The Financial and Fiscal Commission (FFC) briefed the Committee on the budget and strategic planning, spending patters and findings in relation to the health sector. The Department of Health’s mandate included increasing the life expectancy rate, decreasing the maternal and child mortality rate, the burden of HIV and TB and the role of the National Health Reform. FFC said the Health performance levels in South Africa were very poor compared to its counterparts in other countries. The Department fell short of attaining the Millennium Development Goals. There were six working programmes, and R30.7 billion budget, of which maternal and child health care and hospitals comprised the largest spending, because of the high level of disease and lack of infrastructure in the country. On aggregate, there was 99.25% spending, with the main under-spending in primary healthcare and health and compliance management. The conditional grants were performing fairly well, except for reporting on performance. The National Health Insurance (NHI) grant, however, had not produced audited financial information in this year, and the problems largely were attributed to insufficient planning before the grants were introduced. If the grant continued to under-perform, this would have very serious consequences for the NHI. The FFC had recommended a merging of different grants that essentially dealt with infrastructure, but its assessment now indicated that this had not solved the problems. Although the DOH itself had an unqualified audit report, six provinces had a qualified report, and Limpopo and Northern Cape had disclaimers. There were concerns about leadership instability, staff not held accountable, wasteful expenditure and unauthorised expenditure. Performance reports were not directly linked to the outcomes and there was also poor reporting of data on the HIV and AIDS grants, and revitalisation projects faced delays and budget inconsistencies that resulted, for instance, in a new hospital produced but no budget to run it. Hospital waste was not properly disposed of, and there were poor response times for emergency calls. Provincial budget allocations were inconsistent and sometimes the districts with the highest burden of disease received the lowest budget. FFC recommended that government must extend the efforts to reform by taking the burden of diseases into account, and emphasise HIV and AIDS programmes, to try to reach Millennium Development Goals targets. Lack of norms and standards was a very serious problem that further led to disparities. Interventions were needed to address the underlying causes of poor performance and to try to improve accountability.
Members appreciated the presentation but commented that many of the matters commented upon were long-ongoing. They asked if distance and populations were taken into account when calculating the budget. Auditor-General had raised. They wondered if the FFC had presented this advice to the DOH itself, what its findings were on the impact of budget reductions, asked what the impact of raising the life expectancy would be on targets, urged that reductions should be targeted to specific programmes, wondered how the problems with the Department of Public Works’ problems in managing infrastructure impacted on the DOH and commented that other departments, such as the Department of Transport, should also be involved. Members were concerned about the Primary Healthcare allocations, noted that there were insufficient clinics, and urged more monitoring and accountability. They asked why there was no reporting on the NHI and new grants, and were concerned that there was not real transformation in the rural areas, and how the allocations to heath could improve.
The Auditor-General (AGSA) reported an unqualified audit for the Department of Health, but it still faced challenges, as a result of being neglected for many years in the past, but was aware of, and trying to address the problems. Several of its entities received qualified reports and some failed to meet targets. The Medical Research Council (MRC) had an unqualified audit. The National Laboratory Services had regressed, to an unqualified audit with findings. The Commission for Compensation for Occupational Diseases (CCOD) had not submitted accounts for the last two years, was trying to update its huge backlogs of data but needed more funding. Provinces, apart from North West and Western Cape, had problems, although there were some improvements seen from new leadership; where leadership was unstable, this would be a challenge for the future. Limpopo’s procurement was satisfactory in cases where it was overseen by the administrator, but there was irregular expenditure where the facilities themselves procured. Northern Cape had finally managed to improve on eleven years of disclaimers. One of the major challenges remained with supply chain management. Although it still seemed large, at R855 million, the levels of unauthorised expenditure had dropped. Irregular expenditure by Department of Health accounted for 25% of the country’s irregular expenditure, but there was hope for the improvement of the sector.
Members appreciated the report, asked if AGSA was paid for auditing in the provinces, and about its interaction with DOH to solve the problems, and how it could ensure implementation of recommendations. Another Member, however, said that this was a direct challenge to the Committee to ensure that it monitored more stringently, although the Chairperson pointed out that this Committee’s ability to monitor the provinces was limited. AGSA agreed and said that this was a concern it would be raising in its annual report. Members asked about the irregular expenditure, the role of the State Information Technology Agency, use of consultants, and agreed that CCOD was a serious concern.
The South African Medical Research Council (MRC) briefed the Committee on its 2012/13 Annual Report, noting that it had received an unqualified audit, and remained focused on building a healthy nation through research and innovation. Its progress had been stagnated by the lack of funding from government, and it was presently obtaining about 75% of its funding from donors in the USA, including the Gates Foundation. MRC had been through a revitalisation process, and announced some significant successes, internally and externally. It had managed to reduce the number of policies, had reduced its targets to speak more directly to the new strategic objectives, had hired consultant to help it with staff and space design, and had a number of significant research findings, including development of a new malaria vaccine, in conjunction with the University of Cape Town, and some significant findings that may lead to a HIV and AIDS vaccine. It was concentrating on the Top 10 causes of death.
Members asked what MRC was doing to help transformation in the health sector, would recommend more support, but hoped it could move closer to government and help with policies. Members asked what the implications would be if the USA ceased funding, and asked about collaborative research with the rest of Africa, other institutions, and pharmaceutical companies. They wondered to what extent it took millennium development goals into account, asked about risk management, if there had been any fraud, and urged it to remain accountable.
Health budget and financial position: Financial and Fiscal Commission (FFC) briefing
Professor Daniel Plaatjies, newly appointed Commissioner, Financial and Fiscal Commission said his presentation would analyse the past budget and spending trends of the Department of Health (DOH or the Department). FFC was available to come back to the Portfolio Committee and speak also on the efficiencies within the allocations and budgets
The health sector accounted for about 4% gross domestic product spending in 2012/2013 and this was expected to take a slight drop from a 4% to 3.9%. The figure was below the 5% of GDP recommended by the World health Organisation. The decline was attributed to the slowing down of the award of conditional grants, and budget of the Department of Health, and the Departmental demands as envisaged in Chapter 3 of the National Health Act which also spoke to Home services and programmes, norms and standards of health and the coordination of the Financial Fiscal Commission.
Ms Nomonde Madubula, Senior Researcher: Fiscal policy, FFC, said that in terms of the National Service Delivery agreement signed between the President and the Minister of Health, the DOH was expected to focus on four strategic points:
-increasing the life expectancy to 70 years by the end of 2013, a rise from its present 55 years|
-tackling the high maternal and child mortality rate
-addressing the burden of HIV disease associated with TB
-focusing on National Health Reform, which included strengthening of the primary health care.
The health sector’s performance was relatively poor in comparison with other countries at the same level as South Africa, despite a lot of money being spent on this Department. Particularly striking was the high maternal and child mortality rate and the low level of life expectancy. The health sector was also faced with a problem of violence related injuries, non communicable diseases, infrastructure negligence, and poor management of facilities – such as emergency transport.
The DOH targets were in line with the Millennium Development Goals (MDGs), although it was aware that it was far below reaching them. It intended, by 2014, to reduce the maternal mortality rate drastically, by 270 per 1000 live births, and infant mortality must also be reduced. It had six programmes with a total budget of R30.7 billion. Programme 1: Administration, dealt with management of the Department and support. Programme 2: National Health Planning Insurance was about the financing reforms, with a budget of R11.29 billion. Programme 3 focused on HIV, TB, Maternal and Child health. Programme 4: primary health Care received a budget of R109.4 million. Programme 5: Hospital and tertiary health services and Human Resources (HR) had a budget of R17 billion. Programmes 5 and 3 accounted for the largest chunks of the budget, because of the wide-spread prevalence of disease in the country. The Department was in the process of upgrading hospital and tertiary health care facilities to deliver services efficiently. Programme 6: Health Regulation and Compliance Management had a budget of R754.1 million. This was meant for regulating medicine, accountability and for compliance purposes.
The largest slice of the budget related to transfers and subsidies to provinces and municipalities, as well as transfers to the academic programmes in which the Department was involved, up to 92% of the budget. The least portion was taken by the expenditure on goods and services, payment of capital assets and compensation of employees. In relation to spending in 2013/14, provinces would account for over 90% of the budget, because they were the implementers of the national policies. Local government took a small portion of the national budget. Provincial health expenditure covered eight programmes. In 2012/2013 provinces were spending fairly well, and real growth rate in the provinces, judged on spending, had improved, by 7% per annum between 2005 and 2011. However, in 2010/2011 it was at 4%. In the remaining two years between 2011 and 2013 the real growth rate had now dropped in the provinces. Provinces faced problems in delivering services, because of lack of a standard methodology in the distribution of the budget. Provinces were spending approximately 60% of the budget on compensation of employees, and the rest was allocated to the health care facilities.
The aggregate spending progress for the six programmes was fairly good, at 99.25%. Under spending had mainly been in the two programmes of Health Regulation and Compliance management and Primary Health Care (PHC). This was because the setting up of the Standards and Compliance offices was delayed, and because, in the PHC sector, there had been late delivery of influenza vaccines. Some provinces, especially Eastern Cape, Gauteng, Limpopo and Northern Cape, showed over expenditure with disparities in performances. There were no ring-fencing mechanisms when funds were transferred for a specific purpose, so the spending was not always in line.
Mr Eddie Rakabe, Programme Manager: Fiscal Policy, FFC, spoke to the Conditional Grant performance. There was, overall, relatively good performance, except for the National Health Insurance (NHI) Grant which was introduced two years ago. The conditional grants that were now performing a lot better were those administered by the national department on behalf of the provinces. Under performance was attributed to the direct transfer of money to the provinces by the Department. There was lack of information in the spending outcomes – so that whilst there might be good performance, there was no information to back that up. Direct grants have a higher provincial spending than indirect ones. The average aggregate spending of all conditional grants was about 90%.
The FFC was particularly concerned about the insufficiency of data to assess the performance of conditional grants, especially those most recently introduced. In several cases there was no reporting for two consecutive years after the grant was introduced in a bid to bridge the revenue gap. There was a practice of merging under-performing grants even where there was no underlying performance data. Last year, three national conditional grants were merged into a single infrastructure grant, as they had all related in some way to infrastructure. However, there had been serious under-performance. The FFC’s analysis now suggested that merging was not a particularly good solution.
There was a very serious problem of under spending in the NHI grant introduced two years ago, with no audited financial information on this grant for 2012/2013. The reason given for this was the grant was still new. This problem resulted from the way these grants were introduced, without proper planning preceding the introduction of the conditional grants, which also inhibited timely performance of useful data. For the current Medium Term Expenditure Framework (MTEF) allocation, the NHI grant budget was R291 million, with R420 million and R440 million in the next two years, for the ten districts selected for piloting the National Health Insurance scheme. If the grant continued to under perform it could undermine the implementation of the national health insurance in the future.
The FFC noted that it was happy that the DOH had an unqualified audit report from the Auditor-General South Africa (AGSA). However, qualified reports were received in six provinces: KwaZulu Natal (KZN), Gauteng, Eastern Cape, Free State, Mpumalanga and North West. Limpopo and Northern Cape had disclaimers. There were concerns at the inability of the sector to demonstrate improvements, leadership instabilities in the Department, and staff not being held accountable for the poor performance. There was also some level of wasteful expenditure and unauthorised expenditure which contributed to the Auditor General’s findings in some of the influential units of the Department.
The key findings were that in the HIV/AIDS grant there were weaknesses in identifying and reporting performance data which should ideally drive the allocation to the various beneficiaries of the anti-retroviral treatment (ART). Spending performance information was given, but this was not linked to the actual outcomes of what the grant sought to achieve. Hospital revitalisation continued to experience high levels of delay in completion of projects and in certain cases infrastructure was not correctly identified. This was confirmed in one of the studies undertaken by the FFC, which indicated that a hospital in East Rand was built, but no budget allocated to run it. Expired medication and hospital waste was not properly disposed of. This had hazard and disciplinary implications. There was low response time to emergency calls.
On the audit side, he repeated that there were, in some provinces, qualified and disclaimer reports. There was non compliance to supply chain management procedures. Poor health outcomes put South Africa’s health targets way below the MDG. Discrepancies in provincial spending translated into disparities in district funding. Surveys done showed that districts which had a higher disease burden received the lowest budget allocations, the opposite of what should be happening. There was policy uncertainty, and the spending discrepancies on NHI would negatively affect the rollout of the NHI programme.
FFC recommended that government must extend the efforts the reform the health situation by taking into account the burden of diseases, as this was the area creating most budget pressure. For example, in Kwa Zulu Natal, there was insufficient money to cope with the TB epidemic. In relation to MDG targets, the FFC recommended emphasis on and protection of programmes combating AIDS and it urged that when budget cuts were made, they should not be made indiscriminately, but targeted specifically, so that programmes key to the attainment of the MDGs, such as combating HIV and AIDS, should be protected.
FFC had on several occasions commented on the lack of norms and standards for the funding and delivery of health care. This had become a very serious problem and led to disparities in the levels of service delivery for the provinces. There was information from the provinces claiming that budgets were inadequate to cater for their health care needs but because there were no norms and standards against which the budgets were evaluated, it was not possible to tell if this was correct. Consolidation of the grants had been symptomatic of the poor performance and interventions were needed to address the underlying causes of poor performance and to try to improve accountability.
Professor Plaatjies said that the efficient use of the budget was a key aspect that FFC wanted to examine further.
The Chairperson said the reason why the Committee wanted to speak with the FFC and AGSA was to determine how the Department of Health should be funded. He said that the Committee would be asking FFC what recommendations it was making to National Treasury. For example, he wondered if the distances people had to travel to access medical healthcare services were taken into account when setting budgets. It seemed, from this presentation, that government was actually failing to follow some of its own policies. For instance, he had noted most of the money going to hospitals, which was contrary to the policy of government to focus on PHC. Ms Nomonde had confirmed the big discrepancy in the money allocated to provinces as confirmed by Ms Nomonde. Information from the national offices was not similar to the information got from the provinces where the work was actually done, and where the bulk of the money was being spent. He needed clarity on all these issues.
Ms M Dube (ANC) wondered why did the presentation of the FFC included comment on the report of the Auditor-General, who would be presenting separately. However, given that this was included now, she wondered what the findings were of FFC on the issues which the Auditor-General had raised.
Ms P Kopane (ANC) noted that the mission of FFC was to provide pro-active advice and independent advice. She asked if, at any stage, the FFC sat down with the Department and come up with the kinds of recommendations now presented to the Committee. The Committee had already heard of the problems highlighted here, but the Committee was actually looking for a way to move forward. She thought that parallel mechanisms were needed, to solve these problems once and for all.
Mr D Kganare (COPE) believed the work of the FFC was to do research that would allow it to report to National Treasury (NT) on the allocation of the budget. He asked what were the FFC’s findings on the budget reductions and how they had impacted on service delivery and the quality of health care. He asked for clarity on the statement that South Africa’s health performance was low. Had FFC given any advice to NT in terms of reducing over-expenditure in the Department of Health? He wanted to know more about infrastructure negligence and any recommendations made to ensure this was addressed? He noted, in this regard, that the Department of Public Works was supposed to deal with infrastructure, but there were many problems and each department had been told to start looking at whether it might manage its own infrastructure.
Mr Kganare asked how the 70 year life expectancy target was going to be achieved. When people got older, they became more sickly, and this would then also impact on social benefits and provision of health care, so he wondered if this impact had been taken into account.
Ms M Segale-Diswai (ANC) would have appreciated the presence of the Department of Health at the meeting, because some of the questions related to it. She asked what advice and recommendations had been made by FFC on budget allocations, and she wondered, for instance, how the Department would achieve its targets on PHC, given that it was fifth in line for funding. She asked what yard stick was used in the allocation of budget for the provinces, to enable them to deal with their particular problems. She concluded from this presentation that the bulk of the funding when to Gauteng and Western Cape whilst provinces like Limpopo and Eastern Cape lagged behind. She asked how often the Commission interacted with the Department.
Ms Segale-Diswai said that the presentation on the findings of the Auditor-General seemed like a “cut and paste” exercise, because the same issues around the reliability of data given, revitalisation, contract delays, improper disposal of medical waste, and low response in emergency situations were being raised again. They had been in existence even before she came to Parliament and was still working as a professional nurse. Recommendations had been made year after year, but she wondered if anyone was actually implementing those. If the same thing continued, hoping for different results, which were not achieved, then this was like pouring water into a leaky bucket. She commented that sometimes failure were confused with challenges – she believed that challenges were something to which there was no solution, but believed that what had been outlined was actually failure to act. She repeated that the DOH should have been at the meeting to answer on this point. However, she would use the FFC comment and Annual Report to pose questions to the Department. She knew the work of the FFC was limited to making recommendations; it was sad that nobody was doing anything.
The Chairperson said that the FFC and AGSA had been called to help the Members prepare for their meeting with the DOH. It was unfortunate that DOH was not present, but what had been raised here could be put as questions to the DOH. The budget was a major political tool to transform. However, it seemed that the budget was not being used properly to transform the health services in South Africa. There was lot of money going into the health sector, but the outcomes were not good, particularly in the rural and the peri-urban areas where insufficient money was given. Infant and mother mortality was also mostly found in the rural areas. The problems in those areas had not been addressed. He was worried that more money was given to hospitals when people needed to be treated at clinics.
Ms D Robinson (ANC) confirmed that all Members were very concerned of the lack of outcomes, yet money had been allocated for health services. She agreed that there was particular concern with PHC being allocated less budget, despite the fact that this was where the masses were involved. There were not enough hospitals and clinics. In addition, many women in labour never got to medical clinics because of poor roads and infrastructure. She believed that the problems were not only in the health sector, but various departments had to pool their efforts to ensure real health outcomes. There needed to be more monitoring, and more people held accountable, checking if they were working, performing, doing the jobs they were supposed to do and using the tax-payers’ money wisely.
Ms Robinson did not think all the answers would be found today. She suggested the need to look at the roles of the FFC and AGSA, who were doing a great job, but somebody else needed to be out there, in the provinces, where there was very poor management and a need to address it. She remained concerned at the lack of a cancer registry, and other basics. She said that there was a need to find out exactly where the problems emanated, where research would be applied and where the money must go. She thought the presentation touched the surface but did not reach the root causes.
Ms B Ngcobo (ANC) enquired whether FFC looked at health alone, or health in combination with other services to the poor and rural. This presentation seemed to focus on the urban setting. She noted that the outputs were not as they should be, and asked whether the budget was adequate. She wanted more detail on the life expectancy figure of 55 years, asking if this was a general calculation. The Medical Research Council (MRC) had said that life expectancy was improving, to up to 60 years, and she asked if this was taken into account. She thought that NHI was still in its early stages, and it was never easy to plan for a pilot project. She was not trying to defend the Department but thought it was unfair if funding was not used correctly because of poor planning. She asked if FFC had made any specific recommendations to the Department of Public Works – which was a thorn in the side of other departments also. She asked how seriously government took the recommendations from FFC? She concurred that there was repetition of the audit issues, but said that when it came to the Auditor-General’s recommendations, the Minister of Health had actually dealt with those recommendations and managed to correct some areas.
Ms T Kenye (ANC) said that Members were very concerned with lack of documentation around the NHI implementation, and the under-spending that could compromise the implementation and role of NHI. She agreed with the Chairperson that this presentation was useful in providing information in preparation for the discussions with the DOH, particularly on under-performance. She wondered however, why there were no recommendations on NHI and the PHC services, and why some programmes were allocated more than PHC? This allocation undermined PHC. She wondered why the same problems of under staffing, low response rates and poor infrastructure were still cited, as they had received specific budget to correct them in the past years. She asked for FFC’s recommendations on the problem of low response rates, and other findings, and what would be needed to correct this.
Ms Kenye noted that expenditure in this Department was always between 95% and 97%. She asked about the specific reasons for the audit disclaimer and the continued qualified report for all the six provinces, and said that FFC should have a specific recommendation to help the provinces move away from this.
Ms C Dudley (ACDP) asked why there was no reporting for two consecutive years for new grants and why there was such serious under spending on the NHI, as well as who was responsible, at the end of the day, to ensure the availability of the reports.
The Chairperson enquired whether FFC had engaged in talks with the Department. He thought the Department was employing some people who did not know what they were doing, and did not know how to transform South Africa. He noted that FFC was not employed to look at the health indicators, but made recommendations on what it was told by the DOH, and he wondered then if the DOH itself knew what it must achieve, and was able to convince the FFC on health matters. He noted his concerns about under spending in the provinces. The country spoke of “transformation”, but the main health problems were found in the rural and the peri-urban areas. Looking at the spending now, work in the provinces was lacking. However, he noted that the fact that records had not been produced was not necessarily a failure to do the work, and asked if the work was actually being done. FFC had been helpful, but he needed suggestions on how to address the problems in the Department. He understood that some of the questions asked may be beyond the FFC’s mandate, but asked for referrals to the relevant body in those instances.
Professor Plaatjies said the questions related precisely to the point on how to ensure health spending delivered the desired outcomes. The FFC was not going to reply to every question individually, but would categorise the answers to questions that related to allocations, service delivery matters, performance, strategic liaison and spending capacity.
Professor Plaatjies agreed that the AGSA report was simply repeated by the FFC, and that the same trends continued. If the Committee looked at the spending trends it also needed to look at what had been provided. The questions relating to the Auditor General would be left to the Auditor General, but it was good practice for FFC to have recourse to these reports.
He agreed that the geographical distances were a key factor in terms of the financial allocations and the service delivery, for it must be remembered that getting health service to the people in Northern Cape, Eastern Cape and the bigger rural provinces cost more than health services in the city and urban areas, for a number of reasons, including the cost of transport, and the infrastructure investments that were needed. The FFC did recommend, in 2001-2004, a “cost advance approach”, which would have helped to deal with the funding disparities between provinces, within provinces and in certain geographical areas. National Treasury had argued, at the time, that there was insufficient data on demographics and service delivery to use that approach. FFC pointed out that some recommendations were equally valid today, and that might be considered again.
Questions as to why there was data disparity between national and provincial departments would have to be answered by the DOH. FFC could consider doing further work on it. If these concerned demographics, then FFC could try to make some sense of the acquired data on distribution and allocations.
In relation to the spending, Prof Plaatjies recognised the Committee’s passion and commitment to PHC, because it was the sector closer to the people The budget and statistics came from the national DOH budget. However, what government was spending must be considered against the consolidated districts’ health budget, which spent R86 billion in 2011. R35 billion was transferred to district health care services and municipalities to deal with primary health care. Other amounts had therefore been allocated to primary health care, so it was not as low as the DOH budget seemed to reflect. He reminded the Committee that the allocations shown here were national department with national responsibilities on that PHC function. The PHC function was funded in part by the equitable share allocation.
The Chairperson commented that budget allocations were sometimes based on population, but he was particularly worried about the poor health indicators in the rural areas. In South Africa, people were moving from rural areas to the richer provinces in search of better services, and he wondered if this meant that over time, services of the wealthier provinces would not also be affected. This could lead to a vicious cycle.
Mr Rakabe responded that the FFC was currently looking at the provincial equitable share for distribution of funds across all the provinces. It currently worked on a population-based model with about 60% of the allocations to provinces being explained by the distribution of the population across the nine provinces. There was indeed a problem of inter-provincial migration, with decrease of populations in some provinces, which could then lead to a loss of money. In 2011, however, the health component of the provincial equitable share was reviewed to incorporate other indicators, including the relative demand for health services, the number of elderly and children and the burden of disease in the provinces. This formula, however, only guided the allocation; it was left to the discretion of the provincial executives to allocate the specific health budget. Norms and standards should help in that allocation, and there were different systems around allocation of budgets to districts, hospitals and to clinics. He agreed that districts which had high levels of disease burden did not necessarily get a high level of resources. Studies showed that the relationships between the budget, resources and outcomes were not always positive. Districts with more money did not necessarily have better outcomes or improvement of health services. A decision had been taken to try to identify where the problems lay, and to address them.
Ms Madubula said FFC was currently undertaking a study on underfunding of public health care, which would form part of the FFC recommendations in the following year. The analysis had found that causes of failure included poor budgeting, funding, inefficiencies in the system leading to institutional failure, and weak district structures.
Ms Madubula commented that the allocation to the health sector from the fiscus would depend on those allocating the total state budget. In South Africa, this could be raised if the inefficiencies were corrected by devolution of authorities and operational procedures. The institutional failures needed to be addressed. At the moment, the budget for health was around 3.3% to 4% of GDP. The FFC was recommending striking a balance to increase that to 5% but also resolving inefficiencies. Most of the inefficiencies were at district level – for instance, a district manager did not have the proper powers and could not fire inefficient staff, but had to make recommendations to the provincial head. This led to low morale at district level. FFC was making recommendations on such anomalies.
Mr Rakabe responded, in brief, to questions around infrastructure, and said that it was a problem in both the national and provincial units. The hospital revitalisation grant was the main financer of this programme, but provinces were expected to top up infrastructure spending from their provincial equitable share allocation. However, over time, resources from the equitable share for infrastructure had declined so many provinces were now dependent on the grant. National Treasury had introduced new reforms for spending on infrastructure in general, under which provinces must submit plans for approval, to ensure that money was able to be spent as soon as it was allocated. This should limit the under spending.
The Chairperson said that health indicators should include finances, human resources and infrastructure holistically. A clinic must have doctors and nurses; it was not possible to look at separate budgets. Some of the main challenges lay with human resources. If there were medical personnel, the system would fail. There was also a need for an infrastructure grant for PHC. However, this grant was being used for other purposes, due to the lack of proper reference systems. People tended to use the large hospitals, for small problems which could have been dealt with at a clinic, which impeded on the revitalisation programmes. There was major mismanagement in the provinces.
Professor Plaatjies said, at this point, that the FFC had been called to another meeting and requested permission to give written answers to the remainder of the questions, or return for another session.
The Chairperson agreed that this was a practice in the Committee, to request written answers for issues not addressed at the meeting. After discussion, it was agreed that the responses would be made available by the following Tuesday.
Department of Health and its entities: Performance report: Auditor General South Africa
Ms Alice Muller, Corporate Executive, Auditor-General South Africa, noted that much of the information by the FFC was derived from the audit report of the Auditor-General (AGSA) and said that AGSA wanted more entities to use audit information to support their presentations, and that this was a good reflection on AGSA’s credibility.
She confirmed that the DOH itself had an unqualified audit report, for the second consecutive year, having dealt with the previous qualifications around assets. However, there were still concerns about compliance, in monitoring the conditional grants, and reaching pre-determined objectives. The audit report specifically mentioned the grants; for instance, the National Health Insurance Grant where the DOH needed to tighten monitoring, and sometimes conditional grant information was not reported on time. Sometimes allocations were made to provinces, although they had not signed the business plans. The DOH quality of information was not fully correct and adjustments were needed to the financial statements. Leave management, under HR, needed to be captured correctly. However, the DOH had no adverse findings on procurement. Nine staff members had done other remunerative work without getting the necessary approval (a drop from 11 in the previous year). Procurement processes were generally satisfactory.
The Chairperson questioned whether these staff were outside professionals, or members who formed part of the administration.
Ms Muller said these were administrative staff who were working for the national department.
Ms Muller continued that the governance frameworks had now been approved and were waiting for rollout and implementation, which was needed to fix some performance information issues. However, this was common to other departments also.
In relation to the pre-determined objectives, she pointed out that many of the targets for the DOH flowed from provincial work, and there were many reasons why this information was not reliable. The figures were totalled on the system, but manual registers were also used, and this could lead to errors, if there was no adequate supervision or if registers at the facilities were not completed properly. This might be because of a lack of personnel to capture data, or nurses simply having too much to do for the day; for instance, AGSA had visited a small clinic in Free State who had to close in order to allow for the audit to be done. In this clinic, despite the fact that there was only one nurse, and she kept the records after hours, there were no adverse financial findings, although the performance information was not reliable. However, there had been huge progress at national level, because there were now policies and procedures prescribing how information was to be captured and checked, but the challenge remained with implementation. The Office of Standards Compliance was set to focus on this area, because all policy decisions were based on data, which must be correct.
The FFC had commented about the lack of norms and standards. A number of projects had been started where the norms and standards were established, but this would have to be clarified by the DOH itself.
In relation to the Commission for Compensation for Occupational Diseases (CCOD), there had been disclaimers for a few years, but no audit opinions were given for the 2011/12 and 2012/13 financial years.
Ms Jolene Pillay, Senior Manager, AGSA, said that there was insufficient data made available to AGSA to reach any conclusion, but when the accounts were ready, the Committee would have to get reasons from the DOH. She said that the main reason behind the disclaimer was the inability to account for liabilities in the CCOD. There was a separate system to capture the data and note the number of claims, but there was a vast backlog, with an estimate of three to five years needed to clean up the system. Whether CCOD would be able to submit information would depend on effective leadership and a strong action plan. The Commissioner had changed, but he needed a strong team to implement his ideas. Some resources and data capturing assistance was given by DOH, but more resources were still needed at CCOD, who had requested, but not yet received, more funding.
Ms Muller said the Council for Medical Schemes (CMS) had regressed from a clean audit, to one that was unqualified but that raised a number of matters of emphasis. This, she believed, was a temporary set back, that was not due to deficiency in the internal controls, but rather to incorrect formulae being used when doing procurement. It had now been rectified and the internal controls remained quite strong, so it should be able to attain clean audits again.
The National Health Laboratory Services (NHLS) still maintained an unqualified audit with findings. The main area of non compliance issues was in human resource management, where there were prolonged Acting positions for longer than six months. There had been investigations in KZN and Gauteng and, once the reports were finalised the Department would share them with the Committee. NHLS had achieved 44% of its targets and had no adverse findings on performance information.
The Medical Research Council (MRC) had no material problems, although there was one finding on supply chain management, which did not involve a large amount, and there were not consistent problems. She explained at this point that a clean audit did not necessarily mean that everything was perfect, but it would indicate that internal controls were strong enough to pick up any discrepancies and fix them. However, even if an entity achieved a clean audit, it could still fail to meet targets. The transparency of the information presented would allow readers to assess the levels of performance. MRC received a clean audit, but failed to reach 54% of the targets. She stressed, however, that AGSA looked at achievement as meaning full achievement, so there might be some targets that were partially achieved.
Ms Muller continued that there were several challenges facing the provincial health departments. Some of the challenges were very deep rooted and would take some time to remove them from the system. Eastern Cape had a qualified report for the last three years but the AGSA was optimistic that it could improve on this, under initiatives currently driven by the new Head of Department and Chief Financial Officer. This came back to the comment that many audit issues were dependent on the strength of leadership and emphasised the need to have leadership driving the issues, as well as a qualified Chief Financial Officer. One of the main challenges with departments was that they were slow to take up recommendations of the AGSA.
Free State was of great concern because there were instabilities in certain key positions. In January 2013, a number of the administration positions were vacant. The MEC resigned, the Head of Department was transferred, the Chief Financial Officer and General Manager of Finance resigned, there was no Chief Operations Officer or Chief Information Officer and nobody heading up supply chain. There was a need for serious interventions to deal with these challenges. However, the audit opinion, although qualified, at least had not regressed.
Gauteng had improved on internal controls and this was a positive move. The risk manager implemented the internal control task force for every single facility, all were now being tested and taken on within the province. KZN made good progress with the qualification areas, having addressed all but a few. There were still major challenges with the assets but KZN was working hard to get it addressed.
Limpopo still needed serious attention, where a Head of Department had been appointed, but there was still no Chief Financial Officer. The national intervention had actually not impacted on the health sector. The province had procured properly under the watchful eye of the administrator, but procurement at the facilities resulted in irregular expenditure. The new leadership would have to deal seriously with the financial divisions of all the facilities to ensure compliance and accountability – the latter being a huge concern in the past.
Mpumalanga experienced some instability challenges during the year, such as a new Head of Department and two Chief Financial Officers in one year. The audit was qualified but hopefully the new appointments would ensure renewed energy. Northern Cape had managed, at last, to move away from eleven years of disclaimers, but this was as a result of processes started two years ago to obtain information. There was a serious qualification on employee costs, and missing information was eventually provided, but too late for the audit. It was hoped that it would improve next year. North West also had restored internal controls by the new appointments like the Chief Financial Officer.
Western Cape maintained its unqualified audit opinion and was also the only province which did not have issues around performance. Ms Muller explained that as long as the discrepancies were below 20%, they would not be counted for audit qualifications. There were minimal findings. However, it did have some supply chain challenges, but there were serious actions taken by the HOD in instituting disciplinary action where the irregular expenditure occurred.
North West and Western Cape submitted financial statements which did not require any adjustments, and that was commendable. In generally, the quality of financial statements submitted for auditing was good. All ten entities (national and provincial), however, had human resource issues, which they would need to attend to. Serious attention had to be paid to financial statements all through the year. Management was using this information to make very serious decisions and the information had to be credible. This would really drive the sustainability of health, and the challenges should not be under-estimated.
Kwa Zulu Natal had managed to deal with its supply chain issues which had previously impeded on performance, and there were no findings in this area.
Generally, she commented that two years back, unauthorised expenditure was at R1.5 billion, but in the last two years it had then dropped to R1.3 billion and further down to R855 million, which was still large, but at least declining. Gauteng’s unauthorised spending last year was R1 billion in the previous year, but had managed to drop it to R324 million, by having tighter controls in the system. Limpopo received no funding in the previous year, but this year had unauthorised expenditure of R222 million.
The Chairperson pointed out the increase of unauthorised expenditure in the Eastern Cape.
Ms Muller continued that there was a slight increase on the irregular expenditure, to R1.8 billion of irregular expenditure this year. Last year the irregular expenditure of the Department of Health counted for one quarter of the total irregular expenditure of the country, and this was serious.
The problem of medical waste disposal had been spoken of for a number of years and was not getting the required attention. AGSA asked the national DOH to tighten the monitoring of infrastructure and several departments had appointed engineers to help in this regard.
In conclusion, Ms Muller said that the health sector had been neglected for many years, but there was hope for improvement from the way the challenges were systematically being addressed and the cooperation from the national department and the Minister in taking on AGSA’s recommendations.
The Chairperson was impressed by the presentation, which reflected what the Committee had seen. He requested, however, a breakdown of the irregular expenditure.
Ms Segale-Diswai thanked the presenters and asked if AGSA was paid for the audits it did in the provinces.
The Chairperson said that AGSA was paid because it was performing a service in the provinces.
Ms Segale-Diswai said that she was just wanting to clarify that there was not double-spending, on both the AGSA and National Treasury. She asked how the AGSA tried to interact with DOH to try to solve its problems. She found the information helpful. She wondered why there were still leadership problem, when a lot had been done to try to solve this, and why the same problems were still being raised. She asked if the AGSA was trying to ensure that recommendations made were implemented. She questioned the role of AGSA in management of the health sector, especially in relation to administration, and the reason for the vacancies.
Ms Robinson congratulated the Minister and Department on the turnarounds for the better.
Ms Ngcobo wondered why there was so much irregular expenditure, why there were so many acting positions, what recommendations had AGSA made to the Department regarding vacant positions and what level of interaction there was between AGSA and the DOH.
Mr D Kganare (DA) asked what the role of the State Information Technology Agency (SITA) was, and whether it was involved in updating structures of the provinces. He asked why people were not following the regulations. He wondered if the right skills were in place, and if these problems had been highlighted to management before, why there had been no response. The presentation appeared to be suggesting that the Committee had not followed upon the recommendations of AGSA. He saw this as a direct challenge to the Committee to identify the provinces and entities not adhering to the requirements of the Auditor-General
Ms Kopane asked how the Department used consultants, and their impact on service delivery, mentioning that at the beginning of the year, it appeared that consultants were used where the Department had nobody capable of doing the jobs.
Ms Dube said that all these problems had been raised before and her only question was who was supposed to do what, and when? The AGSA’s job stopped at making recommendations, and it had no authority to enquire further into implementation. She wondered what the DOH was doing to (ensure there was an increase in medical staff, who were the backbone of the health sector.
The Chairperson spoke to Mr Kganare’s point about whether the Committee was doing its job, and believed that it was, but there were still some failures in certain areas; however, most of these were at provincial level where this Committee’s intervention was not readily welcomed. The Committee had tried to bridge this gap by asking the national DOH to come with Members on oversight visits to the provinces, but the problem was that committee members of provincial legislatures tended not to show up.
Ms Muller said AGSA had also experienced challenges with the Health Council, where decisions were flawed when some members failed to take implementation seriously. She agreed that AGSA needed help from this Committee, in ensuring, for instance, that CCOD submitted its statements for auditing, which it had failed to do for two years, and this in itself posed a serious risk as nobody knew what was going on.
Ms Muller reiterated that indeed AGSA was paid for its work, and its fees were budgeted for by the departments it audited. Over-expenditure did not occur as a result of paying audit fees, but mostly because too much was spent on personnel. AGSA engaged in several interactions with the departments at every level, and for instance AGSA was meeting also with the Minister of Health, then with the Health Council, and scheduled meetings regularly.
Ms Muller agreed that AGSA could “bark, but not bite” and its role was to make recommendations. It could not do more, because this would put it at risk of intervening into management decisions or interfering with leadership. However, political leaders had to take AGSA’s messages seriously, and so did the administrative heads, as the leadership could be empowered by AGSA and be given information by AGSA on how to implement recommendations.
In relation to some of the administrative questions, she said that the Department had introduced a data clean up process, to deal with vacancies, was trying to deal with norms and standards to reduce expenditure and ensure standardised data collection systems. Personnel expenditure accounted for the highest percentage of irregular expenditure, and the Director General of DOH was looking into that, by setting norms and standards.
Ms Muller said that SITA was responsible only for transferring systems to DOH, but not for actual implementation of Department-owned systems.
She agreed that supply chain management was a big issue, probably because of the lack of a supply chain management head or lack of skilled people in the Department, rather than intentional mismanagement. She would revert on the consultants, but thought that some of these had been brought in to help resolve issues; they were not doing the work of the people hired to perform the core tasks. She noted that AGSA had been pleased to see changes in the DOH, due to good leadership at national level, and an active involvement in facing health problem. There were still inefficiencies in the systems, and more money would be saved if these were addressed.
AGSA was also concerned about the effectiveness of the Portfolio Committees at provincial level and this was being flagged in the Annual Report of AGSA. If there was quicker response to the AGSA recommendations, more developments in the sector could be seen. There was progress with new leadership at national level.
The Chairperson commented that CCOD was a major area of concern to the Committee.
Briefing by the Medical Research Council (MRC) 2012/13 Annual Report 2012/2013
The Chairperson noted that the Committee still had to deal with the Budgetary Review and Recommendation Report (BRRR) which was a way for the Committee to check what had happened and where the money was going. The Committee was worried that the Medical Research Council (MRC) was not receiving enough money from the Department, and was heavily reliant on external funders, although its research was supposed to be done on matters that would enlighten South Africa of areas to be focused upon.
The Chairperson also remarked on the Malaria conference in Durban, which reported that a vaccine for malaria had been found. Malaria was not of the greatest concern in South Africa, but this did give hope that, hopefully in the near future, a vaccine might be found against HIV and AIDS. Such developments in science were appreciated by this Committee.
Professor Salim S. Abdool Karim, Director, Medical Research Council, noted that MRC’s latest Annual Report followed the new National Treasury format and was more data intensive. He noted that the vision of the MRC was to build a healthy nation through research and innovation, and the mission involved improvement of the nation’s health by conducting and funding relevant and responsive research – “relevant” meant that it addressed the health issues of South Africa, and “responsive” meant that it must know and respond to the challenges. This was the underlying theme of MRC’s work. It was not the task of the MRC to implement services, or ensure new treatments were being used, merely to create research, new products, and make them readily available for use. MRC had been revitalised, and this should be concluded by the end of the year.
To enable the revitalisation process, measures had been taken to ensure that research was better funded in South Africa. The largest main contributor for funding medical research in South Africa was the USA government, which provided around R1.2 billion a year. Most of this funding came from the USA national Institutes of Health; some from the USA Centres for Disease Control and Management and some from USAid. He made the point that medical research in South Africa would totally collapse if there was no additional funding. The MRC thus continued to lobby for funding from USA.
He noted that South Africa provided only one quarter of the funding for research, compared to external funding from the USA. MRC had prioritised the need to find alternative funding. As technology advanced, newer techniques, newer machines and laboratory equipment became much more expensive. If MRC was to remain at the cutting edge of science it had to have the best technology. MRC had so far managed to maintain its competitive advantage by ensuring it could secure funding for certain equipment, in certain fields such as HIV and AIDS, but it had not catered for fields like cancer. MRC aimed to double its budget over the next three years. Under the current MTEF, it received about R1 billion, and aimed to have R2 billion in the next MTEF. Its basic allocation from government had not grown but MRC had received R700 million in additional funding from the National Treasury, and the Bill and Melinda Gates Foundation had made a large sum available, specifically for new technology development, as well as donations from the USA government. It was currently short of about R100 million to meet its needs. Anglo American had promised R14 million per year over the next three years, which might bring it closer to reaching the desired sum, and MRC was trying to get philanthropic funding, rather than achieving it by selling its research capacity.
MRC was pleased to announce a clean audit and improved compliance with the recommendations of AGSA.
One of the big success stories in the revitalisation process was the creation of the Strategic Human Resource Health Innovations Partnerships (SHIP), which aimed to create new drugs, vaccines, diagnostics and new devices. The research was geared to practical product development, and many new products had been developed. For example, in the malaria field, MRC and University of Cape Town were developing a completely new class of anti-malaria drugs, as announced in Durban. It had secured $5 million from the Gates Foundation, which was then matched by $5 million of South Africa’s own money to invest in the drug development.
The MRC was investing, with the DOH, in the HIV/AIDS vaccine development, and early data indicated that there may be breakthroughs; although this was not a vaccine, there were indicators of the path to it. MRC believed that the country was still very “raw” when it came to developing new drugs and new diagnostics which would be critical in helping South Africa improve the health of the nation.
MRC had now revamped its extra mural unit and the review process for grants, had improved its administrative system, had pared down policies to 25 in number, and KPMG had reviewed all the administrative departments to restructure them in a more efficient way. Some savings had been achieved from the restructuring. Deloittes was commissioned to help with a space audit. MRC had improved communications, and was issuing a “Friday bulletin” to keep all players informed about its new initiatives. Every month, it held a “MRC Celebrates Science” even to convey new findings to the research community. The Annual Report and brochure reported on all major events. The intra-mural programmes had been reduced to 11, from 27, and were focusing on the top ten causes of death and the burden of disease. Another two programmes may be introduced when there was more funding. Overall, Prof Karim said that MRC was meaner, leaner and more productive.
One of MRC’s most prestigious offerings was the Science Journal paper on the intimate partner violence against women. This was a global study, was co-authored by an MRC employee. MRC set global policies on how to deal with the challenges of intimate partner violence. The MRC had also contributed special publications in the LANCET papers, bringing the burden of TB and HIV to the forefront, and chronicled the improvements, such as South Africans’ 10% increased life expectancy. MRC was continuing to make substantial impact into both TB and HIV, the greatest health problems, and was finding new ways to deal with them, including the development of new drugs for drug resistant tuberculosis. MRC also investigated providing ARVs, in a sustainable way, to the required scale. There was no question that it was performing well in contributing to new knowledge and making major scientific contributions at global level.
The MRC was in the process of revising the inherited set of strategic goals and performance indicators into a new set, which fitted better into the revitalised MRC. Prof Karim summarised the four main strategic goals (see attached presentation) and said that these were supported by ten new indicators, a drop from the previous 22 indicators. MRC wanted to ensure that the bulk of its allocation went to research, not administration, and had methods to track this. It was leading in the generation of new knowledge, and needed to track how many articles were being published, and how many journals and other research projects were referencing its work. In addition, it was now tracking the projects more specifically, and scholarships provided, and all these new indicators were aligned to the future growth path.
The MRC ensured it had good governance in the organisation and had a functional board of Directors, whose term was coming to an end, so new appointments were awaited from the DOH. It had improved its risk management by following the set laws and regulations, and had detailed plans for mitigation of risk. The clean audit was another indicator of good governance.
Mr Nick Buick, Chief Financial Officer, MRC, presented the financial information of the company. MRC’s revenue for the year decreased slightly, by 6.5%, to R504 million largely because of the drop in allocation of grant income. MRC managed to keep its operating expenditure well under control, to avoid being affected by the decline in its revenue and in fact managed to drop expenditure by 0.73% which was substantial, especially in comparison to the 6% inflation. MRC had an operating deficit of R63 million, an increase on that reported in the previous year, but this was offset by an increase in the investment income, to reduce it down to R45 million. It had, however, budgeted for a R42 million. The extra R3 million not budgeted for was accounted for by severance packages and the fees of consultants helping with the revitalisation process. The balance sheet was stronger, as reserves remained strong at R241 million whilst total assets increased by 2.4% to R535 million, largely because of an increase in cash and investments generating income. In 2013/14 the baseline allocation from government was R416 million. The finances looked strong for the following year.
Prof Karim concluded that MRC and South Africa had made major research contributions over the last years. The President specifically honoured it in the State of the Nation Address. It had new strategic plans and targets, was very focused on raising standards to ensure that it was world-class and was benchmarking itself against other top class scientific institutions. It was focusing on the impact of research, had increased funding for new drug development, vaccines and diagnostics and more than tripled the money available to universities for them to rebuild research. It wanted to ensure that it remained competitive and had sought an additional R14 million from the DOH, but would continue to seek donor funding.
The Chairperson asked MRC how much it had done to help the current government to transform the racial inequality from apartheid days, which forced the poor to remain poor which the rich got richer, and that also had an impact on opportunities for education. Health indicators in South Africa were that the less developed areas had, for instance, higher infant mortality rates, although this may have to do with less infrastructure development, than health institutions. However, this had also impacted on the large hospitals, for people migrated in search of better healthcare. He wondered if MRC was helping to transform the health services in South Africa to help everyone equally, and give people the assurance that, no matter where they were living, they would get good quality healthcare services.
The Chairperson said that the BRRR would seriously recommend more support for MRC but it had then to help with making policies and bringing MRC closer to government, as it naturally now was closer to on its own funders. He commended MRC on a good report and said that the Committee could make suggestions on the mandate, without necessarily changing the policy.
Mr Kganare asked what the implications would be if USA stopped funding the MRC, and said that PEPFAR had stopped funding other projects in South Africa. He asked about the role of the pharmaceutical companies in promoting medical research in South Africa and whether they were aware of the benefits of new drugs. He wondered why nothing was said about the MDGs. He asked if proper risk management was now in place to avoid previous problems.
Ms Segwale-Diswai congratulated MRC on the clean audit, and asked what collaborative research it did.
Ms Ngcobo also thanked MRC, and asked if it worked with partners in the rest of Africa. She asked where its offices were in rural KZN, and other rural provinces, in light of complaints that people only saw MRC when they were looking for volunteers to test new products.
Ms Kopane saw that AGSA reported great improvements in management of the MRC, although there was still a need to address the IT controls. She asked about the cost implications of the strategies to improve on the HR management, why there was high staff turnover in lower management. She asked why the issue of Mozambique was still coming up, why it was not resolved quickly and what was still outstanding.
Ms Dube asked why only USA was assisting with funding.
The Chairperson explained that MRC had a fundraising model for raising resources, which involved accepting funding from whoever would respond to a widespread request.
Ms Kenye encouraged MRC to permanently maintain the clean audit. She asked if it was taking into account the need to reduce mortality, and whether all health sector challenges were treated with equal attention. She thought there was mostly concentration on infant mortality. She asked if MRC undertook pilot research
Ms Msweli asked how MRC had managed to reduce the number of policies.
Ms Kopane asked what happened to the fraud hotline that employees had been using.
The Chairperson said he was generally happy with the work of MRC but said that there was a problem in the provinces, where there were more administrators than health workers. MRC had, in general, managed well, and the Committee could learn from it. He asked if the strategic plans were now working, in line with the Committee’s recommendations, and encouraged it to keep up the good work.
Professor Karim said he was heartened by the level of accountability and detail to which the Committee was holding the MRC and assured it that it would respond. He said that if the USA government stopped funding, this would pretty much lead to the collapse of medical science in South Africa. Fortunately, the world was uni-polar in medical research, as foreign countries were allocated more and could pass some on to less privileged countries like South Africa. The withdrawal of PEPFAR funding had not affected medical research, because they did not account for much medical research, but rather affected those on the service side, treating AIDS patients.
Prof Karim said that one of his greatest disappointments was that pharmaceutical companies invested very little meaningful funding into health research providing MRC with zero and investing zero. They simply copied drugs made elsewhere but did not research or develop their own, which was a sad reflection.
Prof Karim assured the Committee that MRC did support the MDGs, and research work in this area was published in the Lancet in 2009. He agreed that South Africa would not achieve the MDGs but would at least have made progress to the goals, as opposed to its less forward position in 2009.
MRC addressed inequities in various ways, and considered carefully where it must invest. The top ten causes of death, its main focus at the moment, were essentially the diseases of poverty, and of the rural poor – such as drug resistant TB, pneumonia in children. MRC also had huge programmes in place to address the historical inequities of gender in terms of their student population, and how students applied for funding. It had partnered with universities to provide substantial funding to historically less privileged institutions, to give them opportunities to improve their research. It provided both grant money and also infrastructural support to help them establish support systems for research.
The MRC had substantial relationships with about four countries’ medical research organisations. The strongest links were with Kenya, but it engaged in collaborative studies also with Ghana, Zambia, Malawi, Mozambique, and malaria research was done with Zimbabwe and Mozambique. Prof Karim thought there was a need to change the nature of these relationships; if partnerships were created, however, MRC would have to fund them as the majority of these institutions could not depend on their own governments. It was preferable, therefore, to make a joint application to the USA for joint funding.
MRC monitored, through a whole range of different mechanisms, the burden of disease and the NHI pilot districts. A proposal had been put through to the Minister of Health, for a NHI Unit at the MRC, but MRC did not want to have its own unit isolated from what was happening elsewhere,, but be doing joint work with the DOH. This was detailed in the revitalisation report, had been approved by the Board, but was awaiting approval from the DOH.
Mr Buick said that in relation to tax clearance, MRC had put in place an automated supply chain system, which flagged suppliers within three months of their tax clearances expiring.
Prof Karim said that no fraudulent expenditure had been found. He said that MRC had managed to reduce the number of policies by merging any that were similar and sought the same goals.
Mr Mbulelo Bikwani, Executive Director: Human Resources, MRC, said that there was only really one area in the revitalisation plan with financial implications; which was alignment of the remuneration as the salaries were not market-related yet. In the past, MRC had paid poorly and had lost people, and was only now catching up to the 25% mark.
Prof Karim explained that when qualified companies conducted surveys into market salaries, they would come up with a median, which meant that about 50% of companies (public or private) paid below and 50% above that rate. A 25% rating meant that 75% of companies were paying more, and 25% were paying less. At the moment, MRC was around 10%.
Ms Nobayeni Dladla, Chief Operations Officer, DOH, said she would be pleased if MRC and DOH continued to work well together. Each could complement the other. They dealt with similar issues, and standardised solutions were needed over time. There was no country which could compete with the USA in terms of funding what the MRC researched, and this could hopefully serve also as a model for other funders.
- PC Health: Department of Health: Financial & Fiscal Commission & Auditor-General’s briefings - part 1
- PC Health: FFC on Health’s budget, spending patterns & recommendations that were made by FFC to Department - part 2
- PC Health: FFC on Health’s budget, spending patterns & recommendations that were made by FFC to Department - part 1
- PC Health: Department of Health: Financial & Fiscal Commission & Auditor-General’s briefings - part 2
- Medical Research Council of South Africa: Annual Report 2012/13
- Medical Research Council of South Africa: Annual Report Briefing to Portfolio Committee on Health.
- Financial & Fiscal Commission briefing
- Significant findings from the audit outcomes that require monitoring
- Public Finance Management Act audit outcomes of 2012-13 financial year
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