NDP & Annual Performance Plan alignment: DPME briefing

Meeting report

Ms Edeshri Moodley, Acting Deputy Director General (DDG): National Planning, Department of Performance Management and Evaluation (DPME), gave an update on the alignment of the annual performance plans (APPS) of departments with the National Development Plan (NDP) goals, the medium term strategic framework (MTSF) and the Budget. Its assessment was that most departments were in alignment. Where departments were not in alignment, they had been told to ensure that all MTSF targets were reflected in their APPs.

She addressed all the vote allocations, and said there were misalignments in:

Vote 3 – Communications,
Vote 4 – Cooperative Governance and Traditional Affairs (COGTA),
Vote 9 – Public Enterprises,
Vote 14 – Basic Education,
Vote 15 – Higher Education,
Vote 16 – Health,
Vote 17 – Social Development,
Vote 20 – Independent Police Investigative Directorate (IPID),
Vote 23 – Police,
Vote 27 – Environmental Affairs,
Vote 33 – Tourism, and
Vote 36 – Water and Sanitation. 

She then provided an analysis of the Vote performance for the Departments of Agriculture, Forestry and Fishing; Basic education, Higher Education and Training; Human Settlements; Energy; Health; Social Development; Transport; Water and Sanitation; and Police, focusing on targets that were not met.  

Ms Moodley referred to the considerations that had to be taken into account in the 2018 Appropriations Bill. They were that the Budget had been finalised in difficult conditions and trade-offs in terms of the Budget Priorities Framework, and the Budget had to be made to stabilise prospects.  The balance of the Appropriation Bill was sound, but there were warning signals in a number of areas. Key areas were small business development, youth opportunities, labour intensive programmes, infrastructure spending, land reform, regional integration and development, agriculture, social protection, education, skills development and crime fighting.

To make space for budget priorities, given the slow growth of the economy, there was a focus on areas of wastage and cost containment, on improving value for money in procurement, on efficient infrastructure delivery, and on redundant assets as a revenue opportunity.

The DPME had looked at growth inhibitors and policy blockages as areas where growth prospects could be improved without a need for funding, by making key decisions and finalising or refining policy. It sought to focus on efficiency and value for money by getting improved data and improved monitoring of consultants, travel, procurement, litigation, infrastructure delivery and redundant assets, as well as reducing overlaps, duplication and wastage in government systems. It had also looked at demand areas such as school sanitation, learner-teacher ratios, climate change, and water and sanitation infrastructure, as well as risk areas such as wage settlements; finances of state-owned enterprises (SoEs); credit ratings; and the drought.

Ms Nelia Orlandi, Policy Analyst: Parliamentary Budget Office (PBO) said the PBO had concentrated on the MTSF and checked whether the indicators had been included in the APPs so that the APPs were integrated with the NDP. The DPME presentation was a good exercise in terms of the Estimates of National Expenditure (ENE) being in alignment.

Discussion

Mr A McLoughlin (DA) complained about how late the presentation had been made available to Committee Members. It did not reflect on how effectively money was spent by departments, and this was the area the Committee was interested in. He would like to see the DPME submit an assessment on the spending of departments in relation to their APPs, because normally the spending had little bearing in relation to the APPs.

The Chairperson said presentations had to be submitted a minimum of three days before the meeting.

Ms D Senokonyane (ANC) said there had been a decrease in misalignments from the past, but she wondered whether it was because departments were ‘cutting and pasting’ when making up their APPs. She wanted to know why the APP and ENE figures were different. She asked the DPME what its view was on invoices not being paid within 30 days. Was it an issue of leadership? Was the DPME centralising redundant assets -- how was the matter being approached?

Ms S Shope-Sithole (ANC) said all departments had to submit a list of redundant assets and the reasons for classifying them as redundant, as well as how the assets would be disposed of.

Ms Moodley apologised for the late submission of the presentation.

On the targets of departments and the different figures the departments had presented, she said the DPME did have the target figures for the ENE and for the APP, and departments were copying and pasting. However, in some instances, it was because they set targets for the ENE without taking into account that they had set targets in the APP, and had used different sets of figures without realising it.  A few years ago, this problem was huge, but there had been a significant improvement since then.

On what the focus of the presentation should be, she said the DPME’s starting point was that when departments budgeted, they had to have the right indicators and targets. If that were not the case, then there would not be value for money – like, for example, the Departments of Water and Sanitation and of Human Settlements. The departments’ APPs had to be credible and reflect the priorities of government, and only after this should departments look at the budget. The DPME had partnered with Treasury in hosting performance dialogues with departments to bring the quarterly performance and the financial reporting information together, and to see whether government priorities were being achieved and whether value for money was being attained.

The issue of leadership and management was important, and was a matter of accountability. Were senior management being held to account for attaining the targets in their APPs? Were there early warning mechanisms within the department? Was data being collected for compliance or to drive forward awareness, change and performance?

Work had started this year on redundant assets, and the idea was to get a sense of existing redundant assets and their value, and whether revenue could be generated from them.

Mr John Kruger, Acting Chief Director: Budget Prioritisation Framework, said the redundant assets matter was in the initial stages. The first phase was exploratory, and the DPME was working on definitions and were starting investigations to find out what the Treasury and the Auditor General (AG) had done in this area.

The DPME did not have the most recent information on the 30-day payment of invoices. It had flagged the matter because if departments were working with inadequate operational systems, then the issue would never be solved. Government’s administrative systems had not kept up to date and did not have modern enterprise management systems. It was not just about payments -- it was also about systems and about departmental budget constraints.

On what the presentation had meant for the Committee, he said the DPME had not done a lot on the performance of departments, especially high risk departments, in the presentation because it was not that time of the cycle. The DPME was focused on the 2018 Appropriations Bill which had to be approved, but would be looking at different departments, and especially the different types of risk they were exposed to, in the coming quarters.

Ms Euody Mogaswa, Director: National Planning, DPME, referred to the misalignment of targets between the APP and ENE, and said the DPME assessed the first and second drafts of the APPs together with Treasury, to ensure that what was in the plans were in the budget. After recommendations were made to the department, the DPME held meetings with the departments to discuss identified issues. The quarterly performance reports were assessed and the DPME held engagements with the departments on the DPME’s review. There had been huge improvements, but there were still challenges in a few departments.

Ms Shope-Sithole said that maybe some departments should not just be criticised, but needed help. She suggested that an assessment form be completed to identify departments that needed assistance. R4 billion had been spent on integrated financial management systems. How far had the systems been integrated, because after 20 years this should not still be an issue? She wanted to see the reasons departments were giving for making assets redundant.  If this exercise was not carefully done, it could bring the economy down. She quoted the South African Airways (SAA) case, where aircraft had been sold but the money from the sale had not been realised.

Mr McLoughlin wanted to know what was meant by an indicator which said a number of new schools were ‘practically complete’. Did the DPME investigate what ‘practically complete’ meant? Was this similar to the term ‘virtually complete,’ which was used by contractors to get money from the government before a contract was completed? On the Department of Correctional Services’ target of 80% of offenders participating in skills development programmes, he asked if that was the target or whether that was what had occurred. Similarly, the percentage targets for escaped inmates and injured inmates. He asked about the targets and success rates of the Department of Military Veterans, and what was meant by the term ‘decision ready’. He said the content of the presentation was puzzling and not telling him anything.

Mr N Gcwabaza (ANC) asked for the DPME’s view on the 2018/19 budget, and whether it addressed the needs of the country. When would the DPME be going to departments to get them to correct misalignments in their APPs and budgets? He could not make sense of whether the budget issues had been attended to or not.

The Chairperson asked if the DPME gave advice or corrective measures to departments regarding the anomalies and gaps between the ENE and APP. She asked what the DPME thought about it also receiving the quarterly income statements and balance sheets from the departments, so that they could be closely monitored.

On the issue of cutting and pasting and a lack of empowerment of departmental officials, Ms Moodley was in agreement, and said a few years ago there had been misalignment between planning and budgeting documents. A wide scale capacity building programme had been instituted in the national and provincial spheres of government, so there had been improvement.

The DPME had started work on developing a framework on how to define a redundant asset, based on criteria.

Regarding the description of targets and indicators, she said that at the end of the APP there was a technical indicator description which defined what each indicator, such as the term ‘completed’, meant. The AG had also used and benefited from this format.

On the issue of indicators on slides 31 and 34 being vague, she said that the indicators did appear very vague and immeasurable, but the DPME would have raised such issues when doing assessments with the departments concerned. It needed to start focusing on the tabled APPs to ensure that its recommendations were actually being taken into consideration. The DPME did not always establish whether action was taken on its recommendations.

Regarding whether the presentation spoke to the needs of the country, she said that for the 2014-2019 electoral cycle the DPME had issued a directive to institutions in all spheres of government that alignment to the MTSF was non-negotiable. 

On the issue of balance sheets and income statements being forwarded to the DPME, she said that the DPME had introduced quarterly performance dialogues which were hosted together with the Treasury. This addressed whether the government was getting value for money, in terms of Treasury; and in terms of the DPME, whether there was alignment to the priorities of government in their planning. This allowed for departments to talk about the challenges they experienced, so that strategies could be developed to assist them.  This had been piloted for two to three years.

Ms Mogaswa referred to the indicators for Correctional Services, and said the DPME had tried to cut the wording of the indicators short. In the first instance, it was the percentage measurement of offenders subjected to correctional programmes. In the second instance, the Department of Correctional Services had wanted to reduce the number of inmates who escaped or were injured. The DPME, in their interactions with the Department, had been pushing for the number of escapes or injuries to be reduced, because the targets of the Department were just maintaining the status quo. The figures measured the reduction the Department was trying to achieve.

On whether the budget spoke to the needs of the country, Mr Kruger said that the DPME was the wrong entity to ask, because it was merely part of the budget process. There were warning signals, such as infrastructure spending not increasing much as was wished. There were many challenges going forward. It was an ongoing process to improve.

Ms Moodley said the Committee’s recommendations had been noted, and would be implemented by the Department upon their return. She said the DPME did work with the PBO and did collect quarterly reports from the provinces. 

The Committee then discussed and adopted minutes of meetings held on 8 and 9 May 2018, before discussing the agenda of a meeting to be held the following day.  

The meeting was adjourned.