Committee Strategic Plans

NCOP Finance

15 March 2022
Chairperson: Mr Y Carrim (ANC, KZN) & Ms D Mahlangu (ANC, Mpumalanga)
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Meeting Summary

The Select Committees on Finance and Appropriations met to consider their internal 2022/23 draft annual performance plan (APP) and strategic planning review.

The draft APP reflected on the Committee's 2019/20 and 2020/21 performance which indicated that, despite a slight improvement in the economic and fiscal outlook, the economy remained stagnant. The South African economy continued to shed jobs at the highest recorded rate of unemployment. Risks to the economic outlook and fiscal framework were expected to be significant and should be monitored quarterly. The APP included priorities such as economic growth, job creation, broadband accessibility and efficiency, matters of oversight and public involvement.

The strategic planning review concentrated on the most critical issues flagged in the revised APP. The presentation provided a recap on the Committee's focus areas for 2021/22, the achievements for the year under review, as well as challenges and proposed key focus areas for the new financial year (2022/23). Areas of recommendation included encouraging collaboration, strengthening the Auditor-General's (AG's) office, joint addresses from the Committee and National Treasury, and the implementation of a reporting period from the Committee based around the financial year.

Members deliberated over matters concerning oversight, such as whether it should be virtual or physical, their oversight responsibilities over the National Treasury (NT), and follow-up visits to areas to ensure Committee recommendations were implemented. Other matters included sufficient time allocation for public participation and stakeholder engagements, the continuation of oversight in the O. R Tambo district, establishing the purposes for international visits, and overlapping National Council of Provinces (NCOP) and National Assembly (NA) meetings.

Meeting report

The Select Committees on Finance and Appropriations met to consider their internal 2022/23 draft annual performance plan (APP) and strategic planning review.

Mr D Ryder (DA, Gauteng) said that better planning must go into scheduling meetings to allow the Committee to meet in plenary as well as to join morning committee meetings. He asked that the programming committee take this into account when scheduling meetings to avoid future clashes with National Assembly (NA) committees.

Mr Ryder noted that other committees had two days to discuss the matters addressed in the meeting. The discussions on the role of the National Council of Provinces (NCOP) displayed the importance of showing their impact on legislation affecting communities. S75 and S77 bills were tricky in determining the oversight role of the NCOP, which must be reviewed. While the NCOP did not have oversight of the NA, they did have oversight over the legislation drafted. He suggested that this be a focus point of the Committee going forward.

Co-Chairperson Carrim said that schedule clashes had been reported, and were found to be due to the change in Cabinet meeting times. He agreed that the clash was uncalled for, and when reported had not been taken up further. He suggested that it be taken up by the programming committee.

Draft 2022/23 Committee annual performance plan

Ms Esther Mohube, Committee Content Advisor, presented the 2022/23 draft APP to the Select Committees. The draft APP reflected on the Committees 2019/20 and 2020/21 performance. Based on this analysis, the 2022/23 APP had been developed to align the plans with their parliamentary mandate.

(See presentation for review of 2019/20 and 2020/21 performance)

2022/23 APP: Key issues and sector priorities

The 2022/23 APP was guided by the National Development Plan (NDP) 2030, the State of the Nation Address (SONA), and the mandates of Parliament and the Committee. This included priorities such as economic growth, job creation, broadband accessibility and efficiency, matters of oversight and public involvement.

Ms Mohube said that due to COVID, global forecasts had been revised downwards and economic growth was expected to decline over the medium term expenditure framework (MTEF). Domestic economic outlook risks had been significant, prior to the announcement of the war in Ukraine and Russia.

On labour markets, it was noted that unemployment rates were increasing rapidly, which had severe consequences for low-skilled workers, and would deepen pre-existing inequalities. While poverty levels remained high, social grants had helped to reduce the number of people living below lower-bound poverty levels. Concerning monetary policy, the South African Reserve Bank had tightened measures through increased interest rates to reduce the risks of inflation.

Ms Mohube said that despite a slight improvement in the economic and fiscal outlook, the economy remained stagnant. The South African economy continued to shed jobs at the highest recorded rate of unemployment. Risks to the economic outlook and fiscal framework were expected to be significant and should be monitored quarterly.

Bills and strategies for implementation

Annual money and taxation bills would continue to be processed, while other bills from the NA, such as the Conduct of Financial Institutions (CoFI) Bill and the Financial Matters Amendment Bill, would be referred to the Committee. The Committee had agreed to meet jointly with the NA committees and, where appropriate, conduct public hearings. Ms Mohube stressed the need for sufficient time to engage with the bills and stated that the Minister of Finance would be consulted to consider tabling the money bills sooner.

Oversight tools and strategies

The Committee would prioritise and continue to oversee National Treasury (NT) and its entities. It would be briefed by these institutions, monitor the South African Revenue Service's (SARS's) performance and follow-up on recommendations made to the Minister of Finance in committee reports. The Committee was able to deliberate on matters of oversight.

Strategies for public participation

Regarding public participation, it was suggested that sufficient time be allocated, that inclusive participation beyond formal public hearings be introduced, and that collaboration with other Committees and improved use of technology be incorporated.

Cooperative governance -- intergovernmental relations (IGR)

Ms Mohube suggested that the Committee deliberate on how to cooperate and collaborate with other spheres of government on matters of common interest and ensure cooperative and sound intergovernmental relations.

The Committee must continue to capacitate itself to deliver effectively on its mandate. She suggested that some follow-up visits be conducted virtually, such as oversight of the South African Reserve Bank (SARB).

Strategic Planning Review

Mr Phelelani Dlomo, Content Advisor, presented the most critical issues flagged in the revised APP. The presentation provided a recap on the Committee's focus areas for 2021/22, the achievements for the year under review, as well as the challenges and proposed key focus areas for the new financial year (2022/23).  

When reviewing the APP key documents, such as the policy priorities from the SONA 2022, the aims of the government recovery plan were highly considered.

2021/22 Committee achievements

In 2021/22, the Committee had achieved:

  • Making recommendations concerning the Social Relief of Distress (SRD) grant, local government allocation above inflation, the move of the early childhood development (ECD) grant from the Department of Social Development (DSD) to Basic Education (DBE), and the increased allocation to rural provinces and municipalities.
  • Processing and adoption of the 2021/22 budget bills, the Division of Revenue Bill and Appropriation Bill, including the special appropriation bills.
  • A virtual oversight meeting was held with the provincial education departments to discuss spending and the performance of conditional grants.
  • A workshop was held to discuss the structure of the equitable share formulas for provinces and local government, to answer some questions regarding how they were designed, what data was incorporated and the allocation of funds to the different spheres of government.
  • With regard to the medium term budget policy statement (MTBPS) 2021, the Committee had processed and adopted the Adjustments Appropriation Bill and the Division of Revenue Amendment Bill within extremely tight time frames, and reported on the proposed division of revenue and conditional grants for provinces and local government.
  • Processing and adoption of the Financial and Fiscal Commission's (FFC’s) recommendations for the 2022/23 division of revenue for the upcoming financial year.
  • The Committee ensured full compliance with s72 of the South African Constitution.
  • A recommendation tracking report was produced and shared with Members for follow-ups.

(See presentation for key focus areas of the Committee in 2022/23)

Factors impacting on planned oversight visits included such issues as budget constraints, project information constraints or late submissions, capture of the Committee by the project-implementing agency/department, unavailability of senior officials from the department in question, time constraints, lack of follow-ups on oversight visits, and lack of a collaborative approach between budget committees and sector committees. 

Other general challenges were noted, including time constraints on monitoring, oversight limitations, the need for more time to process money bills, accessibility to performance information on conditional grant spending and targets achieved, COVID implications, and the NCOP's annual strategic plan being scheduled when Parliament's strategic plan had not yet been finalised.

Recommendations

  • In future, the NCOP strategic plan should take into account Parliament's five-year strategic plan and policy priorities.
  • The reporting period for committee activities should be based on the financial year, and the NCOP strategic planning session should also be aligned to the financial year, and ensure that it did not clash with the budget process.
  • Encourage a collaborative approach and sharing of information where necessary with other sector committees to follow up on specific sector issues, and ensure that oversight visits to provinces should avoid duplication. The Committee should not visit areas already visited or follow-up on issues already attended to by others.
  • Strengthening relations with the Auditor-General’s (AG's) office.
  • Create more time to conduct in-year monitoring and oversight activities, including visiting grant-funded projects for both provincial and municipal conditional grants to ensure value for money and well-informed recommendations for budget processing. 
  • There was a need for both National Treasury and Parliament to jointly address the issues around time constraints when processing a budget.
  • The NCOP should consider the consolidated draft MTBPS programme of the four committees before scheduling its programmes.
  • Intensify capacity-building initiatives to empower both Members and support staff.

In summary, Mr Dlomo emphasised the need for follow-ups from the Committee when passing budgets to ensure the challenges of unemployment and inequalities were addressed.

Discussion

Mr Ryder said that the office of the AG must inform the Committee of performance outcomes timeously to initiate a rapid response. The Committee could not allocate budgets and then take a passive stance in ensuring performance outcomes. As local government entered into a decline, it was imperative that the Committee provide oversight over performance of their functions.

There must be more communication between local governments and committees to assess differences between poor and well-performing municipalities. This would provide the Committee with an idea of how legislation and budgeting could be improved to enhance fulfilment of their business. He stressed the need for oversight of conditional grants. Municipalities must feel that they could come to Parliament to share their challenges.

On the Committee deliberations that formed part of the budget review, Mr Ryder said that this was widely well-received. He felt it was worthwhile for the Committee to review this document and NT’s response to Committee comments.

On local government oversight, it would be useful to ask Cooperative Governance and Traditional Affairs (COGTA) for insight into the progress from a financial perspective to interrogate the viability of certain municipalities and provinces in difficult administrative positions.

He said that COGTA was one of the biggest partners of the NCOP. He felt that it should be looked into how COGTA spent its funding. He asked if they could explain their difficulties in fulfilling their mandate. He felt this was the most important partnership held by the NCOP to ensure cooperative governance.

Mr S du Toit (FF+, North West) referred to the oversight role of the Committee, and said that there was a history of state capture and corruption in all institutions of government, and referenced the AG reports and an instance years back at SARS. He asked how to go about investigating if NT was providing the correct figures, knowing that the Minister was responsible for their oversight. This had to be looked into, as NT was responsible for all incoming and exiting funds, with little oversight.

Mr M Moletsane (EFF, Free State) said he felt the Committee was not doing justice to the public hearing process, especially when engaging stakeholders. Insufficient time was allocated for presentations. He asked that the Committee look into providing sufficient time for presentations from stakeholders.

Mr Ryder suggested that stakeholder public participation could be virtual, while with other matters, like visits to the South African Reserve Bank (SARB), it would be unfair to conduct it virtually where there could be signal or internet constraints.

Co-Chairperson Mahlangu asked what the CoFI bill was, as mentioned in the APP presentation. On international visits, she said that the Portfolio Committee would present to the Committee to see where they could travel and for what purposes. She was aware of fear from support staff surrounding visits to other countries and said that it would not be forced on the Committee.

She referred to a follow-up meeting in the O.R Tambo municipality and stressed the importance of physical oversight. Local governments, especially, and provincial departments must be contacted to assess where Committee intervention was needed. She said that perhaps one rural and one metropolitan municipality could be visited. Physical oversight was necessary for the oversight of funds in institutions, rather than relying on reports from projects.

The presentations had been positively received for highlighting the achievements of the Committee. On public participation, she suggested that the Committee come up with creative proposals to reach the poorest areas and communities. It was important to assess feedback, whether in person or virtually, from the recipients of the service delivery to ensure their needs had been met.

Co-Chairperson Carrim said it would be beneficial if the Committee was more clear about the respective roles of the provincial legislature, the National Assembly committees, and finance and appropriation portfolios. He exemplified this by saying that the Committee was having the same meeting that the provincial legislature committee had covered a few weeks previously.

The Committee had to look into their tasks to ensure that they were in line with their mandate when conducting oversight visits. The Committee was also entitled to do more than the prescribed function of focusing on spending on conditional grants. It must focus on conducting physical oversight in cooperation with the NCOP committees and the legislature.

Co-Chairperson Carrim said there must be a reason, or an investigative purpose, for international visits. He exemplified previous instances where concrete deliverables were provided following a Committee international study tour to develop a programme. He suggested that themes be chosen annually for the Committee to investigate, either internationally or locally. Matters must be conducted sensibly to ensure the whole Committee may participate. Oversight should be targeted for the third quarter, including cooperation from the relevant committees.

On public participation, he said that only a tenth got practiced from the Municipal Systems Act. Municipalities often avoided it. He listed various aspects hindering public participation, such as a lack of funds and inaccessibility due to language barriers. The issue represented the lack of public confidence with all parties in Parliament beyond the practical problems listed. The state and political parties alone could not deliver -- the role of civil society was important.

On the matter of physical visits, the Co-Chairperson said that it was rewarding to see projects working effectively. It was ambitious to get everyone to conduct physical visits due to the list of standard procedures committees had, aside from oversight. He reflected on a 2003 oversight report that was printed and sent to provincial departments, banks, municipalities, the NA and the NCOP. Many of the municipal issues mentioned in the report still existed today. He asked that the Committee limit their APP scope to ensure they were fulfilled as required. He suggested that travel be limited to certain areas to reduce overall travel while conducting more engagements in more local municipalities.

Concerning the O.R Tambo district, he asked what the purpose would be of reviewing a report which had been abandoned due to COVID. He suggested that another report be chosen, or that the report be used as a base-line to evaluate the current needs of the district, with the assistance of the mayor and the Eastern Cape Committee.

Co-Chairperson Mahlangu referred to the O.R Tambo issue, asking whether there was a need for physical oversight in this district again, as virtual oversight had been conducted. She agreed that the Committee should identify other municipalities in need of attention.

Mr Ryder asked for a response to his questions regarding the AG.

Mr Du Toit asked for feedback on oversight of NT funds entering or leaving the institution. Since the Minister of Finance might have been aware of money laundering and state capture, he asked what measures could be taken to ensure these instances were not occurring in the NT.

Co-Chairperson Mahlangu said that the Select Committee on Finance had an oversight role on the NT.

Co-Chairperson Carrim agreed with Ms Mahlangu. He was unaware of accusations against members in the NT. If Mr Du Toit was aware of these issues, it should be raised between the Co-Chairpersons privately, for them to write to the Minister and Director-General. He said the only instance he was aware of was regarding the integrated financial management systems.

Mr Du Toit clarified that he was not aware of any corruption in the NT. However, he wanted to ask the question since there had been many instances of corruption in departments. He asked whether there were other institutions responsible for oversight on the NT to avoid potential corruption.  

Mr Ryder said that monthly the state budget released in terms of the Public Finance Management Act (PFMA) gave an update of incoming and exiting funds. He presumed that the Select Committee had oversight over this.

Co-Chairperson Carrim said that the NA and NCOP have oversight of the NT, as well as other unions involved in the Department. The Finance and Appropriations Committees had limited time to deal with all these matters.

Co-Chairperson Mahlangu said she agreed that those institutions were responsible for oversight, in conjunction with the Department of Performance Monitoring and Evaluation (DPME). It was the responsibility of the Committee to conduct oversight of the NT.

Committee support response

Ms Mohube said the NT had made it seem as though the matter of processing the Financial Sector Laws Amendment Bill was urgent. She assumed that it would be available in 2022. On public participation, when the Fifth Parliament was processing the bill, the Committee had travelled to Gauteng to meet stakeholders. While this would not be effective for the MTBPS due to time constraints, reaching out to stakeholders in affected areas could work for other bills.

Mr Dlomo said he would find an available slot with his colleagues and identify when a meeting on the AG report could take place. He felt that this was a valuable relationship, as the AG had information that could be of assistance to the Committee. Departments needed to present before the Committee was provided with that information. The researchers conducted some analysis surrounding the AG reports which were shared with the Committee.

He agreed that oversight of local governments should be prioritised in affected communities, or where there had been public protests surrounding service delivery. He agreed that both functional municipalities and poorly run and maintained municipalities should learn from one another. He suggested that these areas should also be included in oversight visits.

Mr Dlomo agreed that COGTA was the biggest partner of the Committee. It was mentioned in the report under the umbrella term of “local government”.

 He said public participation was guided by the Constitution and PFMA. His personal opinion was that no matter how much time was allocated to public participation, unless the matter was reflected in the report, the exercise became futile. Submissions made via email that ended up in reports had more impact than timeous physical hearings that did not make it into the reports.

There was a need to strengthen public education in communities on budget bills. Communities should understand the purpose of the bills to make informed and relevant submissions before the Committee.

He agreed with the Co-Chairperson that there must be clear objectives on the purpose of international visits, why the specific focus was on an area, and how information would be used. The intention of international visits was to ensure that the oversight work of the Committee was improved. While some things may not be applicable, due to varying systems in countries, there was always something that could be learnt and applied in South Africa.

Regarding public participation, mitigating the challenges of accessing hearings was difficult. For the Committee to reach all areas, including the poorest areas, could be a topic for learning from other countries.

On the rules and responsibilities of oversight between NCOP and NA members, Mr Dlomo said that these spheres of government did not always share what they were working on. He encouraged this to function as an area for collaboration. NCOP members could conduct oversight while representing their respective provinces on a national law-making platform. Collaborative efforts must be made with the provincial legislature and councils on the ground to strengthen intergovernmental administration.

The necessary information on O.R Tambo could be provided to the Committee from a report drafted by the Fifth Parliament and a report from a follow-up meeting conducted by the municipality. The situation might not have changed in the area, only worsened, but the additional information could increase the scope of the project and provide new insight. He also suggested that while O.R Tambo could be revisited, other municipalities must also be assessed to provide insight into the situation.

Co-Chairperson Mahlangu said that when making proposals, the Committee must consider the impact that they wanted to achieve in O.R Tambo to impose a better approach. Members in the Eastern Cape were going to identify municipalities that need to be visited. It was suggested that O.R Tambo got added to this list of municipalities.

Co-Chairperson Carrim said that the NCOP strategy meetings took place at the same time as budget meetings, resulting in the Committee's exemption. He said that when provinces were visited, the provincial structures of the South African Local Government Association (SALGA) should be included. He discouraged the Committee from visiting a building instead of communities and programmes when conducting oversight. He felt that a blended system could be adopted where virtual and physical oversight was included, with only key concerns prompting physical oversight.

He agreed on the AG matter and said that the ombud dates should be discussed for the first few weeks of the next quarter in the presence of the South African Revenue Service (SARS). He noted that the Committee was receiving far less legislation than in previous years, but this would increase towards the end of the term. He reiterated that the bills, especially tax bills, had been brought in to the Committee too late -- towards the end of the year. The NCOP meeting should occur prior to the budget meeting.

Mr Ryder agreed that physical and virtual methods of oversight were needed during this transitional period in South Africa.

Committee minutes

Portfolio Committee minutes of 17 and 24 February, and 1, 2 and 4 March, were adopted.  

The meeting was adjourned.

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