Monitoring of performance and expenditure on outcomes of National Development Plan: Parliamentary Budget Office briefing

Meeting report

Opening remarks and Apologies
Mr N Gcwabaza (ANC) welcomed the Parliamentary Budget Office (PBO) and all present, and outlined that the Committee meeting concerned a briefing on the monitoring of performance and expenditure of the National Development Plan. He indicated that there was no need for introductions as everyone was well acquainted with each other, except a Ms N Ndongeni (ANC), who was new member of the Committee.

Mr Gcwabaza requested an early adjournment as he sat on the Joint Committee on the Financial Management of Parliament, which was scheduled to meet. He proposed that Ms S Shope-Sithole (ANC) chair the meeting instead.

An apology was noted on behalf of the Chairperson, Ms Y Phosa (ANC).

An apology was noted from Ms E Louw (EFF) and Mr A Shaik Emam (NFP). No reasons were presented for the apologies.

Mr A McLoughlin (DA) requested to be excused early as he had to attend another meeting.

Mr N Kwankwa (UDM) apologised for his late arrival to the Committee meeting.

Monitoring of Performance and Expenditure on the Outcomes of the National Development Plan
Ms Nelia Orlandi, Deputy Director: Policy, Parliamentary Budgetary Office, took the Committee through the presentation. She began by outlining the Speaker of the National Assembly’s request for the establishment of a Committee to exercise oversight over the National Development Plan (NDP) and this was part of the aim of the Standing Committee on Appropriations. The purpose of the NDP was to encourage the unity and integration of other government budget plans.

Ms Orlandi outlined, that the purpose of the presentation was to look at different processes in place on expenditure and monitoring of the NDP. The NDP was a complex system and the analysis of the NDP looked at the alignment of management structures involved, and its alignment with the 14 outcomes of the Medium Term Strategic Framework (MTSF) with the functional budget allocations.

The planning processes of departments and other government entities have a vital role to play in the integration of the vision and proposals contained in the NDP into their own plans and budgets. The NDP proposals must be incorporated into the existing activities of departments and broken down into the short and medium -term plans of government at national, provincial and municipal level.

Government has already started the process of aligning the long term plans of departments with the NDP and to identify areas where policy change is required to ensure consistency and coherence.

Some of the key steps taken to facilitate the integration of the NDP include:

• The formulation of the 2014-2019 MTSF
• The clarification of roles and responsibilities
• The alignment of plans and budgets
• The development of clear performance indicators for each programme
• Alignment of the NDP with departmental strategic plans, annual performance plans and programme plans
• Monitoring and evaluation to identify obstacles to implementation
• Continuous improvement of implementation.

The implementation of the NDP in government requires a process of breaking down the plan into key outputs and activities to be implemented by individual departments or groups of departments.

One of the oversight roles of Parliament is to hold the government answerable to how taxpayers’ money is spent. This happens at different stages of the budget process, from the planning to the evaluation stage

Challenges that could influence the implementation of the MTSF and NDP include:

• The absence of systems for collecting data for reporting on the targets in the MTSF
• Departments do not submit progress reports
• Progress reports are not in line with the targets set, which makes evaluation difficult
• Performance indicators are not relevant
• No baseline data available in certain instances
• More than one target set per performance indicator
• The concepts used in the MTSF differ from those in the current performance management system in government
• Too many operational actions developed
• Provincial and other entities’ responsibilities not always reflected in the programme of action reports

Attention was drawn to the fact that the Budget Programmes per Vote was funded by the Equitable Share and Conditional Grants. The fund constitutes 22.6% of the Budget Programmes per Vote and its purpose is to fund national priorities, which is why it is separated from the rest of the budget. A previous assessment report by the PBO found that approximately 38 of the recommendations reflected in the NDP have not been prioritised in the 2014-2019 MTSF. She proceeded to look at Table 1 and 2 in the Annexures and explained that there is a complete misalignment and complication in the way the National Treasury assessed the NDP.

The integration of the Budget for the MTSF depended on successful intergovernmental planning and budget processes. Integration is best explained by looking at the 9 Functional Groups that have been aligned with the 14 outcomes and the different departments which are outlined within those 9 functional groups. When a comparison is made between the departments contributing to the functional groups and the departments contributing to the outcomes of the MTSF, there is definitely a misalignment between the management of the budget and its outcomes. The misalignment is expressed as follows:

Outcome 1: three departments which are categorised within the outcome 1 functional group, but there are also three departments contributing to the outputs of that outcome but these are not the same three departments. This is a misalignment.

Outcome 4: 21 departments are contributing to the output. However, there are only 6 departments which are aligned to outcome 4.

Outcome 8: 4 departments are contributing to the outputs, yet 5 departments are linked to the functional groups.

This was a problem as every department is therefore, not contributing to the MTSF. There is a misalignment between the budget structures and management.

The PBO plans to continue the analysis and assessments on the integration of the budgeting and planning processes of government. The aim is to continuously identify the obstacles to implement the NDP and to monitor the progress on the targets set.

The next step in the analysis process will include:

• An analysis on programme structures
• A report on the 2015/16 performance as reflected in the Programme of Action Report
• Assessments on departmental APP alignment to the NDP outcomes

Discussion
Mr McLoughlin understood that there are 14 outcomes and 9 functional groups but stated that to align them appears to be difficult as there is so much overlap. Is there any way in which this process could be streamlined as everything seemed to be spread all over the place? He was extremely concerned about whether the money invested is achieving its purpose.

Dr C Madlopha (ANC) was concerned with the lack of compliance. Those departments not adhering to the NDP need to be held accountable for non-management. Research needs to be conducted into whether the NDP and its outcomes form part of their performance contracts. She was shocked that while unemployment is a challenge in the country and has 21 outputs, only 6 departments have budgeted for this. It indicated that departments were not serious about the issue. She recalled that in 2011, the President had made a call, on the issue of unemployment - all departments were asked to fill vacant posts as way to reduce unemployment. Information for the non-complying departments should be retrieved to enable the Committee to summon them on these matters.

Dr M Figg (DA) agreed that the information is complicated. He struggled find a solution and was of the opinion that it does not assist in listening to something and asking for clarification because the PBO was working on a solution. He criticised the complications in the system: it is simple – there are 14 outcomes and these should be aligned with the MTSF, but this is not happening. The ulterior motive should not be to give someone something to do for the sake of it and creating jobs in the wrong areas, while the Budget Office is understaffed. The paradox is that departments are overstaffed and under-skilled. He questioned an alternative way in which a solution could be found, but emphasised that the purpose of the Committee is to assist the budget office in doing so as it is one of the Committee’s most valuable assets.

Ms Ndongeni sought clarity around outputs as she found Table 1 and 2 quite complicated.

The Chairperson complemented Ms Orlandi on highlighting the challenges with the NDP. She encouraged finding a solution to properly exercise oversight. Issues have to be aligned – this is not an option, but rather a matter of doing what is required. In the end, the Committee would like to see if the NDP is on course.

Ms Orlandi said she could only express views but could not make any recommendations:

On Communication, the DPME and the National Treasury need to be brought together as they failed to communicate properly. Both needed to be informed about the misalignment. Treasury would, in future, be required to reformulate the functional groups and compile a report to allow the Committee to exercise oversight over functional groups on a quarterly basis.

On Consequences, promise agreements are aligned with the MTSF. Everything is included into the MTSF. All the recommendations in the NDP need to be enforced through the APP. If the APP and MTSF can show the outcome with the departments, it may also be a solution allowing the Committee to monitor all the outputs which contribute to the outcomes.

On Access to Information, the Committee can tell Treasury and DPME what its needs are and that at this stage it is impossible to exercise oversight.

On the Way Forward, the Committee should ensure that the plans for the next five years are perfect as constrains can be fixed with recommendations.

On Clarity, she agreed that table was a confusing document. The outcome was read with the departments that should contribute and those that actually did. These were ticked in line with Treasury's documents and their categorisation of functional groups. The outcomes were then compared.

Dr Figg agreed that a solution is necessary. He was critical about the number of times the DPME has appeared before the Committee - once every two years. If they are not reporting to the Committee, then who are they reporting to anyway? It could be because there is an overlap between departments. When a budget is prepared it is done so for programmes and then allocated as grants to specific departments. If a function is not aligned with the spending, then surely, there is a problem. Having them in the same room, would be part of the solution to the problem.

Ms Ndongeni acknowledged the importance of the information but stated that clarity is an absolute necessity. First, when the NDP is discussed as part of the APP, we should “not fall along the threads”. Second, when Treasury appears before the Committee it does not present the true state of affairs. She requested that the Chairperson organise a workshop on clarification of the information presented by the PBO to determine where the problem lies.

Ms Orlandi stated that a solution is being worked on – it would be in the form of a document. The misalignment also arises from the fact that the MTSF was developed before the NDP. However, the Committee is able to attempt to make a difference within the next five years to ensure oversight on a regular basis.

The Chairperson shared with Members that during a flight she had heard two passengers saying that the NDP will not happen because Treasury does not like it. Therefore, once Treasury has appeared before the Committee, they should tell the Committee whether they would like the NDP to happen.

A Member recommended that the Committee consider the academia who are writing critically about the NDP and benefit from those people who compare South Africa with the rest of the world so as to determine our internal problems. This would enrich the Committee.

Dr Figg encouraged expediency on the matter. The NDP is not negotiable. The outcomes must be achieved and therefore, it is important to receive the analysis from the Treasury, DPME and PBO to assist us in moving forward.

The Chairperson encouraged the appearance and opinions of academic experts at the University of Witwatersrand as soon as possible along with other critics and experts.

Mr Kwankwa made reference to Brazil and their programme on identifying gaps in their implementation. The problem is that in South Africa, target-setting happens in a vacuum and government then, loses sight of the bigger picture. It would assist if the Committe received a presentation from an expert as to how we can incorporate this into the government agenda as a whole. He apologised for his late attendance.

On behalf of the Committee, the Chairperson thanked the Parliamentary Budget Office for the informative briefing.

The meeting was adjourned.