Health Budget Review and Recommendations Report

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22 October 2014
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Meeting Summary

The Committee met to examine the Department of Health’s (DoH) budgetary review and recommendations report. Key issues raised by members included concerns about the format of the report, the information provided regarding the mandate of the Committee and the data itself and its accuracy. Could it be more recent? Clarification about the Compensation Commissioner for Occupational Diseases (CCOD) status as an entity of the DoH was requested and there were several issues relating to its finances which members made recommendations upon. Various grammatical and spelling errors were addressed in order to make the report more concise to its readers. Graphs illustrating the correlation between performance and expenditure were requested, alongside more information on block grants and the relationship between the DoH and National Treasury (NT).

Significant concern was raised about spending in the DoH, with under and irregular expenditure being an issue in relation to service delivery. Recommendations were also made regarding consequences for non-compliance, expressing appreciation for the MomConnect project, the phrasing of the non-financial recommendations, and the pharmaceutical manufacturing capacity of South Africa. The report was adopted with all amendments, corrections and additions.

Committee minutes for 17 September 2014 were adopted. 

Meeting report

Health Review and Recommendations Report
The Committee examined the Department of Health’s (DoH) budgetary review and recommendations report page by page.

Page 1
Mr AF Mahlaela (ANC) drew attention to the second paragraph and suggested the 11 pilot districts needed to be separated into 10 plus 1, because nationally it was usually 10 but they added 1. It needed to be clear to anyone reading what was part of the DoH's Accelerated Development Plan (ADP).

Mr H Volmink (DA) referred to the section on the National Development Plan (NDP), which spoke to goals and targets. That should be framed within the social determinants of health because the NDP went to great lengths to establish it as a point of reference.

Mr Mahlaela was unsure whether the mandate given in the report was in terms of the Act or whether it referred to the general mandate of the Committee. Other committees began with their own mandate first. It was not necessarily wrong, but could it be standardised?

Mr N Matiase (EFF) asked whether it was possible that more recent data could be referred to.

Mr I Mosala (ANC) said it was up to members to evaluate whether the data reflected in the report was different to that which Mr Matiase was referring to. If it were the same, the report could say according to the Twenty Year Review issued by the Presidency in 2014 and the Annual Performance Plan (APP) or assessment by the DoH, before continuing.

Mr Mahlaela said that when the DoH presented its annual report it was not exactly what was in the Twenty Year Review, which was the issue Mr Matiase had raised, especially relating to life expectancy. Could that be captured and expanded to show that life expectancy had moved from 60 to 61?

Members agreed to all of the suggestions.

Page 2
Mr Volmink commented that it was well put together and laid out a nice context for the rest of the report. There was a missing policy framework that should be mentioned. The Minister's 10-point plan detailed ways in which he envisioned achieving certain outputs. There should be a sentence stating that many of those outcomes were expected to be achieved through that plan, in addition to a brief explanation of it.

Members agreed to the suggestion.

Page 3
Mr Mahlaela said the Compensation Commissioner for Occupational Diseases (CCOD) confused him. The report said it was an entity, but when the Committee engaged with them they said they were not. They were listed as an entity in the annual report, so clarification was needed. It was not listed in terms of the PFMA. The second issue was around the method on 1.4.  The Committee had not dealt with the oversight report, only conducted an oversight visit. They were still waiting for the discussion on the report, but it was listed as one of the documents that had been considered.

The Chairperson said that the report was not yet finalised. Did Members request they have it before finalising the current report? Only one province was visited for oversight and Members were of the view that they could not accurately reflect on its state and what they picked up as they only visited once. It was one of the methods, should it be deleted? Perhaps it should be reflected in the document?

Mr Mosala suggested removing it. Even if members had it, it would not be used to reflect on the broader national perspective of the DoH because it was only a visit to one province.

Ms C Ndaba (ANC) referred to the issue raised regarding the CCOD not being resolved. Had the Committee made non-financial recommendations to the DoH?

Another member asked whether the FFC should be on the list of entities.

Ms Ndaba was unsure about deleting the oversight report, because the oversight had been done, so how else should it be captured?

Mr Mosala reiterated the wording with regard to the Committee's consultation on reports and documents. Oversight visits were not sufficient so it should be deleted.

The Chairperson stated the Committee would leave it until the DoH could clarify the grey areas.

Page 4
Members made no comments.

Page 5
The Chairperson noted that the CCOD appeared again. Until the matter was clarified, the Committee would continue to reflect on it as an entity in terms of the report.

Mr Mahlalea said that page 5 was the result of the previous recommendations. What about progress made on those recommendations? It should be illustrated in the report alongside those that were still outstanding.

Mr Mosala said only three of the many bullets on page 5 were reflected on page 6. It would be proper to get an indication of the responses of the DoH on their progress for all of them.

Members agreed to the recommendations.

Page 6
Mr Mahlalea said that 4.1 referred to the 2013/14 budget but indicated a review of the 2014/15 budget. Could the relationship between the two sentences be explained?

It was pointed out that the reference to 2013/14 was a typo - it should be 2014/15.

Mr Mahlalela commented that in that case the heading would also need correcting.

The Chairperson repeated the first bullet under 4.1and asked whether it had been structured correctly? Was it the role of the DoH or the National Treasury (NT)?

Mr Mahlalela said that everything collected went to the NT. There could not be a unilateral decision to say a certain portion must be retained. It had to be requested from NT. 

Dr W James (DA) asked what the regulations were that governed such distribution. If there was to be a specification as to the portion retained, who set the percentage? What was the size of the portion? In terms of financial regulations, how did it work?

Mr Mosala agreed that there was some confusion with the manner in which the paragraph was written. It was supposed to suggest the DoH work with NT in developing a method to collect revenue from medical aid patients, as there was currently nothing in place. The problem was the manner in which the first paragraph was captured that caused confusion and must be reworked to make sense.

Dr James recommended that when rephrased it said 'ensuring the DoH should work with NT to find an appropriate vehicle for the distribution of revenue between a province and national'.

The Chairperson said that there were other institutions with revenue collection issues. It was not that the system was not there, but that others are failing to do it.

Mr Mahlalela said that there were institutions that wanted to expand but had to apply to NT. The system should allow maximum collection of revenue and, as an incentive, there should be a portion that remained with the institution which would encourage them to raise more.

Dr Maesela asked whether the Committee was going to help try to make these recommendations binding on all of the institutions that were collecting revenue. How much was equitable for them to retain? If they were doing it on an ad-hoc basis it was difficult in terms policy formation.

The Chairperson said that would be factored in when doing observations on the recommendations of the report.

One member commented that the difficulty with putting it uniformly was that the capacity to collect was not the same. Capacity needed to gradually increase in every institution, and this would incentivise them. Once that was completed it could be uniformed.

Mr Mosala said that the most important thing was reworking the paragraph so that it spoke to the recommendation. As it stood, it was confusing.

Dr James suggested it be rephrased as follows: The National DoH should work with the NT to ensure all provinces develop the capacity to retain their due portion of the medical aid patient revenue.

The Committee agreed to the amendment.

Ms Ndaba said the overview and assessment of financial performance seemed like recommendations. This was because, when doing an overall assessment, observations were made with regard to the report then recommendations made.

Dr Maesela said he understood, because the observation had to be done before making recommendations. Members did not need to waste anymore time on the matter and could deal with it when necessary.

Mr Mahlalela stated that what was captured was the Committee's recommendations during the 2014/15 budget.

Mr Mosala commented that pages 15, 16 and 17 covered the Committee's observations and responses. The issue might be the manner in which that was captured. It was what was done in the budget review when the DoH presented.

Ms L James (DA) agreed. It was the recommendations being made just below 4.1.

The Chairperson suggested adding a paragraph to explain that. They were structured as recommendations, but were from a previous report before, for example, the oversight visit.

Mr Matiase suggested deleting the word 'recommendation' to be replaced with 'the following assessment was made'.

Mr Mahlalela said he was privy to other reports and the way they were structured. On the overview, that was what they did. What was written on the report was not an overview. What was needed was an overview and assessment of the recommendations.

The Chairperson said on pages 6-7 there would be a complete new format to reflect an overview of the recommendations for 2013/14.

Members agreed to this.

Page 7
Members made no comments.

Page 8
Mr Volmink said at the previous meeting they spoke about the difficulty with linking performance to expenditure. The table under 4.3 showed all the programmes and percentage spent. The table on page 13 then spoke about targets and percentages achieved. It would be valuable to have one comparative graph that compared the spending percentages against achievement percentages. It could show some interesting trends. For example, programme 1 had an 89.8% expenditure and achieved 78% of their targets, which was less than a 10% gap. On programme 2 there was a 40.1% expenditure but they achieved 74% of their targets. On the surface it would appear that they were getting good value for money and the budget could be readjusted. On programme 3, however, there was 99.3% expenditure and yet only 33% was achieved. That was a 66% discrepancy, which suggested more funding was needed for that programme. 

The Chairperson referred to 4.2. Should it be an observation, an overview or assessment of 2013/14?

Mr Mosala still believed the problem with 4.1 was the way in which it was captured. They were the Committee's recommendations, issues that had been raised with the DoH and corrective measures that must be taken forward. When they assessed the performance of the 2013/14, it related to the figures. As the new Committee, the report needed to have their observations, the recommendations they made and the response of the DoH before coming to their assessment of the financial performance of the Department. They were not only dealing with the content of the report, but the structure.

Ms Ndaba commented that the Committee should use the standardised format for writing reports in parliament. The overview and assessment needed to be corrected. In terms of the breaking down of programmes to reflect their spending and finances, that was correct. It showed what the programmes entailed and how they performed in terms of percentages and finances.

Mr Volmink suggested that 4.1 be taken out entirely and replaced with 4.2. Then, at the end before the AG’s report, 4.1 could be put there along with the last Committee's recommendations.

Mr Mahlalela said that there was a format followed by the Committee. 4.1 dealt with the previous committee budget report, not the current one. That it was why it was 2013/14, and there must be an assessment of that. Page 8 was not the current budget; it was 2013/14, as was the assessment. This was exactly how it should be structured and it could not be changed.

Dr Maesela said the recommendations were done for the other budget. It made sense to deal with the previous budget before following with the present 2014/15 budget.

Page 9
Members made no comments.

Page 10
The Chairperson said the last paragraph required a correction, as irregular expenditure had decreased not an increased.

Mr Volmink asked about economic value of the money invested in the entities. It would be useful to add a quantitative indication of whether they were achieving their targets. The return could then be seen for the money that has been invested.75:00

The Committee agreed to the recommendation.

Page 11
Mr Matiase commented on the CCOD budget rise from R221 million in 2013/14 to R255 million in 2014/15. He expressed concern about its mandate and how it accounted to the Committee. That was compounded by the report that stated it had received a disclaimer by not submitting its financial reports. There was a lot of money allocated and not accounted for, yet there was no clarity on their mandate, role or responsibilities. Members should reflect on the relevance of this entity, and whether such allocations were acceptable when it was not accounted for.

The Chairperson understood that the CCOD had appeared before the Committee to reflect on the challenges it faced. It was not that no work was being done. The Committee could not address all the challenges in the meeting, but it did need clarity from the DoH on what to do with regard to the CCOD's disclaimer audit.

Mr Mahlalela said they were making an assessment because the money had already been allocated. They needed to see if there was anything they could do to address the problem going forward. What was the account being managed by the CCOD actually called? It was not part of the budget members were dealing with. The one being approved was part of the DoH and had been accounted for. The disclaimer and the allocated budget were separate matters. One of the issues raised by the audit report on the Health sector was about its financial health. Of the ten, nine were of grave concern and one required urgent intervention.

Ms Ndaba said that on page 16 non-compliance of those entities was listed as a challenge facing the sector.

Page 12
A Member said if a function had been shifted with consultation with the FFC it had no legal status, but money was being spent by the DoH on that. The other issue was the difficulty in evaluating whether the sector was under funded due to the waste that was going on. Could that be raised as a matter as well?

Ms James did not remember the FFC outlining the implications. The Committee needed to engage the DoH to get an understanding of the situation. As for block grants, clarity was needed from the DoH. It touched on issues raised about unauthorised and irregular expenditure. That contributed to the wastefulness within the DoH, alongside skill shortages and management style amongst others. When members did their oversight, those were areas that must be looked into. The money was there for the DoH; it was the way in which it was being utilised that was a problem. The FFC did say they were willing to come back and expand more on some of the areas of concern if Members felt it necessary.

Ms Ndaba said she would also like more information on the nature of a block grant. The Committee was concerned about the under spending of the grant for infrastructure and on NHI. Members needed to check whether the method of funding was the problem - they should recommend a review.

Ms James said that the under spending on the infrastructure grant could have been lack of capacity. When looking at the facilities available, they should look at the way in which they could be upgraded and not only where to build new ones. Maintenance was important.

Mr Volmink added that the Committee should ensure they had legal opinion at the workshop. The FFC spoke about the potential unconstitutionality of the block grant but there was no consensus.

Dr Maesela said funds could be taken from equitable allocations to the provinces to deal with renovations. The intention of the block grant was to deal with infrastructure needs that could not be from the allocation to the province. It could be unconstitutional because money was taken from provinces to do other work.

Another Member said it was both the AG and the FFC that observed the financial problems in the Health sector, so they were not only informed by one source.

Dr James said block grants were the result of provinces not committing money the way they should in order to reach targets for improvements in Health. If the national ministries were more active in holding provinces to account, the NT could withhold money. National ministries were not simply policy units - they could be operational in terms of preventing provinces from spending money in a particular way. The real issue was that health outcomes were not good given the amount of money that was put in. Irregular expenditure was 11% of the budget, which was not necessarily bad, but wasteful expenditure accounted for 0.23%. That was not irrelevant when the budget was R289 billion, so that was where the Committee should focus their attention.

Mr Mahlalela raised the issue of lack of coordination as a matter that could not be ignored. It was one of the challenges that prevented work being carried out when it was supposed to. There was no system in which local government engaged with the national DoH, so why were they providing health services? There was no system in place and they relied on provincial government.

Ms Ndaba said committees needed to act upon the persistent non-compliance of departments. The FFC raised it, and in the past 3 years AGSA had raised the non-compliance issue of wasteful and irregular expenditure. Should the Committee just complain without taking any steps to combat the problem? It should assist in ensuring departments complied, or the Committee was not doing its work.

The Chairperson referred to the issue of coordination. It was a process that had been engaged on in the last term but Members were not confident in saying that the outcomes had been favourable. With regard to money taken to other levels without a mandate, the Chairperson suggested Members ask for clarification from the DoH on the matter. As for block grants, they were dealing with their possible unconstitutionality as raised by the FFC so they should engage more with them on the matter. 

Mr Mahlalela said the challenge was that, until such time as the FFC was consulted, the transfer of money to a different function had no legal status. There was no discussion on it, but the DoH was performing the functions. This report would go to the DoH when it was adopted so that the Committee did not have to wait to meet with them. If it were picked up now, the matter could be looked at as soon as possible and the Committee could possibly make a recommendation around it.

Dr Maesela stated that he did not think the Committee should have to wait. Irregular expenditure and non-compliance may cause unnecessary contradictions, so the two parties should be invited to come before the Committee to resolve the issues before adoption.

The Chairperson said that would be looked into when dealing with recommendations at the end.

Page 13
Mr Volmink again raised the issue of the link between performance and expenditure. A graph linking them both would be very valuable. If this were done on a regular basis the Committee would be able to better evaluate how adjustments to the budget and the application of oversight actually brought those lines together, because the ideal would be 100% expenditure and 100% of targets reached. The gaps between them could be because they gave too little money, or not enough money, and there was a need to see investments measured according to achievement of targets. Members could then see where the problems were and what the effective mechanisms would be to bring the lines together, even at a sub-programme level.

Page 14
Members made no comments.

Page 15
Dr Maesela pointed out that for programme 5 the targets reached stood at 41.6%. There was a lot of money not accounted for and there was no reason given for the under spending, even though they requested more. They need to know that the Committee was concerned about the matter otherwise the problem would continue.

The Chairperson asked for clarification on the precise nature of the problem. She reminded members that the report was not just a reflection, but a way to put recommendations to the DoH which they would then have to follow up. Oversight was one mechanism in which to do that. The Committee's concern was for South African citizens to get better service in terms of health. Dr Maesela's issue could be raised when it came to the recommendations.

Dr Maesela referred to the subdermal implant - would it not interfere with the systems going forward?

Page 16
Ms Ndeba said the DoH had secured funding from the Global Fund for HIV. What about the private sector? It was not contributing to this, where did it come in?

Mr Mahlalela said the issue of financial health and wastage needed to be added under 7.2 as they were a challenge within the sector. On 7.4, under governance, the issue of coordination should be raised.

Mr Volmink referred back to 7.1 - the Global Fund spoke to Correctional Services and mining communities, but were members certain that there was no funding specifically for mine workers? Could that be checked?

One Member said that they had requested the DoH to ensure all mines were found and registered, so that they could pay up to the CCODs. Tax could be collected from them and used to increase the fiscal of the DoH. The private sector had contributed money to the Ebola crisis.

The Chairperson said the contribution of the private sector should be looked at, including that by mines. There were issues that cut across several sectors - agriculture, mining, labour and education, for example. The Committee should look into it the role of the private sector and gather data. Members raised relevant questions but should remember they were developing a report. Some of the questions should have been asked of the DoH for a response. They took issues raised seriously, but the timing could be difficult.

Ms Ndeba commented on the issue of data for the CCOD. How was it recorded? The issue was raised at the presentation as a problem because data was privately owned, making it difficult to get hold of.

The Chairperson said it was up to the Committee to make a follow up, identify the problem and speak with the relevant institutions. Should the Committee make the follow up first? Or should they restructure the recommendation?

Ms Ndeba asked whether they could write it as a question to the Department.

Page 17
Ms Ndeba said there was an issue regarding EEE, APP and spending, amongst others. There was some confusion there.

Mr Mosala said it was reflected on 7.3 under technical issues.

Mr Mahlalela said 7.6 need to be reworded. It needed to give the overall performance of 54% before going explicitly into the most under achieving programmes. That would allow Members to understand it in relation to the spending of the budget as it was not congruent. The budget was at 90% whilst achievement was 54%, but there was no relationship between the two. It needed to be written in a way that was easier to understand.

Members agreed to the recommendation.

Page 18
A Member said the DoH indicated how they assisted with financial management in struggling provinces such as Mpumalanga. The AG's report suggested the whole sector was of financial concern, but Free State was unread. That was not mentioned.

The Chairperson asked how they would factor in that the Free State's DoH was under administration of the Free State Treasury. It needed to be reflected so that they were aware of what the province was doing and could be checked by the Committee.

Mr Volmink commented on the non-financial recommendations. One of the things raised with the DG was the threat of multi-drug-resistant tuberculosis. It was such a threat to the public that it needed to come out as a strong non-financial recommendation. For example, something along the lines of 'ensuring the full implementation of the management of drug-resistant tuberculosis strategy that was developed in 2012' with the intention of putting pressure on the DoH to make sure it was under control.

The Chairperson questioned why the statement regarding primary health required more funding to be viable was located under non-financial recommendations.

Dr James agreed, that was not a non-financial recommendation. Would it not make sense to put a quantum on it in terms of money? It was very vague.

The Committee agreed it was a financial recommendation. The Chairperson asked Dr James about a figure.

Dr James responded that he did not have any numbers to hand about what was required in terms of a quantum. If figures were not available they should leave the numbers out.

The Chairperson asked whether appreciation should be expressed for the MomConnect project that the Minister had engaged on. It was a powerful tool in terms of addressing the mortality rate. It had been launched in a number of provinces where technology was used for information and advice about pregnancy and about 60,000 pregnant women had been successfully registered. It had limitations but was a powerful and profound project that should be reflected as an appreciation.

One of the Members asked whether the pharmaceutical manufacturing capacity of South Africa should be included in the report.

A researcher responded that it was a separate issue but related to three things - medicine manufacturing, condom manufacturing and the review of patent laws. This highlighted issue spoke to the review of patent laws in order to bring down the price of medication within the country. The other two issues raised during the meeting included a strategy for South Africa to increase condom production and government support for the manufacturing of medicines.

Dr James did not understand the issue around patents, in that it was their renewal that was the problem. Companies renewed them on the basis of a small change to chemical properties. That costs money, which kept medicine prices high.

Dr Maesela said the sentence referring to the renewal of patents needed to be clearer. Patents elapsed, but it did not mean the original formula could not be used to produce the medicine.

Dr James said that, whilst the idea of South Africa producing its own medicines was nice, if they could buy them cheaply globally there was no need for them to be made locally. What usually happened in the pharmaceutical world was attracting a large company to invest in a country to manufacture a drug, which created jobs for local people. That needed to happen in South Africa. From that perspective, the Committee would like to see government promote public-private partnerships to attract the investment of pharmaceutical companies.

The Chairperson asked whether it would not be important to make medicines more affordable moving forward. Why did South Africa have to depend on foreign countries?

Ms James suggested they find out why the country was not making its own medicines in order to know how to address that.

Ms Ndaba said it was important that South Africa could produce its own medication.

Dr James commented that it was important to consider economics when living in a globalised world. South Africa lost the capacity to produce vaccines for foot and mouth disease to Botswana. That was because it was cheaper from there than locally. Therefore, when buying medicines worldwide, South Africa bought the cheapest available. The country needed to boost the manufacturing policy in pharmaceuticals. The industry needed to become more competitive so that South Africa could become a global supplier. A clause encouraging all players to boost South Africa's biomedical and pharmaceutical production capacity would be supported, rather than making it a stand alone statement.

Dr Maesela said that there was no reason that they could not support local manufacturers and export. The loss of the ability to manufacture foot and mouth disease vaccines was not because they were incapable of making it, there were economic imperatives of those behind the business. South Africa had the necessary flora, which was taken and exploited for production in Europe. If the country could fund the research, it could have the patents.

The Chairperson said it was a broad debate. The Committee was interested in ensuring South African citizens could access affordable treatment. They would craft a general statement that would be circulated to gather the Members' views.

Dr James agreed South Africa needed to obtain medicines as cheaply as possible; the process of getting there was another issue.

Dr Maesela proposed the capacity of entities to collect money should be accelerated. Under spending and requesting more money should be discouraged. An overspending should be needed for further funding.

Mr Mosala was under the impression that all the practical recommendations made from the beginning would be incorporated into the report because none of the members objected.

Ms Ndaba added that there were issues raised that were not concluded, so they had to check that they were captured correctly. With regard to the CCOD, the DoH must provide the Committee with details of those they had assisted. They should also provide a list of contributing mines. There must be a recommendation regarding consequences for non-compliance, under expenditure and irregular expenditure.

The report was adopted inclusive of all the above amendments, corrections and additions.

Adoption of minutes
Minutes of Committee meeting held on 17 September 2014 were adopted.

The meeting was adjourned.


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