2019 Division of Revenue Amendment Bill: committee report; DPME 2019/20 Quarter 2 Performance, with Minister

Standing Committee on Appropriations

19 November 2019
Chairperson: Mr S Buthelezi (ANC)
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Meeting Summary

The Committee met to review a draft Division of Revenue Act (DORA) Committee report and receive a briefing by the Department of Planning, Monitoring and Evaluation (DPME) on the 2019/20 second quarter performance report for national departments.

The Committee discussed issues raised by Treasury on the Committee’s findings around constant underspending on grants by municipalities, and on the ‘user pay’ principle relating to pollution of the Vaal River, because municipalities had been the culprits. The Committee agreed that Treasury should be assisting municipalities in not underspending, and that apart from damages caused by a lack of maintenance by municipalities, the ‘user pay’ principle should remain. It agreed to add a further recommendation that there had to be consequence management, and that it had to be reported back to the Committee. The report was adopted.

The DPME presented on national departments’ second quarter performances against their annual performance plan (APP) targets in summary form. Four departments had scored less than 50% -- the Departments of Environmental Affairs (33%), Rural Development and Land Affairs (26%), Telecommunications and Postal Services (40%) and Trade and Industry (36.8%). 

Impact evaluations on service delivery had been conducted on early grade reading, nutrition interventions for children under five years, restitution, the drug master plan, the urban settlements development grant, the policy on community colleges, and gender-based violence. The DPME then presented on the 14 priority medium term strategic framework (MTSF) outcome impact indicators. These were improved quality of basic education; health; safety; economy; skills; infrastructure; rural development; human settlements; local government; environment; international; public service; social protection; and nation building.

Members asked if the government could target eradicating the bucket toilet system by the end of the 6th Parliament. Was expenditure tracking part of the DPME’s mandate? Had the government looked into the effectiveness of its many policy instruments? Members were concerned about the accuracy of the Department’s statistics. What was it doing regarding service delivery at municipalities? Did it think it was necessary to retain the three-tier format of government if it was not working? Who did the DPME report to after conducting evaluations?

The DPME was asked how it intended to monitor the process of attaining the President’s call to create 275 000 job opportunities per annum, and also the transformation issues involving gender and people with disabilities. Members expressed concern at the functionality of ward committees, which impacted on the stability of municipalities. Was the National School of Government relevant to the needs of government? Why was project and contract management absent from its curriculum? Were Sector Education and Training Authorities (SETAs) still relevant? Would the housing problem ever be solved? What would it take to eradicate pit latrines in schools? Members said national government’s non-payment of invoices within 30 days had an impact on job creation and economic growth.

Meeting report

Draft DORA Report

Mr Sifiso Magagula, Committee Content Advisor, took the Committee through the draft Division of Revenue Act (DORA) report.  On point 8.3 of the findings, he said that the Committee's finding was that Treasury and the Department of Cooperative Governance and Traditional Affairs (COGTA) must provide assistance to municipalities who were constantly underspending on grants, instead of implementing budget cuts. He pointed out that Treasury had said that one could not use the word ‘underspend,’ because the budgets had been increased by R3 billion. The grants were allocated, but the chances were that municipalities would underspend continuously and so it was easy for Treasury to shift funds, because there was always underspending.

Mr Z Mlenzana (ANC) said that the knowledge that municipalities would underspend appeared to be Treasury’s ‘reserves’.

Mr D Joseph (DA) said Treasury and the DCOG should be responsible to ensure there was no underspending.

On point 8.4, he said Treasury had said one could not say that those that polluted the Vaal River should pay, because municipalities had been the culprits.

Mr X Qayiso (ANC) did not agree. He said there was no concrete proof of who polluted the Vaal River or Vaal Dam.

Ms D Peters (ANC) said Treasury’s presentation to the Committee had said that dysfunctional wastewater works was the cause, and money had been targeted to deal with them. It was public knowledge that the South African National Defence Force (SANDF) had done an intervention on the matter. What could be done was to emphasise the fact that municipalities were responsible for forcing companies that were polluting to also pay.

Mr O Mathafa (ANC) said there was a need to get a comprehensive report on the pollution of the Vaal River and Vaal Dam.

Mr Joseph suggested the word ‘identify’ be replaced with ‘ensure’.

Mr A Shaik-Emam (NFP) said consequence management had to be included in the recommendations.

Ms Peters said that apart from damage caused by a lack of maintenance, the ‘user pay’ principle should remain. She wanted to avoid a fight with the Treasury.

The Chairperson agreed.

Mr Shaik-Emam said there had to be consequence management, and that it had to be reported back to the Committee.

The Committee Secretary said reporting on under expenditure was done in the section 32 reports.

Mr Joseph said that consequence management should be a separate point 9.2 in the report. On point 8.4 of the report, on the ‘user pay’ principle, he said that polluters should not be allowed to pollute in the first place.

The Chairperson said they should be held liable for their actions.

Mr Mathafa said the report did not reflect any input from the South African Local Government Association (SALGA).

The Committee Secretary said that SALGA’s input was in the Medium Term Budget Policy Statement (MTBPS) and would be in the MTBPS report, not the DORA report.

The report was adopted by the Committee.

Quarterly reports: Department of Planning, Monitoring and Evaluation (DPME)

Mr Jackson Mthembu, Minister: Department of Planning, Monitoring and Evaluation (DPME), said it had been an oversight on his part not to be present at the previous meeting of the DPME with the Committee, as it was the first interaction with the Committee and he needed to inform it what the DPME did. The Department had sent the person responsible for quarterly reports, as he had been in Kenya at the time.

Ms Mpumi Mpofu, Director General (DG), DPME, said that she had to inform the Committee that the DPME had a new organisational structure. The deputy directors-general (DDGs) were sector experts and were called outcomes facilitators. Generally, the DPME was spread thin because their input was requested across all committees. She asked for their understanding, because there would not always be a big delegation or even DDGs, but there would be people who could answer their questions.

Since July, the DPME had been busy setting up the administration of the 6th Parliament. It had concluded the 25-year review and would be submitting the next day to Cabinet the national evaluation plan based on the Medium Term Strategic Framework (MTSF), which indicates which areas would be evaluated over the next five years -- normally the underperforming and problem areas.

The Minister was excused from the meeting.

Ms Edeshri Moodley, Acting DDG: National Planning, DPME, and responsible for quarterly reports, presented on departments’ second quarter performances against annual performance plan (APP) targets in summary form. The detailed report was contained in an Annexure.

The Department of Environmental Affairs (DEA) had scored 33%, with 29 out of 88 targets achieved.

The following departments had scored 50% or less:

The Department of Military veterans scored 50%, with one out of two targets achieved.
The Department of Telecommunications and Postal Services scored 40%, with two out of five targets achieved.
The Department of Trade and Industry scored 36.8%, with seven out of 19 targets achieved. 

Ms Mpofu moved on to present on impact evaluations on service delivery, and the MTSF outcome impact indicators. She said one issue was that the outcome impact indicators did not align with the quarterly reports because the former were done annually. The impact evaluations on service delivery had been done on early grade reading, nutrition interventions for children under five years, restitution, the drug master plan, the urban settlements development grant, the policy on community colleges, and gender-based violence GBV.

She then addressed the 14 MTSF impact indicators. On improved quality of basic education, the number of grade 12 learners passing maths at 50% or more, and the number passing at a Bachelor’s level, had decreased, as had the percentage of youths who had obtained any further education and training (FET) qualification.

On Outcome 3 (all people in South Africa are and feel free), Mr Shaikh-Emam asked why the statistics provided were for the year 2017/18 and not for 2018/19.

Ms Mpofu said that the statistics were based on statutory surveys undertaken by Stats SA, which were normally biennial surveys.

Mr Shaik-Emam said that Stats SA’s statistics had been found wanting. They were not credible and would mislead.

Ms Mpofu said that with all the corruption and related cases the justice system had, it was not able to cope. The DPME had looked for money to increase the prosecutorial capacity for corruption cases, especially in the North West province. The jobs freeze and cuts to the compensation of employees (CoE) in departments also had an impact.

On Outcome 4 (decent employment through inclusive economic growth), she said unemployment and inequality remained high.
 
On Outcome 5 (a skilled and capable workforce to support growth), she spoke to the certification rates of TVET colleges.
 
On Outcome 7 (vibrant equitable and sustainable rural communities), she said only one million hectares of a targeted two million hectares of land for land reform had been acquired.

On Outcome 8 (sustainable human settlements and improved quality of household life), she spoke to the backlog in title deed transfers. She also said that the MTSF and national development plan (NDP) targets for human settlements could not be achieved by government alone. This would need the support of partnerships.

On Outcome 9 (a responsive accountable effective and efficient local government system), she said irregular expenditure had decreased from R29.7 billion to R21.4 billion, and government was targeting 0% fruitless and wasteful expenditure.

On Outcome 12 (an efficient effective and development oriented public service), she said the challenge of non-payment of suppliers within 30 days remained, and heads of departments (HODs) had to discipline officials causing delays, otherwise they themselves should be disciplined. The DPME had made interventions in Gauteng province, and these related mainly to payments for medico-legal cases which caused funds for other suppliers not being available.

Discussion

Mr Mlenzana asked the DPME their view on the DORA bill and on independent power producers (IPPs). He asked if government could target eradicating the bucket toilet system by the end of the 6th Parliament.

Mr Mathafa asked if expenditure tracking was part of DPME’s mandate. He wanted the DPME to talk to the two targets not achieved by the Department of Public Service and Administration (DPSA). He asked if government had looked into the effectiveness of its many policy instruments.
 
Mr Shaikh-Emam was concerned about the accuracy of the DPME’s statistics. What would the impact of the Department of Health (DoH) be on the roll out of the National Health Insurance (NHI) scheme? How did the DPME get other departments to comply, when Treasury itself did not? What was the DPME doing regarding service delivery at municipalities? Did the DPME think it was necessary to retain the three-tier format of government if it was not working? He said the presentation had not touched on government debt and its impact on government. He asked who the DPME reported to after doing evaluations.

Mr Qayiso asked how the DPME intended to monitor the processes of attaining the President’s call to create 275 000 job opportunities per annum, and also on the issues of gender and disability transformation.

Ms Peters said that if one looked at the performance indicators, one would think the government was doing well, but when one looked at impact, one got worried. She was concerned about the development of sustainable human settlements, especially in rural areas. What would theDPME advise the Department of Human Settlements (DHS)? There was a challenge of multiple owners of a property in townships, where one person owned the land while another owned the property on the land. The underspending on household electricity grid connections needed to be looked at. There was an opportunity for job creation in the environmental sphere in the remediation of the Jukskei River in the Alexandra area.

Mr Joseph asked for the DPME’s view on the income from the informal economy, given the decline in SARS’s tax revenue. He was concerned about the government’s 2% target of for employing people with disabilities, and the achievement of only 1%. A national database on housing was needed. He expressed concern at the functionality of ward committees, which impacted on the stability of municipalities.

The Chairperson asked what the outcomes of the National School of Government (NSG) were, and whether it was relevant to the needs of government. Could the DPME comment on the absence of project management and contract management from its curriculum and on the relevance of sector education and training authorities (SETAs)? He suggested these funds could be used by state-owned companies (SOCs). What was holding up the NSG? Would the housing problem ever be solved? What it would take to eradicate pit latrines in schools? He said national government was as guilty as Gauteng was in not paying invoices within 30 days, and this had an impact on job creation and economic growth.

Ms Josephilda Nhlapo-Hlope, Acting DDG: Monitoring, said DPME did monitor expenditure.

On the question related to gender transformation and people with disabilities, she said the DPME had noticed that government was not moving as fast as it should. Going forward, the matters would be tracked during, and not at the end, of a period.

On why transformation was not moving as fast as it should, she said the inequality was because there was a history of inequality, and there was inequality in terms of opportunities.

She said that with people living longer because of better health, more would be paid in old age pensions because South Africa had committed, via the constitution, to look after the most vulnerable. 

Ms Moodley referred to the lack of performance by the DPSA, and said the Department had not achieved its Programme 6 target on governance because it had prioritised the ethics and integrity and technical assistance unit, which had taken precedence over other work.

The reasons cited by Treasury for the non-achievements of targets for quarter 2 were capacity constraints, the demand for their services, and delays in processes.

Ms Mpofu said the government had not perfected the system of managing and monitoring the conditionalities in the DORA Bill. The evolution of this system to include a system for free services had been developed, but could be improved. The DPME did not do effective monitoring of grant systems.

On IPPs, she said there had been support for the diversification of power generation. One needed IPPs to diversify energy generation sources and to improve the security of the country’s energy supply.

The bucket system could be eradicated, but it was a moving target.

The DPME had engaged with the public on outreach programmes, and the Deputy Minister had been delegated this responsibility. There was citizen-based monitoring, community-based monitoring, front-line monitoring, and the hotline which would also be turned into an app. The DPME had a team of people in communities who worked liked inspectors and tried to solve problem areas, but it also did community dialogues. There was also the Presidential Hotline, and people were using it as if it was their last hope.

Mr Shaik-Emam asked what the responses to the hotline were.

Ms Mpofu said the DPME could do a presentation on it, as well as on TVET colleges. The Department had subjected the hotline to an audit.

The challenge in improving the quality of health was the lack of health facilities. Operation Phakisa had a subset on the ideal clinic, and the DPME could talk to that. The government’s payments relating to medico-legal fees was a case of corruption, with collusion occurring between the state law advisor and lawyers. Lawyers who had operated in the sphere of the Road Accident Fund had moved to the area of medico-legal fees. These opportunities were being shut down. A big priority for the DPME was the state liabilities bill, which would allow government to reimburse in kind through the provision of health services, and if payment was financial, then the payment would be made monthly, instead of a lump sum.  She said lawyers were also moving into the sphere of police, and there would be an increase in cases in this department.

She said that when centres of government departments failed, it had an impact on the whole of government. The failure of the integrated financial management system (IFMS) had led to the high compensation of employees. The DPME’s chief financial officer (CFO) had said that if the IFMS was in place, then the number of officials in the finance section could be decreased by 20%.

The Chairperson said that IFMS 1 had failed.

Ms Mpofu said that the DPME had been asked to zoom in on centres of government departments and monitor them, including itself and government clusters.

Everyone was working on five year cycles, as per the MTEF, and therefore Treasury also had to do five-year and not three-year budgets. The DPME looked at the financial performance of all departments and wanted to eradicate fruitless and wasteful expenditure.

On local government, she said the DPME had an instrument that had been incubated -- the local government management information system -- which had been designed by the DPME. Take up was voluntary, and half of the municipalities had taken up the system. The DPME wanted to give the system to COGTA for implementation, as its task was to monitor COGTA strategically, not to implement the management information system.

On integrated planning, she said the DPME had an integrated planning bill which had missed the June 2018 cut-off date for legislation to be worked on by Parliament. The bill would help manage the full cycle of integrated planning from the NDP to the integrated development plan (IDP).  This was a very important bill which needed to be supported.

The most important development recently had been the district model of service delivery which was led by the President. This would make the district the unit of planning and service delivery. The DPME was doing an evaluation on the design of the model.

She suggested a discussion on rising government debt at another time.

She said DPME did interventions when there were problems -- for example, the stabilisation of the South African Social Security Agency (SASSA) and the North West province section 100 interventions.

The 275 000 jobs figure had come came from a jobs summit committee. She said performance agreements needed to be signed with the private sector, because government did not really create jobs -- the private sector did. There was also the Public Private Growth Initiative, which was based in the Economic Development Department (EDD), which would also contribute to job creation.

On human settlements in rural areas, she said that overall the rural strategy was new and all of the sector required interventions at some point. In rural areas, people did not want reconstruction and development programme (RDP) houses or contractors -- they wanted to do it themselves, and in some instances in Mpumlanga and Limpopo provinces, this method had done well.

Regarding property ownership, she said there were nightmarish instances of ownership and access to land and property, like for example in Limpopo province. The Department of Traditional Affairs (DTA) was now looking at rural affairs. Up till now, the focus had been on Amakhosi issues, but this was changing. The urban to rural movement of people was driven by poverty. This could be reversed by providing decent services and facilities in rural areas. Title deeds issues were an administrative problem and could be cleared. There were also ownership issues because of corruption. This could be mitigated by the use of family title deeds to land and property which the DPME had designed.

Mr Shaik-Emam asked what the latest information on the suggested provision of serviced sites was.

Ms Mpofu agreed that when looking at the performance of departments against targets, this had not solved problems, and the DPME was working on the consolidation of social services.

On the Jukskei River and Alexandra Township, she said one other alternative was the banning of informal settlements in areas of flooding or fire risk, and therefore the DPME had designed interventions.

The Department was engaging with the Department of Labour (DoL) on informal economic trade, and it could report back to the Committee on this matter. The informal economy was the responsibility of the EDD. The definition of local economic development (LED) was evolving. Local government could not deal with a single approach to LED, because it was localised and not informed by a national strategy. It had devolved too much and relied too much on local government. The DPME could come back on this matter.

She said the DPME had spread itself too thin, so the 14 priorities in the previous MTEF had been cut to seven for the new MTEF. Previously it had monitored 1 051 indicators, but now it would be doing only 300, which were vertically integrated through the three spheres of government and the districts.

The DPME had tried to assist the National School of Government. The challenge was that government could not support it. The NSG did not provide the type of training that was needed, so the central government’s training services were used.

On the government skills master-plan, she said the task was given to the Departments of Higher Education and Labour, and it would be delivered on 1 April next year. The DoH was currently doing their skills master-plan. It had been agreed that SETAs should be targeted to provide clear training programmes, preferably though established institutions. The weakness of SETA was the private sector, and private service providers.

On housing, she said the way RDP housing had been made central to the redevelopment programme was because they had expected partnerships in this model, but this had not happened and so the program had fallen flat. The ‘red lining’ of areas by banks should be made unconstitutional, as no one had then invested or bought properties in these areas. The strategy should be reviewed to give people land for them to develop further. This was already done in Gauteng. The ratio of giving land to houses was already 1:3. People wanted land, but there were vulnerable groups like the elderly, for example, where housing would be the only option.

She would come back to the Committee on the pit latrines issue.

Regarding payment within 30 days and the role of national departments, the DPME had targeted Gauteng and the Eastern Cape because they accounted for more than 80% of the instances of non-payment. The principle driver of non-payments was the health departments because of the cost of medico-legal cases -- small creditors did not get paid because all the money was taken by the medico-legal cases. The cases were being lost because the hospitals’ medical records were not up to standard. There was a lack of proper record keeping, and the DPME had spoken to Treasury on prioritising hospitals getting electronic systems to manage records. The 30-day payment was so important that it was managed by the Presidential Coordinating Council (PCC).

She said the integrated planning bill was very important, to ensure proper planning.

The DPME had been to the North West province for 12 months, and good outcomes were emerging on the financial performance indicators. Before the appointment of an administrator, there had been a spike in irregular payments, but since then the numbers had come down. Citizen surveys showed that protests had decreased. There was still a problem with local government, but interventions had been put in place.

She said section 100 interventions were done on provinces, and section 139 on local governments, but before a section 139 could be done one had to assist local government via section 154 interventions. Twelve municipalities were under section 139. The challenge was that while the DPME had instruments to deal with provinces and municipalities, in the pat two to three years there had been instances of national departments being delinquent, like the Department of Military Veterans (DMV) and the Department of Water and Sanitation (DWS). The DPME had been asked to do an intervention at the DMV, and was doing a ‘soft’ section 100, assisting the department in the same way it would help a province. There was no legal way of providing interventions to departments, and this was what was needed. This was also an example of constitutional ‘underdevelopment.’

The meeting was adjourned.





 

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