Department of Transport response to Budgetary Review & Recommendations Report, in presence of Deputy Minister

Meeting report

The meeting started with a minute of silence in remembrance of the late Minister Collins Chabane

Department of Transport response to Portfolio Committee's Budgetary Review and Recommendations Report (BRRR)
Mr Collins Letsoalo, Chief Financial Officer, Department of Transport (DoT), put his presentation into context, noting that it would address the comments made by the Portfolio Committee in the Budgetary Review and Recommendations Report (BRRR) of 24 October 2014, subsequent to the Department of Transport (DoT or the Department) having presented its Annual Report for 2013/14, when the work of each of the branches and entities was interrogated.

The DoT's Strategic Plan for 2015-2020 and Annual Performance Plan (APP) for 2015/16 was tabled in Parliament on 11 March 2015, with specific and measurable indicators defined. Technical indicator description tables had been completed in line with the National Treasury framework. There was admissible evidence, for all quarterly and annual targets in the APP were predetermined and quality assured. The APP aligned to the approved Estimates of National Expenditure for optimal allocation of resources for planned targets, and all the targets were within the control of the DoT, with quarterly and annual time lines indicated. 

The recommendations of the Auditor-General (AG) were being implemented, with the Audit Committee (AC) attending to the matter, with ongoing monitoring. The Internal Control Unit falling under the office of the Chief Financial Officer follows up on all internal audit and AG's recommendations for implementation, and a regular quarterly report was presented to the AC.

In response to the BRRR recommendation 7.3, a Procurement Plan has been developed and was being discussed at the moment with National Treasury. The National Treasury had issued guidelines on Supply Chain Management (SCM) procurement to departments and entities to implement. Those entities where the Auditor-General had identified problems would be subjected to quarterly monitoring by the Department.

In relation to recommendation 7.4, Mr Letsoalo noted that the eNatis contract was to expire on 30 April 2015. A Project Management Handover Plan was being implemented, guided by the task team of the Shareholder Committee, chaired by the Free State MEC for Police, Roads and Transport. The plan was focusing on the operational issues after expiry of existing contract, information technology, facility and facility management. A risk management plan, communications plan and financial plan were being or had been developed.

Recommendation 7.5 of the BRRR had dealt with the filling of vacant posts. Mr Letsoalo noted that the DoT was trying to keep the vacancy rate to 10%. The Senior Management Service members were to commit to meeting the targets on their performance agreements. To date, the vacancy rate had been reduced, from 26.52% of last year, to 22.01%, and 119 vacancies were filled, including internal promotions. The total establishment had 864 funded posts, of which 197 were vacant at the moment. 87 posts had been added in the current financial year , which explained the increase in the vacancy rate. The filling of vacancies was a standing item on the agenda of Exco and senior management committee. The key vacant posts were four at Deputy Director General level, eleven Chief Director. So far, three of the DDG posts were awaiting short-listing and three CD posts were awaiting interviews.

In answer to recommendation 7.6 of the BRRR, Mr Letsoalo explained that the Department has now consolidated its approach to public entity oversight. A new Chief Directorate will be introduced, in the Office of the Director-General, to address this matter in a holistic manner. The Minister granted approval for the creation of posts in the DoT structure. National Treasury allocated funds to DoT to create additional capacity for Provincial executive oversight, and oversight on grants.

Recommendation 7.7 asked the Department to prioritise discussions around the financial sustainability of entities. Mr Letsoalo said that a mechanism was being established to assist entities who had experienced financial resources challenges. Financial oversight analysis over entities was performed quarterly, in order to identify any entities where there was a potential financial sustainability problem. He highlighted that most entities received the majority of their revenue through the levies and tariffs that were imposed and these entities were able to conduct their operations with such income, although the DoT would be alerted to any possible sustainability challenges, and if this did happen, the Department would immediately engage with the entity and National Treasury. Funding strategies had been developed and submitted to DoT, from entities such as the Ports Regulator and Cross Border Road Transport Agency.

Recommendation 7.8 called on the DoT to ensure alignment of the Strategic and Annual Plans to the National Development Plan. He repeated that the plans were tabled on 11 March 2015, and that the planning frameworks were fully aligned to the NDP and Medium Term Strategic Framework (MTSF). These plans also responded to Outcomes 4, 6, 7, and 10 of the NDP, in line with the Minister’s Delivery Agreement.

Recommendation 7.9 referred to the legislative programme. Mr Letsoalo reminded Members that the DoT's legislative programme for 2015 had been outlined to the Committee. Three bills were due for tabling in 2015: the Merchant Shipping Bill 2015; Administrative Adjudication of Road Traffic Offences Amendment Bill 2015 and National Land Transport Amendment Bill 2015. Other new legislation still at the drafting stage comprised:

(a) Road Accident Benefit Scheme Amendment Bill 2015
(b) Airports Company Amendment Bill 2015
(c) Air Traffic and Navigational Services Company Amendment Bill 2015
(d) Single Transport Economic Regulation Bill 2015
(e) Ship Registration Amendment Bill 2015
(f) Road Traffic Amendment Bill 2015

Finally, the Committee had requested written responses from the DoT. In compliance with this, the DoT had submitted a written plan from the Passenger Rail Agency South Africa (PRASA) on the turnaround strategy to address the AG's recommendations, and a plan on introduction of new rolling stock. For the Cross Border Road Transport Agency, a draft funding strategy had been received, and so had a report on the Road Traffic Management Corporation (RTMC) on its turnaround strategy to address the recommendations of the AG. Legal Services had presented the legislative status report. Still in the course of preparation were the Ports Regulator draft funding strategy, and the procurement plan for 2015/16 was still with National Treasury for approval. 
 

Discussion
Mr G Radebe (ANC) said he was not satisfied with the responses. He asked why  the DoT was not able to fill all the vacancies, pointing out that the failure to do so had resulted in National Treasury cutting its budget. The numerous vacancies were likely to lead to problems in service delivery. He asked why the responses for the BRRR came late, despite the DoT being given a deadline last year. Furthermore he was not happy that the presentation documentation had been submitted to the Committee late.

Ms D Carter (COPE) asked if the Committee could be provided with a list of the issues raised by the Auditor General (24% of the total) that were not yet complete. She asked what percentage of vacant positions existed in key positions.

Mr M De Frietas (DA) asked what would transpire if the implementation of the AG’s recommendations was not done. He asked for the specific dates when the legislation would be tabled in Parliament.

Mr P Sibande (ANC) noted that it was vital to fill the key vacant posts, for example performance monitoring and evaluation. He pointed out that when certain questions were put to the Department, it seemed that nobody wanted to take responsibility because the vacancies meant that nobody was dealing with the issues. He wondered why it was taking so long to fill the posts, and what the reasons were for the delays. He pointed out that the AG had strongly recommended the need to increase monitoring and evaluation, yet those posts remained vacant, and again he stressed the DoT needed to have people in place to do that work. He pointed out that advertising or interviewing was not enough, the positions must be filled.

Mr Sibande further pointed out that this Committee had often asked how often the DoT interacted with entities, and the response in this presentation was that the DOT "will engage" with some of the entities. Some of the entities had serious challenges and he wanted to know when exactly those engagements would start. 

Ms S Xego-Sovita (ANC) asked if the Committee could be briefed quarterly on contract management. Given that there were budget cuts, she felt that it was important that the DoT had identified and would fill the most critical vacant positions. She felt, overall, that the report was acceptable, even though it was received late. 

The Chairperson asked about the shortcomings that the DOT had identified in contract management. She wanted clarity on the issue that was taken to court. She asked what issues had been raised in its interaction with the Ports Regulator. She pointed out that there were some problems with the way in which  Transnet viewed the Ports Act, although that Act (No 12 of 2005) clearly said, in section 3(5) what the Minister had to do. If that point could be clarified, it would assist the DoT and Ports Regulator in being able to generate revenue. She pointed out that Transnet should be doing what was right under the legislation, and give the Regulator what rightly belonged to it.

Ms Sindisiwe Chikunga, Deputy Minister of Transport, apologised for the late submission of the presentation, and said she would check how the delay occurred, because the Minister had signed off the document a week before. Vacancies would remain a standing priority at strategic management and planning meetings. In April 2014, the vacancy rate was 26%, but it had been reduced to 22% by end of the financial year. The emphasis of the DoT was on getting the right people, rather than merely filling the posts. DoT was an engineering department that did not have enough engineers and it also required specific engineering skills. It was therefore impossible to have just anyone occupying certain posts, if they were unable to perform the required duties, and lacked the right skills and requisite experience. At the same time that vacancies were being filled, others were resigning, and there were currently two Deputy Director General posts vacant because of resignations. The DoT could not prevent people from leaving and resigning. She explained that the cuts in budget were part of the Minister of Finance's cost containment measures. Most government departments experienced budget cuts. DoT had to look carefully at its vacant posts and analyse if the vacancies could best judge that from the Annual Performance Plan.

Ms Chikunga told the Committee that the Merchant Shipping Bill 2015, Administrative Adjudication of Road Traffic Offences Amendment Bill 2015 and National Land Transport Amendment Bill 2015 were due for tabling in Parliament in the coming financial year. Those that were still in the drafting stage would only be tabled in the 2016/17 financial year, but the DoT felt it important to alert the Committee to what it was doing. These pieces of legislation would help solve challenges that were identified by the entities.

Mr Sibande said while people had the freedom to resign, one problem that concerned the Committee was that some of them resigned when they were still due to account before the Committee. When this happened, the DoT was setting up the new Director-General and the Ministry for failure. As long as there was no recruitment strategy, the problems of vacancies will persist

The Deputy Minister replied that when senior managers resigned, the DoT would conduct an exit interview. The Department had been unable to confirm, on any occasion, that people resigned because they were due to account to the Committee. For instance, one of the senior managers resigned because she had found work at a company in her home district. Interviews for exiting senior managers was in line with the code of public administration. It was important to be clear that people were not running away because they were about to be called to account. The Accounting Officers were the Director General, Minister and Deputy Ministers, in terms of the Constitution and other legislation. The emphasis was that DoT wanted to employ people with a particular skill, experience and qualification at a particular time.  A number of positions had been advertised, some had been interviewed and DoT would be employing people on a continual basis, with other positions to be advertised in line with the available budget. She reiterated that the filling of vacancies was a constant and important point for strategic management.

Mr Letsoalo spoke to the court case and said that an interdict had been granted against DoT preventing it from filling posts until certain procedures had been completed. In relation to the AG's reports, he noted that some of the recommendations of the AG would take a while to implement fully, so it would be a while before he would be able to report that all had been addressed. Some had been completed by 31 March 2015, others would continue to 31 July. Progress was monitored by the Exco and the Audit Committee, on a quarterly basis, and these two committees would share the commitments they had in fulfilling the AG's commitments. He reiterated that the DoT needed fill Deputy Director General (DDG) posts; it had lost two DDGs and there were vacancies for four DDGs that it required, as well as other posts to be filled at management level. When the AG made a recommendation, it would be the Accounting Officer who would    make sure that it was implemented. DoT had a good working relationship with the AG and implementing its recommendations would help the DoT move towards a clean audit. The budget cuts affected it, because it was not given money for increases. The point was, however, that vacancies would always be there and this did not mean that DoT was not addressing them.

He noted that the Public Finance Management Act (PFMA) required that entities must report to the Ministry on a quarterly basis. The Ministry would interrogates their reports for oversight purposes. DoT was thinking of reintroducing a public entity oversight branch, to strengthen the oversight capability of the DoT.

Another official from DoT noted that the Ports Regulator was funded by appropriation from Parliament, according to legislation, and there was no room for raising other revenue from other sources. If it was desired that it should raise additional funding, discussions could be held on whether levies should be charged on ports and paid directly to the Regulator, but this would have to be sanctioned in amending legislation. The challenges with contract management were that there were certain clauses in the contracts that were not in line with the PFMA, especially contracts that came from abroad.

The Chairperson asked if DoT had learnt any lessons on contract management to avoid the same problems arising again in the future. She asked the for ratio of support staff to staff performing core functions of the Department, noting that some other departments displayed more support than professional staff, which affected their functioning. She said that in the future, she would like to see these ratios displayed in every presentation.

Ms Carter said if DoT still had a 22% vacancy rate, something was wrong. She was in construction engineering herself and she knew well that when people were given work without also being supplied with the necessary tools to work properly, they would resign. She asked what qualifications were needed for the vacant engineering posts. There were many qualified engineers who were looking for jobs, and she reiterated that for there to be so many resignations and so many vacancies still suggested a problem. She suggested that DoT must develop a process to ensure that if one person left, someone else would immediately take over that workload, to avoid compromising the work of the Department.

Mr L Ramatlakane (ANC) said if the Department failed to fill vacancies soon, there would be a problem because acting appointments would have to be made. This impacted on delivery because capacity was reduced if relying on acting positions. He also believed that it was no justification to claim scarce skills, and the Department could well tell the Committee that it would then never be able to deliver on its mandate. Members should be hearing a different response by now; DoT should have begun to head-hunt, it was permitted to do so, and the Committee wanted to hear what it was doing differently to address the problem. Some other departments were recruiting out of universities. It pained him to hear of budget that had to be returned unused. The DoT management was employed to meet all requirements, and that was exactly what this Committee expected.

Mr Letsoalo gave details on the staff complement. There were 1 054 funded posts, of which 197 were vacant, and 87 of those had been added in the 2014/15 financial year, with eleven posts for Chief Directors and four for DDGs. The breakdown of how many resigned, promoted, or left for other companies could be given later. He noted the Committee's request and said that quarterly updates would be given.

The Chairperson said the DoT has to speed up on the filling of vacant posts, serious monitoring and evaluation of entities and regulators that fell under DoT. It was, however, doing better than last year and deserves to be commended for that, but still needed to improve.

Adoption of Committee Minutes
The Committee adopted minutes of the previous meeting

The meeting was adjourned.