Alignment of spending outcomes with Programme of Action by Department of Planning, Monitoring and Evaluation; DPME 1st Quarter 2015/16 performance

Standing Committee on Appropriations

01 September 2015
Chairperson: Mr N Gcwabaza (ANC) (Acting)
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Meeting Summary

The Department of Planning, Monitoring and Evaluation (DPME) briefed the Committee on the progress report on the implementation of the Medium Term Strategic Framework (MTSF) 2014-2019, and on the Department’s expenditure and performance for the first quarter of the 2015/16 financial year.

The progress report spoke to the monitoring and evaluation of the MTSF 2014-2019, which sought to address unemployment, inequality and poverty via the themes of growing the economy, and strengthening society and building a service-oriented public service. It considered the critical role of planning, monitoring and evaluation, focusing on strengthening planning data, management performance assessment tools, monitoring management performance and the national evaluation system.

Under the theme, “growing the economy,” it looked at the global economic outlook, some of the causes of South Africa’s poor economic performance, its stubbornly high unemployment, the contribution of productive sectors to growth and employment, historically excluded and vulnerable groups, bulk water resources, rural development, and information and communications infrastructure.

Under strengthening society, it looked at the quality of basic education, the national senior certificate, health care and what needed to be done in this sector, sustainable human settlements and safety and security.

Dealing with a service-oriented public service, the presentation looked at access to basic services, municipal financial and administrative management, and municipal payments to creditors within the prescribed 30-day period. A special unit had been established in the DPME to investigate cases where payment of invoices were made after 30 days. It said the pace of delivery of basic services was not satisfactory to meet 2019 targets, the major reason being the absence of a credible project management and delivery planning approach. Debt owing to municipalities was close to R100bn -- almost double the figure in 2009. A clear policy response was needed to address the low payment levels to municipalities for services provided, and to deal with the accumulated debt.

The extent of irregular expenditure in municipalities was a concern. A key challenge for municipalities was that heads of department stayed in their posts for only 2.7 years on average, which did not ensure stable municipal leadership. A number of high level posts had been vacant but most of these posts, excluding the Director General post, had since been filled. More work on improving data and analysis was needed.

Members said the Committee had not received the presentation in advance, as had been requested. In addition, the two most important slides in the presentation had not been part of the presentation handed out to Members, which led to them feeling that the Committee was being treated with contempt. Members said the Department had to present a summary of the progress on the 14 outcomes, but departments such as Police and Justice had been ignored.

Members noted that South Africa had been compared with other countries but not with other African countries. What volume of calls had the Presidential hotline received? Why were there conflicting views regarding the implementation of the 75% local content target policy? What were the completion dates for the Mokolo and Crocodile River Water Augmentation Project? What were the dates for the Integrated Water Plan which the DPME was working on, in conjunction with the Department of Water Affairs and Sanitation? Why was the country still planning for water 20 years after Codesa had highlighted water access as a priority? How much effort had municipalities put into recovering the debt owed to them?

Members said the presentation should be more specific when discussing the social compact for the agricultural sector. Why had there been no measurement taking place since 2011 of the percentage of learners completing their schooling? Why was there still a backlog in title deed transfers occurring, as the issue had been going on for at least ten years? What was the strategic function of the National Youth Development programme, and did its roles not overlap with the National Youth Development Agency (NYDA)?

Members asked what the cause of under-spending for Programme 2: Monitoring and Evaluation was. What was the projected first quarter expenditure for this programme? Given that Operation Phakisa was a flagship programme of the President, how far away was the production of the ‘lab’ report? What plans were there to fill all critical vacant posts in the Department? Why was the spending on the compensation of employees reflecting one of the highest growth rates? What was the cost incurred over the delay in the salary adjustment? Who would enforce the recommendations put forward in the presentation?

Meeting report

Briefing by Department of Planning, Monitoring and Evaluation (DPME)
Ms Tsakani Ngomane, Acting Deputy Director General: Outcomes Monitoring and Evaluation, Department of Planning, Monitoring and Evaluation (DPME), spoke about the monitoring and evaluation of the Medium Term Strategic Framework (MTSF) 2014-2019, which sought to address unemployment, inequality and poverty via the themes of growing the economy, strengthening society and building a service-oriented public service. She then moved on to look at the critical role of planning, monitoring and evaluation, speaking about strengthening planning data, management performance assessment tools, monitoring management performance and the national evaluation system.

Under the theme, “growing the economy,” she looked at the global economic outlook, some of the causes of South Africa’s poor economic performance, its stubbornly high unemployment, the contribution of productive sectors to growth and employment, historically excluded and vulnerable groups, bulk water resources, rural development, and information and communications infrastructure.

She said the infrastructure programme should be used to crowd in private sector investment, exports should also include a focus on Africa, regulatory efficiencies should be improved at all levels of government and red tape should be reduced for the Small, Medium, Micro Enterprises (SMME) sector in particular. She said the slow transformation in land reform was a cause for great concern. Rural unemployment had increased from 46.1% to 47.7% between the fourth quarter of 2014 and the first quarter of 2015, while agriculture’s contribution to gross domestic product (GDP) had declined by 16.6% between the third quarter of 2014 and the first quarter of 2015. Inadequate information communication technology (ICT) infrastructure in rural communities and funding for broadband remained challenges.

Under strengthening society, the Department looked at the quality of basic education, the national senior certificate, health care and what needed to be done in this sector, sustainable human settlements and safety and security.

Although the building of Accelerated Schools Infrastructure Development Initiative (ASIDI) schools was improving, targets were still not being met and school sanitation remained a challenge. While infrastructure norms had been published, it could not be determined whether they were being met, leading to a risk of litigation if schools were not meeting these norms. Some provinces still struggled to spend their education infrastructure budgets. Specific measurements were needed to determine if text books which had been delivered to schools were being issued to learners. The Department would not be able to determine whether learners were completing the whole schooling system, because there had been no instrument to measure this indicator since 2011. The Department of Health and the Treasury had had to finalise the National Health Insurance (NHI) policy and its legislative framework and funding. The National Health Commission needed to be operationalised to address the social determinants of health and to fast track Operation Phakisa in health.

Under building a service oriented public service, the presentation looked at access to basic services, municipal financial and administrative management, and municipal payments to creditors within the prescribed 30-day period.

She said the pace of delivery of basic services was not satisfactory to meet 2019 targets, with the major reason being the absence of a credible project management and delivery planning approach. Debt owing to municipalities was close to R100bn -- almost double the figure in 2009. A clear policy response was needed to address the low payment levels and to deal with the accumulated debt. The extent of irregular expenditure in municipalities was a concern. A key challenge was that heads of department stayed in their posts for only 2.7 years on average, which did not ensure stable leadership. A special unit had been established in the DPME to investigate cases where payment of invoices was made after 30 days.

Mr Pieter Pretorius, Chief Financial Officer (CFO), said the Department had spent 80.9% of its first quarter drawings, which was below its target of 95%. This had arisen because a payment to a national Income Dynamics study had been made one month late. A number of high level posts had been vacant but most of these posts, excluding the Director General (DG) post, had since been filled. Programmes 1, 2 and 3 were on target in spending their budgets. The National Planning branch had been transferred to the DPME the previous year and was reflected in Programme 4. The National Planning Commissioner’s contract had ended in May and the new Commissioner would start only in September, and therefore there had been an under-spend in the intervening period resulting in the major under-expenditure in Programme 4. The Department had a history of being able to spend its budget, and had submitted requests to Treasury for additional funding because of significant areas where the Department needed to expand its current operations, like the 30-days payment unit for example.

Ms Ngomane concluded the briefing by saying more work on improving data and analysis was needed. She said the DPME tools were invaluable resources for the Committee to use.

Discussion
Mr M Figg (DA) said the Committee had not received the presentation in advance, as had been requested, and therefore the Committee had not had enough time to study it. He asked who would enforce the recommendations found in the presentation. What volume of calls had the Presidential hotline received? He said the SA economic growth rate mentioned had not been correct -- and why was the focus on the slowing Chinese economy, rather than the growing American economy. Why were there conflicting views regarding the implementation of policy with regard to the 75% local content target? He asked what would happen next if the challenges relating to the 30% set-aside target for public sector procurement from SMMEs were not met. In the context of cost overruns, he asked what the completion dates for the Mokolo and Crocodile River Water Augmentation Project were. Similarly, what were the dates for the Integrated Water Plan which the DPME was working on, in conjunction with the Department of Water Affairs and Sanitation? With regard to the analysis presented on the National Senior Certificate, he wanted to know whether it referred to Mathematics only, or included Mathematical Literacy. He asked how much effort municipalities had put into recovering the debt owed to them.

Mr A McLoughlin (DA) said the request addressed to the Department was for it to present a summary of the progress on the 14 outcomes, and departments such as Police and Justice had been ignored. In addition, the presentation had been received late, which added up to him feeling that the Committee was being treated with contempt. Furthermore, the two most important slides in the presentation were not part of the presentation handed out to Members. He felt the performance rating system was too broad, with ‘almost achieved’ lumped together with ‘achieved’. Regarding economic growth, he noted that South Africa was compared with other countries, but not with other African countries. He said there could not be conflicting views on implementing a local content procurement policy. He wanted an explanation of the graph shown on private sector investment in the productive sector. Regarding the high unemployment figure of the country, he said it was because SA was trying to run a capitalist economy using communist labour policies. Regarding reducing red tape for small businesses, he said regulations were seen as a compliance issue and created non-productive employment, so how would the red tape issue be resolved? He asked why the country was still planning for water 20 years after Codesa had highlighted water access as a priority. He asked for clarification of the phrase “emerging water sector turbulence.”

He said the presentation should be more specific when discussing the social compact for the agricultural sector. The report contained a lot of negatives, in the sense of targets not achieved, but had not discussed what had been achieved. On the analysis that funding for broadband remained an issue, he asked if the department had not budgeted for broadband. He asked why there had been no measurement since 2011of the percentage of learners completing their schooling. Why was the backlog in title deed transfers happening -- the issue had been going on for at least ten years? If the backlog was eliminated it would unlock a huge capital amount which could be injected into the economy. Commenting on what needed to be done, he said he did not see anyone being punished for their wrongdoing. On the 30-day payment analysis, he wanted to know whether the figures referred to payments to the municipalities or by the municipalities.

Ms R Nyalungu (ANC) asked what the cause of under-spending in Programme 2: Monitoring and Evaluation was. What was the projected first quarter expenditure for this programme? Given that Operation Phakisa was a flagship programme of the President, how far away was the production of the ‘lab’ report? Regarding the delay in the green or white paper, how long should the process take? What was the strategic function of the National Youth Development programme, and did its roles not overlap with the National Youth Development Agency (NYDA)? With regard to section 38 of the Public Finance Management Act (PFMA), what was the state of payments made within 30-days of invoicing? What plans were there to fill all critical vacant posts in the Department? Why was the spending on compensation of employees reflecting one of the highest growth rates? What was the cost incurred because of the delay in the salary adjustment?

The Chairperson said labour laws in Europe were more inflexible than those in South Africa.

Ms Ngomane replied that the Department had noted areas of weakness and Committee Members had to take these issues up with the relevant departments, as the DPME had no legislative standing to take up matters with the departments.

Regarding the focus on what was wrong, she said that the strategic approach adopted by the DPME and recommended by Cabinet was to drive change via oversight committees, like that of Appropriations.

After analysis had been carried out by the DPME, it made suggestions to decision makers like the leadership and Ministers of departments. The value for the Committee was that these issues could be raised with the departments.

Regarding the quality of the data, she said the MTEF was for the last quarter of the 2014/15 financial year and in the current week, the first quarter of the current financial year would be presented, so there could be a misalignment of the figures.

Regarding mismatched units of analysis, she said it was difficult to match on the ground because of new departments, and because it took time to refine the analysis of the MTSF. The current review would have percentages.

She apologised for the late submission of the presentation.

Regarding the late submission of the numbers to the Committee, she said the DPME’s work tracked performance on the outcomes, then in partnership with the Treasury it looked at the expenditure reviews. The DPME thus provided evidence on what a department claimed it had done. Treasury dealt with the financial aspects so the Committee could request the numbers from them.

Regarding why the departments of Police and Justice had been left out, she said it was because the presentation had been based on outcomes, not departments. Outcome 11 would cover the departments of Police and Justice.

She said it was expected that clusters would implement the recommendations.

She would accept as a recommendation the Committee’s request that other African countries be looked at in addition to the Eurozone trading partners.

Regarding the 75% local content requirement, she said there had been different views around that, with most views regarding strategic intervention. There were also ideological differences, and whether the country had the capacity had been take into account. However, the consensus was that it should be 75%.

Regarding rural unemployment, she said that there was high unemployment all around the country but rural unemployment had been highlighted because the outcome dealt with rural unemployment.

Regarding the question on whether maths literacy was included in the quoted figures, she said a sector specialist had said the figure reflected mathematics only.

Regarding municipalities’ debt, she said the Municipal Infrastructure Support Agent (MISA) was intended to strengthen the capacity of vulnerable municipalities. However, the solution was not easy as rural municipalities had real capacity problems and a weak resource base.

Regarding the performance rating criteria used on whether targets had been achieved or not achieved, she said the key phrase was whether the targets were achieved ‘within the time period specified.’

She said agreement had been reached regarding the 30% figure for preferential procurement.

Regarding regulatory red tape for SMMEs, she said it had to be recognised that government acknowledged that bureaucratic processes were a hindrance and was trying to reduce the red tape, especially for SMMEs.

Regarding the green paper process, she said that ideally the process took 12 to 18 months, but that the consultation process, which could be lengthy, had not started yet.

The Chairperson said the DPME was a very important Department in government, but appeared to lack an enforcement ability. Was it proper that it did monitoring and evaluation without an enforcement ability?

Ms Ngomane said enabling legislation would assist in enforcement, but currently it had the performance agreements of Ministers to work with, and these were monitored to drive the change. The same applied to the DGs and heads of departments.

Mr Pretorius said the payments were to service providers of the municipalities. The Department paid 97% of its invoices within ten days, and the rest within 30 days.

The delays in paying senior management salaries were because of negotiations with labour. The increases had been backdated to 1 April.

Filling senior management posts required more tests, and high level posts like the Director General had to go to the Cabinet. Posts at the executive level had been filled and the Director General post was at Cabinet level.

The National Development Agency (NDA) was there purely to transfer funds to the NYDA. 99% was transferred to the National Youth Development Agency (NYDA), and a small amount remained to do oversight and policy development work.

Regarding the question on the budget for the first quarter, he said the drawings for Programme 2 in the quarter was R20.5m.

The meeting was adjourned

 

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