Annual Performance Report 2018/9; Secretary to Parliament disciplinary matter

Joint Standing Committee on Financial Management of Parliament

10 May 2018
Chairperson: Mr V Smith (ANC); Co-Chairperson: Mr D Monakedi (ANC)
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Meeting Summary

Annual Performance Report 2018/9 presentation awaited

The funding for political parties is the only thing that has not been affected by budgetary cuts while the core business of Parliament has been allocated less.

The Joint Standing Committee on the Financial Management of Parliament was left wondering why the budget for political parties could not be reduced in proportion to everything else. This transpired during the discussion on Parliament’s 2018/19 Budget and Annual Performance Plan (APP).

Indications are that there would be an underspending of R108.7 million of 2017/18 which would be surrendered to National Revenue Fund (NFR) in terms of Financial Management Parliament and Provincial Legislatures Act (FMPPLA).

The Acting Secretary to Parliament informed the Committee of the budget cuts in its 2018/19 budget. These are in addition to reductions of R342.750m already implemented from the 2016/2017 MTEF, with R228.430m being reductions on compensation of employees.

One of the key changes made to the APP was the consolidation of the 12 timeliness indicators into a singular Core Service Business Charter indicator. These have been incorporated into the operational plans. The Oversight and Accountability Model, Public Participation Model, Legislative Model and Co-operative Government Oversight Mechanism were removed from the APP. Whilst these have been removed as targets from the APP, the review of the Oversight and Accountability Model, development of a Legislative Model and a Co-operative Government Oversight Mechanism, and the further review continues of the Public Participation Model (in view of the High Level Panel on Assessment of Key Legislation Report recommendations). The Accountability and Public Involvement indexes are appropriate outcome indicators required to measure the work of Parliament and are currently in development.

The Acting Secretary provided an update on the disciplinary matter of the suspended Secretary to Parliament. The executive authority of the institution has appointed the chairperson and initiator of the disciplinary committee. When the process started, there was an interdict from the lawyers of the suspended Secretary. The process is set to begin during May 2018 with a view to proceed in June 2018 on a date to be agreed to by the parties concerned. The audit committee report has not been released to the public by Parliament because it contains names of certain officials and people. The audit committee stated there are actions that need to take place internally. Parallel to that, and independent chairperson would be appointed to deal with staff members below the level of Secretary to Parliament. This has been communicated to the executive authority. The disciplinary committee chairperson and evidence leader have been appointed.

Members asked at what point is the committed donor funding from the EU going to be available; if the Acting Secretary is satisfied with the programmes; if Parliament is operating in terms of the Act because there were doubts about how it operates around 2016; how Parliament will ensure all indicators are achieved; why political parties were getting a full allocation while core business of Parliament has budget cuts; if Parliament will revert to its initial Compensation of Employees process because the new model is going to centralize that under HR.

Meeting report

Ms Penelope Tyawa, Acting Secretary to Parliament, explained the budget cuts applied by National Treasury to Parliament’s 2018/2019 budget (see presentation for details).

One of the key changes made to the APP was the consolidation of the 12 timeliness indicators into a singular Core Service Business Charter indicator. These have been incorporated into the operational plans. The Oversight and Accountability Model, Public Participation Model, Legislative Model and Co-operative Government Oversight Mechanism were removed from the APP. Whilst these have been removed as targets from the APP, the review of the Oversight and Accountability Model, development of a Legislative Model and a Co-operative Government Oversight Mechanism, and the further review continues of the Public Participation Model (in view of the High Level Panel on Assessment of Key Legislation Report. recommendations). The Accountability and Public Involvement indexes are appropriate outcome indicators required to measure the work of Parliament and are currently in development.

Indications are that there would be an underspending of R108.7 million of 2017/18 which would be surrendered to National Revenue Fund (NFR) in terms of Financial Management Parliament and Provincial Legislatures Act (FMPPLA).

Discussion
Mr F Essack (DA) asked at what point is the committed EU donor funding going to be available or not available. He asked if the Acting Secretary to Parliament is satisfied with the programmes of Parliament and if the Parliament is operating in terms of the Act because he started to have doubts about how it operates around 2016. He also wondered how aggressive oversight is going to be addressed because the Acting Secretary stated there is going to be a reduction of impact on the work of Parliament in terms of oversight.

Ms Tyawa replied the EU donor funding is in its first year of the four-year agreement. They have started to look at the legislative sector because these are transversal projects to build capacity within the sector. They are working through the Speakers’ Forum. The Speakers’ Forum, with 10 Speakers of legislatures and their deputies, has put together a team of Secretaries to look at how the sector should be funded and to absorb projects rolled out through the funding. They have informed Treasury that at some point the donor funds would come to an end and they would need to fund these projects. The Speakers of the legislatures are talking of putting together a budget process for the sector. It could address a lot of things.

Ms Tyawa replied there is a level of satisfaction because Parliament is complying with the Act. Annual Performance Plans are dissected on a monthly basis and financial reports are being submitted as per National Treasury requirements. They are complying with the Act in developing strategic plans on time for submitting to the executive authority, and aligning the budget. They need to sort out only one factor in the Act. She explained when the Parliament Oversight Authority (POA) existed, there was a multi-party budget forum which discussed the needs of Parliament with respect to finances. This multi-party budget forum would then present to the POA. But with changes in the governance model in the FMPPLA there is no space for a sub-committee to deal with Parliament finances for presenting to the Joint Standing Committee on Financial Management of Parliament. There is a gap there and the legal team is addressing it.

Mr M Waters (DA) remarked that at a meeting in May 2017 it was indicated Parliament must not subject itself to the Money Bills and has to determine its own budgeting process. He asked why the budgeting process was not submitted to the Committee. It is going to be difficult to hold Parliament to account to the Act if the budgeting process is not known. How is Parliament going to ensure indicators are met in the next five years? The Office of the Institutions Supporting Democracy has an allocation of R500 000 but has no performance indicators. Why were political parties getting a full allocation while the core business of Parliament is getting less due to budget cuts? Why could the budget for political parties not be reduced in proportion to everything else? It is a huge problem that there has been no funding for the Parliamentary Budget Office. There is a direct conflict of interest in the audit committee because there are people there who the executive has to have accountability over but the same people are briefing the executive. The matter should be resolved sooner rather than later.

Ms Tyawa reported that the APP document of last year outlines the targets for each division. It was presented to the Committee and circulated. The 2018/19 APP document is aligned to the allocated budget. In this budget they targeted each division and aligned targets. Last year they accounted to the Committee on targets met and not met. With respect to core business, the targets have been pulled together tin order to do service charters. They are then articulated as turnaround time on the delivery of needs to Members. The biggest challenge is that sometimes they do an analysis of a reduced budget. For example, how much does a committee costs in terms of staff. When a committee goes out for an oversight visit, it uses staff to do reconnaissance or inspection, something they never used to do before. So, if those costs are not addressed, they would compromise the oversight.

Ms Tyawa would like to see the Committee standing up and being vocal if it feels the Parliament budget will not be enough to carry out its constitutional mandate. The Committee has to assist in the Parliament Budget Debate and ask for more budget for Parliament. She has seen politicians fighting for the increase of budget for certain departments, but that has not happened for Parliament. The Parliamentary Budget Office (PBO) is not funded. From the baseline, the key driving budget is HR, Compensation of Employees (CoE) being the largest, and Goods and Services being the smallest, they have flagged the PBO and have been saying many times that if the PBO is not funded properly, which would compromise the work of Parliament. They had discussions with the technocrats to increase its budget to be higher than that of Treasury of Parliament. They continue to sustain the PBO through the budget they have got. The function of Treasury advice is currently done through the Office of the CFO.  The CFO Office needs a verifier to validate the financial reports submitted to the executive authority. The Office of the Institutions Supporting Democracy is restructuring itself and its work correlates with the work of the committees and looks at Chapter 9 and 10 institutions. That is why it has been given little allocation on Goods and Services.

Mr Manenzhe Manenzhe, CFO: Parliament, informed the Committee that the budget was reduced over the last three years (2015/16/17). This year, it went down by R180m. Treasury demonstrated where the cuts applied. There were cuts on CoE and Goods and Services, but there was no cut for Transfers to political party funding and that is why there have been no changes. The budget was guided by spending of previous years. No decision was taken to either increase or decrease the budget for political parties.

The Chairperson commented that it is clear it is National Treasury that has decided for Parliament on party political funding. He reasoned that Parliament presented to Treasury a reprioritised budget, except the line item on funding for political parties. Then it is Treasury which decided how much to give to Parliament.

Mr Waters said he could not understand why Treasury would not reduce funding for political parties while the costs for staff were reduced.

The Co-Chairperson commended the management for the steps it has taken to address these challenges. Other flagged issues would be resolved towards the end of May 2018. He asked if the 2018/19 Draft APP was sent straight to Treasury before tabled to Parliament. He asked if Parliament in future is going to revert to its initial CoE process because it is in the process of coming up with a new model after it held discussions with the Committee. The new arrangement is that the CoE is going to be centralised under HR.

Ms Tyawa indicated the final 2018/19 APP would be submitted during May 2018 to the Committee. She noted that if the Committee feels there should be revisions in the new CoE arrangement, the management would consider new suggestions.

Ms T Motara (ANC) remarked that when the Committee started its work it had challenges, especially on the outcomes for each KPI. It has been difficult to track progress on these per quarter and Parliament indicated it could only present these as annual targets at the end of the year.  The Committee disagreed with that because it felt it should be done quarterly. That is what the Committee has been pushing for.

Ms Motara said she does not think the centralisation of the CoE under HR should be done. What the Committee asked for was to indicate what the CoE employee head count cost is per unit. It could only be centralised if you want to increase the capacity of Parliament for service delivery. She pointed out there are units which do not need many staff members and higher budget allocations; whereas there are critical units that really need more people. There is an imbalance between strategic leadership and core business.

The Chairperson stated that management should put money where it belongs, even if it means there are more people in core business than the Speaker’s Office, for example. The funding model of Parliament does not suit it because the institution is not a department.

Ms Tyawa stated Parliament is going to come up with a format to report to the Committee on items that needed to be reported on quarterly. Even the annual targets’ progress would be broken down quarterly. There have been discussions on the Parliament funding model with the new Finance Minister. A document has been submitted to Treasury. The Speaker and NCOP Chairperson are going to have a discussion with the head of state on how the sector should be funded.

Ms E Coleman asked when is the budget vote of Parliament and the Chairperson replied on 22 May 2018.

The meeting was adjourned.

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