Sport and Recreation Budgetary Review and Recommendations Report

Sports, Arts and Culture

19 October 2016
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary

2016 Budget Review & Recommendations Reports – BRRR

The Content Adviser briefed the Committee on the Budgetary Review and Recommendation Reports of the Department of Sport and Recreation.

The Committee Content Advisor explained that the BRRR has been informed by the 2016 State of the Nation address, which strongly highlighted the need for a good working relationship between government and business in order to ensure that the economy grows. Another important issue highlighted during the State of the Nation Address 2016 is around curbing fruitless and wasteful expenditure by government departments.

The National Sport and Recreation Plan, continues to be the policy guideline that has been used to deliver sport and recreation opportunities in order to ensure that South Africa becomes an active and winning nation. This is being implemented in a phased-in approach, which will ensure that change is introduced slowly but surely, largely due to the fact that the plan is not fully funded. As a result, so far only 23% of the National Sport and Recreation Plan objectives have been achieved and a further 40% partially achieved. The role of South Africa to influence the development of world sport was increased by its election to the Chairpersonship of the Intergovernmental Committee for Physical Education and Sport in February 2016.

The report stated that during the 2014/15 Budgetary Review and Recommendation Report process the Committee had made a number of recommendations to the executive for implementation. These recommendations include amongst others the following: Advocate for building of sport facilities in rural communities which will benefit not only schools but the general communities living in the rural areas. Ensure that Community Sport programme receives attention and the necessary resources for its full implementation. Oversee that the department is able to align its strategic plans with the Annual Performance Plans to ensure compliance with the National Treasury and AG.

In terms of the summary of selective 2016/17 Committee Budget Report recommendations the budget of the Department and the entities during 2016/17 was presented having taken into consideration the significant negative economic changes. These economic conditions have had the country to actually revise its growth forecast to 0.9% in 2016. The decision by National Treasury to give Sport and Recreation SA a chance to determine allocations of R300 million of p-Component of the MIG, outside the formula, during the 2016/17 financial year is another fundamental change in the work of the Department. The procurement of services relating this amount will be done in collaboration with Cooperative Governance and Traditional Affairs. To this effect an additional R6 million was allocated to Infrastructure Support Programme to ensure that Sport and Recreation SA is able to build capacity in order to deliver on this mandate.

The report further stated that through the MINMEC and HEADCOM platforms between national and provincial departments of sport and recreation, there will be a continuous engagement between these spheres of government in order to mitigate the risks of managing the concurrent functions. The intention is to ensure that there is a clear alignment of all policy initiatives to the National Sport and Recreation Plan. The Chief Director's forum will ensure that all the decisions taken are properly implemented in provinces.

Members of the Committee commented on the report from the Content Adviser. They raised raised concern about the lack of performance programmes in entities such as SAIDS.  There was a view that the Committee probe the federations that receive funding from the lottery and hold them to account so as to measure the outcomes of those funds. Members also noted that the Department’s budget is spent on transfers and subsidies and highlighted the need for the Committee to elevate its intervention when dealing with provinces.  There was also a concern about the under-spending and fruitless expenditure. 

Meeting report

Budgetary Review and Recommendations Report (BRRR)
Mr Teboho Thebehae, Content Adviser, Portfolio Committee on Sports and Recreation said the BRRR has been informed by the 2016 State of the Nation address (SONA 2016), which strongly highlighted the need for a good working relationship between government and business in order to ensure that the economy grows and there is a conducive environment for business to invest. Indeed, this is important for sport to be conducted in a manner that brings confidence and attracts investment, as investment in sport remains conservative due to the tough economic conditions. The negative publicity that certain sporting codes continue to attract, like the FIFA corruption scandal particularly, where South Africa is being implicated for the 2010 FIFA World Cup, doping in sport and match-fixing in cricket are some of the impediments that continue to hamper investor confidence in sport. Another important issue highlighted during the SONA 2016 is around curbing fruitless and wasteful expenditure by government departments. These included certain immediate measures that should be implemented, and these are: Overseas trips should be curtailed and those requesting permission needed to motivate strongly and prove the benefit to the country; Ensuring that the size of delegations is greatly reduced and standardised; Instituting further restrictions on conferences, catering, entertainment and social; and cutting out the budget vote dinners for stakeholders hosted by government departments in Parliament after the delivery of budget speeches.

Mr Thebehae said the Medium-Term Strategic Framework (2014-2019) is a key policy document that has been taken into consideration. Sport and Recreation South Africa has aligned itself with the National
Development Plan (NDP) and signatories towards the implementation of Outcome 14, which seeks to create empowered, fair and inclusive citizenship. Social inclusion is an important condition for social cohesion. All members of society, regardless of their race, sex, belief, or class should therefore participate in processes aimed at promoting social cohesion. Sports and Recreation can potentially play a significant role in these processes. At the heart of this process, is the implementation of the transformation scorecard, to ensure that you can effectively change the demographic profile of Team South Africa to reflect the population of the country. These efforts are to be done for many reasons, first as a moral thing, because it is the right thing to do, but secondly for strategic reasons, which will mean that it is essential for long-term survival, growth and competitiveness. The National Sport and Recreation Plan, continues to be the policy guideline that has been used to deliver sport and recreation opportunities in order to ensure that South Africa becomes an active and winning nation. This is being implemented in a phased-in approach, which will ensure that change is introduced slowly but surely, largely due to fact that the plan is not fully funded. As a result, so far only 23% of the NSRP objectives have been achieved and a further 40% partially achieved. The role of South Africa to influence the development of world sport was increased by its election to the Chairpersonship of the Intergovernmental Committee for Physical Education and Sport {CIGEPS) in February 2016. In addition to this South Africa has been identified as one of the four countries that should pilot Quality Physical Education which has been developed by the United Nations Educational, Scientific and Cultural Organisation (UNESCO). The country continues to fulfil its responsibilities with the UN SDPIWG, UNESCO and WADA amongst others. As a member of the African Union Sport Council Region, the country is represented in the Sport Development Committee, the Women and Sport Committee and the Committee on Sport for the disabled.

The following are the strategic outcome-oriented goals of the Department over the medium term: Increase the access of South Africans citizens to Sport and Recreation; provide mass participation opportunities; advocate transformation in sport and recreation; develop talented athletes by providing them with opportunities to excel; and support high performance athletes to achieve success ·in international sport.

Mr Thebehae said during the 2014/15 BRRR process the Committee had made a number of recommendations to the executive for implementation. These recommendations include amongst others the following: Advocate for building of sport facilities in rural communities which will benefit not only schools but the general communities living in the rural areas. Ensure that Community Sport programme receives attention and the necessary resources for its full implementation. Oversee that the department is able to align its strategic plans with the Annual Performance Plans to ensure compliance with the National Treasury and AG. Increase the roll-out of the Club development programme to include more clubs and expand to other provinces. Ensure that there is proper consultation with the DBE and Schools which have identified as sport focused schools and that there are properly signed service level agreements between all the parties involved. Ensure that there is quality equipment delivered to schools and clubs in order to encourage participation in sport amongst learners and community members. And prioritise transformation and monitor on quarterly basis the federation's performance towards the transformation targets.

The broader themes that encapsulate these recommendations are the provision of adequate sport facilities in rural communities, monitoring of performance targets for transformation in sport federations, implementing the recommendation of AGSA, the need for provision of quality sport equipment and sport programmes and improved working relations between SRSA and DBE on the school sport programme. The Committee had been seized with the issue of ensuring that the Department is able to fill all the critical vacancies, requesting for more funding to implement fully the NSRP and ensuring that National Treasury allocated the 15% p-Component of the MIG to SRSA because municipalities have been unable to build sport facilities.

Mr Thebehae said in terms of the summary of selective 2016/17 Committee Budget Report recommendations the budget of the Department and the entities during the 2016/17 was presented having taken into consideration the significant negative economic changes. These economic conditions have had the country to actually revise its growth forecast to 0.9% in 2016. This forecast is considerably lower than the 5% required by the NDP in 2019. Other effects in the economy also include the weakened Rand against most currencies and the depression in commodity prices, poor mining and manufacturing outputs and slow-down in exports due to lower demands from major trading partners. As a result of these changes and difficult economic conditions, notwithstanding the #FeesMustFall protest actions and the unprecedented drought, including the sharp decline of the Rand in December.

The decision by National Treasury to give SRSA a chance to determine allocations of R300 million of p-Component of the MIG, outside the formula, during the 2016/17 financial year is another fundamental change in the work of the Department. The procurement of services relating to this amount will be done in collaboration with Cooperative Governance and Traditional Affairs (COGTA). To this effect an additional R6m was allocated to Infrastructure Support Programme to ensure that SRSA is able to build capacity in order to deliver on this mandate. It is within these conditions that the Portfolio Committee had recommended to the Minister of Sports and Recreation to deliver amongst other things the following: Emphasise the need for provincial departments to budget for sport and recreation from their equitable share budget allocated by provincial treasuries. Ensure that the department has clear performance indicators in line with the mandate of the sub-programmes within each programme.  Ensure that the budget cuts and reduction of programmes, are done in the most cost effective ways to improve the delivery of programmes within the allocated resources. Ensure that the Department is adequately resourced and prepared to roll-out the sport infrastructure support programme through the use of the ring-fenced amount of the MIG. Ensure that both entities, SAIDS and Boxing SA, adequately implement the recommendations of AGSA in order to address the challenges related to governance. Ensure that the process of preparing draft legislation is expedited during the 2016-17 financial year.

Mr Thebehae said when looking at the overview of key developments in the organisational and service delivery environments of the Department for 2015/16 and 2016/17 the environment to which the Department delivers a service is important to understand, because to some extent it exposes some inter and intra governmental cooperation dependency. SRSA has some programmes that are critical to their service delivery mandate, which are linked to activities in other departments and these are the Departments of Health, Basic Education, Cooperative Governance and Traditional Affairs, and Arts and Culture. The provincial budget allocation as prescribed by the Nation Treasury through the equitable share formula is a challenge for provinces with smaller population like the Northern Cape, and seems to favour bigger sized provinces, which are also have some level of development, like Gauteng and Kwazulu-Natal. The formula is used for an equitable share of the budgets to provinces and municipalities in order for them to provide services and perform prescribed functions.

Through this process budgetary conditions are set as well other requirements to ensure the money is used as allocated. The impact of this allocation for SRSA is that, the departmental allocation of resources for the conditional grant is impacted by the demographics of the provinces, thus affecting those with the least population, who are in serious need of the sport development grant. Linked to the allocation of equitable is the Conditional grant allocation. About four provinces who receive the conditional grant do not receive adequate equitable share to implement programmes. These provinces are solely reliant on the Conditional Grant as their voted funds are predominantly used for administration and compensation of employees. These affected provinces are Gauteng, Free State, Limpopo and Northern Cape. The situation poses a threat on the job security of the support staff at district and local level, who is employed through the 6% allocation of the grant.

Through the MINMEC and HEADCOM platforms between national and provincial departments of sport and recreation, there will be a continuous engagement between these spheres of government in order to mitigate the risks of managing the concurrent functions. The intention is to ensure that there is a clear alignment of all policy initiatives to the NSRP. Chief Director's forum will ensure that all the decisions taken are properly implemented in provinces.

Since SRSA has only managed to implement 23% of the NSRP targets and partially achieved the other 40%, it should be taken into consideration this will have an impact on the achievement of the targets within the stipulated timeframes. The fact that the NSRP continues to be implemented with limited funding, makes it difficult to implement in full, thus requiring the Department to reprioritise focus areas and implement it in stages.

Sport in society depends largely on sponsorship, which is predominately, private sector dependant. As a result, SRSA with a budget that is just over a R1 billion, has the enormous responsibility of ensuring that it is able to fund both mandate of development of sport and elite, which is high performance, whilst it also ensures that it provides for recreation. It is imperative that, in the midst of the constrained economic environment and the National Treasury indication that there is no funding for new programmes, SRSA should find innovative ways of generating revenue for sport. The possibility of introducing the law that will ban alcohol advertisements will make it difficult for sport to secure funding. The areas that have been looked at to generate alternative revenue include sport ticket levy and the 15% p-Component of the MIG.

Enforcing the regulations of hosting of international sport and recreation events, especially when not approved by the Minister or Cabinet, as required by the 2010 promulgated regulations should be increased, as it sometimes short-sells the country and puts a burden on the already little budget of the Department. The regulation requires that all sporting bodies requiring bidding events, should first apply and comply with the requisite documentation. The same is also used to penalise federations that are not transformed.

Mr Thebehae said in terms of the recommendations based on the analysis of the Department's budget and the entities for the year under review, that is 2015/16, the Committee recommends that the Minister for Sport and Recreation/SRSA to:
 – Ensure that Community Sport programmes receive attention and the necessary resources for its full implementation
- Undertakes to ensure that there is value for money when it comes to the financial performance of the Department and the service delivery targets
-Ensure that there is alignment between the annual performance plan and the budget allocated
- Completes the proposal for alternative funding for sport through tax on ticket sales in order to ensure that the NSRP is adequately funded and ensures that it is subsequently presented to the Davis Commission on taxation
-Shares the information regarding sport development programmes in the provinces, especially those provided in rural areas including rural sport infrastructure development
- Ensure that the Department is compliant with the classification of Sport Trust as an entity, this comes as a result of the concern National Treasury regarding the transfer of funds to Sports Trust with allocation meant for sport federations
- Regularly consults with the DBE and schools which have identified as sport focused schools to ensure that there are properly signed service level agreements between all the parties involved and value for money for service delivery standards that have been set
- Delivers the appropriate and quality equipment to all targeted schools and clubs in order to encourage participation in sport amongst learners and community members
- Advocates for building of sport facilities in rural communities which will benefit not only schools, but also the general communities living in the rural areas
- Provides adequate financial resources to support the EPG in order to ensure that federations are transforming and that the EPG is able to monitor targets on a quarterly basis
-Pursue the discussions with the Minister of Basic Education regarding the allocation of funds for school sport intra-school programme and the review of the Memorandum of Understanding; Federations to include the school sport in their governance structure, so as to ensure that there is a systematic approach to identify talent at schools
- Capacitate the sport infrastructure programme, in order to ensure that it is able to fulfil its role of supporting the municipalities to build sport facilities through the allocated 15% p-Component of the MIG outside the formula

On Boxing SA: Ensure that management monitor compliance using a procurement checklist, that BSA include compliance with supply chain management (SCM) in individual performance contracts for SCM officials and that officials who incurred/permitted the irregular expenditure are held accountable; Enforce that the leadership of Boxing SA is stable and has developed the necessary policies and controls; Enforce consequence management regarding compliance with legislation; Ensure that management develop and implement the approved HR plan which is suitable to work and demands of the entity; Ensure that the entities develop plan of actions management and monitor compliance using a procurement checklist, that BSA include compliance with SCM in individual performance contracts for SCM officials and that officials who incurred/permitted the irregular expenditure are held accountable.

On SAIDS: Ensure that officials are trained on technical matters and that a skills review of officials in the entity should be undertaken to ensure proper placement. Enforce the development of plan of action and the implementation thereof as per the AGSA recommendations; Enforce compliance with regard to the SCM prescripts and adherence to PFMA provisions that relate to procurement of goods and services.

Mr Thebehae concluded that the Committee appreciates the 100% clean audit on service delivery performance of the Department and the continued improvement of their performance targets. The leadership of Boxing, SRSA and SAIDS including SASCOC are commended for the valuable input that has helped the Committee to prepare this report. Members of the committee for sterling work done in scrutinising and deliberating on the annual reports of the Department and entities, whilst the views may differ; there is one common goal and commitment, which is to improve the lives of people of South Africa through prioritising their needs. And lastly, thanked the staff for putting all the work together.

Discussion
Mr S Ralegoma (ANC) said his only concern is that goals must be clear because if they did not have a direct goal, for example, SAIDS so that it is clear why they were allocating and why it is an entity of the Department.

Mr Ralegoma said they should also clearly state the lack of performance programmes in entities such as SAIDS and others.

Ms D Manana (ANC) corrected the words “Nation Treasury” to the words “National Treasury” on page 8, point of paragraph 2.

Ms Manana said on the MINMEC between the National Department and the Provincial Department that the minutes are not captured very well. There must be another way of instructing the Department because if the executive is taking a decision that they need to divert the 15% to something else, there must be an instruction from the Minister to the provincial executive that the 15% must be utilised to sport infrastructure.

Secondly, National treasury needs to turnaround the function of the municipality if they are unable to account for that 15%. They also need to ask National Treasury for an extra budget since sport is underfunded and is uniting the country, and they know that boxing is getting little money from the department. National Treasury should give extra budget for boxing.

The Committee should also note that South Africa has been identified as one of the four countries that should pilot quality physical education, which has been developed by UNESCO. So, it must emphasise each and every year to the Department to implement the MOU that was signed in 2011, so that the learners could live a happy life style.

Mr S Malatsi (DA) said there are two streams that contribute or get money related to sport issues. One is lottery through money that goes to federations in addition to what lottery provides to SASCOC. And they do not get a sense of accountability in the individual federations about how those monies are spent because with SASCOC what happened is that for elite performance in preparation for Olympics and Paralympics. Therefore, it is high time that they move towards probing and holding those federations to account, or even lottery on how much it has given those federations and for how long so as to measure the outcomes of those funds.

Mr Malatsi said that the second issue which is more troublesome is that 25% of the Department’s budget is spent on transfers and subsidies to provincial governments and federations. They could engage the Department as soon as possible and as much as they can. If they do not get to the provinces and tackle the root cause of the problem, there then they will be barking at the wrong tree for so long because the Department feels helpless. When provinces do not comply in terms of providing documents it affects them but ultimately they are not the wrong doers, the wrong doers are provincial governments and that trickles into some of the metros and the local governments that are not spending money dedicated for sport. Because if they were to look at what is allocated for sport and what is not used, the issue is not that South Africa does not have money for sport, but the issue is that the little that is allocated for sport people use it for other things because they did not consider sport to be very important.

Therefore, the Committee needs to elevate their intervention when dealing with provinces, whether it is structured to understand the intentions of oversight. And provinces also should appear before the Committee so that they could measure what they had and indicate what they were doing so that the Committee could intervene in time. And when they make recommendations they can confidently say to the Department this particular province does not justify getting such a large chunk so that they could engage Treasury about possible penalties because they did not want to punish athletes at the end of the day. They cannot have every year when budget provisions are made but sport is not benefiting because provincial governments deal with themselves as they wish.

Mr K Sithole (IFP) asked for clarity on the last bullet point on page 18 of the report where it states that “The entity did not take effective and appropriate steps to collect all money due to it”. A person reading that sentence would not understand which entity they are talking about; therefore, they need to clarify that sentence.     

Mr Sithole also noted that on recommendations there is nothing that talked to under-spending and fruitless expenditure.

The Chairperson said corrections and amendments will be made to the report and noted the concern from Mr Sithole on under-spending and fruitless expenditure.

Mr Ralegoma said the Content Adviser referred to the Sport Trust and they said it should be flagged to ensure the Department took note of that, appreciating the good work that Sport Trust did. Therefore, they should have something on that in terms of looking forward.

The Chairperson said that in the last two weeks the Committee had been discussing issues relating to this BRRR and they have done justice for the incoming debate. They have also seen where the gaps are and they appreciate what they have done, which is the true reflection of what they are doing. Members of the Committee identified issues that affect provinces and they must invite provinces to come before the Committee. They must also recommend for more funds and call provinces to come before the Committee to tell about the money they were allocated and what they are doing with it to uplift sport in the country.

The Committee Secretary, said that it will be prudent to also consult and consider the National Council of Provinces’ role in provinces. She proposed that a workshop could strengthen accountability in provinces, and all stakeholders including the NCOP. This workshop should be done so that the Committee does not encroach on the work of the NCOP in provinces.

The Chairperson said that they must have a joint sitting with the Select Committee on Sport and Recreation in order to chat a way forward for that workshop.

Mr L Ntshayisa (AIC) said that it is important that the one who gets the money must come and account to the Committee for that money in terms of how it was utilised.

The Chairperson said that they should also recommend to the Minister to do oversight on those provinces because as a Committee they are not happy about the accountability of provinces. The inputs from Members will be incorporated in the recommendations of the report and give the task to officials to organise a hearing with the provinces. The provinces will not only account to the Committee but will also have to account to the NCOP Select Committee on Sport and Recreation.

The Chairperson said next week the officials will implement in the report the recommendations of the Committee because now they are debating something which is clear in terms of what the Committee wants. They should allow the officials to liaise with the NCOP Select Committee and come back and report to the Portfolio Committee on how they will engage with the Department and provinces because there is a gap in the budget of sport. After receiving feedback from the officials, they will be able to adopt the report next week Tuesday.

The Chairperson thanked members for their inputs. She also thanked the officials for the presentation of the BRRR report to the Committee.

The meeting was adjourned.


 

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