted.

Ms N Mkhulusi (ANC) asked if it was only applicable to infrastructure programmes, or whether it referred to planning as a whole.

The Chairperson replied that the point he was making was that it should not be included as a recommendation if this point was already set out in the Act.

Ms Mkhulusi understood that, but said that in practice the Act was not being properly implemented and the wording in the Report should show how it would be “enterprised”.

The Chairperson said that it should be measured by progress the department made, in terms of implementation.

The Chairperson referred to 6.1.2 and said that the Auditor General and the Public Service Commission were currently doing what was set out there. The ‘past performance’ implied that it was no longer National Treasury’s (NT) responsibility.

Ms Mkhulusi said that as much as it was the Auditor General’s responsibility, NT should have its own records.

The Chairperson said that it could be included, but every department had its own responsibilities and was being measured and judged upon those responsibilities.  He asked if this was perhaps an issue that should be properly engaged on.

Mr Swart proposed that this recommendation be deleted.

The Chairperson acknowledged that it was an important issue, and all Portfolio Committees had the responsibility to measure the Annual Performance Plans of the departments that they oversaw. However, if this was an issue from the past, the Committee did not want NT coming back and saying that it was not its responsibility.

Mr G Snell (ANC) said that whilst this may not be a particular Treasury responsibility, he did believe that, for the future, it was indeed the responsibility of NT to ensure that when allocating funds for the future, it must check that funds previously allocated had been spent correctly. He asked what Treasury decision making processes were. If NT was being told on a regular basis if departments were not meeting their Annual Plans, then he wanted to know what was being done.

The Chairperson replied that there were clear responsibilities for NT as well as other arms of Government. He stated that he understood the importance of the Annual Performance Plans, but the Auditor General was responsible for auditing and progress reports.

Ms Mkhulisi understood that the AG would give a factual account of money spent, but NT allocated funds based on proposed plans, and did not monitor past performance.  She asked how Treasury could allocate funds to a department without referring to a legacy or record of past performance as a guideline. 

Mr Swart said that the Public Service Commission presentation had referred to 2011/12, because there was no up to date information available to NT. It was the responsibility of the Portfolio Committees to monitor departments’ performance in terms of their Annual Performance Plans.

The Chairperson said that he was not very familiar with the regulations. However, he cited the Public Finance Management Act (PFMA), which stated, in section 55(2)(a) that the annual reports and financial statements referred to in subsection (1)(d) must fairly present the state of affairs of the public entity, its business, its financial results, its performance against predetermined objects and its financial position as at the end of the financial year concerned.

He said that he was not sure whether the Committee wanted to shift the responsibility back to NT, because the role of the Auditor General was embedded in the Constitution, but the Annual Reports came to Parliament. He was inclined to agree with the view that this statement be removed.

Mr Swart said that was what he proposed.

The Chairperson agreed.

The Chairperson then referred to recommendation 6.1.4, and said that it spoke to the division of revenue, and the issue was very clear.  He proposed that the whole of 6.1 be removed.

Mr Snell stated that he understood the rationale behind the suggestion to delete those statements, but he asked what NT was doing to ensure that Departments adhered to legislation.

The Chairperson replied that different departments had raised the issue of concurrent functioning.  He referred to the division of revenue and the fact that R726 million that was supposed to go to municipalities but was withheld by the National Treasury based on indiscriminate spending, which was an issue of contention at present. He cited the Constitution’s section 154(1), which stated that the national government and provincial governments, by legislative and other measures, must support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions.

He then referred to page 8 of the Committee’s draft Report, and spoke of the role of National Treasury in strengthening the skills and capacities of municipalities. The 2013/14 Appropriation Bill allocated R763.6 million for local government capacity improvements, which had included the Municipal Systems Improvement Grant (R240.3 million), Infrastructure Skills Development Grant (R98.5 million) and the Local Government Financial Management Grant (R424.7 million). He agreed that some of those appointed to positions within municipalities were not suitable to handle the grants, and he agreed that there was a lack of oversight that could support National Treasury and the Auditor General.

The Chairperson then referred to 6.2.1 and proposed that Section 216 of the Constitution and Section 39 of the Municipal Finance Management Act be adhered to, but suggested that those sections should be read again.

The Chairperson next referred to 6.2.2 and amended the statement, in conjunction with Mr Swart, to read:  “That the Department of COGTA expedites the payments of disaster grant funding to ensure that the poorest and most vulnerable of municipalities were not prejudiced by unnecessary red tape in the application for Disaster Grant Funding.”

The Chairperson moved to recommendation 6.2.3.

Mr Swart said that it would be difficult for smaller municipalities that had to do infrastructural work to minimise their use of consultants. For this reason, he proposed amended wording, reading: “That the Department of Public Service and Administration (DPSA) ensures that all national departments minimise the use of consultants, and have service delivery models in place that prioritise the utilisation of internal capacity.”

The Chairperson said that there was an Act that addressed this issue but he could not remember which.  He agreed with the proposed amendment.

Ms Mkhulusi proposed that recommendation 6.3.1 should be removed, because the DPSA had already started setting up a structure on this issue.

Mr Swart proposed that the wording read rather that it should be expedited.

The Chairperson cross-referenced this to page 8, in the third paragraph, of this Report and agreed.

The Chairperson proposed that recommendation 6.3.2 be removed, as the DPSA was working on the matter.

The Chairperson then moved on to discussion on recommendation 6.3.3.

Mr Swart said that people could not be appointed if the posts were not listed in the establishment of posts, and proposed that it be deleted.

Mr S Van Dyk (DA) asked if it was necessary to have recommendations for each department. He wondered if the Report should not consolidate everything into a global recommendation, with five or six points.

The Chairperson replied that this point had been proposed on the previous day.

Mr L Ramatlakane (COPE) noted the request to summarise the recommendations, and said he had found four critical issues that ran across all departments, which he believed were:
- Vacancies – and here he suggested a list of the departments affected
- Capacity of Department, where the skills and shortage of skills should be highlighted
- The points about municipalities, including lack of capacity, withholding of money and so forth, by Treasury, - Consultancies, where it was clear that lack of capacity resulted in money spent on consultants

He stated that summarising the matter in this way would avoid repeating the same recommendations for different departments. Had he arrived earlier at the meeting, he would have suggested this straight away.

The Chairperson agreed but stated that the Committee would not go back on the areas already covered in the Report before he arrived.

Mr Swart asked if Mr Ramatlakane had a copy of the suggested wording for the recommendation, and thought that if he did, it could simply be inserted.

Ms Mkhulusi referred to skills transfer, and said that it could be incorporated under the Vacancy recommendation. It was a point affecting most departments.

The Chairperson said that the Committee had looked at National Treasury’s Quarterly Report and the departments had not filled certain posts.  The Committee had asked in the past that officials from NT should be present in these kinds of meetings so that they could give input.

The Chairperson asked Mr Ramatlakane if he had wording for the recommendations.

After Mr Ramatlakane produced suggested wording, the Committee proceeded to deliberate with a focus on the responsibilities of the different departments, and came up with the following six recommendations:

”6.1  That the Department of Public Service and Administration ensures that the filling of funded vacancies is prioritised by all departments in line with the Public Service Regulations and as per the directive of the President.

6.2 That the Department of Public Service and Administration expedites the process of doing away with the five-year time bound performance contracts for top management, and link contracts to performance.

6.3 That the Department of Public Works develops a framework for long term skills transfer and development in partnership with institutions of higher learning, industry professionals and other stakeholders in the roll-out of infrastructure programmes.

6.4 That the National Treasury and the Department of COGTA ensure that the prescripts of Section 216 of the Constitution and Section 39 of the Municipal Financial Management Act (MFMA) are adhered to, in any consideration to withhold funds from municipalities.

6.5 That the Department of COGTA expedites the payments of disaster grant funding to ensure that the poorest and most vulnerable of municipalities are not prejudiced by unnecessary red tape in the application for Disaster Grant Funding.

6.6 That the DPSA ensures that all national departments minimise the use of consultants and have service delivery models in place that prioritise the utilisation of internal capacity.”

The Committee, having finalised the draft Report, with the amendments, then turned to the Committee report, which the Chairperson read out, and which stated that the Standing Committee on Appropriations recommended that the National Assembly adopt the 2013 Appropriation Bill without amendments.

The Committee agreed.

The Chairperson noted that some of the figures in the report were not correctly rounded off, but said that this would be fully corrected and the final, corrected, version would be made available.

National Youth Development Agency Expenditure and Performance as at the end of the Fourth Quarter of the 2012/13 financial year: Briefing
The Chairperson welcomed the Deputy Minister of Performance Monitoring and Evaluation, and the delegation from the National Youth Development Agency (NYDA). He acknowledged a written apology from Mr Collins Chabane, Minister in the Presidency: Performance, Monitoring and Evaluation, for his absence, as he was attending a Cabinet meeting.

The Chairperson noted that the President had, on 1 April 2013, appointed the new Board of the NYDA. There had been no representation from the Board and no apology for the failure to attend. The Committee expected at least one of the executive members to be present as an Accounting Authority in terms of the NYDA Act.

Mr Obed Bapela, Deputy Minister, stated that the delegation present was what he would describe as the “fourth level in the chain of command”.  He acknowledged that the Chairperson and the Deputy Chairperson of the NYDA were not present, but said he was not sure if apologies were given. The Chief Executive Officer had sent a message that he was not feeling well and he would not be in Cape Town, the Chief Operations Officer was presently suspended and his post not filled until the matter was resolved, but the Chief Financial Officer would present on the accounting in the Fourth Quarter Report.  He hoped that the fact that he himself was present would serve as an indicator that the NYDA indeed respected the work done by the Committee, and that those present would be given the opportunity to give the briefing.

The Chairperson replied that whilst the Committee appreciated the presence of the Deputy Minister, there were some practical problems. Firstly, in terms of the Public Finance Management Act, the Chief Executive Officer should have presented an apology in writing, if not able to attend. He noted that section 44(1) of the PFMA said that the Accounting Officer for a department, trading entity or constitutional institution may, in writing, delegate any of the powers entrusted or delegated to the accounting officer in terms of this Act, to another official in that department, or instruct any official to perform any duties of the Accounting Officer. Anything done under those delegations could be confirmed, varied or revoked in terms of section 44(3), subject to considerations around vested rights.

Mr Ramatlakane, speaking for his party, COPE, welcomed the Deputy Minister. He fully agreed with what the Chairperson had cited on the PFMA wording. He said he would not like the good start the Committee had with the new board of the NYDA to be compromised, and he therefore proposed that the meeting be rescheduled to the next available date.

Mr Swart, on behalf of the DA, also thanked and welcomed the Deputy Minister, and agreed with Mr Ramatlakane that it would be difficult to continue the meeting. The new Chairperson and Deputy of the Board were instrumental in revamping the Annual Performance Plan, and the budget of the NYDA would be approved in the afternoon, based on the new Annual Performance Plan, without any members present to defend it.

Other Members of the Committee questioned what he meant, and he corrected his statement to say that the budget that would be passed in the afternoon had been previously presented by the NYDA, but that he agreed that the Fourth Quarter expenditure could not be presented without the Board being present.

Ms L Yengeni (ANC) welcomed the presence of the Deputy Minister and acknowledged the apology from the Minister. She agreed with Mr Ramatlakane and Mr Swart, and proposed that the meeting be rescheduled.

The Chairperson cited the PMFA, section 40(5), reminding Members and the Deputy Minister that if an accounting officer was unable to comply with any of the responsibilities set out in this part of the Act, the accounting officer must promptly report the inability, together with reasons, to the relevant executive authority and treasury. This apology, similar to any delegation of authority, had to be in writing. He apologised to the Deputy Minister for any inconvenience caused, but stated that the Chief Executive Officer had been in that position for the past four years, and should know the procedures. The Committee supported the NYDA budget, the new approach and the board, but the Committee could not proceed under these circumstances.

After deliberations by the Committee, the briefing by the NYDA 4th quarter expenditure and performance was postponed to Friday 21 June 2013 at 09h00.

The Deputy Minister thanked the Chairperson for bringing up the issue and he fully respected and acknowledged that the proper procedures as dictated by the PMFA must be followed. He apologised for any inconvenience to the Committee and said that at the next meeting, the Chairperson or his Deputy, or the Chief Executive Officer, should offer an explanation for the mishap, so that it was clear that the intention was not to undermine or disrespect the dignity of the Committee. He fully agreed with Mr Ramatlakane that the good start the new board had with the Committee should continue and not be compromised. The focus must be on issues of youth development, how the Board would inspire the youth, and the new vision of the NYDA, along with recognition and addressing of high unemployment rates and lack of access to government services. He agreed to the postponement, apologising again for the inconvenience of rescheduling and assured the Committee that this would not happen again.  He apologised in advance for not being able to attend the upcoming meeting, as he would be travelling to Tanzania.

The Chairperson said that the rules regarding apologies had been stated, but thanked the Deputy Minister for the courtesy of letting the Committee know.

The Chairperson again confirmed the postponement to 21 June, and mentioned that the Committee would like a workshop with the NYDA’s new board so that there was mutual understanding. It was in the Committee’s interest for the NYDA to succeed.

The meeting was adjourned.


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