The Department of Transport (DoT) told the Standing Committee on Appropriations that it had achieved 36 of 48 its fourth quarter targets. The achievements had included a DoT risk management strategy; the development of a National Rail Bill; construction and maintenance of provincial roads, monitored in line with the approved budget; a national civil aviation policy and a maritime transport policy submitted to Cabinet; and an integrated public transport network plan developed for district municipalities. Targets not achieved included the transport sector gender empowerment policy and the national railway safety strategy. There had been overspending on road transport, and underspending on civil aviation. The overspending of R177 million on road transport had been due to the unfunded mandate of maintaining and operating the electronic National Traffic Information System (eNaTIS). Shifts across programmes were indicated, and there was an analysis of the grant amounts transferred.
At the Passenger Rail Authority of South Africa (PRASA), there had been underspending due to contracts under review, on hold or stopped; inefficient planning and procurement processes and turnaround time; and overspending due to the refurbishment of Main Line Passenger Services (MLPS) coaches. Non-performance on the annual performance plan (APP) was due to the high number of operational and safety incidents; infrastructure failures; accidents; vandalism and arson. Measures to improve service delivery included improved train availability; a reduction of crime-related incidents involving passengers; and a reduction in passenger injuries and fatalities by reducing overcrowding. The Auditor General of South Africa (AGSA) findings on irregular expenditure were mostly related to supply chain management (SCM) issues, fruitless and wasteful expenditure, and litigation matters. There was a R1.7 billion creditor backlog.
In discussion, Members made comments and raised questions about procurement management, litigation and monitoring and evaluation; internal and external controls; air service agreements; corruption and crime in motor vehicle licensing facilities; dense traffic inflows into Cape Town and public transport; underspending on civil aviation; ownership of eNaTIS; PRASA’s performance, including underspending and lack of security, a lack of revenue collection, arson and vandalism. PRASA came under scrutiny for irregular, fruitless and wasteful and unauthorised expenditure; fund shifting; its turnaround and modernisation strategy; the integration of public transport networks; and consequence management. It was told to develop an improvement plan, which would have to be presented to the Standing Committee in the near future.
Introduction by Chairperson
The Chairperson said the meeting of the day was very important. The Department of Transport (DoT) and the Passenger Rail Agency of South Africa (PRASA) would report on their expenditure for the fourth quarter of 2016/17. The mandate of the Appropriations Committee, in terms of the Money Bills Act, was to assess if spending patterns were in line with the voted budget and strategic plan. There had to be clarity for taxpayers that money was being spent with equity, efficiency and effectiveness.
Progress on the medium-term expenditure framework (MTEF) goals had to be monitored, as there were only 18 months of the period left. There had to be fast-tracking to achieve goals set at the beginning of the MTEF. Citizens were dependent on effective transport, and transport had to improve over the MTEF. The spatial division had to be narrowed. The Committee had to see the impact of funds approved.
Mr Mathabatha Mokonyama, Acting Director General (DG), DoT, apologised on behalf of the Minister for his absence, as he was in a Cabinet meeting.
The Chairperson explained to the DoT and PRASA why they had been called to Parliament. After the passing of the Appropriations Bill, the Appropriations Standing Committee followed the money. The National Treasury (NT) submitted quarterly reports for all 40 departments. Those were scrutinised, and the Committee researchers identified and prioritised departments for attention by the Committee. The DG and the Deputy Minister accounted to the Minister, and the Minister accounted to Parliament. She gave the Deputy Minister the opportunity to make introductory remarks.
Ms Lydia Chikunga, Deputy Minister of Transport, acknowledged that the Committee mandate was derived from the Constitution. PRASA was a state-owned company (SOC) that reported to the DoT. The spending of appropriated funds was accounted to the Standing Committee. She asked Mr Mokonyama to lead the Department’s presentation.
DoT: Fourth Quarter Performance
Mr Mokonyama said that the DoT had achieved 36 of its 48 fourth quarter targets, which amounted to 75%. The performance per programme per quarter was indicated. Achievements under the different programmes included implementation of a DoT risk management strategy (Administration); development of a National Rail Bill (Rail transport); construction and maintenance of provincial roads monitored in line with the approved budget (Road transport); a National Civil Aviation policy submitted to Cabinet (Civil Aviation); a maritime transport policy submitted to Cabinet (Maritime Transport); and an integrated public transport network plan developed for district municipalities (Public transport).
Targets not achieved included the transport sector gender empowerment policy; the national railway safety strategy, and infrastructure support for the Operation Phakisa Ocean Economy. Expenditure per programme was indicated. There was overspending on road transport (101%), and underspending on civil aviation (81%). The shifting of funds across programmes was indicated. The road transport programme had overspent by R177 million as a result of the unfunded mandate of maintenance and operating costs of the Electronic National Administration Traffic Information System (eNaTIS). Expenditure per economic classification indicated underspending on compensation of employees (COE), overspending on goods and services, and overspending on transfers and subsidies. There was an analysis of grant amounts transferred.
PRASA: Fourth Quarter Performance
Mr Lindikhaya Zide, Acting CEO, said underspending was due to contracts under review, on hold and /or stopped, and inefficient planning and procurement processes and turnaround time. Overspending was due to the refurbishment of Main Line Passenger Services (MLPS) coaches. Reasons for non-performance on the annual performance plan (APP) included a high number of operational and safety incidents; infrastructure failure; accidents; vandalism; arson; community unrest, and shortage of components.
PRASA needed a turnaround plan to address its unprecedented crisis. Measures to improve service delivery included improved train availability; a reduction in crime-related incidents involving passengers, and a reduction in the number of passenger injuries and fatalities by reducing overcrowding. Auditor General of South Africa (AGSA) findings included irregular expenditure, with the majority of findings in supply chain management (SCM); fruitless and wasteful expenditure, and litigation matters. There was a R1.7 billion creditor backlog. Addressing critical business needs would require a focus on security; engineering and skills shortages; training; marketing and communication, and compliance and governance.
Mr A Shaik Emam (NFP) asked about air service agreements entered into with other airlines. He asked about the impact on local services. There could be a negative impact in some areas. The SA Police Service (SAPS) was tasked with challenges of violence and crime, but the DoT could assist by addressing corruption in motor vehicle licensing departments and motor vehicle scrapyards. There was a car hijacking market. He had sent a student for a licence on the day before, and the official had openly remarked that it could be done fairly, or a plan could be made.
There was the problem in Cape Town of traffic flowing into the city. He asked about plans to address that. There were ever more private vehicles on the roads. Only 81% was spent on civil aviation. He asked about the impact on quality service. There were value for money challenges. Performance was low for the money spent. The Department had met with the Committee the year before and recommendations had been made, none of which had been implemented. Recommendations landed in the bin. He asked about the recent changes concerning eNaTIS. Was it owned and managed by the private sector? There was space for corruption. He asked PRASA about progress with the intended factory at Dunottar that had still been non-existent the year before.
Mr McLoughlin referred to page 19 of the PRASA presentation. The graph presented indicated that the capital subsidy was shrinking way out of proportion, while the revenue subsidy was going up. It was a path of disaster. He warned that the entity was going to run out of somebody’s money. There had to be a turnaround in fare income, so that PRASA could fund itself. PRASA had been visited in 2015, and everything was said to be going well, but that had been false. More money was continuously being requested, but performance was dismal. There was much that was not happening, and no explanation why. The only achievements were related to administrative functions. The question was what was happening on the ground, and whether the core function was being addressed. Only desk top exercises were being performed. Spending on civil aviation was at 81%, yet performance was rated as 100%. The satellite was not funded yet. There had been only 50% performance in quarter 4 for Maritime and Public Transport. The DoT operated in the economy, moved people to work and moved goods around. It had an important economic function, but there was a lack of political will.
The Chairperson objected to Mr McLoughlin’s use of the term ‘political will.’
Mr McLoughlin replied that he had not used it in a party political sense. He referred to the statement about the reason for the National Railway Safety Strategy not being achieved. It was stated that there was a need for further research as a result of stakeholder inputs received. These had surely been received at some time in the past, but nothing had been done about it. He asked when the inputs had been received. Research could go on into the future again, and there would be costs. The corrective measure was said to be expedition of the research process. He asked why that had not been done already. He referred to progress with active Vehicle Testing Centres (VTCs) and asked why it was claimed that the target had been achieved, in spite of the fact that it was stated that outstanding reports for March would be available only by the end of April 2017. It was also stated elsewhere in respect of Road Transport and Public Transport, that targets had been achieved when that was in fact not the case.
Ms D Senokoanyane (ANC) noted that a target in the Administration programme had not been achieved due to delays in internal processes. She asked about reasons, and what those internal processes were. The Committee wanted to see what was performed. It had been stated that there was no qurom for the steering committee, but the meeting could have been moved to another date. The DoT had spent 100% and achieved only 67% of targets, which presented a problem. She did not follow what had been said about accruals and invoices. Late invoices incurred accruals. She realised that the Department sometimes did not pay invoices to save itself from unauthorised expenditure. Delays in targeted processes had to be explained. She referred to reasons for non-performance in the APP, as stated in the PRASA presentation. It had been stated that lower capacity buses were used on high capacity routes during the peak period. She asked if there were no specifications about the size of buses, and what interventions there were. If people used smaller buses, and normal amounts were charged, it could create problems. She asked about the amounts involved in irregular expenditure, and the fruitless and wasteful expenditure related to Swifambo locomotives.
Mr N Gcwabaza (ANC) referred to the performance per programme per quarter, on page 4 of the DoT presentation. It was not clear how performance per quarter was being reported on. The percentages cited for Administration over the four quarters were 67%, 80%, 90%, and 80%. If the budget for the financial year was being reported on, the last quarter had to give an overall current picture. If looked at per quarter, there was overspending throughout. If overall expenditure was being looked at, there had been 100% spending only on civil aviation, and the rest had been underspent. Public Transport hadspent 100% in the first quarter, and then it had declined. He asked what internal processes were referred to on pages 25, 30 and 32. The Department had to expand on how it could be corrected. He referred to the shifting of funds, saying it was not necessarily wrong, but it had to be explained whether the shifts were within the acceptable percentage limit. The impression had been created that external controls were non-existent or weak. He asked about the structure of the external audit committee. Pages 43, 44 and 45 showed evidence of too much shifting. R1.9 million had been allocated to KZN for transfer to the Provincial Road Maintenance Grant, but R2.2 million had been spent. He asked why it had been transferred to KZN. It had been said that Limpopo had spent 100%, but an unspent amount was indicated.
Mr M de Freitas (DA) referred to PRASA measures to improve service delivery through turnaround and modernization. PRASA had to be realistic and allow for a time period of 10 years for achievement, for example. He had done research and found that no new Board had been appointed. He asked why that was so. He asked how decisions were made.
Mr B Topham (DA) commented that he was concerned about the financial impact of rail fatalities, in the form of damages claims. He asked how much these amounted to, and what would be done to ensure that they would not happen again, and the financial implications of precautionary measures.
The Chairperson asked about the transport network to 13 cities, for constructing and integrating their public transport networks. The first phases of the bus rapid transit system were operating at peak capacity, and yet in some cities buses were standing idle. There was no buy-in in from major stakeholders, including taxi operators. Investments were made, and delays presented economic costs to companies. She asked that key interventions and corrective measures be outlined. She noted with concern that there had been overspending on taxi scrapping and payments to international organisations. eNaTIS had had a detrimental impact on AGSA’s findings. It had led to overspending on the road transport programme.
Deputy Minister Chikunga answered Mr McLoughlin that there was ‘political will,’ which was why the Department was there to account, as dictated by the Constitution. It was accountable to Parliament. The DoT and PRASA had prepared according to the invitation. The DoT was a policy-making department, while the SOCs were the implementing arm. To present a full picture of the implementation of policy and legislation, all the SOCs would have to be brought along. For aviation, for instance, all the regulatory agencies responsible for airspace would have to be there. The Board was in the process of being appointed -- it had to be approved by Cabinet.
She answered Mr Shaik Emam about air service agreements. There were various freedoms. Freedom one was to enter SA’s airspace without landing. Still, SA had to know about it. Freedom two was landing for emergency reasons, but not for taking on traffic. Freedom three was to offload passengers, but not to take any on. To land in SA to take passengers to another country was freedom four, as in taking passengers to Heathrow to offload them there. To fly back to SA with passengers, or to fly to Heathrow to take passengers to Germany, was freedom five. SA was accountable for events like air crashes that happened in its airspace. To grant freedom five to its own carriers would present a different issue.
The Board was in the process of being appointed. It had to be approved by Cabinet. The CEO or group CEO would be accountable in terms of the Public Finance Management Act (PFMA). The DoT would remain a shareholder in PRASA. She hoped she had covered the question about why everything revolved around policy, with a lack of reference to delivery.
The Chairperson thanked the Deputy Minister for her input.
Mr Mokonyama said that the Deputy Minister had made it clear that 98% of DoT money went to provinces, municipalities and entities. The Annual Perfromance Plan (APP) was made up of legislation and policies -- the business of the Department was to push paper. The DoT received reports and could account for transfers.
He replied about the 81% spent on aviation. The project would be taken to the entities. R100 million would be given to them. He referred to expenditure versus performance. It would not match line by line. Members had referred to page 4. Page 4 contained non-financial information, related to targets, not money. It was bound to go up and down. The DoT had caught up with the delays in stakeholder consultation. It had tried to indicate what was achieved with annual targets, and what not. It had been mentioned on page 28 that outstanding reports for March would be available only at the end of April 2017.
The presentation was talking to fourth quarter targets. What had been caught up with, what had been completed or not achieved, had been qualified during the presentation. 92% of targets had been achieved. Rail policy, rail structure and roads policy targets were not achieved. Maritime and public transport at the time had been recorded as 50%. The Department had had to report for the quarter at that time. An update could be given about where things currently stood.
eNaTIS was previously managed by a private service provider, up until a pronouncement by the Constitutional Court in November 2016, and vindicated by a High Court judgment of 9 April 2017. It was currently owned by the Road Traffic Management Corporation (RTMC) for the government. There had been overspending on eNaTIS because there had been court orders to pay the service provider. The matter had been put to rest. It was a revenue generating system, and issues of unauthorised expenditure would be a thing of the past. The DoT had contested the contract and it had been vindicated by the Supreme Court. Still, the court had ordered the DoT to pay the service provider. The RTMC would henceforth receive revenue in the form of transaction fees. The steering committee had been convened by the Minister of Economic Development. Problems had been rectified. Funds shifted to fund eNaTIS were within the allowable percentage margin. Programmes from where they had been shifted were not left vulnerable, or exposed to risks of overspending.
Mr Gcwabaza referred to the shifting of funds, as indicated on page 36. The amounts did not tally. It was stated that R27.6 million had been shifted across programmes to reduce the overspending on road transport. However, when the quoted amounts were added together, they came to R30.6 million. Under Integrated Transport, it was not explained why the Harrismith Hub project was not completed. On the same page, R1.6 million was taken from the compensation of employees. He asked the reasons for that. He asked if the rollover of R1.45 million for the Interim Rail Economic Regulatory Capacity project had been granted.
Mr Mokonyama replied that the CFO could talk to the arithmetic. As he had indicated, no project had been affected.
The CFO replied that the arithmetic did tally. In the management of the budget, when a project was delayed, it had to be seen what amount was associated with it. If there were pressing demands on other unfunded projects, management would reprioritise. He referred to page 39. Compensation of employees had come to 91%, with 9% underspending. Given the fact that all positions were not filled in January, an amount would be available if posts could be filled only in October. He referred to page 38. A total of R98.3 million had been shifted, much of it from taxi recapitalisation, because there had been fewer vehicles than anticipated. If money was not paid out, there was underspending. Budgeting was done at the beginning of the year, using a modified cash standard. The DoT budget was based on the movement of money, which was different from running a budget on an accrual basis.
Mr Mokonyama replied to Mr Shaik Emam about the vehicle testing and learner drivers’ centre, and corruption. There was a structure in the current APP to assist with combating corruption, whether perceived or real. There were reports on a weekly and monthly basis about people arrested or busted. There was a coherent strategy.
He answered about traffic flows and congestion, saying that the DoT promoted public transport. There were travel demand issues in major cities. It would not help just to build freeways. Private car usage had to be discouraged, and public transport had to be made attractive. Subsidies were needed to operate public transport. The DoT was worried about dealing with operational costs on its own. There were meetings with provinces and municipalities to assess what was happening, and what was costly. A public transport round table discussion was in order, to get more value for money, and to answer the fundamental question about how to get people into a public transport system. There was also a lack of adequate public transport in the rural areas, and that had to be addressed. He answered about internal and tender processes, saying that the Department had caught up in recent months. An eye was kept on the annual target. Section 49 of the Constitution prescribed what was to be done if there was no Board for PRASA.
Mr Zide replied for PRASA that the Dunottar factory to which Mr Shaik Emam had alluded would be completed in the third quarter of the following financial year, at which time the first train would be rolled out. He answered Mr McLoughlin that PRASA was not asking for more money for operating or capital expenditure. It was a re-allocation that was called for, as projects that were rolled out required maintenance. Opex did not deal with only operations, but also with costs related to vandalism. Unavailability and unreliability of components were impediments to revenue collection. He referred to the Autopax system. There had been a venture into a commuter bus service without the right infrastructure in place. There were unrepaired buses.
He replied about fruitless and wasteful expenditure related to Swifambo locomotives, which amounted to R497 million. It had been R218 million in 2015/16. As of 3 July, the process and award of the contract had been set aside. Swifambo had appealed against the decision.
He answered Mr De Freitas about the realism of turnaround measures. Work done took the challenges in the corporate plan for 2017/18 into account. There were realistic and practical commitments, and engagement with shareholders. Responses to National Treasury (NT) investigations into irregular expenditure had been submitted. The final report had been submitted on 31 July. PRASA was dealing with a disciplinary process. There were some criminal matters that had been submitted to the Hawks. There had been a follow-up on matters submitted to them, and statements were requested from PRASA employees. Fencing of high priority crime areas was prioritised. The availability of reliable coaches had to be ensured. 322 coaches had been lost in the preceding six months, which had had to be replaced at cost. The consequence was overcrowding and injuries. PRASA would re-train its own security personnel.
Mr Gcwabaza returned to the shifting of funds.
The Chairperson mentioned that more than 8% could not be shifted.
Mr Gcwabaza referred to page 36 of the DoT presentation. Figures under ‘Administration’ did not add up to the stated R27.6 million that had been shifted across programmes. R21.6 million had been shifted from COE and R7.5 million from goods and services. R1.5 million had been shifted to machinery and equipment. It did not add up to R27.6 million. It was claimed that an amount of R7.9 million had been shifted from the Rail Transport programme. R1.6 million had been shifted from compensation of employees (COE), R492 000 from goods and services, and R102000 from machinery and equipment. A rollover of R1.452 million had been requested for the Interim Rail Economic Regulatory Capacity project. It did not add up to R7.9 million.
He referred to wholesale underspending indicated on page 4 of the PRASA presentation. Overspending was only on the refurbishment of coaches. He questioned the ability of the management structure to plan for targets, implementation and financial management. The same slide on PRASA performance had been given to the Committee in October 2016. He asked what progress had made since then. On page 19, it was stated that R1.7 billion had not been paid to creditors. He asked what the causes were.
Mr Shaik Emam reiterated that vehicle testing stations and licensing departments, and the motor vehicle scrapyards, had a major impact on crime. People on the ground knew what was going on. It was a major problem. There was a big market for hijacked cars. The Committee had heard about measures to address the challenges, but a lot of that had been spoken about two years ago. He asked if the situation was still unchanged. He requested a detailed report about measures put in place, and timeframes. He asked about the cost implications related to the delay with the implementation of the Dunottar factory.
The vandalisation of 322 coaches was problematic. PRASA had thus far been unable to prevent arson. There had to be a programme dedicated to put an end to it. He asked what was being done with the SAPS to address the problem. PRASA had said that it intended to train its own security units, which meant that there was currently outsourcing. He asked why there was no dedicated internal team to cope with the problems.
Mr McLoughlin referred to the unfunded mandate for eNaTIS. It was unacceptable that there was no budget for maintenance of the system. Leave pay and donantions for the DoT amounted to 10 times as much as the budget. He asked where the 4 000 Afghanistan Railway Authority (AfRA) locomotives were, and what condition they were in.
Ms Senokoanyane asked about the consequences related to the PRASA audit report. She asked why targets were lowered when achievement was satisfactory. Why had targets gone down from 2015/16 to 2016/17? The targets for injuries and fatalities had been raised, which was surprising. Negatives had to be lowered, and positives increased.
The Chairperson remarked that PRASA had in the past indicated challenges related to revenue collection and cost management, funds paid to Transnet, and overall coordination between PRASA and Transnet. It had indicated that there were interventions to coordinate the funding of infrastructure, revenue and other issues between itself and Transnet. The DoT had an internal audit unit. She requested a comment about internal controls on all major projects, like roads and rail infrastructure, and the oversight of entities, and the efficiency and effectiveness of overall operations of the Department.
The DGs and the Deputy Minister had to comment on development of policy, and the other overarching role of monitoring on implementation. Monitoring and evaluation units had to follow the 98% of money that was transferred to provinces, municipalities and entities. The question was if the DoT could monitor. Money had to be followed. She asked if the Department was able to see if money made an impact, as that was what had been promised to the people of the country. She asked if it was possible for the DoT to see if it was on track with its MTSF targets. She asked about remedial steps taken.
Deputy Minister Chikunga replied that there was an oversight member who could comment on the monitoring of SOCs and provinces, about money transferred. Reports were received from SOCs about the spending of money. It was monitored. Shareholders could raise issues with the Board at annual general meetings (AGMs).
She conceded that vehicle testing stations presented a problem. It depended on security agencies. The DG could not arrest people. The police could make arrests to combat crime. The problem was that people were not always ready to give evidence in court. A number of officials had been arrested. Illegally obtained licences posed a safety risk when people who had not been tested for competence drove with bought licences. Such drivers did not know basic rules like keeping left and passing right. The RTMC had to deal with these issues. There had to be work with SAPS and intelligence agencies.
There had been questions about the implementation of PRASA’s turnaround strategies. The CEO had not spoken about implementation, as it had not been part of what he had been called on to present. However, questions would be answered about what was being done about the challenges.
Mr Mokonyama said he could reassure the Committee that virements were done in compliance with the law and within the 8% limit. It was the first thing that the AG looked at.
He replied to Mr McLoughlin about eNaTIS being unfunded for maintenance. eNaTIS was a revenue-generating system that was supposed to pay for itself. A proportion of every transaction fee charged went to the management of the system. Currently, eNaTIS fees went straight to the RTMC. All problems with the system were in the past, but there were costs related to the litigation process.
The CFO explained that there was a distinction between functional and economic classification. The functional classification of the DoT was Transport. The economic classification was related to the current expenditure on COE, goods and services and the like. It was divided into programmes. Within the programmes themselves, there were funds spent on COE, for example. He apologised for that not being cited. The amounts shifted were not large. On page 35, under Administration, there was an adjusted budget of R392 million. The final shift had taken out R27.6 million. The final budget could be seen in the next column. Shifts were done in compliance with the PFMA. He replied about leave pay, saying that when people resigned, it was a public service regulation that if someone did not take leave for a certain period, that amount had to be paid out of leave pay.
Mr Zide said that details would be submitted about the areas not covered. He referred to page 17 in relation to underspending. PRASA had consolidated the engineering function to address challenges. Reliable and available components had all been brought under one roof. The AG had pointed out SCM challenges. Work had been done to review SCM policy, and gaps had been identified. SCM policies had been streamlined into clearer processes. The information communication technology (ICT) environment had been overhauled, with tools created to respond to challenges. Money paid to Transnet was state money. There had been policy interventions. Regarding delays in payment related to the Dunnotar factory, there was a framework for penalties. There were challenges in that community. Economic issues had to be addressed.
He replied about costs related to injuries. PRASA had insurance cover. In 2016/17, there had been a R252 million increase in costs. There had been interventions with the aid of the SAPS to prevent cable theft. Transnet and Eskom had companies trained to focus on that. Issues of governance and compliance, indicated on pages 11 and 18, were being dealt with.
Ms Anna-Marie Lubbe, Senior Manager: Monitoring and Evaluation, PRASA said PRASA was not the only entity that used range targets. It operated in a volatile and complex environment. There was a framework for managing performance evaluation. Decisions about lower targets depended on the status of businesses. Sometimes services had to be interrupted for purposes of maintenance.
Mr Rendani Makhodo, Chief Audit Executive, DoT, responded about the internal control of virements. It started with management. NT regulations were followed. There was a three-year rolling plan that recorded annual assessments of the robustness of the internal control environment. Reasonable reassurance could be given about the areas checked. Control objectives were checked to see what had been achieved. In fiscal terms, there had to be reliable financial information. Control had to comply with the rules. Risk assessments were based on the accomplishment of objectives and the effectiveness of operations in progress. Not all projects were audited, only the ones picked up by researchers.
The annual internal audit assessment report was sent to the DG, external audit and the Minister. Work was completed for the year under review. Different colours were used in rating. Red meant that control objectives had not been met, and the implementation of appropriate controls was required. Yellow meant that control objectives had been partly met. Green meant that control objectives had been met. The Department had received a yellow for reliability of financial and operational reporting, and a green for compliance with regulations. Most issues related to SCM had received a yellow. For achievement of the annual assessment of objectives, the Department had been rated green. As for efficiency and effectiveness, efficiency meant doing things right, and effectiveness meant doing the right thing. The Department had been rated green for that.
Ms Maemili Ramataboe, Member of the External Audit Committee, said that there were aspects of management that worked well. The Department had a robust policy for risk management, and a good strategy for the identification and assessment of risk. The challenging aspect of risk management was in reporting, as the risk management unit had challenges with the filling of positions. Management had looked at the situation and had filled the positions which affected the coordination of risk management. She was positive that going forward, once positions were filled, there would be monitoring by external audit. The external audit committee monitored budgeting and planning, and was happy that any variations were motivated by management.
The Chairperson asked if variations were motivated by management.
Ms Ramataboe replied that there was discussion and interrogation. Engagement was robust.
The Chairperson remarked that robustness had to show zero tolerance for deviation from compliance. Explanations were not to be accepted. Creative thinking and innovation had to be within the parameters of the law. The Committee was asking why there was still fruitless and wasteful expenditure if there was monitoring. Robust internal control meant correcting a deviation as it occurred. Monitoring and evaluation had to do its work. Evaluation had to be done on a monthly basis. The CFO of the DoT had justified shifting, but the question was why there had to be so many if there was planning according to the PFMA.
Mr Mokonyama replied that most of the shifted funds had gone to eNaTIS.
The Deputy Minister added that the Department had had to go to court about eNaTIS and had to pay for that. There had been a delayed outcome of the Constitutional Court’s judgment.
The Chairperson commented that she hoped the Department had learned something from the problem. She asked the NT to comment.
Mr James Archer, Director: Public Finance, replied that NT approval was needed for virements, and shifts had to be motivated. There had been overspending on road transport because of the miscalculation related to the funding and collecting of eNaTIS. The NT worked with PRASA to use capital funds for maintenance. The NT wanted a better capital programme.
The Chairperson remarked that the Committee had been convinced why the shifts were unavoidable.
The Deputy Minister commented that the Members’ questions were taken seriously. Answers to follow-up questions would be prepared. The overall performance of the DoT was good. SA currently had a maritime transport policy plan, and there were implementable targets. There was a Green Paper on rights which the country had never had before, along with a White Paper on rights. eNaTIS was currently in the hands of the government, and managed by an SOC. There were tangible achievements – they were not just in writing.
The DoT was processing a number of Bills. The Road Accident Fund (RAF) system could not be continued with. The new Road Accident Benefit Scheme (RABS) introduced in Parliament would speak to people’s needs. South Africa was respected in the field of maritime and aviation, and rated internationally as one of the best in the world. It was one of the top four countries in Africa respected to carry air cargo. PRASA challenges would be dealt with. A Board had to be appointed. The process had been speeded up so that there could be an accounting authority. In the structure of the Board, the Group CEO would be the accounting authority. All the senior managers had been present on the day, and outstanding questions would be answered.
The Chairperson thanked the Deputy Minister and the entities. The presentations were appreciated. She thanked Members for their constructive engagement. People on the ground had to benefit from an effective transport infrastructure. There had to be support for economic growth through the connecting of groups and markets. Financial management had to be effective. Accruals were to be discouraged, because it meant that an entity had used money it did not have. The following year’s budget then had to be used. There had to be improvement around unauthorised expenditure. It was the duty of the DG to prevent it. If it was not prevented, there had to be consequence management. That meant that the head of the acting DG would be on the block. People under the DG had to comply. There were issues of procurement management and ongoing litigation, and efficiency in the sector.
The Department had explained itself, but areas of improvement had been identified by the Committee. PRASA had to go back and develop an improvement plan. It would be called again in the near future. Performance had to improve. The Committee would work together with the Department of Performance Monitoring and Evaluation (DPME). She welcomed it that eNaTIS issues had come to an end. The appointment of PRASA Board members had to be finalised, and the turnaround strategy had to be implemented. There had to be a strong monitoring unit, to monitor the entities closely. Overspending could not be tolerated. It was an offence, and Parliament would rather avoid making an example of someone by calling for his arrest. Virements and shifting had to be within the law. However, the DoT was not to spend money it did not have. The NT was saying that more had to be done with less, and the Committee would support that.
The Chairperson told Members that the adoption of minutes would have to be postponed, as time had run out.
The Chairperson adjourned the meeting.