The Committee considered the draft report on its oversight visit to the Eastern Cape to be submitted to Parliament, and the presentation by the Committee Researchers on their analysis of the third quarter expenditure patterns of national departments for the 2014/15 financial year.
In discussion of the oversight report, Members raised serious concerns in connection with the Accelerated Schools Infrastructure Delivery Initiative (ASIDI) and the Mount Ayliff bulk water supply project. Challenges included contractors who acquired contracts but did not have the resources to execute, collusion between contractors and consultants resulting in payments being made when projects had not been completed, or even when sites had just been fenced and materials brought in. It was proposed that the Committee should suggest to Treasury that they look at a system of performance guarantees on the part of the contractors, so that government had a guarantee that the job was done and where a contractor defaulted, the government could recover the guarantee. The Committee also raised concerns around the pipes being imported from China for the Mount Ayliff project, and the delays arising from this. A Member said the Committee needed to emphasise to the Department that it was not going to accept as good practice the ordering of products from China when they were locally available.
The Committee said that the lack of sporting facilities and water and sanitation at the ASIDI projects had to be urgently addressed, as the government objective was to build “ideal” schools and without such facilities the whole purpose would be defeated. Other issues arising from the oversight visit included concerns that the billing and revenue collection systems in the district municipalities were still not functional, and the lack of urgency by municipalities in dealing with and addressing the policy priority issues on access to water and sanitation.
The Researchers made a presentation on the third quarter expenditure for 2014/15. They showed the trends of the departments over the last five years, highlighting the significant areas of under-spending by departments. They said that where service delivery was key, departments should ensure that money was channelled toward the provision of services -- for instance, water, sanitation and energy. They made reference to the Auditor General’s report on the issues that had been noted in departments in prior years, which had also impacted on the expenditure portfolio. The general shortcomings across the departments were non-compliance with laws and regulations, the failure by internal auditors to perform their work and the lack of implementation of appropriate action where there were transgressions.
The Chairperson outlined the agenda of the Committee, the main issue being the adoption of the report on the oversight visit to the Eastern Cape, the presentation by the researchers on the analysis of the third quarter expenditure, and the adoption of minutes.
Mr A Shaik Emam (NFP) proposed the adoption of the agenda and Mr M Figg (DA) seconded. Apologies received were from Ms C Madlopha (ANC), Mr S Mashatile (ANC) and Mr N Kwankwa (UDM). The committee went over the report on its oversight visit.
Oversight visit Report
Mr Tshepo Masoeu, the Committee Content Advisor, read through the report, indicating it had been sent to the Committee and all changes were underlined. He would indicate underlined portions and follow guidance from the committee on how to proceed. On page 3 of the report, the amount reflected in the table was not for the Regional Bulk Infrastructure Grant (RBIG) as a whole. In table 3 on page 4, there were figures that the Department was supposed to have submitted to the Committee but had not done so, and the columns reflected zeros.
Mr A McLoughlin (DA) stated that the Committee should note that that was the table presented and that they had questions about the missing information, as it was not a correct reflection. Ms Manana (ANC) asked what the reason behind the figures not being available was, and when could they be added. The content advisor responded that initially the Department had said the figures were not available. They had subsequently been e-mailed, asking if they could be made available, but no response had been received as yet.
The Chairperson said the figures were an issue, and the Department had to explain to the Committee why a zero was shown when money had not been spent. If the money had been moved to another function or programme, as was allowed, it would reflect so. He proposed that the Committee noted that the money had not been used, and therefore the two zeroes may not be correct and the Committee questioned them, so that when the report was submitted to Parliament, this would also be noted. The committee would still want to follow up on the money.
Mr Masoeu highlighted the additions requested by the Committee on page 8, that concrete cradles were not ordered by the contractor, which was one of the challenges of the project. On point 6.1, he said the views of the Committee that the reasons given were unacceptable and a cause for suspicion, were added. Mr McLoughlin referred back to page 6 and noted that the request he had made for percentages to be included to Table 7 were effected, and thanked the presenter.
Mr Masoeu highlighted that the concerns raised by the Committee about the Mount Ayliff bulk water supply not going to benefit the surrounding areas had been captured on page 9, point 6.8, including the point on the significant number of households that still do not have access to water. Mr Figg suggested a grammatical adjustment. Mr. Shaik Emam stated that the issue of the water pipes that were being imported by the contractors was also supposed to be included in the report.
The Chairperson proposed that the Committee make a note that it had raised concerns around the pipes being imported from China and the delays in the project arising from this.
Mr Shaik Emam raised the challenge of contractors who acquired contracts but do not have the resources to execute. The Chairperson asked if he meant that the government should provide the material and then let the private contractors do the work. Had this point been raised during the oversight visit? Mr Shaik Emam said the suggestion they had made was to pay the contractors once the materials were on site, to avoid a situation where the contractor could not source the resources timely. Mr Masoeu said that they could include a recommendation that the sourcing of the material needed to be such that contractors should be able to get sufficient material to implement the project.
Ms S Shope-Sithole (ANC) said the Committee needed to emphasise to the Department that it was not going to accept as good practice the ordering of products from China when they were locally available.
The Chairperson suggested to the Committee that the discussion on materials could be raised with the Presidential Infrastructure Coordinating Council (PICC), Economic Development Minister Patel, in particular, and the Department of Cooperative Governance and Traditional Affairs (COGTA), as most of the construction takes place in the municipalities. He said that it was a bigger discussion, and they should include the Departments of Education and Public Works. He added that if contractors did not have the capacity to purchase materials, then the whole of the infrastructure project was going to cost a lot more than the proposed cost for the next 15years. It would not achieve two major objectives – creating jobs and increasing the share of the estimated expenditure between the established construction companies and emerging companies.
Mr McLoughlin (DA) said the Committee should suggest to Treasury or the relevant entity that they look at a system of performance guarantees on the part of the contractors, so that government has a guarantee that the job was done and where a contractor defaults, the government can recover the guarantee from the financial institution.
The Chairperson gave an example of a contractor who had already been paid R8 million but had failed to complete the work, and the Department was having to pursue legal processes.
Ms Shope-Sithole agreed that cases should never get that far, as the process was long and costly.
Mr Shaik Emam also concurred, and added that when payment has been made and work not effected, it caused delay and added the cost of getting another contractor to finish the job at a higher price than the amount paid to contractors. Guarantees for the contract would not be sufficient for the government to recover its losses. Contractors without the financial muscle should not be considered, and payment should be made only upon completion of at least 10 to 15% of the work.
Mr Figg said that the recommendation should be framed around the submission of a payment certificate and based on the percentage of work completed, the value of which consultants would determine.
Mr McLoughlin said the idea of work virtually completed was compounding the problem.
Mr Shaik Emam added that another problem was site establishment, where the moment a contractor was awarded a contract, he moved in, put up a fence and claimed a high figure, thereby getting a large sum of money before any work had been done. The contractor should bear the cost of setting up its equipment and fencing the site. The other problem was that the consultants were not doing their work. They were colluding with the contractors and extracting payment when an insignificant amount of work had been done
Mr Masoeu said that on point 6.13, the deliberations of the Committee that the billing systems and revenue collection systems in the district municipalities were still not functional had been inserted, together with the dissatisfaction of the Committee at the inadequacy of preparation, compounded by the absence of key officials from the OR Tambo District Municipality. A further point was the disappointment of the Committee at the lack of urgency by municipalities in dealing with and addressing the policy priority issues on access to water and sanitation. The report had also included the observations of the Committee on the number of officials where the Committee could not ascertain their specific contribution to the oversight visit, and this impacted the cost containment policy emphasis contained in the budget framework. They had captured the issue raised by the Committee on cost escalations in page 12 point 8.4, and had added further that ‘the Committee views compliance with the prescripts as non-negotiable’.
Mr Shaik Emam said one of the issues they had observed involved community participation. All the schools that had been converted from mud schools to brick schools were now going to be “ideal” schools, and he lamented that he could not see “ideal” schools in this context, as there were no sport facilities, nutrition centres and oral hygiene. They had observed boys and girls using the same toilet facilities and he wanted that addressed. On the issue of sports facilities, they had been told the terrain was not conducive for sport and yet there was plenty of space to put up sport facilities and even indoor sports facilities. The Department of Education and the Department of Sport and Recreation should work together in ensuring that schools had facilities. He said that ideal schools also needed quality educators that they could take the learners to another level, but some that he saw during the visit were more child minders than educators. He noted that with all the money that was being spent, not much would be improved if quality educators were not made available. This should be part of the objective -- that in setting up ideal schools, all the considerations should be taken into account.
The Chairperson said the point to be made, particularly about sport, was that an integrated action plan was needed for basic education and sport. The Sports Minister had been campaigning about sport, but that kind of integration was not being seen in the Sports and Education ministries to make sure that that agenda was achieved. The issue of boys and girls being made to use the same toilets was a serious concern. These issues must be well captured in the report. The issue of quality educators was too early to judge, however, as the other schools were not yet completed.
Mr McLoughlin said that inter-governmental relations with projects on the ground were generally lacking and that was why schools were finished, but with no water supply or electricity, because those departments had not been called in or brought on board as part of the whole project. It was concerning that the delegation from the water and sanitation department had been big, yet they seemed to be observing and not taking on board what was happening. Communication had to be coordinated between the departments.
The Chairperson concurred and said integration on the delivery of services should be emphasised.
Ms Shope-Sithole suggested that the Committee should invite the Department of Basic Education and the Department of Water on one day so that a commitment on working together could be given.
Ms M Manana (ANC) concurred.
Mr Masoeu said on point 8.6, they had added the Committee’s observation that the contradictions between the contractor’s concerns over the community invasion of the Chief Henry Boklein senior secondary school construction site, and the social facilitation officer’s statement that the matter had been resolved, was a sign of poor contract management. They had captured the Committee’s observations on departmental integration in planning the school facilities, the lack of sports facilities and hygiene standards. They had also noted the concern of the Committee that though tenders were awarded in April 2014, construction had not begun due to termination of contracts and subsequent litigation against the Department of Basic Education, and that the delays were likely to affect the timeframes of the entire Accelerated Schools Infrastructure Delivery Initiative (ASIDI) programme and the life span of the conditional grant.
Mr Shaik Emam said that when contracts are awarded they are based on a number of considerations, including grading, and when a tender was awarded to a particular contractor based on that grading, then to go and award another tender simultaneously to build another school based on the same grading and not necessarily taking into account the value of both those contracts, and see whether that contractor qualified or not, was the reason why some contractors were now running into difficulty. When they did, both schools suffered. Capacity and financial resources should play an important role in whether a contractor was capable to do the work simultaneously.
The Chairperson concurred, and gave the example of one contractor with two contracts. When they had asked why, they had been informed that the contractor had the highest black economic empowerment (BEE) score -- but the contractor was failing. He said a high BEE score did not indicate capacity. Additional criteria had to be formed to ascertain whether a contractor had the capacity and experience.
Mr Masoeu said that they had not added the concern explicitly, and indicated that they would include it.
Mr Masoeu said they had only four recommendations initially, and as the Committee had suggested that recommendations be made from the observations, they had now included the underlined ones, point 9.1 and 9.2. He read them out. The first recommendations in 9.1 were directed to the Minister of Water and Sanitation, and 9.2 to the Minister of Finance.
Mr McLoughlin (DA) suggested some grammatical amendments.
Mr Masoeu said that they had added four more recommendations directed to the Department of Basic Education on appointing credible contractors and creating internal controls so that contracts were not prolonged, and the submission of payment certificates by contractors when the work done had been verified. They had also added a recommendation on quality assurance of all schools built, and integrating the ASIDI programme within the benefiting local municipalities’ integrated development plans, so as to ensure community participation and provision of sports and recreational facilities in schools.
Mr Shaik Emam said the challenge was not on presentation of payment certificates, but on the collusion with contractors for payment when only a small percentage of the work had been done.
The Chairperson asked whether the suggestion was that the Department did not have people to certify that what contractors were being paid for was actually what had been done, and was up to standard.
Mr Shaik Emam responded that indeed was the suggestion, as well as the problem of collusion with the outside consultants. He said that it was important to have ongoing verification.
Mr McLoughlin said that the officials in the Department had to take up the challenge and monitor the work, instead of outside contractors. That could save the government money and unnecessary costs. He then made some grammatical amendments.
The Chairperson proposed that recommendations be made to departments that they build internal capacity to ascertain whether there was value for money on what they were spending, and so avoid collusion between consultants and contractors. These concerns should also be raised with the Chief Procurement Officer and National Treasury.
Ms Shope-Sithole suggested that the Committee secretary contact the office of the Auditor General (AG) and get a copy of its report on departments and the recommendations, because if recommendations had been made similar to what the Committee was suggesting, and these had been ignored, the AG could say there was no compliance and recommendations were being ignored.
Mr Figg said that the issues under consideration were so important that the report should be sent to the departments and strongly worded, so that the Committee expressed its dissatisfaction at the way money allocated was being spent.
The Chairperson concurred that a separate report should go to Parliament and another to the specific departments. This issue had to be attended to urgently by the Committee and the other relevant portfolio committees.
Ms Shope-Sithole said that the Department of Monitoring and Evaluation produces reports, and requested that those reports be made available to the Committee.
Mr Emam and Ms Manana suggested some grammatical changes.
The Chairperson noted that the report should be shared with the relevant portfolio committees.
Ms E Louw (EFF) suggested that the Researchers get some reports from the Standing Committee on Public Accounts (Scopa) so that the Committee worked hand in hand with it, as some departments were called before Scopa and it would be important to have joint meetings.
The Chairperson said that they should find a way of identifying challenges related to public expenditure earlier so that corrections could be made, rather than for Scopa to wait until the end of the financial year.
Ms Shope-Sithole) agreed with Ms Louw, and said the Committee must get the reports of Scopa, the Auditor General and the Department of Monitoring and Evaluation, and invite these people in order to prevent the misuse of state money.
Mr Phelelani Dlomo, Committee Researcher, addressed the proposal made by Mr Figg about preparing a separate report to the departments. He said that maybe the report should not be separated from the one sent to Parliament. There was a protocol around a report. It had to be adopted first by the Committee, then went to the House where it was debated and became a resolution of the house. It was then taken to the relevant ministers, and with that status it became enforceable, and the recommendations became obligatory. He proposed that the report to the departments be incorporated, so that it went through the process.
The Chairperson suggested that the Committee adopt the report with the amendments that had been made.
Ms R Nyalungu (ANC) apologised for arriving late asked whether the issue of water and sanitation had been addressed.
The Chairperson noted that those observations were being captured in the report and proposed that the adoption of the report be suspended for a while to allow the amendments to be made, and allow the researchers to make their presentation.
Presentation of the Third Quarter Expenditure Analysis - 2014/15
Mr Dlomo said that National Treasury had tabled the Third Quarter Expenditure Report a week ago and they had made some remarks about the report before delving into the analysis. The report was significant in that it was an indicator of how money had been spent throughout the financial year. He highlighted the importance of an appropriations committee and noted how in other countries it was constituted by more individuals and even divided into sub-committees. It was therefore difficult to go through all of the departments because of capacity.
He said in the past, the Committee would have had a report detailing under-expenditure, over-expenditure and reasons that underpinned the expenditures. Some departments did keep such records, but some only gave positive reporting although under-expenditure had been identified. A department should be able to account for under-expenditure because if that was not done it became a problem for the researchers in doing their work.
The aim of the presentation was to highlight under-expenditure and over-expenditure, to highlight spending patterns of departments and to draw the attention of Parliament to issues in the report, with the aim of improving public spending and compliance.
The allocation made to the national government for 2014/15 was R636.6 billion, and it did not include the direct charge of R503.8 billion. The direct charge was that amount which did not need parliamentary approval, and this did not even come for consideration before the Committee -- for example, schemes approved and salaries for judges directly withdrawn from the National Revenue Fund. The main focus of the Committee therefore was only the Appropriations Bill.
He said the expenditure as at the end of the third quarter was R462.1 billion. The overall expenditure showed that in the first quarter 22.2% was spent and in the second quarter 47.5%. This was below the linear 50% target. The third quarter was at 72.7%.
Mr Musa Zamisa, Committee Researcher, said that the approach the researchers had adopted to identify departments to analyse was to take into cognisance the situation in the country and look at departments that had a strong impact on service delivery and the performance of government. He took the Committee through graphs showing expenditure trends in terms of economic classifications -- which economic classifications were spending better and which were not. He said the total spending happened at the provincial and local government level and as they engaged in discussion on departments, it would be clear that there was more focus on conditional grants, where service delivery actually happened. Payments for capital assets throughout the quarters were very low and it was difficult to see why, after the Minister had introduced cost containment measures. The Committee, National Treasury and other relevant stakeholders needed to sit down and discuss a mechanism to see which departments were attending to cost containment measures as an excuse for non- performance.
He said that transfers and subsidies constituted the biggest chunk of the budget at the national level, so most of the budget for national departments went to provinces and local government. The departments with the biggest amounts of transfers were those involved with social developments. He further noted that towards the end of the financial year, departments tended to spend money on buying goods and services that may not be essential so that they could get a bigger allocation in the next financial year.
Mr Dlomo directed the Committee to the table which showed the actual expenditure versus the projected expenditure of departments. The Department of Water and Sanitation was allocated R13.6 billion and the projected expenditure as R8.9 billion, but the actual expenditure was R6.1 billion, leaving R2.8 billion unspent, which was 31.4%. This was a problem. The Department of Energy was allocated R7.4 billion, projected to spend R6.6 billion, but the actual expenditure was R5.2 billion, leaving unspent funds of R1.4 billion. The Department of Public Enterprises was allocated R322.9 million and projected to spend R195.4 million, but had exceeded this, as the actual expenditure was R228.2 million, which was an excess of R32.8 million. He noted that the top five departments on the table needed quick intervention, whether from the Committee in collaboration with their portfolio committees and Scopa, as they were worrisome departments.
He referred the Committee to figures showing the trend of the Department of Water and Sanitation’s expenditure over the last five years. In 2010/11 the Department spent 61.8%, and 49.6% in 2011/12. In 2013/14 the Committee had met with the Department hence the increase to 64.3%, but since it had not met the Department in 2014/15, the figure had gone back down to 44.5%. This was an indication that when the Committee invited departments, they took the recommendations of the Committee seriously, so the committee should invite departments to appear before it.
He said there was an unspent amount of R139.4 million due to the change in administration after the elections, which had resulted in changes in the ministerial personnel and activities, but said that this was normal. However, delays in receiving invoices in respect of office accommodation and municipal services from the Public Works Department (PWD) had been a recurrent problem, and he suggested that the committee call the PWD for a discussion, as the billing system affected the cash flows of other departments.
There was also an unspent amount of R68.5 million due to the water legislative review process being halted in order to accommodate the sanitation component. There had also been delays in the “War on Leaks” project and the “Develop and Implement” decision support system project, which were aimed at water conservation and ensuring sustainability of water supply. Failure to spend on such projects would cost the nation. These projects were aimed at raising awareness among the public on detecting water leakages and saving water, and were important. An unspent amount of R2.2 billion was due to the lack of expenditure on the Regional Bulk Infrastructure Grant (RBIG) and Municipal Water Infrastructure Grant (MWIG), which were the cost drivers for the programme. Some areas did not have water, yet there was unspent money.
Mr Dlomo directed the Committee to the issues that had emerged from the Auditor General’s Report for 2013/14 with regard to the Department of Water and Sanitation. The most common issue was non-compliance with legislation, where departments submitted financial statements that were not prepared in accordance with the prescribed reporting framework, did not maintain effective and efficient internal controls over performance management and did not take reasonable steps to ensure full compliance with certain procurement processes and performing remunerative work without permission and did not take effective steps to prevent irregular expenditure. R920 million of irregular expenditure had been incurred.
He said they had recommend that accounting officers should be able to come up with measures to tighten up the system and avoid instances of non-payment of contractual obligations. The remedial actions proposed by the Auditor General were that skilled key staff members should be appointed to critical posts within the finance section and that officials should be held accountable for non-compliance with laws and regulations. He said certain departments did not take the recommendation of the Auditor General seriously, and that was why implementation of the remedial actions was a challenge.
Mr Dlomo also analysed the Department of Human Settlements’ expenditure trend for the past five years. There was a drop from 75% in 2011/12, to 67.7% in 2012/2013, and a significant rise in 2014/15 to 69.9% from 65.1% in 2013/14. The unspent amount of R552.4 million was mainly due to administration and programme delivery support. It was a concern that there was no substantive further information given to show the reason why there had been under-expenditure. The Housing Development Finance was where most transfers were done and it was surprising to see was that there had been a reduction in allocation from an amount of R988.9 million to R22.8 million -- that was a cause for concern, as there no reasons had been offered. The Department had received an unqualified audit only because it had corrected all the material misstatements identified by the AG during the auditing process. He had concerns with issues around internal auditing, especially the deficiencies in internal controls. He suggested some intervention by Parliament to strengthen the intervention of the internal auditors.
He also highlighted the proposed remedial actions and noted that the AG was concerned about the slowness of departments to implement recommendations. He reiterated the point that training must be provided to all supply chain management staff to ensure compliance, and the role of accounting officers in oversight. The issue of transgressions on non-compliance needed to be addressed by having consequences being enforced. The lack of consequences perpetuated the transgressions. This affected the ultimate expenditure, because strong expenditure management programmes were needed in every department
The Department of Health’s expenditure over the last five years had shown a downward trend, from 75.9% in 2011/12, to 75% in 2012/13 and 72.7% in 2013/14. There was a slight improvement in 2014/15, to 73.5%, and an amount of R591 million was recorded as unspent money. He said that health was a key area, where money had to be spent appropriately. There were conditional grants aimed at infrastructural development and if the department did not have the capacity manage infrastructure projects, then there was a problem. He said the Department had asked the Committee to help it re-look at the grants. The delay in appointing the directors for the Compensation Commission for Occupational Diseases (CCOD) was one of the contributors to the slow expenditure. The Auditor General had given the Department an unqualified audit opinion after corrections, and that was an indication that the internal auditors were not doing their job properly. Issues around non-compliance with legislation related to inadequate monitoring of expenditure and non-financial performance information for the National Treasury services grant and the health professions training and development grant, and the fact that the strategic plan covering the financial year under review had not been prepared by the Department. The Department ought to establish achievable and realistic projects. The proposed remedial actions focused on appropriate action being taken against poor performance and improvement in monitoring conditional grants and management of projects.
Mr Dlomo said the Department on Science and Technology showed minor differences over the five-year period, with 71% in 2010/11, 79.8% in 2011/12, 80.5% in 2012/13 and a sharp drop in 2013/14, to 63.2%. However, there was a slight increase in 2014/15 to 72.3%. The major areas for under expenditure could not be determined, because an incorrect table had been presented in the report of the National Treasury, so they could not analyse statistics. The same issues had emerged from the AG’s report, as the Department had also received an unqualified audit opinion, with findings on compliance with legislation. He said that the Department had not always followed competitive bidding processes, did not take reasonable steps to ensure that the vetting process was followed for all new appointments, and that total irregular expenditure incurred amounted to R52 million. Having strong internal auditors could alleviate such problems. The proposed remedial actions were aimed at addressing the issues raised.
Mr Zamisa said COGTA was at the centre of service delivery and if the project on basic education was to succeed, money spent should tally with performance, as the municipalities looked up to COGTA. He said the trend in the graph was concerning, because from 2013/13 to date it was going down, from 70.6% to 64.6%. He said that COGTA needed to appear before the Committee so that challenges could be discussed. COGTA assisted local government and there should be adequate spending.
The slow spending on the Infrastructure and Economic Development Programme was concerning, because it was the biggest programme, with R2.3 billion in the allocated budget, and was responsible for provincial and local government projects and infrastructure. If it was not being spent well, the problem cascaded down to the provincial and local government levels. The challenges noted were the slow progress in filling positions for the administration of the municipal infrastructure grant (MIG), which was key to delivery of infrastructure and job creation. The issue of filling positions had been a recurrent problem for a long time. He said the Governance and Intergovernmental Relations programme had been allocated R34.9 million, but only R29.7 million had been spent. The spending rate was slow on goods and services, where only R1.4 billion had been spent from an allocated budget of R2.4 billion. The Department should explain what had accounted for its fast spending rate on capital items. It would be interesting to know how much the Department was likely to spend at the end of the financial year, given that it had already spent above 100% at the end of the third quarter.
He said that COGTA had transferred R39.3 billion of the total budget allocated for transfers and subsidies. Municipalities started their financial year in July, and COGTA had transferred only R8.2 billion towards the MIG. It would be important to see how money had been appropriated and to assess whether the grants had been channelled to where there were urgently required.
Mr Zamisa referred to the issues that had emerged from the AG’s report on supply chain management (SCM), where COGTA had incurred irregular expenditure which related to non-compliance with SCM laws and regulations when procuring goods and services related to the Community Work Programme (CWP). He said hiring people who were not properly skilled was costing the government money. The proposed remedial actions to improve audit outcomes were that management should review and monitor compliance with applicable laws and regulations, and COGTA must perform quarterly audits on the CWP and provide adequate project management. He highlighted the issue of appropriate and timely action against transgressors, and the point of the consequences that had also been raised with other departments.
Mr Figg sought clarity on the relevance of analysing the third quarter report for 2014/15, yet referring to the AG’s report for 2013/14.
Mr Zamisa said there was a synergy -- that if the AG identified something, the Committee could use it to either warn the department, caution them on addressing the issues or, where the same challenges were repeated, show them that they had been failing to implement the recommendations.
Mr Dlomo added that the issues raised by the AG affected the expenditure portfolio which the Committee has to deal with, so the Committee had to impose the remedial actions and the 2013/14 report was the most current.
Mr Figg said that the response he received from Mr Zamisa was sufficient.
Mr Zamisa said the Department of Energy had experienced a sharp decline from 72.1% in 2012/13, to 63.5% in 2013/14. There was a rise, however, in 2014/15 to 70.5%. He noted that even though there was a rise the Department’s third quarter, expenditure still remained below the spending projection of R6.9 million. The slow spending occurred in the Clean Energy programme, with only R19.5 million of the R50 million allocated budget being spent, and the Nuclear Energy programme had recorded a slow spending rate of R23.3 million. All programmes under the Department were under-spending.
The Chairperson said that the venue would be required by another committee, and so they were running out of time. However, the issues they were discussing were important. The Chairperson asked for the Committee’s suggestions on how to proceed.
Mr Shaik Emam responded that the next committee scheduled to use the venue was coming in only at 2pm.
The Chairperson responded that they had only ten minutes left to use the venue, and suggested that the Committee adjourn and look for another venue or continue the briefing at the next Committee meeting. The Chairperson suggested that Members make comments on the presentation.
Mr Figg said the Committee still had the minutes to approve, and the report of the oversight visit.
The Chairperson responded that these could be approved at the Committee meeting the next day.
The Chairperson said the researchers had done a good job and asked that they get the latest AG report, as well as the report from the Department of Monitoring and Evaluation, for the Committee Members.
Mr Figg said that the analysis had been very good, and the clarity he sought on the relevance of the AG’s report was just for clarity, not criticism. He asked a question about the payment of compensation to employees, since it was an analysis of the third quarter, and if it would be a saving.
Mr Dlomo responded that the saving issue had also been raised when cost containment measures were introduced. Savings could not be used for everything -- something had to give. For instance, critical vacancies had to be filled, therefore departments could not derive savings from that. Departments needed to decide the vacancies to be filled, and not provide for vacancies if they did not intend to fill them. Saving on vacancies could happen only when departments had employed people and managed to negotiate their packages below what was anticipated, or the department had managed to have people work after hours without extra pay. Savings on vacancies were therefore not justified.
Ms Louw said that the report to Parliament should include recommendations and the committee should spend time giving input to it. With regard to internal auditors, it was either that they were skilled and not taking the job seriously, or the AG was not taking them seriously, and they needed to strengthen that area within the departments. Consequences needed to be strengthened where transgressions had been observed. The under-spending of some departments was worrying. Service delivery was lacking in some areas, yet departments were under-spending.
Ms Manana said she had noticed nothing in the National Treasury report, and suggested that they start at 9am the next day so that they could complete all the issues. She suggested Members go and read the document and then discuss it further tomorrow.
Dr Madlopha concurred, and said the Members could adopt the report the next morning.
The Chairperson said the Committee should work closely with the office of the Accountant General.
Ms Nyalungu thanked the researchers for the good presentation.
Mr Shaik Emam (MFP) also commended the researchers for the good work. He said that departments that were under-spending and at the same time having issues of irregular expenditure, were of concern. When departments spent a specific amount, they were not spending it in terms of their strategic plan. They should stick to their strategic plan when they spent their allocations.
The Chairperson asked the researchers to get a copy of the report of the Department of Monitoring and Evaluation.
Mr McLoughlin sought clarity on whether the amounts shown in the graph represented the third quarters for those years, and not the whole financial year. It would also be better to get interim or quarterly reports from the AG before the end of the financial year. AGSA said they could submit quarterly reports.
Mr Zamisa asked the Members if they could identify the departments that they wanted to appear, based on the information in the presentation, and also to make an input on issues for consideration.
The meeting was adjourned
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