National Treasury & Statistics SA Budget Review and Recommendations Report

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Finance Standing Committee

04 November 2014
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The Standing Committee on Finance met to consider the Budgetary Review and Recommendations Report (BRRR) of National Treasury and Statistics SA.

Members wanted the recommendations of the Statistics South Africa (Stats SA) report to highlight the concern about the issue of vacant posts, as South Africa had a skills shortage and posts would be frozen in the forthcoming year. They queried whether Stats SA should be moved from the Department of Finance to the Department of Performance Monitoring and Evaluation.

The Stats SA report was accepted with amendments, with the DA reserving their rights.

The Committee only discussed the National Treasury report, and did not vote on it. Members wanted Treasury to give a detailed report on interventions to rectify errors highlighted by the Auditor General (AG), but agreed that Treasury be given time to track and monitor the interventions. They discussed the twin challenges of the workload facing them and the oversight of entities, given the time constraints.

Concerns were expressed that South African Revenue Service’s (SARS’s) Annual Performance Plan (APP) was signed off in December, without engagement with the legislature. Members were also concerned about vacancy rates at the Treasury, especially the 62 posts in the newly established procurement office. Members wanted a comprehensive report on the high attrition rate as a result of disciplinary cases, submitted within 14 days. They required the Treasury to resubmit an employment equity plan. Members felt the Auditor General’s (AG’s) audit fees were too high for small entities.  It was decided that the Parliamentary Budget Office (PBO) be asked to consider, assess and review audit fees charged by the AG. Members felt the SA Reserve Bank (SARB) report on African Bank could be published sooner than the scheduled January 2015.

Meeting report

Statistics South Africa report

Dr D George (DA) said that the issue of vacant posts in the report had to be expanded upon, as South Africa had a skills shortage and posts would be frozen in the forthcoming year. The Committee had to ensure that Stats SA filled their posts.

He said the Committee had to reflect on what department Stats SA should fall under. During Mr Manual’s tenure as Finance Minister, Stats SA was under the Department of Finance but appeared to have followed Mr Manual when he went to the Office of the Presidency. However, oversight had remained with the Finance Committee. Should it not be under the Department of Finance?

The Chairperson said the ANC position was that it fell under the Department of Performance Monitoring and Evaluation (DPME), because Stats SA was essential for planning. Parliamentary committees could not prescribe to the executive how they structured the Cabinet. There was a committee which would oversee Stats SA there.

Mr  D van Rooyen (ANC) said that in the fourth Parliament, there had been agreement that Stats SA’s location in the Department of Finance had resulted in statistical reports not to being taken seriously by other departments. Statistics was not only about financial data, and was necessary for the operation of all departments. Given that the DPME dealt with the co-ordination of all departments, the recommendation to relocate it to DPME was correct.

The Stats SA report with amendments was accepted, with the DA reserving their rights.

National Treasury report

The Chairperson said that the Committee would only discuss, and not vote on, the report.

Ms D Mahlangu (ANC) said that the recommendations asked Treasury to give a detailed report on interventions to rectify errors highlighted by the Auditor General (AG). Treasury should be given time to track and monitor the interventions.

The Chairperson said the idea of getting reports, rather than holding meetings, was better because of time constraints on the Committee.

Dr M Khoza (ANC) wanted to see the format of the BRRR recommendations laid out with sub points.

Dr George (said the reference to Treasury providing quality financial statements in recommendation 7.1, should read that the Department’s financial statements were continuously improving.

Ms Mahlangu said that in recommendation 7.2, where it said ‘the Committee strongly felt’, this should be reworded as ‘the Committee recommended’. In the last paragraph, ‘to provide periodically’ should be more detailed and be given a time frame, such as quarterly.

The Chairperson said ‘recommendation’ was too strong and that ‘expects’ should be used instead. On the matter of quarterly reports, he said that it would mean more work, whereas periodically would mean that the Committee could decide the time frame, bearing in mind that the workload of the Committee was huge.

Ms Tobias said the Committee needed to decide what it wanted to do -- deal with the challenges or deal with the workload, otherwise it could do nothing and wait until the end of the year to intervene.

The Chairperson reminded her that the Committee had already decided that Treasury would provide quarterly reports.

Ms Mahlangu said that in recommendation 7.3, it was of concern that SARS’ annual performance plan (APP) was signed off in December without engagement with the legislature. The engagement could be done in the form of a presentation to the Committee, and this should be left open ended because of concerns regarding the work load.

The Chairperson said that perhaps it could be done at the end of January.

Ms Bridgette Diutlwileng, Parliamentary Researcher, said that Treasury reported quarterly on their expenditure, but did not report on SARS because Treasury did not get the information from SARS on expenditure quarterly. In the annual report, SARS did not have their appropriation statement so their spending could not be judged. Perhaps SARS could come at the same time Treasury presented its quarterly report.

Ms Mahlangu asked if it was acceptable that SARS did not give the information, because their expenditure had to be reflected in the APP and be accounted for.

The Chairperson said that the Committee had agreed to quarterly reports from Treasury, and SARS should report to the Committee at the same time. He asked whether the APP had to be approved by the legislature and whether any changes to it had to be brought back to the Committee for adoption.

Ms Diutlwileng said Treasury had said it was not necessary for it to be tabled. The amendments did not have to come to the Committee, as the Minister could sign for it.

The Chairperson asked whether the APP was tabled or adopted.

Ms Mahlangu said the APP informed the budget. How did they then account for what had been budgeted?

Ms Diutlwileng said that SARS could report quarterly at the same time as Treasury, without them having to do a presentation.

The Chairperson queried what it meant by a department’s APP having to be approved by the legislature.

Ms Diutlwileng said Treasury said they did not have to, but the problem was that SARS’ APP had been changed when they appeared before the Committee and the targets were different from what they had originally been. So they had reported based on the original APP, and had not provided a copy of the amended APP.

After further scrutiny, the word ‘adopt’ was replaced with ‘tabled’.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, had to be consulted for clarification on whether an APP was supposed to be adopted by the Committee.

Mr D Ross (DA) said he wanted the recommendation on vacancy rates to stress the urgency of filling the vacant posts, especially the 62 posts in the newly established procurement office, while being mindful of the difficulty of filling vacancies and that very competent people were needed. He suggested that a timeline of six months could be set.

Ms Mahlangu suggested that the plan be presented by 1 February 2015.

Mr Van Rooyen said the report on the high attrition rate as a result of disciplinary cases should be a comprehensive one, and that one did not have to wait for end of the quarter. The report could be submitted within fourteen days.

Ms Mahlangu asked if an employment equity plan had ever been received from Treasury, because the Employment Equity Act required every institution to have a plan.

Mr Van Rooyen said they did have a plan, but the plan could be resubmitted so that it could be tightened up.

Dr George said the AG’s audit fees were too high for small entities. There was a broader issue of the funding structure of the AG. Instead of saying the fees were too high, the report should say the fees were relatively high for small entities and the funding model of the AG should be reconsidered.

Dr Khoza said smaller entities were put under pressure by the fees and the question was how best to address the situation, because the fees became a major cost driver.

Mr Van Rooyen said he agreed with Dr George’s comments, but the Committee had at no stage interrogated the funding model of the AG. The focus should remain on the entity and not on the broader issue of the funding of the AG.  He suggested that the sentence be removed from the recommendations, and that the PBO be asked to consider, assess and review audit fees charged by the AG.

Mr N Kwankwa (UDM) said it could be noted as a concern

Regarding the SA Reserve Bank (SARB), Mr Ross said that the SARB report on African Bank had been a topical issue for three months. The report was due only in January, and that was too late. SARB could publish it sooner.

The Chairperson said the Committee should have had a briefing by SARB, but the Committee had agreed to give SARB some space.

Mr Ross said it was a topical issue, because it had been predictable that African Bank would run into trouble. He advised that in future the Committee should reserve its right on the matter of confidentiality. The issue had been an opportunity to step up the Committee’s oversight role. It also posed the question on what would happen in the future, should something like this happen again.

Ms Tobias said all had agreed to hold the meeting in confidence. All had agreed that intervention by the SARB was necessary and correct. The Committee had asked about what measures were in place to prevent it happening again.

Dr George said everyone was aware of the sensitivity of the matter. However, the DA wanted to see a discussion on oversight, because the ‘twin peaks’ legislation was on the horizon.

Ms Tobias said the Committee should wait for the twin peaks legislation to come. The Davis Tax Review Committee report was also due.

The Chairperson said that everyone had agreed the meeting should be confidential because they were sensitive to a ratings downgrade by the ratings agencies. However, the Committee had to reflect on how it would deal with a similar situation.

Ms Mahlangu said that the quarterly report figures should be given in percentage form and that the previous financial year’s expenditure should also be given, so that it could be used as a comparison.

Ms Diutlwileng said the Trade and Industry Committee had asked for quarterly reports, and that she prepared quarterly reports for the Standing Committee on Appropriations.

The Chairperson asked what the roles of the Committees on Finance and of Appropriations were, regarding expenditure.

Ms Diutlwileng said that the Appropriations Committee monitored the consolidated budget, on whether departments were overspending, not whether they were spending well or were requesting virements.

The Chairperson asked who determined the format of the quarterly reports.

Ms Diutlwileng said that the Treasury had templates.

Ms Tobias said that she had asked for quarterly reports when she was chairperson of the Defence Committee.

The Chairperson reminded Members to forward their recommendations on the public sector wage bill.

The meeting was adjourned.

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