Department of Arts and Culture 2nd and 3rd Quarterly Expenditure Report
Arts and Culture
24 February 2015
Chairperson: Ms X Tom
The Department of Arts and Culture briefed the Portfolio Committee on 2nd and 3rd quarter performance reports for the 2014/2015 financial year. Overall the Department was under spending and not able to meet some of its expenditure targets for budget line items. In particular, the Department was unable to achieve its targets for capital works in both quarters, with expenditure at 9% for the 3rd quarter.
Looking at selected indicators, the Department had been able to achieve some of its targets. For instance, a language policy had been adopted, flags had been installed at schools, and grants had been transferred to provinces. Councils had been fully constituted and inducted. There had been an improvement in the 3rd quarter, but challenges still remained with the capital works account. The Department attributed some of the challenges with capital works to the fact that it relied on implementing agencies, which hindered output delivery.
The Committee raised concerns over monitoring mechanisms to ensure projects were implemented effectively. Furthermore, with under expenditure on the one hand, and over achieving targets such as the installation of flags on the other, the Committee had an impression that the Department was not able to implement its plans efficiently.
The Committee was very concerned with the Department’s failure to achieve its expenditure targets, as this implied that it was not able to deliver services to the people who required the services. This was further worrying, as people were constantly approaching the Committee for assistance. The Committee reminded the Department that as civil servants, they were servants of the public. One way to serve the public was to do what their roles required them to do.
Chairperson’s opening remarks
The Chairperson welcomed Members of the Committee, as well as the Deputy Minister of Arts and Culture, Ms Rejoice Mabudafhasi, who said she would have to depart early to attend a cabinet meeting. Apologies were received on behalf of Mr M Rabotapi (DA) and Mr J Esterhuizen (IFP), who was attending another committee meeting. The meeting was told the Minister of Arts and Culture would be undertaking an official visit to Moscow.
The Chairperson said the Committee minutes would be dealt with after the presentation by the Department of Arts and Culture. She commended Members of the Committee for doing an exceptional job. If the Committee continued doing so, it would achieve its goals.
The Chairperson referred the Department to Chapter Ten of the Constitution, which stipulates the basic values and principles governing public administration. There was a need for a daily reminder that the Committee and the Department were public servants and not masters to their communities. There were expectations from communities that high standards of professional ethics should be maintained. Efficient, economic and effective use of resources should be promoted. Public administration should be development oriented, which was very important for the Department of Arts and Culture. Services should be provided impartially, fairly, equitably and without bias. Peoples’ needs should be responded to, and the public encouraged to participate in policy making. Public administration needed to be accountable, and transparency fostered, by providing the public with timely, accessible and accurate information. Good human resource management and career development practices to maximise human potential must be cultivated.
Public administration should be broadly representative of the South African people, with employment and personnel management practices based on ability, objectivity and fairness. This should be visible in all offices and instilled in all civil servants so that they were aware of what was expected of them. This should not be limited to government departments only, but to all government entities and public enterprises so that public servants were reminded every day of what was expected of them. There was a tendency for people to forget their duties and take things for granted. For instance, the Committee had made an appeal during the strategic planning meeting of the Department that the Committee expected to receive all documentation pertaining to committee meetings ten days beforehand. The expectations of the Committee had been clearly stated during the meeting, and it was saddening to report that the Department had not adhered to this, as the documents for the current meeting had not been received ten days before the meeting. Submission of relevant documents ten days before a meeting allowed members to read, review and analyse documents adequately to make meaningful contributions during the meeting. Members could not read documents during meetings. The Deputy Minister and Acting Director General were urged to ensure that the Department adhered to the Committees request on the timely submission of documents for meetings.
The Committee would be meeting the Pan South African Languages Board next week, but documentation pertaining to the meeting had not been submitted yet. It was not the Committee’s responsibility to be pushing PanSALB to submit the documents on time. It was important that entities be accountable to the Department, because they received funding from the Department.
The Chairperson invited the Deputy Minister to say a few words before the Department made its presentation.
Deputy Minister’s comments
Deputy Minister Mabudafhasi regretted that she might have to depart early to attend a Cabinet meeting. It would be good to engage with one another to understand and identify challenges the Department was facing, and not just complain about them. It was rightly said that documents had been submitted late prior to the meeting, as the Department had also identified that things were never done on time. The Department was working on this challenge, and there would be consequences if things were not done on time.
At the end of the 2nd and 3rd quarter, the compensation budget was under pressure and things were not happening as they should have been. It was felt the best thing for the Department would be to go back to basics. More pressure needed to be applied and on-going monitoring of the Department had to be carried out. Staff members would have to do the work they were supposed to, because there would be consequences for those who did not. For instance, some reports were not checked and workers just carried on because there were no consequences following their actions. Fortunately, weaknesses and challenges had been identified and would be worked on. Officers who applied for a job at the Department would have to deliver. It was now a question of either being in or out for those who did not deliver. Politicians had made a promise to the electorate that there would be service delivery. Officers who did not do their job effectively were the stumbling blocks in the way of government to deliver on its promises to the citizens. If there were no consequences for such officers, the people of South Africa would continue to complain about lack of delivery from the government.
The Deputy Minister said that progress had been made on the appointments of Deputy Director Generals, Chief Financial Officers (CFOs) and the process would be concluded by 31 March 2015. The post of Director General had also been advertised and the Department was trying to meet its deadlines to avoid continuously working with acting staff, as this also inhibited the Department’s performance. The Department was also focusing on cleaning up infrastructure, supported by spot visits. Also strategic positions which had been filled by acting personnel were being permanently resolved with full-time staff, who would be answerable if there was no delivery.
The Chairperson said the Committee worried when the word “expiry” was talked of, because when it visited entities, many of them had expired boards. For instance, when the Committee had visited PanSALB, there had been no board. Who was supposed to run entities under the Department in the absence of a board, or was the acting CEO or COO also supposed to run the boards? Why did it take so long to fill up boards, when it was common knowledge from the onset that the boards’ term would end at a specified time?
The Committee was grateful that there would be consequences and would be watching with keen interest to see what would happen especially in the areas that the Committee had visited and seen what was happening. The bulk of the Department’s budget went to entities, and as such the Department of Arts and Culture could not afford to let entities operate the way they were currently operating. The sooner the Department looked into it the better it would be for the Department, the people, the government and everybody. The Committee would be focusing on entities and where they found problems, they would be brought to the Department’s attention. If the Department had difficulty addressing the problems, then the Committee would find a way to assist.
The Chairperson invited comments from Members.
Mr P Mulder (FF+) agreed with the Chairperson. He said it was a chicken and egg type of situation and the two went together. The “acting” posts could actually be part of the long term planning, because none of the people were appointed for a five year period. He was not sure how the “expiry” issue would be resolved. Perhaps a five year diary could be created, with the dates set out to start advertising. That could be done only by a DG who was appointed for a five-year term. Experience in the Department of Agriculture showed long-term planning was a better solution, because within a period of five years the Department had had six DGs, some of whom were acting and some were not.
Department of Arts and Culture on the 2nd Quarter Expenditure Report
Mr Vuyo Jack, Acting Director General, DAC, apologised for the late submission of documents for the meeting. Thankfully, the Department had items for future Portfolio Committee meetings in advance, which would enable it to plan accordingly and meet deadlines. The Department would also be able to set internal deadlines and ensure quality control so that information that came out was accurate and relevant. As such, the Department would be able to meet the ten-day deadline for submitting documents, as the Committee’s programme for the quarter was available.
Members would be taken through the 2nd and 3rd quarter performance reports. The reports would be presented consecutively, which would help members to see the trends and overall themes emerging from the underlying performance of the areas concerned.
The 2nd quarter covered the period up until the end of September. Looking at the performance overview, which was the predetermined objectives, the Department had moved from 68% -- where 73 targets out of 108 targets were met in the 1st quarter -- to 72% in the 2nd quarter, but there was still a challenge in making sure that certain targets were met and this would be unpacked during the presentation. The budget would show what the targets were related to.
Looking at the branch levels, heritage promotion and preservation would be below the 70% target, as that was where most of the infrastructure took place. Overall, 44% of the budget had been spent, with administration being much higher and institutional governance and heritage promotion and preservation constituting around 40% of the total expenditure, while arts and culture development was in the 30th percentile. This was because payments under the Mzansi Golden Economy (MGE) programme were not made quarterly but rather in tranches. This meant the tranche might not be in line with the budget timing, so expenditure would be below 50%.
Under economic classification, the Department was just on target with expenditure on the compensation budget, which needed to be at 50%. As the financial year was half way through, overall the Department was under spending. Much of the under expenditure was attributed to capital works, where Department agencies and accounts had added 8% as at the end of September. Others, such as goods and services, provinces and municipalities, were fine. Municipalities’ expenditure included grants given to libraries, which was on par.
Areas of concern would be the compensation budget because of vacancies, yet expenditure was already at 50%. The vacancies were funded vacancies, and the Department was spending the budget by paying contract workers to fill the gap. The vacancies were not being filled. Instead, the Department was relying on contract workers to help with the work, which was not the most ideal situation. The Department had a history of filling vacant positions with consultants and contract workers. There had been a drive to rely less on consultants, and some contracts where there was no value had been cancelled. Legal processes were expected in due course. Some consultants who had their contracts expiring within the year would no longer be rehired. The Department had taken a decision to no longer use consultants unless there was evidence that the vacancy could not be filled.
Mr Jack said the Department still had a hangover of irregular expenditures from the previous year, especially where the duration of a contract overflowed into the new year. The new financial year would still get irregularities if a contract was active.
Looking at the compensation budget, the Department had been able to complete the handover process of contracts in the Ministry and Deputy Minister’s offices. Some of the costs were paid for by the Department of Water Affairs, where the Department had been able to conclude the handover process in the 2nd quarter. There were vacancies for the Corporate Services DDG and CFO. The recruitment process had started in August in terms of advertising and interviews were held in November. Appointments to these posts would be deliberated in upcoming Cabinet sittings and hopefully the posts would be filled up by 31 March. The posts of Chief Directors would soon be filled, because the Department would no longer extend acting positions and periods. After consultation with Treasury, the posts would either be filled or be lost so there was a process under way for the appointment of the two Chief Directors, for Cultural Development and Archives. The Department was also in the process of filling positions for three Directors and one deputy Director. This would affect the spending on the compensation budget, because currently the Department was on target. Once the vacancies were filled, the budget would probably be above its allocation. In this case, all contract workers would have to be evaluated and some contracts would have to be terminated in order to balance out the positions being filled. This would also help prevent the Department from being over its compensation budget so that it did not breach any targets set by Treasury.
Mr Jack said that expenditure for the goods and services budget was at 55%. The over-expenditure was attributed to the “flags in schools” project. The Department had had to request adjustments, because the initial budget target did not match the amounts needed to actually install the flags. A virement had been requested in order to complete the installation of flags.
Transfers to municipalities regarding community libraries were on target, as the Department had been able to transfer amounts allocated according to provinces. In terms of the performing arts institutions, money was transferred to departmental agencies on a quarterly basis, while for libraries and heritage institutions, money was transferred on a monthly basis. The timing differences affected the 50% expenditure target.
About R500 million had been allocated to capital works in the 2nd quarter and even the 3rd quarter, as the Department was at similar levels. Part of the problem was that the Department had implementing agencies that were relied on to roll out its capital works programme. Firstly, the Department relied on the Department of Public Works. Secondly, with the legacy project, the Department relied on the Independent Development Trust (IDT). Thirdly, these institutions would have had User Asset Management Plans(UAMPs), which stated their own requirements. If there were new projects, the institutions set their own business plans. Determining proof for completion of projects in order to ascertain payments for capital had taken time -- for instance, substantiating the level of progress to match payments had not been forthcoming. The Department had a balance sitting with the IDT from previous years, from legacy projects and other new projects. The IDT was yet to furnish the Department of Arts and Culture proof of what and how previous payments had been used. Also all works must be certified by a third party, such as architects and quantity surveyors, to state the percentage of completion.
Public Works had a long list of amounts, some of which related to accommodation for entities in terms of their leases. Some entities did not do this directly, but transversely through the Department. Before electricity and water accounts were paid, the Department had to substantiate that the amounts were really due to their entities, and had to be signed off by somebody. With regard to the lease payments, these had to be matched to their payment profiles. If the leases were coming to an end, there was a need to trigger a review process to either renew the leases or move, and this had been quite a process.
Mr Jack stated that the biggest problem with the Legacy Project had been determining the level of progress. Money had been released with no accountability, and it was challenging to release more money, as that would be putting good money after bad, which would be reckless in terms of dealing with the issue. Basic questions had been asked without satisfactory answers, which was why the Department had been sitting at a level of 8% and 9%. There would be a future session with the Committee at which the Department would elaborate on how they were dealing with these issues.
The Department was aware that there was a problem of lack of delivery through the use of implementation partners. Internally, the Department did not have the technical expertise because currently the infrastructure was spread out and there were no skills residing to manage the problem. The Department had resolved to take away all the infrastructure-related issues from heritage and cultural development, and house it transversely. Technical skills had to be obtained to focus on what was required. Currently the entities did not have that expertise, and this was evident in the business plans submitted to the Department. Technical skills were also required for asset management and prioritisation, which was not always done, but was a necessity in the light of budget restrictions from Treasury. Commitments had to be costed properly before they were made, which had been a challenge.
The Department had engaged with Treasury to adjust the Department’s Adjusted Estimates of National Expenditure (AENE) and take away budgets from different units and centralise them. A unit would be staffed in a way that would allow entities to engage with the Department in determining asset management plans. Approvals would be based on items that were properly costed. A more detailed presentation on infrastructure would be available in the future.
Other expenditure variances indicated the Department had spent R63 million on non-profit institutions, which was an under expenditure. This under-expenditure related to the MGE aspect, where approval had to be obtained and there had been a time lapse between getting approval and the actual disbursement, based on the Memorandum of Understanding (MOU) that it would happen later in the year. The money was not released at once. No funding had gone directly to tertiary institutions; however, there was a bursary scheme of about R12.4 million administered through the institutions. There was also financial assistance direct to households, at about 65% of the planned expenditure. Some of it related to commitments made previously and were due now, hence the 65% expenditure.
The capital assets budget expenditure had reached 70%, and this related to the purchasing of software and vehicles. The MGE virement had been requested from Treasury to make payment for the triggers of the virement -- amounts agreed in the contracts, as such payments were not necessary uniform. Other indicators relating to finances include a 2% target on employing people with disabilities, which was in line. The 50% representation of women at senior management level, and Broad-based Black Economic Empowerment (BBBEE) contracts, were also in line with targets.
On the percentage of public entities with fully constituted and inducted councils, Mr Jack agreed with the Chairperson that indeed there were some institutions with boards that were not fully constituted. As of 30 September 2014, only 62% of councils were fully constituted. The Department had been able to rectify this during the 3rd quarter, mostly by extending the term of current councils until it was possible to appoint a new council. However, there had been terrible examples of this, such as PanSALB, where the acting CEO was also in the council. This had had negative effects which were still felt by the Department today.
The Department had a target of seven community conversations, and had been able to conduct ten in the second quarter. In the last year, there had been a South African season in China, and this year South Africa would be hosting the China season. Similarly, there had been a UK season which happened in the UK and also in South Africa.
In the 2nd quarter, for the number of artists placed in schools, the target was to sign MOUs. Progress for this had been obtaining approval for project grants, and MOUs had been drafted. Much progress for this would be seen in the 3rd quarter report.
Mr Jack stated that for the art bank, the Department had done a pilot project at Oliewenhuis Art Museum, as they had been identified as hosts. The Department had met its target of securing space for the art works. In the 3rd quarter, the relationship with Oliewenhuis was being built further by identifying the art works and mechanics of how this would work. The target for the National Academy for the Creative Industries in South Africa (NACISA) was to submit a Cabinet memo, and this had not been done. The target had not been met because the Department was re-looking at having an impactful programme with NACISA. The Cultural and Creative Industries Federation of South Africa (CCIFSA) was being supported under sector organisations and skills training projects and helped to represent the artists in one formation in a credible way. There had been consultations in the provinces which had culminated in a conference which would elect representatives of CCIFSA in March this year. This was an important area, as it meant the voice of artists would be represented in the legislative process. CCIFSA allowed for engagement with the public with a unified voice.
In terms of the language policy, at the end of the 2nd quarter, comments had been incorporated in the language policy. The policy had been submitted and launched in the 3rd quarter. The language practice bursaries target for the second quarter was to monitor visits to universities, and the target had duly been met. In the 3rd quarter, more monitoring visits had been approved for future years.
Mr Jack also stated that the Department had surpassed its target to install 2 500 flags and had managed to install 2 852 flags. This was why it had been important to get a virement in order to be able to meet the target and be sure of staying on track for the annual target. The performance indicators for the heritage issues catered for the OR Tambo phase 2. The target was to appoint a contractor, which had been done in May 2014. A contractor had also been appointed for the Sara Bartman Centre of Remembrance, and 4% of the building work had been completed. Some of these projects had been affected by the challenges facing the Department’s capital works infrastructure, such as contractors producing proof of work completed in order to trigger payments.
All three targets for national days had been met.
Department of Arts and Culture on the 3rd Quarter Expenditure Report
Mr Jack reported that there had been a slight improvement in performance during the 3rd quarter. There was a good progress in the heritage area, but institutional governance was still being looked at in terms of the 68% achievement of targets. Expenditure had moved from 44% in the previous quarter, to 65%. Looking at programme levels, programme 1 at 74% was more in line with the 75% target to be met. Arts and culture promotion and development was slightly under target at 59%. It was mostly affected by the infrastructure problems, as well as the heritage promotion.
Under economic classifications, the Department was meeting its targets but was still facing the same problems of outstanding vacancies. Capital works were still at 9%, which had been alluded to earlier. Expenditure on goods and services was slightly under, at 69%, and changes would be visible as some of this expenditure related to contracts. For instance, there were issues with contracts, as the Deputy Minister had mentioned earlier, due to a lack of appropriate contract management systems which could trigger warning lights. Some targets for compensation had not been met, critical positions had not yet been filled, but once an appointment has been made there would be a need to do a proper analysis to ensure that there were no more contract workers or consultants being unnecessarily considered.
There was 6% under-expenditure for goods and services. Hopefully, this would improve in the 4th quarter. The key concerns would be compensation and also infrastructure. With regard to municipalities, expenditure was still mostly in line, but the challenge was still that money was transferred to municipalities and part of the task was to see how funds had been used. Transferring money into the accounts of the province was not enough -- there was also a need to see how much of it was driving the percentage of completion of the libraries. More would be dealt with during a special presentation to the Committee on infrastructure and capital works.
In terms of current transfers, the Department was still in line with the target, at 76%. Capital works was still an issue, at 9%.
Performance indicators for public entities had moved from 62%, to being 100% fully constituted at the end of December 2014. The only thing missing in December had been inductions, which were carried out in January, as appointments were made only at the end of November and early December. Induction was dependent on the availability of council members. The challenge would be to maintain fully constituted councils in order to meet deadlines. To ensure continuity, the Department was trying to establish a board bank, because having boards with relevant skills was a challenge. Not only would the board be required to have the relevant skills for the council, but other skills such as finance management were also important. A board bank with a data base of people with various skills could be used to easily replace people whenever there was a vacancy, and would ensure continuity as well as provide fresh blood and diversity in skills. Part of the problem with councils had been a lack of diversity in skills, and it was hoped there was due consideration with the current appointments. For instance, a council for performing arts would also require people with branding and marketing skills to ensure audiences were attracted, and there might also be a need for people with legal skills to deal with litigation that might arise. People with performing arts skills would also be required for the boards, so a mixture of skills was critical for success.
The target for community conversations was four, and the Department had been able to achieve 14. For artisan schools, the Department had finalised drafting contracts in the 2nd quarter and by the end of the quarter, 200 artists had been placed in line for the new school year and would be fully functional. On 30 October 2014 the Department had adopted the language policy and was able to meet the deadline.
In the last quarter, the Department was unable to meet its target of installing 2 500 flags in schools – only 1 650 flags had been installed. However, it was believed the Department would be on track with its yearly target. The target for national day had been met when the Department had hosted the Day of Reconciliation at Ncome Museum in KwaZulu-Natal.
The Chairperson thanked the Acting Director General for the presentation. She said that looking at the presentation, there was a picture of a Department that did not meet the targets it had set for itself. This raised a question about the Department. Also, the Department was implementing something that it had not planned. The Department had gone on to install more flags than its target in the 2nd quarter. She asked what the budget implications for this achievement were.
The Chairperson also stated that the Committee wished to make it clear that under expenditure, for whatever reason, was a crime against humanity, more especially where a budget had been allocated for the Department to serve the community. It was high time the Department sat down to look at how it could deal with under expenditure. There were some areas in the presentation for which under expenditure could not be forgiven. The Committee had artists knocking on its doors constantly asking for funding which the Committee did not have.
Members were invited to ask questions and make comments.
Ms A Matshobeni (EFF) asked several questions. How much did the installation of flags in schools cost, and was the project was complete? Who was the supplier? Could the Department provide a breakdown per province of how many schools had flags installed and how many were still in the process of having flags installed? Did the Department have a mechanism to monitor how provinces spent the money because from observation, some libraries in remote towns were degenerating to the point of closure? According to the Acting Director’s presentation, most government departments had poor financial control mechanisms -- what was the Department doing to ensure that public money was not wasted annually? Currently thousands of students had been excluded from universities due to lack of money. What reasons did the Department have for not transferring money to the concerned education institutions to help black children to study?
Ms V Mogotsi (ANC) said there was no difference in what the Acting Director General had presented, from what had been heard in May 2014. She was worried about the direction the Department was heading, as there was still no improvement. She referred to the compensation of contract workers, issues of service providers and the filling of vacancies which were alluded to in the presentation, and asked why the compensation budget should be elevated once vacant posts were filled. In her understanding, contract workers tended to cost more than permanent staff. A budget should go down by employing more permanent staff, and not up. The government had been asking Department to cut back on service providers, and sometimes these service providers could be found in the HR section of a Department. Would the Department clarify exactly what services were being provided to the Department? If the services were in HR, perhaps the Department should get legal advice on how to deal with this matter.
Ms Mogotsi added that the Department was not transparent in the filling of posts. The Department was not managed by senior people only, and the committee should be furnished with a complete breakdown of the Department’s staff establishment. The focus should also be on general workers -- the CEO and DG posts were not the only vacancies funded by Treasury.
On goods and services, she agreed with Ms Matshobeni. Whoever did the specifications for the flags tender had it wrong. When drawing a tender document, specifications were put in place -- the type of cloth to be used for the flag, and the number of schools. Before a tender goes out, the public was clear on what was to be done. The specifications must be clear that 5 000 schools would have flags installed. There should not be an open tender, and then say there was under expenditure at the time of costing the flags. With such a scenario, there was a need for the Committee to look further at what had been happening. Was there a feasibility study for the flags tender, so that the Committee could have an idea of the demographics for the tender? The Department knew how many schools were supposed to have the flags, and some of the flags installed were also old.
In regard to capital works, Ms Mogotsi said that under capital works there was the Project Management Unit (PMU). That was where everybody wanted to work because the unit had financial and economic power. There was also corruption there, as that was where all projects were run. She asked who the Chief Director of PMU in the Department was, and whoever it was must come and brief the Committee on what was going on in the Unit. Furthermore, if all under expenditure, over expenditure and all financial discrepancies were due to capital works, something was wrong with the PMU. The Department had not talked about the agencies it was dealing with, and perhaps the PMU of the Department should do a briefing on all projects under capital works, as that was where most of the Department’s funding was going.
Ms Mogotsi said that board banks did not work, as there was no transparency. How was the Department going to fill the data base? Who would be put in the data base? How was the Department going to avoid non-performers? What was the Department going to do to ensure government procedure on recruitment was followed? Furthermore, laymen could also be used on the boards and they might be capable of pointing out discrepancies. Perhaps organisations in the cultural sector funded by the Department could be invited to sit on some of the boards. Unions were sitting on strategic boards because that was where a chunk of public money was spent. Board banks would not work. The solution was the timely refilling of boards -- start appointing a new board before the expiration of an existing board. Councils should be allowed to work, and this could be possible with an efficient monitoring mechanism. If a board did not work, the Minister had the right to dissolve the board, but that was just creating more problems. The Department was not creating the 150 000 jobs that it was supposed to create. She expressed disappointment with the performance of the board.
The Chairperson informed the Committee that she had received word that there had been an accident on the way from Acacia Park, and that was why Ms S Tsoleli (ANC) and Mr J Mahlangu (ANC) had arrived late.
Mr Mahlangu thanked the Chairperson for the reports and the Department for the presentation. He said other members had already reflected on the issues that were of a concern. He asked for clarity on the issue of underperformance in terms of finances for capital works, community libraries as well as the Mzansi Golden Economy. The issue of underperformance was bad, because it was a recurring phenomenon, and was becoming a permanent feature in the Department. The Acting DG had spoken of a lack of in-house capacity, which seemed to be the main problem. The Department was very small in terms of capital budget. Public Works should prioritise deployment of resources through proper planning. In-house capacity was crucial, as it would enable the Department to interact with players from Public Works on a technical basis. Lack of adequate capacity also led to budget overruns.
Colleagues had already raised the issue of staff establishment, contract workers and consultants. During the SONA, it was said that nobody would be working in any government entity on contract for longer than three months. If this occurred, then the person should be employed permanently. It would be important for the Committee to know how many people were not permanently employed, and how long they had been in the system.
When the Committee had visited Freedom Park and the Voortrekker Road, the government had apparently made a promise on the Voortrekker road which it had not honoured. At some point, Voortrekker Road had received money from the government, and should not monopolise something that ought to be a national monument. If the government did promise to pay, why was the government not paying? Freedom Park was being killed by this wrangle, because currently tourists knew only about visiting the Voortrekker Road.
Mr G Grootboom (DA) asked in which sections or areas consultants were currently being used and whether there was any expertise available to fill these posts. He also asked about the transfers to local municipalities, so that he could ascertain the status between local and national museums. Did the money transferred to municipalities also cater for the upkeep of the museums? He asked for the rationale behind the language policy adopted by the Department, as it has excluded Afrikaans and Isixhosa. For the most part, the language policy was inadequate and the Department was best placed to facilitate social cohesion.
Mr Grootboom asked whether development programmes belonged to the provincial Departments of Arts and Culture, as there would be a serious overlap of development programmes if each province had its own development programme. There had been an incident where a provincial development programme had not received any funding from the Department, which raised a concern. He also asked about the asset management of library books. Were library books considered to be consumables items? What was the current status? If the current status remained, then it meant there would be audit implications for the Department. Lastly, when making 2014/2015 plans, the Department had noted that there was weak internal capacity to manage MGE work streams. The proposed mitigation was to strengthen the capacity of MGE projects -- hads this been achieved, and what was the Department doing in that regard?
Ms Tsoleli added to what Mr Mahlangu had raised about the issue of the Voortrekker Road. The Department should perhaps provide an MOU between the government and the monument so that Members could truly understand what was happening between the Department, Voortrekker Road and Freedom Park. If Voortrekker Road was constructed with government money, then what was it doing in the hands of private individuals? This also applied to a number of institutions which were stolen just before the dawn of democracy, by changing ownership from the government to private individuals.
The Chairperson invited the Department to respond to questions.
In response to Ms Matshobeni’s question on how the Department ensured that wastage was controlled in public entities, Mr Jack responded that this was a critical area. The Department had a Public Entities Unit (PEU) which conducts a monitoring exercise and produces a quarterly report. However, the Department also refers to the White Paper for operationalisation, because there may be a small entity with a R10 million budget, and it may have a requirement to have an internal audit function. Sometimes audit fees from the Auditor General may consume a fairly significant proportion of an entity’s budget, which then hinders the entity’s ability to operate effectively. Then a rationalisation process must be initiated through what is called a shared service. An internal audit unit and an audit committee, that could serve a number of entities in the interim, could also be put in place. The entity could also have a governance manual that would enable it to determine roles that need to be put in place as these would be defined centrally and could then be used as monitoring mechanisms. In addition, if there were any internal role violations, risk assessments were performed and external auditors also informed the Department of any wastage.
Regarding the filling of vacancies, the budget would sometimes decrease if a contract worker was doing the same work as a permanent employee, creating a neutral effect. Sometimes a contract worker might be performing a vital function, with no vacancy attached to it. That was what could potentially increase the cost. The Department would be conducting an exercise to look at its entire establishment to assess whether it was properly structured to deliver on its mandate. There should not be contract workers -- all workers should fall under the establishment. There must be a comprehensive process, without which there would be no room to enable the Department to structure itself for delivery. The Department would be reporting on progress and would be able to provide the Committee with a full establishment structure. As per Mr Mahlangu’s statement, this would also be carried out for all entities and at the same time address the problem of having contract workers with permanent status.
In dealing with the age issue, the Department would undertake an audit to determine the age level in the Department and entities. This would assist in succession planning for those who were about to retire. The Department had not done an age audit at all and such information would highlight the gaps. The age profile and equity employment profile would also be shared to give Members a sense of the demographics.
Most of the consultants were in-line positions, and not in HR. The Department had a plan on how to phase out consultants, and had been able to do so. Of course, there had been some who had decided to take legal action, but the Department was happy because there was no substance in the first place for engaging some consultants.
A forensic audit was also underway due to irregular expenditure, and part of the terms of reference for the forensic audit was to look at consultants, as they gave rise to a huge amount of the irregular expenditure. If the audit said there had been no value added by a consultant, then the Department would take legal action to recover the money. Otherwise it would be unjustifiable enrichment, based on forensic evidence.
Mr Jack said that supply chain management was a big problem, as it led the Department into incurring irregular expenditure for goods and services. The Department was dealing with the challenge by finding solutions at the policy level and strengthening procurement policy. By the end of March, this should be finalised so that in the new financial year there would be clarity on the new policy and how it would work. The Department had also had engagement with line mangers, engaging them in how procurement policy works. The Department had ensured accountability for actions, unlike in the past, when there was no clarity. There was now zero tolerance for irregular expenditure especially after conducting training for line managers. Furthermore, the Department was finalising cases involving irregular expenditure from the previous financial year so that disciplinary hearings could be held in March 2015. The Committee would be advised with progress on these hearings. The hearings would help to determine whether to condone the irregular expenditure, or recover it from the person responsible for incurring the expenditure.
Ms Mogotsi’s comments on the board banks were noted. The idea behind the board banks was that there would be an open public process to put a board in place. There were cost implications for the process, which could be reduced by undergoing a once-off process. Legal requirements would have to be weighed in terms of the open process. The board bank was ideally meant to be broad in terms of the skills and constituencies to be included. The reservations around the board bank would be taken into account when finalising the process.
The Chairperson stated that the Committee had received a list of the number and names of schools which were expected to receive flags.
Mr Vusithemba Ndima, Deputy Director General: Heritage Promotion and Preservation, thanked the Chairperson for clarifying that the information regarding the list of schools that had been installed with flags had been shared with the Committee. A provincial breakdown could also be supplied if Members wished to have it.
In reply to Ms Mogotsi’s question on the tender process for the flags, Mr Ndima said that the tender was advertised publicly and briefing sessions were held with those who were interested in tendering. The names of companies who were installing flags had been provided to the Committee. There were certain things that would be known to officials pertaining to advertisements and appointments -- it was impossible to know everything going on behind closed doors. However, if there was a need to probe or if there was a suggestion that something was wrong with a particular projection, then something would be done.
The matter of libraries was topical in all departmental and inter-departmental forums, as well as at Ministerial meetings with MECs. The library issue was a worrisome matter, because when the conditional grant was introduced it was meant to ensure that infrastructure was rolled out for libraries and information services in the country. Some provinces were doing well in the implementation of programmes, while others were not doing well.
In response to how provinces spent grants, Mr Ndima replied that before the start of a financial year, provinces submit business plans stating how funds would be spent. Plans range from infrastructure, which entailed the building of a library, library materials, ICT and internet connectivity. The plans also dwell on human resources -- people who would be employed to work in the library. Reporting was done on the basis of what was put in the business plan. There may be challenges with infrastructure, as the Acting DG had alluded to earlier on. A new approach was being recommended to standardise the design of the libraries in an attempt to overcome the infrastructure challenge. There could be standard designs of libraries for urban areas and also standard designs for rural areas, which would help save time on planning. In addition, there were quarterly reporting sessions and monthly meetings. There were also site visits to different provinces, and support was provided to provinces that were lagging behind.
In regard to the Voortrekker Monument, historically it had been built jointly by the state and the Afrikaner community. The monument fell under the state up to 1993, when it was turned into a Section 21 Company. The relationship between the Voortrekker Monument and the Department of Arts and Culture had been a grant in aid type, and had ended around 2005/2006 due to shrinking resources. Once in a while, the government would provide aid upon request only if funds were available. In terms of the Cultural Institutions Act, the Voortrekker Monument did not qualify as such, so no standing grant in aid had been extended to the institution. It had received assistance from the government with infrastructure development. Currently, there was no standing agreement between government and the Voortrekker Monument. Support to the monument was based purely on the availability of resources, and was largely influenced by the shrinkage of resources in government.
Ms Mogotsi asked the Department if was possible to reorganise the Department’s structure, particularly for newly established posts. Could the specifications for the tender of flags be addressed again, because why should the Department overspend when there were specifications during the tendering process? The specifications would help advise the Committee if the project was indeed under spent. This would also go to the appointment of service providers, because the Department should not appoint a provider who grossly under quotes the tender value -- for example, a provider quoting R20 000 for a tender worth R200 000.
Mr Grootboom raised a concern about audit fees, whereby audit companies had a one size fits all approach. He added that there was an MOU from 2010 between the Department and Voortrekker Monument to open an access road to Freedom Park. By virtue of this MOU, there was an implication that certain amounts of money would be given to the Section 21 Park. He asked the Department for clarity on the MOU.
Mr Jack said that the language policy adopted by the Department included all official languages. A copy of the adopted language policy could be made available to the committee.
He added that potential corruption surrounding PMUs was a big concern, because currently there were no defined processes and prioritisation. However the Department had undertaken workshops to determine how prioritisation could be done. The Department had also looked at how to build checks and balances from inception to conceptualisation and all the way to delivery. As the unit was put together, there would be procedures on checks and balances in terms of thr delegation of authority that would be linked to infrastructure work. This would also allow the Department to monitor and control expenditure, as well as being able to detect any possible misuse of resources.
In response to Ms Matshobeni’s question on the MGE project and higher education, Mr Jack reported that the Department was spending funds on higher education. Previously bursaries were classified as direct transfers to higher education institutions, who were like middle men in ensuring that a bursary reached its ultimate beneficiary. The bursary was now classified as transfers to households. The Department was still spending and would continue with expenditure on the bursaries.
Ms Monica Newton, Deputy Director–General: Arts and Culture Promotion and Development, at the Department of Arts and Culture stated that the MGE programme as a whole was classified as goods and services, which was in fact inflation in the original Adjusted Estimates of National Expenditure (AENE). When the Department begins to identify within the MGE’s open calls for specific beneficiaries, a virement is requested from Treasury. This goods and services money becomes a transfer to public entities, non-profit institutions and profit making entities. The movement was seen when comparing what starts out as an AENE goods and services budget, and what was reported was confusing because there was so much movement due to the virement passed on an annual basis. This caused delays in some of the spending. Once an open call was done and a contract drawn, it raised some of the commitments. The commitment was structured over a series of tranches, but before payment could be made, a virement approval had to be obtained to re-classify the funds. Significant progress had been made with Treasury, whereby the Department could pre-classify some of the MGE funds.
The Department had revised the MGE guidelines in order to make MGE funding more accessible. This meant the MGE open call would be made in perpetuity, unlike in the past, where applications were taken in one batch only. The applications would be reviewed quarterly and furthermore grants of under R100 000 would be expedited so that money could move more quickly.
If any artists or anyone approached the Committee for funding, they should be directed to the Department. Not every project would meet the MGE criteria, but at least it would allow the Department to refer applicants to other entities or funding agencies in the community. The arts community was excited about these developments, but the Department would also be able to transfer the funds more effectively. For instance, last year there were about 980 applications which took the panel seven full days to review. With smaller batches, the Department would be able to make quicker decisions.
Further to MGE questions and about collaborative projects, Ms Newton said that without a clear sense of the exact projects it was hard to comment. Perhaps she could chat with the Member after the meeting to find out exactly which projects were being talked about. The Department did a lot of collaborative work with provinces and local governments. For instance, each province proposed a number of provincial flagship festivals annually, such as the Kalahari Desert Festival and the National Arts Festival. These festivals were co-financed by the Department and the provinces. Therefore what might seem as a duplication may actually be co–financing.
It was true that the Department was struggling with weak capacity. Long and short term approaches had been adopted to deal with the problem. The long term approach was re-looking at the structure to ensure that there was appropriate capacity at the right place at the right time. In the interim, the Department was searching within for spare capacity. If capacity was available, it had been brought into the MGE programme. The Department had ensured that throughout the entire cultural development branch, the MGE project was implemented across the entire branch. Assistance from other branches -- Heritage and Institutional Governance -- had been requested to help with implementation of projects. It was not an ideal situation, but by spreading the load, the Department had ensured greater efficiency in the implementation of MGE projects over the year.
Ms Newton added that the Department had also looked at the process by spreading out the process of open call, which had helped in managing staff resources better. Flattening out demand had made it easier to manage projects, as staff still had time to pay attention to other projects instead of taking a significant amount of time to review applications. There was still a need for additional capacity and the Department was looking at the possibility of re-organising internally, as well as the possibility of creating new posts.
Mr Mandla Langa Acting CFO: Department of Arts and Culture, said that as far as conditional grants were concerned, there had beem a transfer in the 2nd and 3rd quarters. For the periods in question, expenditure was at 79% which was in line with the linear projection. As at the end of January, 100% of the allocated funds had been transferred. Coordinators assist the Department in monitoring the spending of the conditional grants by Provinces. As at the 3rd quarter, provinces had spent 53%, which meant provinces needed to improve their expenditure in order to achieve their targets. As a Department, expenditure on conditional grants was on track. However, in the last year there had been some provinces which were under spending, and this would be looked at closely.
As a Department, library books were not recognised as assets because to meet the definition of assets, the library books must be controlled within the Department. However, funds were transferred out and control was not within the Department, unlike with Basic Education, where control was taken after funds had been transferred.
The Chairperson clarified that the question was about municipalities to which funds were transferred, because if the conditional grant was transferred to provinces, then it was transferred to municipalities. The Committee would like to understand why the Department was transferring money to municipalities.
Mr Sakiwo Tyiso, Chief Director: Coordination, Monitoring and Evaluation, responded that the conditional grant was transferred to provinces, which subsequently transfers the money to municipalities. The money was used for the management of libraries, payment of staff salaries and so forth. The question therefore was referring to another component in the Department’s budget -- items which were transferred to municipalities. He could not provide an answer for that specific question.
Mr Jack said the Department would come back to the Committee with all the details.
Ms Newton said the Division of Revenue Act prevented the Department from providing the conditional grant directly to municipalities. That was why the grant flowed from the Department to the province. Sometimes the province billed itself and sometimes it provided to municipalities. In terms of the regional libraries and other kinds of infrastructure, which was the core of the Member’s question, the conditional grant was restricted to libraries’ maintenance only.
The Chairperson said that the Committee’s questions were still outstanding, because the Department did transfers to municipalities. What and how much was the Department transferring directly to municipalities? Which municipalities was the Department transferring money to? Perhaps the Department would provide the Committee with answers during the next meeting.
Mr Jack said audit fees were an issue, and the Ministry had met with the Auditor General to raise the issue of high audit costs. Audit procedures that must be followed were more costly, but the Accountant General was better able to assist in funding some of the costs. The Accountant General had funds with Treasury which could be used to recover the cost of the audit query. Recovery of audit costs was still work in progress. The Auditor General could outsource reasonable third parties. Treasury could assist to cover that portion of the fee from the central fund of audit fees for smaller entities.
Mr Ndima said looking at slide eight of the 3rd Quarter Performance Report, there was no specific budget line item that referred to the direct transfer of funds to municipalities. The item in the budget was provinces and municipalities, which basically related to the library grant.
The Chairperson replied that the Department could not say “municipalities” if it was talking about the grant that was sent to provinces. The document referred to municipalities, and this should be explained to the Committee.
The Committee broke for a ten minutes tea break
The Chairperson welcomed Members and the Department to the second part of the meeting. She reminded the Department about the importance of answering the Members’ questions as accurately as possible, to close any gaps in information given to the Committee, which was the basis of its work.
The Chairperson asked if the Department was aware of any impact of the programmes that had been delivered to communities, such as the community conversations.
Mr T Makondo (ANC) said that if the Department did not have an answer on the municipality transfers now, surely the answer would not be found at the Department’s offices. At a previous meeting, a Member had raised a question concerning the implementation of infrastructure projects, particularly libraries. It concerned libraries being constructed by the Department. Why were libraries with the same designs costing different amounts in the Northern Cape and Limpopo? The Department had responded then that it was looking at standardising designs. Standardised designs would help the Department to implement the projects faster, as it would cut down the time spent looking for a design. However, the Department’s presentation did not indicate that the designs were now available.
Mr Makondo said the Department was doing only a part of its job and the other part was being left to be done by entities. The Department should bear in mind that about 8% of its budget was transferred to entities, and these entities were full of wastage. What mechanism did the Department have to monitor how money is spent in entities? As the Department had stated, it was under spending in capital works, and the same applied to entities. For instance the Committee had recently paid a visit to Freedom Park where there had been under spending on capital works, particularly with maintenance which could not be carried out.
He said that money was not being spent on bursaries for higher learning. He sought clarity on whether the money that appeared under bursaries was not the same money that had been transferred to PanSALB. If not, why had the money not been spent, as it was denying an opportunity to young people who wanted to go to school to improve their socio-economic status?
Mr Makondo also asked about the Mzansi Golden Economy. He asked if it was statistically possible to determine the benefits, because expenditure for the project was on target. He said that another issue was that entities were not able to budget for long term plans. How was the Department going to deal with such entities?
The Chairperson asked the Acting DG to share his sense on the Department’s expenditure. The Committee was worried about the Department, because it seemed to be making under spending its business.
Mr Jack responded that the process of standardisation of the libraries was under way. The idea was to be able to have three or four choices that could be applied going forward. The process would look at existing structures and get a professional who would make it easier to qualify and also define the process of how people could choose a design. The professional would also help to determine the key considerations that people would have to take into account when choosing a design. The Department was in the process of appointing service providers who would help to streamline the standardisation process. The service providers should be able to determine the design, quantity surveying and costs attached to particular designs, as well as the time. The standard designs should start being applied by 2015/2016.
Looking at wastage and monitoring mechanisms, Mr Jack agreed with Mr Makondo that it also boiled down to entities, as well as maintenance. This was where the Department of Public Works a came in. For example, with Robben Island, Public Works should be carrying out the maintenance aspect of the Island. The Department had to enter into an MOU with Public Works to clarify the roles expected of each Department, and keep accountability. This could also apply to other entities. Previously there had been no engagement with the user. For instance, with Robben Island, management should be able to say what they needed. Excluding users from engagement exacerbated the lack of maintenance. Now the Department had entered into a tripartite MOU, where the user should determine its responsibilities, Public Works must state what it was doing, and the Department too. This would help to verify roles, and also assist with preventive maintenance, rather than maintenance after the fact, which was rather costly. These were some of the ways in which the Department was trying to deal with wastage. In addition, stronger monitoring mechanisms such as tripartite systems were important. Regular meetings on a quarterly basis, or even more frequently with problematic institutions, were included in the MOUs.
Mr Jack said multi-year projects had to be prioritised, because it was not possible to do all of them at once. During prioritisation, consideration must be given to projects which might start in the third year of the medium term framework (MTF), and would finish beyond their time. There should be contingencies to ensure funding for the project, to avoid approving projects which might not have funding. Due to prioritisation, some projects might not be done, but these would not be of a higher end priority. Projects that would enhance service delivery would be prioritised.
The allocation for bursaries was made once a year, which was why there might not be movements in the amounts. Once money was transferred, there would not be more transfers during the course of the year. The Department was highly committed to the bursaries. The difficulties around PanSALB had arisen because of a grant that had been made by the Lotteries Board. There was an amount of R20 million involved, and the Department would like to raise the issue next week when it dealt with PanSALB. The R20 million was not included in the transfer that the Department had made to PanSALB.
Ms Newton said that the Department kept track of the economic impact of various specific interventions. Over the last year, the Department had worked with a research company that had collected a lot of information. A final report of the research finding would be available at the end of the quarter. The report would demonstrate the economic impact of major festivals, like the Cape Town international Jazz Festival, among others. The information could certainly be made available in its draft form. At the next meeting, the Department could share some of the highlights of the findings, like jobs created, local economic impacts or some of the lessons learnt over the last couple of years by implementing the quarterly events work stream of the MGE.
The Chairperson said it might be useful to the Committee to hear about the impacts of smaller events held in rural areas and smaller towns. Perhaps a list of the smaller events and their impacts would be beneficial, because when Members moved in their constituencies they were asked questions that they were not able to answer. The Chairperson also said that the impact of community conversations was important, and how the impact was measured. Measuring impact was important, because where money had been spent there should also be a measure of how people had benefited. It was also important for the Committee to know the areas where the community conversations were held because it would like to go and carry out an assessment of how the community had changed since the conversations were held.
The Chairperson added that the Committee was interested to know about the transfers to the IDT, and how much money was lying with the IDT. Also, how much interest had been accrued with the IDT, as it could perhaps be used to fund some activities where the Department had no money to spend. The Committee was worried that the Department was under spending. It was unacceptable for the Department to be under spending while artists were crying. The Committee would also like to know whether the Department and its under expenditure had led to any fiscal dumping. It wanted information about the expiry dates of current boards. Induction notes for boards should also be distributed to the Committee, so it had an idea of how the board members were inducted. It was unfortunate that the Department had not been present during the Committee’s strategic planning, as it would have been beneficial to the Committee.
Mr Jack said it was good that there had been a target of 33 community conversations, but at the same time it should be questioned to what extent they would contribute to the issues of the day. A report could be produced, but that was not enough, because ultimately there should be a social compact to 2019, as directed by the Medium Term Strategic Framework (MTSF). The community conversations were helping towards that. That was the thematic approach that needed to be taken. For instance, with the energy crisis how could community conversations be utilised that would lead the community to be part of a bigger energy compact at the end of 2019. The current approach of having undirected community conversations based on themes did not allow for conversation follow ups, and did not build on particular issues or increase engagement. The Department was re-looking at how the community conversations could be linked to social compacts. A report could be produced with outputs, but there was a need for tools and mechanisms to measure impact in a credible way. The Department would welcome ideas from the Committee on how to go about doing this.
The Chairperson said that surely as a Department, if it was planning on doing something, it had the basis for doing an impact assessment. The Department should carry out the community conversations if there was a rationale for doing so, and not just hold the community conversations because they appeared on plans.
Mr Jack said the Department was now looking at an evidence-based policy. Social cohesion advocates were being used to provide ground-up evidence, and were being provided with resources to enable them to carry out their job. This would be evident in the 2015/2016 fiscal year.
The Department would not conduct any fiscal dumping, as it was against the law to spend public money just because one did not want to lose it. The Department would have under expenditure for infrastructure, but would be able to explain to the Committee on how it was dealing with it. Other areas, such as compensation budgets, goods and service and transfers were on track, as the Department had control over them. The area of concern was capital works, but this would be discussed in detail at future meetings.
Mr Jack said that apart from capital works, he had a positive sense that the Department would be on track with its expenditure. There were checks and balances to ensure there was no fiscal dumping. On MGE, there were tranches that were clear on how payment should be made. There were procurement contract management systems which would help the Department to stay on track.
The Chairperson said there were some areas for which the Department needed to prepare documents to submit to the Committee. The issue of consultancies used in the Department must be clarified -- how many were used, and where were they used. The issue of municipalities’ transfers had actually been resolved, as it had been explained that the misunderstanding had emerged from the way it was captured. The issue of the flags should also be addressed. The forensic audit report should wait until the auditors conclude their investigations.
The Chairperson concluded the meeting by bringing to the Department’s attention that when the Committee conducted site visits, DDGs of the areas concerned must be present. Sometimes pertinent issues were raised and the Committee could not handle them. It was not proper for such issues to be dealt with by junior staff members. The Committee was also concerned about PanSALB ‘s conduct. It would be engaging with PanSALB next week, but documents for the meeting were yet to be submitted, and it was not the Committee’s duty to be chasing after PanSALB. The Department should take drastic measures to deal with the board. The Committee was humbly appealing to the Department to commit itself to achieve its goals.
Minutes dated 4 November 2014
The Chairperson tabled the minutes for consideration.
Ms Mogotsi proposed adoption of the minutes, and Mr Mahlangu seconded.
The minutes were adopted.
Minutes dated 11 November 2014
The Chairperson tabled the minutes for consideration.
Ms Matshobeni proposed adoption of the minutes and Mr Makondo seconded.
The minutes were adopted.
The Chairperson said that reports would be circulated to all Members and appealed to them to read the reports, as they would be tabled at the next meeting.
There was also a document submitted to the Committee for information, highlighting the Members’ role in SONA.
The meeting was adjourned.
Tom, Ms XS
Bilankulu, Ms NK
Grootboom, Mr GA
Mahlangu, Mr JL
Makondo, Mr T
Matshobeni, Ms A
Mogotsi, Ms VP
Mulder, Dr PW
Tsoleli, Ms SP
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