Draft Social Security Agency Bill: briefing

Social Development

20 May 2003
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Meeting report

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
21 May 2003
DRAFT SOCIAL SECURITY AGENCY BILL: BRIEFING

Chairperson:
Mr E Saloojee (ANC)

Documents handed out:
Social Security Agency Bill: Draft Report for Discussion Purposes
Draft Social Assistance Bill

SUMMARY
Department of Social development gave the background to the Social Assistance Agency Bill and outlined the reasons for establishing a separate agency for dealing with social assistance grants. The primary reasons were that a dedicated and focused unit would improve service delivery by being able to focus solely on grants and would be able to meet strategic objectives by being flexible. Issues discussed included the relationship between the proposed agency and the national Department of Social Development, the consultation process that had taken place around the Bill thus far, drawing from international experience and the exact functions of the proposed agency.

The House was taken through the draft copy of the Bill. The house interrogated the extent to which the Social Security Agency Bill should be regulating the relationships between national government and itself and the extent to which it needed to specify the exact functions of the proposed agency. The Portfolio Committee and the Department agreed that a workshop was necessary to go through the Bill and matters pertaining to it in the new Social Security Agency Bill.

MINUTES
Mr Salojee welcomed the delegation from the Department of Social Development and the Democratic Alliance's new representative on the Committee, Ms Gloria Borman.

Mr S Jehoma (Chief Director: Grant Systems and Administration, Department of Social Development) said that in October of 2002, Cabinet asked that the process of the Social Security Bill be fast tracked. The Department was eager to share the exchange of ideas with the Committee. Apologies were extended on the behalf of the Director-General and the legal service team, who could not attend the meeting as they were attending to the controversial issue of people wanting to access grants and the high courts decision around this issue.

Mr Jehoma gave the background to the Social Security Agency Bill. The delivery of pensions to the elderly has been beset by problems: long queues, the elderly being exposed to the elements etc. After 1994 a committee was set up to look at restructuring the fragmented system of social assistance inherited form the previous government. One of the Commissions main recommendations was that social security should be administered under a national system. Cabinet approved this sentiment in principal. The Department was mandated to investigate further and a public service committee proposed models for such a system.

In 1996 however, the Social Assistance Act assigned the responsibly of the administration of grants to provinces and the public service committee consented that a hybrid system was necessary. In 1998 the decision was taken to look at alternative service delivery models and in 1999/2000 research was undertaken on best practice models.

Mr Jehoma said that it was not possible to give all nine provinces a set of guidelines and expect them to interpret and implement them in the same way, mainly because they had such different working realities to contend with. At present the norms and standards were interpreted differently and a nationally guided process was needed.

Mr Jehoma said that given that the issuing of social assistance grants at the moment was the government's most effective poverty alleviation tool, it was felt that an institution was needed to focus only on social grants so that the Department could attend to the entire spectrum of social development issues. At present social security was taking up 90% of the entire social development budget, and as there was a constitutional obligation to deliver social security grants, the Department always had to prioritise social security, sometimes to the neglect of other issues.

The management of social security also needed to be more flexible than it presently stands. If it were to be run by a separate agency, it could make strategic decisions that best suit the delivery of grants and would not have to be concerned with other worries.

The Department has now finalised a draft and submitted this and the Social Assistance Bill to the state law advisors. A new directorate was to be established to focus only on social assistance. The Department was setting aside fifteen staff members (to be deployed the following week) to concentrate solely on looking at the implications of the reorganisation of administration of grants in setting up the agency. They will look at the constitutional, financial, personnel and service delivery implications of a new agency, which will include assessing the implications in a transitional phase.

A complete detailed investigation as just outlined should be finished by June and submitted in time for the cabinet Lekgotla. If all went well its final submission would be in time for the present parliament.

Discussion:
Ms J Chalmers (ANC) asked for clarity on whether the agency would be a dedicated unit within the Department or separate and whether it would be accountable to the Minister of Social Development.

Mr Salojee commented that in other countries where a similar model had been followed, such agencies had become very separate form welfare departments. He asked how the Department saw the agency functioning in this regard.

Ms G Borman (DA) asked how much consultation they had had with provinces thus far and what their reactions had been.

Ms N Tsheole (ANC) said that there might be tension between national and provincial government and the new agency.

Mr Jehoma said that the proposed agency was a work in progress. As the research continues, the model would be changed. What the draft proposed was generic model, for example similar to the relation between the South African Revenue Service and the Treasury. He said that the relationship between the Department and the agency could be even closer than that between the provincial and national governments. He clarified that the agency would report directly to the Minister of Social Development.

Mr Jehoma said that they would probably use the phrase 'public entity' rather than 'agency' and the agency would be a schedule three entity that reports to a Ministry.

It would be independent as far as the day to day operations went and with regards to remuneration matters, but there would be a separation between the administration of grant and the appeals related to non-payment of grants and other appeals, the agency would therefore not be responsible for handling appeals.

The agency would be run on a contractual management basis and therefore if it failed to deliver the Department could apply penalties. Finally the policy development function would be with the Minister not the agency.

Regarding the consultation undertaken in drafting the Bill, Mr Jehoma said that it had mainly been informal so far. Heads of social security and social developments had been consulted and it was discussed at a MINMEC meeting. He thinks the provinces were happy with it, at least form a financial point of view as funds for administration of grants could be channelled more directly. The Department had started to speak to provincial managers in the Northern Cape, Gauteng and Mpumalanga and they were visiting KwaZulu/Natal the following week. He said that they were still in the early stages of consultation and had begun informal consultation with advocacy groups and organised labour such as NEHAWU (National Education and Health Workers Allied Union).

Mr Salojee asked when the agency would become operational if it was accepted in its proposed form.

Mr Jehoma said that there were two scenarios. Firstly the Bill could be introduced to parliament and go straight to the National Assembly and National Council of Provinces in the present parliamentary year. He cautioned that this was unlikely given the upcoming elections at the beginning of next year. If however it did go through, an office of the board would be established at the beginning of next year and six months later there would be a gradual process of building up staff. It would be fully operational after two to four years.

More likely however was the second scenario in which there was much debate around the Bill and it was not passed in the present parliamentary year. Elections next year would delay it being passed until the end of 2004, and it would only start the process of becoming operational in 2005.

Dr E Jassat (ANC) said that there was no need to reinvent the wheel. He asked if the task team had looked at other countries practices.

Ms Chalmers said that from her experiences in the Eastern Cape, many of the problems in service delivery were at the lower staff levels where the payments actually get made. There was a huge lack of training, commitment and professionalism. There had been a lot of poor communication between national and provincial level and she asked if the introduction of another institution would make this link even more tenuous. Would some of the proposed changes include training and an attempt to make the system more professional? She had seen an improvement in delivery since Allpay had started but there was still a lot that needed to change.

Ms Borman said that she had the same concerns as Ms Chalmers. She also asked if consideration had been given to the cost of implementation of a new agency and its affects on provincial operations, in particular she asked if staff would be transferred from provincial departments.

Ms I Mars (IFP) commented that Mr Jehoma seemed hesitant when he mentioned MINMEC's acceptance of the proposed agency.

Mr Jehoma said that they had visited other countries where similar systems had been set up. They visited Australia and made contact with United Kingdom and Belgian officials. The Minister also visited other countries in Europe. He said that the first draft had elements of the United States model, which was a transitional phase model. He could make available to the Committee some of the case studies from abroad. He added however that their draft was more informed by public entity practices in South Africa.

Regarding the experiences form the Eastern Cape; Mr Jehoma said that it was too early to say how they would handle the payment of grants. The present draft says that the agency would be responsible for payment, but Allpay and other service providers may be further utilised. He added however that they would not have nine different contractual arrangements across all the provinces.

Mr Salojee asked why the state could not be the distributing agent.

Mr Jehoma said that using the state as the distributing agent was the second model, for example in Limpopo province there were two paypoints across the road form each other, both of which were not functioning properly. He felt that decisions were often made with political or private motivation such has placing a paypoint at a certain location because it was near an individual's spaza shop. A single dedicated agency would be able to handle these decisions better.

A third model would be utilising the banks. Since the Department had approached the banks, ABSA, First National Bank and Standard Bank had come up with more attractive packages. The post office was still severely under utilised but the provinces had taken the decision not to use them due to their record of poor service delivery.

Mr Salojee asked if it was therefore an open decision as to whether the state or another party would manage payment of grants.

Mr Jehoma said that they have worked on the costing of the agency and they would need to make a large initial investment in staff and infrastructure. In the third or fourth year of operation of the agency, one would begin to see dividends from pooling buying power and attempts to reduce corruption. At the moment 8-9% was spent on administration of grants but the Department hoped to decrease this to the international best practice of 3%.

Regarding Ms Mars's question on the MINMEC meeting, Mr Jehoma said that he was not officially supposed to talk about it but that there had been no objections but that they the Department had assured those at MINMEC that they would set up structures that enabled participation.

Prof L Mbadi (UDM) said that he was excited that the new agency would enable better service delivery in the deep rural areas, but he asked how exactly this would happen. He also commented that the western part of the Eastern Cape was relatively better off than the northern part, and that although Ms Chalmers felt that Allpay was doing a good job, many in the\is area preferred the old system.

Ms Chalmers interjected that she did not feel they were doing very well, just that there had been an improvement.

Prof Mbadi said that the problem of ghost pensions was partly created by the Departments of Home Affairs and Social Development not working together successfully. He said that it takes so many months to process a death certificate that corrupt officials drew the deceased persons pension in the mean time.

Prof Mbadi said that many people in the Eastern Cape preferred the bank handling grant payments. Many of the elderly paid in cash at paypoints had their money stolen before they reached home.

Mr Salojee said that the Agency Bill and related issues was too big a problem to be covered in a two-hour meeting.

Mr Jehoma said that the turnaround time for processing grants was now 54 days on average, having been reduced from 90 days. He said that there were improvements but that if they continued working within the current structures, the change would be too slow.

Mr Jehoma went through the draft discussion copy of the Social Assistance Agency as attached.
He referred to the introduction saying that 'social assistance' was a more appropriate term than 'social security' as the system was too fragmented as the Taylor Commission had pointed out and at this point the government could only offer social assistance.
-He said that the objectives of the agency would not only be to administer grant payments but could possibly oversee the payment of other social payments (for example the road accident fund- however details were not specified)
-The agency was to set the rules and regulations regarding grant payments, but the provinces would be responsible for day to day administration and the processing of applications
-The agency was responsible for ensuring fraud was kept to a minimum
-Section 4(2) gives the agency power to manage with flexibility to meet its strategic objectives
-Chapter three deals with the establishment of a board. There had been much discussion around the board. They wanted to create a board that was strategically accountable to the Minister, but left day-to-day operations to the staff. Mr Jehoma said that he would appreciate if the Committee looked closely at this section. He said they did not want the national department to run the agency
-Referring to section 29. Mr Jehoma said that the Bill could not come into effect until the Social Assistance Act which deals with assignment pf responsibility was finalised
-Mr Jehoma added that the might have to hand over responsibility to the agency province by province. The Department wished to have a service level agreement up to the hand over period. This would help deal with the possibility that provinces feel that there would be no point in investing in process they were soon to hand over to another body
-Referring to section 30, Mr Jehoma said that the Agency would make all staff members of the department an offer of employment. He added that there was a lot of experience on restructuring to draw from in the country

Ms Tsheole congratulated the Department on its efforts thus far. She suggested that lessons could be drawn from the relationships between other departments and attached bodies such as CSIR and the Department of Science and Technology.

Regarding the transfer of staff to the Agency, she suggested that staff should only be transferred on the basis of good performance so that corrupt staff were not simply transferred to the Agency.

Ms Tsheole also asked if the Department had looked at the legislative and constitutional implications of the Agency. She said that after the 1996 elections some of the provinces were under the control of opposition parties who took the national department to court.

Ms S Rajbally (Minority Front) said that when an application is made for a disability grant, the district surgeon approved or refused the application. She asked what powers the Agency had to disagree with the district surgeon's decision.

Mr Salojee said that a workshop was needed in order to go through the Bill thoroughly. He suggested that the Department might want to facilitate such a workshop and added that the Portfolio Committee should perhaps have public hearings on the Bill before conducting a workshop. Mr Salojee asked Mr Jehoma to confirm that it appeared that the Agency Bill was going ahead and asked if the draft they were looking at was the draft they could use for hearings and discussion purposes

Mr Jehoma said that he supported Mr Salojee's suggestion of a workshop.

Ms Rajbally and Ms Tsheole also supported the suggestion, but Ms Tsheole said that they could not have public hearings until the Bill had been tabled.

Mr Salojee said that they should also go through the Social Assistance bill and determine their position and approach to both Bills.

Mr M Masutha (ANC) said that although he appreciated the urgency in getting the Bill finalised, he felt that certain preliminary matters needed to be resolved in the Social Assistance Bill. He said it was difficult to look at the one Bill without the other. The Social Assistance Agency Bill was attempting to resolve issues around the transition from the present system to a new one, but that this should not be dealt with in the Agency Bill, but in the Social Assistance Bill. The former should confine itself to the structure and functions of the Agency but should not regulate relationships with the government.

Mr Masutha said that a number of issues had been raised internationally around corporate governance. Companies were regulated by the Companies Act and the question that needed to be asked was to what extent this Act should regulate the agency the Department seeks to establish. He warned that if the Committee were to have a workshop they would need thorough preparation.

The present Social Assistance Act does not specify the administrative details of how to implement payments. A new bill would need to specify exactly which functions the national government was responsible for and which the Agency was responsible for. Mr Masutha referred to a section in the draft copy of the Bill, which stated that the Minister could give certain functions to the agency, but that he did not know what these were. He added that they also needed to interrogate which matters should be dealt with in service level agreements (an agreement only applicable to those parties that enter it) or by regulations.

Mr Salojee said that such matters where precisely the kinds of issues they could deal with in the workshop.

Mr Masutha agreed but said that he wanted to give the Department an idea "upfront" of the kinds of issues they would be looking at.

Meeting was adjourned.


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