The Department of Science and Technology (DST) took the Standing Committee on Appropriations through its annual performance plan and budget, as at 30 December 2014. The DST had a total of 65 output targets for the 2014/15 financial year and by the end of the third quarter, it was on course with 36 (56%) of these. Ten (15%) had not been achieved, and there was a moderate risk of not achieving 17 (26%). The Department agreed with the Auditor General that at least 80% of the targeted output had to be achieved. The major reasons why the targets had not been achieved were under-expenditure in the Technology Innovation Agency (TIA) and the failure of the DST to secure R86 million in foreign science, technology and innovation (STI) funds from international partners through agreed instruments for knowledge production, technology transfer, enhanced innovation and STI human capital development.
The budget in support of the strategic objectives for 2014/15 was R6.4 billion. The bulk of the budget had been allocated to transfers, followed by compensation of employees, goods and services and capital assets. At the end of December 2014, the Department had under-spent by 20.7% (R1.2billion). The challenge of the Department’s inability to fill vacant positions due to Treasury cuts was highlighted, and put forward as a reason for set-backs in the DST.
In discussion, the Committee expressed concern over the under-spending of the TIA, and questioned why the Department had not taken action against this. The Department justified its actions by noting that the TIA was fairly new and that the resignation of some of its executive members and management had contributed to under-spending.
The DST described its efforts to ensure social and economic gains for South Africa through science and technology, by engaging in bilateral relations with other countries for the purpose of skills enhancement and the exploitation of knowledge. It had also invested in knowledge by funding researchers in those skills that were much needed in the country. The Committee questioned how the Department ensured that all these efforts would result in value for money. The DST assured the Committee that it had come up with viable indicators to show that this was the case.
Department of Science and Technology Third Quarter Performance Report
Dr Phil Mjwara, Director General, DST, said the mandate of the promoted the concept of a national system of science and technology to contribute to social and economic development in the country, and was derived from two sets of policy papers -- the National Research and Development Strategy (NRDS) and the ten year Innovation Plan approved in 2008. The ten year Innovation Plan looked at how the economy could be transformed from a resource-based economy to a knowledge-based economy, whereby the production of knowledge led to social and economic benefits for society.
The five programmes of the DST included administration, technology innovation, research development and support, socio-economic innovation partnerships, and international cooperation and resources. The DST had a total of 65 output targets for the 2014/15 financial year and at the end of the third quarter, the Department was on course with 36 (56%) of these, but with ten (15%) not achieved. There was a moderate risk of not achieving 17 (26%) of the targets. The Department agreed with the Auditor General that at least 80% of the targeted output had to be achieved.
Two major reasons why the targets were not achieved were presented. There were administrative issues within the Department whereby some of the targets had to be taken through internal processes. The Department was supposed to have secured R86 million in foreign science, technology and innovation (STI) funds from international partners through agreed instruments for knowledge production, technology transfer, enhanced innovation and STI human capital development,
but it had secured only R5.7 million of that money. A strike by contractors’ unions had also led to delays in meeting delivery targets. Submission of the Indigenous Knowledge Systems (IKS) bill to the Cabinet had been delayed because a further opinion for the chief state law adviser was required. Bilateral relations had been promoted through the Minister’s visits to Ethiopia and Sudan to conclude science and technology cooperation agreements. The Department had been allocated an additional R400 million for human capital development activities, such as bursaries and scholarships.
Ms Glen Zulu, Chief Financial Officer (CFO), took the Committee through the financial performance of the DST as at 30 December 2014. The budget in support of the strategic objectives for the year 2014/15 was R6.4 billion. The bulk of the budget was allocated to transfers, followed by compensation of employees, goods and services and capital assets. At the end of December 2014, the Department had under-spent by 20.7% (R1.2billion). The reasons for under-spending included the inability to fill the vacant positions in the Department, and funding planning processes were not in synchronisation with internal processes, which had led to delays in signing contracts.
Mr A Shaik Emam (NFP) made reference to a survey which had placed South Africa last in mathematics and science, and asked for the Department’s comments. He pointed out that one of the outcomes was to ensure a long and healthy life for all South Africans, and asked what processes would be followed to ensure that that was achieved. Although reasons for under-spending had been given, R1.2 billion was a lot of money and therefore cause for concern. He questioned why the Department had made no comment on the challenges in terms of not following processes. In the strategic planning, was it not foreseen that the Memorandums of Agreement (MOAs) with institutes would not be finalised in this quarter? When planning, challenges should be foreseen, because under- spending gave the impression of underperformance, even though that may not be the case.
He asked if the Department had any intention of coming up with scientific measures to combat the smuggling of illegal substances through the South African (SA) borders and airports. What were the successes and achievements from the money allocated to researchers through bursaries? Were the bursaries directed towards the specific needs to meet the skills shortages in the country? There was a challenge in following through on the people who were given bursaries in order to ascertain whether the money was being wasted or if it was being used as it should be -- to produce skills. He expressed concern over the maths literacy subject that had been introduced in schools and asked for clarity on the difference between that and mathematics. There were not enough educators to ensure improvement in mathematics, so was the Department considering getting experts from other countries to fill this gap, especially in rural areas? What positions were vacant in the Department, and at what level?
Ms M Manana (ANC) remarked that the bulk of the under-expenditure had been due to the poor expenditure in the Technology Innovation Agency (TIA) which had still not spent funds dating back to the 2014 financial year. This had resulted in the Department withholding a grant from the agency. What steps and mechanisms had been put in place to address expenditure management of the agency to improve on future expenditure, because this affected the projection of expenditure for the Department as a whole? What measures had been put in place to enhance monitoring in order to ensure value for money in service delivery? How far was the Department regarding the four policies that were supposed to have been developed, but had been postponed?
Mr A McLoughlin (DA) expressed disapproval that the document being presented on was 200 pages long and had been made available only the day before the meeting, therefore not giving them enough time to go through it. He asked the Department to clarify what it does. Was the Department suggesting that the economy be shifted from a resource-based one, ignoring the resources that the country had, in favour of a knowledge-based one based on knowledge that the country did not yet have? The terminology that had been used in the report was difficult to understand. He expressed concern that according to the budget statistics, only 15% of the targets had been achieved. He also questioned why some targets were described as being on course when in actual fact the figures showed that they had been achieved.
Mr McLoughlin referred to the bilateral relations with Ethiopia and Sudan, and asked if these two countries had much to offer in science and technology, or was South Africa offering them science since they were considerably more economically challenged than South Africa. He asked for clarity on what was meant by an Indigenous Knowledge Systems Documentation Centre (IKSDC) and what the purpose of the centre was. He asked why the female target of beneficiaries was 60%, and not 50%, for achieving equality rather than gender domination. The report had many aspects that were not related to the implementation plan and annual targets. Why was there a plan for deviations, and not for contingencies? Why was there a large part of expenditure for employee compensation, compared to the programmes which addressed the core business function of the Department? Planning had been identified as one of the challenges faced by the Department -- why had that not yet been addressed, since it had been a challenge for a long time?
Ms S Shope-Sithole (ANC) pointed out that in South Africa there were more women than men, so the 60% target of females was justified. She commented that when the spending on vacancies was reduced, the spending on goods and services followed. Did the Department have an audit committee and if so, was that committee independent because that type of arrangement was helpful in an organisation.
Mr M Figg (DA) observed that some of the ratings and grading in the document did not make sense. He asked for an explanation for the R3.06 million overspending on transport and capital assets. What did the South African National Space Agency (SANSA) do? Was there an estimated cost per candidate in the training programmes, and what had the cost of the Space Week been? Where was a parliamentary grant payment being withheld, because somebody was being disadvantaged? What happened to the money when it was withheld? He commended the Department for compiling some statistics up to the year-end of 31 March.
Mr Shaik Emam said that according to the report, 56% of the targets had not been achieved by the end of the third quarter, so he wanted to know the current percentage. He asked why the Department continues to plan when it was aware that the Technology Innovation Agency was not achieving its goals.
The Chairperson asked if the vacancies in the Department were funded posts, and what challenges were preventing the Department from filling the positions. He noted that some of the programmes had been delayed by the Executive Committee (EXCO) not approving them, so why had they not been removed from the agenda, since this affected the Department’s spending? What had happened with regard to the funds that had been withheld due to the under-spending of the TIA? What steps had been taken to call the TIA to account for not spending the funds allocated to them? Had National Treasury agreed to allow the Department to roll over some funds to the next financial year?
Ms Shope-Sithole asked for clarity on which the entities the transfers were for.
Mr Mjwara suggested if time was made available, the Department could present on what it does. He said that the DST was not responsible for maths education, but it supported the Department of Basic Education with off-curriculum support, such as the introduction of tablets, the training of teachers and the provision of nutritional support. The problem with maths might have something to do with fear of the subject, but with the proper support of teachers, better results could be achieved. The problem should be looked at holistically and more analysis should be done on the challenges faced in this area.
The socio-economic section of the Department looked at whether or not it was possible to use science and technology to better society and the economic performance of industry. There were two programmes designed to support Small and Medium Enterprises (SMEs) and develop partnerships with the Department of Trade and Industry in order to involve local SMEs. The Department also worked with companies to come up with technology that could help sustain their industries.
The DST had no specific technology to control the smuggling of drugs into the country, but it was something that the Department would look into developing. There had to be specific substances that they were on the lookout for so that they could design specific means to detect them. The DST had the National Research Foundation (NRF) through which it funded researchers, especially in paleo and astronomy studies. The Department focused mostly on lecturers and post-graduate students as beneficiaries. The Masters and PhD students, for example, received their training through the universities of technology.
Mr Mjwara estimated that in terms of the targets, the Department currently stood at approximately 77% and 83%, but would confirm this. He said the problem with the TIA had started four years ago. It was a fairly new agency. The focus of the agency was that there were a number of ideas coming from universities that needed to be funded, and previously the Department had focused more on companies that already existed. A new board had been appointed in 2013 and there had been resignations of senior executives prior to that and this had contributed to the setbacks, but the Department was working with the new board to try and solve the problems. This had affected the targets of the DST, because its targets were linked to those of the TIA. There were also a lot of financial mismanagement cases at the time and the new board had decided to have a forensic audit. Where inconsistencies had been found, the matters had been handed over to the officials who dealt with people who misappropriated public funds. In his own assessment, these problems may still be present in 2015 and 2016. He was aware that at the end of the year the DST could not spend approximately R45 million, and that was one of the reasons why the Department’s expenditure was at 98.8% compared to the usual 99% plus.
Mr Mjwara accepted that the reporting could be improved on. However, there were some targets that could not be reported on a quarterly basis, but can only be known at the end of the year. He gave an example of the number of publications, which the Department could only estimate until they were published. Even with a focus on the resource-based sector, there was a need for knowledge. The DST was not moving away from a resource-based economy but was improving on the knowledge base.
The MOAs could be fast tracked, but sometimes they were with countries outside South Africa, so the department was not always in control of the process. The DST offered other countries what it had in terms of expertise in science and technology, and hopefully learnt from those countries even though they might not be as advanced as South Africa. The DST also received opportunities to exploit some of the knowledge from other countries, even though those may not be high-tech.
Many multinational companies worked with indigenous knowledge holders and found out about the use of medicinal plants, and did research on them. The Department wanted to have a database where indigenous knowledge holders could register their knowledge so that it could be tracked and protected in order to avoid exploitation.
The R400 million for increasing human capital had no specific targeted use, so some of it was used to support established researchers and to provide bursaries to Masters and PhD students across the system. 60% of the target group were females, because there was a need to promote women, as the balance was skewed against males. The Department supported the government’s outcomes in various ways -- for example, work on HIV research and on the right skills needed for the economy.
The DST entities receiving fund transfers were the National Research Foundation (NRF), the Council for Scientific and Industrial Research (CSIR), SANSA, TIA, the Human Sciences Research Council (HSRC), the Academy of Sciences of South Africa and the National Advisory Council.
There was no exact cost of the Space Week, and per candidate trained, available. The Department had developed a set of indicators and targets to determine the value for money and social returns.
Ms Zulu, CFO, said that the Department had developed an action plan to deal with the issues identified in order to enhance its internal controls. It had noted the problem of irregular expenditure and the root causes of it. The Department had developed a check list in order not to repeat the same errors. It had enhanced contract management processes. It would be difficult to comment on the issues of consultancy as opposed to compensation in the absence of the National Treasury, because it was responsible for regulating the budget. The alternative method would be to use consultants and contract workers. There had not really been an overspending of the budget, but rather an under-spending of about R4 million, because positions could not be filled.
Ms Nombuyiselo Mokoena, Deputy Director General, said that the vacant positions were mostly management posts. She said the reason for the skew budget of administration versus the core agenda, was that in administration there were budgets for the ministry and other entities, which created an image of inflated numbers.
Mr David Mmakola, Chief Director, explained that the terminology that wa apparently confusing was standardised by the National Treasury. He gave an example that something such as “certainty” in everyday language could mean something different in the report.
Mr Mjwara said he would make a follow up on why the Members had received the document only a day before the meeting, even though it had been signed off the previous Tuesday. He apologised for the delay.
The Chairperson welcomed the idea of giving the DST an opportunity to present on what their department did. He also suggested a meeting where the agenda would be to discuss problems and solutions, in order to report to Parliament.
Ms Shope-Sithole pointed out that she missed the response to the question of the Department having an audit committee.
Ms Zulu replied that there was an audit committee that had an independent chairperson and two independent members.
The Chairperson adjourned the meeting.