Transport Budgetary Review and Recommendations Report

Meeting report

Draft Budgetary Review and Recommendations Report (BRRR)
Ms Valerie Carelse Committee Secretary commenced the presentation to the Committee with an overview of the Report, touching on the mandate and methodology of the Committee. The Report listed the entities that the Committee had interacted with. The Report also spoke to where information contained in it had been accessed from ie the State of the Nation Address, Department of Transport (DoT) Annual Report and Financial Statements. The Report also contained a synopsis of the Department’s Key Performance Achievements for the 2013/14 financial year- this took up a sizeable portion of the Report. It also contained a report of the Auditor General of SA. The Department had received an unqualified audit report for eight consecutive years. There were however material findings on some of the DoT’s Programmes. An analysis of the financial management of the Department for the financial year 2013/14 was also provided. The observations and recommendations of the Committee were also contained in the Report (see document). Recommendations were made in relation to observations made by the Committee and were directed towards the Minister of Transport. In conclusion there was a summary of reporting requests which entailed requests for the DoT to provide the Committee with information.

Discussion
Mr C Hunsinger (DA) said that it was general knowledge that there would be budget cuts and decreases in funding for the upcoming financial year. However, most entities were asking for increases in funding- it should be included in the recommendations of the Report that the Committee requested a review of the budgets of regulatory bodies in light of their requests for increased funding.

Mr L Ramatlakane (ANC) noted that the structure of the Report should be such that it reflected the concerns of the Committee that there were problems which recurred year after year. The question was also about how the Report was to be linked with reports by agencies. Greater specifics were needed on the funding of agencies. Would the agencies simply be listed in the Report or would there be standalone reports on them? The Report should also reflect whether the DoT was implementing policy or not. It should be stated that recurring problems were not being addressed. The Committee should re consider the structure of the Report and the Report should include an assessment of previous financial years for comparisons to be made with the financial year under review.

The Chairperson speaking to the issue of agencies said that there were some with discrepancies and it should be captured in the Report. Were there agencies that excelled? It was not good enough just to list them. It should be a Committee observation why agencies could not do certain things. The Committee needed to consider the methodology of the Report and how it intended to factor in observations. It was suggested that the Committee go through the Report page by page, heading by heading.

The Committee agreed.

The Committee agreed to reword the paragraph stating the mandate of the Committee.

Reviewing the purpose of the BRRR as captured in the Report, Mr Hunsinger suggested that a comparison be made between the current BRRR and that of previous years with a view to comparing observations and recommendation that had been made.

Mr Ramatlakane suggested the Committee also reviewed the DoT’s previous years’ Annual Reports and Annual Performance Plans.

The Chairperson said that it would be useful as it would allow the Committee to see whether the DoT was able to meet its aims and objectives.

Mr Ramatlakane suggested that the Report needed a section that would reflect policy overview.

The Chairperson agreed that the Report should include a section which mentioned policy imperatives that the DoT needed to take into consideration.

Mr Ramatlakane opined that the current template of the Report needed to be amended and suggested that the Committee rather use the template which the Chairperson had emailed to members. It was a broader template with wider scope. The information at hand should be incorporated into the new template instead of making continuous changes to the existing template that had been used by the Committee Secretary and the Committee Researcher. .

The Chairperson asked the Committee how members felt about using the new template that had been earlier circulated.

Ms Carelse stated that the template used to compile the Report was used by the Committee Section. The template had been introduced in 2013. The template did speak to government policy documents like the SONA. It also allowed for the requesting of any information that had not been received. Information on virements had not been received. The need to reflect on policy imperatives was understood.

The Chairperson said that the Report had covered most of the issues. Policy imperatives were an issue that needed to be discussed and included in the Report.

Mr Ramatlakane responded that information on virements was available from National Treasury.
It meant a little extra effort on the part of the Committee staff but it needed to be done.

The Chairperson asked if the Committee agreed to the insertion of a section to cover policy imperatives.

The Committee agreed.

Ms S Boshielo (ANC) said that figures on performance were also needed.

Mr Ramatlakane stated that the Report should first cover financial review before dealing with the DoT’s key performance achievements. Financial information on the DoT was available from National Treasury.

Mr Hunsinger agreed with Mr Ramatlakane.

The Chairperson stated that members were on the right track-t a financial review should be factored into the Report.

Mr Sifiso Ngesi Committee Researcher agreed that information on virements was available and sought clarity on which template the Committee Staff should be using- the newly suggested one or the one currently being used. The practicability of the exercise given the time constraints was of concern.

The Chairperson responded that members would be available to assist.

Mr Ramatlakane asked which areas Committee Staff needed help with.  

Ms Carelse noted that information on virements would be obtained.

The Committee moved on to the section regarding the performance of programmes in the DoT.

Mr Hunsinger referring to the Administration Programme said that it needed to be reflected in the Report that the verification and reconciling of assets had to be done manually. He suggested that the Committee make a recommendation regarding the asset issue.

Mr Ramatlakane said that the DoT had complained that capacity problems had not allowed it deal with the asset issue as it desired.

On the paragraph speaking to the Integrated Transport Planning Programme of the DoT, Mr Ramatlakane said that a paragraph was needed to encompass the view of the Committee.

The Chairperson added that the Committee needed to review the performance of the Programme for the previous two years as well. It would give the Committee some idea of what was happening and what the consequences should be.

On the paragraph regarding the Rail Transport Programme, Mr Ramatlakane asked whether 598 or 566 rail coaches were upgraded. There seemed to be a discrepancy in figures.

Ms Boshielo remarked that a paragraph expressing the Committee’s view was also needed- the Programme seemed to do nothing else except procuring rolling stock.

The Chairperson agreed that the Rail Transport Programme only seemed to be good at procuring rolling stock.

Referring to the Road Transport Programme paragraph, Mr Ramatlakane asked what had happened in the previous financial year regarding blacktop patching.

Mr Hunsinger suggested a recommendation to the effect that there should be better alignment between road agencies to prevent road carnage.

On the Civil Aviation Programme paragraph, Mr Hunsinger was concerned about the statement by the DoT that there was a general disaster management plan in place for all spheres of government and therefore there was no need for to draft a disaster management plan specifically for aviation.

Mr Ramatlakane noted that the Committee had not discussed the issue.

The Chairperson said that perhaps a recommendation could be made in this regard.

Mr Ramatlakane suggested that in the recommendation made it must state that the Committee was concerned about the issue and that a discussion with the DoT and Civil Aviation should take place.

The Committee agreed.
 
Mr Hunsinger referred to the paragraph on the Marine Transport Programme and the issues pertaining to the administration and services of the current ship registry. In the Report it was stated that no progress was made but this was not factual, some progress was being made.

Mr Ramatlakane confirmed that progress was being made and stated that a paragraph was needed expressing the views of the Committee. The capacity constraints of the DoT and those outside the DoT should also be captured in the paragraph.

On the paragraph regarding the Public Transport Programme, Ms Boshielo pointed out that the Programme had overspent because of transfer of subsidies. 

Mr G Radebe (ANC) was concerned that delays in processes was being caused by the National Economic Development Council (NEDLAC). The Report should reflect that the delays caused by NEDLAC affected processes.

Ms Boshielo noted that if the taxi scrapping programme could not be afforded then there was no point having it. The issue of scholar transport was another issue which needed to be finalised.

Mr M De Freitas (DA) impressed upon members that there needed to be a Committee Recommendation on the issue of scholar transport.

Mr M Sibande (ANC) noted that the taxi recapitalisation programme had gone on for too long- Iit should have been completed. Scholar transport especially relating to rural areas was a concern. There needed to be strict laws on the transport of kids.

Mr Ramatlakane pointed out that there was no integration taking place on transport. There should be an integrated modal system. At the moment each city was doing its own thing. The DoT needed to brief the Committee on what was being done. The issue needed to be captured in the Report. There was a need to review legislation on public transport.

Mr Hunzinger stated that scholar transport was an important issue. 

Mr De Freitas concurred with the inter modal transport issue raised by Mr Ramatlakane. The issue needed to be discussed at the Committee’s strategic workshop The Committee’s concern over the issue should be added as a recommendation in the Report. The recommendation should also state that the DoT needed to address the issue. The responsibility of scholar transport had shifted to the DoT- why was it not happening? Scholar transport used to be the responsibility of the Department of Education, where it had been a total failure.

Ms Boshielo explained that the delay was due to budgeting. The funding for the scheme was still at the Department of Education and had not been transferred to the DoT. The funds would only be transferred in February as the Department of Education did not wish it to reflect on their part that they were underspending. The proper way was for National Treasury to directly transfer funds to the DoT.

The Chairperson noted that the taxi recapitalisation issue and the scholar transport issue needed to be discussed by the Committee at another time.

Regarding the paragraph covering the Report of the Auditor General of SA, Mr Ramatlakane suggested a comparison be made of the audit outcomes going back two years. A paragraph should be added where the Committee would note the inability of the DoT to implement a turnaround strategy to deal with the concerns of the Auditor General of SA.

Mr Hunsinger asked whether the Report only reflected the findings of the Auditor General without the Committee’s comments.

Ms S Xego-Sovita (ANC) referred to the programme that provided bicycles for scholars to travel to school and said that a concern was that scholars were being hijacked and bicycles stolen. There were instances where entities did not agree with the Committee’s propositions in regards to the Auditor General’s audit report.

The Chairperson said that the Committee would look at previous years audit reports of the Auditor General in order to identify recurring issues.

Ms Carelse pointed out that regarding the Auditor General’s audit reports for entities, there were only audit reports for the previous financial year and not for years prior to that.

The Chairperson said that would suffice.

Mr Ramatlakane suggested the Committee’s concerns should be reflected under each of the paragraphs of the Auditor General’s Report within the BRRR. It should be reflected that the Committee stood by the findings of the Auditor General. The DoT if it had issues with the Auditor General should sort it out prior to the completion of the audit. The new template should be followed in capturing the analysis of the financial management of the DoT for the 2013/14 financial year. 

Committee Observations as reflected in the Report
Predetermined objectives – The Committee noted that the performance indicators of the DoT were not well defined and targets were not specific. The reported performance information was not valid, accurate and complete when compared to source information or evidence provided. These findings had been raised with the DoT and its entities in previous financial years. The Committee was concerned that the matter extended to the entities of the DoT such as the Cross Border Road Transport Agency (C-BRTA), the Road Traffic Management Corporation (RTMC) and the South African Maritime Safety Association (SAMSA). The Committee further queried whether the DoT and entities aligned their Strategic Plans and Annual Performance Plans with the National Development Plan.

Supply Chain Management - During its meetings with the DoT and entities, the Committee noted the lack of effective controls to ensure compliance with internal policies with regard to supply chain management. The Committee was not convinced that adequate monitoring controls were in place to ensure adherence to the internal policies and procedures, as well as compliance with laws and regulations.

Human Resource Management – The Committee noted that the DoT had a vacancy rate of 25% and that vacant posts were not advertised within 6 months after becoming vacant and that these posts were not filled within 12 months. The Committee was of the opinion that the DoT lacked effective human resource management to ensure that adequate and sufficiently skilled resources were in place. This affected service delivery in the DoT and entities.

Mr Radebe said that the issue of vacant posts of the DoT was an old issue. The DoT complained about lacking capacity yet it did not fill vacant posts. Information and Communications Technology (ICT) was a problem in the DoT and its parastatals as well.

The Chairperson said that the issue of vacancies in the DoT had to be emphasised. Setas were government parastatals which frustrated government processes. There were also costs incurred in using parastatals.

Mr Sibande said that things needed to be prioritised- timeframes needed to be set for the filling of vacancies.  

Information Technology Controls – The Committee noted the challenge in the DoT with Information Technology management controls and the impact thereof on confidentiality, integrity and availability of financial information.

Material misstatements to financial statements – The Committee noted the opinion from the Auditor General that internal controls implemented were not effective in ensuring that the financial statements submitted for auditing were free from misstatements in the disclosure notes.

Financial health of entities – The Committee was particularly concerned about the uncertainty that existed pertaining to whether the entities SAMSA, C-BRTA and the Road Accident Fund (RAF) would be able to fund their future obligations.

Legislative delays – The Committee noted the impact of delays in the processing of legislation on the DoT and entities. During the interactions with entities it became apparent that delays in the processing of legislation were negatively affecting the ability of entities to optimally fulfil their mandates. In the case of the RAF, the Committee noted that legislative delays had a material financial impact (R14bn growth in liabilities in one year). The Committee requested in its Budgetary Review Recommendations interaction that the DoT provide the Committee with a status quo report on outstanding legislation.
 
Mr Ramatlakane asked whether in the observations the Committee could state what should be done.

Ms Carelse asked if the Committee would perhaps wish to marry the observations with the recommendations of the Committee.

Mr Ramatlakane responded that the two should be treated sepertely.

Mr Ngesi said that with every observation there was a respective recommendation.

Ms Boshielo felt that entities should integrate programmes that were similar. Duplication of activities and rationalisation were also issues to consider.

Mr Radebe asked whether Ms Boshielo was suggesting that the number of parastatals be reduced.

The Chairperson noted that sometimes mandates overlapped.

Mr Radebe requested the Committee Researcher to conduct research into parastatals that have work which overlapped. The Committee could be provided with a report on the research done and the Committee would then be in a position to make recommendations to the Minister. There was perhaps a need to reduce the number of parastatals. The reason why Setas were reduced was because there was overlapping responsibilities. Many were not happy with the decision but it needed to be done. In total there were 18 parastatals and the figure was considered too huge.

The Chairperson stated that perhaps an observation could be included in the Report in this regard.

Mr De Freitas noted that there was a tug of war between Transnet and PRASA. In the end public transport was suffering. If Transnet wished to be territorial, it was perhaps best to place PRASA under the Department of Public Enterprises.

The Chairperson said members had to keep in perspective the fact that the DoT was the custodian of transport.   

Ms S Xego-Sovita (ANC) suggested that the Committee recommend to the Minister to prioritise the scholar transport policy.

Mr T Malaudzi (EFF) supported the suggestion made by Mr Radebe on the research to be done.

Mr Ramatlakane took a different view towards the research. He was concerned that if the research was done the debate may move towards a restructuring debate which was not  within the Committee’s competency. It was a total different debate. The debate was whether the DoT was properly structured- it was suggested that for now an observation be made that there was duplication.
The Chairperson said that Mr Ramatlakane had made a counter proposal to Mr Radebe.

Mr Sibande said that this was a different debate altogether.

The Chairperson said that some members were of the view that the Committee makes an observation and recommends that the DoT reviewed policy and legislation that guides entities and that the research should not be done.

Ms Boshielo suggested that perhaps desktop research from a legislative point of view be done to identify where the problem was and urged the Committee not to shy away from difficult issues.

The Chairperson suggested a middle ground. The Committee could have an observation of discrepancies. The Committee could also recommend that the DoT reviewed legislation and policies and if other departments were involved, start a discussion.

The Committee agreed. 
 
Committee Recommendations to the Minister as reflected in the Report
-That adequate reviews be performed to ensure that targets were in line with the SMART Principle. Performance indicators should be clear and easy to understand and controls should be put in place to ensure that information reported by the public entities was valid, adequate and complete.

-The Committee was concerned that recommendations on findings that had been made by the Auditor General in previous financial years had not been implemented and therefore recommends that recommendations made by the Auditor General be implemented. Action plans and their implementation by the DoT and entities were to address the critical audit findings. The Committee reiterated during its deliberations that audit committees in the DoT and public entities should monitor risks and quarterly progress. The finance department of the DoT and entities should further be capacitated with the appropriate skills to prepare credible financial statements.

-That established controls and processes be adhered to at all times in the DoT and entities when procuring goods and services. Officials in the Supply Chain Management units should be adequately trained on the latest applicable prescripts. Adequate corrective measures should be put in place to address transgression of the applicable prescripts.

-That the eNaTIS system transfer progress plan be monitored. The Committee would be requesting regular feedback on the progress made to take over the system from the service provider.

-The advertising and filling of vacant posts, especially key vacant posts should be prioritised in the DoT and prescribed recruitment processes be followed at all times. The Committee would monitor the progress of the DoT in filling key vacancies.

-The Committee further recommended that the Minister monitor the process with regard to oversight over the public entities and would request regular feedback on key concerns at these entities.

-That the financial sustainability of entities be prioritised. The Minister had to ensure that entities had adequate human and financial resources available to achieve predetermined objectives. The Committee would engage with the DoT and National Treasury over the matter.  

-That the Strategic and Annual Performance Plans of the DoT and entities be aligned to the National Development Plan.

-Legislative delays should be addressed as a matter of urgency. The Committee would regularly request updates from the DoT on outstanding legislation.

-The Committee commends the unqualified and clean audits received by the DoT and its entities but recommended an increased focus on service delivery.

Mr Ramatlakane pointed out that the lists of observations and recommendations by the Committee were by no means a closed list. Members could contribute further to the lists  It seemed the Committee had not made comments on all agencies.

The last portion of the Report contained a summary of reporting requests by the Committee. Not all the requests had timeframes attached to it.

Mr Ramatlakane suggested that where no timeframes were stipulated, 90 days be given to fulfil requests.

For instance the DoT had been requested to provide the Committee with a legislation status report by the 18 October 2014. The deadline had not been met. The Committee gave the DoT up until the close of business the present day to meet the request.

The Committee agreed on a brief meeting the following day to finalise the BRRR.

The meeting was adjourned.