Oversight Reports

Meeting report

Opening Remarks

The Chairperson welcomed all the Members to the consideration of the draft Gauteng and Western Cape Oversight Reports. The Committee would also consider previous meeting minutes and discuss some administrative issues. He put the meeting agenda up for adoption.

Ms J Hermans (ANC) moved for the adoption of the agenda as presented.

Mr M Cuthbert (DA) requested that the National Lottery Commission (NLC) matter which he and the Chairperson have been corresponding on be added on the agenda.

The Chairperson said matter being referred to by Mr Cuthbert could be raised as part of discussions on Committee business, because of its administrative nature.

Mr Cuthbert seconded the adoption of the agenda.

The Chairperson asked if there were any objections.

Mr Andre Hermans, Committee Secretary, noted Ms Y Yako’s (EFF) apology that she would not be joining the meeting.

Gauteng Oversight Report
Mr Hermans said Committee staff had requested that Members submit concluding remarks for consideration. Recommendations had only been received from ANC Members.  

The Chairperson asked the Committee Secretary to take the Committee through additions to the draft report. Members would then give inputs.

Mr Hermans highlighted that the Committee welcomed the progress made by implementation of the National Regulator for Compulsory Specifications’ (NRCS) turnaround strategy and requested that the NRCS continue to update the Committee on its progress and challenges encountered on a regular basis. The Committee would schedule the briefings on a regular basis.

The Chairperson asked if there were any objections from Members.

Mr W Thring (ACDP) said it was obvious that the NRCS is struggling and the Committee would welcome any progress made, but suggested that “update on a regular basis” be clarified. For some, a regular basis is once a year while for others it may be quarterly. He wanted the Committee to be specific as to what “regular basis” meant. He suggested that it be quarterly. 

The Chairperson asked Members if they were in agreement with the proposal from Mr Thring.  

Ms P Mantashe (ANC) said the ANC had no objection to such an amendment.

Ms J Hermans (ANC) agreed.

The Chairperson noted the consensus that the NRCS would be expected to give updates to the Committee on a quarterly basis.

Mr Hermans proceeded to the second item: The Committee remained concerned with the delay in implementation of the ICT modernisation project and noted the appointment of an ICT consultant to assist with the development, management and modernisation project. The NRCS was urged to fill critical funded vacancies to ensure that this project can be effectively implemented.

There were no objections from Members.

Mr Hermans highlighted that the Committee remained concerned about the NRCS’s financial reporting given the findings raised by the Auditor-General and that the Chief Financial Officer (CFO) had resigned.

Mr Thring raised concern about urgently filling the CFO vacancy, especially considering the Auditor-General’s comments. He thought the Committee should maybe look at adding a recommendation with a bit more impetus which would give the entity a clear timeline. In one of the entities in the Department of Public Works, some positions had not been filled and now there is an exit strategy. He proposed giving the NRCS a timeline by when the position must be filled. 

Ms Hermans suggested that the Committee look at who holds the mandate in terms of CFO appointments. She was not sure if this was the prerogative of the shareholder. She felt it was not within the Committee’s purview to give such an instruction.
 
The Chairperson noted both comments and asked how regularly the entity reports to the Committee.  The Committee needed to make the entity aware of the need to report on progress, and appointment of a CFO being one example.

Mr Hermans said that the NRCS’ Acting Chief Operating Officer wanted to respond to the issue.

The Chairperson invited the Acting COO’s to give input.

Ms Nontombi Matomela, Acting COO, NRCS, said interviews were held last Friday, the 5th of June. The entity was in the process of filling the CFO position.
The Chairperson wanted to know when the Committee could expect an update on the appointment of the CFO. 

Ms Matomela reiterated that interviews were held on the 5th of June and they had also asked the Chief Director to assist while appointment of the CFO was being finalised.

The Chairperson reiterated Mr Thring’s question as to when the Committee should expect an update on the filling of the post.
 
Mr Thring stated he was happy with the response from the COO, noting there is progress already.

Mr Hermans noted that the NRCS was also meeting the Committee on 24 June 2020 wherein an update could be provided to the Committee on the matter. The Committee welcomed the implementation on the Enterprise Resource Planning to resolve financial system deficiencies. The implementation process would be monitored to ensure that these deficiencies are fully resolved by March 2021.

Mr Hermans said that the Committee was concerned by the challenges regarding the conditions of the entity’s laboratories. The laboratories were not ideally located and had challenges in terms of lighting and the effects of gravity as well as the impact of electricity supply disruptions. This could affect the accuracy of test results.

Ms Margot Sheldon, Committee Content Advisor, was not sure if the wording was accurate and appropriate. She wanted to know if someone from the NRCS could clarify whether the essence of Committee observations were captured effectively.   

Mr Hermans said that the Committee did receive comments from the NRCS and they have not yet had a chance to look through the comments. Committee Staff would go through these comments after the meeting. 

Mr Cuthbert asked why the report was being fixed and amended retrospectively when the oversight visit was done in the past. This could take away from what the Committee saw from the visit.

The Chairperson replied the exercise was meant to ensure that Members’ observations were captured properly as the report would become a permanent record and reference point.

Mr Thring noted item 5 on metrology labs; the comment is a good summary. The laboratories were on the wrong floor. They should either have been at ground level or underground. Currently, having them on the first and second floor meant temperatures fluctuated and the effect of gravity is felt. The comment was a good summary of the challenges.

The Chairperson invited comments from the Ms Matomela on whether the paragraph was an accurate reflection of the situation on the ground.

Ms Matomela confirmed that it is correct that the condition of the lab has an impact on the test result. The sentence captured the current realities correctly.

The Chairperson thanked Mr Thring and Ms Matomela for their inputs.

Mr Hermans stated that the Committee remained concerned about the financial sustainability of the SA Bureau of Standards (SABS) and its ability to re-establish itself as a preferred certification and testing service provider particularly where it is competing commercially. There are still significant challenges to be addressed to stabilise the institution.

The Chairperson took it that Members’ silence meant consent. He asked the Committee Secretary to move on to the next item.

Mr Hermans read out item seven: The Committee welcomed the improvements made to the plant room, however, Members were of the view that SABS should urgently prioritise the replacement of its network of auxiliary pipelines to ensure that the efficiency gain in the plant room can be transferred to the campus and to ensure that the appropriate laboratory conditions are maintained. Further, the Committee welcomed the SABS approach to seek strategic partnerships to develop and maintain its prioritised laboratories. This could assist in addressing the financial constraints facing the institution and secure revenue. 

The Chairperson noted there were no comments from Members and asked Mr Hermans to proceed.

Mr Hermans noted the lack of capacity within cement laboratory which was exacerbated by delays due to electricity supply disruptions. The Committee was encouraged by the procurement process for the new equipment that will increase the laboratory’s capacity for processing 32 monthly samples to 90 monthly samples. However, there is a need to consider establishment of an independent electricity supply for the laboratories to mitigate against the impact of continues disruptions on the accuracy of its testing results. 

The Chairperson asked for comments from Members.

Mr Thring asked if the aforementioned summary referred to SABS. In the report it was indicated that the electricity challenge was with the NRCS, not SABS. SABS had backup generators, but NRCS did not. This seems to indicate that SABS was also having problems even with backup generators.

Mr Hermans asked the Chairperson if Ms Scholtz who was also present could be asked to clarify.

The Chairperson asked Ms Scholtz to clarify.

Ms Jodi Scholtz, Lead Administrator, SABS, stated they were plagued with electricity challenges due to cable theft. Cable theft affects the existing supply and even though there are backup generators, the duration of the power outages has a negative impact in maintaining laboratories in good condition.

Mr Thring noted that the summary is then accurate. He was happy to leave it as is.

The Chairperson noted that item 10 was agreed to. He moved on to the next item on the agenda, the oversight of the Western Cape.

Western Cape Oversight Report
Mr Hermans took the Committee through the report. He noted that the first item was the Industrial Development Corporation’s (IDC) investment in the film industry. The Committee welcomes the IDC’s investment in the film industry and the positive impact on job creation and small businesses which support the film industry.

The Chairperson noted that the first item was agreed to.

Mr Hermans stated that the Committee was concerned that failure to increase physical capacity of the Cape Town Film Studios and to develop other domestic studios will most likely lead to minimal growth in the industry. This could potentially have a negative impact on the entity’s ability to create additional work thus its job creation capacity. The Committee further noted the industry’s acknowledgment of the positive impact of the Film and TV incentive programme on transformation. However, it was concerned that the sustainability of this growth will be dependent on the growth of the South African film industry’s global market share.

The Chairperson noted that the paragraph was agreed to.

Mr Hermans noted that item five spoke to the opportunities created by growth and demand for content. While the Committee acknowledged the financial and fiscal constraints and the need to spread the TV and film incentive to a wide number of stakeholders, it was of the view that the incentive programme should be reviewed to consider either using a tax incentive or adjusting the cap to factor in the type production and the amount being spent in South Africa. This was critical given the indirect economic benefits of foreign productions.

The Chairperson noted that the Committee was actually not drafting new approaches or programmes but the observations were well within what the entity was expected to achieve.
Mr Hermans talked about the development of local content in the film industry and film studios’ contribution to skills development

The Chairperson noted that items six and seven were agreed to.

Mr Hermans stated that the Committee noted the challenge raised by Rise Uniforms and the Noodle Factory about accessing credit from commercial and development financial institutions. There is a need for financial institutions, particularly development financial institutions, to relook their risk models for small, medium and micro enterprises. 

There were no comments from Members.

Mr Hermans noted that the Committee welcomed the approach by Rise Uniforms and the Noodle Factory to build partnership with other companies to improve their competitiveness and their economies of scale thus growing their business and enable job creation in the process.

The Chairperson asked if there were any comments, additions of amendments.

There were no comments from Members.

Mr Hermans talked about technical assistance offered by the National Empowerment Fund and the Industrial Development Corporation in developing Rise Uniforms and the Noddle Factory respectively. The Committee further noted the challenges raised by the Noodle Factory regarding the impact and cost implications of load shedding due to the loss of production time and imputes. On the recommendation relating to the development of content for film and TV production, the Minister should consider engaging the Minister of Arts and Culture to initiate a programme to nurture the development of local content including indigenous stories and to translate this into film and television production. 

Mr Hermans noted that there appeared to be consensus on both conclusions and recommendations for the Gauteng as well as the Western Cape oversight report. Committee staff would incorporate the amendments and do final technical and typographical checks so that both reports are put before Committee for a five-minute formal consideration and adoption in the next meeting.

The Chairperson agreed with the Committee Secretary and indicated the Committee will proceed in that way. In the next meeting the Committee will consider and adopt the reports.

Ms Mantashe said Members were in agreement with the Chairperson. 

Adoption of minutes

Mr Hermans stated that the Committee will be considering six sets of minutes, of meetings held during the pre-Covid period. The draft minutes had been distributed to Members prior to the meeting.

Minutes of 25 February meeting 
The Chairperson noted the agenda of the meeting as a briefing by the Department of Trade and Industry on their 2018/2019 Incentive Report.

Mr Thring noted that his apology was not recorded. If he is unable to attend a meeting he usually gets his personal assistant to send an apology. He was unsure whether his apology was received.

The Chairperson noted that the draft minutes reflected that Mr Thring had attended the meeting.

Mr Thring asked if the minutes were for 11 March meeting.

Mr Hermans clarified that the Committee was considering the minutes of the 25 February meeting.

Mr Thring clarified that he was looking at the wrong set of minutes.

The Chairperson put the minutes up for adoption. 

Ms Mantashe moved for the adoption of the minutes.

Mr F Mulder (FF+) seconded the adoption of the minutes.

The minutes were adopted. 

Minutes of 26 February meeting
The Chairperson noted that the agenda of the meeting was a briefing on the National Metrology Institute of South Africa’s 2019/29 Quarter 3 performance report.  

Mr S Mbuyane (ANC) moved for adoption of the minutes.

Ms N Motaung (ANC) second the adoption of the minutes.

The minutes were adopted. 

Minutes of 3, 4, 10 and 11 March meetings
The minutes were adopted without amendments.

Committee business
Mr Hermans stated that the National Assembly Programme Committee held last Thursday had reflected certain changes on the parliamentary programme. As indicated earlier, although the Committee has a programme it is subject to changes by the House. The Committee had initially scheduled a briefing on mobilisation and beneficiation for 17 June. However, changes had been effected owing to clashes with other programmes in the House such that the Committee had requested that management shift that particular slot to Friday the 19th of June, 09:00 until 12:00. The Committee will also formally consider the reports on oversight visits.

The Chairperson asked Mr Hermans when the Committee will receive the confirmation of those changes.  

Mr Hermans said that they should hopefully have the confirmation by Friday.

Mr Cuthbert said that on the calendar invites sent out by the secretariat, it says that the briefing on beneficiation and localisation and consideration of certain minutes was scheduled for 12 June. There is a plenary taking place on the day, could the Committee have some clarity?

Mr Hermans apologised and said he should have started with 12 June. That was the original date before the rescheduling to 19 June owing to clashes with House sittings on the other days.  

The Chairperson asked that the Secretary to furnish Members with the amended Committee programme by Friday.

Mr Cuthbert said that he received communication from Mr D Macpherson (DA) that he had to move to a rural area and thus he was unable to connect to the meeting.

Mr Hermans stated that the fourth quarter report had been distributed and the same process will unfold where Members would have to send concluding remarks and recommendations. The report will be considered on 19 June together with minutes of post-Covid meetings.

The Chairperson then proposed to move to the last item on the agenda. He had received communication linked to the question asked by Mr Cuthbert at the start of the meeting. The correspondence was from an organisation called the United Civic Society in Action. He asked Mr Cuthbert to speak to the issue and give feedback on the developments.

Mr Cuthbert thanked the Chairperson for being proactive in sourcing a more detailed response. The additional response received from the National Lottery Commission (NLC) was rejected with contempt. The NLC seemed to be hiding behind section 67 of the National Lotteries Act, subsection 1a and 1b. The section does not specifically state they are not able to make grant recipients public, but rather it speaks to licenses and the so forth. He did not understand how up until financial year 2017/2018 the beneficiary lists were made public and taxpayers could see how this money was being allocated for benevolent causes. The Committee had no problem with that. He did not understand why the NLC seemed to be hiding behind section 67 of the National Lotteries Act which specifically refers to applications of certificates and licenses rather than grant beneficiaries. That would then imply that section 32 and section 33 of the Constitution which refers to freedom of information would allow for this information to be published to the Committee and to the public at large. He did not understand how the NLC had made a U-turn since the 2017/2018 financial year where they were publishing these reports for public consumption and were now hiding behind this particular clause.

Furthermore, there has been a precedent particularly in the post-Covid time where the Industrial Development Corporation and the National Empowerment Fund came to present to the Committee on their spending and Covid relief disbursement recipients. The NLC had not bothered to come before the Committee and he thought that it is pertinent that the Committee request that the NLC appear before the Committee to explain exactly and in detail who was receiving the money and what is happening. Sending the Committee a letter was not sufficient. The Committee must be consistent and the NLC must be given the same treatment that the NEF and the IDC receives. He believed that it is in the public interest that the beneficiaries of the disbursements are made public. He called on the Chairperson to write to the NLC to request them to appear before the Committee at their earliest convenience so that they are able to discuss the disbursement of the R150 million of Covid-19 funds and how this money was being spent.

The Chairperson suggested that this matter be considered by the management committee. The reality is that there are other interested entities or South Africans who wanted to raise the same issue. In the communication received from the NLC relating to Mr Cuthbert’s question, the Committee could follow through on the gaps and spaces where Members the issues were not properly covered.

Mr Mbuyane wanted clarity on process followed to invite entities to appear before Committee.

Ms Hermans said that the ANC does not have a problem with an entity coming to report to the Committee- in actual fact they welcome it as part of their oversight. The Committee has to also holistically look at other entities who have not reported to the Committee on their Covid-19 interventions and put that together with NLC on the programme.

Mr Cuthbert welcomed Ms Hermans suggestion to make sure that every entity dispersing Covid-19 funds comes to appear before the Committee. It should not be a management committee issue, which as far as he understood is an internal party arrangement as opposed to a formal structure of this Committee. It should be decided when the entity could possibly appear before Committee like what was done with the steel and sugar industry.

The Chairperson said the management committee is a formal structure of the Committee. This will be discussed by the management committee and the full Committee will decide.

Mr Cuthbert wanted to know when the full Committee could expect feedback regarding this matter and when the Chairperson will have agreed with the NLC for them to appear.

The Chairperson said the Committee will be given an update at the next meeting.

The meeting was adjourned.