Department Budget and Nemisa: briefings
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Communications and Digital Technologies
04 June 2004
Meeting Summary
A summary of this committee meeting is not yet available.
Meeting report
COMMUNICATION AD HOC COMMITTEE : Mr M Lekgoro
4 June 2004
DEPARTMENT BUDGET AND NEMISA: BRIEFINGS
Chairperson
Documents handed out:
Department budget presentation
National Electronic Media Institute of South Africa (NEMISA) presentation
Post Office presentation Part 1
Post Office presentation Part 2
SUMMARY
Officials from the Department of Communication briefed the Committee on the forthcoming budget vote. Discussion centred around pricing and the second network operator, digitisation, outmoded technology, the Convergence Bill, Channel Africa, regional television, community radio, and specialised training in broadcasting, among other things.
Officials from the South African Post Office gave a presentation after the lunch break. They reported that the organisation had made a small profit (R35.5m) for the first time since 1993. Full and excellent medical aid coverage had been provided for white staff employed at the Post Office since before 1993, and this was drain on the organisation's revenues.
MINUTES
The Deputy Minister said had noted the emphasis on critical partnership in the President's Address. He then introduced his delegation of Deputy Directors-General, Ms P Ntombela-Nzimande, Mr J Mjwara, Mr P Pongwana and Mr O Shelembe.
Department presentation
The Department officials gave the Committee an overview of budget and plans. The Department's vision had changed to becoming "a global leader in harnessing ICT for socio-economic development". The Department's intentions and strategies on telecommunications, broadcasting, postal services, e-commerce and convergence were covered. Key performance areas were corporate governance, policy development, shareholder management, research and innovate applications, legal, internal audit, corporate services, finance and risk management, and strategic management. The global budget would decrease in the 2004/05 financial year because of transfers to the Post Bank.
National Electronic Media Institute of South Africa (NEMISA) presentation
Mr Stan Molema and Ms Ingrid Louw reported that NEMISA was funded by the Department to provide a bridge between academic training and work. Its focus had broadened from traditional broadcasting to creative multimedia, in partnership with the Multimedia University of Malaysia.
Students were drawn largely from rural areas, and many were women. The institute was wholly dependent on the Department for funding, although it had potential to generate revenue. All courses were accredited appropriately and graduate placement within the sector was about 60%. However, training was expensive and there was no obligation from the industry to employ graduates. Moreover, trainees require supervision even after placement completion, and diploma programmes were not suitable for practitioners currently in jobs.
The institute therefore proposed to enhance diploma programmes, develop industry-focussed short courses, create learnerships and establish NEMISA as a content hub for government. NEMISA's budget for 2004/2005 was R16.9 milion.
Discussion
Mr Lekgoro asked for all-inclusive costs per NEMISA student.
Mr R Pieterse (ANC) asked for Department comment on how it would address President Mbeki's priorities of job creation and poverty alleviation. He said that unless the South African Broadcasting Corporation was funded, "other influences would creep in" and asked whether the Sector Education and Training Authority was well run.
Ms M Smuts (DA) said that the Department presentation was "extraordinarily vague". A presentation two weeks previously had been extremely frank on the crisis in service delivery. Why hadn't the June target date for the second network operator (SNO) been met? The government was a shareholder in Telkom - that made the Minister both a shareholder and a policymaker. Funding had been secured for an investigation into sustainability. She found this notion absurd - using funding to find out if there was funding. She asked for more information on the ratios for educational and local content in broadcasting. She wanted to know what basic decisions had been taken about digitisation.
Ms S Vos (IFP) asked what the Department was doing about prices as a fixed lines were unaffordable. What exactly was meant by "bridging the digital divide". Competition between Vodacom and Cell C had not lowered prices.
Mr P Mulder (FFP) asked whether Channel Africa provided any income, and/or whether it was subsidised by the Department of Foreign Affairs.
Mrs W Newhoudt-Drucken (ANC) asked whether the public would have access to e-government only through Public Information Terminals (PITs); whether the SABC had taken action on disability, whether disabled people could access NEMISA courses, and how NEMISA would reduce its dependence on Malaysia.
Mr Lekgoro said that the postal regulator had to evaluate the Post Office monopoly every three years, and that three years was now up. With respect to NEMISA placing 60% of its graduates, he asked whether the remaining 40% were unemployed.
Ms Smuts asked whether it was appropriate for the Department to run a school.
Ms Ntombela-Nzimande, on the allegation of vagueness, responded that their business plan was available. The presentation had been derived from the strategic plan and linked to activities. The latter were divided by quarter, by month and by week. They would address any concerns that the President's demands had not been heeded.
The postal regulator should review the Post Office's exclusivity in August, which would be three years from its licensing. The regulator had begun drawing up the aims, methods and assessment criteria for the review. The United Kingdom was also battling with the issue. She suggested that the Committee engage directly with the regulator at a later date.
At a government level, the Department had looked at the skills shortage and the outcome had been the Institute. It focused on activities that addressed the skills shortage in the short-, medium- and long-term, with the Department of Education (DoE). Although education was not the Department's core business, it was well placed to deliver.
Mr Pongwane said that the Institute had also been initiated with the Departments of Science and Technology, and Trade and Industry, as well as the Council for Scientific and Industrial Research (CSIR) and others. There was no course anywhere elsewhere in South Africa on broadcasting and telecommunications. It addressed the question of how to empower educators, engineers etc. to use ICT. Its advanced research institute was housed at the CSIR. Now that it had been established, it was for government to decide whether it should be refinanced.
Mr Shelembe said that some money had been allocated for the Department to fund regional television. They were looking for a public/private partner (PPP) and trying to limit the state's initial outlay. The SABC had applied for licences and would attend hearings. This was an active PPP already. There would be cost sharing for the state that would not have to commit resources straight away. The Department had negotiated with Treasury and there was basic agreement that this was the route to follow. R47 million would be spent on local content and R30 million related to programming for community radio on health, disability etc.
Ms Smuts asked if this was in addition to the R9 million for studios etc. This made community radio 'state broadcasters'.
Mr Shelembe said that the Department was looking at ways to diversify Channel Africa. It would be a subsidiary of the SABC - it was the old Radio South Africa. The Organisation for African Unity had asked South Africa to reinstate it. As it was difficult for a government department to run a radio station, it had been handed over to the SABC. It was to be "corporatised" although its mandate differed from the SABC. Its board would have some SABC boardmembers and experts in foreign affairs. Unfortunately the Department of Foreign Affairs was not funding it.
The SABC had finalised its policies on disability, broadcasting and employment. Its operations could be scrutinised.
Ms Nzimande said that the SETA for broadcasting and telecommunications was leading the way.
Mr Phakamile said that pricing would be controlled in two ways - through policy and through regulation e.g. price capping. An example of controlling through policy would be introducing a flat rate for internet dial-up, which the Department would probably do. In 2002, a year after ICASA set up price capping regulations, there had been high inflation. It was now time for the regulator to review increases. Another way to control prices was to create competition. As three mobile operators had not done so, a second network operator (SNO) was also unlikely to lower prices.
The Convergence Bill had been published with a document that detailed what the Bill hadn't covered. If another fixed-line operator was feasible, did the country need it? An alternative was to licence a service-based operator and repackage services, but there was still no guarantee that this would lower prices. He could not give details on the second operator as the proposal was three months from completion, but the state would be given 25% control.
Ms Nzimande provided more information on digitisation and said analogue would be totally obsolete in 20 years. South Africa could be ready to move to digital long before then, but the rest of Africa was less developed. There were a number of niche areas where the Department could contribute to making e-government accessible - not only through PITs but at MPCCs and school cyberlabs. The Department also provided smart cards for the Departments of Labour, Education, Trade and Industry, and others.
Mr Molema gave all-inclusive costs per NEMISA student: R15 000, R20 000 and R25 000 for radio, television and creative multimedia per annum respectively. NEMISA could not increase volume and reduce costs because the equipment was too expensive. The 40% of students that were not placed became freelancers and worked regularly. The building did not accommodate the disabled but short courses had been conducted for the disabled. A total of 94 students were currently enrolled and 21 would graduate at the end of June. Intake was annual and training took place in Parktown. NEMISA did work with other institutions, but no institution beside NEMISA provided for convergence. NEMISA was not abandoning its old programme - the additional courses for the employed would cross-subsidise. The relationship with Malaysia would end in 2006, by which time NEMISA would be independent and get a licence from the Department of Education.
Mr K Khumalo (ANC) commented that it was good to fund a bigger intake of students at NEMISA because addressing the skills shortage indirectly provided employment. Funding Channel Africa was not understandable because it was popular in the rest of Africa but not in South Africa and that not all South Africans had access to postal services.
The Department officials were asked to translate the budget into percentages and how they would measure bridging the digital divide.
Mrs L Yengeni (ANC) asked when consultation on the Convergence Bill would be completed and what it covered, how many rural inhabitants received channels 1, 2 and 3.
Ms Newhoudt-Druchen asked if the NEMISA building could be made accessible to the disabled.
Mr Pieterse asked whether the Vodacom "fiasco" in Nigeria would have a negative impact in South Africa.
Mr Lekgoro asked when regional stations would be operating.
Ms Nzimande said that the Post Office executive would engage in detail with the Committee on postal access.
Mr Mjwara said that Channel Africa was broadcast in four languages and would soon be on 24 hours. South Africans could not tune in, but the Department was investigating this with ICASA.
ICASA said there would be public hearings on regional television in July, August and September and the final licence would be granted thereafter. By 2005/6, the Department should know how it would be resourced. In rural areas, 89%, 91% and 77% of the television-watching public had access to Channels 1, 2 and respectively. The SABC would address the Committee the following week. Attaining 100% coverage was disproportionately expensive. In some cases, there would have to be a dedicated satellite. Radio was nearly 100% available, and even FM was a recent development. Digitisation would make television more accessible.
The Convergence Bill would be before Parliament in the third quarter of the year. It addressed the transmission media. Present structures were vertically integrated although it was possible to broadcast using a telecommunications structure. The Department was in the process of removing technology. The second operator process had been taking too long. Funding of the regulator needed to be addressed and the Department was discussing this with Treasury because it was essential for the regulator to be well-resourced. Restrictions on voice services would be removed and other laws would be repealed. There was debate on whether there should be one or more pieces of legislation; and whether the telecommunications law should be implemented as soon as possible, with the Convergence Bill at a later date. There would be a period for migration.
Mr Phakamile proposed a separate session on MTN and Vodacom.
The budget increased by 5% a year; administration grew at an average of 4%; postal services grew 24% (for the regulator and shareholder management), multimedia services grew 5.2% and auxiliary services grew 5.7%.
The Deputy Minister then reported the Department appreciated all criticisms and questions. The second operator issue would be dealt with very soon at a scheduled media briefing. The Minister would report to Cabinet by August.
Post Office presentation
This presentation has unfortunately been requested repeatedly from the Post Office, and PMG will update this minute as soon as it has been received.
Discussion
Ms S Vos (IFP) asked the period over which the medical aid liability would be reduced. The CEO said it would be reduced next year, if not in 2004.
Ms Newhoudt-Druchen asked which races were covered by the medical aid?
Ms N Mokoto (ANC) asked what challenges the Post Office faced in ensuring universal access. Since most products and services were available online, what had been put in place to help the 'technologically challenged'.
Mr S Haasbroek (DA) said that there had been agreement between with the Post Office union in 2003 that had addressed salary anomalies. According to the agreement, salaries would be adjusted from July 2003 - had this been done?
Mrs L Yengeni (ANC) asked if the Post Office was being franchised in black areas. Was the Post Office assisting postal services in other parts of Africa?
Mr R Pieterse (ANC) said he had been informally testing postal services by posting money to and from his home and parliamentary and constituency offices, and the letters had been delivered in a day. He was now testing postal agencies. Regarding the Post Bank and grants payouts, he asked whether the facilities were user-friendly to the disabled and aged. If not, when would they be? Was the Post Office sufficiently well funded? What joint projects had been conducted with other Departments?
The CEO said that every citizen should have access to a postal address on request by August 2004. The Post Office was financing Public Information Terminals to ensure access for all. There was insufficient funding to visit all Post Offices to evaluate their user-friendliness; but they visited 20 per quarter. A model for pensioners had been piloted in Brits, included staff training, customer seating and water availability. The universities had sent health staff to give check-ups to pensioners while they were waiting. It was seen that pensioners did not like to receive their grants by direct deposit, because the grant day was a social occasion. It was possible to link a teller to a particular pensioner's grant payment if there was a complaint.
The CEO was on a board for all the Post Offices in Africa: Maputo had needed aid with information technology and couriers etc. Other African countries would be assisted for free because it would aid South Africa. Currently, most money going to Maputo and elsewhere went in workers' pockets. If other African countries' banking services became more efficient, that money would go through the South African banking system and increase revenue.
He would not use the term "franchising" when talking about remodelling postal agencies. They had to have watertight agreements, good monitoring and good infrastructure, and be able to support entrepreneurs. At the Post Office Learning Institute, students were trained to provide exactly what was required.
The greatest challenge was balancing universal access with financial sustainability. Universal access was difficult to define but the Post Office had decided on street delivery in urban areas and post boxes in rural areas. There were three models of sophistication for Post Offices in all areas.
Regarding online products, some Post Offices could only reconcile their business online at the end of the day's trading. Education on the use of PITs was inadequate. Funds would be set aside for training and relationships with schools would be forged. All employees were covered by the medical aid.
The agreement regarding the address of salary anomalies had been implemented. The agreement had addressed salaries for people who signed on after 1993, but 90% of salary anomalies still remained. Unequal benefits would be paid for at least 20 years after retirement because of the very good medical aid - dependants had a right to take over the benefit. The Post Office was exploring legal avenues but other parastatals had taken similar cases to court and lost.
Mr K Khumalo (ANC) asked for the new post delivery target. The Post Office delivered 6 million letters a day to 7.5 million delivery points, but could do better. Address provision was a problem in informal settlements Courier services were under-utilised. He suggested that stamps could have images of popular South African rolemodels on them. Very often Post Offices had no water or toilets for clients, and this should be rectified. Was the Post Office Training Institute running well?
Mr Lekgoro also wanted to know about postal delivery to informal settlements because the delivery of identity documents was a problem for the Department of Home Affairs there. Informal settlements were not places of transit - most inhabitants stayed there for 10-15 years. The Post Office had a joint programme with READ, an NGO. Were there any projects for reaching the aged?
The CEO responded that the Post Office had prioritised delivery to informal settlements and had conducted special training regarding deliveries there. The National Address Database (NAD) team aimed to create an address system for anybody who wanted one. They worked with metropolitan and provincial governments and others. The timeframe for NAD completion was available. The Financial Intelligence Centre also had an interest in the NAD. Difficulties included that after all the shacks were numbered, additional structures were erected in between the numbered ones. The NAD would be complete within three years and email addresses would be available on request from the Post Office. The Learning institute was functioning well. About 150 staff were trained on a variety of courses a day.
The courier business was under-utilised, although it was profitable. Other commercial courier services made use of it to cover rural areas. Most of the Post Office courier business (about R19 million) was controlled by the private sector. The Post Office was not a Black Economic Empowerment enterprise so did not get government contracts even though its prices were competitive.
When the Post Office was taken over from the state, the organisation had made a R1 million loss and had a staff complement of 17 000. This figure was reduced by voluntary retrenchment.
It was hoped that the 'Stamp Advisory Committee' would stamp revenue - it had already grown from R2 m to R10 million .
The meeting was adjourned.
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