Progress made in addressing concerns about Parliament’s budget; Follow-up meeting with DPWI on outcome of fire investigation; with Deputy Minister
Joint Standing Committee on Financial Management of Parliament
21 May 2021
Chairperson: Ms B Mabe (ANC) & Ms D Mahlangu (ANC, Mpumalanga)
Video: Joint Standing Committee on the Financial Management of Parliament
14 May 2021
Parliament 2020/21 Quarter 4 performance; Investigation into cause of fire in Old Assembly Building; with Minister
The Committee was briefed, in a virtual meeting, by officials from National Treasury (NT/Treasury) and the Department of Public Works and Infrastructure (DPWI).
In the first briefing, officials from Treasury informed the Committee that its budget had been cut from R2 331.5 billion in 2020/21 financial year, to R2 144.1 billion in this financial year. Treasury anticipated that this cut would affect Parliament’s ability to both conduct its oversight function and its ability to fill vacancies. To mitigate against the effect of the cuts, Treasury recommended that Parliament to reconsider the 6% salary adjustment
The Committee voiced its concern over the fact that Parliament’s budget cut of 8.7% was higher than that of other government departments and despite the fact that Parliament was an important arm of the state. Whilst they recognised that the country’s economic outlook was poor, they felt that for Parliament to efficiently carry out its duties, it required additional monies. Members requested that in the next scheduled meeting with Treasury, the Minister of Finance and his team should explain what will be done to increase Parliament’s budget allocation. This was especially so as Parliament must be capacitated to hold the Executive accountable and therein, ensure better service delivery.
During the same briefing, Members also reminded officials from Treasury about Parliament’s long-standing proposal that provincial legislatures should cover their MPLs contributions to the PARMED medical insurance scheme, and not Parliament. It was said these funds could better be used for constituency offices, for example. A Member said as it is Parliament’s responsibility to appropriate the budgets, it should be in the position to inform Treasury on where and how to allocate the money.
In the second briefing, officials from the DPWI informed the Committee on the findings of the investigation into the fire that occurred at the Old Assembly Building (OAB) on 16 March 2021. Members learned that the fire was caused by an electrical fault in the roof space of room 454. The Department indicated that it had instituted a restoration project, to fix the damage caused by the fire. The Committee asked that the Department inform it, from time-to-time, on the progress of the project.
In the final briefing, Members were informed by the DPWI officials that the Department sought to upgrade four kitchens in the buildings of the parliamentary Precinct, as much of the infrastructure is old and in poor condition. Members felt that the funds allocated to the planned project could be better utilised. The Committee agreed that it would await word from the Executive Authority of Parliament on this matter before proceeding.
Co-Chairperson Mahlangu mentioned that this sitting would continue where the Committee had left off in the meeting last week Friday. The Committee would first be briefed by officials from National Treasury on Parliament’s budget allocation.
National Treasury (NT): Parliament’s 2021 budget allocation
Dr Mampho Modise, DDG: Public Finance, NT, briefed the Committee on Parliament’s 2021 budget allocation. In its 2021 budget, Treasury had to balance the immediate need to support the economy during the pandemic and the need to close the large budget deficit. As part of its mechanisms to stabilise the country’s fiscus, Treasury decided to implement baseline budget cuts to all government departments and entities. Parliament was also affected by this decision, as its allocation was reduced from R2 331.5 billion to R2 144.1 billion, representing an 8.7% reduction. Treasury concluded that the reduction would affect Parliament’s ability to fill its vacant posts and its ability to conduct its oversight functions. To mitigate against the effect of the cuts, Treasury recommended that Parliament to reconsider the 6% salary adjustment.
Parliament approached Treasury to gain assistance on how to be included in the early retirement (ER) programme. It was advised to introduce its own ER programme for its employees and then submit a request to Treasury. Discussions between the parties are currently ongoing, with a focus on determining the liabilities, finding a budget to pay the liability within the parliamentary budget and determining the number of people interested vs. those who are eligible.
During their consultations, Parliament indicated in 2018 that it wanted to offload its post-retirement liability to Treasury; however, NT indicated, in a letter written to both PARMED and Parliament, that it cannot take over the liability. Treasury has informed Parliament that a strategic solution needs to be found to deal with the issues plaguing PARMED.
Mr M Moletsane (EFF, Free State) asked whether the budget reductions, coupled with Parliament’s inability to fill vacant positions, would reduce its ability to fully carry out its functions.
He also asked how the discussions between Parliament and NT – regarding the determination of the liabilities and the number of parliamentary officials eligible and interested in voluntary retirement – were going and whether they would bear fruit.
Mr B Hadebe (ANC) noted it was indicated in the presentation that due to the current economic climate, NT had to make cuts across the board. However, as an arm of state, Parliament should be adequately funded to ensure that it has the capacity to carry out it functions. He asked why Parliament’s budget had been reduced by 8.7%, yet government departments had smaller cuts. At present, Parliament is understaffed. NT should take Parliament more seriously.
He asked why labour is aggrieved by government’s proposed salary increments for workers, as it was consulted, along with business on the matter.
Mr N Singh (IFP) appreciated the fact that NT recognised the independence of Parliament, and its position as one of the arms of the state. For Parliament to be able to execute its oversight function over the spending in other departments and public entities, it has to be better capacitated. Through its oversight mechanism, Parliament can assist the Executive in ensuring better service delivery to the citizens.
In the previous meeting, the Committee suggested that MPs should not be liable for MPL contributions to PARMED. Instead, this should be responsibility of the provincial legislatures. Parliament could instead utilise that money to better capacitate its constituency offices. He suggested that the Committee have an urgent meeting with the Minister of Finance, to request that Parliament receives a higher allocation than its current one. Parliament will implement cost-cutting mechanisms in its administration, to ensure that it has savings. In the next meeting, the Committee should be briefed on what will be done to increase the budget.
Co-Chairperson Mahlangu indicated that the Members should consider Mr Singh’s proposal.
Mr J Julius (DA) mentioned that the presentation did not add new information. The Committee wanted to know why NT had not supported Parliament with a suitable budget. NT officials did not refer to the Committee’s proposal that provincial legislatures should cover the liabilities of their MPLs towards PARMED and not Parliament.
He asked whether Parliament could not request additional funds due to the 86% increase in money allocated to Eskom. It seemed as if Treasury takes a blanket approach in applying reductions. Had Treasury made concerted efforts to understand the specific needs of Parliament?
He asked what Treasury’s view was on the new Political Party Funding Act.
Mr X Qayiso (ANC) was pleased that Treasury’s budget looked to support and resuscitate public entities. This would allow for the state to continue implementing its developmental agenda.
Referring to the point on the increased funding to Eskom, he said that the increase was valid, as Eskom provides a basic need to citizens and it plays a significant role in the country’s Economic Recovery Plan. The provision of funds to public entities is not the issue; the issue is the lack of accountability and the misappropriation of funds, which needs to be attended to.
He asked what the officials had meant in their presentation when they mentioned the lesser transfer to public entities.
Mr M Rayi (ANC, Eastern Cape) appreciated the report, more specifically the fact that it indicated that Treasury recognised that Parliament is an arm of state.
As it is Parliament’s responsibility to appropriate the budgets, it should be in the position to inform Treasury on where and how to allocate the money.
He indicated that he supported the proposal to organise a meeting with the Minister to discuss the budget.
Of the 900 billion allocated, the Executive is allocated R600 billion, whilst Parliament has only been allocated R2 billion. The low budget makes it difficult for Parliament to provide oversight over the Executive. In addition, with Treasury’s intent to freeze wages and vacancies, Parliament’s capacity would be crippled further. He suggested that Parliament should consider not passing the budget until it has its fair share.
Co-Chairperson Mabe said the presentation should have focused on the progress made in addressing the concerns of Parliament on its 2021 budget allocation. Further, the Committee should have been briefed by the Chairperson of PARMED on the liabilities. The Committee should assist Treasury to find solutions on how to resolve the PARMED liability matter.
She suggested that the officials re-do the presentation and that more engagements should be held to find consensus. In addition, both the Minister and the DG should be available in the next meeting to gain finality on the matter.
Co-Chairperson Mahlangu said the Speaker and Chairperson of the National Council of Provinces (NCOP) should be part of the meeting with the Minister, to gain clarity on the issues raised.
The Committee was not requesting that Treasury take monies from the budgets of other departments, as it recognises that this would affect service delivery - Members sought to indicate that Parliament’s budget should be re-evaluated.
Dr Modise said additional slides will be provided to the Committee, which will provide answers to some of the questions asked by Members.
As Parliament is an arm of the state, Treasury acts as a supporting role to assist it on various matters.
Responding to the question on PARMED, she said it is Parliament (not Treasury), through the Acting Secretary, who must address concerns relating to PARMED. Treasury can only provide advice on the matter.
Mr Edgar Sishi, Acting Head of the Budget Office, NT, said that due to the dire fiscal situation, Treasury has had to take measures to restore the health of public finances. With its debt to gross domestic product (GDP) sitting at 80%, South Africa is, on average, faring worse than its emerging market peers. The country has never had such high debt and interest levels. To reign in expenditure, Treasury had to implement baseline cuts in all government departments and entities.
Treasury wrote to both PARMED and the Speaker of Parliament in 2018 - this letter was signed by the Minister of Finance and it explained, in great detail, Treasury’s views on how to solve the various matters. As PARMED is a medical insurance scheme for Parliament (with its own board of trustees), the Secretary of Parliament is legally responsible for driving reform in it. Any insurance scheme has to have a structure where a benefit arrangement is not out of line with the contributions; it needs to be made responsible.
He explained that he wanted to correct the misconception that Treasury had not taken initiative on the matter. Presently, Treasury is awaiting responses from both Parliament and the BOT. Treasury has discussions with both parties in 2021, and it will continue to do so until the issues are resolved. Further, Treasury welcomes further engagement with the Committee.
Co-Chairperson Mahlangu said Treasury did not address the matter of provincial legislatures taking responsibility for their MPL’s medical aid expenses.
Dr Modise clarified that the budgets of public entities were also reduced.
The Co-Chairperson requested that the Committee move to the next item on the agenda.
DPWI on the investigation into the cause of fire at the Old Assembly Building (OAB)
The Deputy Minister of the Department of Public Works and Infrastructure, Ms Noxolo Kiviet, thanked the Committee for the opportunity for the Department to present and answer questions posed by Members.
She acknowledged that this was a follow-up on a recent sitting with the Committee. The two presentations would focus on the burning at the OAB and the renovations of kitchens at Parliament. In the previous meeting, the officials were not able to brief Members on the condition of the kitchens, as they did not have access to them, but now that they had recently viewed them, they have more to report to Members. It was agreed between the Department and the Executive Authority (EA) of Parliament that prior to the commencement of a project taking place in Parliament, details must be provided to the latter.
The Committee was briefed by Mr Imtiaz Fazel, Acting Director-General, Mr Mzwandile Sazona, Chief Director: Prestige Policy, and the Chief Construction Project Manager at the DPWI, Ms Thembeka Kolele, on the progress of the investigation into the cause of fire at the OAB. They explained that on 16 March 2021, a fire was reported at the OAB. A final report was submitted by the fire department, which indicated that the cause of the fire was an electrical fault that started in the roof space of room 454. To repair the damage at the building, the Department instituted a restoration project.
Co-Chairperson Mabe indicated that this was a continuation from the previous meeting. She asked how much it would cost the Department to complete the project.
The Chairperson opened the floor for discussion
Mr Qayiso indicated that no date of completion of the restorations to the OAB was provided by the Department. He asked whether the Council for Scientific and Industrial Research (CSIR) would be able to assist and monitor this process, as its work is highly specialised.
He asked whether the Committee had received the Occupational Health and Safety (OHS) committee report.
Mr Rayi welcomed the report presented. He suggested that the Department should brief the Committee from time-to-time on the progress of the refurbishment of the floors that have been damaged.
He indicated that the Committee had received a report which covers issues such as the OHS measures.
Co-Chairperson Mabe said the Department would be expected to provide progress updates. She also asked it to explain why the costs of the restoration were not included in the final report presented.
Mr Fazel indicated that the Department noted the need to provide regular updates to the Committee on the matter.
Mr Sazona said the cost of the project is R10.7 million but this amount excluded the cost of items that the Department agreed to absorb, such as the restoration of the immovable infrastructure that was damaged.
He confirmed that Parliament did release a report which included the OHS measures as well as an investigation into who will assist with the technical issues.
Co-Chairperson Mabe advised that the Committee move to the next matter on the agenda.
Briefing by DPWI on upgrades to the kitchen equipment and kitchens in the parliamentary precinct
The Committee was then briefed by the DPWI on the proposed upgrades to the kitchen equipment and kitchens in the parliamentary precinct. It was explained that in March 2019, consultants were appointed to provide services for the upgrading of four kitchens in the parliamentary buildings. This decision was made because both the kitchens and the equipment were found to be old and in poor condition. In addition, the Department wanted to ensure that all the kitchen staff had access to a safe and secure working environment. The project is currently awaiting final approval from the Department.
Co-Chairperson Mabe said the Committee has not given the Department the go ahead to continue with the upgrades until they have reached a consensus. The Committee was of the view that the amounted allocated for the upgrades could be utilised in other ways, such as the improvement of constituency offices and oversight over the Executive. If the appliances in the kitchen are operation, the upgrades should not be prioritised.
She asked how much the Department has spent on the consultants to conduct their work, and what their scope of work was. Had consultants also been used in the OAB restoration project?
The Chairperson opened the floor for discussion.
Mr Rayi said the approval of the upgrades will be provided by the EA of Parliament, not the Committee. He requested that the Acting Secretary to Parliament, who was present in the meeting, inform the Committee on where the EA stands on the matter and to clarify whether the costs for refurbishment will be provided by the Department or Parliament.
Co-Chairperson Mabe agreed that the matter is out of the Committee’s hands and it will have to await word from the EA.
Ms N Mahlo (ANC) supported this suggestion. She suggested that the Committee organise a meeting with the EA when it is available.
The Acting Secretary to Parliament, Ms Baby Tyawa, said that the EA had discussions with the Minister on the scope, value, need, and risk of the upgrades. The Department will be responsible for the costs of the project and as such, only it can decide whether the project is worthwhile, and that the money spent can be justified. There is a need to ensure that the chefs working in the kitchens work in a safe environment. However, both the EA and the Department have taken into consideration that there is less staff in Parliament due to the pandemic. All of the relevant information has been handed to the EA.
Ms Kolele, referring to the question on consultants, said that during its project evaluation of the kitchens in Parliament, the Department utilised its own internal young professionals, architect, electrical engineer, and mechanical engineer, who were supervised by the Department’s professional registered engineers. The team was led by the Chief Construction Project Manager and a registered quantity surveyor (QS) who scoped and costed the project. As the Department could not execute this particular project, it had to appoint consultants to assist it. The Department has appointed architects, who are serving as the principal agents in the project, a QS company, and electrical and mechanical engineering companies. A structural engineer has not been appointed.
Each service provider was procured through an open tender process and they were appointed based on the price they offered (which included the consultant fees) and the total amount budgeted for their services was R1.2 million. To date, the project is at the completed design stage and is awaiting final approval for the Department to commence with the project. So far, the Department has paid the consultants R208 000.
Co-Chairperson Mabe requested that the officials provide a better response to the question on the use of consultants and the fees paid to them, as she was not satisfied with the response.
DM Kiviet mentioned that much of the equipment in the kitchens is old and needed to be replaced or refurbished. She pleaded with the Committee that it allow for the Department to commence with the renovations. With the low number of officials at Parliament, due to the pandemic, the Department would be able to complete the project efficiently and on time. This would also benefit the Department and Parliament financially. Upgrading the kitchens would also improve the conditions for kitchen staff.
She thanked the Members for the opportunity.
Co-Chairperson Mabe thanked the Department officials for availing themselves to the Committee for the past two weeks.
The Committee will allow the Parliament’s EA to deliberate further on the matter and will await guidance.
As the meeting did not meet quorum at the end of the meeting, she proposed that the Committee deal will with the minutes in the next meeting.
The meeting was adjourned.
- National Treasury: Parliament Budget issues presentation
- Cape Town: Parliamentary Precinct: Upgrade and Reconfiguration of Various Kitchen Including Replacement of Equipment and Assciated Works
- Department of Public Works and Infrastructure on the Investigation into the cause of the fire in the Old Assembly Building
Mabe, Ms BP
Julius, Mr J
Kiviet, Ms N
Mahlangu, Ms DG
Mahlo, Ms NP
Moletsane, Mr MS
Qayiso, Mr XS
Radebe, Mr BA
Rayi, Mr M
Singh, Mr N
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