Overview of 2017 Committee work & 2018 Committee Programme

Standing Committee on Appropriations

30 January 2018
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Committee received an overview on the work it did during 2017. This included oversight visits, a study tour, legislative business and engagements with departments and entities. The presentation also highlighted some of the issues that Members had raised in the previous year. General observations by the Committee included the need to enhance audit committees so that they add value and that there were inadequate responses to recommendations it made.

During the discussion, Members said the Department of Health needed to be more professional and vigilant and had to sort out its internal issues. They felt that the Committee needed to do a follow up on the implementation of the scholar transport programme. Given the migration of persons from rural areas to cities the need to strengthen cities was understood. However what was concerning to members was the narrative out there that there was no need to pursue economic development in rural areas. On the contrary rural areas deserved economic development. It was common cause during public hearings that issues were often raised with departments and spheres of government. Members asked how far the process was in addressing issues raised during its public hearings. Members felt that the Committee needed to do a follow up over the issue of debts owed to and by municipalities. Members noted the importance of integrated planning. In many cases that nice schools were built but provision was not made for roads to it nor was there any provision of water or electricity to the school. Given the water crises that were rearing its head in parts of SA, they urged that strategies on harvesting and the storage of water had to be put in place. Members would request to see the Water and Sanitation Master Plan. Members raised concern that year in and year out departments incurred unauthorised and wasteful expenditure. The question to be asked was whether internal audit units and audit committees were doing what they were supposed to. A further concern was the delay in the rollout of broadband which was affecting departments. The increase in SA of irregular expenditure by 55% to R45.6bn was concerning. Was no planning taking place? Members hoped that the Public Audit Bill would give the Auditor General of SA more teeth to take departments and state entities to task.

The Committee considered its First Term 2018 Draft Programme but was unable to adopt it due to a lack of quorum of members.  

Meeting report

Overview of 2017 Committee work

Mr Tshepo Maseou, Committee Content Advisor, presented the Committee with an overview of its work in 2017 and this was broken down per quarter.

Quarter 1

The Committee hosted the World Bank and it was well covered in the media. A key issue was that countries should not focus on avoiding a downgrade but rather on the quality of state spending and on the management of the economy. The Committee had also undertaken a successful study tour to Germany and Sweden. Germany and Sweden’s parliaments’ budget oversight objective was underlined by a clear commitment to fiscal discipline and debt reduction. Similarities with SA were that education and health were high priority when it came to budget allocations. Another highlight was the successful hearings about the delivery of health services in the country. Health Minister, Mr Aaron Motsoaledi, had undertaken to investigate the actions of lawyers who were suing provincial departments of health for billions of rand. This followed complaints by provincial departments to the Joint Committees on Health and Appropriations in Parliament. The Division of Revenue Act (DORA) showed that National Treasury accepted all the Committees recommendations. This indicated the relevance and significance of issues raised by the Committee and accepted by the Executive.

Quarter 2

Government was proposing a new financing facility for large infrastructure projects that required funding or other state support such as sovereign guarantees. National Treasury, the Presidential Infrastructure Coordinating Commission (PICC), the Economic Development Department (EDD) and the Department of Planning, Monitoring and Evaluation (DPME) were currently working on the project proposal to serve before cabinet. The Committee was excited about the development and expected an update in the course of 2018. Another highlight was that the Office of the Chief Procurement Officer (OCPO) was making progress on key reforms. For instance the OCPO was currently facilitating 70 transversal contracts with an estimated value of R62bn. The projects were classified into six main commodity groups: health & medical technology, vehicles equipment & services, textiles, perishables & consumables, information communication technologies, property and leasing and education. However, the problem is that there is a fragmented procurement system across government. Tender processes were lengthy and could take between six months and one year to finalise. It was important for the Committee to ensure that the work of the OCPO was seen by other committees of Parliament. Other highlights included the successful processing of the 2017 Appropriation Bill and the successful hosting of public hearings on it in Khayelitsha in Cape Town.

Quarter 3

Rollout of broadband was a key concern to the Committee. Members were concerned about the delays that had been experienced with the implementation of the SA Connect Programme and the effect of these delays on the deliverables of other sector departments such as the Department of Education and the Department of Health. The Committee held comprehensive hearings on the Fourth Quarter Expenditure for the 2016/17 financial year with amongst others the Departments of Basic Education and Cooperative Governance. The Committee stressed the need for effective grant design. Monitoring and evaluation was also important as well as ensuring proper coordination of infrastructure grants amongst the different spheres of government. There was also a need to streamline financial and non financial reporting of public entities and state owned entities to their responsible oversight departments. The tracking and reporting on funding and support provided to Small, Medium and Micro Enterprises (SMMEs) and cooperatives was also important. The Committee observed that planning was still a challenge across all departments and was something that required attention. The Committee undertook an oversight visit to KwaZulu-Natal to asses and inspect health infrastructure in the province and the roll out of bulk water infrastructure projects.   

Quarter 4

The Committee held comprehensive hearings on the 2017 Medium Term Budget Policy Statements (MTBPS) with amongst others the Financial Fiscal Commission, the Human Sciences Research Council and the Public Service Commission. The Committee also held comprehensive hearings on the 2017 Adjusted Appropriation Bill and the 2017 Division of Revenue Bill. Some key issues which the Committee sought to highlight were the prevention of the build-up of unpaid accounts which contributed to the build-up of a hidden deficit. A comprehensive arrears/accruals clearance strategy should apply to all outstanding payments incurred by all of government.  Furthermore there was a need to ensure that internal audit units and audit committees as part of the governance system within departments and state owned entities should be held accountable to execute their functions competently. The Committee felt that information in annual reports should contain performance information tracking performance for the last five years. A major innovation by the Committee was the first ever Committee Risk Statement that was published in 2017. The Committee’s Risk Statement served to identify and focus attention to programmes that displayed planning and implementation weaknesses. Another major intervention was the first ever Budget Amendment in the history of a democratic SA. Few parliaments in the world were constitutionally empowered to make changes to the budget in the appropriation process.

In as much as the Committee had put in a great deal of effort in 2017 and had much to be proud of there still remained formidable challenges in SA. Unemployment was rising and at 27.7% had reached the highest level recorded since 2003. Irregular expenditure had increased by 55% to R45.6bn. Overall a lot more needed to be done. General observations by the Committee included that audit committees needed to be enhanced so that there was value added by them. Many departments spoke about implementing cost containment measures but the value of these measures needed to be quantified. The Committee also felt that there were not adequate responses to recommendations made by the Committee. A further observation by the Committee was that experts often had much to say in the media about issues like for example the South African Airways (SAA) government bailout issue but did not come forward to make submissions to the Committee over the issue.  

Discussion

Mr A McLaughlin (DA) referred to the paragraph which spoke about the Health Minister promising to investigate the actions of lawyers who were suing provincial departments of health for billions of rand. This followed complaints by provincial departments to the joint committees on health and appropriations in Parliament. He felt that the aforementioned statement implied that the fault lied with lawyers. The facts were that the fault lied with the Department of Health. He also referred to slide 14 bullet 3 which spoke about the implementation of the scholar transport programme and felt that the Committee should do a follow up and oversight over it. The Committee needed to ensure that the scholar transport programme happened.

Mr N Gcwabaza (ANC) referred to the paragraph which spoke about improving the execution of key public investment projects and the strengthening of cities as South African powerhouses. Experts agreed that cities needed to be strengthened. This was in light of the migration of people from rural areas to cities. The Committee needed to discuss the matter a little further. He had read an article on News24 where a person had stated that there was no need to develop rural areas. The sentiment was expressed at a Presidential Infrastructure Coordinating Commission (PICC) meeting as well. He was concerned that there was a narrative out there which stated that rural areas should be neglected when it came to economic development. Rural areas deserved economic development. On the one hand the Committee wished for the Department of Trade and Industry (DTI) to establish Industrial Development Zones (IDZs) in rural areas and on the other hand there was the sentiment that rural areas should not be developed. The Committee needed to clarify the issue.

He agreed with Mr McLaughlin that the fault lied with the Department of Health. The Department of Health needed to be more professional and vigilant. The Department should sort out its internal issues. Systems had to be put in place. It was an issue which the Committee should deal with. Perhaps the Committee should afford a lawyers association an audience on the matter. On slide 6 which spoke about the OCPO, he suggested that the Committee request the Office to pay specific attention to city projects in the Eastern Cape and other provinces where things were not being done properly. On slide 7, reference was made to public hearings on the Appropriation Bill that had taken place in Khayelitsha. Many issues had emanated from the public hearings which the Committee had referred to departments and spheres of government. How far was the process on addressing the issues raised? The Committee needed to do a follow up on progress made as it had promised to report back. Reference was made to slide 8 bullet 3 and he suggested that the Committee needed to follow up on the issue of debts owed to and by municipalities. In 2017 the Department of Water and Sanitation had threatened to cut off supplies. The issue needed to be resolved. On slide 9 which spoke to the Committee’s oversight to KwaZulu-Natal the issue of integrated planning and implementation was raised. The matter was raised in projects all over SA. In many instances nice schools were built but no roads, no water or electricity was provided. Hence integrated planning and implementation was needed. Reticulation had to be looked at once bulk water was provided. Strategies for harvesting and storing of water had to be put in place. Drought had forced harsh lessons to be learnt. Years ago the Minister of Water and Sanitation had spoken about a 10-year plan on water. Where was the plan? He asked what the strategy on water harvesting and water storage was. He pointed out that in Cape Town in canals running under the city billions of cubic litres of water was running off into the sea. The water crisis in Cape Town could have been averted. He was aware that there were issues of budgets that had to be taken into consideration. On slide 11 bullet 4 which spoke to internal audit units and audit committees of departments and state owned entities in executing their functions said that they tend to come to the Committee year in and year out with the same unauthorised and wasteful expenditures. The internal audit units’ and audit committees’ reports said one thing whilst the Auditor General of South Africa’s (AGSA) reports said another. Why was it necessary for the AGSA to ask for proof of documents from departments and state own entities. Were audit committees asking the heads of departments the correct questions? Were they willing to ask questions that needed to be asked?

Ms M Manana (ANC) stated that the Committee was to have scheduled a meeting to deal with the attorney-Department of Health issue. Why had the meeting not taken place? She agreed that follow up had to be done on issues raised at the Khayelitsha public hearings. The delays in the rollout of broadband were a concern to the Committee. The Committee needed to contact the department responsible for the rollout of broadband and inform it that the delays were affecting other departments. She was concerned about irregular expenditure by departments and state owned entities increasing by 55% over the previous year to R45.6bn. There seemed to be no planning. She suggested that the Committee ask the AGSA to break the R45.6bn figure down so that the Committee could deal with the responsible departments.

Mr McLaughlin pointed out that early this year the Public Audit Bill had been tabled. The Bill would give the AGSA more teeth to take departments and state entities to task. This would essentially deal with the irregular expenditure issue.

The Chairperson in summary stated that members had raised issues which the Committee needed to follow up on. Mr Maseou was asked to look at the outstanding issues identified by members so that the Committee could come up with a plan of action. For example the Committee was still expecting a report from South African Airways (SAA). The report would allow the Committee to take the government bailout issue forward. SAA need to operate independently without bailouts from government. Another example was that the Committee needed to get responses from departments over matters that were raised during the public hearings in Khayelitsha. The Committee could write a letter to departments asking about what the progress on their responses were. She said that the Committee had asked for the Water and Sanitation Master Plan to be submitted to it. The Committee needed to do a follow up on it. These issues would guide the Committee’s Second Term Programme of action. The Committee had also asked the Department of Basic Education to submit the Infrastructure and Development Plan with a special focus on water and sanitation especially at schools to it. 

Ms Manana added that there were state owned entities like SAA and Eskom that had received government bailouts.

First Term 2018 Committee Draft Programme 23 Jan - 29 March 2018

The Chairperson stated that the management committee of the Committee had compiled the Draft Programme and had circulated it to members. She placed the Draft Programme before the Committee for consideration and asked members to make input on it.

Mr McLaughlin asked that the times of meetings scheduled be confirmed with members. He suggested that when the Committee goes to the Free State it visits military bases as well.

Members had no objection to the suggestion of visiting military bases in the Free State.

The Committee could not adopt the Draft Programme due to a lack of quorum of members.

The meeting was adjourned.

 

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