The Joint Standing Committee on the Financial Management of Parliament had a pre-briefing by the Committee Researcher and Parliamentary Budget Office, preparatory to the Committee's engagement with the Secretary of Parliament on the institution’s performance in the first half of the 2016/17 financial-year.
The Committee Researcher pointed out that expenditure of Parliament in the first half of the year had not matched the 50% expected by this time, but because of the reporting format and in the absence of projected expenditure amounts, it was difficult to gauge whether there had been improvements in expenditure. It was suggested that in future projections must be given to the Committee. Parliament had not achieved its aims in paying all suppliers within 30 days, although the reasons for late payment had not been explained. There had been underspending on transfers and capital expenditure, and there was no indication whether projects currently under way would be completed by year end, or whether Parliament would be able to fill vacancies by the end of the year. The target for a 1% budget saving had not been achieved and it was stressed that targets needed to be realistic. One of the problems was that public service managers were not trained in financial management and it was suggested that workshops and training should be arranged. At the moment targets were stated in a quantitative way, which made them difficult to analyse.
The Parliamentary Budget Office also reported an estimate of R72.85 million underspending on direct charges, which would have to be surrendered to the National Treasury. Over expenditure of R10.5 million on associated services was likely which would not be offset with savings on other programmes. On current trends of underspending, Parliament may under-spent by 10% by the end of the year, including in compensation of Members, although overspending on transfers could be likely. It was pointed out that the Annual Performance Plan did not comply with the format prescribed by National Treasury, which made it difficult to analyse the document. Furthermore, the Annual Report also did not adhere to guidelines, because it should have detailed whether there were long-term investments, and accumulated surplus funds, as well as donor funding. It was suggested that the Committee must be given this information. The Office thought the budget was unrealistic. There was concern over the number of errors in the Annual Report.
Members wanted to know if the PBO had looked at the programmes to see whether they had achieved what they set out to do, pointing out that money had been set aside for various different programmes. They pointed out that Parliament was setting a poor example by not paying suppliers within the prescribed period. Further explanation was requested on what was making analysis so difficult and Members asked if budget had been properly allocated to the most important objectives, and it was pointed out that perhaps there was a mismatch in that budget had been allocated according to divisions but no appropriations had been done. NEHAWU had requested a meeting with the Committee around human resource issues, and there was a need for clarity on promotions, particularly the definition. Members suggested that the Committee must engage with the Secretary to Parliament on the cost implications of moving the Enterprise Resource Programme to a different system.
Parliament's performance April to September 2016
Parliamentary Researchers' briefing
Mr Phelelani Dlomo, Researcher: Parliamentary Research Unit, informed the Committee that the expenditure of Parliament was below 50% at the end of the second quarter. However, in the absence of projected expenditure amounts, it was difficult to see whether or not there had been an improvement in expenditure. He suggested that in future the Committee will require expenditure projections as part of the information to be used for mid-term assessment process or oversight.
He looked specifically at the line item reports. In respect of goods and services, he reported that the target of paying suppliers within 30 days was only partly achieved. This was compromising the value chain. However, he noted that the Committee would have to ask more questions around this as it might be that suppliers have not submitted invoices, or that at other times the invoices have not been processed.
He noted underspending in relation to transfers and capital expenditure. The Parliamentary Research Unit was concerned whether projects that are currently under way would be completed by the end of the year.
There was also some doubt whether, in relation to compensation of employees, Parliament would be able to fill the vacancies by the end of the year.
He further reported the target for the 1% budget saving was not achieved. The targets need to be set realistically. He suggested that workshops need to be held for public service managers who are not financial management officers so that they could fully understand the process of setting and achieving targets. For Parliament to achieve its 1% budget saving, it must understand the cost drivers of its business and ensure all managers understand the idea behind the 1% saving.
Even though some targets have been achieved or exceeded, there is a need to look at the impact of those targets on the ground, and this was something that the Committee should be looking at carefully.
Mr Dlomo pointed out that Parliament needed to improve its reporting format to cover both the achievement and the impact. The achievement of targets is quantitative, not qualitative, and that made it more difficult to analyse. The format of reporting should aim to make it easier for analysts to bring up any issues that need to be highlighted.
Parliamentary Budget Office Presentation
Ms Nelia Orlandi, Deputy Director for Policy: Parliamentary Budget Office, briefed the Committee on the spending. In relation to expenditure it was estimated that R72.85 million would be under-spent on the budget, on direct charges. This amount would be surrendered to the National Treasury. The Parliament estimated that there would be an over expenditure of R10.5 million on Associated Services. However, there was no indication of any savings on other programmes that would defray the estimated over expenditure on Associated Services.
The Parliament spent 45.1% of the R1.8526 billion allocated in 2016/17. If Parliament continued with the current expenditure trend this could result in under-expenditure of almost 10%. The 2016 MTEF estimates as revised over the 2017 MTEF reflect a growth rate of almost 14% on programme expenditure. The Members’ remuneration (direct charges) had increased on average annually by 5.5% from 2015/16. Under-expenditure on compensation of Members and over-expenditure on transfers were anticipated. The detail of the transfers has not been provided.
The Annual Performance Plans form part of the documentation required for budget submissions to the National Treasury. National Treasury prescribes the formats for all budget documentation to ensure consistency across all government institutions. The prescribed format had not been followed in the case of the Parliament, which makes the analysis of the document difficult. The Annual Performance Plan contains strategic objectives and specific objectives per section, which is very confusing. The reconciliation of the plan with the budget is not possible. Performance indicators are only reflected per programme, while budgets are allocated per sub-programme to ensure accountability.
She was also concerned that the Annual Report did not adhere to the guidelines. It needed to detail long-term investments of accumulated surplus funds. There was uncertainty as to whether there are long-term investments because that was not indicated in the report. The Parliament did not report donor funding revenue. She pointed out that the Committee must be told about the amount of money received. She suggested that the mid-term budget is unrealistic.
(Graphs and tables were shown to illustrate budget per economic classification; expenditure per programme; expenditure and estimates per economic classification)
Ms C September (ANC) wanted to know if the PBO had looked at the programmes to see whether the Parliament has achieved what it set out to do. Money had been set aside for several programmes. She asked that the researchers should explain the methodology they used to come to their conclusions regarding the reporting format, and explain why this made it so difficult to do an analysis.
Ms Orlandi stated that, because Parliament was not complying with the recommended frameworks, it is difficult to reconcile the budget allocations to the performance information reflected in the Annual Performance Plan. If Parliament reports on details per item, it would be possible to analyse expenditure on training and skills development, for example.
Mr Dlomo explained that the concern of the researchers was genuine, especially on the Annual Report. The Committee should engage with the institution on the format of reporting. He agreed fully with Ms Orlandi that it was difficult to assess if resources had been disbursed and to see the outcomes. He thought that it would be very useful and important to hold a workshop on the reporting format. He pointed out that there has been no oversight over Parliament for the last four years.
The Chairperson remarked that the presentation from the PBO seemed to indicate that financial statements and results were not talking to the strategic plans. He asked if this meant that the budget had not been allocated to the main divisions and aims. He also reminded the Committee that trade union NEHAWU wants to communicate with the Committee regarding human resources matters. The Committee had previously agreed that it would not engage with NEHAWU on labour matters.
Ms Orlandi spoke to the point that perhaps the financial statements were not aligned to the strategic plans. She explained that the strategic plan should also be developed in terms of the budget programmes and sub-programmes, in order to be able to reconcile the expenditure with performance outputs. The Parliament had allocated the budget according to divisions, but this had not been appropriated in a specific piece of legislation.
Mr L Gaehler (UDM) remarked that the Parliament is not setting a good example by not paying its suppliers within the 30-day period. He further pointed out that it is important to have more support staff for Members of Parliament. He said this could be done by recruiting interns who could help Members in their work.
Mr Dlomo pointed out that an issue had been raised around promotion, as reported in the Annual Report, but that there have been no promotions seen in Parliament. The definition of “promotion” should be redefined so that it was clear what that meant. In Parliament, staff did move from one section to another but they did so only through applying for those positions and going through the normal interview processes.
Ms Orlandi added that the Annual Report of Parliament is full of errors. For instance, it indicated that 95% of Level D employees got performance bonuses, but that is not true. It further indicated that Level E and F employees did not get salary increases whereas they did in fact received them.
Mr J Steenhuisen (DA) asked the Committee to engage with the Secretary to Parliament on the cost implications of moving the Enterprise Resource Programme (ERP) to a different system. That had been something that the Secretary to Parliament had indicated in the previous meeting.
The meeting was adjourned.
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