DSI; CSIR & NRF 2020/21 Special Adjustments Budget

Meeting report

The Chairperson noted apologies from the Minister and Deputy Minister of the Department of Higher Education, Science and Innovation.

Department of Science and Innovation Special Adjustment Budget Allocations and Impact on Delivery

Ms Pretty Makukule, Chief Financial Officer, Department of Science and Innovation (DSI), said the presentation focuses on the Department's budget. At the beginning of the financial year the total budget was R8.7 billion.

The bulk of this was allocated to transfers and subsidies, which consists of money transferred to entities and institutions such as universities. A total of 78% of the Department's transfers budget is allocated to public entities. The biggest portion of the budget was reduced in transfers and subsidies for specific programmes. During the Department's engagements with National Treasury (NT), it said four percent of its budget is reprioritised to support Covid-19 initiatives. It will be able to absorb the R40 million cut under compensation of employees, resulting from delays in filling vacancies during the lockdown. Certain activities are restricted under the lockdown. This means savings will be realised. It is assumed borders will remain closed for the rest of the financial year. This means 100% of foreign travel will be reduced. On parliamentary grants, the Department proposed a smaller cut of 10% rather than 20% to minimise the impact of the cut on entities. Most entities are using the grants to fund projects and many lost revenue because of the economic consequences of Covid-19. The revised allocation letter confirms the cuts in critical areas. The Department must accept competing constraints in the fiscus.

Dr Phil Mjwara, Director-General of DSI, said in compensation of employees the Department does not anticipate a negative impact from the budget cut. There is a general delay in filling vacant posts. In goods and services, cuts were made in advertising and travel. A number of targets must be revised. In the Administration programme, branding initiatives must be reduced. In the Technology Innovation programme, instead of having 17 technology demonstrations there will only be ten. There is no intention to revise any of the planned targets in the International Cooperation and Resources Programme.

Three main areas are affected in the Research Development and Support Programme. Less PhD and pipeline postgraduate students will be awarded bursaries. Fewer researchers will be awarded research grants. It is anticipated that some of the initiatives promoting public awareness and engagement will be reduced. It will not be possible to conduct science festivals. The total available broadband capacity will also be reduced. In the Socio-Economic Innovation Partnerships Programme, there will be a reduced number of Honours, Masters’ and Doctoral students participating in niche areas. The Department started to work with entities to look at unspent money at the end of the financial year. It also looks at progress on these projects.

The Chairperson thanked the Department for its presentation. Members have a good sense of which programmes will be impacted, abandoned, and revised, because of the adjustment.

Council for Scientific and Industrial Research: Lockdown Impact  

Prof Thokozani Majozi, Chairperson of the Council for Scientific and Industrial Research (CSIR) Board, said the presentation is two-fold. The major part of the presentation talks to the impact of the Budget cuts on a number of programmes. The latter part deals with some of the interventions in the fight against Covid-19.

Dr Thulani Dlamini, Chief Executive Officer (CEO), CSIR, said the CSIR is heavily dependent on the public sector for its income. Reducing the Parliamentary Grant will significantly impact its strategic initiatives. Various infrastructure investments will be delayed and suspended. There are a number of programmes, such as the Accelerated Researcher Development Programme (ARDP) and the Bursary Programme, which must be reviewed and its budget allocations reduced.

Ms Khungeka Njobe, Group Executive: Business Excellence and Integration, CSIR, said the lockdown put an additional strain on the operations of CSIR. Some contracts with partners are postponed and one or two are even been cancelled. The restrictions on international travel hampers the amount which can be earned in contracts already secured with international clients. There is an inability to earn income on contracts due to delays in the procurement of goods needed to support projects.

Regional programmes are also affected by limited mobility. The revised Key Performance Indicators (KPIs) will be presented to the Board on Friday. More detail on this will be shared with Members after this process.

Mr Ashraf Dindar, Chief Financial Officer, CSIR, said the main impact is the reduction in the parliamentary grant, and in contract income. The research income generated both locally and internationally will be reduced by R245 million. The operating costs of utilities and electricity will be reduced by R78 million. The manpower will be reduced because of the non-filling of critical vacancies, and not granting an increase in October. There will be a move towards a net loss because of Covid-19 and adjustments which must be made. There is a significant increase in the CSIR's debtors because customers are failing to fulfill obligations caused by adverse economic conditions.

Dr Motodi Maserumule, Group Executive: Mining, Manufacturing, Defence and Security, CSIR, said there is a locally designed and developed ventilator. The design process started in March. Medical approval was given in June. The 10 000 ventilators are scheduled to be delivered. The Minister of Health said an additional 10 000 ventilators is needed. The facial shields were delivered to the South African National Defence Force (SANDF). Modelling the spread of Covid-19 is a very crucial and successful cross-organisational effort. The Department has given strong leadership. Telephone mobile data platforms are used to monitor the movement of people across high-risk areas. It also helps with tracing.

Dr Rachel Chikwamba, Group Executive: Chemicals, Agriculture, Food and Health, CSIR, said National Health Laboratory Services gets support to help with the backlog in Covid-19 testing. The team developed a home-grown kit which rapidly detects Covid-19. This initiative is supported by the Department. Medicinal plants were tested to see if indigenous materials can be used as remedies for Covid-19 and the symptoms it causes. Cash is one of the areas where the virus can be transmitted. The virus survives on money bills. The CSIR is currently working with the private sector and commercial banks to find solutions to sanitise money without destroying it. Plant platforms are also used to look at making Covid-19 sub-unit vaccines.

National Research Foundation Revised Budget Allocation due to COVID19 and Impact on Delivery Programme

Dr Nompumelelo Obokoh, Chairperson of the National Research Foundation (NRF) Board, said the presentation highlights the various principles informing the revised budget allocation.

Dr Molapo Qhobela, Chief Executive Officer, NRF, said the presentation deals with preliminary allocations because there are still refinements to be made. The economy is significantly affected by the Covid-19 pandemic. The science sector is working alongside government in response to the pandemic. An example of this is the ventilator project where the CSIR is taking the lead in the manufacturing of such ventilators. The revised budget for the 2020/21 financial year constitutes a total of R3 billion.

Resources must be an investment in the sciences and the investment must be according to current and future capacity. Investments in knowledge and scientific infrastructure must be protected. The budget cuts will not be implemented on active graduate internships, postgraduate bursaries, postdoctoral fellowships, and early career researchers. Certain critical projects will also not be affected. If one stops these, it becomes almost impossible to start it again. A number of cost containment measures will be instituted, such as postponing science festivals, scientific conferences, and non-critical projects. The baseline of the parliamentary grant is not only used for salaries but also to run the organisation.

The value of student bursaries is relatively modest compared to bursaries available from other institutions. As a result, 40% of the awarded bursaries are not taken up by students. The Square Kilometre Array (SKA) Project will not be negatively affected by the budget cuts because these funds accumulated because of delays in the international project. There is a reduction in science awareness because of the adjustment in the school calendar. No new awards will be made in the Science Mission Programme.

Discussion

Prog B Bozzoli (DA) said the Budget cuts are very serious and sad. It looks as if the science system is going to be damaged in fundamental ways. She asked what the long-term effects of the budget cuts are.

The Department said nearly 5000 students will not be funded. That is a lot of postgraduate students and careers not happening. The Department of Higher Education (DHE) clearly said it does not want to cut student funding. Now there is no choice but to do so. Postgraduate students are always treated as second-class citizens because funding is not given nearly as much consideration as the funding of undergraduate students. She asked how sure the Department is the long-term effects of the budget cuts can be managed. She wanted to know if the Department is sure it will not damage the science system and the lives of students fundamentally.

She asked what a postgraduate student going into Honours or Masters can do if there is no funding.

The person will have to drop out and will probably never go back to being a student. This is a very serious matter. The question is how many students are actually going to be affected. The calculations in the Department's presentation are based on hypothetical figures and the NRF presentation does not include a calculated number.

Every CSIR project cancelled will also affect students. She asked if Members can get a clear and careful calculation of the assumed number of students going to be affected by these Budget cuts. The Committee must object to this and state its disappointment. The science system is treated so badly. Some of the money is going towards good causes such as the health system or social development, but some is used to fund the police and the army. The precious science system is severely cut to fund the police and the army. She asked if Members can get a detailed breakdown of the number of affected students.

Prof Bozzoli asked what the effect of the cutbacks will be on the laser, titanium, and robotics projects. She wanted to know if the Department can be rescued from the cuts or if there will be severe long term affects. The CSIR presentation modelled a 40% cut in the parliamentary grant as if it is a possibility. She asked where it got this idea. It is extremely worrying, the idea of a 40% cut floating around as a possibility.  She wanted this to be clarified. The CSIR is congratulated on its Covid-19 work and the predictive modelling of the disease. She asked for copies of this modelling to be provided to Members.

Each NRF project is unbelievably precious and is regarded as such by students and staff at universities. It is very sad and concerning to see projects cut severely. These cuts will have a long-term effect.

Prof Bozzoli said she does not think it is short term and the projects will just bounce back next year. She wanted to know what guarantee there is from National Treasury that cuts are finished, and will not remain in place. She asked how the Department knows Treasury will not say, since the entity managed fine without the money it will have to last without it again. There must be some guarantee from Treasury ensuring this is not a long-term problem. If the Committee can help in any way it must.

Ms N Mkhatshwa (ANC) said she is very concerned about the budget cut made under the Research Development and Support Programme. This Programme is a space where targets must be met within particular timeframes. The ability to meet those targets within the set timeframes is a concern. She said she hopes there is substantial consideration for this Programme while addressing and managing Covid-19. The Covid-19 interventions are welcomed by Members, particularly the use of indigenous knowledge systems as remedies for Covid-19, and the funds going towards the African rapid response.

The concern is adjustments and budget cuts will prohibit South Africa from fulfilling its obligations and commitments under various multilateral and international agreements. The CSIR presentation clearly outlines the impact of the budget cut on each particular programme.

The ability of entities and the sector at large to recover from budget cuts in the long run is extremely concerning. Based on the CSIR's presentation, there is also a concern about possible retrenchments in the future. It may not occur in this particular financial year but the terrain is very unpredictable. No one knows what is going to happen next year. Things are forever changing. There is a concern about retrenchments which will come out of this.

Ms Mkhatshwa noted the cut back on communication and conferences. It remains important for there to be some form of conversation or communication. Where physical conferences are not possible, it is important to have webinars, cyber channels, or anything which can be done as do-able measures. This will ensure all the hard work done to bring about awareness in the sciences is not regressed. It must be communicated to young people using radio, television, or broadcasters. It can even be related to the work currently being done in response to Covid-19, to draw more young people into the space.

Dr W Boshoff (FF+) said it seems as if the whole science ecosystem is a farming enterprise, then it is decided this year there will be no tending to the fences, roads, or sheep. It is going to save on everything not essential, and then hope it will still be in business next year. This is what happens if the economy comes to a standstill. Some people think it only impacts large businesses and monopoly capital, but it also impacts the everyday reality of ordinary people like students and scientists. As a joke he always thought the CSIR is a money laundering scheme. He asked what the exact impact of the 41% cut in the Square Kilometre Array (SKA) project is. The presentation mentions something about accumulated funds but the 41% is a large cut and it is a concern for the communities around the area. The economic activity of farming is greatly reduced. The promise was there will be an influx of money in the operations of SKA. He asked if it is going to be negatively impacted by the cut. He is being pessimistic because next year is not going to be better since the Department has a seven percent downward growth. It is a great pity.

The Chairperson said he should not be a pessimist. Hope for the best.

Ms J Mananiso (ANC) noted the non-critical vacancies in the CSIR presentation. She wanted to know what particular kind of vacancies these are. Covid-19 taught everyone science and technology is the solution to various problems and challenges. The NRF presentation shows there will not be cuts in supporting programmes. She asked what the total number of people who will benefit from each programme are. There are other initiatives to replace the national science week. She asked what other alternatives are planned instead of removing the programmes, and not doing anything.

Regarding gender-based violence (GBV), she wanted to know if there are any programmes or solutions responding to it. GBV is also declared a pandemic.

Ms D Sibiya (ANC) had connection problems, but wanted to ask what criteria are used to reduce the student beneficiaries.

The Chairperson said he missed the science week last year but Ms Mananiso attended it and is speaking from a subjective and passionate viewpoint.

Mr W Letsie (ANC) said the Department is doing extremely well in maintaining targets and accounting for the Budget it has. The presentations are also always on point. He asked if any work is put into motivating Treasury for the Department to be classified as an essential service Department, which must not get the 20% proposed budget cut.

This is important because of the work the Department does around Covid-19. The country is in the Fourth Industrial Revolution and this is also part of the Department’s work.

While doing the motivation, he asked if there is anything speaking to the fact the entities must be exempted from the budget cuts.

Last year the Committee said it believes the Department is underfunded. Ways of improving this must be looked into. He asked if there is any work the Committee can do before it adopts the report on Friday. He congratulated the CSIR on its work in developing a vaccine and asked if it utilises the services of Biovac. He wanted to know if support is given directly to Biovac so it is capacitated. Cutting postgraduate student funding is not good, especially given the skills in the country. The DHE said the previous day it avoided funding cuts. He asked if there is anything the Committee can do between today and Friday to mitigate against the funding cuts. This will have a devastating and negative impact on the foreseeable future.

Mr P Keetse (EFF) said it is important for Members to have these kinds of engagements and to give it undivided attention. Load shedding is interfering with this work. Yesterday the Economic Freedom Fighters could not make contributions because of it. The budget cuts in the Research Development and Support Programme is concerning. Research capacity must not only focus on a vaccine for Covid-19. There are other important areas. The World Health Organisation (WHO) agrees people must change the way people live. He asked what happens from now onwards if research into new ways of living is abandoned.

The Department must ensure there is research capacity to reach the new normal which society is not even sure of yet. Too much money is spent on unnecessary things which are going to put people in danger. Children are going to schools and funds are going towards sanitising schools. Money is taken away from important aspects. He asked how the tourism industry will look moving forward. He wanted to know what the content of education in schools will be going forward. Things studied now might not be necessary moving forward. Members thought the Department and Government itself would prioritise the indigenous knowledge system.

The Chairperson said Members work on virtual platforms and need electricity to do so. If Eskom cannot provide electricity then it disrupts the work of Parliament. Members consistently raised concerns about the Department’s funding and its entities. Members expressed themselves clearly and the Chairperson said he also shares the view. The Department is the least funded out of all of the Departments, except for Tourism. It does not get the funding from the fiscus it must be getting. It should not be one of the Department’s targeted for budget cuts given the kind of work it does. The CSIR and NRF do very good work in fighting Covid-19. The collective view of the Committee is the Department's funding is insufficient. Treasury must not identify it to have budget cuts.

There is not much the Committee can do before the report is finalised. This is because of the way the system is structured. The budget tabled by the Minister of Finance in Parliament is something the Committee merely approves. There is a lot which is introduced allowing the Committee to make some changes. It did not exercise this option and it will not be able to do so now because of the onerous process followed. The Committee can only make recommendations in the report which will be discussed in Parliament. He asked what impact the 41% cut on SKA will have. There was mention of accumulated funding but the 41% is quite substantial. He wanted to know if Members can be reassured it is not going to have a big impact.

Responses

Dr Mjwara said the total number of affected students can be provided to Members. The letters were finalised this week after the Department received the allocation letter from Treasury. The numbers on the Annual Performance Plan (APP) are dependent on the entities and how it manages the cuts. The entities and the boards must first be allowed to reconcile. Afterwards the total number can be provided to the Committee. There is no reason why the Department's international obligations will not be met, the money taken away will be returned in the next financial year. It is a gentleman's agreement since it is not written down, but is the understanding. There is no anticipation of an inability to meet the obligations. The Minister of the Department and the Minister of Health agreed to conduct a webinar conference. The conference will illustrate the contribution by research into Covid-19, and how the research responded. This is in support of the work done by the Department of Health.

On gender-based violence, the Human Sciences Research Council (HSRC) is the best entity to reply. The Department motivated and said cuts must not be effected, but Treasury said cash is needed. As a result, the Department is faced with the option to either do it in a way minimising the impact, or Treasury will not do it.

There are discussions to support Biovac. The Department was contacted by the World Health Organisation (WHO), to determine if it has the space and can manufacture the vaccine for the whole Continent. The funding received is less than ideal but the Department does the best it can with what it has. There are some months ahead to think creatively around the Budget challenges.

Dr Dlamini said the projects will have an impact on students in the system. The total number of affected students will be supplied to the Department, who will then provide it to Members.

On the reduction in budget, there will be delays in the delivery and execution of certain Programmes. The modelling report can also be provided to Members.

Regarding the 40% parliamentary grant cut, this work was done very early on during a scenario analysis. This matter has not come up. It is not expected to increase. It was only included as part of the very early work done.

Speaking on retrenchments, he said the Department might have to consider it as an issue going forward. 75% of the costs relate to human resources because it is a knowledge-based organisation.

On non-critical vacancies, these include support functions such as personal assistants and boardroom assistants. Those considered critical form part of the core business. These are necessary positions to deliver on critical projects. The plan is to look at delaying the appointment of non-critical vacancies.

Dr Chikwamba said the capabilities of Biovac are leveraged to put together international partnerships. Biovac is recognised. Its capabilities are included in the project. There is current expansion on its capabilities for the actual manufacturing of vaccines.

Mr Bishen Singh, Chief Financial Officer, NRF, said it is unlikely Treasury will give guarantees. There are no guarantees. There is no confirmation of the allocation of the two outer years. The NRF must make some assumptions which it responsibly started to do. It will deliberate further on this, this week.

Dr Rob Adam, Project Director: Square Kilometre Array Project, NRF, replied, the International Treaty was signed in March 2019. It must be ratified by each of the member countries. It is expected to be done by this month but the first scheduled meeting for July will not be able to happen. Each country must pay in an agreed amount to fund the construction of the telescope. The NRF budgeted to pay over the bulk of money cut in the current financial year. Ultimately the money comes back to South Africa through South African companies. The project is slowed down by nine months because of Covid-19. There is no impact on the communities in the Karoo because of the project going ahead. Various social development type grants are also signed off to communities. Covid-19 affects the whole world. The delays in the international project are caused by the budget constraints of member countries and the restriction on travel.

Dr Clifford Nxomani, Deputy Chief Executive Officer: National Research Infrastructure Platforms, NRF, said South Africa subscribed to a number of multilateral and global research infrastructure agreements because no single country can afford it. The subscription is membership-based so the obligations cannot be postponed or cancelled. As a result, there will not be any cuts related to it.

Dr Gansen Pillay, Deputy Chief Executive Officer: Research and Innovation Support and Advancement, NRF, said the budget cuts will not affect postgraduate students. It is of vital importance to secure the next generation of researchers. The budget cuts only affect postgraduate students in the current year. If the NRF sticks to the same Budget, the number of students will be reduced.

Dr Beverley Damonse, Group Executive: Science Engagement and Corporate Relations, NRF, said the science festivals moved many lectures onto online and virtual platforms. The science community continues to provide online learner and education support, and fun science entertainment content. The Cape Town Science Centre provides online coding activities which have a large subscription.

Postgraduate students took part in an international competition. South Africa did very well and the finals will be held this month on the online platform. There are also partnerships with community radios and televisions, such as Soweto TV, to host a series of educational inserts around health and science-based issues.

Follow up questions

Prof Bozzoli asked for clarity on what Dr Pillay meant when he said there will be no affected students. The presentation showed the APP target went down.

Dr Pillay said there will not be any budget cuts on student grants. The numbers projected for the current year will remain, as the numbers can be supported. The impact of Covid-19 affected the uptake of scholarships. This rate of uptake is included in the presentation. As part of the budget cut, bursaries not been taken up, will form part of the Covid-19 budget cut savings.

Dr Mjwara said after reconciliation, the Department will provide Members with the final number of affected students. The estimated numbers are on the basis of budget cuts. These numbers may change according to entities and its calculations. The issue of GBV will be replied to in writing.

The Chairperson agreed those answers must be given in writing. Members are disappointed and concerned about the further cuts to an already underfunded Department. The bulk of investment comes from the public sector.

The meeting was adjourned.