2013 Medium Term Budget Policy Statement: input by Public Service Commission

Standing Committee on Appropriations

28 October 2013
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Committee was briefed by the Public Service Commission (PSC) on the 2012 Medium Term Budget Policy Statement focusing on (a) governance and (b) efficient performance within the Public Service.

The Public Service Commission (PSC) explained it was created by the Constitution to promote and maintain effective and efficient public administration with a high standard of professional ethics. Some key points it made at the outset were:
- A balance between compliance and outcomes based performance management was required for the Public Service.
- There was a lack of appropriate management action in cases of poor performance.
- Departments continuously seek resources with still no indication on return on investment.
- Resource management, in particular human resources, was central to building a capable state to deliver on the National Development Plan (NDP), therefore shortcomings and limitations should be addressed speedily.
- Rigorous scrutiny by Parliament of each institution’s performance against plans, and assessment of their capability to deliver results is required. Annual Reports are currently not user friendly.

Within government’s five priorities, PSC looked at these departments over the last two years according to spending; audit and performance indicators:
- Decent work and sustainable livelihoods:- Labour; Trade and Industry (dti); Cooperative Governance (COGTA); Agriculture, Forestry and Fisheries; Public Works; Economic Development (EDD);
- Education: Basic Education;
- Health: Health
- Rural development, food security and land reform: Rural Development and Land Reform (RDLR); Human Settlements; and Agriculture, Forestry and Fisheries;
- Fight against crime and corruption: South African Police Service (SAPS); Justice and Constitutional Development (DoJCD).

For (a) Governance, PSC looked at expenditure versus performance; Management Performance Assessment Tool (MPAT) scores: Filing of Performance Agreements by Head of Department National Anti-Corruption Hotline (NACH): Financial Disclosure Framework (FDF): Financial misconduct

PSC looked at the reasons for the current performance in Governance:
- Performance information in annual reports remained overwhelming and obfuscated rather than enlightened – hampering oversight.
- EAs and HoDs do not visibly support performance management processes or ensure that these cascaded down to other levels in the SMS.
- Although the relationship between output targets and expenditure was not a direct one, the fact that on average 60% or less of predetermined targets were achieved should raise a question about the efficiency of the spending.
- The frequency of undertaking MPAT might constrain the ability of departments to put improvement mechanisms in place (quality vs. compliance).

For (b) Performance, evidence presented focused on: Quality of service delivery for Electricity, Access to water,  Education,  Health,  Housing; Delivery in relation to need; Unemployment and  government programmes; Development orientation. Measures here included access to sanitation and electricity; level of satisfaction with service received at a health facility; unemployment rate; number of work opportunities created by the Extended Public Works Programme; access to food; number of participants in the Community Work Programme.

In conclusion PSC said that Chapter 13 of the NDP highlighted a number of key administrative issues that should be addressed to build a capable state, included - making the public service a career of choice through effective human resource management practices; developing technical and specialist professional skills through professionalising the public service; strengthening delegation, accountability and oversight; improving interdepartmental coordination; and the Public Service should ensure that these priorities were reflected in implementation vehicles such as Strategic Plans and Annual Performance Plans.

Members of the Committee asked questions on the current RT systems not being utilised, reasons for the 0% achievements, rewarding people for performance, whether PSC had done a study on salary versus productivity in the public service, clarity on how performance was measured, anti-corruption in terms of reported cases and concluded cases. In its replies, the PSC spoke about ethics officers, of a central dedicated capacity to investigate corruption cases, the need for assessments on impact of value for money should be performance based rather than compliance based.
 

Meeting report

Opening Remarks
The Chairperson started the meeting by apologising for other Members who were in the House but would join them later. He informed the Committee that the purpose of that meeting was to be briefed by both the PSC on the 2013 Medium Term Budget Policy Statement (MTBPS).

Public Service Commission (PSC) briefing
Ms Phelele Tengeni, PSC Deputy Chairperson, said that the presentation would look at the five priorities of government and assess the current situation and underlying reasons in respect of – governance; effective and efficient performance within the Public Service. Ms Tengeni said that the Public Service Commission (PSC) was created by the Constitution to promote and maintain effective and efficient public administration with a high standard of professional ethics. The core business of PSC was to investigate, monitor, evaluate and advise on strategic Public Service issues. The Standing Committee on Appropriations had requested the Commission to comment on the 2013 MTBPS, with a focus on the following key areas within the context of the Government priorities: Governance; Effective and efficient performance within the Public Service.

Governance
Data used to do this included Annual Reports for the 2011/12 and 2012/13 financial years; PSC tools, Presidency (DPME), Stats South Africa. On governance evidence PSC focused on: Expenditure vs. Performance; Quality of performance information; Service delivery improvement; Filing of Performance Agreements (PAs) by Head of Department (HoDs); National Anti-Corruption Hotline; Financial Disclosure Framework; and Financial Misconduct.

Ms Tengeni said that a balance between compliance and outcomes based performance management was required for the Public Service. There was a lack of appropriate management action in cases of poor performance. Departments continuously seek resources with still no indication on return on investment. Resource management, in particular human resources was central to building a capable state to deliver on the National Development Plan (NDP), therefore shortcomings and limitations should be addressed speedily if they were to improve performance and service delivery. However, the current reporting template(s) did not provide a platform for departments to show how additional resources contributed to improved performance and/or service delivery. Continuous and random rigorous scrutiny by Parliament of each and every institution’s performance against plans, and an assessment of their capability to deliver results was required. This would require support to Parliament to analyse and interpret annual reports. Annual reports were currently not user friendly. The question was whether compliance requirements enable or hinder performance improvement and/or service delivery?

Within government’s five priorities, PSC looked at these departments over the last two years according to spending; audit and performance indicator results:
- Decent work and sustainable livelihoods:- Labour; Trade and Industry (dti); Cooperative Governance (COGTA); Agriculture, Forestry and Fisheries; Public Works; Economic Development (EDD);
- Education: Basic Education;
- Health: Health
- Rural development, food security and land reform: Rural Development and Land Reform (RDLR); Human Settlements; and Agriculture, Forestry and Fisheries;
- Fight against crime and corruption: South African Police Service (SAPS); Justice and Constitutional Development (DoJCD).

Expenditure versus performance
Ms Tengeni said the performance of the Economic Development Department (EDD) increased significantly, whilst spending was less. Seven of the departments’ performance declined over the past financial year with a sharp decline (-55%) in respect of the SAPS. There was a noteworthy decline in the achievement of outputs for the Department of Rural Development and Land Reform (RDLR) (-24%), as it is one of the government key priority areas. Four departments were not able to achieve more than 50% of their outputs even though their performance increased compared to the previous financial year. Although there have been improvements, the quality of performance information remains poor.

Management Performance Assessment Tool (MPAT) scores: The general picture showed no improvement when comparing the two financial years. Significant findings from MPAT were:
The majority of departments were not compliant in terms of service delivery mechanisms (that was the submission of service charters and service delivery improvement plans to the DPSA). 74% of departments were operating with an organisational structure (funded establishment) without having secured concurrence from the DPSA. 88% of departments did not comply with the HR planning requirements.

Filing of Performance Agreements (PAs) by Head of Department (HoDs): Apart from two acting HoDs, the overall compliance with the submission of PAs by HoDs on the due date of 30 June 2013 was 70% for the selected national departments. Of concern was that the Dept of Public Works had had an acting HoD for the last two financial years.

National Anti-Corruption Hotline (NACH): Only three departments showed above 60% closure rate. Overall cases closure was a mere 32% of the selected departments for 2013.

Financial Disclosure Framework (FDF): All members of the Senior Management Service (SMS) were required to disclose the particulars of all their registrable interests (e.g. companies and properties) to their respective Executive Authorities (EAs) by not later than 30 April each year. Only a 100% compliance rate by the due date was acceptable. 50% of selected national departments had a 100% compliance rate at 31 May 2013. Of concern was that the Departments of Agriculture Forestry and Fisheries, and Labour maintained a 0% compliance rate. Of further concern was that the Department of Human Settlements had a 100% in 2012 and a 0% compliance rate in 2013. In 2013, there was improvement in compliance for the Departments of Justice and Constitutional Development (DoJCD) and Public Works, which had reached a100% compliance rate by the due date.

Financial misconduct: There had been a decline in the number of cases, while the cost of financial misconduct seems to be increasing.

Reasons for the current performance:
- Performance information in annual reports remained overwhelming and obfuscated rather than enlightened – hampering oversight.
- EAs and HoDs do not visibly support performance management processes or ensure that these cascaded down to other levels in the SMS.
- Although the relationship between output targets and expenditure was not a direct one, the fact that on average 60% or less of predetermined targets were achieved should raise a question about the efficiency of the spending.
- The frequency of undertaking MPAT might constrain the ability of departments to put improvement mechanisms in place (quality vs. compliance).

Performance
Evidence presented here focused on:
Quality of service delivery for Electricity, Access to water,  Education,  Health,  Housing; Delivery in relation to need; Unemployment and  government programmes; Development orientation  

Measures here included access to sanitation and electricity; level of satisfaction with service received at a health facility; unemployment rate; number of work opportunities created by the Extended Public Works Programme; access to food; number of participants in the Community Work Programme (see document).

Development Orientation: The percentage of households that fully own the dwellings (Stats SA General Household Survey 2012). For example, the percentage of households that fully own the dwellings they inhabit increased slightly from 52,9% in 2002 to 54,5% in 2012. This increase was accompanied by a decrease of 4.4% for households that partially owned their houses, and a slight increase in the percentage of households that rented accommodation. Households that maintained ‘other’ tenure arrangements increased from 11,7% in 2002 to 13,1% in 2012. New initiatives, structures and systems were developed and put in place to ensure the establishment of new communities and address the critical nationwide housing backlog.

A total of 243 municipalities in all 9 provinces were supported by the Department of Human Settlements with assessments of water services development plans (IDPs). This process had assisted with ensuring that sanitation projects were prioritised and adequately budgeted for. The Department supported 45 water service authorities in 7 provinces on water and sanitation hygiene initiatives. RHIP served 27 144 households with sanitation facilities, thus reducing the rural sanitation backlog in seven benefiting provinces. The Department through the Informal Settlement Upgrading Programme had improved outputs and had to date provided nearly 190 000 households with upgraded services and secure tenure.

Ms Tengeni concluded that these diagnostic studies were available and recommendations within the NDP and the Public Administration Ministry clearly articulate the priority areas that should be focused on to improve performance and service delivery within the Public Service. For example, Chap 13 of the NDP highlighted a number of key administrative issues that should be addressed to build a capable state, included - making the public service a career of choice through effective human resource management practices; developing technical and specialist professional skills through professionalising the public service; strengthening delegation, accountability and oversight; improving interdepartmental coordination; and the Public Service should ensure that these priorities were reflected in implementation vehicles such as Strategic Plans and Annual Performance Plans.

Discussion
Mr G Snell (ANC) thanked the Commission for the good presentation. The points that had been raised in the presentation were pertinent but the success of change depended on PSC being taken seriously about what they were saying. The Performance Management and Development System (PMDS) had been used for years not to achieve objectives but merely to pay bonuses to people for performance. It should be linked to the Annual Performance Plan (APP) to assist the department in driving towards achieving the objectives of the APP, and of course to give training to staff so that they were assisted when they fell short. Mr Snell said that the current real-time (RT) systems, although utilised by the state, did not give relevant data utilising the objectives of the APP so as to manage a department. Somewhere along the line the Committee had been told that government was investigating implementing a new RT management system, but he did not know the progress of this and where it was.

Mr Snell said that there was another situation where government had decided to make a five-year performance based contract for heads of departments and senior managers. That was how they built a professional public service. Therefore, one needed to talk with the Department of Public Service and Administration so that it could push the argument for the amendment of the Act on this aspect.

Mr J Gederblom (ANC) noted that on page 9 of the report the first sentence read: “The performance of the Economic Development Department (EDD) increased significantly, whilst spending less”. That was something good. He asked what lessons could be learned from EDD so as to implement these in other departments. Was it about appointments, or about recruiting of new people, or about moving of people to senior levels? He asked in terms of pages 14 and 16 of the report why there were no performance agreements with Forestry with regard to financial disclosure framework, and were there any specific reasons for the 0% achievements.
 
Mr N Singh (IFP) asked PSC to explain the specific areas of training for public servants like finance and HR, so that public servants could be moved anywhere. What specialisation training was given to public servants? In terms of performance and rewards in the public service, what kind of challenges were they facing, were they rewarding people for performance? Had they done an exercise on salary versus productivity in the public service, and was that not something they should be doing?

Dr S van Dyk (DA) asked for clarity in terms of the way performance was measured. PSC had mentioned “internal tools” to measure the performance. On page 8, they compared apples with apples, one department with another department, for example, how they measured performance in South African Police Service (SAPS). He asked how they compared performance between two different departments which had different spending trends and functions.

Mr L Ramatlakane (COPE) asked which target they were talking about in terms of expenditure versus performance.

Mr Ramatlakane asked for comment on anti-corruption in terms of reported cases and concluded cases.

The Chairperson asked for clarity on disclosure where the last day was 31 May. What happened if someone missed that deadline, and where they able to track the disclosures of departments?

Ms Tengeni replied that she agreed with Members that the management of the RT system should be linked with the APP so that whatever the department sought to achieve could be linked to the performance agreements of the managers carrying out those functions. But the challenge they were faced with was that the Performance Management and Development System (PMDS) in its nature was supposed to start from the top. The HoD should commit and sign with the Minister indicating what would be achieved and what should be in the APP.

Then the HoD signs down with his/her managers indicating what to achieve and at the end of the day it became the achievement of the whole department. If it happened in that manner they would not find a situation where the department was paying performance bonuses to people willy-nilly. Instead they looked at the performance of the department as a whole – if it got a qualified audit report or disclaimer. But how would they linked that rewarding so the department was not rewarding non-performance. PSC had established that  the failure of the performance management system was at the top, especially the signing of agreements of HoDs because they did not sign with Ministers and MECs in provinces. When asked the reason for not signing one was blaming the other, and in some cases it was true that the HoD requested the Minister to sign but the Minister did not. Therefore, the whole system collapsed because the one on top did not sign the performance agreement.

Ms Tengeni said in terms of the Performance Development Plans (PDPs) that it was also a disaster in that area because they talked about training that should come out of PDPs which took time for HR department to compile a Work Place Skills Plan. Training did not take place immediately after PDPs were signed. They sign PDPs and attach them into their performance agreements and send them to the HR department so that it could incorporate all that training that was highlighted in the PDPs of all those staff members. For example, SAPS which was a big department, and departments like Public Works which took them 12 months to finalise its Work Place Skills Plan and they did not comply with the deadline date at the Department of Labour. As a result, they were dealing with lots of grievances from officials for failure of the department to conclude the assessment of officials. It was an area which was really in disaster. She was not saying the system itself was a good system. It was a borrowed system that South Africa copied from Australia which had abandoned it because it did not work and had all these gaps and problems. It could still work if people would just comply because there was high level of non-compliance.

Ms Tengeni replied that as already indicated in terms of HoD five-year based contracts, the HoDs did not sign performance agreements (so as to be able to assess whether those people had performed or not) because of the failure of the system. So Ministers would not know whether those HoDs had performed because what currently happened was that they got to be recycled . That is, one finds a person in a department had not signed a performance agreement and another person had emerged from another department to join this one  - which was something that was happening all the time.

Ms Tengeni replied about the training of civil servants, saying a school of Government was upcoming which they hoped would address that issue. In other countries the entrance into the public service was through examinations. However, this did not happen when the person was already inside the system because they were not allowed in terms of the laws of the country to dismiss that person. But again it came back to management performance because there were poor performers who sit in the system year after year. There were policies in place to enable those people to be flushed out of the system through incapacity but departments did not do that. Instead they sit with those people year after year, who get the annual cost of living adjustment. The cost of living adjustment had nothing to do with service delivery. Whether those people perform or not at the end of the year, they would sit and bargain at the bargaining chamber and agree on the percentage of the cost of living adjustment arguing that everybody should be given it whether they are performing or not.

Ms Tengeni replied on the evaluation of HoDs, PSC believed that function should go because they have been given another responsibility of dealing with the grievances of HoDs. If they got involved in the management processes of performance agreements (filing, compliance or non-compliance), the most grievances came from the point of evaluation. So, they were the ones that dealt with those grievances. They were getting a lot of grievances from the HoDs against their Ministers. Therefore, the evaluation of HoDs function should sit with DPME because they were dealing with grievances of HoDs at the moment.

Mr Paul Helepi, PSC Commissioner, said that they have done a number of studies on the Political-Administrative interface, the relationship between politicians and administrators. One study they were currently doing was on HR and Financial Delegations. HoDs have financial delegation in terms of accounting for finances but they did not have HR delegations because the HR delegations were with politicians. One HoD said that when one did not have an HR delegation, it was like being a coach of the national team where one was not allowed to choose his players and had to win the tournament. The fact that the plan of winning one’s game depended on the kind of players one had chosen. However, one did not have the ability and power to choose players because it lay elsewhere

Commissioner Helepi said that what was also disconcerting was that HR delegations had financial implications. Politicians did not have accountability in terms of financial delegations because that lay with the HoD. So the politician appointed someone else and that person accounted for the financial implications thereof. Therefore, it was why the National Development Plan (NDP) stated that they needed to deal with that. In professionalising the public sector they had to make sure that their recruitment and selection was aimed at fitness for purpose which was very key. They needed to have people who were fit for the purpose of delivery of specific services. The delivery training was very important and it should be geared towards specific skills that were needed in the public sector.

Ms L Sizani, PSC Commissioner, noted that what Commissioner Helepi said adequately addressed the problems around professionalising the public service. Many of the grievances they were dealing with in the Commission pertained to recruitment and selection. There was a plethora of irregular appointments in the public service and the decision had already been taken. As a Commission, they would put together a report and would come back to Parliament. The report would state that in respect of irregular appointments this was what they have found. But also they took comfort in the recommendations contained in the NDP that there should be a strengthened role for the PSC considering the fact that it proposed a high breed model. Obviously the appointment function was the prerogative of the executive authorities but that did not mean the PSC could not scrutinise the process and the documents without actually making the appointments. Hopefully, when they engage on the developmental state paper they would flag all those issues because they all go back to the professionalisation of the public service.

Commissioner Sizani said that the MPAT self assessment was always a good thing. One had the African Peer Review Mechanism where countries assessed themselves as individual countries. But they needed to inject into MPAT that kind of peer review system in terms of external aspects. They had taken note of the suggestion that they should not start a new process but be part of external aspects. But they could strengthen the MPAT by introducing a peer review of when departments self assessed, when DPME had compiled and consolidated these self assessments and inject an element of peer review so that an the assessment could be credible and objective. Therefore, they were happy to regard it as work in progress, it was a 2009 initiative that was unfolding and it could be strengthened.

Commissioner Sizani said the financial disclosure closing date was 31 of May. In SARS, when one did not file one’s return by the closing date, one had not complied. It was the same in the PSC as well because if one did not file bye 31 May, it was regarded as non-compliance. It should be add that the process did not start there. The public service regulations prescribed that the forms should be with the executive authority a month before the deadline date. So, if the designated officials and senior managers complied with the first date, it should be easy to comply with the second date. If they did not comply with the second date, that really did raise an eyebrow about whether the official did disclose to the executive authority by 30 April. They did keep track, in fact for the first time this year, they recorded the dates of when the forms was signed by the official, the date when the form was signed by the executive authority and the date when the form reached the offices of the PSC. Therefore they got a clear picture. They found sometimes that SMS signed their forms on time but Executive Authorities signed only in June. They were moving in the direction of E-Disclosures, and over a number of years the Commission had been recommending the appointment of ethics officers who would sit on departments to take compliance seriously so that the Commission was able to focus on scrutinising the forms. PSC did not just want to focus on compliance, they needed to check the number of companies that were registered with CIPRO and so on. Therefore, they were moving in a direction where they wanted an ethics officer internally in the department to work with executive authorities to ensure there was compliance so that the Commission’s time was freed for scrutiny.

Commissioner Sizani said indeed PSC finds the closure of corruption cases a concern. What they have noted in various reports of the Commission was that there was no internal capacity in departments to investigate the cases and bring them to a logical stage of closure. So, there was lack of capacity. On the other hand, they wanted to caution that they had reservations about departments themselves because sometimes the lack of closure of cases came from a lack of commitment to investigate. If departments were going to find themselves liable and guilty, they would not have the commitment to investigate and as a Commission they wanted to encourage the establishment of dedicated capacity to investigate those cases.

Commissioner Sizani said PSC had not done a study on productivity versus salary, but on the perennial basis they brought together various stakeholders on the issues like the worker rights and rights of citizens to service delivery. But they took note that there was a need to incorporate the wage bill versus productivity concept into the work of the Commission which was something they had not done yet.

Commissioner Helepi noted one of the Committee’s proposals was that in future any negotiations with regard to salaries should include the issue of productivity. The only way to move to a developmental state was to increase productivity where workers could earn more for contributing to productivity level which was a logical thing to do.

Commissioner Helepi said that for performance rewards, they have developed an organisational assessment tool because they realised that there was always a disjuncture between the performance of the individual and the performance of the organisation. Therefore, they needed to link the two so that the assessment should be holistic and it should be linked in terms of the way they plan. The planning trajectory as of now was more compliance based than performance based. There were a whole lot of issues they needed to work on so that they could come to a stage where they could assess the impact of value for money. They have done studies on value for money principles and the depth was not as much as it had been proposed. They needed to go much deeper into that.

Commissioner Helepi replied on the question of comparing departments that normally departments had their strategic plans and their annual performance plans where they had specific objectives they had set for themselves. When they evaluate departments, PSC looked at what objectives the departments had set themselves and how far they had achieved them and that was the performance they were talking about, as well as looking at what the Auditor-General had said about performance in the audit report.

The Chairperson thanked the PSC delegation for the presentation and responses.

The meeting was adjourned.
 

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