Standing Committee on Appropriations performance and programme: deliberations

Meeting report

Welcome and Introduction
The Chairperson said the purpose of the meeting had been a request made by Mr A McLoughlin (DA), to discuss the performance and programme of the Committee, of which he was a Member. Therefore, as they reflected on the work of the Committee, it was important that they went back and reminded themselves of the vision and mission statement of Parliament, which spoke of an activist and responsive Peoples’ Parliament that improved the quality of life of all South Africans. It was a Parliament that intervened and transformed society and addressed development challenges of the people, provided effective oversight over the Executive by strengthening its scrutiny of actions against the needs of South Africans, participation of South Africans in the decision-making processes that affect their lives, a healthy relationship between the three arms of the State, promoted efficient co-operative governance between the spheres of government, and ensured appropriate links with our region and the world.
 
Briefing by Content Adviser
Mr Tshepo Masoeu, Content Adviser: Appropriations Committee, said the mandate of the Standing Committee on Appropriations had been established in terms of the Money Bills Act to look at spending issues; amendments to the Division of Revenue Bill, the Appropriation Bill, the Supplementary Appropriation Bill and the Adjusted Appropriation Bill; recommendations of the Financial and Fiscal Commission (FFC), including those referred to in the Intergovernmental Fiscal Relations Act, 1997 (Act No. 97 of 1997); reports on actual expenditure published by the National Treasury (section 32 reports); and any other related matters.

Mr Masoeu said that a strategic planning session had been held from 13 to 15 October 2015. Theme 1 had been the alignment of spending priorities with the Medium Term Strategic Framework (MTSF) and ensuring that spending performance was aligned with predetermined objectives and outcomes. It was important to scrutinise department spending priorities for alignment with the MTSF. Furthermore, it was agreed that spending outcomes should be aligned with the attainment of predetermined objectives. The Committee had highlighted the need for thorough interrogation and verification of departments’ performance. Critical in this respect would be the need for continuous feedback and responses by departments and state agencies on work undertaken by the Committee in the various outcome areas, and alignment of spending priorities with the MTSF to ensure that spending performance was aligned with predetermined objectives and outcomes.

In this regard, the Committee’s recommendations in the 2015 Medium Term Budget Policy Statement (MTBPS) had included the following:

• Consider ways for managing growth in significant cost drivers such as student support services, meals, accommodation and books;
• To benchmark South African higher education funding with comparable countries;
• To immediately embark on a comprehensive partnership building drive with key stakeholders in the financial sector to implement innovative ways for funding higher education students;
• Together with relevant stakeholders, including the leveraging of expertise from the Auditor General of South Africa (AGSA) and other stakeholders, support higher education institutions most affected by the reprioritisation exercise, especially the historically disadvantaged institutions;
• Embark on a comprehensive communication drive targeted at students and parents on all aspects pertaining to student funding and possible financing options; and
• Immediate support for the National Student Financial Aid Scheme (NSFAS) to ensure its readiness for additional resources envisaged for the medium term.
• The Department of Higher Education and Training and NSFAS to ensure the development and implementation of systems linkages with the South African Revenue Service (SARS) and other stakeholders to assist in the selection of students and in the repayments of loans.

With regard to the alignment and enhancement of budget planning and infrastructure planning functions, the Department of Basic Education (DBE) and National Treasury had introduced a performance-based assessment which enhanced proper planning and budgeting. Further, provinces had, through the human resources capacitating process, appointed Infrastructure Delivery Management System (IDMS) technical advisors who monitor and advise on planning, budgeting and the delivery of infrastructure, enhance data systems, and develop indicators for monitoring to ensure that all schools provided nutritious meals. The monitoring tools which had National School Nutrition Programme (NSNP) key indicators were used to monitor the quality and efficiency of the programme in partnership with FUEL (Feed, Uplift, Educate, Love), an NGO on Monitoring, Reporting and Response (MRR) to train monitors to improve the quality of meals and the efficiency of the programme, and to ensure that vacant posts were filled in a timely manner: The Department was presently in the process of finalising the reconfiguration of the organisational structure. Once the process had been finalised and the structure approved, the DBE would move expeditiously towards the filling of all vacant posts in the Department.

Mr Masoeu said that Theme 2 had focused on collaboration between the committees of both Houses of Parliament. In the planning session it had been emphasised that joint hearings with portfolio committees on quarterly expenditure performances should result in more concrete joint recommendations. There had been successful joint hearings with the Portfolio Committee on Higher Education and the Select Committee on Appropriation. It had encouraged portfolio committees to make recommendations to it on vote allocations/appropriations as per Section 10 (5) and Section 10 (6) of the Money Bills Act. It had been highlighted that there should also be more regular engagements with the finance committees on cross cutting issues which had a bearing on both revenue and expenditure issues, which had not yet been achieved.

Theme 3 was to ensure proactive and visible oversight. The Committee had emphasised the importance of in-year/quarterly engagements with the Auditor-General and also of tracking progress by departments during the quarterly expenditure hearings in addressing matters raised by AGSA in management letters. To be more proactive, the Committee would engage with key stakeholders in the relevant sectors to identify potential sites for oversight visits. The Committee would also broaden engagements on-site to include stakeholders representing community interests – such as Equal Education, COSATU and AGSA -- and not just departments, although more innovative ways were still needed to fulfil this. There should be regular meetings with the Finance Ministry on major reforms under way in their budget framework, the effects of which were often visible only in the medium to long term, as well as engagements with the Office of the Chief Procurement Officer (OCPO). A Public Procurement Bill was also being finalised and would be released for comment in the first half of 2016.

Theme 4 was to broaden public participation, with the Committee agreeing it should broaden the participation of the public in the budget process through advertisements and press statements on community radio stations and in regional newspapers. To this end, advertisements had been published in national and community newspapers, and aired on local stations for all budget milestones. Meetings of the Committee would need to get more media coverage, including television and other media platforms. There was a need to issue more press statements, and a major innovation had been the partnership with International Budget Partnership (IBP) and Code4SA, an online tool which had served to provide an opportunity for the public to weigh in on the five biggest increases and five biggest cuts to programmes in the 2016/17 Budget. The online budget tool had received 204 submissions.

Theme 5 was to utilise the powers conferred by the Money Bills Amendment Procedures and Related Matters Act of 2009. The Committee had agreed that a comprehensive review of the current budgetary framework/process should be undertaken in order to explore ways of strengthening the budgetary role of Parliament, and that all four Committees should deliberate on this. In addition, it had been highlighted that the Committee should also focus more on the MTEF allocations and the government’s future policy choices which would have a considerable impact on the fiscus. There were time constraints, but timeous invitations were needed and invitations for the 2016 MTBPS should be issued by now. There should be engagement with the OCPO -- from April 2016, all routine procurement of goods and services would be managed through the e-commerce portal, which was expected to reduce corruption by reducing human intervention and the risk of overriding established protocols.

Theme 6 was aimed at improving the responsiveness of the Executive to Committee recommendations and requests by refining and strengthening the Parliamentary mechanisms for follow-up. In order to strengthen the accountability of the Executive to the Committee, the Committee should insist on leaner department delegations, represented by the Minister or Deputy Minister and the Accounting Officer. The Committee had communicated a strong message to non-compliant departments. It had also been emphasised that Parliament should improve its follow-up mechanisms with the Executive in terms of recommendations and requests made by committees through committee reports adopted by the House. This still remained a challenge, as responses through powerpoint presentations were not comprehensive enough.

Mr Masoeu concluded that the oversight of public finances was one of the most important roles Parliament performed on behalf of citizens and taxpayers. As they paid taxes, they all wanted to be confident that government spent the money properly and with proper regard for the value of money. The Committee had noted the budget pressures indicated by departments during the hearings on the Appropriation Bill and the negative effect these pressures might have on the ability to attain MTSF and the National Development Plan (NDP) targets. The Committee was of the view that the principle of doing more with less should become the central ethos of departments and public entities, as meeting the challenge of radically transforming the economy and the achievement of targets contained in the NDP was a fundamental imperative in efforts to uplift the lives of the poor and vulnerable, and to protect the welfare of South Africans.  

Discussion
Mr McLoughlin said that the report referred to the mandate of the Committee, and also stated that the oversight of public finances was one of the most important roles Parliament performed on behalf of our citizens and taxpayers. The Appropriations Committee was not a Portfolio Committee, and had a slightly different structure and set up. However, it seemed as if their role was slightly blurred because there was an Auditor General (AG) whose function was similar to theirs in a way -- because the AG also exercised an oversight function, did performance and financial assessments to see that departments were meeting their targets, and produced a report about what had to happen after the event.

There was also the Select Committee on Public Accounts (SCOPA) which did similar functions as well, overseeing how departments had performed.

Mr McLoughlin said that as an Appropriations Committee, they needed to differentiate themselves and not become lost in the midst of different departments or committees. When they spoke of their mandate, there should be something specific that distinguished them from other departments or committees like SCOPA and the AG. Their function needed to be something more than just how they followed the money or dished it out, in order to find out what the departments had done with the money. It was a slightly different shift in emphasis, which was more of their function.

Mr N Gcwabaza (ANC) agreed with Mr McLoughlin, because the concept of following the money should be clearly defined as their key mandate. However, one of the challenges was that they were not timed to look at the Annual Performance Plans (APPs) of the departments ahead of the budgets, which perhaps was where their limitations might be linked. It was this that led them to follow the money, as they always said, rather than saying they wanted to see what was in the APPs, what the predetermined targets were, how the departments had budgeted or how they had planned to budget for all of these projects. Then at the end of the first quarter, the Committee said it had met the department, had discussions with the department and been shown what the department planned to do. He was not sure if that was the task the committee was prepared to do -- and it might not accomplish that task. Perhaps that be done at the level of the Portfolio Committee in terms of sharing information, which meant that they should find a better way of following the money, as Members always said. Maybe when the Appropriations Committee met the departments, having received the first quarter performance report from the National Treasury (NT), it should look at their plans. In the second quarter, it should alert the departments ahead that they did not want to see the shortcomings of the first quarter. Departments had to show the Committee progress, and should not tell them there was no progress because there were repeat offenders -- for example, in under-spending. There were also repeat offenders when they showed high expenditure against low predetermined targets. The Committee should strengthen its oversight on State Owned Entities (SOEs), because they played a critical role in the area of economic development.

Dr M Figg (DA) said that they should not just follow the money but rather determine where the money was. The Committee should be involved in the money that had been spent on a project, and determine whether the cost of that project was reasonable. It was not only about meeting targets, because the Committee would not know unless they had done an investigation as to whether a certain project -- for example, a school -- would cost R18m or R30m. Therefore, by appropriating funds which the department had requested for one school at R18m might not necessarily be a reasonable cost for that particular school. Therefore, that should be the task of the Appropriations Committee before the funds were spent, because as already stated, taking the money was too late because the money was spent and the people responsible for it were gone. They had been saying that for two years and they had not caught and identified even one thief. Therefore, they really need to seriously look at their role and what value they were going to add as Members of Parliament, because there were important projects that were coming like the nuclear power station, the jet of the President, etc. It was important for the Committee to determine whether funds were used efficiently, effectively and economically.

Ms S Shope-Sithole (ANC) suggested that as a Committee they should go to the outskirts of the country in terms of their community work, because effective oversight should be done in communities so as to understand the challenges people faced on the ground. Their Committee was responsible for appropriating the money and checking what the money was doing, and the costs were very important in determining the amount of that money, as already explained by Dr Figg. She said that the SCOPA mandate was very clear because it dealt with unauthorised expenditure after they had read the AG’s report. On the other hand, the Standing Committee on the Auditor General was not dealing with departments, but oversaw the performance of the AG. The AG was the support institution for the Committees, like the Office of the Public Protector, which was a chapter 9 institution. Therefore, there was no confusion -- their task as a Committee was very clear.

Mr Gcwabaza asked that at what point the Committee saw what the departments had planned in terms of their APPs. As a Committee, they could get information beforehand by requesting departments to forward their APPs so that they were pre-informed when they began to look at quarterly expenditure reports. This would enable them to follow the money, because it was practically impossible to meet departments in the same way that portfolio committees did.

Ms M Manana (ANC) said that the information was already in Parliament because when departments submitted their reports to different committees they could get that information from those committees.

Mr Masoeu said it was possible to get comprehensive information on performance without necessarily seeing the departments. This was from the information that would be submitted to the Speaker’s office, the APPs, the AG’s reports and other sources. There was also the work done by all the chapter 9 institutions which was disseminated to the public, but often it did not get to where it was intended and become useful. For the quarterly expenditure, the departments held hearings with the Department of Planning, Monitoring and Evaluation (DPME), and also met with the AG’s office and with the Procurement Officer.

An issue was how the Committee tracked progress without necessarily seeing the departments. On page 15 of the APP, each of the indicators there noted that they wanted each department to attain its performance targets, attain a clean audit and fill vacancies. Those were the key targets they wanted to track. However, were they going to track them because they would re-invite the same departments in August? Possibly not, because they had seen the Small Business Development and Higher Education Departments. Possibly, in August they would want to see the Department of Police or the Department of Trade and Industry (DTI), and so on. What this entailed therefore was that to track each department, and to invite a department to the Appropriations Committee at least in every quarter. A message should be sent out by the support staff to each department to indicate how far the departments were, because already they had been told that they had to comply with this provision. That information would be brought to the Committee and shared with the Committee quarterly and if there were significant indications it would warrant an immediate invitation for that particular department.

The Chairperson said that apparently there was a way to provide information from stakeholders such as AGSA, NT, etc. However, what were the chances of the Committee accessing the APPs of departments before they presented them to the Committee so that they did not just follow the expenditure without knowing the shortcomings. The Committee needed to prioritise which departments it wanted to see before its term ended in the next two years so that it made an impact in terms of its mandate, which was to follow expenditure. However, if they wanted to look at all 40 departments in the last two years, they would not make an impact in terms of what they wanted to achieve. Therefore, they needed to prioritise those departments that they felt had shortcomings in terms of their expenditure. As a Committee, they needed to ensure that those departments delivered on their targets and ensured their expenditure balanced with their performance.

Dr C Madlopha (ANC) thanked the support staff for a well written presentation. She said that their mandate was to focus on whether the departments’ predetermined objectives were aligned with the MTSF and the NDP, because these were government priorities and each department should plan around those policies. When departments came before the Committee its task was to look if the expenditure had been planned around the MTSF and the NDP. Secondly, the Committee’s duty was to look at the predetermined objectives in terms of the plans and targets, because if they looked at all the APPs of the different departments they would be diverting their focus.

The Chairperson said that in the APPs of the departments, they wanted to see in terms of the strategic objectives whether they had spent the money correctly. They should identify which departments to prioritise, looking at those that were lagging behind in terms of performance.

Dr Madlopha said that in terms of identifying and prioritising departments, they should leave that to the support staff to do the research.

Ms Shope Sithole said that they should priorities the Department of Trade and Industry (DTI) and the Department of Small Business Development, because both dealt with economic development.

The Chairperson said that the support staff should bring a list departments that should be prioritized, and add the two departments mentioned by Ms Shope-Sithole.

Ms D Senokoanyane (ANC) said that the Financial and Fiscal Commission (FFC) had made quite a number of recommendations when it presented to the Committee, and the support staff should also look at those recommendations in order to see which departments to prioritise.

Ms Shope Sithole proposed that they should write a letter to the DTI requesting a list of projects it had funded and should respond by August, when Parliament resumed.

Mr Gcwabaza said that they should also prioritise the Department of Social Development because they needed to look at the issue of social grants.

Mr McLoughlin suggested that they should go on oversight visits to provinces without announcing they were coming, because most of the areas they had visited were areas that officials had wanted them to see.

The Chairperson agreed, adding that Parliament should have a public participation branch which would research beforehand those areas and go there without announcement.

Dr Madlopha said that they should look at the performance of provinces on projects so that they could see what was happening with the money allocated to the projects.

The Chairperson said that they should also ask the departments to submit their implementation plans for infrastructure development, and visit them on that basis. To validate that information, they should go for a site visit.
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Mr Gcwabaza said that with all that they would have to do, they should look at the budget of the Committee.

The Chairperson agreed that they would do whatever they could with the resources they had, which was why they needed to prioritise the departments.

He said that in terms of the recommendations and findings which they had forwarded to the portfolio committees, Members should comment on the issue of SOEs, especially the Passenger Rail Agency of SA (PRASA).

Mr Gcwabaza said that the reason they had visited PRASA had been the R53bn that had been appropriated from PRASA by NT. The Committee needed to make a follow up in this regard to understand what percentage of that money had been allocated to cooperatives because SOEs had a responsibility to assist cooperatives and small, medium and micro enterprises (SMMEs) in terms of economic growth and job creation.

The Chairperson said that the researchers should also identify which SOEs were lagging behind so that the Committee could look at them. She thanked the support staff for the presentation and inputs.

Minutes of 10 May 2016 (am)
Mr Gwabaza made a correction to point 3.4 on page 3 of the minutes.

Dr Madlopha noted that in the minutes she was recorded as having apologised for her absence, while she had been present at the meeting.

Mr McLoughlin moved the adoption of minutes, with amendments.

Ms Shope-Sithole seconded..

The Committee adopted the minutes with amendments.

Minutes of 10 May 2016 (pm)
Dr Madlopha was in attendance, but had been recorded as having apologized for absence.

Ms Senokoanyane moved the adoption, with amendments.

Ms Manana seconded.

The Committee adopted the minutes with amendments.

Minutes of 11 May 2016 (am)
Mr Gcwabaza corrected the wording of point 3.1: “Houses were free and pre-owned by beneficiaries”.

Mr McLoughlin moved the adoption, with amendments.

Dr Madlopha seconded.

The Committee adopted the minutes with amendments.

Minutes of 11 May 2016 (midday)
Dr Madlopha was registered as absent, although she had been present at the meeting.

Ms Manana moved the adoption, with amendments.

Ms Shope-Sithole seconded.

The Committee adopted the minutes with amendments.

Minutes of 11 May 2016 (pm)
Dr Madlopha was registered as absent, although she had been present at the meeting.

Ms Senokoanyane moved the adoption, with amendments.

Dr Madlopha seconded.

The Committee adopted the minutes with amendments.

Minutes of 12 May 2016
Ms Senokoanyane moved the adoption.

Ms Manana seconded.

The Committee adopted the minutes.

Minutes of 13 May 2016
Dr Madlopha was registered as absent, although she had been present at the meeting.

Mr McLoughlin moved the adoption, with amendments.

Dr Madlopha seconded.

The Committee adopted the minutes with amendments.

Minutes of 17 May 2016
Dr Madlopha was registered as absent, although she had been present at the meeting.

Ms Manana moved the adoption, with amendments.

Ms Shope-Sithole seconded.

The Committee adopted the minutes with amendments.

The Chairperson thanked Members for their inputs.

The meeting was adjourned.