Transport Budgetary Review and Recommendations Report

Meeting report

Briefing on the Budgetary Review and Recommendations Report (BRRR)

Adv Alma Nel indicated that on 30 September 2016 the Annual Reports of the Department of Transport’s entities were tabled in Parliament but the Annual Report of the Department, however, was only tabled on 31 October 2016.

She noted that the recommendations and findings of the past two years appear identical, which either meant that the Department and the entities were not complying or that the recommendations may need to be amended in order to allow for meaningful achievement thereof in order to ensure a change for future annual reports. The recommendations made in terms of BRR for 2015/16 financial year highlighted that the advertising and filling of vacant posts should be prioritised by the Department and the affected entities. The Department should also ensure that effective steps are being implemented to prevent irregular expenditure and officials who had incurred irregular, fruitless and wasteful expenditure should be duly disciplined. It was also recommended that the Department should implement proper recording keeping for information supporting compliance and procurement process.

Adv Nel highlighted the recommendation that the Department and entities should capacitate their finance and Supply Chain Management (SCM) divisions with appropriately skilled and competent personnel to prepare credible financial statements. The Committee further recommended:

-The Minister must ensure that the Department had a Memorandum of Understanding (MoU) in place for transfers/ grants from the transferring agency to the implementing agency

- The Department should evaluate whether value for money was received and whether the Department had mechanisms in place to monitor and evaluate transfers to province

- The Department should continue with engagement with National Treasury with regard to the filling of critical posts at the Department and its entities

- The Minister should ensure that the Department engages with National Treasury with a view to ensure that funds are secured for the rail component of the Moloto Corridor Initiative

- South African National Road Agency Limited (SANRAL) should explain why repeat findings have not been addressed

The Committee also emphasised that the Minister must ensure that the Department should provide the Committee with quarterly updates on strategies to improve the financial health status of Passenger Railway Agency of South Africa (PRASA), Cross-Border Road Transport Agency (CBRTA), Road Agency Fund (RAF) and South African Maritime Safety Authority (SAMSA).

Adv Nel said that the Committee had also recommended that the Minister must also ensure the following:

• The Department, with SAMSA, must provide a comprehensive briefing on Operation Phakisa
• The Minister must ensure that the Department ensures that there is an alignment between the amended Strategic Plan, 2016/17 Annual Performance Report (APP) and the 2016/17 Budget Vote
• The Department should review its funding model as it relates to PRASA in order to address, among other things, the unfunded mandate of Shosholoza Meyl
• The Department should provide the Committee with a comprehensive briefing on Shova Kalula
• Senior management should address document management. In addition, it should attend to financial and performance reporting discipline as well compliance management
• Management should exercise responsibility pertaining to financial and performance reporting, as well financial constrains and liquidity concerns
• The Department should engage with National Treasury to ensure that the key vacant positions of five Deputy-Directors Generals are filled
• The Department should process the legislative amendments without delay
• The Department should enhance departmental oversight and engagement with its entities    

The Auditor-General also made recommendations to be taken into consideration in the BRRR. There was an emphasis on SAMSA to implement the action plan to address prior year audit findings and enhance performance and consequence management. RAF should state whether it has an action plan to address the audit findings, and if it exists, it should be shared with the Committee. The Railway Safety Regulator (RSR) must develop/implement an action plan to address the audit findings. It was also highlighted that RSR should present a retention strategy to the Committee. The management should implement effective Human Relations management to ensure that adequate and sufficiently skilled resources are in place and that performance is monitored. The management should exercise responsibility pertaining to financial and performance reporting, as well financial constrains and liquidity concerns.

In conclusion, Adv Nel indicated that there were also additional matters that had been proposed to be requested by the Committee for the BRRR 2015/16 and these included suggestion that the Department should submit an Action Plan to address the findings of the AGSA by 15 December 2016. The Department should submit quarterly reports on strategies to address the financial health status of RAF within 60 days of the adoption of the BRRR report by the National Assembly. The Committee should also request that the Department should submit quarterly reports on strategies to address financial health of SAMSA, PRASA, and C-BRTA within 60 days of the adoption of the report by National Assembly.

Discussion

The Chairperson firstly thanked the team for producing a very elaborative report and it was likely that the Department could be one of the best departments if it could strictly follow the recommendations that had been made in the report.

Mr G Radebe (ANC) also appreciated the work that had been done in producing the report as it contained clear recommendations for the Department. The Tasima judgement on eNatis should also be included in the report as this was an important matter to be dealt with by the Department

Mr C Hunsinger (DA) suggested that the Committee should be more specific on the matter of the Single Transport Economic Regulator (STER) as it was clear that there were instances where STER was only part of the programme when it was convenient. There should be consistency in the application of STER especially when one considered the existing budget constraints. The Committee should be very serious to the Department on issues around budget allocation and the promises which were linked to those budget allocations and be a bit harder on allowing veriments. It would be important for the Committee to include other elements in the report for the sake of doing comparison and this was particularly important since this is mid-term budget review and therefore there is great relevance to do a comparison.

Mr Hunsinger said the unfunded mandate around the Moloto Corridor was of great concern and this was something that would need to be explained further by the Department. Notwithstanding this, he stated that he was in strong support of Moloto Corridor as it made so much sense and urged that the Committee should also support the project. In relation to the issue of the rollover of funds, it would be important to know about the criteria that was being used for the rollover of funds and whether the criteria was met for the rollover of funds for roads ground in KwaZulu-Natal (KZN). It was clear that there was still lack of consequence management within the Department and a lot of irregularities within the Supply Chain Management (SCM). There should be firmer recommendations from the Committee that would focus on competence training of staff members on SCM. It was a huge relief to hear that the issue of eNatis and Tasima judgement was finally over but it should not be included on page 46 of the report but paragraph 6.7 where it was more relevant and appropriate. The eNatis and Tasima judgement was clearly a principle matter and could also happen to other government departments or entities where a hanging judgment could force a particular department to have a particular structure in the financial delivery.

Mr M De Freitus (DA) also commended Adv Nel for the excellent report and even recommended that the report should be used as a reference document for the programme of the Committee going forward. It must be highlighted that a lot of recommendations that had been made to the Department had been ignored and it was time that the Committee analysed the recommendations that had been made in the report and actually challenge the Department and its entities to implement these recommendations.

Ms S Xego (ANC) proposed that private sector funding should be recommended in the Moloto Corridor project. It was concerning to see that there are instances where the Department or some of its entities would set targets that are too low. There should be a consideration in place on the targets that are put in place by the Department and its entities. The Committee should put in place recommendations to deal with the problem where the liabilities would exceed the total assets as it had happened to RAF and C-BRTA.  

Mr T Mulaudzi (EFF) expressed concern about the problems of HR within the Department as this was affecting the operation of the Department. The Committee should also be briefed on what had happened to the former Director-General of Transport, Mr Mawethu Vilane. It was clear at the moment that RAF was technically insolvent as the liabilities had exceeded the total assets. The Committee should also be briefed about the investigation on the fraud cases.

The Chairperson commented that clearly Mr Mulaudzi was not regularly attending the Committee meetings as some of the questions that he had asked had been covered.

Mr M Maswanganyi (ANC) asked if there was a settlement between SANRAL and companies that were alleged to be involved in collusion. The Committee should not be seen as “hard-headed” on one entity and apply a different standard to another entity as the Committee could be construed as being inconsistent. SANRAL should also brief the Committee on the Gauteng Freeway Improvement Project (GFIP) was causing a lot of problems politically and financially.  There was a Public Protector report which pointed out that there was a serious problem of maladministration and irregular procurement pertaining to e-tolls. The Committee should go deeper into this report as it had been done to other entities like PRASA. It was incorrect for the report to solely credit the Road Traffic Management Corporation (RTMC) for reducing the scourge of road fatalities as this was a societal matter and a number of entities also contribute to the reduction of road fatalities. The report should be able to distinguish between the recommendations of AGSA and those of the Committee.

Mr L Ramatlakane (ANC) also commended the team for producing a brilliant report although it was also intimidating when considering the gravity of challenges within the Department and its entities. It would be important for the report on page 38 to also highlight in bullet point that the Department had received a qualified audit opinion. The report should also flag the concern that was raised by the Committee in regard to the cost overruns on the PRASA tender investigation conducted by Werksman Attorneys. The Committee was particularly concern that the cost of PRASA tender investigation was currently sitting at R100 million despite the fact that there was no budget allocation for this investigation. The report should indeed differentiate between observations that had been made by the Committee and the recommendations of AGSA and those that had been made in terms of the BRRR. The unfunded mandate of Shosholoza Meyl was running contrary to the directives of the National Development Plan (NDP) in regard to accessibility on long distance rail and this matter had already been raised to the Department. The Committee had also highlighted to the Department that there should be a monitoring and doing oversight of the bulk of the money that often goes to metro cities.

Mr Ramatlakane added that there was a strong argument with the Acting DG of the Department that the unfunded mandate of Shosholoza Meyl was a shell that was brought to the Department by Transnet during the transfer of assets. The Minister had made it clear that the Department should fill all the critical funded vacant posts. The recommendations of the Auditor-General should indeed be part of the report as a way of pulling together of one report or all other issues in one. The recommendations to the Department should not all focus on the Minister but all the Accounting Authority. It would be critical important for the Committee to be provided with quarterly report on the filling in of critical funded vacant posts. There should be a recommendation that the Department should review its departmental budget in order to ensure that the targets that had been set are able to meet the smart principle. The Committee had not discussed the matter of eNatis and Tasima judgement and therefore it should not be included in the BRRR without a proper deliberation on what to do moving forward.              

Mr M Sibande (ANC) expressed concern that the report was mainly silent on the issue of job creation as this was a matter that was often raised to the Department and its entities. The report was also silent on the recommendation in regard to the taxi recapitalisation and this was an important issue that needed to be addressed with urgency. It was unclear if the Department was achieving anything on the Shova Kalula and the amount of money that had been spent on the project at the moment. There was a lot of impression that the Shova Kalula was going to create a number of job opportunities and this would be the matter that the Committee should be updated on. The Committee should be briefed on the problem of irregular expenditure within PRASA. There were also reports around PRASAs unsuitable trains for South Africa.

The Chairperson mentioned that there were instances where PRASA would be required by Transnet to pay for the use of railway and these were one of the things that the Committee should raise in the report. The report that had been produced was generally good and this was particularly the case on recommendations and observations. The Committee should refine some of the matters and in the report so that it could be adopted by tomorrow.

Adoption of minutes

18 October 2016 minutes

The Chairperson took the members through the document page by page.

The minutes were adopted without amendments.

Adoption of minutes

25 October 2016 minutes

The Chairperson took the members through the document page by page.

The minutes were adopted with amendments.

Adoption of minutes

08 November 2016 minutes

The Chairperson took the members through the document page by page.

The minutes were adopted with amendments.

The Chairperson thanked everyone present in the meeting and reiterated that the report would need to be refined and adopted tomorrow. The Committee had also received an apology from Ms D Carter (COPE) who had been hospitalised after going through an operation.

The meeting was adjourned.