Department of Transport on its 3rd Quarter 2015/16 performance

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01 March 2016
Chairperson: Mr G Radebe (ANC) for Ms D Magadzi (ANC)
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Meeting Summary

The Department of Transport third quarter performance analysis showed a decline in achieved targets, compared to the second quarter, for all seven programmes. Performance per programme was reported on and notable Quarter 3 achievements and non-achievements for every programme were identified. Non-achievements and red flag areas were heavily concentrated in the Maritime Transport programme. The Department presented an improvement plan to address non-achievements and timelines for each milestone per programme. Expenditure analysis showed that the DoT had spent 74% of the total adjusted budget.

The Committee was taken through the financial report showing the overspending and underspending in the various programmes, and transfers. Spending was reported on for the Provincial Road Maintenance Grant; the Public Transport Operations Grant, and the Public Transport Network Grant. An action plan to address 2014/15 audit findings was developed and monitored. An improvement plan to address non-achievement of targets was being monitored.

In discussion, there was general concern about the vacancy rate and the suggestion was made that the vacancies are due to bad planning, even though the Department maintained that it was on account of an instruction from National Treasury. There was interest in the lack of expenditure on the taxi recapitalisation programme.

Concerns were expressed about the overspending and underspending, and delays in convening the Presidential Infrastructure Coordinating Commission (PICC) about NATMAP 2015. DoT was vigorously interrogated about the Mthatha airport upgrade, and had to face critical remarks. There were questions about the decline in performance from the second quarter. Members asked what the Department had done in the first two quarters, which was not carried through into the third quarter, and what would be done to get performance up to par again. The Chairperson was critical of a perceived tendency in the Department to delegate responsibility and blame other agencies. An ANC Member was severely critical of the zero budget and spending for Buffalo City and Mangaung and of DoT for not attending sufficiently to the Auditor-General findings. There were comments and questions  about the intermodal transport facility in Venda. An update on progress with legislation was requested. The Chairperson told the Director-General that he had to provide direction about the kind of assistance the Department needed. 

Meeting report

Postponement of PRASA meeting
The Chairperson noted that the board chairperson of the Passenger Rail Association of South Africa (PRASA) had submitted an apology, as PRASA had to meet with an international insurance agency, and was currently in London. PRASA would be engaged in the following week. The Committee wanted a full response from them with all present.

Department of Transport on third quarter performance
Mr Geoffrey Selepe, Director General, and Mr Collins Letswalo, Chief Financial Officer, presented. The performance analysis indicated a decline in targets achieved, compared to the second quarter, for all seven programmes. The overall DoT performance declined from 84% of targets achieved in the second quarter, to 70% in the third quarter. Performance was reported on for the programmes of: Administration; Integrated Transport Planning; Rail Transport; Road Transport; Civil Aviation; Maritime Transport, and Public Transport - indicating notable Quarter 3 achievements and non-achievements for each programme. Non-achievements and red flag areas were heavily concentrated in Maritime Transport. The Department presented an improvement plan to address non-achievements and timelines for each milestone, per programme.

Expenditure analysis showed that the DoT had spent R39 561 billion or 74% of the total adjusted budget of R53 615 billion. Under expenditure per economic classification, the Committee was taken through overspending and underspending in the various programmes, and transfers. Spending was reported on for the Provincial Road Maintenance Grant; the Public Transport Operations Grant, and  the Public Transport Network Grant. With regard to governance, an action plan to address audit findings was developed and was being monitored regularly. Under risk management there was an improvement plan to address non-achievement of targets, which was being monitored.

Ms D Carter (COPE) recommended for the future that documents be taken as read, so more time could be given over to questions. Members had had two weeks to study the presentation. An hour was wasted on the presentation. It would be better if quarterly reports could grant insight. The Department could compile a table with targets and show progress on it. DoT had to explain why targets were not met, and how far the Department had progressed with that. She asked if content was available about ICT security and solutions infrastructure architecture (slide 7). She asked what effect unfilled vacancies was bound to have. She asked what the unforeseen delays were, with regard to convening the PICC about NATMAP. She referred to the taxi recapitalisation programme where 804 old taxis were scrapped. There was underspending. She asked if too much money had been allocated to that.

Ms Carter remarked that there was a spending cake. If there were 10 slices, one could only eat those. She asked how overspending and underspending could be prevented. She noted that KZN had not spent the money from the Provincial Road Maintenance Grant (PRMG). It would not be a problem if KZN had fantastic roads, but KZN roads were terrible. She asked for reasons targets were not met.

Mr C Hunsinger (DA) referred to the implementation of the internet portal (slide 9). He asked if there were hard- or software or capacity shortfall? He referred to the vacancy rate, and asked how long vacancies had been open, and what the challenges were. He asked about specific constraints with respect to unforeseen delays in convening the PICC. He asked why the PICC could not be convened.

Mr Hunsinger continued that a draft railway safety strategy was not developed as targetted in Quarter 3. He asked what the follow-up plan was. He did not see any reference to it in the remedy schedule. He asked how it would be finalised. He asked what changed in the scope of work tendered at Mthatha airport. He noted that the maritime transport policy Green Paper could not be finalised due to capacity constraints. He asked what those were, and when it could be finalised. It was holding up a lot of other items, that had come up since the Convention was adopted. The mock audit had pointed to a lack of evidence. He asked about a remedy, and action steps to be taken.

Mr T Mudlauzi EF) referred to gross underspending (slide 5). He was concerned about what happened in the third quarter, and what could be anticipated in the fourth. What the Department said to Treasury, would have an effect in years to come. To underspend due to lack of money was not good for a department. He was happy about the implementation of the internet portal. It had been said earlier that it was not implemented, but it seemed to have been fixed. He asked at what stage the AARTO Amendment Bill was during the current quarter. It was mentioned that a Cabinet memorandum had been submitted to the Minister for approval. He asked if the Minister had approved it yet. He asked how many old taxis were scrapped in Quarter 3. He asked about the status of the Land Transportation Amendment Bill. It was scheduled to be finalised in Quarter 2.

Mr Selepe responded that the challenge with vacancy rates was to bring it down to 10% or below. National Treasury had sent a letter in August 2015 noting that positions were not to be filled. The DoT could not move on vacancies as a result of this. It was decided at a Cabinet Lekgotla that filling of positions was not to proceed. The DoT waited for Treasury and Department of Public Service and Administration (DPSA) to unpack the decision and advise departments. The DoT was stuck until such time. It was one deliverable that the Department would not be able to meet.

Mr Letswalo responded that slide 5 referred to over- or underperformance on targets, not to over- or underspending. Spending had to be around 75% at the third quarter mark. There was no underspending of the budget. He answered Ms Carter that although one could only eat the cake that was available, there were a lot of cakes, in this instance. The decision could be made to eat of one cake, and not another. When there were unforeseen or unavoidable expenses, there was reprioritisation of the budget. Money could be moved. Virements of up to 8% were allowed, to try and stick to the budget plan. But planning and the budget did not always work hand in hand. With regard to taxi scrapping, he said that no money was taken from the DoT. If taxis were not brought in, there was no money to spend. It was demand driven. Planning was done on the basis of demand projected from the previous year, but there were fewer and fewer taxis to be scrapped.

Mr Chris Hlatswa responded about non-performance in KZN. There was an engineered approach, with physical monitoring on the ground, to match performance to expenditure.  But planning processes had lagged behind. Business plans were submitted late. The situation was being corrected. Complete business plans would be submitted for the following financial year. Provinces dealt with procurement, the Department only monitored the process. The Administrative Adjudication of Road Traffic Offences (AARTO) Amendment Bill was presented to Cabinet, and went through the process. Parliament was written to for further engagement. Cabinet approved the Bill.

Mr Jan-David De Villiers, DDG: Roads, responded that the follow-up strategy for the National Road Safety Strategy was presented on slide 33. Interim targets were achieved. There would be a draft plan by the end of the fourth quarter.

Mr Mpolokeng Makhari, DDG: Integrated Transport Planning (ITP), responded on constraints with respect to convening the PICC on NATMAP. Plans had to be reviewed with the PICC. The PICC had various substructures. The DoT had to enter the process with the PICC secretariat. Thereafter, DoT was directed to work with the technical committee. But there had not yet been an opportunity to engage.  The DG wrote letters to the PICC secretariat and the Minister, but no appointment was secured. The report was finalised and the DoT had done what it was supposed to do, but the PICC could not be moved to convene. It was a red flag issue. If the report could not get out, the DoT could not record it as a success.

Mr Mathabatho Mokonyama, DDG: Public Transport,  responded that the Department did not have much control concerning the  Bill. There was a Cabinet process. The Bill was supported by the Cabinet Committee and would be approved by Cabinet on the day following. Taxi scrapping was demand driven, with a budget based on history. Taxis were coming in slowly. The affordability of new taxis was sky-high. A review was being done. Figures for the previous year were higher.

The Acting DDG: Maritime Transport, responded that targets for maritime transport policy were not achieved. Steps were being taken to ensure that the green paper was submitted to Cabinet. Cabotage depended on the maritime policy. Policy provisions had to be extracted from the Green Paper. Terms of reference would be developed for the Cabotage Bill.

The DoT responsible for ensuring the e-portal was up and running, said it would consolidate data to reflect the content  of transport acting as a central deposit. It would be completed by the end of the financial year. It would enable citizens to do research and gain knowledge about laws.

Mr Letswalo responded about the variation orders at Mthatha Airport. R64 million was paid to upgrade the airport lights. On commission it was found that the lights gave problems. The DoT position was that there could not be a variation order, since lights were included in the initial provision.

Mr M Maswanganyi (ANC) asked how it was possible that there were lots of defects in the completed Mthatha project, when there was an inspection process. He asked how inspection was done. Rightly a team of engineers from the DoT had to be there. Airports Company South Africa (ACSA) would have to take the liability. He referred to an intermodal transport facility close to where he lived. The facility could not be used  and would have to be demolished. The contractor was WBHO. Government had spent much in a rural town, but the work was shoddy. It could not be patched or welded, and would have to be demolished. It had to be possible to see where the money went. It had to be determined what work had been done by the Municipality. PRASA was an important stakeholder in Nedlac. He asked when the downward trend visible in slide 5, would end.

Mr L Ramatlakane (ANC) referred to the downward trend shown in slide 5. He asked what was not done in the current year, that had been done in the previous year. There had to be more skills to understand what caused the backward trend. He asked what the maritime division was doing in the fourth quarter, that was not done in the second and third quarter. He asked if there were more bodies and skills.

Mr Ramatlakane noted that the Department had received a letter from Treasury in August, that called a halt to appointments. The question was why the posts were not filled before that time. The DoT was saying that Treasury had blocked apppointments, yet there had been a chance to fill positions before August. There was a planning cycle, and the question was why it had not been used for apppointments. The actions of Treasury was not a valid reason or excuse. The fact was that the DoT were bad planners. It would be acceptable if people could not be found in South Africa. But internal red tape had to be looked at.

Mr Ramatlakane asked the CFO about the decision to pay, at Mthatha Airport, which was then recalled. It appeared that the DoT was on its way to obtain condonement from Treasury to pay, but then something  happened and payment was not done. The step taken of requesting further money from Treasury, was inappropriate. The Department had paid enough. There had to be a clause in the contract to protect the State. If there were deficiencies, money could be withheld. The second sentence referred to a variation of order claim by the service provider. The contractor had not restored the lights, because money was not paid. He asked if ACSA would be asked to foot the Bill. He asked what the DoT solution was. Appointment of another contractor was not mentioned as an option. He asked if all the money had been paid. In contract language, there was a period during which money was not paid but set aside to deal with things that went wrong.

Mr Ramatlakane asked why the PICC technical group refused to meet with the DoT about NATMAP. Even the Minister could not get them to meet. He asked why that was so. He asked what else could be done, if there could be no meeting. It was not acceptable to say that it was not working. Cabinet had to take decisions. It had to be escalated to another level. He asked what the Department planned to do. The DoT was a leading agent in the National Development Plan (NDP). The country could not go forward because the technical committee would not move. They were after all getting paid for it.

Ms S Xego (ANC) referred to the upgrading of Mthatha Airport. She was satisfied with the CFO’s answer. But she would do her own oversight.  She was satisfied with taxi re-capitalisation workshops. There was underspending because taxi drivers were not bringing in the taxis. She was not satisfied with the reason cited in the report. Spending on the Provincial Roads Maintenance Grant (PRMG) stood at 82%. She wondered if the fourth quarter report would indicate a shift. There could be a rollover for the province.  She asked about funds transferred to metros and public transport, and future plans for Buffalo City.

Mr M Sibande (ANC) said that there had been an emphasis of matter by the Auditor-General (AG) n the 2014/15 Annual Report. He asked how far the department was with investigating assets that could not be verified. It was clear from the SCOPA presentation that the DoT could not keep proper records. The arrows on slide 5 showed a downward trend because of the inability to keep records.

Mr Sibande said that he was worried about public transport. There were people who took the Committee for granted, in terms of its line function as a portfolio committee. It was not understood that public transport dealt with people who had nothing in the past. The draft national rail safety strategy was not developed in Quarter 3. It had to form part of public transport. Figures related to maritime transport in slide 19 reflected exactly what was raised in SCOPA, about implementation of audit findings. Systems were not talking to each other. The maritime rescue coordination centre was doing well, but the rest was not.

Mr Sibande remarked that there was a zero budget and spending for Buffalo City and Mangaung. The majority of the population was much more concentrated there than in the Western Cape or Northern Cape. He referred to the PRMG. The Committee had to be taken on board about developments. Most of the crises were in the provinces. Where national roads passed through municipalities like Bethal and Ermelo, it became a local responsibility, and municipalities could not maintain them. At Ermelo heavy trucks were using the roads, and these roads could barely last six months.

Mr Letswalo responded that the Mthatha Airport project was started by the Department of Defence. The DoT was not involved. The project was started to support economic development in the Eastern Cape as a primary responsibility. The project was to be used for the funeral of the former President Nelson Mandela, and thereafter it was to be a military airport. It was not possible to serve civilians through a military airport. The project was always owned by the Eastern Cape provincial government. The service provider worked on risk. The ordinary process of tendering was not followed, which would have provided agreement about retention. There were no guarantees by the service provider. It became an item of irregular expenditure in 2013/14, condoned by Treasury. There was no formal process of monitoring and quantity surveying. ACSA provided the project managers, before the money was paid. The Treasury hired a quantity surveying team from Cape Town. Civil works were done, including checking for the correctness of the slab. R354 million was claimed. It was R312 million when the DoT started. The Treasury agreed to that. It was felt that money claimed was not too much above the value of the project. The question was who owned the asset, and why it was on the DoT books. The Auditor-General had said that money could not be spent on an asset the DoT did not own. In terms of modified cash standards, the DoT owned the upgrade as an asset. R354 million was paid and the DoT called it an asset upgrade in its books. It had to be kept for transfer purposes. During the turnaround it was found that the lights were not fit for the purpose. It did not pass the breakability test. A process was started with the service provider. DoT argued that Treasury had done quantity surveying and everything was commissioned in it. The service provider argued that there was a variation order over and above the R354 million, which had to be paid to them so that they could fix the lights. The DoT wanted money to be paid back to them for retention. ACSA did not own the project. It was owned by the Eastern Cape provincial government, but ACSA operated it for them.

Mr Letswalo responded on vacancies, saying R27 million was cut from the compensation of employees baseline. The DoT reasoned that to fill vacancies in spite of the baseline cut, could amount to unauthorised expenditure. It was decided to move money from goods and services for appointments. However, in August the instruction came from Treasury not to move money or fill posts. It was not a planning failure. The DoT planned and budgeted on the assumption that money could be moved from goods and services.

Mr Selepe agreed that it was not a matter of poor planning. Positions were advertised on time and the DoT sat with applications. But it could not proceed, due to Treasury's instruction. Had the Department been allowed, it would have quickly filled the positions.

Mr De Villiers responded about the Transnet stakeholder engagements scheduled for the fourth quarter, and these were indeed taking place.

Mr Makari responded about delays in engaging with the PICC about NATMAP. There was a meeting scheduled for 17 February, which was postponed to 17 March. After the Cabinet cluster approval of reviewed work, it could go to the Cabinet committee and be finalised. But Cabinet would ask if consultations with the PICC had been resolved.

Mr Selepe added that the PICC was led by the President. The Minister of Transport was part of the management committee, and the Deputy Minister was part of the secretariat. The secretariat of the PICC was led by Minister Ebrahim Patel and Deputy Minister Jeremy Cronin. It was not just a technical committee. It was a high powered government structure, which the Department had to pass through for NATMAP's submission to Cabinet.

Mr Mokonyama responded to questions and comments about the downward trend exhibited in slide 5. Red flag issues were being dealt with. Important issues were resolved in the third quarter. On the review of the rural transport strategy, the Department went back to MinMec and told it that its consultations were going too slowly, and that DoT wanted to start a parallel process to go to the cluster system. There was monitoring of all branches towards improvement. The intermodal facility in Venda was a provincial project. The Department had nothing to do with it. The challenge was only met with during the Section 100 intervention work in Limpopo. There were three or four engineering reports. The Department was in litigation with the service providers. He hoped there could be an amicable solution. DoT was told that the problems came from the designs. He hoped that money would not have to be shifted. The DoT was working hard on the public transport subsidy. Currently the beneficiaries were not benefitting. He assured Mr Sibande that the DoT would work fast to turn things around. There would be a new re-capitalisation process, not in 2016, but in the following year. The focus would be on the commuter, rather than the operator. The DoT wanted performance on the matter, so that Treasury would not ask for money to be returned. On the lack of money spent at Buffalo City and Mangaung, he said that money was not given if it could not be spent. The DoT had to be shown plans that indicated readiness. Buffalo City had supply chain and litigation issues. At the mid-term adjustment of R26 million was given to Buffalo City, to resolve their issues. Money was given on the basis of readiness to spend. Money was taken from those who were not ready and given to those were ready. Buffalo City received R26 million and Mangaung R21 million at mid-term. They would get more in the following year.

The Acting DDG: Maritime Transport, said that there appeared to be discrepancies on maritime transport in the expenditure report. Maritime transport was seen to be performing badly, which was regretted. Expenditure on the maritime rescue coordinating centre appeared a little bit high. It was a function assigned to the South African Maritime Safety Authority. Expenditure referred to a transfer for services performed.

Mr M Ndlovu, DDG: Roads, noted that SANRAL could enter into a MOU with municipalities. If the municipality could not fix the streets it could resort to the South African National Road Agency Limited (SANRAL), but it had to use its own resources.

Mr Ramatlakane said that he had asked about the PICC technical committee because the DoT had declared that it was stuck. The President and the Deputy President  chaired the PICC.

Mr Ramatlakane referred to the statement that all monies had been paid at Mthatha. There had been no retention. He asked why that was so. DoT in dealing with the issue was making it someone else’s problem. He asked if it was an empty threat that the service provider had to pay back the money for the lights. If Treasury had done the scoping and had excluded something, or had thought that it was included, it would be another story. The DoT statement was that the lights were part of the scoping. The question remained why all the money was paid out.

Mr Sibande wondered how long the Mthatha issue was going to take. It was not acceptable, the government had been in power for 20 years. Social responsibility had to be taken. His question about proper keeping of records was still unanswered. In the SCOPA meeting of 24 February it was highlighted that proper records were not kept. DoT was saying that records were kept, but no evidence was provided. A matter of emphasis from the Auditor-General was reported in 2014/15. He asked about progress with investigation of the AG findings.

Mr Maswanganyi referred to money from PRASA for intermodal transport facilities. The project started in 2008. Several towns in Limpopo were identified. There was an MOU between PRASA, the Department and the municipalities. Money had to come from the DoT. There was only one Director General of Transport in the country. PRASA was an organ of state that had to account to the DG. It was not a provincial function. He could recall instances of when and where projects were rolled out where municipalities were just implementing agencies. Money had to come from the Department. State agencies accounted to the DG and the Minister.

Mr Letswalo replied that there was no retention at Mthatha, because it had started out with a contractor working at risk. The DoT would submit that it was not reasonable to say that the lights were outside of the original agreement. Lights were in from the beginning. The service provider claimed that there was a variation order that the DoT did not know about. If the variation order was paid out, the lights could be fixed. The DoT insisted that money be paid back. 90% of assets had been verified, and the DoT would see what could be done about unverifiable assets. The DoT did keep records. The DoT wanted to keep records of monitoring and meetings. In places where it did not, measures would be put in place.

Mr Mokonyama added that proof and records would be provided. With regard to PRASA, no allocation was made from the DoT. There was litigation about the project manager. It would amount to different government agencies taking each other to court, which would be challenged. He did not know about the matter, and only learnt about it when section 100 work was being done in Limpopo. The issue was between the province, the municipality and the project manager.

Mr Mudlauzi volunteered that he had information about the project. He was a chief transport officer at the time. There was a council resolution and a letter from the provincial department. He was willing to assist with information.

Mr Selepe said that it was indeed a worrying trend that performance was down in all branches. The intended DoT response was to increase the frequency of EXCO meetings in the last quarter of the previous year. EXCO meetings were increased to one per week, as the year was rounded off. There was assistance for sister branches that were lagging behind. A performance turnaround was possible. There were challenges with human resource capacity. According to the organogram there had to be ten DDGs. Currently five were vacant and two were on suspension. There were only three DDGs for the better part of the year. There were 13 positions vacant at the Chief Director level. There were 23 vacancies out of 99 Directors. The vacancy rate was 43% at the senior management level. It had an impact on performance. The DoT would use the current period to close ranks, and to work as a collective. The Department was limping along but doing its best. It would not disappoint the people or the Portfolio Committee.

The Chairperson told the DG that he had to take note that Hollywood had nominated him for an Oscar.  Everyone in the Department wanted to be a Hollywood actor all the time. That would not do. As Director-General  he had to be able to provide direction on the kind of assistance the DoT needed. He agreed with Mr Ramatlakane that the Department had taken too long to fill vacancies. There were responsibilities that could not be delegated. The DG had to say how the problem was to be sorted out. The DoT responsibility with regard to AARTO had to be clarified. There had to be engagement with both Houses of Parliament. The Department did not provide an update of what EXCO was doing. It means that it was not doing what the Committee had asked in the previous year. Transfers were made to state owned entities (SOEs) but the Committee was not told if the money was used or not. Tenders had increased. The PRASA report showed an increase from R1 million to R40 million. SOE performance had to be reported. DoT performance was going down and there was a need for strong improvement. The question was why it was necessary for the DoT to have so many meetings at the end of the year. It noted that challenges were anticipated in September. There had to be a presentation on outstanding legislation. Maritime transport was an issue. The Committee had to be told who was not doing their work, and why there was poor performance. Someone suggested there were too many targets, but there were only eight. It had to be understood why targets were not met.

Mr Mudlauzi asked when the meeting with PRASA would take place.

The Chairperson replied that it had been shifted from today, and would probably take place in the following week.

Mr Hunsinger remarked that Members would agree with each other in the Portfolio Committee, and then differ in the Assembly.

Committee minutes of 16 February were adopted.

The Chairperson adjourned the meeting.

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