Government Departments & Entities 2019/20 Annual Performance Plan (APP)
The Committee elected Co-Chairpersons from both the National Assembly (NA) and the National Council of Provinces (NCOP) respectively.
Members also adopted the Committee Programme with the proviso to engage further in the next meeting on the new or rather proposed structure of Parliament.
Parliament briefed the Committee on its 2019/20 budget. The institution has been able to get a clean audit and internal controls have been strengthened. A final draft management letter was expected from the Office of Auditor-General of South Africa (AGSA) on the 15th of July. In terms of the 2019/20 APP development process, the Accounting Officer and senior management held a strategic planning session from the 9th to 11th April 2018. The purpose of the session was to:
-Identify possible key drivers of the 6th Parliament, as the 2019/20 financial year will most likely be the first year of the 6th term;
-Provide a result framework to serve as a basis for preparing the 2019/20 APP and Budget;
-Review immediate outcomes and indicators aligned to the policy priorities;
-Review programme indicators and targets for 2019/20 to 2021/22;
-Develop operational plans for 2019/20 to 2021/22, to implement the annual performance plan; and
-Develop resource and budget requirements for 2019/20 to 2021/22, aligned with requirements for the implementation of plans. The 2019/20 APP and Budget would be subject to the strategic plan of the 6th Parliament, and will therefore be revised.
As for budgetary information, Parliament’s proposed budget for 2019/20 financial year as presented by the Minister of Finance in Parliament on the 20th February 2019 was R2.521 billion. Requests from business units for the 2019/20 financial year amounted to R3,003 billion resulting in a shortfall of R394 million. Parliament’s total expected revenue for the 2019/20 financial year was R2.609 billion.
Members asked questions about the proposed structure and the timeframes; clarity on key positions that were not filled and whether that affected the operations; the impact on the payment of salaries and daily operations as a result of the shortfall; plans to address the lack of funding; the breakdown of the R1 billion spent on salaries; where the donor funding money was spent; plans on addressing the Advisory Office or Budget Office incapacity; how Parliament generated its revenue; where the Retained Earnings came from; how the donor funding was utilised; the gratuities of loss of Office for MPs; how much was budgeted for in the current financial year versus the budget as the result of the gratuities paid out and how would that affect the budget going forward; how much has been paid out so far in the current financial year; and whether the loss of Office gratuity allowance was as a result of Parliament’s policy not under the purview of the Remuneration of Public Office Bearers Act.
Members agreed that the Committee would engage more on other issues relating to the oversight of Parliament.
Ms Cindy Balie, Committee Secretary welcomed everyone present at the meeting and announced that she would shortly carry out the proceedings for the election of Co-Chairpersons.
Election of Chairpersons
Mr Bhekisizwe Radebe (ANC) nominated Ms Peace Mabe (ANC) as the Co-Chairperson from the National Assembly (NA) component. Mr Xolisile Qayiso (ANC) seconded the nomination.
Mr Jomo Nyambi (ANC; Mpumalanga) nominated Ms Dikeledi Mahlangu (ANC; Mpumalanga) as the Co-Chairperson from the National Council of Provinces (NCOP) component. Mr Mandla Rayi (ANC; Eastern Cape) seconded the nomination and there were no further nominations.
Ms Mabe and Ms Mahlangu were both elected as Co-Chairpersons for the Joint Standing Committee on Financial Management of Parliament for the NA and NCOP components respectively.
The Co-Chairpersons thanked the Members for the election.
Consideration and adoption of the Committee Programme
The Committee Secretary took the Members through the programme.
Mr J Steenhuisen (DA) said that after looking at the programme he realised that it seemed that the Committee would be dealing largely with the financial component of Parliament. The programme was dominated by finance. He sought clarity on matters that would no longer be dealt with in the Committee. He advised that the Committee should exercise oversight over the running of Parliament as in institution and not be limited to the finances as was the case previously.
Ms Dlakude concurred with Mr Steenhuisen and indicated that the new House Chairperson was dealing with internal arrangements. She suggested that the matter should be taken directly to her instead of wasting time as some Members had debates to attend to.
Mr Nyambi suggested that Members can look at the Programme and adopt it for now but with a proviso that accommodates the point raised by Mr Steenhuisen. He agreed that his point was important and the Committee would have to entertain it. Members could then set a date on which the Committee should deal with that matter.
Members all agreed that the Programme can be adopted with the suggested proviso that the Committee would set a date to discuss other matters relating to exercising oversight over Parliament besides the financial component.
The Committee Programme was adopted with the above mentioned proviso.
Briefing by Acting Secretary to Parliament on the Institution’s Budget and Annual Performance Plan 2019/20
Ms Baby Tyawa, Acting Secretary to Parliament said that in the five years she has been in Parliament, the institution has been able to get a clean audit and internal controls were strengthened. A final draft management letter was expected from the Office of the Auditor-General of South Africa (AGSA) on the 15th of July.
In terms of the 2019/20 APP development process, the Accounting Officer and senior management held a strategic planning session from the 9th to 11th April 2018. The purpose of the session was to:
- Identify possible key drivers of the 6th Parliament, as the 2019/20 financial year will most likely be the first year of the 6th term;
- Provide a result framework to serve as a basis for preparing the 2019/20 APP and Budget;
- Review immediate outcomes and indicators aligned to the policy priorities;
- Review programme indicators and targets for 2019/20 to 2021/22;
- Develop operational plans for 2019/20 to 2021/22, to implement the annual performance plan; and
- Develop resource and budget requirements for 2019/20 to 2021/22, aligned with requirements for the implementation of plans. The 2019/20 APP and Budget will be subject to the strategic plan of the 6th Parliament, and will therefore be revised.
As for budgetary information, Parliament’s proposed budget for 2019/20 financial year as presented by the Minister of Finance in Parliament on the 20th February 2019 was R2.521 billion. Requests from business units for the 2019/20 financial year amounted to R3, 003 billion resulting in a shortfall of R394 million. Parliament’s total expected revenue for the 2019/20 financial year was R2.609 billion.
Ms Tyawa advised that Parliament’s Budget Office was not funded and this remained a problem. The donor funding was money received from the European Union (EU) to fund the capacity building of Members in partnership with the University of Witwatersrand. The money sits with the National Treasury but it is made available to Parliament when requested. The biggest slice of the budget goes towards Associated Services, and the National Treasury (Treasury) had inquired about the ballooned Parliamentary staff situation. However, one had to remember that the services provided by the staff are human driven not driven by technology.
Ms Tyawa touched on the new organogram or the slides of the structure of Parliament which were not included in the presentations that were sent to Members. In the organogram there was a position of Chief Operating Officer of Parliament.
Mr Steenhuisen interjected and asked whether Members would be given an opportunity to engage the delegation on the new information that was presented regarding the new ‘approved’ structure of Parliament. He said that he would like to interrogate the new structure as he had never seen a position for a Chief Operating Officer in Parliament. He had a few questions and comments regarding the new structure.
Mr Nyambi suggested that the Deputy Secretary should not get into the details of the new structure until she sends the copy of the updated presentation as Members were now at a disadvantage because they did not possess it.
Chairperson Mahlangu said that she would allow questions to the Acting Secretary on the organogram information because she presented the information to Members. Members may note the slide and ask questions later.
Chairperson Mabe proposed that the debate or engagement on the proposed structure be considered for the next meeting.
Mr Steenhuisen said he was happy with that but he wanted to know about the timeframes on the next debate because the slide on the structure outlined that the new structure had been approved. He would want to know by whom it was approved. He also said that he was deeply concerned about that slide and he would like to receive the information as soon as possible.
Mr J Julius (DA) asked for clarity on the key positions that must be filled and the impact on operations as the result of the unfilled key positions. Secondly, he wanted to know whether Parliament had money at this stage due to the shortfall, and what the impact of the shortfall was regarding the payment of Members and personnel.
Mr Nyambi asked what the implications up to this point were regarding the lack of funding as he had missed the sense of a clear direction on the shortfall. He wanted a more detailed analysis and plan moving to address the matter.
Mr T Brauteseth (DA; KZN) asked for a breakdown of the R1 billion spent on staff to get an idea on which departments the money was spent on and especially how much of it on the Executive Offices. Secondly, he was astonished that half of the R43 million of the Donor Funding went towards salaries. He said that he certainly did not encounter a staff compliment worth R20 million during his studies, and he was certain that the Co-Chairperson could agree to that as they were both beneficiaries of that donor funding. He asked for a breakdown of the salaries, not necessarily with people’s names but just a general idea of where the monies went.
Chairperson Mahlangu said that with regard to ‘Own Revenue’, she wanted to know how Parliament generated revenue. Secondly, on the donor funding, it was mentioned during the presentation that some of the donor funding had already been spent. She asked where the money was spent because the Sixth Parliament just commenced and the up-skilling programme for Members had not started as yet.
She said that the Committee would have adequate opportunity to get into deeper discussions during its induction. Lastly, on the PBO (Parliamentary Budget Office), it is extremely under-staffed and the Director in that Office left much earlier as he had resigned so that office does not have a leader and it is over-stretched. Will the matter of the under-staffing be addressed?
Chairperson Mahlangu also commented on the Parliamentary Budgetary Office and said that she was concerned that it was under-capacitated. The Office was established for a purpose to uphold accountability in the institution.
She suggested that in the next meeting Parliament could go deeper into the Kada Asmal Report on how he (Kada Asmal) advised in relation to the Chapter Nine institutions and the role of Parliament in funding the Chapter Nine institutions and where they should account. The Committee could interrogate the possible implementation of the Report’s recommendations.
She asked further about the contributing factors to the ‘un-spending’ of the budget. She also enquired about the Retained Earnings line item on the budget and where it came from. As for the donor funding, how effectively was it used? Is there a Programme Six in the Annual Performance Plan and what is it about?
Ms Tyawa said that Programme Six was just direct charges and salaries of Members and the budget is not appropriated. It comes from the National Revenue Fund and any leftover monies from that go back to the National Revenue Fund. The team included it on the programme just to compartmentalise the budget.
On the donor funding, she said that the bulk of the money was not allowed for salaries, so from Parliament’s compensation, 50% was paid towards the managers who implemented the programme under donor funding. Of the R40 million over a period of five years, 70% plus had to go to the programme and the programme was for the sector. The programme’s year does not correspond with Parliament’s year, so there are programmes that ran beyond its (Parliament’s) financial years – it overlaps. The development of manuals on oversight, law-making and public participation that were shared at the induction were as a result of the fund. This was shared across all provinces – within the 10 legislatures.
When the realised that the Treasury Office was important, Parliament approached G-Tec (technical advisory council) and asked for assistance to establish the Treasury Office. However, the team realised that that would cost money, so a project team was established to conduct an analysis of the function of that Office and hoped that in the next month or two, Parliament would be able to pay someone who will carry the Office.
On the budget cuts, in the previous Committee it was said that the Committee would work with the Executive Authority to assist in unpacking the budget of Parliament and make sure that Treasury does not just give Parliament a budget. So it is within the powers of the political leadership of the institutions to make sure about this. The timing was bad now due to fiscal constraints. Officials cannot do much when meeting with the technocrats of Treasury. The former Co-Chairpersons of the Committee said that they would work with the Executive Authority to ensure that Parliament’s budget was not at the discretion of Treasury. Perhaps that was something the current Co-Chairpersons may want to take up and follow up on.
At the level of technocrats, when the fiscus is down and out, all departments funding must be cut by 5% and Parliament received a letter that the budget would be cut by 8%. When Treasury looked at Parliament’s budget, they indicated that Parliament’s budget was consumed by its personnel. They then cut out personnel spending and that propelled Parliament to reprioritise areas where Members had to be supported.
When the PBO was established, it did not have a budget and it still does not have a budget; the team takes from the baseline and passes it on to the PBO. The Amendment Act that established the PBO makes it clear that that Office must be independent and does not report to the Executive Authority of Parliament. It would be important for Members to have a discussion on strengthening and funding that Office going forward for Parliament to ensure that it was sustained.
When the team conducted a trend analysis and the budget of Parliament, it realised that the baseline had not been revisited for a long time. If PAMET was taken out, Direct Charges of Members and Members’ Entitlements, Members would see how much it really cost to run Parliament. Those figures distorted the baseline of Parliament’s budget. The R2.6 billion baseline paid former MPLs and MPs – these are all the amounts that burdened the baseline of Parliament. The PAMET and the Medical Aid of former Members should not be in Parliament’s budget as they distorted the baseline. Once those figures have been removed, Members would be able to determine how much was spent on oversight by Parliament. The amounts also included post-retirement benefits and salaries of former Members which were dealt with by the Commission not Parliament, but Parliament carried those amounts.
Mr Joe Nkuna, Acting Chief Executive Officer said that Parliament was in a shortfall of R394 million from what was requested. Therefore, the funding was inadequate; the team then went back and re-looked at Parliament’s plans to reprioritise.
The breakdown on the compensation of employees is indicated on the budget but if Members wanted a breakdown on each department and office this could be provided. The team can provide that information without people’s names next to their salaries.
As for the revenue, it comes from the restaurant in Parliament and interest earned from the bank. He encouraged Members to utilise the restaurant to boost the revenue.
Treasury does not consult with Parliament when it decides to cut its funds. Recently, the Office of the Chief Executive Officer received a letter indicating that the budget will be cut by 5% in the 2020 MTEF, 7% in 2021 and 8% in 2022. If one quantifies those percentages, it adds up to R400 million. These budget cuts are referred to by Treasury as compulsory budget reduction – this with no consultation. The team engaged the Executive Authority to speak to the Minister of Finance because the technocrats cannot do anything about it.
The Retained Earnings were as a result of resignations that took place during the course of the financial year. Normally, the retained earnings stem from the compensation of employees.
The percentage of donor funding against the total budget only constitutes 1.5% of the total budget.
Ms Tyawa said that more information may be provided at a later stage regarding the question on the Kada Asmal Report. The team did not possess the information at the moment.
Mr Steenhuisen said that on the compensation of employees, particularly the gratuities of loss of Office for MPs; how much was budgeted for in the current financial year versus the budget as the result of the gratuities paid out and how is that going to affect the budget going forward? And lastly, how much has been paid out so far in the current financial year?
Mr Brauteseth asked for a suggestion on where the payment of Members should go to because it seemed that this could point to where the blame lay. Those payments have to be registered somewhere. The reason there are so many budget cuts was because of the mismanagement of funds not because of direct charges to Members.
Chairperson Mabe asked about the EAP (Employee Assistance Programme).
Ms Tyawa said that there is an EAP for Members. Once the Members’ Interest Committee has been activated, it will deal with the EAP.
She clarified that she was not blaming the Direct Charges but that Parliament carries the amounts of former MPs and MPLs. The point is that it is on the baseline and it has crippled Parliament. Parliament also carries MPs before 1994. Parliament has written three letters to Treasury to request that that line item should be located with Treasury. Proposals have been made to Treasury and Treasury suggested that an Actuarial Scientist could be utilised to assist on which vehicle Parliament can use for that line item.
Mr Nkuna said that on the gratuities, about R527 million has been calculated for the 2019/20 financial year for payment of Members and gratuities. So far Parliament has paid a total of R76 million towards gratuities.
Mr Julius asked about the money that has been paid so far, if Parliament had money to spend to pay the outstanding establishment fees for returning Members.
One of the Co-Chairpersons said that as much as Members were being encouraged to utilise the restaurant, she requested that Parliament should consider improving on its menu to make it healthier. Secondly, in 2013, the halls in the villages were renovated and transformed into gyms but to date the halls are still empty. Can Parliament engage the Department of Public Works on this?
Mr Steenhuisen asked for confirmation on whether the loss of the Gratuity Allowance was as a result of Parliament’s policy not under the purview of the Remuneration of Public Office Bearers Act; therefore, any amendments to that gratuity would be a decision of Parliament to take and what would be the relevant body to amend the policy?
Ms Tyawa took note of the menu comments.
Mr Nkuna said that the loss of office gratuity came from a government gazette that was issued in 2008 and it was done by the Committee that dealt with salaries of Members. Parliament has no control over it which was why it was part of direct charges.
Ms Tyawa committed to Members that her team would send the missing pages of the presentation which pertained to the structure the next day. She also confirmed that the establishment fees for returning Members would be paid at the end of July.
The Chairpersons thanked the Members.
The meeting was adjourned.
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