The Joint Standing Committee on the Financial Management of Parliament met for a briefing by the Secretary to Parliament on the institution’s performance in 2018/19.
The Secretary informed the Committee that the institutional performance had increased from 45.87% to 78.6% over the term of the Fifth Parliament. 2018/19 had seen Parliament’s highest level of institutional performance. There were 14 performance indicators in the 2018/2019 Annual Performance Plan, of which 11 indicators had been met or had exceeded the target. Five consecutive clean audits affirmed a clean governance record. The Auditor-General’s Report confirmed that there were no material, financial or performance information findings in 2018/19. The increased performance had been achieved despite a declining budget. Parliament had a net liability amounting to R1.46 billion due to the post-service medical provision made for the former Members of Parliament and provincial legislatures. Constrained, declining operational budgets remained an institutional risk, which highlighted the need for the 6th Parliament to strategically prioritise and use resources effectively.
Members were concerned that the system being used to pay Members’ claims was a bad system. Why were claims only accepted once a week and why were Members waiting two weeks for re-imbursement? Why had the capacity in that office been lost? Concerning the client service, Members asked who was happy. What was the size of the survey? Who had been surveyed?
Was the relationship between the Executive and staff improving? Members noted a R56 million underspend in terms of employees’ compensation and asked whether Parliament had the staff it needed. Was the Parliamentary Budget Office adequately staffed? What about the legal section that could never offer sufficient legal support? What were benefits, the advantages versus disadvantages, and the productivity in terms of spending in respect of insourcing?
Members also asked what the Section 25 hearings had cost and whether there was a set budget for a public hearing. Members requested a breakdown of the expenditure of European Union funding for training and policy development in the previous year and whether there was any possibility of further funding in 2019/20. Had the Secretary’s post had been advertised?
The Chairperson informed the Committee that the co-Chairperson of the Joint Standing Committee was ill and had sent her apologies.
The Chairperson noted that there were no representatives from the National Council of Provinces but that the rules required a minimum number of Members, regardless of which House they represented.
Presentation by Secretary to Parliament on Parliament’s 2018/19 audit outcomes
The Acting Secretary to Parliament, Ms Tyawa provided an overview of the Annual Report. The institutional performance had increased from 45.87% to 78.6% over the term of the Fifth Parliament. 2018/19 had seen Parliament’s highest level of institutional performance. Five consecutive clean audits affirmed a clean governance record. The Auditor-General’s Report confirmed that there were no material, financial or performance information findings. The increased performance was achieved despite a declining budget.
There had been constant improvement from 2016 as a result of continuous monitoring of the implementation of action plans, adequate reviews of the Annual Financial Statements before submission and a continuous improvement in the supply chain management processes. There were 14 performance indicators in the 2018/2019 Annual Performance Plan. Of those, 11 indicators had been met or had exceeded the target. Three indicators had performed below the target level. Programme 1 had one performance indicator which had exceeded the target substantively: The Parliamentary Budget Office (PBO) had produced 36 analytical reports in the financial year against a set target of 24. The positive variance was against requests from Committees and Members of Parliament.
Performance against the Service Charter had improved substantively over the 2018/2019 financial year to meet the target. That indicator had historically underperformed. The percentage of the population having access to participation in parliamentary processes had maintained its trajectory of good performance in the 2018/2019 financial year. The percentage of the population participating in parliamentary processes had also met the target in the 2018/2019 financial year from a position of historical underperformance. An analysis of historical performance trends revealed that the Parliamentary Administration needed to do more work to enhance client satisfaction by focusing on client experience and quality of service.
Overview of Financial Position
Parliament had a net liability amounting to R1.46 billion due to the post-service medical provision made for the former Members of Parliament and provincial legislatures. In 1999 Parliament had approved that the medical aid contributions for former Members of Parliament and provincial legislatures would be paid by Parliament. 961 former members received the subsidy as at the end of the financial year. The actual contribution made by Parliament was R62.4 million during the year and was funded from the annual appropriation.
Parliament had written to National Treasury twice to take over the management and payment of post-retirement medical aid (PRMA) benefits to former Members of Parliament and provincial legislatures. National Treasury responded it had limited scope to take over the liability of retired Members as Parliament fell outside the scope of NT’s post-retirement medical scheme and advised that an investigation of the underlying structure and risk profile of PARMED and financial modelling should be conducted. Parliament’s financial position without the post-retirement medical aid liability would be a net liability of R217.6 million. Included under non-current liabilities were provisions of R140.2 million and R200 million for Members’ loss of office and exit gratuities, respectively, which were paid from direct charges.
The employee benefits relating to the post-retirement medical aid plan for all Members and pensioners who belong to PARMED medical aid had increased by of 9% due to the increase in discount rates and the average benefit commencement which had decreased from 62 years to 55 years due to the younger intake of Members who, on termination of service in Parliament, became eligible for the medical subsidy.
The provision for Members' gratuities was calculated for all current Members of Parliament with service exceeding five years, assuming termination of service at the reporting date. It was calculated as four months’ pensionable salary for every five years in service or pro-rata share of the five year period. Pensionable salary was 60% of the total gazetted remuneration package. The increase of 10% was due to the increase in salaries and years of service.
The exit gratuity was payable to relevant eligible Members of Parliament who were Members of the Political Office Bearers Pension Fund and who exited the fund before, or as a consequence of, the 2019 general elections due to amendments made in the rules in terms of the Proclamation 48 of 21 July 2016. The gratuity liability was calculated at reporting date and compared to the benefit that would have been payable to each Member under the old fund benefit rules. The increase of 23% was due to discount rate and inflation.
Constrained, declining operational budgets remained an institutional risk, which highlighted the need for the 6th Parliament to strategically prioritise and use resources effectively. Strategic prioritisation and tactical allocation of the scarce resources would ensure effective implementation of goals.
The Chairperson stated that the Annual Report would be adopted the following week and sent to the House.
Mr B Radebe (ANC) appreciated the presentation and the timely distribution so that Members had had time to reflect on it. He congratulated the team on the clean audit. The Acting Secretary had said that she wanted to improve and move forward. He was concerned about the system being used to pay claims which was a bad system. Claims used to be paid twice a week but claims were currently accepted only on a Monday and Members waited two weeks for re-imbursement. Why had the capacity been lost? It had never been like that in the past.
He asked what the Department of Public Works (DPW) had done that Parliament owed money to DPW, and likewise the South African Police Service (SAPS). It was the mandate of SAPS to protect the national key point so how could Parliament owe SAPS money?
Mr Radebe stated that PARMED was not going anywhere. It had to be a direct charge from National Treasury. That had to be done immediately. It could not be a liability. It was not a threat. The people had worked for SA and must enjoy their benefits. PARMED should not be moved from Parliament to provinces as the current situation allowed people to move from the provinces to national and vice versa. There was no capacity in local government because people did not go there because the conditions of service were not the same. If PARMED was devolved to the provinces, there would be problem. It would be dangerous. The Constitution was clear. There were three arms: The Judiciary, Executive and Legislature. That was why the legislature matters could not be separated.
Concerning the client service, Mr Radebe asked who was happy. The smell during the State of the Nation Address was terrible. What was the size of the survey? Who had been surveyed? If the MPs were the clients and if only 20 or 50 had been interviewed, the results would be faulty.
Mr N Singh (IFP) thanked the Acting Secretary and her team. As with a school report, he was going to say that it was very good but there was room for improvement. Having served on the Committee since its inception, he could say that the Committee had done well, had asked searching questions and had been well-led by past and the current Chairpersons. The Committee had helped the Administration to improve.
Noting the challenges in the past, Mr Singh asked about the relationship between the Executive and staff. Were things improving? He noted a R56 million underspend in terms of employees. Why was that and did Parliament have the staff it needed? Was the PBO adequately staffed? What about the legal section? He believed that Parliament was short of legal support. There was not sufficient for all Committees and no support to Members. He acknowledged the budgetary constraints.
Mr Singh asked about insourcing, which, he noted, everyone supported. Catering, for example, had been in-sourced. What were benefits, the advantages versus disadvantages, and the productivity in terms of spending in respect of insourcing?
He agreed with Mr Radebe regarding the PARMED issue, but it dragged on year after year, as did the issue of flights where Parliament was carrying the Executive. High level talks were meant to have been held with the Minister, National Treasury and the Speaker. The Executive could not continue to be entitled to 48 business flights a year. The Speaker needed to give the Executive a timeframe, such as by the next budget. Parliament had to finalise the matter. The Legislature was an arm of the State. It should not be told what to do by the Executive.
Finally, Mr Singh asked what the Section 25 hearings had cost. He was happy to receive the answer in writing. Two members had retired. Were they from the section that was responsible for payment? Was that why payments had been delayed?
Ms R Lesoma (ANC) asked if, when the Administration provided information regarding public hearings on Section 25, it was possible to say how much public hearings should cost. If there were no guidelines, the budget office was going to say that there was no money when Committees wanted to hold public hearings.
She hoped that Mr Singh had not meant that out-sourcing was better than insourcing. She agreed with Mr Radebe that PARMED was a financial issue, not a political issue.
The Acting CFO for Parliament, Mr Joe Nkuna, responded to the question about the payment for SAPS. SAPS did provide protection services as part of its mandate but Parliament and SAPS had an agreement that Parliament had to pay overtime if the officers worked above a certain number of hours. In respect of DPW, he informed Members that Parliament had Parliamentary Democracy Offices in three provinces: Limpopo, Northern Cape and North West. DPW paid for the offices but Parliament had to refund DPW.
Regarding PARMED, Mr Nkuna acknowledged that it was out of frustration that his office had suggested devolving some responsibility to the provinces, although he admitted that it was probably not politically correct. The amount was R1.5 billion and he had hoped to reduce the risk to the institution. If Parliament was a business, it would be a non-going concern. National Treasury was clear that it would not take over the PARMED. National Treasury dealt with medical aid for former veterans but Parliamentary Members could not be included. National Treasury would be in Parliament the following week to discuss the matter. It was essential that PARMED be adequately funded. In 2019 many Members had resigned and so the situation in the current year would be worse.
Mr Nkuna explained that the R56 million underspend on compensation of employees was due to an agreement between the union and management that Parliament had to reverse the performance bonus for the previous financial year.
The Acting Secretary explained that that had occurred during the time that Parliament was implementing the “no work no pay” policy and there were people who would have received zero salaries. That was how management had reached that agreement.
She informed the Committee that PBO had been established without a budget allocation. It had an unfunded mandate. No allocation was sanctioned for the Office so the budget came from Parliament’s budget. Parliament had requested funding for the three offices: PBO, OISD, and the Treasury Advisory Office. Parliament’s baseline budget had never been changed, so management supported the three Offices as best it could by re-prioritising and filling the critical positions. She was aware that Parliament needed stronger legal support. There had never been as many legal advisors as the number required so management was re-aligning that area, but she had seen that other parliaments worked with universities and she believed that establishing partnerships with specialists at universities would help as Parliament could sign contracts for using those specialists only when needed. It was difficult as there was always litigation against Parliament.
The Acting Secretary stated that insourcing had been extremely difficult as she had had to explain to Labour there had to criteria and could not just absorb everyone that the union had been trying to force them to accept. The people had been absorbed but the middle management, especially in the Old Assembly building, had to be trained to supervise. Parliament would be breaking even but employee salaries from R1,500 upwards had been tripled by Parliament and that had had a significant impact. There had also a need for capital injection of equipment and other tools of trade. The Division Managers had been managing suppliers. However, she had been told that there was an emerging pattern of stealing. Parliament had to exercise consequence management and had to train controllers and make sure that staff worked shifts. Training and a change of attitude was needed. The training budget was currently skewed towards Adult Basic Education and Training (ABET) to educate the insourced people. The bottom line was that managers had to manage.
Concerning the relationship between staff and management, the Acting Secretary conceded that no organisation had perfect relationships but Parliament held monthly meetings between management and Labour where matters were discussed. Certain problems could never be resolved. Ten years ago, some staff had not signed performance agreements and were aggrieved that they did not receive bonuses. However, there was not an extensive toxic atmosphere and fighting. Parliament could not have achieved a 78% performance level if staff were not cooperating. Band D had its own forum but even there, there were problems. When the Acting Secretary had found so much conflict and so many fights, managers had been trained in conflict management, there was coaching for some managers, and some managers had trained in conflict management at Stellenbosch University.
Ms Ressida Begg, Division Manager: Core Business Support, responded to the question on the cost of public hearings. She stated that she could provide the costs but could not draw comparisons between the public hearing held by the Fifth Parliament and the National Health Insurance (NHI) Bill hearings as the cost of public hearings depended on the nature of the Bill and the extent to which the Bill would impact on the citizenry. It was largely dependent on Committees how extensive public hearings were, but Parliament tried to be as inclusive as possible. Comparing the Section 25 hearings with the NHI hearings, she explained that during the previous year Section 25 hearings had been held in two municipal districts per province whereas NHI hearings would be held in four municipal districts per province. Parliament did not want contestation in court that public participation had been inadequate. That was the advice that her office gave to Committees.
The Acting Secretary stated that reimbursing Members had been delayed as two officials had retired and two staff members in that office had been ill. The manager in that office had to manage and her office would address that.
Ms Lesoma stated that there was talk in the corridor, that she knew she should not bring to the meeting but she was relating it to the HR discussion, that if a person resigned or if there was any intention of the Administration to change any units, how they operated or were managed, no matter how subtle, there had to be consultation before any processes started. The HR Manager had to pay attention to the units and how they were being managed.
Mr Singh said that a Member of his party had been extremely unimpressed with the lunch provided at an outside venue that day. He wanted that followed up. A lot of money came from the European Union (EU) for training and he requested a breakdown of the expenditure of EU money in the previous year and whether there was any possibility of further funding in 2019/20. He asked whether the Secretary’s post had been advertised and suggested that Members of the Finance Committee should be on the Interview panel for the Secretary job.
Ms Tyawa reassured the Committee that the HR unit was extremely professional and that there was a formal process to evaluate each job if it was to be changed to ensure that it was at the correct grade. Parliament had a permanent shop steward so if any issue happened more than three times, it was elevated to the Deputy Minister. She admitted that the job descriptions were old; some had been drawn up in 1974. HR was addressing the job descriptions. She suggested that the Committee might want a presentation on HR. The unit now drove all HR needs in such a way that an employee could go to a single person with all one’s HR requirements.
She promised to provide the Committee with full details of the EU funding as she had prepared a report for the Speakers Forum.
Ms N Mahlo (ANC) was impressed that there were highly qualified people in HR but the Members needed a presentation and Members should go through the HR Quality Management System which had all the policies and procedures, so that all Members could address the corridor talk.
Mr Radebe noted that the vacancy rate of staff was high. There was a high rate of unemployment in the country and Parliament should employ people where it could. The Minister of Finance had made a plea regarding cost-cutting measures. What was Parliament doing to respond to the call?
The Acting Secretary replied that the Administration had done away with printing and used the MyParliament App to distribute information. Management had done an assessment of printers and had found that there were printers everywhere and everyone had been printing in colour. Now only those who had codes could print. She was trying to cut the extent to which food was served, especially in internal meetings. Where meetings were held at 8:30 or 9:00, there was no need for a full blown meal. Management had cut down on the strategic planning as the strategic plans were done in the precinct and that saved on food and accommodation. She was holding a senior management lekgotla the following week and management would look at patterns of expenditure to see where it could start reducing expenditure.
She asked the Committee to assist with international travel. Parliament was asked to provide support when Members travelled and while she was happy to support Members, some officials went just to carry a jacket for a Member. Pre-planning of travel by Committees was essential. There should be no unplanned or unforeseen travel. When tickets were bought at the last minute, they were very expensive. Early, planned tickets cost a great deal less. The Members would have to raise the matter with the Chair of Chairs and the party leaders because the Administration did not want to appear arrogant but she and the CFO had a responsibility to manage the budget. It might be important to know which multi-lateral meetings were non-negotiable and Parliament could plan for those in advance. She appealed for the Committee’s assistance in the matter.
The Chairperson congratulated the Acting Secretary and her team on the five years of clean audits. As an oversight body, Parliament had to lead by example. She agreed with the setting of clear, measurable targets which would ensure a clean audit in the future.
She believed that the Committee should talk about Parliament’s relationship with National Treasury and National Treasury’s apparent power over Parliament. Parliament was independent of National Treasury and needed to be properly funded to fulfil its mandate. National Treasury could not tell Parliament that it could not have funds. Their roles had to be properly defined. She suggested that management meetings were required.
Seven items needed urgent attention:
-PARMED liability had to be resolved. National Treasury had recommended that Parliament do some financial modelling and that was outstanding.
- Internal control systems had to be improved.
- The reimbursement of Members on time had to be resolved. A system had to developed. Writing endless claim forms, which a person had to do personally, was time consuming.
- Material irregularity and fruitless expenditure issues from 2017/18 had to be resolved and removed from the books.
-Consequence management had to be improved. The Administration was not doing enough. The Committee needed detailed reports.
-Cost-cutting measures needed to be identified. Members could not appear to live lavishly while the country was not doing well.
- The implementation of MyParliament App had to be used effectively. Members needed training on the expensive items that they carried so that the printing budget could be eliminated.
Ms Mahlo informed the Administration that in respect of the issue of internal control, the ISSO 1300 Quality Control App would help. Managers could track where people were not paid in time, etc. She highly recommended the use of ISSO 1300.
The Chairperson thanked Members for their time.
Meeting was adjourned
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