Basic Education Laws Amendment (BELA) Bill: Proposed costing & implementation of transversal procurement

Meeting report

The Chairperson said the meeting was for a briefing by the Department of Basic Education (DBE) on the costing, or the proposed costing, of the Basic Education Laws Amendment (BELA) Bill and the proposed implementation of transversal procurement, as outlined in the Bill.

Mr James Ndlebe, Chief Director: Education Management and Governance, DBE, suggested starting with the central procurement, and invited the Members to lead the discussion as he believed it did not require a formal presentation, but rather addressing any concerns they might have.

The Chairperson indicated that Mr Ndlebe could proceed with discussing the proposed implementation of transversal procurement first.

Central procurement matter

Mr Ndlebe clarified that the inclusion of the clause aimed to facilitate an enabling condition for central procurement, and ensure that it would not halt all procurement once the BELA bill was passed. The aim was to allow the Department to negotiate for goods and services, when necessary, particularly for Section 21 schools, which manage their finances independently. He emphasised the importance of consulting with school governing bodies (SGBs) to ensure transparency and avoid the legal issues encountered in the past.

He provided an example of procuring textbooks at a lower cost, and suggested that central procurement would be beneficial if schools agreed to it. He acknowledged concerns about trust and proposed mechanisms for schools to opt-out if they found better deals elsewhere. He highlighted the need for transparency in demonstrating cost savings, and clarified that central procurement would not override schools' ability to negotiate locally. He concluded by reiterating that central procurement would not replace existing procurement processes, but would allow for negotiation on a case-by-case basis. He invited questions from the Members.

See attached

Discussion

The Chairperson asked Mr Ndlebe to first address questions regarding the central procurement clause before moving on to discuss other aspects of costing. She said that she would pose her own if there were no questions from other Members. Regarding the opt-out clause on transversal procurement, she proposed considering an opt-in system instead, suggesting that it might be more efficient to allow entities to choose to participate, rather than requiring them to opt-out. She pointed out that in current practices, such as in National Treasury, opting in was typically the norm. She raised concerns about potential difficulties and unintended consequences with an opt-out system, emphasising the importance of ensuring clarity and ease of participation for all involved parties.

DBE's response

Mr Ndlebe explained that, in his view, the Department did not create laws; instead, laws were crafted by parliamentarians. He emphasised that parliamentarians present different perspectives, and listen to the public, and it was then up to the parliamentarians to amend and shape the legislation according to their preferences. He expressed his expectation that based on the feedback received from the public and stakeholders during the clause-by-clause debate, parliamentarians would propose amendments to reflect their desired changes. He noted that once the Bill was passed in this manner, it was in the hands of Parliament, and there was no insistence on using opt-out provisions at present. He suggested that whether to opt in or out depended on the prevailing perspective and agreement reached.

Further discussion

The Chairperson sought clarification, acknowledging the necessity for clarity on their roles as legislators. She highlighted that although it was the DBE that had drafted the Bill and sought agreement from national and provincial parliaments, the essence of the legislative process was simplified to seeking agreement or disagreement, and considering potential amendments. She then raised a specific scenario regarding the Western Cape's stance on clauses related to opting in or out, aimed at providing flexibility for schools in contractual arrangements for procuring goods. She queried whether the DBE would be receptive to such clauses proposed by the Western Cape Provincial Parliament, given that the issue would likely arise during consideration by the National Council of Provinces (NCOP).

DBE's response

Mr Ndlebe highlighted the DBE's main focus on maximising the benefits of central procurement. This included ensuring universal access to textbooks and stationery at reduced costs, allowing for broader coverage and increased purchases. Consequently, the DBE supported forward-thinking proposals like the one suggested by the Chairperson, particularly if they empowered schools to participate in procurement activities independently of the Department. The idea of collective purchasing to secure goods at more favourable prices aligned with their objectives. Regarding nutritional considerations, while they recognised its significance, the DBE acknowledges the challenge of enforcement. The Department suggests that if schools choose to participate, it should be presented in a manner that is appealing to all stakeholders. Mr Ndlebe affirmed the DBE's openness to such proposals.

The Chairperson confirmed that the DBE Was indeed open to discussing and deliberating on potential amendments proposed by the Western Cape Provincial Parliament. These amendments aimed to ensure that schools had the flexibility to opt in or out of contracts without feeling constrained. She indicated that when the Bill was forwarded to the NCOP, discussions could be held regarding the specifics of such clauses.

Mr Ndlebe concurred with this stance.

BELA Bill's financial implications

Mr Ndlebe reiterated the consistency of the presentation with what had initially been presented in the National Assembly, and had included the Socioeconomic Impact Assessment Statement (SEIAS). He explained that the purpose was to provide a foundation for discussion, and outlined the aim of making Grade R a compulsory grade within the education system. He referenced previous State of the Nation Addresses by the President, which emphasised the integration of the schooling system into the education sector. He elaborated on the requirement for socioeconomic impact assessments before amendments could proceed, highlighting the Department's compliance and the necessity of a certificate of approval from the Presidency. He noted that without this certification, the Bill would not be discussed in Parliament.

 Mr Ndlebe further detailed the financial implications, including the need for additional funding and the discrepancy in the remuneration of educators across provinces. He discussed various payment methods for practitioners and the calculation of deficits in qualified teachers. He provided statistics on the number of schools offering Grade R and the estimated number of learners enrolled. He explained the infrastructure requirements and funding mechanisms, including the Education Infrastructure Grant (EUG) and equitable share allocations. He mentioned the calculation of costs for infrastructure and teacher salaries, as well as the need for compliance with Section 35 of the Public Finance Management Act (PFMA) regarding unfunded mandates. He underscored the expectation for funding to be available upon the passage of the Bill, and outlined the process of budget allocations for education.

(See attached)

Discussion

The Chairperson raised a query before opening the floor to questions. She had noted the absence of a specific figure on the slide, but anticipated its mention.

Mr Ndlebe responded, indicating that an additional R2.5 million needed to be added to the budget for teachers.

The Chairperson sought clarification, questioning if the exact amount was not readily available due to the Bill's introduction some time ago.

Mr Ndlebe confirmed the figure as R2.689 million.

The Chairperson redirected the inquiry, seeking clarity on the total amount the DBE requested from National Treasury to fully implement the BELA bill.

Mr Ndlebe clarified that the Department was requesting R15 billion.

The Chairperson then proceeded to invite Members to pose their questions.

Mr C Fry (DA) referred to the infrastructure funding mentioned in the presentation, noting the Department's intention to use part of the R12.4 billion for infrastructure, with some of it being covered by the equitable share. He highlighted the discrepancy in the Western Cape's equitable share compared to its population size, being the third largest province by population but having the fifth largest equitable share overall. Given this disparity, he sought clarification on how the R12 billion, particularly in the Western Cape's case, would be covered by the equitable share. Additionally, he inquired about the Department's strategy to assist provinces facing shortfalls and inequitable share funding for infrastructure.

Mr F Christians (ACDP) acknowledged the complexity of the issues at hand, given the varied remuneration structures across different provinces. He highlighted his concerns regarding infrastructure and recruiting additional educators, particularly in light of the need for approximately 20 000 qualified teachers. He emphasised the financial challenges associated with implementing the Bill, stating that while affordability was a concern, there was also the issue of the Western Cape being the last province to conduct public hearings for the BELA bill. Given the financial constraints, he expressed uncertainty about the Department's readiness to implement the Bill in its entirety. He voiced his apprehension about the lack of funding and the potential burden it could place on the Western Cape, which was already struggling to provide services in areas such as healthcare. He concluded by reiterating his concerns about the financial implications, and the strain it may place on the province.

The Chairperson first addressed the topic of the equitable share, drawing on her experience as the budget chairperson in the Western Cape. She explained that the equitable share calculation primarily relied on data from the Department of Health and the Department of Education, constituting a significant portion of the overall allocation. However, she noted that the education component of the shares was still under review. She emphasised that the census data, which was crucial for accurate calculations, would not be available soon. Therefore, she cast doubt on the immediate availability of funds, highlighting the ongoing review processes and the uncertainty surrounding the equitable share formula.

Moving on, she referred to the memorandum of the Bill and cited section 35 of the PFMA, emphasising the requirement to provide a projection of the financial implications. She reiterated her concerns about the accuracy of the estimated costs outlined in the memorandum, questioning the discrepancies between the figures presented and the actual expenses. Quoting from the memorandum, she outlined the estimated costs associated with implementing Grade R, additional infrastructure, and home education assessment costs. Based on the information provided in the memorandum, she calculated the total estimated cost to be R17.26 billion, excluding certain expenses related to marking, sourcing of papers, and invigilation.

She then compared these figures with the estimates presented by the Financial and Fiscal Commission (FFC), pointing out discrepancies in the total costs for remuneration and infrastructure. Additionally, she noted that the infrastructure cost was actually estimated to be R12.4 billion, not R12 billion, as initially stated.

The Chairperson also raised concerns about the absence of provisions for cost-of-living adjustments and other expenses such as learning materials, learner transport, special education needs, and administrative costs. She questioned the lack of clarity on how these expenses would be covered, especially given the timing of the current division of revenue adoption. She requested clarification on the source of funding, emphasising the need for a written commitment from the National Treasury to provide the necessary funds if the BELA bill was passed.

DBE's response

Mr Ndlebe acknowledged the challenges faced by the DBE in responding to the raised concerns. He stressed that the DBE did not typically generate funding and relied on following established processes for dealing with unfunded mandates. He indicated that if the correct procedures had been followed and assurances given, it was assumed that the commitments would be met, particularly during parliamentary discussions.

Regarding specific figures for items such as learning and teaching support materials (LTSM) and learner transport and nutrition, he admitted not having them readily available. He clarified that home education would not fall under the DBE's management entirely, with assessments and marking being the responsibility of households. Consequently, the costs associated with home education might not be relevant to the Bill. However, he acknowledged the need to address the other expenses mentioned by the Chairperson.

Mr Ndlebe acknowledged discrepancies in calculations between different organisations, and proposed bringing together the relevant parties to reconcile the differences. He suggested that such collaboration could help ensure accurate calculations and address any missed figures. He expressed confidence that this process could be swiftly executed to rectify any discrepancies.

Further discussion

The Chairperson requested clarification regarding the total cost of remuneration for South Africa, stating that she was familiar with the previously mentioned figure of R2.7 billion, but was not aware of the new figure of R4.76 billion mentioned today. She asked Mr  Ndlebe to display the slide containing the total cost for remuneration to ensure she understood the number correctly.

She verified the total cost, confirming that it amounted to R4.7 billion. She also noted a discrepancy in the infrastructure cost mentioned in the slide, which was R12.4 billion, including an additional R400 million not stated in the legislation. Regarding the uncosted items such as LTSM, learner transport, nutrition, special education needs education, administrative costs, and cost of living adjustments, she emphasised the need to obtain those figures as they were not accounted for in the Bill.

When discussing the homeschooling assessment costs mentioned in the Bill, Mr Ndlebe had agreed that it might not be necessary, acknowledging the importance of public comments to guide decision-making.

The Chairperson clarified that she wanted to ensure she understood correctly, then proceeded to address other clarification questions, noting that more hands were raised for questions.

Mr K Sayed (ANC) welcomed the inputs and responses from the DBE, particularly from Mr Ndlebe. He noted that he had been quiet, mainly listening and observing the questions raised. However, he expressed concern about the direction the meeting was taking. He emphasised that as a provincial legislature standing committee, their focus should be on examining the substance of the Bill. He said that during public hearings, the public raised substantive issues, and he expected the Committee to delve into these matters, particularly issues related to costing, which he believed was primarily a National Treasury concern. He remarked that the official had made efforts to explain the costing issues, but he felt that similar attention was not being given to provincial bills. He concluded that he viewed his comment as a point of order.

The Chairperson responded to Mr Sayed, acknowledging his concerns and reminding him of previous discussions on the matter. She noted that in previous meetings where this topic was discussed, Mr Sayed had been present, and no objections had been raised regarding costing by either the National Treasury or the FCC. She explained that costing was an integral part of the legislative process, as outlined in the PFMA and various sections of the Constitution, such as section 35 and section 195. She emphasised that every Bill introduced by a Minister must address the financial implications, and she referred to pages 47 and 48 of the official Bill, where the DBE had outlined the financial implications.

She also clarified that the procedure for bills introduced by Members differed from those introduced by Ministers. Highlighting the importance of Members having all the necessary information before deliberations, she encouraged them to raise any questions or concerns they had regarding costing or funding.

Mr Ian de Vega, Chief Director: Business Intelligence Management, Western Cape Education Department (WCED), addressed several points.

Firstly, he noted a discrepancy in the data regarding the number of schools offering grade R, pointing out that there were actually 986 schools in the Western Cape, not 896 as stated. This discrepancy left 25 schools unaccounted for.

Secondly, he raised a concern regarding the ratio of learners per classroom. Referring to Gazette Number 37081, which outlined the regulations for public school infrastructure, he highlighted that the acceptable norm for classrooms was a maximum of 30 learners for grade R, and a maximum of 40 learners for all other classrooms. He stressed that using a ratio of 40 learners per classroom may not be an accurate estimate.

Lastly, he expressed the need for a socioeconomic impact analysis, suggesting that the current model lacked detail, clarity on assumptions, and a fully explained methodology. He acknowledged that the presenter may not be an economist, but stressed the importance of ensuring the robustness of model results and providing comprehensive evaluations to the Department and the Standing Committee.

Mr Ndlebe expressed a desire to address all the questions comprehensively to avoid it sounding like a dialogue.

The Chairperson responded, acknowledging his concern and noting that no other hands were raised for questions at the moment. She proceeded to reiterate her questions, requesting figures for LTSM, projected cost of living allowance (COLA) adjustments, learner transport projections, nutrition projections, special education needs, including assistive devices, and anticipated administrative costs for provincial departments to handle these matters.

Addressing Mr Ndlebe's point about uncertainty regarding National Treasury's ability to fulfil promises, the Chairperson sought clarity on who to approach for further information. She highlighted that despite previous resolutions and engagements with National Treasury, there remained uncertainty about funding sources for the Bill. She requested guidance on who to contact or what steps to take to ascertain where the funding would come from, should the Bill be passed.

DBE's responses

Mr Ndlebe expressed his views on the questions raised, emphasising that the responsibility for funding lay with Parliament and the National Treasury. He clarified that while the DBE presented recommendations, it was not responsible for funding commitments. He highlighted the legislative process involved, stating that once a bill was introduced and certified by relevant departments, it was up to Parliament and Treasury to ensure funding.

Mr Ndlebe also noted that challenges regarding the figures could be addressed, but the Department should not be tasked with funding issues, as its role was to implement legislation. He further explained that the DBE already operated Grade R classes, providing materials to students, and any additional funding would be allocated based on student numbers determined through headcounts. He underscored that administrative costs were usually covered within existing budgets, and that the Department relied on government funding.

Further discussion

The Chairperson emphasised the importance of obtaining the uncosted projections. She highlighted the need to approach the Minister of Finance for funding.

Mr Ndlebe acknowledged the need to address the issues raised, and said the Department would look into them. He reiterated the importance of the Minister of Finance's involvement in funding matters, especially if the law was to be passed by Parliament.

The Chairperson thanked everyone and invited any final questions before closing the round of questions. Not seeing any further questions, she expressed gratitude to Mr Ndlebe and his team for their presentation on the costing, emphasising the importance of understanding the financial implications of legislation. She said specific questions would be forwarded to them for clarity. She also requested the Procedural Officer to obtain the presentation from Mr Ndlebe for distribution to the Members.

Moving on to the resolutions section, she asked if there were any other questions to be posed to either the Department or Treasury.

She then raised an additional question concerning the funding aspect, expressing concern about the responsibility being shifted between the DBE and National Treasury regarding funding sources. She suggested that clarity should be sought directly from the National Minister of Finance to determine how the funding would be allocated if the Bill were implemented. She sought feedback from the Members on this matter.

Members were in agreement with what the Chairperson suggested.

The Chairperson said that since there were no further questions or solutions from the Members, she would proceed to inquire about the funding for the Bill from the National Minister of Finance, given the current ambiguity between the two departments. She requested the Procedural Officer to assist in formulating the inquiry in proper English.

She asked if there were any other matters to address before concluding the meeting. She also inquired about any response from the NCOP regarding a previous letter sent, noting that they had received only an acknowledgement thus far.

The Procedural Officer confirmed the acknowledgement of the letter, but said no further feedback had been received. She assured the Chairperson that she would inform the Members if any matters needed to be addressed either later that day or on Monday.

The Chairperson then reminded the Members about the scheduled Saldanha Bay public hearing.

The meeting was adjourned.