Economic Development Department on quarterly expenditure reports for 2013/14: postponement of meeting

Economic Development

19 August 2014
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Chairperson stressed the importance of quarterly reports, or reports in process, as far as legislation was concerned, because this was where the work done by the executive was reviewed. This process, in the case of this Department, was informed by the Budgetary Review and Recommendation Report (BRRR) cycle, which in turn was informed by the Money Bills Amendment Procedure and Related Matters Act.  It was therefore important and obligatory for institutions to report to Parliament to observe and abide by the processes required by this particular Act.  In order for government departments to comply, Parliament had to receive quarterly and annual reports, whether they were considered by the Committee at the time of submission or not.  They were obligatory, as management within every government department was well aware.  It was also obligatory for departments to submit Section 132 reports -- the Treasury reports.

The Economic Development Department (EDD) was supposed to have submitted its second, third and fourth quarter reports, so that Members could read their contents and engage the Department meaningfully.  The Department had been invited to come and present on its Annual Performance Plan and its Strategic Plan, but the Chairperson decided against allowing the Department to go ahead with the presentation, because the Committee had not seen the original reports on these issues, and had nothing to compare the presentation to. 

The DG of the EDD said that inefficiency, staff turnover and interrupted systems were some of the elements which had contributed to the Economic Development Department (EDD) not submitting quarterly financial reports for the 2013/14 financial year.  All of the challenges would be explained in the reports, together with the remedies the EDD had put in place to prevent them from recurring. The Department would submit the reports and presentations simultaneously in future, as soon as they were completed, and not when the Committee asked for them. She offered apologies for not providing the report on time and committed to comply in future.  The Department never expected any presentation to be accepted in good faith, but expected submissions to be interrogated and the evidence verified. The Department would be available to do the presentation at any time the Committee saw fit.

Members agreed that the EDD had to return to the Committee on 26 August, after submitting the report to the Committee well in advance, and should provide a written explanation for its non-compliance.  They also drew attention to the cost of bringing a delegation from Pretoria at huge expense. This was wasteful expenditure and not acceptable. It was not value-for-money for the Committee -- and certainly not for the taxpayer.
 

Meeting report

The Chairperson said this was the term when the Budgetary Review and Recommendation Report (BRRR) process required the Committee to look at all reports related to the previous financial year. In this particular case, it would relate to the end of the fourth term.   Members had to be reminded that government terms differed from school calendar terms.  Government looked at terms as prescribed by the Money Bills Amendment Procedure and Related Matters Act, or the fiscal policy. Quarterly reports, or reports in process, were quite an important aspect as far as legislation was concerned, because that was where the work done by the executive was reviewed. This process, in the case of this Department, was informed by the BRRR cycle, which in turn was informed by the Money Bills Amendment Procedure and Related Matters Act. It was therefore important and obligatory for institutions to report to Parliament to observe and abide by the processes required by this particular Act.

In order for government departments to comply, Parliament had to receive quarterly and annual reports, whether they were considered by the Committee at the time of submission or not.  They were obligatory, as management within every government department was well aware.  It was also obligatory for departments to submit Section 132 reports -- the Treasury reports.  The Economic Development Department (EDD) was supposed to have submitted its second, third and fourth quarter reports, so that so that Members could read their contents and engage the Department meaningfully.  

In this instance, the Department could not present its reports to Parliament or to the committee secretary. The Committee Members therefore had not had an opportunity to go through the reports on the Annual Performance Plan and the Strategic Plan, which was a requirement in terms of the BRRR and Money Bills Amendment Procedure and Related Matters Act.  For the Portfolio Committee (PC) to scrutinise this report, it needed to have received the report beforehand.  In terms of the submission of reports, Members had to receive reports by 12h00 on Thursdays, because many did not attend Parliament on a Friday in order to go home for the weekends.

The Chairperson had decided not to allow the Department to present the presentation, because the Committee had not received the report on which the presentation was based. The Department had submitted the wrong reports the previous day. The Committee could not look at reports without reference points. In that spirit, she had spoken to the Director General (DG), and had given the EDD an alternative date on which to present its report.

The PC had been accused of not doing its work, but it could not do its work if it had not received a report, but only a summary in the form of a presentation on the report. The secretary would contact the DG for an alternative date on which to do the presentation. The Committee had a very tight schedule. It was also dealing with the mid-term review. The EDD had to submit quarterly reports before submitting an annual report.   The Department also had to offer to present reports to the Committee, and not wait to be asked to produce the reports.

Discussion
Mr S Marais (DA) supported the discipline the Chairperson was exercising.  He had looked at the report and thought he would have to accept the presentation in good faith, without having read the report on which the presentation was based, believing that the presentation was an accurate reflection of the report.

He asked whether the DG could explain why the report had not been submitted in time.  Was it due to problems or shortcomings in the Department?  The Department was non-compliant, although the whole delegation had flown down from Pretoria and was staying in hotels in Cape Town at huge expense. This was wasteful expenditure and not acceptable. It was not value-for-money for the Committee -- and certainly not for the taxpayer. If the Department had excess funds in its budget, the departmental budget had to be decreased.

Mr S Tleane (ANC) said the Chairperson had outlined the issue correctly, and agreed that the DG should give a verbal explanation.   However, he wanted the Department to go back and compile a report on the challenges it faced, which had led to the non-compliance.  The Committee did not want to be too quick to condemn the Department, without understanding why it was not compliant.  He agreed that the Department had to go back and come to present on another occasion.

Ms Jenny Schreiner, DG of the Department, replied that the EDD had heard the Chairperson and Members clearly. It would have to do introspection and identify for itself what the problems and challenges were, after which it would present an explanation and identify the challenges to the Committee. The Department took its work and the Committee seriously, and she agreed fully with the concerns raised regarding the use of funds by the Department. She asked the Committee not to decrease the departmental budget.

There had been many elements leading up to the non-compliance. Among these were inefficiency, staff turnover and interrupted systems.  All of these would be explained in the reports, together with the remedies the EDD had put in place to prevent them from recurring. The Department would submit the report and presentations simultaneously in future, as soon as they were completed, and not when the Committee asked for them. She offered apologies for not providing the report on time and committed to compliance in future.  The Department never expected any presentation to be accepted in good faith, but expected submissions to be interrogated and the evidence verified. The Department would be available to do the presentation at any time the Committee saw fit.

The Chairperson said it was only five weeks to the mid-term budgeting process, where the Minister of Finance would add to, and subtract from, budgets and would give new fiscal policy directives. The process was important, and the Committee wanted to make sure it completed the process within the timeframes provided. Anything that disrupted this process would interfere with the success of the outcome.  The Committee could not consider a departmental briefing on its third quarterly report at this meeting (19 August).  She decided to move it to 26 August.   The briefing by the Financial and Fiscal Commission (FFC) would be moved to 9 September -- on the same date as the briefing by the Auditor General (AG).

Mr Marais agreed with the Chairperson.

The Chairperson asked whether Members agreed with the changes, and all agreed.

The Chairperson said the Department of Trade and Industry (DTI) would have a colloquium on beneficiation on 26, 27 and 29 August 2014.   Members had to avail themselves to attend, as this was a sister committee within the economic cluster.  Reciprocity in attendance was expected within the cluster. She would ask the researcher to prepare some background information in preparation for the colloquium.
The Chairperson also informed Members that the committee content adviser was leaving, as she had accepted a promotion within the economic cluster. She hoped the legislature would fast-track the process of appointing a new committee content adviser.

The meeting was adjourned.
 

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