Prioritisation of departments for Committee oversight: briefing by Committee researcher

Meeting report

Opening remarks
The Chairperson commended the Committee and staff for their hard work and encouraged the Committee to have a positive impact. She briefly spoke of the meeting with National Treasury on the fourth quarter preliminary spending outcomes and the first quarter spending performance. The briefing was to empower the Committee with information so that when departments were called on the Committee would be robust in their engagement and be able to methodically point out exactly where the challenges were and how to address them speedily.

It was noted and highlighted from the report that departments persistently continued to experience challenges in terms of vacancies and this affected the effective implementation of plans. The Chairperson also highlighted and noted the other challenges faced, namely:

1. Infrastructural programmes such as ACIDY continued to experience challenges in spending their budget.
2. procurement challenges remained, such as delayed rollout of condoms,
3. Difficulties in replacing underperforming implementing agents,

    iv  .Delay in computing services, delay due to delay in placing and receiving order from SITA

     v.  Delay in receiving invoice from DPW for office accommodation and other Capex projects.

The purpose of the briefing by the researchers is to identify the problematic departments needing the Committee’s attention. It Chairperson emphasised the importance of the Committee to intensify its oversight role.

Review of key departments for prioritisation
Mr Musa Zamisa, Researcher Appropriations Committee, briefed the Committee. The report focused on a list of twenty departments to identify the critical issues facing the departments in terms of:

• Spending performance
• Track record of their Audit as to what kind of opinion they received from the Auditor General.
• Expenditure Management in terms of wasteful expenditure, unauthorised expenditure, as well as some key indicators coming as a result of wrong choice in management performance undertaken by performance monitoring evaluation.

The departments strategic roles were looked into in terms of the National Development Plan (NDP), because departments that played a coordinating role in the NDP, in the 9 points plan presented by the President in 2015, also in the five strategic role in the five priorities of government, size of their budget, strategic contribution in terms of the developmental agenda and it significance.

(See document for table)

The report focused on the following departments:

Basic Education: Basic education played a very important role and stood to be one of the departments prioritised due to their significant role on the developmental agenda of government.

Health: played a significant role in the developmental agenda of government.

Rural Development: an important agenda in South Africa in terms of main distribution and the role played in the NDP of government

Trade and Industry: very important, as well as small business development in the issue of economic growth, played a big role in facilitating small business and in terms of job creation

Higher Education and Training:  shows significant budget size and in terms of their ranking and their coordinating played a key role in developmental stage, improving educational skills and training.

Telecommunication and Postal Services:  has a big budget, which is very important because it attracts foreign investors and should not have challenges because it causes in the case of digital migration and communication.

Agriculture:  is important as rural development

Small Business Development:  contributes to the NDP and plays a significant role to the growth of the Economy such as creating Jobs.

Energy:  is involved in the NDP and does not coordinate in the MTSF but is involved in the 9-point plan which is very important in resolving the issue of energy crisis. They have a very significant budget and the economy of the country depends on energy.

Water and Sanitation:  is a constitutional imperative and the right to water should be taken into consideration for prioritisation

Transport:  is very important because it has a significant role in terms of their budget. It goes with enterprises like CASA and they play a very big role in terms of infrastructure because the expenditure of the implementation is done by SOEs

Defence:  plays an important role on the safety of lives and properties and builds safer communities

Human Settlements:  cannot be over emphasised as plays a very important role in the NDP.

Cooperative Governance: also very important where we have community work programmes.

Social Development had the biggest budget of all departments. A significant budget goes to the South Africa Social Security Agency (SASSA) on the issue of grants. The issue of grants has been speculated with fraud, the money allocated does not reach the intended beneficiaries because people were expected to bribe officials before being given a grant. SASSA should be questioned what they put in place to check measures and the mechanisms in place to curb the issue of fraud in terms of bribe.

Police: play a significant role in government for safety and also significant in building safer communities and they have no MTSF and Nine (9) points plan coordination.

Public Works:  in terms of poverty eradication programmes, they also serve services to carry out other projects in terms of capital projects of National Infrastructure which is the key agenda of Government. They are expected to implement infrastructural projects and other departments end up under spending because they are expected to implement as Agencies where other departments cannot move if they do not carry out their work.

Justice and Constitutional Development:  played a very important role in the area of fighting corruption, crime, building centre communities such as the National Task Team (NTT).

Correctional Services: played an important role in fighting crime and also ensuring Safety.

National Treasury:  is very important around the issue of the Job Span in terms of job creation. On the issue of under spending it is not clear why it is not spending as anticipated. There are other conditional grants in National Treasury to municipalities for instance the developmental grant which helps to facilitate economic activities in townships. 

Discussion

Mr A McLoughlin (DA) referred to part one in the table highlighted on Defence on slide 8 under the column of amount, and noted a correction that the figure should be millions not billions.

Ms M Manana (ANC) noted that on the list of the twenty departments Social Development was not part of the summary list. She asked for the list to be edited and to include the Department of Social Development

Mr M Figg (DA) referred to the the indicator showing the useful outcome of the audit opinion the department that shows frequent disclaimer and unqualified audit opinion, and suggested that it may be useful to include the outcome of the audit opinion somewhere.

Mr Phelelani Dlomo said the suggestions would be noted and corrections made, and he explained that some things were not put in the report in order to avoid the report looking clumsy. They wanted to produce a useful report that could be used for the Committee’s oversight.

Ms S Shope-Sithole (ANC) commended the researchers on a job well done. the Committee needed to proactively use this information.

Mr Zamisa acknowledged the errors that were observed.  He explained that Social Development was not part of the summary list as Science and Technology was recently substituted for Social Development.

Mr Dlomo commented on the issue of the Department of Public Works’ billing system. Public Works is meant to give other departments a framework to manage their expenditure. If other departments did not give their invoices to other departments it would have an effect on the departments’ expenditure. He suggested that the Committee call in the Department of Public Works to interrogate their billing system and find out what measures and mechanism should be put in place to deal with these challenges.

He spoke more about Telecommunication. The department had the responsibility to produce and provide an integrated ICT and strategy for the rest of the government departments to adopt.  He highlighted and emphasised the fact that if one department was not meeting their targets with regard to outcomes it affected the whole system and other departments.

Ms Shope-Sithole asked if it were advantageous that some people were corrupt in the system and said the Committee should do a follow up on this issue.  She proposed that the researcher look thoroughly at the real cause and after that the department responsible should be called upon.

Ms M Manana (ANC) said the issue should be treated as soon as possible because the delays were there, corruption was there.  She emphasised that it was a serious issue that needed to be dealt with as soon as possible. It was unacceptable for the Department of Public Works to require a different amount to the one that was initially agreed upon at the beginning of a project. Such things needed to be interrogated and the Department of Public Works needed to explain themselves and justify the over expenditure that had been identified.

Mr A Shaik Emam (NFP) said his concern was follow up on areas where the Committee went on oversight. Follow up on areas were identified. He gave an example of the Eastern Cape, where they saw corruption alive, and explained that the Committee had continuously requested information from the Department of Water and Sanitation but the information received was inadequate. He emphasised the need to focus on follow up after oversight. He suggested that the relevant departments should be present for the oversights, for example the DOE should be present if the Committee went to schools for oversight, in order to avoid inadequacy and excuses from the different departments. Follow up was more difficult when departments were working and operating in silos and it became difficult to achieve what the Committee set out to achieve.

Cannot hear what he is saying: he talks about visiting two schools - 39:44

Departments needed to be reporting to the Committee on a regular basis.

Ms C Madlopha (ANC) suggested that since Public Works was also part of the problem identified by the researchers they should come and explain the reason for the delay in implementing their budget. There should be follow up in the case of ACIDY, how they were performing in infrastructure was terrible. She asked what the delay was with implementing the turn-around strategy that was meant to be rolled out over seven years. she echoed Mr Shaik Emam’s concern on the poor follow up of oversight visits.

Mr McLoughlin suggested that the portfolio committees responsible for specific departments, for example the Portfolio Committee on Water and Sanitation or the Committee on Education, should be the ones who did follow up on the issues that the Appropriations Committee had identified, and then report back to the Committee, instead of the committee going to do follow up themselves because they did not actually have the time to do so. Responsibility should be transferred to the relevant portfolio committee.

The Chairperson supported the questions and suggestions raised and insisted the Committee must go to find out the causes of these problems.

Ms Manana said that the problem was that the Department of Public works made excuses so in order to avoid this, the committee responsible for this department should be also be present when the department is asked to appear before the Committee to answer questions.

Mr Shaik Emam said they had been following up. These departments did not take the committee seriously and if requested for their reports they did not submit a report, and what should the Committee do if there is no follow through?

Ms Shope-Sithole replied that Parliament had given the Committee powers, so if these departments failed to come to the party the Committee could hold them to account through questions to the Deputy President, who is the leader of government business.

Mr N Gcwabaza (ANC) said the Committee must look at the full package of the implementing agencies under the departments so that they could understand problems. She said the Committee should highlight corruption. The delay in invoicing by these departments was a result of the many implementing agencies the Department of Public Works used. The Committee should look at the issue is of procurement, the Committee had the right to evaluate the monetary value of any projects undertaken. She asked whether there was an arm of government that could evaluate the cost of projects - where the money was going, where money was lost and whether the project was overpriced - and inform the Committee on the results. She explained that this would minimise and arrest corruption in these departments and minimise over expenditure.  She asked the Chairperson to look into this possibility and whether there was an office that did such.

The Chairperson said she would investigate and report back to the Committee at the next meeting.

Part 2: Review of Expenditure Performance
The table showed that some departments were transparent and spent 70% of their budget, for instance Basic Education. The most problematic departments were Energy, Water and Sanitation, Higher Education and Transport.

Part 3: Review of Audit Opinion
A clean audit was important but it was also important to show if the money allocated to the various departments was spent. At the end of the table the departments highlighted with orange colour showed unqualified findings and some departments improved from unqualified to qualified findings and never came down like Social Development. Some departments needed urgent attention like Water and Sanitation, Correctional Services and all those shown on the table who did not receive clean audits.

Part 4: Review on Expenditure management
Mr Dlomo dealt with irregular expenditure, fruitless and wasteful expenditure. He spoke about the need to promote public finance discipline and reminded the Committee that in 1999 the Public Finance Management Act (PFMA) was passed as a bill for the accounting officers at the departments of the Direct Marketing Fund Raiser Associations (DMFA) to set out rules and responsibilities for the accounting officer from section 38 to section 41, and also chapter 10 gave actions of what needed to be done if the accounting officer and the other officials in the department did not comply with section 38 to 50

Section 38 1c (ii) provides that the accounting officer should put in place measures to prevent irregular expenditure, fruitless and wasteful expenditure and from the table the red colour under irregular expenditure indicated a need for urgent attention to these areas of expenditure and the yellow indicated that those departments were not doing that badly on wasteful expenditure. The big question the Committee must ask themselves was if section 38 states that the accounting office must put in place systems to prevent irregular and unauthorised expenditure why are we seeing these issues? There are no systems and the Rules of the PFMA had been neglected and definitely there was non-compliance, therefore the Committee should call for elections according to section 81 in the PFMA.

The Accounting officer was accountable for what is contained in the PFMA because it was meant to implement.

He suggested the Committee should put in place that compliance is done in the department and consequence management should be put in place. From the table the money on wasteful expenditure could have been allocated for other things to meet certain targets.

He further said section 55 of the Constitution empowered Parliament to conduct oversight and the Committee had the power and opportunities to question all these issues to the accounting office and the Minister should also explain what he had done to put in place that the accounting officer complies.

Part 5: Review of MPAT outcomes
Management Performance Assessment (MPAT) was one of the several initiatives used to assess individual departmental performance. It was a structured, evidence based approach to perform the assessment of management practice. It covered four key departmental performance areas: strategic management, governance and accountability, human resource management, and finance and supply chain management.  Each management practice is assessed and scored against four levels of performance:

• Non- compliance in red
• Partially compliant in yellow
• Fully compliant in green
• Fully compliant, implementing policies and beyond, green

A lot of problems and issues were identified here because there were no processes, policies, and compliance in place to assess management practice in the departments.

All national and provincial government departments plans focused extensively on improving service delivery across. Thus absence of compliance with relevant legislations in certain key performance areas poses a risk of not meeting such plans.

 

Lack of compliance simple means lack of good management practice and good governance. This might impact negatively in the management of resources allocated to implement the National Development Plan (NDP).

 

These four key performance areas, namely strategic management, governance and accountability, human resource management, finance and supply chain management are an important pillars of a well-oiled institution to achieve its policy objectives.
 

Discussion
Ms Shope-Sithole said she had a book that contained all these processes and suggested the Committee write a letter to APAC and ask them to give the book to the committee. What the researchers were presenting was very clear and that she had raised with the Department that the Committee needed to attend the APAC conferences.

The Chairperson requested the title of the book be given to the secretary so that they could get the books and distribute them to the Committee in order to empower the Committee

Mr Figg commended the researchers on a great job, they had adequately prepared the Committee to do what needs to be done. The Committee needed to take it seriously and implement these recommendations.

Ms D Senekaonyane (ANC) also commended the researchers on their great work. She was very concerned by the irregular wasteful expenditure. There was clear noncompliance to Treasury Regulations and these need to be investigated and interrogated by the Committee.

Ms E Louw (EFF) commended the researchers for good work and highlighted the need to move forward and implement the recommendations. It was a clear that the Committee needed more information to back up their concerns and to start holding these departments properly accountable. She was concerned with departments such as Water Sanitation and Correctional Services, who showed no improvement three years in a row, this showed incompetence. She emphasised the need for the Committee to properly hold the departments accountable.

Mr Shaik Emam also commended the researchers. The presentation helpfully identified who the big offenders were. He highlighted the problem of irregular expenditure, he felt that this was being abused by the departments because there was a certain section that regulated such but it was clearly being abused since there was no compliance. It was important to identify and get to the bottom of who the perpetrators were so that the department could put pressure on those individuals and hold them accountable. He thanked and commended them on the book that will be made available to the Committee. He highlighted another lesson learnt from the presentation - that a clean audit did not mean that service delivery was taking place.

Ms Shope-Sithole commended the researchers on a thorough report and explained that previously Parliament and Ministers did not take them seriously because of a lack of thorough reports. What was needed was a report highlighting the challenges and recommendations on the way forward that would back up your plea or demand before Parliament and ministers.

Mr McLoughlin commended the researchers. He was very concerned that there was not one green bar in sight, which was a terrible indication of how departments were operating and it showed that they showed no concern on doing their work correctly and following rules and regulations. Government we spent a lot of time devising rules, guidelines and regulations as a way of monitoring things but people did not care because there were no consequences to not following these rules and regulations. He recommended putting consequences in place for non-compliance.

Dr Madlopha said the Committee would need the Accounting officer and the CFO to be present to address these problems. Travelling to Pretoria to meet with these departments would not be possible for the Committee because they were small in number compared to the number of Members in Pretoria. She stated that they should come to Parliament.

Mr Zamisa suggested that letters of invitation to the departments must state whether they come here or the committee goes there and that their reports should be sent to the Committee three days prior to time of the meeting so that the committee could engage with their report.

The Chairperson asked what the Committee thought, whether the Committee should go to Pretoria or whether the departments come to them. she suggested that if they came to Parliament, it should only be the key stakeholders, such as the PFO, HOD and Audit Officer.

Mr Shaik Emam suggested the Committee go there so they see all the departments over three days; this would be more effective and efficient, and would also avoid departments giving excuses. He supported reports being submitted three days before so that the Committee could interrogate the report before discussing it. Furthermore, it would save the Committees time as there would be no need for a presentation on the report.

Mr Phelelani continued with his presentation. He said that one of the ways to solve these issues was to hold meetings with the relevant portfolio committees, to address them to eradicate these issues.

The MNE was compliant but not effective. The structure was there but it was not integrated to the planning recycling of the department. The MNE in the Presidency as the brother of this MNE unit in the department were to coordinate, evaluate themselves and they should be integrated to the future plans of the departments to have findings and if there are no findings it could not be implemented.

The management structure did exist must talk to the mandate of the department and was partially compliant but there were issues in some cases.

The Department of Telecommunications is to produce ICT to help other departments produce their own ICT and if they do not produce other departments who depend on them cannot produce. Internal auditors are there but they were not functional

There was also a Human Resource plan for the Human resource division, if non-compliant the plan did not exist.

Recruitment areas, were they there?  If there were no policies, processes, how did they recruit if there are no processes that guide the policies?

Fraud prevention strategies and in this case is non-compliant

These assessments navigate all the internal issues which impact negatively on the output that is meant to be achieved.

Discussion

Mr McLoughlin said the Committee’s new motto should be No more Mr Nice Guy. What the Committee was seeing was very concerning. He questioned and was concerned about how these Departments, such as Correctional Services, actually operated because they did not comply to rules and regulations.

Dr Madlopha commended the researchers again. She asked how these departments held people accountable with no policies. What did they base what they did on? What were audits being based on when there were no policies and spending? She asked the researchers to find out whether the absence of policies was a common trend that had been taking place in previous years.

Mr Shaik Emam was frightened by the operations of these departments, which showed non-compliance.  There had never been compliance. The Department of Correctional Services was an example of non-compliance. There are so many other structures below the Committee that were responsible for ensuring the compliance of the rules and regulations in departments, he was very concerned that these structures were not doing their jobs and ensuring compliance. The Committee should ask itself where it was failing and what it should do to solve these problems.

The Chairperson replied that the Committee would look at the status quo of every department and prioritise the departments that need the Committee’s immediate attention.

Ms Manana requested an analysis of all the government departments, not just the most problematic departments.

The Chairperson explained that only the top twenty problematic departments were initially requested.

Ms Louw recommended that the Committee be firm going forward because departments kept on making promises that they did not follow through on and deliver. There was a need to be firm and to interrogate the accounting officer.

Ms Shope-Sithole reminded the Committee that it had previously agreed to be trained by the staff of the Institute of Government Auditors in order to perform adequate financial oversight. The Committee should be trained specifically to know how to read financial statements. She followed up on that conversation and asked when it would take place. She thanked the researchers.

The Chairperson proposed to Members of the Committee and it was agreed upon that there should be training.

A Member strongly supported the training because he felt that the Committee was undermined.

A Researcher made a request that when the departments come before the Committee that they bring the internal auditors. The Committee had not followed up on this commitment. It was Important because the internal auditors reported to the audit committee.

The Chairperson supported this and included internal auditors to the list of key stakeholders to call before the committee.

Mr Gcwabaza said the Committee was having these problems because there were no checks and balances in place to hold these departments accountable. Responsibility and accountability was never taken in the departments. It was important to identify the key stakeholders in order to hold them accountable. Parliament as an institution did not exert its authority and it did not appreciate its role or act in its full capacity. The Committee needed to play a role in making sure that Parliament steps into its authoritative role and makes sure government functions adequately and effectively. He suggested that the Committee deal with these issues between now and January/February.

Chairperson said the way forward was to ask how many departments the Committee would be seeing in this period.

Dr Madlopha asked what the role of the Accountant General was; as of 2014 it was said that the Accountant General was there to strengthen and control government’s financial systems. The Committee needed to check the Treasury Regulations regarding over expenditure and wastage, and that the Committee should hold the office of the Accountant General to account to put in place these measures to curb all the issues identified by the researchers.

A Member commented that there would be value in having all the relevant departments in the same room and talking about these issues and discussing the way forward.

The Chairperson asked how many departments the Committee could see and said it also depended on the Committee’s availability.

Dr Madlopha suggested that the department saw two of those that had been prioritised.

Mr Gcwabaza proposed that the Committee Secretary put together a programme between now and January that could be presented to the Committee for discussion.

Dr Madlopha withdrew his suggestion and supported this proposal.

The Chairperson said that the draft programme would be presented by the Committee Secretary at the next meeting, highlighting when the Committee would meet with different departments.

Mr Mcloughlin referred to the APAC conference, taking place from 19 - 21 September in Bloemfontein, and asked the Chairperson to please follow up on the invitations from the Auditor General because the Committee had not received an invitation.

The Chairperson said she would deal with it later in the agenda, as there was correspondence.

Mr Figg requested that the book include the small booklet from the researchers about the PFFA. (2:15:40 - 2:23:30) could not make out what they were talking about.

The Chairperson said it could be looked at later because of the workload the Committee had. She suggested that it be looked at again next year. She asked the researchers to assist in finding a place where the Committee could learn from and the place learn from them. Three places could be chosen and motivated for. She emphasised that the places identified needed to be relevant to the Committee’s work.

The researcher said they had the places but because of a number of interruptions and other issues and challenges, implementation had been hindered.

It was decided that this discussion would be revisited after the budget has been announced and set, around February.

Committee business
The Committee received an invitation from the Association of Public Account Committee (APAC) to the 60 Bi-annual APAC Conference 2016 from 19 to 21 September in Bloemfontein.

Dr Madlopha proposed that all Members should attend to empower the Committee. Members agreed that they would attend as a team.

The meeting was adjourned.