Department of Arts and Culture 2016/17 Annual Report, with Minister and Deputy
Arts and Culture
17 October 2017
Chairperson: Ms X Tom (ANC)
The Department of Arts and Culture (DAC) was commended by the Committee on receiving an unqualified opinion from the Auditor General of South Africa (AGSA), based on its audit of the Department’s 2016/17 annual performance report. At the same time, it attracted criticism for the under-expenditure of its budget, the fruitless and wasteful expenditure, failures in consequence management, and slowness to act upon Committee queries.
Mr Nathi Mthethwa, Minister of Arts and Culture, told the meeting how culture and the arts were driving factors for social cohesion and nation-building, and emphasised that the Department’s planning, budgeting, expenditure regularity and internal controls had improved. He had been advised that there had been no proper planning for the Enyokeni Cultural Precinct project, and it had raised issues of land ownership and budget considerations. Essentially, the people in Enyokeni felt like they had been “taken for a ride.” The Minister asked the Committee about their views on the best course of action for the precinct.
Some Members thought that it was important to prioritise Enyokeni. Others were concerned with the unclear budgetary and human resource allocations to the project. The Freedom Front + supported the Minister’s call to promote multi-lingualism in South Africa, but expressed concern about dwindling social cohesion and how it put Afrikaner culture at risk. The Department was urged to give more recognition to the role of music in culture and the arts. The Chairperson asked for evidence of the impact of the work that the Department does.
Presenting the annual report, the DAC reported that it had achieved 73% of its targets. However, the AGSA had drawn attention to misstated financial statements, non-compliance and inadequate prevention of irregular expenditure. Although the annual financial statements demonstrated improvement, none of the DAC’s programmes had spent their full budgets, and the total expenditure for the year was 97.4% of its final appropriation.
The Chairperson reprimanded the Department for consistently changing its deadlines and then failing to deliver. Members asked for further information about the Liberation Heritage Route and job creation, the differences between the budget allocations for Enyokeni and the National Heritage Monument, the forensic investigations at the Department, the under-reporting of achievements, the Pan South African Language Board (PanSALB) and projects in Verkeerdevlei, the late payment of service providers, bursaries and heritage preservation training.
The Chairperson commented on the annual reports that the Portfolio Committees had been reviewing, and said that the Department of Arts and Culture (DAC) had improved. The Performing Arts Centre of the Free State (PACOFS) needed the attention of the Department. She commended the Department on the “unqualified” outcome, and emphasised the desirability of a fully clean audit, but acknowledged that many of those departments with clean audits actually required a forensic investigation. She expressed dismay at under-expenditure by the Department, and offered examples of artists who would be upset to hear about this. Lastly, she highlighted the importance of consequence management.
Last week, the Committee had heard about fruitless and wasteful expenditure, and it asked the Department for a list of those expenditures and who had been involved in them. That information had been received this morning. However, the information provided was not useful. The Department did not respond effectively when issues were raised.
Ms V Mogotsi (ANC) and Mr J Mahlangu (ANC) moved to accept the agenda as it was.
Minister Arts and Culture: Introductory Comments
Mr Nathi Mthethwa, Minister: Department of Arts and Culture (DAC), said that the five key dimensions that guided the Department’s work were inclusive social and economic development, sustainable investment and growth, decent jobs and sustainable livelihoods, a capable developmental state, and expanding opportunities. Arts and culture helped a society understand where it finds itself and where it was going, and could support small business development, social cohesion and nation-building. It acted as both a reflection and a catalyst for change.
The Department collaborated with other entities both inside and outside of South Africa for heritage preservation, and this collaboration was crucial. The United Nations Educational, Scientific and Cultural Organisation (UNESCO) Hashim Mbita Research Project had recorded nine volumes about South African history and independence.
The legal opinion from the Chief State Law Advisor about the Enyokeni Cultural Precinct project was that there had been no proper planning for the precinct, and it had raised issues of land ownership and budget considerations. Essentially, the people in Enyokeni feel like they have been “taken for a ride.” The Minister asked the Committee about their views on the best course of action for the precinct.
The Department’s performance had improved in planning, budgeting, expenditure regularity and internal controls for acting procedures. The Minister also mentioned that South Africa was becoming a leader in the film industry.
Mr J Mahlangu (ANC) thought it would be appropriate to engage the Minister on his presentation before he had to leave.
Ms S Tsoleli (ANC) expressed her appreciation for the visit that the Committee had made to the Enyokeni Cultural Precinct, because it made one proud to be a South African. However, she was concerned that the people working there – about 67 young people – had not received sufficient assistance. They needed more funding because it had burned down a few years ago. The workers had re-opened it themselves and were now funded by external and international donors. She wanted to prioritise that project. She also wanted the Department to demonstrate more interest in projects within the sector that it was not funding. If a project was in the sector, the people working on it needed advice, even if they did not receive funding.
The Chairperson followed up on Ms Tsoleli’s comment, saying that she appreciates the Department’s care for the artist, Mama Esther Mahlangu, even though they were not funding her.
Dr P Mulder (FF+) said he had enjoyed the visit and hearing from the King. He would like to show the Minister the Voortrekker Monument. Within the Minister’s ten-point plan, he thought the first three points were the most important. When it came to promoting multiple languages, it seemed that the country was going in the direction of having only one language - English. He was concerned that children no longer spoke their grandparents’ language. Additionally, when it came to nation-building and social cohesion, South Africa needed to balance between tribe and nation. The “Rainbow Nation” had not worked for the last five to ten years, which had led to scapegoating and had put Afrikaner culture at risk.
Mr G Grootboom (DA) said it was unclear where the responsibility for work on the Enyokeni Project lay. It would be better to cut one’s losses and walk away. The Department needed to assign clear budgetary allocations to the project. The building belonged to the Ingonyama Trust. He was concerned with the use of national events as party political events. When government funding was used to host flagship projects, the event could not be transformed into a political rally, as this undermined social cohesion.
Mr J Mahlangu (ANC) said that PACOFS had sat before the Committee the previous week. It was in a terrible state. It had regressed to an “adverse” audit opinion. It had been very irresponsible for its Chairperson and CEO to make the statements that they had. Other entities could learn from how the Pan South African Language Board (PanSALB) was planning to use the audit findings -- it may have the best response to audit findings of every entity in the country. Enyokeni had the bad and the good. If the Department and Committee were to abandon that community, they would have to take responsibility. Another factor in the situation was the drought in that region. The people there should have access to water outside of national events. The Committee was happy with the approach that PanSALB had taken to language diversity. Since language and music were suppressed through Afrikaans during apartheid, the Department should support a depiction of language development, similar to what had been done at the Afrikaans Museum in Paarl. He said the struggle had succeeded through music, and the role of music should be honoured through memorialisation and preservation.
The Chairperson asked the Minister to take note of what the Committee asked about, and to provide evidence of the impact of the work that the Department did in those areas. She expressed the Committee’s support for the Department’s success, and said that the Committee wanted the DAC to continue to improve for the sake of the people of South Africa. Everyday irresponsibility led to failure, just as everyday responsibility led to success.
The Minister said it was important to invite the Committee to the community conversations hosted by the Department’s programmes. The socioeconomic conditions in which people found themselves revolved around social cohesion and other things discussed in the community conversations. Social cohesion was dictated by people’s lived experiences. He gave an example of a community conversation that the programme had hosted about resources in a township outside of Durban. It was a completely diverse community now, with people from all over the world. The community conversation had helped to prevent violence. Elsewhere, where there was not a community conversation, violence erupted when employers hired immigrants. The Department believed that the soft power of arts and culture could help transform conversations about those economic issues in a way that conventional security could not.
In response to Mr Mahlangu’s comments about music, the Minister highlighted the example of the award with which the Department had honoured uMama Mahlangu. Dance, theatre and other performing arts had also played important roles in the struggle. Thuso Mbedu, an actress, had been nominated for an international Emmy award --this said that South Africa had talent. This was a difficult sector, because it was not only art -- it was a business, which was a very tough terrain. The Department must level the playing field for South African artists.
The Minister heard Ms Tsoleli’s concerns about working conditions at the Enyokeni Cultural Precinct.
In response to Mr Grootboom’s concerns about national events being used for party platforms, he pointed out that ordinary people who attended national events wore party T-shirts. What could one say to people who came to events wearing party-affiliated clothing? He reminded the Committee of the President’s call for all political parties to each say something at national events. Parties ended up speaking about party politics rather than the topic of the day. How did one draw people to events without utilising their ties to a party? How did one ensure that people across racial and other divides shared spaces?
The Minister agreed with Dr Mulder’s concerns about language. PanSALB had to coordinate the proper development of indigenous languages through research and museums. For example, the Paarl Afrikaans Museum successfully achieves cultural preservation and celebration. Research museums were crucial to work on language development and preservation, and PanSALB needed to do similar work with other languages. He would also like to have a conversation with Dr Mulder about the resurgence of the pernicious ideology of racism in South Africa. Over and above condemning such acts, the government needed to act in response to instances of racism. The challenge was when a racist incident occurred, but certain parties did not respond. He would like to hear the voice of the party more.
Dr P Mulder (FF+) agreed with the Minister, and added that the condemnation of racism must occur on both sides, including when racism against white people occurred.
The Chairperson followed up on this exchange, pointing out that even the Committee needed its own community conversation. She highlighted how important conversation was for understanding. She emphasised the issue of Departments setting targets, and failing to reach them.
Department of Arts and Culture: Annual Report
Mr Vusi Mkhize, Director-General: DAC, said the Department had achieved 73% of its targets. Six targets from the administration programme, one from the institutional governance programme, three from the Arts and Culture Promotion and Development (ACPD) programme, and nine from the Heritage Programme, were not achieved. Some expenditures had been higher than they should have been, compared to the targets achieved, due to partial implementation, unforeseen programmes (such as responding to protests), and discrepancies between the budget allocation and implementation on national days.
The Department’s administration programme had spent only 97.4% of its annual budget due to under-expenditure on the compensation of employees, goods and services, the Department of Agencies and Accounts, Foreign Government Organisation and other entities. It was not meeting its targets for the following:
- The White Paper on Arts, Culture and Heritage;
- Management Performance Assessment Tool (MPAT) measures;
- The integrated enterprise-side information communication technology (ICT) architecture plan;
- Recruitment of staff members with disabilities - because the Department was unable to employ more staff due to cuts in the compensation budget;
- Payment punctuality; and
- The constitution of Councils for public entities, because only PanSALB was constituted.
The Institutional Governance Programme was meeting or exceeding most of its targets.
The ACPD Programme was not meeting 50% of its targets, which were:
- The number of artists and organisations provided with work opportunities;
- The number of infrastructure refurbishment projects supported; and
- The number of programmes linked to the Khoi San Heritage Route and the Liberation Heritage Route.
The Heritage Programme was not meeting its targets for:
- The number of schools provided with national symbols toolkits, due to distribution issues;
- The Liberation Heritage Route online map, because the service provider was not signed on time;
- The number of community libraries built, because three of the 23 libraries were built but the processes had not been completed;
- Library material provision;
- Library upgrading/maintenance, due to a change in the Eastern Cape’s procurement process;
- Infrastructure projects, and three other targets.
Mr Makoto Matlala, Chief Financial Officer (CFO): DAC, presented the audit outcomes, which had resulted in an unqualified opinion from the Auditor-General (AG). The AG drew attention to misstated financial statements, non-compliance, inadequate irregular expenditure prevention, and other items. Reported achievements about the number of artists provided with work opportunities and placed in schools, as well as information about the provision of national symbol toolkits, were not reliable.
Mr Matlala reported that the findings about the annual financial statements demonstrated improvement. Irregular expenditure and the number of irregular expenditure transactions had been reduced. Four lost assets were being investigated. Not all commitments had been disclosed in the financial statements due to the end of the financial year. The understatement of prior year accruals was due to a typographical error. The Department had developed an audit action plan which was monitored on a monthly basis. (The reasons that the Department did not receive a clean audit were listed in the presentation.
The Department’s administration programme had spent 92.5% of its final appropriation, in part so that it could pay its external audit fees and make room for the Young Patriots programme. The institutional governance programme had spent 80.2% of its final appropriation. The Arts and Culture Promotion and Development Programme had spent 97.7% of its final appropriation. The heritage programme had spent 99.5% of its final appropriation. In total, the Department had spent 97.4% of its final appropriation for 2016/2017.
The Chairperson reprimanded the Department for consistently changing its deadlines, and then failing to deliver.
Mr Makondo asked for a breakdown of the Department’s expenditure. He asked for identification of those artists who the Department had failed to pay on time. He
Mr Grootboom (asked about the discrepancy in the figures about fruitless and wasteful expenditure. Why was it that the Liberation Heritage Route was no longer in the annual performance plan (APP), yet there was still a service provider who had been appointed to work on the route’s online map application? Why had the Department achieved only 51% of its targets set for job creation?
Mr Mahlangu asked for the document regarding the achievement of a good, clean audit to be made available to the Committee. Why did the Department under-report when they achieved on projects like the artisan school? Enyokeni and the National Monument had had a forensic audit; Enyokeni had a budget allocation and the National Monument did not have one. Why was it a competition within the Department? The investigation into Enyokeni had concluded -- why had there been no action to ensure the success of that project? The Committee had not been able to find recent media clips about PanSALB, so he asked the Department to please pass them along. Events in rural areas were not often well publicised. The Committee Secretary should be informed about PanSALB calls, so that Members of Parliament could be informed and assist in informing their constituencies. Lastly, the population in Verkeerdevlei was diminishing, and the cost of delivery for projects in that area was very high. The Director-General needed to be hands on, paying more attention to entities.
Dr N Dlamini-Zuma (ANC) asked when service providers received payment. She wanted a breakdown on bursaries provided by the Department by gender and ability. It was important to provide opportunities to people with disabilities. How much heritage preservation training did the Department offer?
The Chairperson emphasised the need for accuracy in the Department’s financial statements, as the documents that it submitted were publicly available. For example, in one document the Department said that it responded to the Committee’s requests promptly; but the Committee had complained that the Department was consistently slow to respond. The Department said that it funded film production, but some of them were outsourced. What was the Department’s position in film production? Did it duplicate duties? What were the financial implications of the Department’s adjustment of targets after they had been set? What was the Department’s relationship with implementing agencies for its infrastructure projects, or had it done away with those agencies? Why were there always misstatements in the Department’s financial statements? Could the Department explain its contingent liabilities?
Mr Mkhize responded to the queries about the Heritage Programme, saying that the dashboards would be monitored for compliance. Matters regarding staff who were unable to be disciplined and access to documents were issued. The Department had just finished investigating all of the invoices that were flagged.
Mr Matlala first said that Slide 51 of the presentation gives the breakdown of under-expenditures. Second, most of the artists whose payments were not completed within 30 days were paid via transfer, so they were not included in the 30-day cycle. Out of 1 112 payments, only 65 were paid late; but he does not know how late those late payments were made. Third, the Department’s expenditure on Big Innovation Group was irregular because in May 2016 the National Treasury instructed that the valuation of an order must not receive more than 15 percent. During the transitional period in which the instruction was issued, a deviation of more than 15% was approved. Any amount above that 15% was added to the Department’s irregular expenditure. Fourth, there were 18 officials involved in consequence management in the Department. Fifth, the Department would submit the audit action plan to the Committee. Sixth, misstatement occurs when the Department disagrees with the AG. Some of the issues of irregular expenditure were disputed; when the AG proves that it was irregular, the Department agrees to adjust the figures. Misstatements could also occur because the modified cash standard system of financial reporting was updated every year; sometimes the Department does not know about the updates and fails to comply with the standards. The Department was also required to state the potential risk and to state payment for things that it had not yet paid for or may no longer plan to sign a contract for. This occurred in a statement about a building that the Department procured but then decided not to occupy; it still had to disclose how much would be owed if it did decide to occupy the building.
Mr Vusi Ndima, Deputy Director-General: Heritage Programme, DAC, explained that when problems arose on Departmental projects, the common sentiment was that resources must still be found to complete them. Therefore, the Department made provisions to address these scenarios by setting aside funds to be used after the problems were resolved, and that was what it had done for the National Heritage Monument.
Mr Mahlangu and Ms Tsoleli said that the problem was that this did not appear in their books.
Mr Ndima said that he thought that it was there, as it had been discussed in the Department.
Mr Matlala said that the data sheet reflected an allocation for the National Heritage Monument of R1.8 million, but the sheet was not present at the meeting.
Ms Tsoleli asked what the procedure was, when an amount such as this did not appear in the APP.
Mr Ndima said that it was not in the APP because there was still an investigation around the National Heritage Monument project. It had not been resolved, so they could not put it in the APP, but they had still indicated in their books that they would have to honour that commitment. For the other project, the investigation was complete, so they could put it in the APP.
Mr Mahlangu said that he was confused because Mr Ndima’s and Mr Matlala’s explanations were not the same. Which was which?
Mr Ndima explained that the Department had to make provision for the project. It knew that the problem was likely be resolved in the future, and it had to plan to pay for it if that happened.
Ms Tsoleli said that this explanation confused her even more. She would like a document of the time frames during which both projects’ issues arose, when investigations were completed and the consequence management which had occurred, because it seemed that nothing had happened as yet.
Mr Ndima said that the Deputy Minister may want to talk about the National Heritage Monument, but he could offer further clarification. A report had been issued about the monument, stating that the Department needed to get a legal opinion about several items. The legal opinion had then stated that all of the Memoranda of Agreement (MOAs) that had been signed needed to be accounted for. Law enforcement agencies had been followed up with. The Department had decided that if it could do so legally, it would try to finalise the project. There was a difference between the two projects.
The Chairperson asked when this whole process would come to an end.
Mr Ndima responded to Mr Mahlangu’s concern that the Department did not have steering committees, stating that it did in fact have steering committees. However, where a project had been suspended for an investigation, the steering committee would cease to function, as it would when the project was under way.
The Chairperson asked how, if the Department had a representative on the steering committee,
a project could get to a stage where the Department did not know what was going on.
Mr Ndima explained that heritage was supposed to be part of this project, but had not ended up being a part of it, so this project was irregular.
The Chairperson asked if there was a steering committee for the National Heritage Monument.
Mr Ndima said that there was a steering committee, but it was also working on the Heroes Acre, and had prioritised that.
Ms Maggie Sotyu, Deputy Minister: DAC, said the National Heritage Monument’s steering committee was formed by people who were involved in the project. Mr Dali Tambo, CEO of the National Heritage Project Company, had objected to the Department’s recommended names for the steering committee. The Deputy Minister had a meeting planned with him soon.
She said that she had taken note of the issues raised by the Committee. She acknowledged the perception that the Department did not want to cooperate with the Committee -- for example, the documents that the Committee needed had not been sent until the morning of this meeting. She promised to make sure to send officials from the Department’s offices to the Committee’s meetings.
The Deputy Minister said that there were many investigations in the Department. The more investigations there were, the more expensive it became. The findings in the National Heritage Monument project investigation indicated that both parties were at fault. Firstly, the Department did not monitor how the funding it gave to entities was being used. She had found that the service provider had deviated from the original agreement due to communication issues. Secondly, the Lotto money given to Mr Tambo did not come from the Department, but it had told him that he must account for the funds that he received from the Department. Mr Tambo had responded that if the Department wanted to know what was in his company’s books, it must go to his offices. The meeting with him had been very tense, as he did not want to account. She had told him that he had to meet with her, and after her meeting with him next week, she would ask him about the steering committee.
The Chairperson said that the Department must communicate with its steering committees and the agencies implementing its projects. She requested that the responses to the rest of the Committee’s questions be delivered in writing to the Committee by early the next day. The Committee did not want only to oversee the Department, but to support its work. The Members hoped that the Department would respond positively to this gesture and answer their questions.
The Chairperson adjourned the meeting.
Tom, Ms XS
Bilankulu, Ms NK
Dlamini-Zuma, Dr N
Grootboom, Mr GA
Mahlangu, Mr JL
Makondo, Mr T
Mogotsi, Ms VP
Mthethwa, Mr EN
Mulder, Dr PW
Rabotapi, Mr MW
Sotyu, Ms MM
Tsoleli, Ms SP
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