Department of the Premier 2022/23 Annual Report

Meeting report

The Chairperson welcomed all the attendees to the meeting and directed the Members to move to discussions, if they had prepared questions in advance as they received the Annual Report beforehand.

Premier’s Opening Remarks

Mr Alan Winde, Premier of the Western Cape, remarked that good governance is the foundation of any government and should become a habit of spending time focusing on what is needed. He appreciated the audit outcome and thanked the Department leadership for the work it has put in towards making sure that good governance is a habit so that service delivery can be the primary focus. He said that they are also taking note of the existing risks and finding strategies to mitigate them.

DG’s Opening Remarks

Dr Harry Malila, Director-General of Western Cape Government, said that, as an accounting officer, he was happy with the progress made over the past year when dealing with risk management. As a Department, they are committed to good governance as the audit report has indicated. The number of meetings attended, how they deal with fraud and corruption, the code of conduct as it relates to financial matters and the findings of the Standing Committee being responded to accordingly indicate how seriously they take the audit process. He appreciated the clean audit report without matters raised, achieving 100% of their annual performance plan (APP) targets and spending 98.8% of their budget. The internal control unit is very strong and takes seriously how it carries out the internal audit process according to the principles set.

Discussion

Ms M Maseko (DA) congratulated the Department and the Premier for their audit outcome. She asked the Department to explain some of the issues raised to get a bigger picture of the audit outcome. These issues include the reasons for the underspending of the expenditure and over-collection of the revenue. On the first reason being that staff existence being lower than anticipated filling of positions: who was responsible for the hiring process, why were they not filled, and what impact has the vacant position caused in the Department? On the second one –the non-receipt of response about the trainer initiative: what was the impact of the funds having to be rolled over to the next financial year, and how are they planning to counteract to ensure that it does not happen again in the next financial year? What caused the delays in the rollout of Wi-Fi services and the procurement regarding SITA? She noted that the Western Cape Government is known to be innovative, and they must find innovative ways to deal with the procurement of SITA. She then asked how far the Department is with the appointment of an official.

Ms N Nkondlo (ANC) indicated that she does not understand why the fact that the political environment, which may bring changes to political leadership of this office, is not viewed as a risk, considering that this is the last report of this Administration. She noted that she was raising this because the upcoming elections will impact the plans, and decisions taken by this administration should things change. How is the government approach citizen centric from a governance point of view? And how are campaigns like First Thursdays made to influence how the Department functions and limit risks around service delivery issues? She asked for the Department to give more clarity about the pending case, and asked how the irregular appointment happened under the existing rules of public service. She applauded the management of irregular expenditure and said that the issues that are hanging will always be a concern, especially looking at how the Department is planning to manage them.

Mr I Sileku (DA) commended the consistency of the Department in their audit outcomes, and he asked them what the next step is from here. Irregular expenditure would be pinned on incompetent staff. But in this Department’s case, it is a matter of highly qualified individuals who are not immune to mistakes when performing compliance exercises. What is the Department planning to do to deal with this compliance exercise that led to irregularities, as competent as they are?

Another Member asked the Department to give a figure representing the number of public servants who have applied to do remunerative work outside the public service, and how many have been granted permission. He noted that the resolutions at table 8.4.1 resolved that (6.4.1) the Department develop and implement a mechanism to address the concern raised by the AGSA, including the measures in place to mitigate this risk. This was around the fact that there was an increase in the overpayment to employees in the Western Cape government. He asked what practical measures have been put in place about these overpayments over the past years, and what the extent of these overpayments was. He also asked if any interventions had been put in place and if the practice had stopped since the interventions were executed since the meeting on 22 February 2023.

The Chairperson asked what the difference between GOVCOM and EXCO is, as they are both governance committees in the WCPDP administration. Are there any instances of conflict of interest picked up? What has been done to deal with them? Are the contract variations and expansions supposed to be taken as deviation and extension of contracts? If so, why was this so? He asked about the allocation of accommodation for two officials on government premises or if there is a different law for MPs and Ministers. Is the donation made by the United States Trade Agency to the Department allowed in the laws? Are there processes that need to be followed to transfer the donation? Were local contractors used to implement the project to expand network connectivity in the Western Cape? He applauded the resolution of the property claims by JF Van Niekerk and others (Seemeeu Park), and asked if they could be taken through the resolution process.

Premier Winde said that the SITA issue is huge and gets in the way of a lot that needs to be done and achieved. There should be resolution found on it but it cannot be done at the provincial level. The First Thursday’s campaign is taken to other parts of the province where they regularly conduct unannounced visits to service centres to have the service recipient’s experience. He recently went to the SASSA offices and saw queues of people frustrated about not getting their payments on time. His office has embarked on making the full Provincial Cabinet and HODs available once a month, with no appointment, to see how the public is treated in these facilities. He is proud of how the project has been citizen-centric, how they have produced a good record of the citizens they have served, and the resolutions they have come up with. He said that government spends over R100 million on the AGSA yearly to ensure that they keep good governance and audit outcomes but have delivered that on a constant basis. They need to change their focus. They had a workshop with the AGSA to devise ways to measure their outcomes differently to benefit the citizens.

Dr Malila said that the annual approach touches on the way they want to change their service approach to have the citizen at the centre of it. Field visits are made to look at the services received by citizens and improve them for the benefit of the population, and this relates to the work done in the ICT environment. The 1 508 Wi-Fi hotspots, the upgrade of network speeds to over 100Mbs per second and the 15 channels for citizen interaction (the 0860142142 number) provide the citizens a platform to provide citizen-centric services and help the Department with disaster management. The Department believes that, in addition to the work they are doing within the health environment where some of the members have visited some of the hospitals and health institutions, they have provided close to 1 300 schools with local network, and this speaks to their new approach to following citizen-centric approaches. The Cape Examination Centres, together with Wi-Fi hotspot areas, are covered all over the province, and they are trying to pull in some other services regarding that. He believes that, as an administration, they put systems in place to ensure that government continues, whether there will be a new government or a continuation of the current one. They believe that a firm governance approach will ensure that the institution works and that all systems are intact for any government administration. He acknowledged the challenges that may come with that, considering the challenges already faced by the local government but he is confident that the Western Cape government is a strong institution with individuals that can carry the system.

The transition may have an impact on their system. And they will include that in the next year’s APP, considering there will be elections in May of next year. In everything they do, they look at it through the risk lenses so that, when they approach the budget, they look across the entire provincial government system. Over the last year, the Department lost three of its DDGs and the Superintendent General responsible for dealing with all matters regarding the shared services centre. The Department has created responsibilities for this entire management team, and everyone has stepped up to them. Ms Louise Esterhuyse, Chief Director: People Management Practices, has taken the responsibility as Programme Manager for programme three; Mr Drikus Basson, Chief Financial Officer, has taken all responsibilities of programme one; Former Superintendent General, Mr Andre Joemat’s, responsibilities are taken by the DG. The Department is run by a collective. They guide and assist based on their specialisation. They have advertised the DDG positions, and they are in the process of hiring despite the budget limitations.

With some of the issues within the land contract resurfacing, a major contract is going out next year about Broadband 2.0 and other contracts run through SITA. It is hard for the Department to go through all the different processes. There are ongoing discussions about the future with SITA, considering the inefficiencies within the system and the internal challenges with the new management. The Western Cape government always extends a helping hand to other spheres of government in other provinces, prioritising the well-being of the citizens of the province and they ensure that the Premier sets a good example by maintaining a balance. They encourage their managers to attend different forums, extend a helping hand and learn from other provinces to share best practices. Having a clean audit lays a foundation for everything else the Department is planning to do – for instance, attracting investors, growing the economy, and creating jobs. The next step is about taking the next level to conformance, which is smart compliance but really think about the citizen and the difference they make provides value for money.

It would be unfair for government to think that nothing will go wrong with running an R80 billion government, and they acknowledge that in running a R2 billion budget. They learn, correct, and ensure taxpayers do not lose money. Irregular expenditure does not always mean that someone stole money but maybe there was no compliance, and they need to come up with training initiatives and counselling for people who have done wrong with the objective to ensure that a mistake of that nature does not happen again. He indicated that he approved all the Department's RWOPS (Remunerative Work Outside of the Public Service), with this year’s approvals being 47. It comprises professionals who help others with the reward of little stipends. They have a ruling in the Department that one cannot work for 30 hours of RWOPS in a whole month and that people must disclose that they will meet all the requirements for the year they are applying for.

Government employees generally get paid on the 15th of each month. If a worker passes away on the 14th, there is no way their salary cannot be reversed from their bank. This example is one of many that contribute to overcompensation. GOVCOM is the executive of the Department (The DG, the DDGs and the SG) and EXCO consists of GOVCOM members and additional members that the executive chooses to add at any time. GVCOM deals with any matters of conflict of interest reported and disclosed. The issue raised by the Chairperson on page 217 is not related to residential accommodation but temporary resided accommodations due to the challenges with mobility and low Departmental budgets belonging to those government officials. The donation from the United States Trade Agency is a donation in kind and is allowed. Hence it was disclosed, and they appointed their own service providers because of the Broadband contract. On the matter of the appointment of staff members stems from 2010, the amount of R36 495 000 reflects what has been going on in the system over the last 13 years. After receiving legal opinion, they have decided over the last two years to finally deal with the matter and have applied to speak with National Treasury to speak to them about the processes they can follow to condone some of the expenditure that has taken place.

This matter is related to the appointment of officials in salary level eight in salary level 11 post 2010 and subsequent increases to salary level 12 during 2013. Some of these things did not comply with the legislative framework. None of the officials involved in this entire process is employed by the current government. They have worked with legal services and upped their internal control measures to ensure that all appointments made comply with the necessary legislative frameworks. He said that if the Committee requires any more information, they will gladly provide it in writing. Regular cases that cause overpayment of employees include death (as the DG has explained), salary paid to absconded employees due to the 30 calendar day grace period, and leaves taken without pay.

Ms Esterhuyse said that the condonement would be finalised in the next financial. All necessary documents have been submitted to National Treasury, and they will meet them to discuss processes that need to be taken from there.

An official said that the first case was a suspicion of theft received by the DG. It was sent to the provincial forensic services. After a complete investigation, it was unsubstantiated, and control measures were implemented. The second case was still ongoing at the end of the financial year. It has been finalised in June of 2023, and recommendations have been implemented. He said there was no cause of action against the Premier for the Seemeeu Park case and the plaintiff withdrew the claim, and there is no lesson learnt from this case. It has been a relief for the Department, as such charges are not a norm and they have been saved from spending about R18 million in their expenditure.

Mr Lucas Buter, Legal Services, said they prefer to use the word ‘variation’ for contracts, as everything is not a deviation. The extensions are caused by issues including shared services between different departments, preferential procurement regulations, SITA delays and service tool expansion projects.

The Chairperson asked if the security services in page 167 are for an open land, and for the Department to explain the amounts related to the procurement of Microsoft Technical Services.  

Ms Maseko asked what the sustainability over the medium- and long-term assumptions of all the government plans are considering the floods and budget constraints and if there are any departments that may be impacted by the challenges.   

Ms Nkondlo asked what the issues were around not securing a bidder for the train-the-trainer initiative. Was it because they could not get bidders to submit proposals, or was there no market assessment done to ascertain any loopholes surrounding the projects? She asked what the issues were related to the below 50% spending in Programme Three (people management), as stated on page 185. What makes the bids on page 167 to be done under a limited bidding provision, why are the amounts lower than expected, and what is the context in the approach the Department is taking to ensure competitiveness in procurement? The AGSA made recommendations to the coordination function. How does the Department take those recommendations from an administrative point of view, especially for the Infrastructure and Mobility Departments? She asked how the Department ensures that there is no duplication between what the Department and National Treasury do from a financial point of view.

Mr Sileku quoted the statement on page 103: “The risk of inadequate financial resources resulting in risk to the Department fulfilling its mandate”. He asked what the contributing factors that could lead to inadequate financial resources are, and how the Department is going to mitigate the risks.

Mr Buter said that the security services are for Kromme Rhee Provincial Training Institute, Stellenbosch, as well as De Built, an IT office connected near a school in George. He said that the value of the expansion related to the procurement of Microsoft Technical Services is R75 000, and it is put in place to announce the service.

The DG said there had been discussions between them and AGSA about establishing coordinating departments under the guidance of the Premier, Treasury under Minister M Wenger, and the local government under Minister A Bredell. Many best practices are used to take governance maturity to the next level. As of late, all the departments have received unqualified reports. There is a lot of work underlying where CFOs and Accounts Officers deal closely with key programmes within government that should not go unnoticed. There is a HOD committee designated to support the Infrastructure and Mobility Departments. They meet once a month to discuss issues related to them. There are teams with them in the HR, Legal and Governance spaces, and regular interventions and support initiatives are set in place for the two departments.

The work in the Train-The-Trainer initiatives started in quarter four. They put a tender out, and there were no responsive bids, resulting in the money being rolled over. Limited bidding is a form of procurement, but the Department does not go for this approach immediately, unless there are independent suppliers as stated on page 165. The biggest challenges faced by the Western Cape government include limitations with Financial Resources where there is a shortfall in the revenue and the economy at large, resulting in budget cuts that limit service delivery and salaries. They are working hard to reassess what can be done internally to manage this challenge without compromising service delivery.

Premier Winde said that the Finance Minister has a tough task ahead after announcing the adjustment budget and the budget policy statement. Loadshedding costs the economy R900 million a day, and debt servicing costs have increased to R1.2 billion daily. And the failure in other state entities has caused huge pressure on the system, resulting in less tax coming in. The Western Cape has gone from the fifth most populated province to the third most populated. They have recently recorded a growth rate of 27%, resulting in a lot of pressure for basic services like health, education and social services. Climate change has an impact, with about two floods that have occurred this year. There are initial indicative costs of over R500 million for the provincial and national roads components each, and there are citizen costs to recover the loss by citizens to the floods. 

The Chairperson thanked the Department for its hard work, and the Members for a fruitful meeting.

The meeting was adjourned.