Pensions Pay-Out Delays: briefing

Social Development

17 June 2003
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Meeting report

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTOFORLIO COMMITTEE

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
18 June 2003
PENSIONS PAY-OUT DELAYS: BRIEFING BY CASH PAYMASTER SERVICES AND DEPARTMENT

Chairperson:
Mr. E Saloojee (ANC)

Documents handed out
Joint Report of Home Affairs and Social Development Portfolio Committees on Eastern Cape study tour 5 - 9 May 2003

Relevant newsarticle:
Mail and Guardian news article 15 April 2003: The high cost of grants (see Appendix)

SUMMARY
Cash Paymaster Services, a private company contracted to issue social security grants to beneficiaries, traded accusations with the Department on who is responsible for the mess that is service delivery in pay-out points in the Eastern Cape. The Department blamed the CPS for the recent death of a beneficiary at Mqanduli who was reported in the media to have died while awaiting payment for a disability grant. The CPS on its part denied any wrongdoing noting that the expanse of the province was such that it has now been forced to deploy 40% additional resources compared to other provinces. The Committee called on the Department to move with speed and enforce service level agreements so that the CPS can be held to account whenever there is a decline in service delivery as is the case at present.

MINUTES
The Chair informed members that following media reports that a beneficiary for the disability grant had died in the Eastern Cape while awaiting payment, the Cash Paymaster Services and the Department had been summoned to enlighten the Committee on the incident. He then asked the Department to address the meeting followed by the CPS.

Department briefing
Mr Bandile Maqetuka, Co- Director: Social Security Eastern Cape, gave a broad background to the performance of the CPS in the Eastern Cape and noted that the pay-out services were contracted to CPS due mainly to the lack of capacity within the Department. He pointed out that to the sheer surprise and dismay of the Department the quality of services delivered by the CPS has so far been unsatisfactory. He lamented that as matters stand now it seems the Department has actually sold out the beneficiaries to CPS in that the service provider has abused the dignity and respect of the people it is mandated to serve. He reported that the only sole preoccupation of the CPS is the maximisation of profits at the expense of good service delivery.

Mr Maqetuka complained that the CPS does not honour the contractual time table within which payments are to be made to the beneficiaries - a situation that causes people to unnecessarily endure long painful hours of waiting. He added that due to late payments some beneficiaries have been robbed of their payments while others have even been raped. He blamed the CPS provincial management for lack of respect for the Department and the people it serves. He reported that the Department has held several meetings with the CPS but there has not been any improvement in service delivery. He added that following the unfortunate incident of the death of a beneficiary the Department held several meetings with the CPS. CPS has given an unequivocal undertaking to improve on service delivery within seven days. The Department will take appropriate punitive measures to enforce contractual obligations in the event that CPS fails to live up to this promise.

Cash Paymaster Services
Mr Mazwi Yako, CEO, denied that the CPS is insensitive to the plight of the beneficiaries and dismissed the allegations that its performance was below par. He pointed out that the CPS operates in other provinces where their performance has been commended. His company has on several occasions engaged the Department to resolve some of the problems that keep cropping up with regard to payments. He reported that as a result of these meetings the CPS took a decision to deploy an extra 40% resources in the province. He continued that a project of such magnitude called for partnership between all stakeholders for it to succeed. He singled out the problem of people moving from station to station for pay-out as one of the biggest challenges his organisation is faced with.

The Chair at this point interjected to remind the CPS that the subject is the problem of poor service delivery, which might have directly or indirectly contributed to the death of a beneficiary. He asked the CPS to confine its presentation to this particular issue.

Mr. Yako noted that in the light of the publicity the reported incident has generated, the CPS has increased its resources in the province by 40%. In addition to that, the CPS has made a commitment to the Department to supply a detailed plan on how much more CPS equipment and employees would be moved to the province. He added that the CPS has offered to contribute to the deceased's beneficiary's funeral costs noting that she was receiving her disability grant due to her state of health. In terms of the schedule the CPS was supposed to have started payments at 12 noon but they were late and made payments at 7.30pm. The deceased passed on at 5pm. He speculated that the reason for her death might have been lack of blood circulation due to the chilling winter conditions at that time. He stressed that the CPS is committed to deliver the best possible service in all the provinces where it operates.

Discussion
Mr. Da Camara (DA) said that the Government must take full responsibility for the death of the pensioner and not pass the buck to the service provider. He argued that the Department has the sole responsibility to enforce service level contracts and hence it should not blame anyone when things go wrong.

The Chair concurred that the Department should take the full responsibility - and it has in this regard taken measures to enforce the contractual obligation by CPS. And has called on CPS to explain their actions.

Mr Van Jaarsveld (NNP) disagreed and pointed out that putting blame on the government of the Eastern Cape for this unfortunate incident is a vain move to score cheap political points.

Mr Maqetuka admitted that the government takes full responsibility and that is why it took the trouble to engage the services of experts to run this important service without compromising the dignity of the people and breaching service level agreements. The deceased had been standing in the queue for more than six hours and that had the CPS arrived within the scheduled time it is unlikely that such an unfortunate incident would have happened. He therefore blamed the death on CPS's incompetence.

Ms Rajbali (FF) took issue with the inaction displayed by the CPS following the death of the beneficiary. CPS should have taken steps to determine the cause of death since it is likely that it may have had a direct link to the long waiting period for payments. She castigated the CPS for arriving at a time when people should have already retired to their homes for the day.

The Chair inquired whether there were any shelters for people so as not to be exposed to the biting cold weather conditions.

Mr Maqetuka from the Department replied that there were no shelters in the former Transkei and that people had to endure the cold in the open while they await for payment. He explained that the provision of shelter is a joint responsibility of the CPS and the Department but that the Department has called upon the CPS to point out suitable areas for the construction of a shelter to no avail. He noted that the CPS is reluctant to set up shelters because their pay-out equipment is attached to their vehicles yet other companies make payments in shelters.

Ms Tsheole (ANC) suggested that people should be paid at the villages and not in the open where they are exposed to the biting cold. She lambasted the CPS for its apparent lack of remorse and sympathy for what had befallen the poor beneficiary who died while waiting to be paid.

Mr. Yako said that the CPS greatly regrets the death of the beneficiary and would not have wished for things to turn out that way. He explained that although a fund for setting up shelters is run jointly between the CPS and the Department, these resources were not enough to construct the required number of shelters. Negotiations with traditional leaders on the provision of suitable areas for shelters have not made much headway so far.

The Chair observed that even in Mpumalanga there were no shelters and an accusing finger has been pointed at the CPS for lack of positive action.

Mr. Yako sought to set the record clear that the CPS decamped from Mpumalanga more than three years ago and that it has no operations there.

Mr. Van Jaarsveld (NNP) asked the CPS to explain its claim of having deployed an additional 40% resources in the Eastern Cape noting that it is not clear whether the company was operating below capacity before.

Mr. Yako clarified that the 40% addition was in relation to resources that are deployed in other provinces noting that 40 extra workstations have been created in the province.

Mr. Masutha complained that the presentation was shallow in that it did not furnish enough information for the Committee to be able to interact meaningfully on the critical question of service delivery. He suggested that copies of the service level agreements be made available to members so that they are in a position to question the quality of service that is currently rendered. He emphasised that members have a constitutional right to any information or document that would facilitate their oversight duty. He alluded to remarks by the CPS that they have taken the decision to move their provincial manager from the Eastern Cape to some other place and questioned the wisdom of this action. He contended that dereliction of duty must be met with appropriate legal sanctions and not merely to shuffle persons around. He asked the Department to be vigilant and enforce the relevant provision of the service level agreement whenever there is a breach of contract on the part of the service provider.

Ms Tshivashe (ANC) said that the CPS explanation was unconvincing noting that the level of service that is being offered exposes people to unnecessary suffering. She pointed out that when the Department was running these pay-out points there was a media frenzy on their perceived deficiency in service delivery. She noted that the death of the beneficiary though unfortunate was nonetheless a blessing in disguise since it has now brought to the limelight the pathetic conditions of service delivery in this area.

Mr. Ngema (IFP) concurred with Ms Tshivhase that indeed this unfortunate incident was a blessing in disguise noting that now the Committee can see that the Department and CPS are not talking the same language at all. He urged the Committee to impress upon the Department the fact that the CPS was its baby and that it must clear its mess and account for its actions or omissions to the Committee.

Ms Kasienyane (ANC) criticised the apparent acrimonious working relationship between the Department and the CPS noting that this hostility is not good for service delivery in the province. She suggested that a health official should be on standby at the pay-out points to constantly monitor the health of the beneficiaries.

Prof. Mbadi (UDM) expressed concern that the CPS has been a success story elsewhere yet it has failed to live up to its reputation in the Eastern Cape. He wondered why the Department is ambivalent on what action to take against the CPS even though their dismal performance is beyond question. He questioned the feasibility of the suggestion to centralise pay-out points noting that the sheer expanse of the Eastern Cape and the sparse population distribution militates against such an idea.

Ms Tsheole asked the Department to constantly run an awareness program to inform people that they need not go to the pay-out points when they are ill.

Mr Mabeta (UDM) wanted to know how the Department deals with the finger print problem in winter when such prints are difficult to obtain.

Mr Maqetuka reported that the CPS says that it utilises its own official to override the beneficiary's fingerprint requirement in such an event - which method was an open avenue for corrupt practices. The CPS is reluctant to invest in new fingerprint technology that would sort out this problem.

Ms Bowman wanted to know whether the Department has put in place a monitoring mechanism to check on what is happening at the pay-points.

Mr Maqetuka replied in the affirmative noting that the Department has so far invested a sum of 1.8 million in monitoring pay-points. He noted that before the CPS came on the scene people never used to queue for such long periods but that the situation has actually moved from bad to worse.

The Chair requested the CPS to supply the Committee with a written submission for its further deliberation and record. He announced that members would meet to discuss the deliberations and make appropriate recommendations.

Committee Report on Study tour of the Eastern Cape
The draft joint report of the Portfolio Committee of Home Affairs and Social Development on their joint provincial study tour of the Eastern Cape between 5th May to 9th May 2003 was adapted with amendments.

Meeting adjourned.

Appendix:
Mail and Guardian news article of 15 April 2003

The high cost of grants

Date: 15 Apr 2003

It costs between R16,73 and R31,50 to administer each social grant, whether it is a R700 monthly pension or a R160 child support grant, says the Intergovernmental Fiscal Review.

The Eastern Cape spends the most, at R31,50, and the Western Cape the least, at R16,73, on each grant paid out by third-party private contractors. Administration costs in some other provinces are R30,14 in KwaZulu-Natal, R23,22 in Mpumalanga and R17,52 in Limpopo.

Costs drop if grants are paid through the Post Office, to R9 in the Western Cape, R14,27 in the Eastern Cape and about R12 in other provinces. Only in KwaZulu-Natal do costs remain the same. Post Office payments are not available in the Northern Cape.

Of the 4,8-million grant payments made in December, 74% were made through private contractors, 7,3% though the Post Office and 11,5% through banks, the review says.

Among initiatives to reduce the cost of grant administration are discussions with banks about their taking on a larger proportion of grant payments.

Meanwhile, the number of grant recipients has increased to 5,6-million in March from 2,5-million in April 1997. The number of recipients is expected to increase further with the staggered extension of the child support grant to children under 14 by 2006.

Provinces are responsible for administering the social grants, although the money is transferred into the provincial fiscus from the national government.

Social grants account for more than 87% of the total social development budget of R32,1-billion for all nine provinces in 2002/3.

In poorer provinces social grants take up more: 90,8% in the Eastern Cape, 91,8% in Limpopo and 88,4% in KwaZulu-Natal.

The fiscal review identifies the delivery of social grants as a key area of improvement. "Administrative and information systems must be strengthened," it says, adding that current practices must be improved in the medium term. The establishment of a single national entity to administer grants was approved in principle by the Cabinet last year.

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