Annual Reports 2017/18
Auditor General South Africa (AGSA) noted the regression in clean audits in 2017/18 compared to 2016/17, the reasons for SAMSA and PRASA having qualified audits, the root causes of audit findings and its recommendations for improvements. AGSA emphasised the importance of implementing consequence management for non compliance with supply chain management rules as a way to deter officials from abusing the system.
The Committee expressed disappointment that DoT and some of its entities had continually received negative reports from AGSA but had not bothered to correct these. The Committee asked AGSA questions about its reputation promise, its role after it discovers irregular expenditure and after the audit outcomes, about the liquidity of some of DoT’s entities, non-compliance and about the new bill to enforce compliance and consequence management. The Committee asked AGSA to submit in writing a full list of recommendations specifically addressing DoT and each its entities.
The DoT briefing included financial and non-financial performance, its organisational health and capability to deliver on policy objectives. It provided reasons for not achieving three targets and the corrective measures to achieve them, its human resource development initiatives, employment equity statistics, and governance obligations. It gave an overview of the financial results per programme, an explanation of the virements undertaken, the status of unauthorised, fruitless or wasteful and irregular expenditure, and an explanation of the deviations and expansions approved by National Treasury in 2017/18.
The Minister for Transport said the goal of a Minister was to ensure that the Department and its entities had clean audits even though it was not happening yet. He agreed with the Committee that increased monitoring would ensure that service delivery improves. Highlights of his brief were emphasis on strengthening technology that could to lead to effective service delivery as mentioned in his Budget Vote speech, the initiation of a green paper to back it up, the planned engagement of stakeholders on transformation before the year ended, the efforts to prioritise filling of vacant posts, the planned engagement with CEOs and COOs before the investment summit, and the challenges in public transport. He agreed with the Committee that if departments focussed on addressing audit findings, there would be improvements in service delivery.
The Committee expressed concern that DoT’s audit results did not align with those of its entities and that there was a regression in clean audits in 2017/18 compared to 2016/17. It noted that DoT entities were challenged on governance, internal audit controls and senior management assurances and asked DoT to assure the Committee that its entities would improve. The Committee expressed concern about service delivery challenges that occurred because some entities were not performing well. The Committee questioned DoT on its consequence management, vacancies, amounts written off in cases of irregular expenditure, the role of its shareholder representative on the boards of its entities, transformation status in maritime and civil aviation programs, the taxi recapitalisation, bus rapid transit (BRT), road maintenance, integrated public transport network programme, Shosholoza Meyl budget allocation, implications for late submission of annual reports, and its process of transfer of funds to its entities.
The Committee mandated the shareholder representative to make proper interventions in entities, mandated DoT to submit its policy document on taxi recapitalisation, and improve on its monitoring of entities but expressed happiness with the newly established monitoring unit at DoT. It mandated DoT to intervene and ensure that service delivery was improved in its entities because taxi strikes and burnt trains rubbish the efforts of the President who is seeking international investors for the country.
The Chairperson noted that there were certain audit queries that AGSA had raised and the Committee wondered why DoT had failed to correct these. She asked the DoT Acting DG and his team to pay attention to the brief to ensure that DoT corrects any audit query raised.
Auditor General South Africa (AGSA) presentation
Mr Solomon Segooa, Corporate Executive AGSA, introduced his team and emphasised the reputation promise of AGSA in South Africa.
Ms Madidi Malongo said AGSA in carrying out its audit focussed on three areas: fair presentation and reliability of financial statements, reliable and credible performance information for predetermined objectives and compliance with key legislation on financial and performance management. AGSA expresses five audit opinions: unqualified with no findings (clean audit), financially unqualified with findings, qualified, adverse or disclaimer opinions. A comparison of the results showed a regression in clean audits i.e. entities with no findings on compliance with legislation with a decrease to 21% in 2017/18 as against 43% in 2016/17.
The statistics for the quality financial statements remained the same at 50% but there was a slight increase in quality performance reports from 43% in 2016/17 to 50% in 2017/18. Irregular expenditure decreased from R6 165m in 2016/17 to R5 188m in 2017/18. Only three of the entities in DoT had clean audits consistently in three of the four financial years considered (2015/16, 2016/17, 2017/18): Cross Border Road Transport Agency (C-BRTA), South African Civil Aviation Authority (SACAA) and Ports Regulator of South Africa (PRSA). However, RTMC, RTIA, RAF regressed from clean audits in 2017/18 and joined DoT and entities like SANRAL, ACSA, RSR and DLCA to receive financially unqualified opinion with findings. SAMSA and PRASA also received a qualified opinion with findings in 2017/18 as they did in 2016/17.
Only 50% of the portfolio submitted its annual financial statements without any material misstatements while 85% were able to correct their annual financial statements after resubmitting them. However, 15% (SAMSA and PRASA) could not. SAMSA received a qualified opinion with findings in 2017/18 due to irregular expenditure. PRASA’s qualified opinion with findings in 2017/18 was due to unreliable assets register documentation, unfair revenue, and complications of irregular expenditure.
Only 50% of the portfolio submitted its annual performance reports without any material misstatements while 77% were able to correct their annual performance reports after resubmitting them but 23% had material findings. A comparison of 2016/17 (57%) and 2017/18 (77%) financial years showed that more entities struggled with compliance with key legislation. Only 23% complied and had clean audits. AGSA has discovered that the more an entity complies with key legislation, the more stable the entity becomes.
The status of the drivers of internal control showed that SAMSA and PRASA showed slow response to audit queries and governance issues. 62% of entities struggle with leadership, 23% struggle with financial and performance management while 70% struggle with governance in the 2017/18 financial year.
An analysis of the assurance provided showed that entities that struggle with governance issues such as SAMSA and PRASA had challenges with internal controls because senior managers did not act in a timely manner. Also the accounting officer and executive authority in SAMSA and PRASA have governance challenges. The internal audit unit and audit committee of PRASA have not been finalised and this has led to findings in procurement and contract management. ACSA does not have an audit committee. AGSA has noted that the Portfolio Committee provides assurance through engaging with the portfolio and undertaking oversight visits. AGSA has liquidity concerns over SANRAL and RAF and suggests that management of DoT and entities should enhance timely remedial action to improve the management of working capital especially with regards to the debtor and creditor collection period. The biggest contributors to fruitless and wasteful expenditure in the portfolio are PRASA, ACSA and RAF.
AGSA is concerned that there are entities that struggle with laws and end up with irregular expenditure. On supply chain management (SCM), PRASA had challenges with competitive bidding and fairness processes, does not follow procurement rules, does not get its deviations approved and did not comply to a tender process. The most common findings on SCM are not inviting three written quotations or competitive bidding, not adhering to local content minimum threshold for local production, procurement staff not submitting declarations of interest, not applying or incorrectly applying preference point system, and inadequate contract performance measures and monitoring.
The root causes of audit outcomes are slow response to improving key controls and addressing risk areas by accounting authority and senior management. Also entities do not give adequate consequence management for poor performance and transgressions. The instability of entities and vacancies in key positions are also root causes of audit outcomes.
AGSA recommends that monitoring and regular follow up with the executive authority and the accounting officer, and the appointment of boards and other governance structures so boards are fully constituted with members with appropriate skills and experience for effective governance and oversight. Also management of vacancies systems to ensure stability of leadership and monitoring progress of audit action plans put in place by the entities to address undesirable audit outcomes would assist entities. The implementation of consequence management especially around supply chain management would deter officials from abusing the system.
Mr Segooa said work schedules showed little improvement in the plan-do-check-act process. Regressions were noticed in the status of audit action plans, overall internal controls, financial and performance management controls, assurance provided by senior management and accounting authority, internal audit units and audit committees and compliance with consequence management legislation. Slight regressions were observed in ICT controls, vacancies in CFO positions, investigations in SCM findings and investigations of unauthorised, irregular as well as fruitless and wasteful expenditure for previous years. Improvements were only noticed in usefulness of performance indicators and targets.
The Chairperson noted that PRASA had challenges across various areas of the audit.
Mr C Hunsinger (DA) said it was disappointing that DoT and its entities have had the same negative report over and over. The report shows a reputation that does not hold any reputation promise. He asked why DoT and its entities had repeated the same indiscretions in its audit report. It was disturbing as the absence of basic internal controls has been reported many times. He asked AGSA to give the Committee more information on its suggested comprehensive framework based on contingent liabilities and contingent reserve for guarantees. He asked AGSA to state why it should charge entities for providing risk assessment services. He asked AGSA to clarify its role in ensuring the early submission of annual reports by entities. He also asked for clarity on the role of AGSA when it discovered irregular expenditure in entities and how this could be aligned to AGSA’s role on reputation. He noted that the PFMA rules bind the accounting authority to monitor and implement changes that would correct audit findings but this was not working. Hence he asked AGSA to clarify its role after it discovers audit queries as an agency that is supposed to build the reputation of entities in South Africa.
Mr M De Freitas asked AGSA to give clarity on the kinds of sanctions it could impose on entities that do not comply. He asked AGSA to confirm if it was enabled by law to impose sanctions on entities that would force them to improve and have clean audits.
Mr Solomon Segooa replied that lack of action on AGSA recommendations that affected the public confidence as mentioned by the Committee was also a concern for AGSA. The role of AGSA based on its mandate is limited to carrying out audits and reflecting areas that need further action. As mentioned by Mr Hunsinger the duty of the accounting authority to monitor and implement changes that would correct audit queries based on PFMA rules was not working. AGSA has been frustrated by reporting the same audit queries for entities like PRASA and SAMSA every financial year without these entities implementing processes that would ensure that they produce clean audits. In the case of PRASA the continual change in the executive hampers consequence management. Although AGSA’s present role is based upon its mandate is to highlight and report audit queries to the accounting authority, a new Amendment Bill is about to be enacted that would give AGSA the power to enforce and deliver punishment to entities that do not comply to PFMA rules. AGSA was not aware of the consequence framework mentioned by Mr Hunsinger and requested to have the document so that AGSA could respond to the question in writing.
Mr M Sibande (ANC) expressed concerns why AGSA waited for entities to have many audit queries before it acts. He asked AGSA to clarify how often it interacted with accounting authorities to address audit queries that had been raised initially. He expressed concern that AGSA only mentioned PRASA and SAMSA as culprits of decline in internal controls in 2016/17 and 2017/18 while other entities where involved and asked why. He remarked that the PFMA rules were explicit on non-compliance but because consequence management was not enforced, entities continued to repeat non-compliance. He asked AGSA to clarify why PRASA was not listed among DoT entities that had liquidity concerns because it was equally challenged. He asked AGSA to give clarity why it did not report on the corruption of the PRASA-Werksmans contract because the contract was signed without being finalised and to clarify if it checks contracts that are signed by unknown persons. He expected AGSA to highlight this issue as one of the challenges PRASA still had to enable the Committee to focus on it. He asked AGSA to give the Committee specific information on officials that contravene PFMA rules and give it more specific recommendations to ensure that the Committee would be able to focus on the crux of the matter when it engaged with the specific entity. He could understand why SANRAL could have liquidity concerns as it was plagued with e-toll challenges due to Provinces going back on their promises. He proposed that AGSA come before the Committee when it engages with DoT and its entities.
Ms S Xego (ANC) said she agreed with Mr Hunsinger that AGSA was not supposed to bill entities for providing risk assessment services. She expressed concerns that DoT itself was not compliant and asked AGSA to clarify if the internal audit controls in DoT and its entities were functional. She also asked AGSA to confirm if it checked how DoT oversees its entities and clarify if DoT agreed with the opinion presented in the brief because If DoT did agree then the Committee had to direct its questions to DoT. She remarked that if an entity did not have an internal audit committee then it would result in audit outcomes.
Mr Segooa said that AGSA it often engaged with the accounting officer of entities to follow-up on the status of audit queries and had recently created a status of records review forum. It has forums where it engages with entities to find out the status of audit outcomes of previous years. He said he agreed with Mr Sibande that if consequence management was not implemented the non-compliance would be repeated. SAMSA and PRASA were highlighted for decline in internal controls because they were the worst offenders AGSA takes up the issue with other entities as well. AGSA did not report its concerns on PRASA-Werksmans contract because it had been reported in briefs of previous financial years. AGSA would give specific information, expound on its recommendations and submit it to the Committee.
Mr Nicholas Mokoena, AGSA senior manager, said PRASA had liquidity ratio problems that were a concern to AGSA but it had left it out from the list because its liquidity challenges were due to stability issues.
Ms Malongo said AGSA did not place confidence in the inter audit committee of PRASA because the entity did not carry out audit meetings as scheduled. AGSA suggests that DoT review on its entities be improved.
Mr A Seabi (ANC) said the recommendations were not clear enough and asked AGSA to specifically mention an entity and give clear recommendations to ensure that the Committee could assist the specific entity. He said from experience that most entities were unable to get clean audits because the senior managers in charge of asset management were not appropriately skilled. Hence he asked if AGSA based on its mandate had a model that could address asset management challenges that entities failed. He asked AGSA to give clarity on the accounting authority that did not give assurance on governance the Minister or the board and asked if AGSA audited skills and expertise of board members. He asked AGSA to identify entities that had not appointed CFO’s and confirm that the AGSA report had mentioned that there was an improvement on the level of investigation of SCM challenges in entities but this had not impacted on service delivery.
Mr T Mpanza (ANC) said he agreed with AGSA that when officials were seconded into acting positions, the performance of the entity was affected. He asked AGSA to state how the new Bill to address consequence management on non-compliance assisted AGSA in enforcing audit query corrections. He asked AGSA to clarify if it had a good relationship with DoT and is entities and to give clarity to how frequently it met to empower officials with skills to address audit queries. He also asked if AGSA suspected corrupt activities on unauthorised, irregular or fruitless expenditure in agencies that it audited. He asked AGSA to state the overall way forward for the agencies it audited and how prevalent was the use of consultants in agencies within its portfolio.
The Chairperson asked AGSA to clarify that there was little improvement based on accountability with work schedules in its four stages of plan, do, check and act system, give clarity on why there was decline and state the reason for the regression in clean audits. She asked AGSA to state the steps the Committee could undertake to stop the regression in clean audits. She asked AGSA to clarify the official that was supposed to check in the entity apart from audit because other areas were equally affected. She asked AGSA to clarify if the shareholders representative did enough to ensure that the challenges did not occur.
Mr Segooa said that AGSA would send a full list of recommendations to the Committee as suggested. He said AGSA agreed with Mr Seabi that most entities were unable to get clean audits because the senior managers in charge of asset management were not appropriately skilled. The issues are due to inappropriate technical management, skills and expertise on the part of some senior managers in the entity but the challenges vary from entity to entity. The executive authority is the Ministers office while accounting authority is the board. If leadership is in position for longer periods the entity achieves more however when changes occur on a regular basis, it becomes difficult to hold a new leadership to the goals of old leadership. AGSA does not have the power to apply consequence management yet and it does not audit the impact on service delivery but it sees from experience that entities that fail to apply consequence management struggle with service delivery. AGSA’s relationship with DoT is in good order. If the entity is stable the gaps are easily seen and if DoT and its entities can establish consequence management on non-compliance there would be improvements.
Ms Malongo said PRASA, DLCA and C-BRTA were entities without CFO’s. Prior to audits AGSA meets with accounting authority to check the progress on audit queries of previous years in a quarterly manner and it also engages with agencies to find out what is being done on its action plans. Clean audits regressed because some entities were struggling with action plans on audit queries while some entities were delaying the actions. AGSA noticed that agencies that had not drafted action plans on audit queries did not take action in a timely manner. AGSA recommends investigations if fraud is suspected in cases of irregular expenditure.
Mr Mokoena said AGSA had not analysed the consultant portfolio of entities but would present it to the Committee as soon as it is ready.
The Chairperson asked AGSA to clarify if the shareholders representative was present during the time that AGSA audited the entity.
Mr Mokoena said the shareholders representative were present when AGSA audited the entity.
The Chairperson asked AGSA to clarify if there was a lot of mismatch on skills and asked AGSA to state the issues.
Mr Mokoena said the competence was a key challenge in entities.
Mr Chris Hlabisa, Acting DOT DG, said the new status of records review forum created by AGSA was a good approach that enabled prompt correction of audit queries. Apart from the status of records review forum, AGSA has one on one engagement with accounting officers. DoT has just started having engagements with AGSA on its entities. DoT has being affected by stability at the top within the period of six years it has had five Ministers and only one substantive DG who worked for one year all others have been acting. The Minister has just created a unit to carry out oversight activities on its entities it is headed by a DDG. The role of the shareholders representative is to represent the DoT at the board of entities; the office of the shareholders representative is being reviewed to enhance its performance. Governance of boards is challenged because some members of the board do not see eye to eye and this affects the CEO. A governance counsel approach would assist DoT.
The Chairperson thanked AGSA and said it would reiterate AGSA’s opinion to DoT and its entities as it agreed with these recurring opinions. For instance ICT issues has been spoken of repeatedly and this is an indication that the entities hear but do not comply. She said the Committee would repeat the points to DoT and its entities to ensure that these agencies improve its service delivery. She dispatched the AGSA and welcomed DoT. She informed DoT that the picture drawn by AGSA on DoT and its entities is not a good one and the Committee is looking at recommendations that would assist. As a Department officials should not that challenges exists such as taxi strikes, derailments and trains being bunt hence; DoT should focus on how it can get its entities out of the situation and improve. DoT should focus on assisting with growth as investors are invited into the country.
Department of Transport (DoT) Annual Report presentation
Mr Chris Hlabisa, Acting DG DoT, noted that the Minister for Transport who was in Cabinet meeting would be joining the meeting late. He introduced his team and said that he and his team would brief the Committee and the answer questions of the Committee. The key focus areas of the report were performance of DoT and its organisational health and capability to deliver on policy objectives. DoT achieved 34 out of its 3t objectives. It did not achieve one target each under integrated transport planning, rail and maritime transport programs. He outlined the key achievements in all programs, the notable challenges to be prioritised for remedial action and the corrective measures to be prioritised. He highlighted the human resource development initiatives, the employment equity statistics, and the governance obligations. He invited Mr Collins Letsoalo to brief the Committee on DoT’s financial status.
Mr Collins Letsoalo, DoT CFO, said DoT had clean audits on irregular expenditure and predetermined objectives as efforts were taken to prevent unauthorised, irregular and fruitless and wasteful expenditure and to ensure that no material findings were identified on the usefulness and reliability of performance information. However, DoT was able to make corrections on its annual financial statements: finalise deviations on non-compliance and begin investigations on procurement and contract management and initiate the process on four internal investigations. He also gave an overview of the financial results per programme expenditure and explained the virements undertaken. He analysed the status of unauthorised, fruitless or wasteful and irregular expenditure in the 2017/18 financial year and explained the deviations and expansions received from National Treasury. The annual appropriation was around R59Million while the annual expenditure was R56 million. He analysed the transfer payments to its entities, its expenditure goods and services, compensation of employees, capital assets, payments for financial assets and expenditure on major projects for 2017/18.
The Chairperson welcomed the Minister for Transport Mr Blade Nzimande and invited Members to interrogate the report.
Mr Hunsinger asked the CFO to clarify the Ministers’ statement and his statement that DoT had received a clean audit when AGSA’s brief had indicated that DoT had received a financially unqualified opinion with one or two findings that were quickly corrected. He expressed concerns that DoT achieved 34 out of its 37 targets looked like a good results but these result did not align with the results of it entities. In 2016/17 DoT and its entities had 45% clean audits but it reduced to 21% in 2017/18 which showed that DoT had not set its targets to align with the performance of its 14 entities. For instance PRASA had under expenditures when it could not fill its vacancies even though the positions were funded and the funds were available. He remarked that DoT had conveniently set targets that did not align with its entities that were achievable. He asked DoT to sate why it was not implementing consequence management on staff involved in irregular, fruitless and wasteful expenditures. He asked how it was possible for increases to occur in fruitless and wasteful expenditures when 2016/17 and 2017/18 financial years were compared. He asked DoT to confirm if it had recovered any amounts for the 69 cases it reported.
Mr Sibande noted from the brief with AGSA that there was a regression in the performance of DoT and entities when 2016/17 and 2017/18 financial years were compared. Hence he asked the Minister to justify its vacancies because AGSA had said the increased number of acting positions had made it difficult to hold acting officers accountable. He asked DoT to state why some amounts in cases of irregular expenditure were written off and if it complied with PFMA rules. He asked DoT to explain why transformation in maritime and civil aviation sectors had not taken place despite being prioritised for many years by Government. He asked why the Taxi Recapitalisation (TR) program had not being implemented and why some funds had to be written off on the integrated public transport network (IPTN) program. He asked DoT to state its role when SAMSA and PRASA were regressing and SANRAL and RAF had liquidity challenges. He also asked DoT to state the implications of late submission of annual reports which had been the practice of PRASA.
The acting DG DoT Mr Chris Hlabisa said Department of Planning Monitoring and Evaluation (DPME) guided its target alignment and they were undertaken under smart principles. DoT engages with its entities to ensure that its targets are aligned before it submits its annual performance plans. DoT is in the process of filling positions by having adverts on paper, the adverts closed in the last week of September 2018 and all acting posts would soon be filled. DoT is prioritising the challenges of entities to ensure reports are submitted in time. PRASAs 2016/17 annual report was challenged because it had challenges with its board but it sees no challenges with its 2017/18 annual report, DoT has a governance structure headed by a DDG to ensure that it fulfils its roles on its entities.
Mr Letsoalo said when the Minister had talked about clean audits at DoT he was referring to the pre-determined objectives but his emphasis was on the two areas that DoT had clean audits. Any Department that has large entities have fiscal risk challenges. The amounts disclosed in the under expenditure was moved to other branches as captured under virements. He said DoT ensured that monies disclosed in wasteful expenditure were recovered and he explained how the monies were recovered in 59 of the 64 cases mentioned. Also processes are in place to recover the funds in cases concluded.
The DDG for Public Transport, Mr Mathabatha Mokonyama, said the TR program had been reviewed when DoT noticed that scrap amount of used taxi’s did not encourage owners to scrap its taxis. He talked about the steps that DoT was using to review the amounts to levels that would encourage owners to scrap there taxis. DoT was advised by National Treasury to use smart principles to set targets that were achievable hence DoT has set targets that are within its control as against what happened in the past.
Mr Theophilus Motiti, Acting DDG: Maritime Transport, DoT, said it had achieved some success in the Maritime sector they include finalising its strategy and the procurement of three bunkers for training of youth and women is already in place. Other achievements would soon be rolled out.
Mr Johan De Villers, DDG Rail Transport, DoT, said transfers to PRASA were stopped because of its challenges.
Mr Letsoalo said DoT had put in place more internal controls before procurements to prevent more irregular expenditure. Liquidity concerns occur because some entities are allowed to have deficits; SANRAL’s occurred because of the challenges on e-tolls while at RAF it occurs claims are always above funds received.
Mr Mpanza said he did not notice a major difference in briefs when compared to previous years but the Committee wants DoT to make progress. He supported Mr Sibande’s proposal that AGSA engage with the Committee before the Committee meets with DoT and its entities. He noted that there was a disjunction between what AGSA presented and what DoT presented. He expressed concerns that the transfer of funds from DoT to entities was not working as some of the entities have under expenditures. He asked DoT to clarify its role in ensuring that funds transferred to entities were spent correctly. He said it seemed that DoT was disengaging from its entities, Provinces and Municipalities. He suggested that DoT improves on its synergy with its entities, Provinces and Municipalities. He asked DoT to clarify its status on the use of consultants. He recalled that October was the month of transport; hence he asked if DoT had programs to reflect that the country was in the month of transport. He asked DoT to state the quick-fix plans on challenges that were being faced by the transport industry based on identified Presidential projects.
Mr Ramatlakane said he was concerned that transformation had not being achieved in the taxi industry. He asked DoT to state its intervention programs in the taxi industry since 2016/17 apart from reviewing policy. He noted that despite the new policy on maritime, previously disadvantaged people had not being able to break through in Maritime transport. He asked DoT to clarify if entities had been empowered to act after receiving transfers from DoT. He asked the DDG rails to clarify why PRASA was challenged during his watch even when a shareholder representative was sitting in the board of entities. He noted that AGSA’s brief showed that there was a regression in clean audits in the portfolio despite the presence of the shareholders representative. He expressed concerns that some of the entities that had clean audits in 2016/17 had regressed in 2017/18. He noted that AGSA had stated that the governance, internal audit controls and senior management assurances of entities were challenged; hence he asked DoT to assure the Committee that its entities would improve along these lines. The Committee is frustrated by service delivery challenges occurring because some entities are not performing well.
The Chairperson recalled that in 2015/16 and 2917/18 the Committee highlighted matters raised by AGSA. They included regression in performance reporting standards of SAMSA and PRASA, targets not achieved and targets not specific. Despite these warnings DoT did not make corrections and this had led to service delivery challenges. If DoT increases its level of monitoring this would go a long way to improve service delivery. She invited the Minister for Transport Mr Blade Nzimande to brief the Committee.
Minister for Transport, Mr Blade Nzimande, said the goal of Minister is for the Department and its entities to have a clean audit even though it was not happening yet. He noted that although some the Departments and its entities had clean audit it might not translate into improved service delivery. As mentioned by the Chairperson increased monitoring would go a long way to ensure that service delivery improves. Officials of DoT must strengthen its monitoring and oversight functions and work in such a way that it does not affect the effectiveness of its entities. He said in his Budget Vote presentation he emphasised strengthening technology to lead to effective service delivery and a green paper has been initiated to back it up. He said he would engage with stakeholders on transformation before the year ended. He said he had prioritised filling of DDG posts before the end of October 2018 to ensure stability. Also chief director and director posts are being advertised. An engagement with CEO’s and COO’s is being planned before the investment summit to discuss the way forward for DoT entities. He said he agreed with Mr Ramatlakane that public transport was an anchor of DoT priorities but despite the progress in the sector there were still challenges such as increased violence. It is difficult to move people from stokvels and to cause stokvels to proceed to cooperatives but the stokvels are not fulfilling the roles of manufacturing of tyres, vehicle parts or building of vehicles. These roles have been hijacked by smart investors. He said if Departments focussed on AGSA opinions there would be improvements and he expressed happiness that Parliament was given AGSA the powers to enforce corrections. He appreciated the Committee for its comments.
The Chairperson said she had indicated that in the past three years AGSA had outlined challenges on taxi recapitalisation, bus rapid transit (BRT), road maintenance, Shosholoza Meyl budget allocation, the accountability of DoT and its entities on planning, acting and checking for impact to see if value for money reflected in the activities of the agencies. Hence she mandated DoT to improve on monitoring its entities and expressed happiness with newly established monitoring unit.
Mr Seabi recalled that the report on BRT in Polokwane showed that it would be opened in January 2019 this suggests that DoT was not aware of what was the reality on ground. He asked DoT to clarify if the standards for BRT in Polokwane were in place. He asked for clarity on targets that had zero expenditure especially when it showed that it was achieved. He also asked DoT to give evidence to show that there was value for money on service delivery projects.
Mr Sibande recalled that during oversight vests to Northern Cape and Tshwane the Committee noted that the roads were destroyed by rain. He also noted that must Provinces depended on the road maintenance grants and did not contribute their quotas hence he asked DoT to give feedback on the project.
Mr Chris Hlabisa agreed that DoT needed a workshop on public transport that would address construction of infrastructure, roads and IPTN as mentioned by both the Minster and Chairperson. He pleaded with the Committee to guide DoT to ensure that it would not repeat the mistakes of the past. He observed that a lot of Provinces depended on the road maintenance grants for repairs to road infrastructure but there were conditions attached to accessing the grants. He remarked that KwaZulu-Natal, Gauteng and Western Cape had budgets for equitable shares but DoT needed the assistance of the Committee to enforce the need for other Provinces to budget for its equitable shares because it affected the quality of road infrastructure. There are three levels of roads National, Province and Municipalities and each sphere need to plan for its equitable shares and prioritise the roads that need infrastructure repairs. The status of road infrastructure shows the arrangement with SANRAL is working with Gauteng but does not work with Ermelo, Mpumalanga. DoT would work with the National Treasury to review the profitability of Shosholoza Meyl and give the Committee feedback on if it could be revived.
Mr Mathabatha Mokonyama said the three strategies approved to public transport were training and development t which was ongoing, the National Land Transport Act regulations which had been completed and the economic empowerment involves the integration of the informal sector to the mainstream which includes the Taxi recapitalisation scheme. DoT realised that there were challenges such as the number of taxis been scrapped reduced from 11000 to 2500 because the amount given was lower than the amount the taxis were bought. Also since majority did not bank assessing finance was difficult and players in the industry exploit taxi operators with higher interest rate charges. DoT has informed the taxi industry that strikes are not a solution when banks do not finance buying taxis. Financing could be done through cooperatives which have lower loan financing rates. The visit of DoT and taxi operators to Brazil showed the possibility of being able to produce tyres, other vehicle components and vehicles. DoT is proposing to increase taxi scraping allowance from to amounts that could encourage operators to scrap taxis. The proposed workshop would be a forum to discuss these challenges and the way forward and lead to a standardized IPTN structure. He corrected the impression that the brief presented in the previous years were similar to that presented this year.
The DoT Acting COO, Ms Zulu Sizani, said DoT would send the data on bursaries given to staff and memorandum of understanding signed with University to the Committee. The disciplinary processes are the ones planned from the last year no new case is been reported .DoT does not place staff under investigation on long suspensions. The delay was caused by the resignation of most staff in the unit and the staff available now is an intern. The shortage of skilled staff has affected the performance of DoT.
The Chairperson mandated DoT to submit its policy document on Taxi recapitalisation because it was important for members to be the mouth piece of DoT in its constituency. AGSA informed the Committee that DoT and its entities regressed in some areas the Committee is confident that DoT would address these areas. The shareholders representative needs to make proper interventions in entities as and at when due. During the Committee’s engagements with PRASA on 9 October 2018 it noticed that PRASA did not have quick fixes for basic things such as burnt bulbs at stations. She asked DoT to clarify when it would appoint CFO at SAMSA, Also Members were brutalised by RAF clients who claimed that RAF staff did not treat claimants well and RAF needs to review its Arrive Alive policy as it is not working. DoT has to intervene and ensure that service delivery is improved in its entities because taxi strikes and burnt trains rubbish the efforts of the President who is seeking investors in the country. She mandated DoT to answer the Committees questions, submit the documents requested and appreciated the team.
The meeting was adjourned.
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