Department of Transport on its Quarter 1 & 2 performance

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Transport

29 November 2016
Chairperson: Mr L Ramatlakane (ANC) (Acting)
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Meeting Summary

The Department of Transport briefed the Committee on its 2016/17 first and second quarter expenditure.
The Department had 50 planned targets for Quarter 1, 32 targets were achieved and 18 targets were not achieved. The overall performance percentage of the Department for Quarter 1 was 64%. All the targets for public transport were achieved, while three of the five targets were achieved for rail transport. A total of six out of the nine targets were achieved for administration, while two of the six targets were achieved for Integrated Transport Planning. Areas of non-achievement in programme 1 included development of the status report on the transport sector socio-economic empowerment programmes. The Department incurred an under expenditure of R35 million in the first quarter and this was mainly due to outstanding invoices for the lease of office accommodation and “Arrive Alive” campaigns. Under expenditure of R4 million was mainly due to outstanding invoices for services rendered on the “Multi Modal Transport Planning and Coordination Act” project as well as other projects. The under expenditure of R3.2 billion under road transport was mainly due to delays in transfer payments: The Provincial Road Maintenance Grant payments were scheduled to be paid in July. Due to cash flow problems of National Treasury the payment date was moved to August. There was an over-expenditure of R136.6 million under Goods and Services and this was due to paid for Electronic National Traffic Information System services.

The Department managed to achieve 33 out of the 52 planned targets for the second quarter. A total of 19 targets were not achieved, resulting in the overall percentage performance of 63% for Quarter 2. A total of seven targets out of 10 targets under administration were achieved resulting in 70% overall achievement, while six of the planned targets for public transport were achieved. A total of seven of the eight targets under civil aviation were achieved while four of the seven targets in integrated transport planning were achieved. The areas of non-achievement in programme included failure of the relevant unit to conduct community outreach campaigns. Under expenditure of R49 million was incurred under administration. There was also an under expenditure of R8 million mainly due to non-spending in the following projects: National Transport planning databank, Harrismith Hub, Transport Sector Economic Regulator as well as green transport strategy. Funds will be reprioritised to other projects. The Department incurred an under expenditure of R6 million. It was highlighted that the Department had already spent about 46% of the total allocated budget in the second quarter. There was an under expenditure of R26 million under compensation of employees as a result of slow filling of critical vacant posts.

Members wanted to know why there was under expenditure of R26 million in the compensation of employees for the first quarter. The Committee had already mentioned that the issue of unfilled vacancies was a main concern to the Department. Was the Department doing enough in terms of popularising the maritime sector? What measures had been put in place aimed at popularising the maritime sector? It was really unnecessary for the Department to budget so much money to the maritime sector when the bulk of the allocated funds would be shifted to other programmes.  When was the Department going to advertise internally for those vacant posts as there were many people in acting positions? The Department should explain how it incurred R96 million and the corrective measures to address this problem. What was the reason for under expenditure on the Shova Kalula bicycle project? It was clear that the main issue was not with the performance of the Department but unrealistic targets that had been set.

Some Members asked about plans in place to ensure that the service providers are able to submit invoices on time. There should be penalties imposed to service providers who are submitting their invoices later than the stipulated 30 working day period. Members expressed concern about the amount of under expenditure and the perennial problem of underperformance within the Department especially when one considered that this is an important Department that fell under the economic cluster, particularly infrastructure development. What could be the possible repercussions for the under expenditure of R49 million under administration? It was concerning to see the number of targets that had not been achieved. What could be the possible reason for this problem and the strategies in place to address it? Why funds amounting to R40 million under maritime transport would be shifted to cover the shortfalls as a result of the cost of incidents that the service provider had to respond to if funds are not allocated on the adjusted budget? Why was there an under expenditure of R42 million under public transport?

The Department was requested to respond in writing to all the questions that had been asked by Members.

Meeting report

Election of the Chairperson
The Committee Secretary explained that the Chairperson of the Committee was absent and therefore the Committee would have to appoint an acting Chairperson. She explained the procedure and called for nominations.
                       
Mr L Ramatlakane (ANC) was elected as the acting Chairperson.

Briefing by the Department of Transport:
First Quarter

Mr Mathabatha Mokonyama, Acting Director-General: DoT, indicated that there were 50 planned targets for Quarter 1, 32 targets were achieved and 18 targets were not achieved. The overall performance percentage of the Department for Quarter 1 was 64%. All the targets for public transport were achieved, while three of the five targets were achieved for rail transport. A total of six out of the nine targets were achieved for administration, while two of the six targets were achieved for Integrated Transport Planning. Areas of non-achievement in programme 1 included development of the status report on the transport sector socio-economic empowerment programmes. However, the Department submitted evidence that was contrary to the TID (Transport Investment Directorate). An under expenditure of R35 million was mainly due to outstanding invoices for the lease of office accommodation and “Arrive Alive” campaigns. Under expenditure of R4 million was mainly due to outstanding invoices for services rendered on the “Multi Modal Transport Planning and Coordination Act” project as well as other projects. The Department also registered an under expenditure of R2 million in programme 2 and this was mainly due to the delays in the appointment of the service provider for the “Interim Rail Economic Regulatory Capacity” project.

Mr Mokonyama pointed out that the under expenditure of R3.2 billion under road transport was mainly due to delays in transfer payments: The Provincial Road Maintenance Grant (PRMG) payments were scheduled to be paid in July. Due to cash flow problems of National Treasury the payment date was moved to August. The revision of the payment schedule for the Rural Road Asset Management Grant (RRAMS). There was an over-expenditure of R136.6 million under Goods and Services, and this was due to paid for Electronic National Traffic Information System (eNaTIS) services. The function relating to eNaTIS could not be transferred to the Road Traffic Management Corporation (RTMC) from May 2015 due to subsequent litigation. The under expenditure of R10.4 million under civil aviation was mainly due to delays in transfer payments to the South African Maritime Safety Authority (Maritime Rescue Coordination Centre) as well as the African Civil Aviation Commission. An amount of R100 million was included in the budget for 201617 for a new Satellite Tracking System. The programme indicated that it might not be able to spend the amount by the end of the financial year (earmarked allocation).

There was an under expenditure of R29 million under maritime transport and this was mainly due to delays in a number of projects (feasibility study on tug boat services; training on UN dangerous goods, boat building repairs and skippers; salvage strategy; Maritime transport policy and legislation). There was an under expenditure on the oil pollution prevention project due to outstanding invoices. Funds of R40 million will have to be shifted to cover shortfalls as a result of the cost of incidents that the service provider had to respond if funds are not allocated on the Adjusted Budget. The under expenditure of R 250 million in public transport was mainly due to:

  • The revised payment schedule for Public Transport Network Grant (PTNG)
  • Rejected transfer payment for Public Transport Operations Grant (PTOG) for Western Cape Province
  • Slow spending in taxi recapitalisation which is demand driven
  • Delays in other projects on goods and services.

Mr Mokonyama mentioned that the Department had already spent 20% of the allocated budget in Quarter 1. The under expenditure of R20 million under compensation of employees was mainly due to the non-implementation of the salary increments for senior managers (implemented august 2016); pay progression (due to late finalisation of assessments) as well as a saving which was as a result of once off additional funding for filling of critical posts. The over expenditure of R62 million in goods and services was mainly due to the cost of the unfunded mandate of maintaining and operating the eNaTIS.

Second Quarter

Mr Mokonyama stated that the Department managed to achieve 33 out of the 52 planned targets for Quarter 2. A total of 19 targets were not achieved resulting in the overall percentage performance of 63% for Quarter 2. A total of seven targets out of 10 targets under administration were achieved resulting in 70% overall achievement, while six of the planned targets for public transport were achieved. A total of seven of the eight targets under civil aviation were achieved while four of the seven targets in integrated transport planning were achieved. The areas of non-achievement in programme included failure of the relevant unit to conduct community outreach campaigns. Under expenditure of R49 million was incurred under administration, mainly due to outstanding invoices for the lease of office accommodation as a result of dispute with the service provider; slow filling of critical vacant posts, as well as delays in the procurement processes for the events and protocol management project.

Mr Mokonyama highlighted that there was also an under expenditure of an amount of R8 million, mainly due to non-spending in the following projects: National Transport planning databank, Harrismith Hub, Transport Sector Economic Regulator, as well as green transport strategy. Funds will be reprioritised to other projects. The Department incurred an under expenditure of R6 million mainly due to non-spending in the following projects: Moloto development corridor (funds will be reprioritised to the Establishment of the Rail Economic Regulator project), Interim Rail Economic Regulatory capacity, White Paper on Rail Transport, National Rail Safety Strategy and Rail Safety Amendment Bill. Over expenditure of R109 million on goods and services was mainly due the cost of the unfunded mandate of maintaining and operating the Electronic National Traffic Information System (eNaTIS) of which by the end of September an amount of R225 million had already been paid; however other goods and services project such S’hamba Sonke and road policy projects are underspending due to outstanding invoices. The under expenditure on transfers and subsidies was due to the following:

  • Rural Road Asset Management Grant (RRAMS) to several municipalities was withheld due to non-compliance as well as the revision of the payment schedule.
  • Withholding of the second tranche payment to the Road Traffic Management Corporation (RTMC)                     

The Department incurred an under expenditure in transfer payments, mainly due to the delays in the transfer payments to the South African Maritime Safety Authority: Marine Rescue Coordination Centre.  The under expenditure on goods and services was as a result of delays in expenditure on Committees, National Airports Development Plan and White Paper on Civil Aviation. An amount of R100 million was included in the budget for 201617 for a new Satellite Tracking System. The programme indicated that it might not be able to spend the amount by the end of the financial year (earmarked allocation). To date of reporting the programme’s actual expenditure was on par with the projected expenditure however Funds amounting to R40 million will have to be shifted to cover shortfalls as a result of the cost of incidents that the service provider had to respond to if funds are not allocated on the Adjusted Budget. The under spending of R42 million under public transport was mainly due to non-spending on a number of projects such the review of taxi recapitalisation model, implementation of IPTN in district municipalities and the Shova Kalula bicycle project.

The Department had already spent about 46% of the total allocated budget in the second quarter. There was an under expenditure of R26 million under compensation of employees and this was as a result of slow filling of critical vacant posts of which once off additional funding was provided by National Treasury. The delay on filling of posts is due to no carry through of fund in the coming financial years. The Department is still engaging National Treasury. The Department also registered an under expenditure of R96 million because of withholding of transfer payments; revision of payment schedules for conditional grants as well as delays in other transfer payments.

Discussion

Mr M Sibande (ANC) said the Committee appreciated that the Department was able to cover the issue of gender representivity within the Department and this was evident in the delegation that was present in the meeting. It would be important to know if there were any measures taken within the Department to reduce the problem of financial burden as this was clearly “killing” the operation of the Department. It was concerning to see that there were instances where the Department would set up targets that are unattainable. It was unclear as to why there was an under expenditure of R26 million in the compensation of employees. The Committee had already mentioned that the issue of unfilled vacancies was a main concern to the Department. Was the Department doing enough in terms of popularising the maritime sector? What measures were in place aimed at popularising the maritime sector? It was really unnecessary for the Department to budget so much money to the maritime sector when the bulk of the allocated funds would be shifted to other programmes.  When was the Department going to advertise internally for those vacant posts as there were many people in acting positions? Some of the targets achieved by the Department in the first and second quarter were as a result of the efforts of those acting positions

Mr Sibande requested the Department to explain as to how it was going to go about conducting stakeholder consultations and compilation of a draft report on the transport sector socio-economic empowerment programmes for Gender, Disability, Youth and Children (GDYC). It was clear that public consultation had been used to target certain groups that would make a presentation to Parliament without reaching the broader spectrum. The process of public consultation should also reach out to those based in rural areas. What criterion is going to be used for conducting stakeholder consultations? The Department should explain how it was going to be able to reconcile different projects that belonged to different government departments such as the case with scholar transport that the Department was working with the Department of Basic Education. In relation to the matter of eNaTIS, it was commended to hear that the Department had won the case as this was really affecting how the Department operated. It would be important to know if the Department was able to deal decisively with the challenges highlighted during the appearance to the Standing Committee on Public Accounts (SCOPA). 

Ms S Xego (ANC) appreciated that the issue of gender representivity was being taken seriously by the Department. It was concerning to see that the Department had incurred an under expenditure of R96 million due to withholding of transfer payments; revision of payment schedules for conditional grants as well as delays in other transfer payments. The Department should explain as to how it incurred R96 million and the corrective measures to address this problem. It was stated that the under expenditure of R26 million under compensation of employees was because of the delay on filling of post due to no carry through of funds in the coming financial years. The Department should categorise the critical posts that still needed to be filled so as to be able to carry through funds in the coming financial years.

Ms Xego asked about strategies in place to address the problem of under expenditure of R42 million under public transport. What could be the reason for under expenditure on the Shova Kalula bicycle project? It was clear that the main issue was not with the performance of the Department but unrealistic targets that had been set. What plans were in place to ensure that the service providers were able to submit the invoices on time? There should be penalties imposed to service providers who submitted their invoices later than the stipulated 30 working days period. It was confusing as to how there was an under expenditure of R6 million for the Moloto Rail Corridor despite the fact that the Department had said there was no budget for this particular project. It was clear that a lot of things had been achieved by the Department although this had not been highlighted in the presentation. The Department should provide reasons for not achieving certain targets as this was not stipulated in the presentation.

Mr M Maswanganyi (ANC) expressed concern about the amount of under expenditure and the perennial problem of underperformance within the Department, especially when one considered that this is an important Department that falls under the economic cluster, particularly infrastructure development. Members were not here to merely ensure that the Department complied in terms of presenting quarterly reports but here as elected representatives. The Committee was also not happy about the under expenditure of R26 million under the compensation of employees. It was concerning to see that the Department had an under expenditure of R3.2 billion under road transport in the first quarter due to delays in transfer payments. The country was engulfed by challenges of unemployment, poverty and inequality and therefore it was completely unacceptable to have such an enormous under expenditure. The Department should expedite the filling in of critical vacant posts as this was another issue that was negatively impacting on the operation of the Department.

Mr T Mulaudzi (EFF) asked about the stakeholders that would be consulted in the process of submission of Road Accident Benefit Scheme (RABS) to Cabinet and the specific deadline for the consultation as this was not stipulated in the presentation. In relation to road safety strategies and Arrive Alive, it would be important for the Department to move towards completely outlawing the use of alcohol on our roads rather than putting a limit of the acceptable level of drinking. What was the outcome of the consultations with the Forum of SA Directors General (FOSAD) and other cluster forums on the Rural Transport Strategy to be submitted to the Cabinet by March 2017? What could be the possible repercussions for the under expenditure of R49 million under administration? It was concerning to see that a number of targets that had not been achieved. What could be the possible reason for this problem and the strategies in place to address the problem?

Mr Mulaudzi wanted to know if there was any particular reason the Department was unable to implement the Integrated Communications and Marketing Strategy. The Department should explain as to when it was planning to submit the Road Safety Strategy for South Africa to Cabinet. It was unclear as to when the Department aimed to engage with the Minister on the infrastructure support for Operation Phakisa Ocean Economy.  Why was the Department withholding the second tranche payment to the Road Traffic Management Corporation (RTMC)?  The Department should explain why there had been under expenditure on goods and services, particularly on the White Paper on Civil Aviation. Why funds amounting to R40 million under maritime transport would be shifted to cover the shortfalls as a result of the cost of incidents that the service provider had to respond to if funds are not allocated on the adjusted budget? Why there was an under expenditure of R42 million under public transport?

Mr C Hunsinger (DA) also expressed concern about the amount of over expenditure within the Department and asked if measures were in place to deal with this problem. The Department had promised to have a workshop on RABS Bill however this did not happen. The issue of vacancy in critical posts should be addressed with urgency as it clearly impacted on the operation of the Department.

Mr Mokonyama replied that the Committee would be provided with written response to all the questions that had been posed by Members. What had been presented to the Committee from first to the second quarter is a cumulative process of how the Department arrived at what had been presented. The issue of capacity within the Department is indeed a problem and this was particularly the case in the maritime sector. The Department might have money this year but this could not be sustainable in the coming financial years. The Department was requested to reduce the budget on compensation of employees for the next three years. It must also be remembered that more money was taken from the Department after there was a demand from the Treasury to fund tertiary institutions under #FeesMustFall. The Department could be able to fill in fifteen critical vacancies this year but it would be impossible to fund those posts in the outer years. The Department would like to get assurance from National Treasury on whether there were enough funds to start filling in those vacant positions. National Treasury was blamed for the inability of the Department to fill in those critical vacant posts. There are fourteen Chief Directorate positions that the Department still needed to fill in. The Department had already advertised the position of the Director-General and another DDG. The Department was obviously not happy with the current situation within the Department            

The Acting Chairperson also made it clear that the Department should ensure that the filling in of the critical vacant posts remained a priority. The Department would be afforded an opportunity to respond in writing to all the questions that had been asked by Members.

Adoption of minutes

Minutes of Committee meeting dated 15 November 2016 were adopted without amendments.

The meeting was adjourned.

 

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