2014 Medium Term Budget Policy Statement: Public Service Commission briefing

Standing Committee on Appropriations

04 November 2014
Chairperson: Mr N Gcwabaza (ANC) (Acting)
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Meeting Summary

The briefing by the Public Service Commission (PSC) on the Medium Term Budget Policy Statement (MTBPS) focused on the 14 government departments that represented the five priorities of government: decent work and sustainable livelihoods; education; health; rural development, food security and land reform; and the fight against crime and corruption. With the call for reduced public spending, and for doing more with less, the public service had to focus on smarter planning. The ongoing neglect of appropriate management action against cases of poor performance needed to be revised. There had to be continuous and random scrutiny by Parliament of every institution’s performance against plans.

Management Performance Assessment Tool (MPAT) scores were presented. The briefing looked at leadership, HRM practices, labour relations and governance. HRM was the poorest performer on MPAT scores, due to poor performance management of senior managers and Heads of Departments (HoDs), and lower levels for planning and disciplinary cases. The public service had to ensure that anti-corruption measures and capacities were strengthened. Increased access to housing had to remain a key focus area for government.

In discussion, it was remarked that overspending and underspending were not dealt with severely enough. Perpetrators of fraud and corruption had to be identified, and money recovered. It was remarked that the poor HRM scores for MPAT boded ill for the public service. It was felt that the sanctions did not reflect the seriousness of offences. Municipalities were setting too easy or impossible targets.

The assessment of HoDs and vacancies received much attention. The PSC was asked to comment on the pronouncement by Treasury, that funded vacancies not utilised would be frozen. There were critical remarks about the inability of departments to fill vacancies, and general concern about the lack of HRM capacity. There were questions about retention and recruitment strategies, and vetting. There was concern about the signing of performance contracts.

It was asked if the government was lagging behind with IT, and what the role of the State Information Technology Agency (SITA) was in that regard.

Meeting report

Nomination of an acting Chairperson
Mr N Gcwabaza (ANC) was nominated in terms of rule 130 of the National Assembly, to act as Chairperson in the absence of Mr P Mashatile (ANC), the Committee Chairperson.
Briefing by Public Service Commission on Medium Term Budget Policy Statement
The Standing Committee was briefed by Commissioners Phumelele Nzimande and Lulu Sizane, and Ms Carmen Domingo-Swarts, Director: Programme Evaluations. Data in the presentation focused on 14 government departments that represented the five priorities of government: decent work and sustainable livelihoods; education; health; rural development, food security and land reform; and the fight against crime and corruption. With the call for reduced public spending, and for doing more with less, the public service had to focus on smarter planning. The ongoing neglect of appropriate management action against cases of poor performance needed to be revised. There had to be continuous and random scrutiny by Parliament of every institution’s performance against plans.

Management Performance Assessment Tool (MPAT) scores were presented. Human Resource Management (HRM) scores were the poorest, with a compliance rating of 34 percent. The briefing looked at leadership, HRM practices and labour relations. A section on governance looked at expenditure against performance; quality of performance information; vacancy rates; the filing of performance agreements; the National Anti-Corruption Hotline; the financial disclosure framework, and financial misconduct. Human resource management remained the poorest performer of the four MPAT areas, due to poor performance management of senior managers and Heads of Department (HoDs), and lower levels for planning and disciplinary cases. The public service had to ensure that anti-corruption measures and capacities were strengthened. Increasing access to housing had to remain a key focus area for government.

Mr M Figg (DA) praised good work done, but would have liked to see small business included in the list of departments on slide 7. Chapter 9 institutions had also been excluded. Only the SAPS and Justice were included.

Ms Domingo-Swarts replied that the departments selected were ones that had presented previously. Information about the previous two years for those departments was available. Departments were requested to include norms of expenditure.

Mr Figg remarked that overspending and underspending were not dealt with severely enough. Heads of departments were not reporting properly. There was lack of capacity and a prevalence of incompetence.

Mr Figg referred to only 25 percent of performance agreements being submitted by HoDs by the due date (slide 27). Action had to be taken against the errant HoDs. Being in an acting capacity was no reason for not performing.

Ms Sizane replied that she concurred about an acting capacity being no excuse for not signing a performance contract.

Mr Figg said that he agreed with the statement on slide 47, that government had to rethink its strategy in dealing with corruption. Government had to get back the money and identify perpetrators.

He asked why there had been a decrease in the ownership of houses.

Ms Domingo-Swarts replied that it was more a matter of a decline in the quality of houses.

Mr McLoughlin said that he had remarks to make which were not to been seen as critical. It was stated on slide 5 that the PSC had conducted inspections at service delivery points, as well as public hearings. He advised that inspections be unannounced. If an appointment was made, everything would be made to seem in order beforehand. An unannounced visit could catch people out.

Ms Sizane replied that the PSC did in fact carry out unannounced inspections. The Minister had commissioned an unannounced visit to the Department of Transport. The PSC was shocked to see the condition HRM was in.

Mr McLoughlin thanked the PSC for the focus on significant improvement of management practices in the public service (slide 6).

He would have liked to have seen water and sanitation included amomg the prioritised departments on slide 7.

Ms Domingo-Swarts responded that she agreed with that.

Mr McLoughlin remarked that he was seeing to many “woulds” and “shoulds”. The term “should” implied that things were not happening. It implied that there had been no previous assessment of management practices.

He referred to the 34 percent MPAT score for HRM, indicated on slide 11. The private sector would fail without motivated workers, as would the public service. The 34 percent boded ill for the public service.

Mr McLoughlin commented on leadership and HRM practices on slide 28. There had been a lack of investigation into non-compliance, and sanctions did not reflect the seriousness of offences. When left to their own devices, people could not police themselves. Favouritism set in. The refusal of applications for early retirement by police officers that had been referred to, was probably because those people were not well liked. Such matters had to be investigated.

Ms Sizane replied that it was difficult to standardise sanctions. The disciplinary process had to produce sanctions. There were various disciplinary committees and different merits in every case. There had to be proposals for consistency.

It was unacceptable to not grant early retirement to a person who was too sick to deliver. Health risk officers had to make recommendations.

Mr McLoughlin referred to slide 17, which identified governance issues. There was definitely something wrong. Target setting was way off the mark, and there was rampant corruption. Too much money was spent for too little. Municipalities set their own targets. Easy or impossible targets could be set. It would be noted that four meetings had been attended, when more was needed to actually achieve something. The question was, how relevant was the information?

He referred to the quality of performance information, as shown on slide 24. He asked if it was possible that departments did not keep records because they did not want to disclose performance information.

He noted that in 2013 no HoD had been assessed. It was a cause for great concern. Every HoD had to be assessed at least once a year. It could not be known if they were performing. He asked if there were sanctions in place. There had to be action when a performance contract was not signed. The question was how to hold HoDs to account.

Mr McLauglin suggested that numbers, as well as percentages, be given. If only one person was doing something, a 100 percent score would mean something completely different to what it would be when more people were involved. The system was being manipulated. People were ticking boxes about targets. Best results were not being obtained from people. There had to be incentives to do more.

Ms R Nyalungu (ANC) asked who was responsible for vetting. She asked what happened if the work was not done.

Ms Sizane replied that the State Security Agency (SSA) did the vetting. The national vetting strategy had come into being in 2006. The PSC had called the SSA after complaints from departments that the SSA was not making progress. The SSA lacked sufficent capacity for the volume of work. Sometimes departments required the re-vetting of people who had already been vetted in another department, thus adding to the burden. The SSA was assisted by the South African Qualification Authority (SAQA), which verified qualifications. There were people who had a degree only in their dreams. Certificates were manufactured. Cabinet had called for verification. But SAQA was charging fees without delivering. The PSC would advise that service level agreements must be signed. Re-testing for qualifications cost money.

Ms Nyalungu asked what made people move between departments. She also wanted information for the current term on changes of HoDs.

Dr C Madlopha (ANC) commended the valuable information presented. There was forward thinking to be seen, especially in the initiatives to enable new Ministers to grasp where they had to start. As a result of PSC recommendations, there was greater stability with regard to HoDs.

She referred to lack of capacity. Planning had to be compulsory, to strengthen the capacity of the state. She asked what was currently being done about the lack of HR capacity, and vacancies. The low MPAT scores for HRM pointed to a problem. She asked what was being done to effect an HRM turnaround. Unemployment was high. The President had declared decent jobs a priority.

Dr Madlopha referred to corruption challenges. Sanctions did not match offences. People were being dismissed for relatively minor offences, while some received a slap on the wrist for large ones. She asked how departments explained that.

She asked how many departments had retention strategies.

Ms Sizane replied that retention strategies were limited to issues of counter-offers. Departments offered officials promotion if they declined an offer from elsewhere. It was not a good strategy. A pro-active strategy was needed. Only scarce and required skills had to be retained.

Dr Madlopha noted that the Treasury, the Department of Performance Monitoring and Evaluation (DPME) and the Department of Public Service and Administration (DPSA) would conduct a review of the withdrawal of funded vacancies. She asked what the PSC’s position was. There were different views about the Treasury policy statement. Cosatu and the National Union of Metal Workers of South Africa (NUMSA) had views to the effect that there was the implication of job opportunies being lost. She asked if departments had best strategies to attract or retain staff. It was possible to have retention without attraction.

Ms Sizane replied that the freeze of funded posts had not been discussed in the PSC. She was personally not in favour of it. Some departments had positions that they simply could not do without. However, it was unacceptable to for a department to sit with a vacancy for four years.

Dr Madlopha stressed that the signing of performance contracts by all departments had to be checked by the fifth Parliament. Departments had to explain why contracts had not been signed, if that were the case. She asked about consequences for late submission of performance agreements.

Ms Sizane responded that there were also performance contracts for other officials, not only for HoDs. If HoDs did not sign performance contracts themselves, they could not charge others for not doing so.

Dr Madlopha referred to service delivery protests over electricity. Expenditure compared to performance had to be investigated. The Department of Energy was committed to projects through Eskom. In her constituency, it was asked what had happened to funds. The Department of Energy said that it had run out of funds. It had been said that the 2014/15 budget would cover what had not been paid in 2013/14. It did not make sense that nothing had been done in the current year. She asked about committed budgets for electricity in municipalities. There had been a failure of the performance contract.

Ms Nzimande responded that the same values that underpinned public administration had also to inform Eskom. However, oversight was restricted to the Department of Energy.

Ms Domingo-Swarts added that challenges in the Department of Energy were related to annual planning. Proper costing had not been done.

Ms S Shope-Sithole (ANC) remarked that orientation was necessary not only for new Ministers, she needed it herself. She commended the PSC for doing good work, and spelling out its mandate. She asked that the PSC supply contact details, so that there could be rigorous interaction on all items. The President had recently called for radical change. The Standing Committee (SC) dealt with allocation. That implied giving to the deserving, and penalising those who did not work. Leadership had to be looked at. It had to be seen to, so that people did not suffer at the grassroots level.

Ms Shope-Sithole noted that the PSC dealt with the civil service at the national level. She asked if the PSC was fully equipped and committed to deal with municipalities. There was a lack of knowledge about municipalities, with a perception on their part that the public service did not see municipalities. If the SC was given information, it could deal with civil servants who were non-compliant.

Ms Nzimande replied that the context in which the PSC exercised its mandate had to be understood. The legal framework restricted the PSC from overseeing municipalities. There had been attempts by the DPSA to create a framwerk for a single public service, but the Public Service Act imposed restraint. Municipalities were a huge area of oversight. A country like Mauritius had a body that resembled the PSC, but there was also a municipal commission, and one for the uniformed services.

The Chairperson referred to the poor management of records. It was an age of information technology (IT). He asked if the government was lagging behind with IT. Paper was to be used only as backup. What was the status of the IT agency in government?

Ms Nzimande replied that there were islands of excellence among the state information technology agency (SITA), but it had not sufficiently permeated. Oversight of SITA had to include a rethinking of their role. It was not adequate for SITA to be merely a procurement body. IT uptake had to be pushed.

The Chairperson asked for an explanation of figures related to the decline in vulnerability to hunger. It had been reported two years before that nine million tons of food were wasted each year. Inequality was rife. The haves knew abundance, whereas the have-nots did not know where their next meal was coming from. It was not so much a challenge of food security, as it was one of unequal distribution.

Ms Domingo-Swarts responded that the survey did not cover all areas. It was based on a sample of the population.

The Chairperson remarked that it was not sufficient to assess the performance of HoDs only. Whole departments had to be assessed. HoDs had to be encouraged to play their part in the process. The HoD had to be assessed in terms of the whole staff, to see if service was performed. HoDs received bonuses when the department performed above the average. The issue was sometimes not so much the lack of service delivery, but the quality thereof. The question was, what was being evaluated in an HoD?

Ms Nzimande responded that HoDs were the mandarins of the public service. They had to set the tone. HoDs provided primary strategic support to the Minister. The Cabinet secretariat had to ensure that there was a performance contract between the Minister and the HOD. It was also responsible for the assessment of HoDs.

Ms Sizane added that managerial development was a developmental tool. Senior managers had to be completely assessed. There were weaknesses in performance and development plans. The contribution of senior managers to a department was not properly assessed. There had been round table discussions, with the DPSA called in. Departments that did not perform could not explain why senior officials got bonuses. The Minister had to do an assessment with the HoD. Agreements were filed with the PSC. Sometimes departments failed to submit agreements because no assessment with the Minister had been done. The PSC did not have a mandate to monitor the Minister.

The Chairperson referred to vacancies. The President had called for the filling of vacant funded posts, and was seemingly being defied by HoDs. The Treasury was currently prescribing the freezing of posts. Henceforth, people had to submit HR requirements to the Treasury. There were some posts created by senior management that were not needed. The Treasury had to pronounce at the end of the financial year, when rollovers were requested, about funded posts that were not filled. Money was being spent that rightly had to go to warm bodies. A complete HR review was needed in departments. The correct principle was to fund posts that were needed, and to close down others. State departments could not lament about a lack of skills, 20 years into democracy. Government had to create skills. The question was what Parliament was doing. Departments had relations with universities. There were huge numbers of qualified young people. It was not acceptable for departments to say that they could not fill posts due to a lack of available skills. The NDP required the creation of a capable developmental state. The Minister had stated that perpetually vacant posts would no longer be filled.

Ms Sizane responded that HRM issues were not due to the lack of a legislative framework. The issue was a lack of compliance with existing legislation. The DPSA was pushing directives, but departments were not complying. The role of the PSC was not so much to inform on departments, as it also went through issues with them, moving from ministry to ministry. Parliament was responsible for following up. The challenge in terms of building a capable developmental state was that there was no succession planning. There was a high turnover rate between departments, because people could not move up higher than where they were currently placed. A challenge with filling posts was often the overwhelming number of applications. There could be 10 000 applicants for a single post. HR then had to capture all the applications. There was unavailability of interview panels. When people could not attend an interview because of illness, the process was delayed.

The Chairperson asked the Treasury to comment.

Ms Trinish Padayachee, Senior Policy Analyst, National Treasury, responded that departments did not want to surrender funding for vacant posts. They wanted it for virements, to move the funds to other areas of expenditure. Sometimes it was justified. If departments wanted to roll over funds, it had to be approved by the Treasury committee. There was an expenditure ceiling. The Treasury could not add to the baseline. Departments did not willingly hand over money in that context.

Ms Shope-Sithole said that the Treasury had to be asked about real figures related to people who had budgeting skills. If such people had budgeting skills, they would not have created posts not really needed. She asked for the total of posts budgeted and not filled. Money saved through not funding unnecessary posts could be used for women or small businesses.

The Chairperson asked what the Public Finance Management Act (PFMA) prescribed about rollovers. He asked if a department could refuse to give back money for funded vacancies.

Dr Madlopha remarked that government had changed its approach to working with a three year Medium Term Expenditure Framework (MTEF) period. The first year could be used to prepare and plan the budget. Plans could be implemented in the second year. There was no excuse for a lack of spending over the three year period. The performance contract was the crux of the matter. Compliance had to be in line with the priorities of governance. The Minister had to sign the performance contract with the HoD. She asked if the system was viable, and whether Ministers could be assisted in any way. There had to be a model that worked.

Ms Shope-Sithole asked for information about the number of police officials who had applied for retirement on medical grounds, with applications refused, and what the reasons for refusal were.

She also asked about the number of HoDs who had failed to sign assessments, the number of years they had failed to do so, and whether they had received bonuses or not.

The Chairperson asked the Parliamentary Budget Office (PBO) to comment.

Ms Nelia Orlandi, Senior Policy Analyst, PBO, responded that there was a relation between MPAT scores and audit outcomes. The PBO could provide information on the role of compensation of employees,

Ms Nzimande concluded for the PSC that Ministers were prepared by the PSC for the responsibilites facing them. Nothing had prepared them for the nuts and bolts of their positions. The PSC approached new Ministers, and took them through their responsibilities.

Mr Figg remarked that for the first time he did not feel hoodwinked. He commended the PSC for sincere answers.

The Chairperson likewise expressed appreciation for the frankness of the PSC. The SC would call on the PSC again.

The meeting was closed.

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