Department of Social Development Annual Report 2021/2022

Meeting report

The Chairperson welcomed the Department to the meeting, led by Mr Daylin Mitchell, Acting Provincial Minister of Social Development, as the Minister could not join the meeting due to an unforeseen event that had occurred. He extended the Committee’s condolences to the Minister’s family.

Mr Mitchell thanked the Committee for the message of condolences and gave an assurance that the message would be passed on to the Minister. He would not make any further opening remarks to save time, and handed over to the Head of Department (HOD) to proceed.

Department of Social Development annual performance report 2021/22

Dr Robert Macdonald, Head of Department, WCDSD, thanked the Department team for the positive developments in governance in the 2021/22 financial year, as there had been major improvements. He congratulated the finance and human resource teams, the chief directors and senior managers for the improvements in the various areas, and said it was an unfortunate irony that as their governance was improving, service delivery was struggling because of the contractions in the budgets.

He said things were extremely tough on the ground. He acknowledged all the frontline workers, including social workers, child and youth care workers, community development practitioners, and all the support staff who were working under tremendous strain trying to keep up with the demands for service delivery in the communities of the province. He also thanked the Auditor General of South Africa (AGSA) and the audit committee for their oversight and support.

The Chairperson reminded the members that the Acting Minister had said he might leave the meeting early and permitted him to excuse himself when needed. He said the Committee would discuss Part C and Part E of the Department’s annual report, and the Committee started with Part C of the report, which began on page 87.

Discussion

Part C: Governance

Mr D America (DA) congratulated the HOD on the clean audit. He noted that he had been in the Department for several years and had always maintained a clean audit under his leadership. Having had the experience of maintaining the standard that they had created in the Department with his team, Mr America wanted to know what the HOD considered one of the major threats that could have a major impact on the audit outcomes of the Department in the future and what he thought ought to be done to mitigate that threat.

On page 87, the Department had listed inadequate human resource capacity to deliver on their strategic mandates as a risk, and he wanted to know which human resource components were deficient in enabling the Department to continue to deliver on their strategic mandates within their organisational structure. The Department had also mentioned it was in the process of establishing a new organogram that would be contextualised in the new human resource structure and positions. How far was the Department with the finalisation of this new organisational structure?

Ms N Nkondlo (ANC) said the Department had referred to the inability to address capacity constraints as one of the emerging risks in their report, highlighting that three non-governmental organisations (NGOs) were about to close. What plan had the Department put in place for those NGOs, as the Department had previously mentioned a challenge with NGOs closing due to lack of funding? Had the Department ever engaged the private sector in that regard? She also asked the Department to mention the number of registered and non-registered NGOs that the Department funded.

On page 89, the Department spoke of the increased household hunger in many communities and the Department’s additional food relief initiatives above the interventions made by the South African Social Security Agency (SASSA). She asked if the Department believed that using interventions such as providing food parcels was responding to household hunger. What was the main cause of household hunger, according to the Department, and what were their plans to address it, besides the food parcels?

Assuming that the Department delivered through NGOs, what kind of framework did it have regarding non-profit organisations (NPOs) and NGOs and how it interacted with them? Were there any black economic empowerment (BEE) qualification requirements with the NGOs that the Department engaged with?

Mr M Xego (EFF) noted the description of the responsibilities of the Ethics and Enterprise Risk Management Committee (ERMCO) on page 87, and the fact that only one ERMCO member had attended all their meetings, which did not sit daily. He asked for clarity on the operational challenges that the Department had, including the key risks such as the safety and security threats faced by the DSD staff, which ERMCO was supposed to deal with. He was concerned about ERMCO members not attending all the meetings when such challenges existed.

On the inadequate human resources to deliver on the Department’s strategic mandate, he asked it to expand its explanation because it showed a negative reflection on the Department. Regarding fraud and corruption on page 91, he noted the case of 28 January involving allegations of fraud, corruption and mismanagement, and the investigation was still ongoing. He wanted to know if the case had been reported to law enforcement agencies outside of the Department’s internal investigation, and what the status of the case was from those law enforcement agencies.

Ms M Maseko (DA) said the issue of the NPOs had also been in the Department’s last annual report, and it still appeared on the 2021/22 financial year’s annual report. She understood that these were the service providers within the Department and were the core business of the Department, as they implemented some of the services it provided to the communities. However, she wanted to know how the ripple effect of the inadequate human resources affected NPO contract management in the Department. She wanted to know at what point it would receive quality services from the NPOs. In the interactions between the accounting officers and the Audit Committee, what did they discuss as the possible solutions to the shortcomings of the Department, especially regarding the inadequate human resources within the DSD to deliver on its strategic mandate?

Department's response

Dr Macdonald said trying to reduce the major threat to future audit outcomes to one issue was difficult, but the audit outcomes were not the worst risk for the Department, as a much more severe risk would be something that impacted the human rights of their clients. From an audit perspective, the biggest risk would be the Department’s financial situation, because it affected its capacity to implement good governance, as it reduced its ability to monitor non-governmental organisations (NGOs) and effectively implement and comply with supply chain and financial processes. The much graver risk than audit impact would be the impact on the citizens that the Department served, because when services failed, severe human rights violations occurred, which was evident in other provinces as well -- for example, the Life Esidimeni incident. The Department's financial situation was pushing them in the direction where those outcomes could become a reality in the province, because there were several facilities for disabled and older persons and children who were experiencing serious financial vulnerability. The Department was concerned about what could happen in the next financial year.

On mitigating risks and impacts, he said the Department was carefully reviewing its expenditure to see how it could reprioritise to protect essential services, which would come at a price in its own right, but would be better than the worst-case scenario. This also meant looking at the programmes that it had implemented that were positive and proactive that may have to be shutdown, like youth cafés and preventative services in the space of drug treatment, families, as well as service centres for older persons and protective workshops for disabled persons. The Department was not mandated by law to run such services, and they did not pose an immediate risk to the lives of clients if they were to be shutdown to save money.

The consequence of cutting the other services involved losing critical capacity in the preventative space. It was a very short-term approach because when one has reduced preventative programmes, it inevitably meant that people became more at risk and in the end, there was more pressure on the intervention services. For example, closing down services for 4 000 older persons across the province this year meant that those people were no longer able to access healthy meals, enjoy social interaction, or be screened regularly for elderly abuse. There was a greater chance now that those people would end up going into old-age homes, which were already strained and under pressure. In essence, a short-term approach to get the Department through the next year would cost it in the medium term. It was not an approach that the Department wanted to implement, but it was an inevitable consequence of its immediate challenges.

The DSD was equally looking at all the non-essential activities, but the problem was that it was closing in on ten years of austerity measures because National Treasury had started implementing cost containment around 2012/013. The Department had been cutting its budget ever since, and was now doing serious damage. The deficient human resource areas in the Department included the child and youth care centres, as there was a serious shortage of child and youth care workers in the residential facilities for children who had been sentenced for crimes and children who had behavioural problems. This was dangerous, because it meant that children overpowered the staff because there was not enough staff on shift. This often resulted in children burning the facilities and centres, breaking out, or even attacking civilians when they got out of the centres. It also created unliveable work conditions for the available child and youth care workers.

There was also a shortage of social workers, and there was a huge risk of children dying because social workers were unable to get to their cases properly or did not do proper due diligence. There were also administrative vacancies which hampered service delivery, because if there were delays in supply chain or human resources processes, it impacted the frontline staff. The Department was considering reviewing its regional structures because they were capacitated to deal with the population as at 2010, which was during the modernisation process. Since then, the province's population has grown significantly and there were new settlements in some areas, and a lot of NGOs were closing because they could not carry on, and the regional staff had to step in and take over the caseloads. Each social worker in the NGO sector was sitting with an average of about 150 cases, so for each social worker who ceased to operate, 150 cases went to the DSD, and its social workers had to take on the cases on top of their existing caseloads.

The Department had a process of operation design underway to look at how it could capacitate certain parts of the province where there was a shortage of capacity, but it currently did not have the money for those posts and it could not fill the posts until the financial situation eased. It was trying as hard as it could to get NGOs to step into the areas where it could not, and if the NGOs closed, the Department’s option was to try and find other NGOs willing and able to step in, and sometimes there were such NGOs. This was difficult to do in the rural areas, because the NGOs battled to recruit and secure social workers, as they did not pay them enough to attract and keep them.

The design work of the new organogram was currently underway and had already been done in a few regions, but the big process was submitting it to the Department of Public Service and Administration (DPSA) for approval and to have the posts funded. This would probably not be possible before 2025, given the budget situation as projected by Treasury. The DSD was trying as far as possible to support NGOs with capacity building, and reached over 8 000 of them in the last five years with capacity support to help them with fundraising, connecting them with donors, and helping their boards improve their financial management and administration. When NGOs ran into financial difficulties, the Department sometimes bailed them out with additional funds and tried to bring in other NGOs to support them. It tried several interventions to help NGOs not close, but sometimes their boards decided that they would close the NGOs, and there was nothing the Department could do about it. An example was the Cape Peninsula Organisation for the Aged (CPOA) Old Age Home, which the Department could not convince to not close.

Mr Mzwandile Hewu, Chief Director: Community and Partnership Development, WCDSD, said the Department had a unit called Partnership Development, which had a full directorate. It had a component that dealt with stakeholder management and a component that dealt with business development.

The stakeholder management unit helped it to interact with other government departments so that government could deliver services in an integrated way. It helped it to interact with other government agencies so that if there were projects done by agencies such as the SA Social Security Agency (SASSA) in some of the communities in the province, the Department would share its resources such as vehicles, labour and the budget to maximise the impact of the project done by government. The biggest part of the work done by the unit was its interaction with municipalities, because the beneficiaries of its services were the citizens who belonged to the municipalities. The unit worked with municipalities to understand their Integrated Development Plans (IDPs), their target areas on social development and their services, and worked with them to share budgets and resources to maximise the impact.

The business development unit looked at the private sector and interacted with willing private sector companies to look at their corporate social investment (CSI) budgets to see if there were any interactions that they could develop. Recently, the Department had worked with Standard Bank for Mandela Day. Standard Bank had approached the Department, having identified an early childhood development (ECD) centre and decided to work with the Department. The Department looked at what the private sector could do to augment or complement the work it wanted to do but did not have sufficient budget for, which was not an easy exercise because of its human resource issues. It was easy to identify partners, but it was difficult to ensure that the partners delivered on the mandates.

One example was that in Saldanha Bay, the Department had been working with Sea Harvest, a fishing company that had identified substance abuse as one of the challenges among their staff members for six years. The WCDSD had provided social workers who could be on site once or twice a week, and the company offered a bigger office space for the Department so that it could have an area to operate from, as it was difficult to get a government building in the area. This not only enhanced the relationship between Sea Harvest and its workers, but it also benefited the entire Department, as it gained an office space where it could run all its other programmes, and was not limited to substance abuse.

Dr Macdonald said there were about 60 000 NGOs in the national NGO Directorate’s database, of which 38 000 were non-compliant and were at risk of being de-registered. The Department had funded 2 200 NGOs during the 2021/22 financial year, but had funded only 1 100 during the current financial year because the 1 100 ECD NGOs had gone over to the Department of Education as of 1 April 2022. Not a large proportion of the NGOs applied to the Department for funding, considering the total number of NGOs in the province.

The Department received about 4 000 applications when it did calls for proposals. NGOs serviced many sectors and were wide-ranging in their functions, and only a few of them worked in the social development space, but all of them had to be registered with the national DSD's NGO Directorate. Currently, they were sitting with backlogs for re-registration or confirmation of compliance, as most of the NGOs were submitting their annual financial statements as required in the NPO Act, but the national Department was falling behind in the checking and processing of all those documents. The WCDSD was trying to support the NGOs by communicating with them and the national NGO Directorate in that regard.

He said the biggest driver of the increase in household hunger was unemployment and the state of the economy of the country, as there had been a lot of job losses due to the COVID-19 pandemic, and it also affected people’s ability to access food, especially in the rural areas. Things were bouncing back significantly from the situation during the middle of the COVID-19 disaster, when food security had been very bad. Under the leadership of the Department of Agriculture, the province was developing a food security plan, and the DSD had a role in that plan, but the leaders were the Department of Agriculture, as they were looking at sustainability.

The WCDSD was looking at dealing with immediate needs, but that was a short-term response and there was a need to shift to sustainable food security. Considering the food relief and the food that was in the system from government, the Education Department reached hundreds or thousands of schools with the Peninsula Feeding Scheme. The WCDSD provided food through the old age homes' protective workshop service centres, drop-in centres for children, soup kitchens and the targeted feeding schemes, and also distributed food ingredients to informal community kitchens that were not necessarily registered NGOs. The Department also gave funds to large organisations like the Red Cross to get bulk food ingredients to distribute through the connections established in the Western Cape Food Forum to many small neighbourhood operations, where they cook food for people in the communities. The Department had phased out the food parcels because they were too expensive to reach many people.

The Department of Health (DoH) also had food programmes for people presenting with malnutrition or who were on medication and needed to have nutritional support with their medication. The Department of Education has also taken over the ECD function which feeds 80 000 children daily through the funded ECDs. The Department did have a big food relief footprint, not including the SASSA COVID-19 relief grant and the social relief of distress (SRD) grants. Nationally, there was currently a process underway to review the social protection system in South Africa to see how it could be consolidated and rationalised. Although it was unclear at the moment, there were talks of a basic income grant (BIG) and other kinds of measures, but provincially, food security needed to be looked at holistically because the DSD could not do it on its own.

He said the Department had an NGO funding policy that was broadly aligned with the national NGO funding policy that had been developed over the years in response to the "No Hunger" court judgment which happened in the Free State, where a coalition of NGOs took the Department of Social Development to court over concerns about the rationality of how funding was being distributed to NGOs. This led to the development of the national NGO funding policy to try and create more transparency and consistency around NGO funding allocations. The WCDSD had already had an NGO funding policy in place before that, but with the development of the national one, they had incorporated some of its elements to align themselves with it and to bring more consistency. They used that policy as a framework for how they funded NGOs. There was no black economic empowerment (BEE) aspect to the funding because NGOs were not enrichment schemes that were designed to generate profit, so they were usually given less money than they actually needed to operate, because they were also intended to fundraise on their own, and the government only subsidised them.

Regarding ERMCO attendance, he said they had four ERMCO sessions a year, and the core ERMCO members had mostly attended three or four sessions. The ones who had attended only one session had needed to attend only for specific items, and were not necessarily expected to attend ERMCO routinely. One of the core members of ERMCO was with the Department only for the last quarter of the financial year and attended only one meeting, but there was generally a majority attendance at ERMCO meetings. Several meetings with each Chief Directorate led up to the quarterly ERMCO meetings, meaning each Chief Director that was listed in the report had management committee meetings with the enterprise risk management team before the final meetings. In most instances, they would be familiar with the contents of the final quarterly ERMCO meetings before they sat.

Regarding the fraud and corruption case on 28 January 2022, he said the fraud and corruption cases had been handed over to the South African Police Service (SAPS), and the Provincial Forensic Services (PFS) kept a register of the cases that were with the SAPS and gave the Department updates on the movements of those cases. Unfortunately, the cases were not moving very well, and the PFS had followed up, but there was not much traction on the cases. In some cases, there was also civil action to recover funds that had been misappropriated which was handed over to the State Attorney for action, and was still underway. The area where the Department had the most control was with disciplinary action that it could implement, but the criminal side of the cases was monitored so that the Department could keep track of whether there was movement, but there was none currently. The PFS team had engaged with the SAPS and handed them affidavits to try and assist, but the cases remained with the SAPS.

The risk of ineffective NGO contract management remained a concern for the Department, especially because there was a shortage of monitoring staff, which meant they were less able to check on the NGOs, so there was a greater risk of problems within the NGOs and them not being detected timeously. The Department had sufficient capacity to be able to look at what the NGOs were submitting in terms of financial information and audited financials, and what they delivered from a non-financial data perspective. The AG also checked that information, and the Department did get some assurance in that regard, but it could do site visits only for the big programmes once every three years, which was not often enough.

On the accounting officer’s interactions with the Audit Committee on NGO non-compliance, he said the risks would always be in the Department’s risk register, because they required constant vigilance to ensure that it did not escalate. To reduce the risks, the Department needed to visit them more often and to get to a point where they had better electronic management of submitted data so that it could pick up more quickly where there were issues around under-performance. The Department had benefited a lot from the departure of the ECD programme, because it meant that the senior managers could focus more on the remaining NGOs, as it now had a reduced the scope to 1 100 as opposed to the 2 200. They were still assisting the WCED with the transition, and once they had fully transferred it, it would give them more room to breathe and focus on the remaining NGOs.

Follow-up discussion

Ms Maseko said the Committee had met with the WCED the previous day and was discussing the ECDs, in that they were facing challenges regarding zoning, and asked if the relations between the government departments in handing over the ECD had been a challenge. She also wanted to know how that issue could be solved, especially in rural areas, as she feared that many children ready to go to school would be stuck in non-recognised ECDs.

Ms Nkondlo asked if the Department had a sexual harassment policy in place, given the clout of the Department involving a case in the highest office. She was interested to know the level of safety of women within the DSD and what measures had been implemented to protect women in the political office of the Department.

Department's responses

Dr Macdonald referred to the zoning issues of the ECDs, and said the Department relied on good intergovernmental relations with the municipalities to overcome some of the hurdles that the ECDs faced, because the regulations around their registration were onerous and designed for a more developed and formal context, as opposed to many of the ECDs which were in informal communities. The zoning had always been a problem for the Department, and it had managed to work well with some municipalities, while others were not as forthcoming. There were also a lot of inconsistencies around bylaws for zoning in different municipalities, and the South African Local Government Association (SALGA) had been working with the Department at one point to see if they could try to create a more consistent approach for the zoning of ECDs in the province and in the country.

During the process of shifting the ECDs to the WCED, the whole team that was dealing with ECD at the WCDSD had moved over to the WCED and maintained the good working relationship with the municipalities, and had taken their experience and knowledge with them to the WCED. There was also a need for legislative reform, especially with the legislation that was within the control of the national Minister of Education. The de-registration that was going on was also a huge risk for the WCED, because they wanted to be able to continue funding the facilities, but if they were becoming de-registered, it put them in an awkward position because they did not want to close them down by stopping the funding, but they also did not want to fund the facilities if they were unregistered because it would send the wrong message. The Department had seconded one of its senior staff members to assist them for a year with the process, and she would return to the Department once the year was up, but the relationships with the municipalities had proved to be very valuable because some of them had really bought into the idea of the ECDs and saw the value in them.

De-registrations were happening for other reasons as well, including the inability to sustain or keep staff on board that was able to work with children, and ensure that there were correct staff-to-children ratios to ensure that they kept their programme in line with the national norms and standards. The DSD would continue to support the WCED until the end of the financial year, and by that time, perhaps the WCED would be able to decide how it would go forward with the ECDs. The WCED also had an opportunity to provide a much bigger footprint than the WCDSD, so the local municipalities could also hopefully take on a supporting role as well.

The DSD had had a sexual harassment policy for a long time, and a sexual harassment contact officer had been appointed at the most senior level in the Department, as well as in all the Department units outside of the head office. It had picked up sexual harassment cases within it and had to deal with them incisively. In 2014/15, when it had had a lot of sexual harassment cases, the Department embarked on a very proactive sexual harassment campaign which is still continuing currently, to try and raise awareness of what constituted sexual harassment and how to get help if one experienced sexual harassment among the staff.

The Corporate Services interns were currently revising the provincial sexual harassment policy and were bringing it into line with international norms. The policy was currently in the process of being consulted with the unions. Once that was done, it would be adopted as the updated sexual harassment policy for the province as a whole. Some areas in the policy may be a bit difficult to implement in its current form, but it did broaden the definition and the focus to beyond sexual harassment, and included workplace bullying. The Department would have to see how it would work out.

Discussion

Part E: Financial Information  

Mr America said on page 194, on contingent liabilities, he could not find the explanation of the claim for damages of R5 million against the Department in case number LT/144/2011. He asked for clarity in that regard as it was still reflected as an outstanding claim. On the reconciliation of irregular expenditure on page 198, looking at the analysis of closing balances, there was an amount of R79 000 for the prior year, and he asked for more information on the amount because the opening balance of the prior year had been R1.211 million, and the removal of R525 000 was not condoned. Why was the amount removed when it was not condoned? On page 211, in Annexure 1A of the payments to the Sector Education and Training Authority (SETA) of R2.788 million, he wanted to know how much of the money that was paid to the SETA had been recouped in the form of training provided to staff.

Ms Nkondlo said the issue of staff overpayments had been picked up in the discussion of the community service centre (CSC) role of the Premier’s Department. She wanted to know whether there were such overpayments in the DSD, and if that was the case, what was the nature of the overpayments? On under-spending, she said Programme 2 and Programme 3 had explained some amounts on the sub-programme on services to persons with disabilities, social relief, and ECD. What were the activities where money was not spent, because the activities would have been budgeted for in the planning cycle?

On page 171, the report mentioned that money not spent and surrendered to the Revenue Fund had increased. How was the Department managing its money if the money it sent to the Revenue Fund was increasing? Were there any challenges in spending its allocated budget that would warrant concern for the Committee? Which programmes were facing challenges in spending the money allocated to them? How was the funding to the NGOs treated? Was it treated as a donation or a transfer payment? There was also an overpayment on page 192 which the Department stated it was dealing with in consultation with the State Attorney. How did this overpayment happen, and from which programme did the overpayment emanate?

Mr Xego wanted to know the reason for the shifting of funds mentioned on page 162 under the care and services to families sub-programme, and the ECD Partial Care. He wanted to understand the impact the shifting of funds had, especially on ECD centres. He had the same question from page 164 on the crime prevention and support and the victim empowerment sub-programmes. The same was the case on page 166, on the poverty alleviation and sustainable livelihoods sub-programme. On page 168, there was an issue of underspending on goods and services relating to the sanitary dignity project, and the reason that was given in the report was that there was a challenge with the supplier, who had a problem with load-shedding. He did not understand how this was an issue, because load-shedding had been happening since 2008. He struggled to make sense of the correlation between dignity packs and load-shedding and needed clarity in that regard.

On page 184, regarding the amount of R42.6 million spent on agency support for outsourcing services, he said the Department seemed to be paying for every service because all the services were outsourced. He wanted to know what type of services were outsourced and if there was any necessity for those services to be outsourced from those agencies. He also wanted to know the names of the agencies in question. On page 192, he wanted to know what the Department had done to recover the money it lost due to overpayments, and how far the process for recovering the money was. He also wanted to know what the claims against the Department of close to R1 million were for.

The Chairperson said some questions he would ask would require written responses, and some could be responded to in the meeting. On page 195, on the contingent assets, it was stated that there were 12 policy and procedure on incapacity leave and ill-health retirement (PILIR) cases under investigation which were not finalised by the Department of the Premier (DotP) as at 31 March 2022, and were not included in the report. He wanted to know what the cases were about and if the Department had interacted with the DotP, he wanted to know the latest on those cases.

On page 198, the report showed that the irregular expenditure of the Department was very minimal, as it stood at R79 000, which meant that it could be completely eliminated at some point. He wanted to know what might have been the reason for this amount, because it seemed to be minimal compared to the Department’s overall budget of billions of rands. There might have been a lot of irregular expenditure, but it might have been condoned. He wanted to know what might have been the reason for the condonations.

Regarding the audit committee and AG's report, it had been highlighted that this was probably the Department’s ninth clean audit report for nine consecutive years, which was commendable, but there were still a lot of social development problems and there was something amiss. There was a suggestion that performance audits needed to be considered, because most of the departments in the province had received clean audits, while service delivery did not reflect the clean audits. He asked the HOD to comment on whether they would be ready to engage on their performance audits.

Department's responses on Part E

Dr Macdonald said it would be a good idea to start engaging on performance audits, but it would depend on what they would be measured against. If the Department were given R2.4 billion and was asked to use the money well, they could be measured against how well they used the money, but it could not be audited against what one would expect from a department that would have a R5 billion budget. The current AG reports tell Parliament, as the oversight body, and the Department as management, that the information that was presented was accurate, and the Department had shown that they could present accurate financial information and accurate performance information. The AG reports also look at compliance to see if the Department had not done anything dodgy that requires the involvement of an oversight body such as Parliament.

The AG was beginning to experiment with the idea of a performance audit, as there was a section in the audit report that referred to issues they had picked up around the outcomes of some of the projects, which was useful, but even performance audits would not provide the answers that were needed. The DSD could work as hard as they could with the 800 social workers that they had and the NGOs that they fund, but that would not be enough to solve the problems, as there would still be homeless people in the streets, child abuse, gender-based violence, etc. The question would be whether they had allocated enough resources as a province and whether the province had been allocated enough resources, and whether they were making the right policy decisions. He was unsure if those were things that the AG would want to audit, because they were high level questions that were politically and policy-driven and highly debatable.

The Department would be comfortable to be audited on their performance, because that would help them improve service delivery and the effective use of their resources, which would be a value add. It would be very difficult for the AG, because every department in the province had specialisations. It would be a big ask to request the AG to audit against social work norms and standards, because they would have to get a social work specialist, a substance abuse specialist, a specialist in disabilities, education, health, etc. There were national mechanisms that were set up to monitor adherence to norms and standards by the provinces, and in the provinces, there were systems that monitored norms and standards in the NGOs and among the social workers and so on. He said there were assurance systems, but he was unsure how they would translate into something the Committee would find useful in the governance space, as it would be a big leap to try and get into an audit report in a way that would be sufficiently detailed and sufficiently insightful.

He warned against the continuous tightening of oversight and putting more resources into oversight when there were not enough resources for service delivery, because the country was getting to a point where more money and resources were put into oversight bodies and new commissions, but there was no money being put towards the people that had to deliver services. “Government could score an own goal if they get the balance between oversight and service delivery wrong,” he said.

Mr Juan Smith, Chief Financial Officer, WCDSD, said the R5 million on contingent liabilities was a case of damage in respect of exposure to danger, pain and suffering, and the State Attorney had advised that the plaintiff had not prosecuted its claim further after the Department had filed an exception to its particulars, pending for three months until June 2022. The case was indicated as resolved, so the Department would have to do a follow up on the case.

Dr Macdonald said this was a case where children had escaped from Outeniqua and assaulted a woman in George, who had decided to sue the Department.

Mr Smith said the Department did not have any irregular, fruitless and wasteful expenditure in the year under review, and that the three cases that added up to the R79 000 were from the prior year. The Department was investigating those cases, and two had been resolved. One had been for R8 500, where the official was disciplined and had to repay the amount. The other was from the Western Cape Sports School, which was a service provider, and when the Department initially identified the case, it was highlighted as irregular. The Department had later discovered that there were three quotations, because the irregularity occurred because there was only one quote. In that case, Provincial Treasury had advised the Department that it was not irregular, but it was non-compliant, so the amount could be condoned. The only outstanding case was for R48 000, which was for a private automatic branch exchange (PABX) system that the Department did not use, but because it had not cancelled the lease in time, they had to pay for it. An official of the Department was also disciplined for that, and the official had also retired, and the matter would be finalised in due course.

On the removal of irregular expenditure, he explained that two processes could be followed -- one was condonement, and the other was the removal. Irregular expenditure could be removed only when it was free from fraud, corruption or a criminal act, but there must be disciplinary actions taken, and the Department must not have suffered any losses, and the irregularity must have led to a non-compliance which had been addressed. This was what the Department had done with the prior year’s R525 000.

On the payment of R2.8 million to SETA, he said this was a compulsory payment that the Department had to pay every year. On how they recouped the amounts, he said there were certain projects the SETAs ran that the Department had also bought into.

On staff overpayments, he said the Department normally gave out allowances, and sometimes the calculations were incorrect or the recipients were not eligible for the allowances, so it would follow a process to disallow the payments and record that in their books by creating a debt, and follow-up the debts. In most situations, they had bursary debts, where officials that had bursaries with the Department did not complete their studies and were no longer with the Department. The Department would continue to pursue those debts via deductions and so on. There were also cases which involved the time lapses that happened when the approval for temporary incapacity leave was given after the staff member had already taken the leave credits, and it then turned out that they were not entitled to them. Those also resulted in overpayments that needed to be recouped by the Department, and this was also the case for unpaid leave.

Dr Macdonald said referred to the underspending on disabilities, and said two vehicles were to be procured for children with severe to profound intellectual disabilities and then donated to NGOs. This resulted from the right to education court case from around 2008 or 2010, where the country was taken to task for not providing sufficiently for the educational needs of children with severe to profound intellectual disabilities. The provinces had put in several initiatives to respond to that judgment, and one of the areas identified as a need was to have some vehicles to transport these children to protective workshops or education facilities. These were children who could not join a normal school, so the need for transportation required very specialised vehicles.

The Department of Transport and Public Works had been commissioned to develop the vehicles for the DSD, and the vehicles were procured through a national tender, but had to be adapted to have a raising platform for the children to get in and out, and various adjustments to hold the children in their seats. The service providers who were doing that had run into trouble with meeting the national standards that were set out for the vehicles with those modifications, so they had to go back and do additional work on the vehicles to ensure that they were fully compliant with the national standards, which had led to a delay in the process. Once this was completed, the vehicles were handed over, but it resulted in the Department not being able to spend the funds for that year, so the funds had to be rolled over. The vehicles had subsequently been delivered, but there had been a delay of several months.

The underspending in the social relief programme resulted from the sanitary dignity project. There was a combination of factors, but the main one involved the service provider which was producing the sanitary pads. Their last shipment was due to come in March, at the end of the financial year under review, but due to loadshedding, they had delayed the factory run, so they delivered only in April. The delay into April resulted in the Department being unable to pay them for that last delivery. It was not a long delay, but it was enough to put the Department off at the end of the financial year.

The underspending on ECDs was related to the ECD stimulus package, where the national DSD had allocated funds to the WCDSD with a short turnaround time to spend them and give them to the NGOs. The process was difficult because the NGOs had to apply through the national central supplier database to benefit from the ECD stimulus package. The national DSD had appointed a service provider to check the information and verify that the people qualified for the package. They were then sent the list of the people’s names through the WCDSD in batches, which led to severe delays in the provision of the names to the WCDSD. In essence, the Department had received the money, but had not received the list of people to give the money to in time. The project was later handed over to the WCED when the ECD function shifted.

Mr Smith said the delay in the delivery of the sanitary pads delivery had happened because of load-shedding, according to the explanation that the service provider gave, and the Department had allowed the service provider to deliver in April and could pay the amount only during that month.
 
Mr Hewu added that the specific issue with the service provider was around the packaging, which the service provider outsourced from another company. The company doing the packaging could not put the boxes together for them to put the products into, and the Department had no choice but to accept what the service provider said and asked for a 60-day grace period. They had delivered on 16 May, which was already in the new financial year.

Mr Xego asked what load-shedding had to do with the situation.

Mr Hewu said the manufacturer used electricity to produce the packaging used for the pads.

Ms Nkondlo wanted to know if allowing a 60-day grace period for all suppliers who failed to deliver on time was standard practice in the WCDSD’s supply chain process.

Dr Macdonald said it depended on the service provider and the type of service they provided. For example, if it did not affect the Department severely, or it was a service provider that provided a critical service and they did not comply with contract conditions, the Department was more stringent. For example, in the Department’s child and youth care centres, there were service providers who provided food for the children, so if they suddenly stopped providing food, the Department would be on their case immediately. If they could not fix it within a few days, it would replace them because the risk for the children was severe.

Mr Smith said the standard procedure when they awarded a contract to service providers was that they had a service level agreement (SLA) with them within 30 days of signing, where they looked at the operation of the service providers and what their responsibility as the Department would be within that relationship. They also had a clause in the SLA that stated that if there was anything the service provider wanted to bring to the attention of the Department, it must be within 30 days, and that also went for the Department. The Department might also ask to delay a project for some reasons, but in severe cases, it would also get legal advice from their legal services unit and act upon it immediately.

Mr Hewu said the delivery of the sanitary pads was worth R1.5 million, and it was due in March at the end of the financial year. The Department had the option of a penalty clause which would have led to the service provider challenging it, because load-shedding was a legally sound reason that the service provider gave, so the Department felt that because of the severity of the matter, and the fact that they had stock on hand, they did not want to spend three to four million rands in legal fees for products worth R1.5 million. This was because it would not be worth the exercise and was not standard practice.

Mr Xego said the load-shedding issue did not make sense, especially considering the value of the product that the Department was expecting in huge volumes. It would have been expected that anyone who rendered such a service to the Department had adequate facilities that would be able to deliver. In most cases, people who manufacture and produce normally had back-up systems to ensure that they delivered on time. He said these were the implications of the Department outsourcing every service. He asked if it still had a relationship with the supplier.

Mr Smith said the contract with the supplier had been terminated after the delivery was made in May, and the Department had embarked on a new tender process and acquired a new service provider. He said there was a decrease from R113 million to R42 million on the agency and outsourcing expenditure. The Department had previously in-sourced the Bosasa centres. The remaining R42 million was for the catering which it was still outsourcing, and the food provision which the Department did.

He said the impairment of receivables was a provision that the Department made as an accounting principle, and was not a recovery that needed to be made. It worked on a formula that it raised in its books as impairments for the likelihood that if they were unable to recoup, or there was hardship or economic difficulty, or a person was deceased, the Department could then write off the amount. The calculation was determined on all receivables older than three years where the recovery was unlikely to occur. The estimate of impairment related to staff debt (R2.584 million), supplier debt (R128 000), recoverable expenditure (R203 000) and claims recoverable (R152 000).

The claims against the state related to the contingencies that were currently in the process of being dealt with by the State Attorney and the legal services unit. The possibility existed that the Department would have to pay the amounts, but there was also a possibility that the Department need not pay some of them. There was also a possibility that the amounts could increase or decrease. The contingent assets of the 12 PILIR cases under investigation by the DotP were not included in the assets. The process was that the Department would sit with the DotP and evaluate the cases based on the time they happened and they would be discussed regularly. They could have resulted in overpayments that needed to be deducted, or the PILIR could have been accepted.

Dr Macdonald said the outsourcing of the agencies and the money that went into things like social security and food provision in child and youth care centres were things that the Department needed for those centres. The Department was 50% in-sourced and 50% outsourced, as it funded about R1 billion to the NGO sector. The remainder of its budget was for internal services where the Department had its teams of social workers in the regions and the child and youth care workers in the child and youth care centres who provided services directly to the public as the Department’s employees. The Department tried to keep a 50/50 split between services that it subsidised through the NGOs so they could reach further than the Department, because they also subsidised their services with their own money. The Department tried to arrange it in a way that its personnel would deal with the highest risk services that it could not expect the NGO sector to handle, like probation services, etc. The Department takes on the hardest work because it has the resources and backing of state cover.

Follow-up discussion

Mr America said the transfer of the ECD function to the WCED meant that the funding would also follow that transfer. He asked if the transfer would significantly impact the Department’s staff establishment once the transfer of the function was complete. Had the Department considered the componentisation of assets, as the AG had continuously raised it as an emerging risk?

Ms Nkondlo said since the money was going to follow the ECDs and there were stringent measures in the registration of the ECDs, was the Department going to transfer all the money to the WCED, or was it going to allocate it per NGO?

Responses

Dr Macdonald said the budget the Department had was sufficient to cover the contractual commitments that were held with the ECDs that the Department funded, so that had all gone to the WCED and the DSD did not have any of these funds left. The WCED would now have to decide if they wanted to expand the number of ECDs they funded, for which they would need more money from Treasury, or they would have to find the funds internally within their budget.

He said they had transferred all the staff who worked on the ECDs. The Department had had an ECD unit of about 50 staff members, who had now moved over to the WCED, except for four who had remained to assist with the after-school care centres which remained in the Department. That had reduced the Department’s staff establishment significantly, as there were also support staff included in the 46 staff members who had left, and R1.7 million worth of assets. However, because the Department did not run any ECDs on its own, no facilities or capital went over to the WCED, because the unit was still sitting in the DSD's building as the WCED still needed to find space for them.

Mr Smith said the idea would be to do the componentisation of assets from a central location, and Provincial Treasury would need to be involved because the Department would need systems to do that because this was one product that had different components which would need to be evaluated, and the Department would need to account for each of them.

Mr America said this was a useful response, as the Committee would not get different responses from different departments -- it could just ask the Provincial Treasury how they envisaged the rollout and assist the departments.

Mr Xego referred to the shifting and movement of responsibilities and functions that affected the Department. He said he did not see anything relating to the issue of wellness, working with the Department of Health, in the report. He was unsure if it had not had any impact during the financial year under review, especially regarding mental health.

Ms Nkondlo said that on page 222 of the report, there had been reference to a unique finance agreement with the motor vehicle leases of the Department. She asked it to explain what it was about and what was unique about it, and whether it was different from the government motor transport available to all the departments. On page 207, the report referred to the non-residential buildings -- containers that had been converted to offices and workshops that were immovable in nature. She wanted to know whether those were the DSD offices or some NGOs the Department was working with. How many containers were there, and at what cost?

Ms Maseko wanted to know how important the componentisation of assets was, because it always appeared in the AG's reports but did not have a deadline of when it should be done. Why did the AG feel it needed to appear in the reports, and what were the foreseeable risks it posed if it were not to be done?

Dr Macdonald did not understand Mr Xego’s question about wellness.

Mr Xego said he was asking about employees' wellness, which possibly was the responsibility of the Department of Health, and he wanted to know why it was not included in the report.

Dr Macdonald said employee wellness was provided for by the Corporate Services Centre (CSC), and not the Department of Health. The CSC had a service provider that they contracted, and the service provider provided employee wellness services, including counselling and interventions to assist with employee wellness issues, including mental health. They also did wellness checks, including blood pressure and other tests. The CSC sometimes did a summary of the outcomes of the process, but they did not feature in the Department’s annual reports.

Ms Annemie van Reenen, Chief Director: Service Delivery Management and Coordination, WCDSD, said quarterly reports were submitted to the Department by the CSC, but they often had a confidentiality limit, so they would just speak on the trends and then an annual report would be submitted to the Department by the service provider.

Dr Macdonald said it did not feature in the Department’s annual report, but they received reports on wellness trends, as well as the work done by the service provider. The Department had been picking up issues such as increasing burnout and mental health challenges among staff, and during Covid, there was a lot of strain on the staff and several deaths of staff members, which caused a lot of trauma. The service provider provided counselling services with employees, and it also required more than just counselling in some instances, and the Department would refer employees for more specialised assessments and support where required. The social work supervisors also supported their staff, and part of their work was to debrief social workers who experienced the burden of their work with their clients. The staff's mental health was under strain because of the workload, given the Department's financial situation and the increasing overtime hours.

On the uniqueness of the finance lease of the motor vehicles, Mr Smith said the Department still used the same government motor transport used in other provinces. What was unique about the Department was that it did not make a lease payment, but rather paid a daily tariff for every day that it used a vehicle, and for the kilometres travelled. The other uniqueness was that their vehicles from Government Motor Transport (GMT) remained GMT assets and were not transferred to the Department. Because it paid a daily tariff, it was entitled to replace the vehicle after a certain number of kilometres were used or after a period.

The containers were non-residential buildings that the Department needed for the Sivuyile Residential Centre for People with Profound Disabilities, where more space was needed, so it was easier to acquire the containers until the Department could do infrastructure planning and renovations to accommodate the staff for office space.

On componentisation, he said that they worked through modified cash spaces in government, meaning whatever they paid for today, they must account for today. National Treasury modified segments and parts so that they would not do all the accrual accounting, which was the reason the componentisation of assets would take time, because it was part of the core of asset management and asset reporting that they needed to do, according to the generally recognised accounting principles (GRAP) standards. Government departments were slowly moving to the accrual space, where they could also account like the state-owned entities (SOEs).

The Chairperson said Ms Maseko had also asked if it was good for the componentisation to always be included in the reports.

A representative from the Auditor-General of South Africa (AGSA) said the emerging risks that they included in their presentations were not in the audit report itself, but they normally included them in the management report that they send to management. They were sharing the information for the insight of the Committee. In the case of agriculture, there was a reference where the AG needed to inform the auditee about the changes to how they were going to be accounting for certain elements of the financial statements, so it may be important for them to continuously communicate, otherwise, it may give the impression that they had changed their position if they no longer communicated.

The Chairperson asked if there were any outstanding issues that the HOD wanted to raise concerning what was discussed in the meeting.

Dr Macdonald thanked the Committee for the comprehensive engagement and noted that the Department was happy to share its story with people willing to listen. He thanked the Members for the way the questions had been posed.

The Chairperson thanked the HOD and the delegation from the Department for their responses to the questions and the clarity they provided, and said the Committee would make resolutions based on the issues that the Department and the Committee had raised. He said that when the Committee raised questions in such meetings, they did not do so to try and prove a point, but were asking so that they could also assist the Department in its efforts to render service delivery.

Although the Committee was happy to see that the Department had kept a clean audit, it still wanted the Department to improve on other aspects, including irregular expenditure.

The Committee dealt with its resolutions in a closed meeting.

The meeting was adjourned.