The Committee Secretary took the meeting through the draft report on the 2017/18 annual performance plan (APP) and budget of the Department of Science and Technology (DST) so that the Members could consider each observation and recommendation.
The report highlighted the challenges faced by DST due to inadequate funding and reduced financial support. It made the point that inadequate funding inevitably affected the retention or recruitment of key personnel in science, technology and innovation (STI) institutions. The 42 vacancies in the Department were major concerns, as 17 of them were considered critical. The primary work of researchers was also being compromised, as they now had to undertake administrative tasks such as sourcing, contracting and preparing tender documents for research funding.
The current forex volatility affected the activities of the Department and its entities, since science inflation was higher than the standard inflation. This affected its expenditure in the form of subscriptions to international journals, the maintenance of equipment, the acquisition of satellite imagery and importing necessary skills.
The Committee expressed concern that some of the institutions that applied for tenders were universities, and as such should benefit from any tax exemption that state-owned entities enjoyed. It was agreed that universities were still government institutions to a great extent, despite being independent institutions, and should therefore be included in the exemption. It was further proposed that the government should investigate and formulate a policy that favoured universities with the required expertise when tendering for R&D contracts that fell within their mandates.
The report was adopted with amendments.
The Committee meeting began informally with Ms Shanaaz Isaacs, Committee Secretary, requesting Mr C Mathale (ANC), to be Acting Chairperson of the Committee. It was proposed that the meeting proceed with the deliberations on the report, as the Committee was awaiting the arrival of Mr M Kekana (ANC), to brief him and formally constitute the meeting. The Acting Chairperson suggested that the meeting should go through the report page by page for the Members make comments, if any.
Department of Science and Technology: Report on 2017/18 APP and budget
Ms Isaacs notified the Committee that there had been two new corrections made to typographical errors on page 4 of the report. The corrected report followed the same structure as the previously issued copy, but had been drafted in the absence of a content advisor or a researcher. The report did not go into the details, as the details would emerge from the discussions among the Committee Members. It recognized the good work that had been done, but emphasised on the challenges faced by the Department in pursuit of most of its projects, due to financial constraints. The achievements of the Department would be contextualised in the Budget review, however, and any additional content or amendments to the report were acceptable.
The Acting Chairperson asked the Committee to go through page 12 together, which dealt with the Committee’s observations, and approve them categorically. The observations commended the Department of Science and Technology (DST) on the work they did in formulating coherent and sustainable budget plans.
Science and technology played an important role in improving the economic performance and social well-being of all South Africans. To give effect to this, the DST had aligned its activities with key policies such as the 1996 White Paper on science and technology, the National Development Plan (NDP) and the Nine-Point plan, which seek to create initiatives for radical socio-economic change. The Nine-Point plan recognised science, technology and innovation (STI) as crucial and should be placed at the centre of the work of government. The effectiveness of STI could be achieved only if it was optimally coordinated.
The Department and its entities had a mandate to deliver on the government’s national priorities, which included poverty alleviation and reducing unemployment. The Committee was therefore concerned by the reduced funding and how it affected the ability of the DST to meet its targets and deliver on its outputs. It compromised the ability of the DST to acquire or maintain the existing infrastructure and the monitoring of departmental initiatives.
Ms Isaacs said that inadequate funding inevitably affected the retention or recruitment of key personnel in the STI institutions. The 42 vacancies in the Department were major concerns, as 17 of those vacancies were considered critical. The primary work of researchers was further compromised, as they now needed to undertake administrative tasks such as sourcing, contracting and preparing tender documents for research funding.
The current low trajectory in business development due to declining business and research and development (R&D) investments made the 2019 target of having 1.5% in (R&D) expenditure as a proportion of the GDP not achievable. The Committee would like to seek a more robust investment in R&D. Industries should co-fund and invest. The Committee urged the Department to improve on the effectiveness of such investments in R&D, and this could be done through an increase in the number of tax incentives, to ensure that more enterprises participated. Any increase in investment in the STI area would make economic benefits more possible.
The current forex volatility affected the activities of the Department and entities, since science inflation was higher than standard inflation. This affected the Department’s expenditure in the form of subscriptions to international journals, the maintenance of equipment and the acquisition of satellite imagery and importing necessary skills.
Mr N Koornhof (ANC) pointed out that despite the forex volatility, the Rand had strengthened against other currencies since last year. He suggested that the report should indicate that more funds had been spent on the expenditure items, and hence the projects had been under budgeted. The forex volatility made it difficult to budget for projects.
Dr A Lotriet (DA) suggested that the report should state that the fluctuating exchange rate could have a negative effect on the funds that would be spent.
Ms Isaacs said that the Committee had observed that the formulation of certain performance targets had been a challenge for the Department due to concerns on the performance statistics. The Committee had advised the Department to create new measures of performance in order to assess the quality of its work. The Department should also review all its entities’ mandates in order to address any overlaps.
The intergovernmental department partnerships were essential in ensuring that the work done by the departments and entities was implemented. This would ensure that cross-cutting projects were better coordinated, with less duplication and effective use of resources. Enhanced cooperation at the executive and Parliamentary level remained essential in aspects where science and technology were concerned.
On the recommendations, all mechanisms should be used to increase the funding of the DST, and the Minister of Science and Technology should follow up on the funding.
The Committee was yet to receive the report on the Department’s tax incentives and the possible measures to resolve the issues around the R&D tax initiative by the end of October 2017. The Department should table the 2015-2017 tax incentive programme performance for review by the Committee as soon as possible.
The government should also formulate a policy that exempted state-owned entities with the required expertise from tendering for government research contracts in their mandate. There would be meetings and briefings to facilitate discussions on this matter. Lastly, Parliament should adopt Budget Vote 30 on Science and Technology.
Dr Lotriet said that the DA reserved its right on the vote.
The Acting Chairperson suggested that research work that could be done by government entities, should be referred to government entities.
Mr Koornhof agreed with the localisation of human resources and contracts, and expressed concerns regarding the exemption of state-owned enterprises as a policy, with the entities ending up being unable to perform.
Dr Lotriet expressed concern that some of the institutions that applied for the tendering process were universities, and as such may not benefit from the exemption. She suggested that the Committee use less firm words in the report so as not to prejudice the potential benefits of such institutions.
The Acting Chairperson: said that universities were to a great extent still government institutions, despite being independent, and should not be exempt from any benefit that may accrue to the government as well, since they were both pursuing the same objective. He proposed that institutions of higher learning should be included in the exemption.
Mr Koornhof proposed that government should investigate and formulate a policy that favoured universities with the required expertise when tendering for R&D contracts that fell within their mandate.
Mr Mathale proposed that the meeting be formalised by electing a chairperson.
Ms Isaacs asked whether the Members had a nominee for the Chairperson’s position.
Mr Koornhof nominated Mr Mathale
Ms N Ndongeni (ANC) moved the adoption of the report.
Dr Lotriet seconded the motion
The Chairperson requested that Members move for the adoption of the report, as read.
The report was adopted with amendments.
The meeting was adjourned.
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