Overview of DTIC, DCDT, DSBD, DEL & DoT audit outcomes: AGSA briefing; Committee Legacy Report

Meeting report

Opening Remarks
The Chairperson opened the meeting with introductions, as it was the Committee’s first meeting with the Auditor-General of South Africa (AGSA). Committee Members had received reports from the AG and a synopsis of the reports.

The Chairperson reminded Members that they could not engage the AG as the officials from AGSA could only give Members what they had found. The departments must report to the Committee on the AG’s findings.  Members could engage the Office of the AG on anything unclear. The AG would be reporting on five entities of a massive portfolio. She asked Members to consider that and thanked the AG and her Office for their enormous work on the audits and reports.

It was agreed that the AG and her team would present the five reports and that members would ask questions at the end of the presentations.
AGSA Presentation

Ms Tsakani Maluleke, Auditor-General of South Africa, explained that her office was a big one and her staff's portfolio was quite extensive, so she had brought all the individual executives responsible for the reports so that Members could hear directly from them. She told Members that she wanted to reach a point where her Office could effectively support the Committee in its oversight work. Her Office had the benefit of operating across all three tiers of government, looking at every single public institution every year, giving them a unique perspective on an entire value chain and an entire sector, something that very few people had.

She briefed the Committee on how her Office operated as per its constitutional mandate and various pieces of legislation. She also briefed them on the structure and intention of the audit reports. Ms Maluleke added that to be as efficient as possible without further expanding staff in AGSA, a component of audit work was undertaken by private sector auditors under the supervision or monitoring of AGSA. Some of the briefings would be by her colleagues in the private sector. She concluded with the assurance that she had a team of people who were capable technocrats but who were inspirational because they operated based on tremendous patriotism.

The audit outcomes for the cluster remained stagnant over the administration term. The main contributors to the stagnation were the poor quality of financial reporting, inadequate record keeping, and lack of compliance with key legislation during daily activities. Financial sustainability remained a concern in some of the state-owned enterprises in the cluster, such as the South African Post Office and the South African Broadcasting Corporation. There were 11 unqualified audit outcomes with no findings in the cluster.

The audits of particular concern were:
- an outstanding audit from the Unemployment Insurance Fund (UIF);
- four disclaimed audits with findings, i.e. South African Post Office (SAPO)​, South African Post Bank​, Commercial Enterprises – South African Broadcasting Corporation (SABC)​, Compensation fund (CF);
-one Adverse audit with findings, the Supported Employment Enterprises (SEE)​.

Overall performance in the economic development and trade cluster was not at the required or expected level, as some of the key targets had not been achieved. Some non-achieved targets were key to stimulating economic growth and job creation. The main reasons for non-achievement were delays in procurement, instability and vacancies in key positions, and inadequate systems to monitor and deliver on service delivery indicators.

The Auditor General advised the Committee to closely monitor the achievement of targets and insist on feedback and corrective action for non-achievement of key performance indicators. Accountability should be at the forefront of the mind when repeated underperformance or repeat findings occur without the implementation of corrective action.

(See Presentation)

Discussion
The Chairperson noted that the Select Committee was not in a fortunate position like the National Assembly (NA) to meet with its departments and entities every week, so the Committee Members had their work cut out. The information given by the AG did not bode well for the departments that the Committee was responsible for overseeing. The Select Committee had the opportunity to engage with the departments three times a year, but the AG had suggested that there was the opportunity to submit written questions. It was time that the Committee took what the AG had given it very seriously; Members should investigate through questions why the departments were not doing what they were supposed to do and implementing the suggestions made by the Auditor-General. The current culture had to change. She added that all the presenters had pointed out that everything the Committee did created a ripple effect. The Select Committee was there to create an environment for creating jobs.

The Chairperson requested that Members study the AG documents and submit questions every week to hold the departments accountable.

Mr B Farmer (PA, Western Cape) appreciated how the report was presented. There seemed to be a disjuncture between what the AG was doing and the results out there. It seemed that South Africa was failing, yet the AG was supposed to be a watchdog to ensure that, especially on finances, several things happened properly, in the correct order, and had been checked to ensure that South Africa did not fail as a state. Currently, there was a perception that the country was failing. If the AG was doing her job, why was it going wrong?

Mr Farmer said that he had come to Parliament with the view that it was time to get it right. The election results showed the unhappiness in the country with what had been going on in the past, so the current Parliament had to get it right, or, at the very least, get it going in the right direction. Where did the AG think the National Council of Provinces (NCOP) should focus because the Committee could not get to everything? To achieve one thing, where did the AG think the focus should be?

He added that what stood out was that the Unemployment Insurance Fund (UIF) could not continue submitting reports and materials late. How could the Committee assist in addressing the matter? It was a crucial entity for people who had lost their jobs, yet it did not even submit reports.

The Chairperson requested a response to Mr Farmer’s questions as he had to leave the meeting.

The AG noted that Mr Farmer was asking a big question. She could only go back to her team's analysis of the root causes that made things difficult. Principally, it was about shaping a culture of professionalism within the public sector, ensuring a consistent effort to drive effective consequence management and looking at real service delivery issues. What was meant by a professionalised public service? The question would dwell on the capability of those people in specific roles. The vacancies and instability were issues, but capability was a problem. There had to be a pushback on that. In the Public Finance Management Act (PFMA), capability was not the real problem, unlike the Municipal Finance Management Act (MFMA), and instability was not everywhere. There was a lack of discipline and attention to the things that mattered. That was part of professionalism because a professional was never comfortable doing the bare minimum and submitting financial statements; a professional asked how to deliver what should be delivered.

Her sense as the country's AG, but also as a citizen, was that one should worry about the people executing key functions. What qualifications did they have? What manner of people were they from an ethical posture, and how stable were they in those roles? She would pinpoint that that would drive closing the gap between where the country was and where they wanted it to be. She stated that the portfolio was big, so the Committee could not meet with everybody or have any real meaningful conversations with individuals. Perhaps it was best to look at the high-impact ones in the value chain across the different sectors, the ones with the biggest impact on a particular sector, focus attention on those, not on anybody else, and focus that attention consistently. The Committee should ensure resolutions at a meeting are tracked at the next meeting.  A conversation should not get flowery and lead Members all over the place because their time is limited. Meetings should stick with what the Committee had raised until they were resolved. They had to ensure a DG was building controls to limit the instances of a particular issue and follow it through. Essentially, the Committee should pick priorities and follow through, especially on recommendations.

Ms Maluleke suggested that, as a focus, the Committee could look at UIF and CF for answers to the question about what was lacking and what could be done. If somebody did not submit financial statements, they were breaking the law, but all the AG could do was report that an audit had not been done because the department did not submit statements or submitted them late. Although the UIF had been in that situation for ten years, the AG could not believe it was that hard to submit a financial statement. There was something fundamentally problematic at that institution, and she would stick with a conversation with the Minister and the DG and hold them accountable. It shouldn't be that critical entities with a significant amount of public money running through them could continue to be dysfunctional. That could be the sweet spot for the NCOP because the Select Committee was not rushed through the Budget Review and Recommendations Reports (BRRR) and then the budget approvals, etc., as in the National Assembly. In the NCOP, a Committee could stick with a particular theme and focus, not losing sight of it. Whenever the audit was late, the Committee should pick it up and follow it through. The UIF and CF kept missing it, perhaps because their budget did not come through the government appropriation of funds. However, they received a significant amount of money from taxpayers and were mandated to safeguard people's livelihoods. However, if those funds were not being managed properly, one day, the funds would not be there when needed.

Mr S Mabilo (ANC, Northern Cape) asked if he was correct in saying some entities were struggling or dysfunctional. He felt they were dysfunctional, but it might be a matter of language. What happened to the legislation a few years ago heralded as empowering the AG to hold officials on the wrong side of the law personally liable? There had been many fears at a municipal level that officials would be held liable for malfeasance, salaries would be dropped, or pensions curtailed. Was that only applicable at the local level; what about the other levels finding themselves in a similar situation? How was the AG recovering the money that it had just spent?

Mr H Van den Berg (FF+, Northern Cape) said that coming from a business environment, he sometimes fell into the trap of “reg of weg”, i.e. good or gone. The government did not always work the same way, but from the perspective of the AG, how far could the Committee go? What were its rights and powers? Could the Committee subpoena? Looking at the UIF, could the Committee stop a department and outsource its function to an international operator until the department reorganised and reshaped itself? How far and to what extent could the Committee enforce matters to get to the point of obtaining results?

Mr N Pienaar (DA, Limpopo) quipped that the future was the domain of females, but he acknowledged that the topic was very serious. He was deeply disturbed as a public representative. The state generated no money; all the money to pay the DGs, his cup of tea, etc was paid for by the public. The hundreds of millions of Rands being wrongfully spent was the public's money, and now the AG was brave enough to tell the Committee what was happening. He understood she was in a difficult position because she had to be neutral, but the document suggested what the Committee should do. He understood that about 15% of the state audits were conducted by outside auditors like Deloitte and an outside auditing firm audited the AGSA. Were they different audit firms? He wanted assurance that there was no conflict there.

He noted that the word “stagnant” appeared throughout the document and aptly described the condition of state entities that had been going on for ten years in some cases. The AG had given great advice that the Committee should focus on the critical areas. He requested the Chairperson to call the Minister, the DG and the UIF to the Committee each quarter, with a representative from the AG’s office acting as a lie detector, to explain why the financial statements and reports had not been submitted. The Committee had been preaching for the past four months that things would be different and the Members would have an impact, so they should do it. The Compensation Fund and the UIF should be first in line for such an approach.

Mr Pienaar said there were some ageing giants, like the Post Bank and the SABC, with whom they had to have difficult conversations about whether or not to cut off dead weight because the government was spending millions of Rands trying to uphold something that was not there. That was not business. He said that the AG had told the Committee what to do on page 19 of the report: “The entity should report to the Committee of the progress made in instituting consequence management processes as well as recovery or financial loss.” He urged the Committee Members to do it. If not, they would not be doing their work.  He referred to the report on industrial parks, noting that sometimes there was a difference between what was being reported and what was actually happening on the ground. He knew that auditors did that groundwork as well, but he and the Chairperson had visited a few in Gauteng and the state of industrial parks in the country was shocking. The briefing stated that they were creating jobs and were hubs of industry, but the majority of them were not. The working ones were those in the private sector. State industrial parks were shocking: dilapidated, falling apart, and subject to criminals and mafia interference. It was shocking. He could not agree with the AGSA representative.

Ms M Kennedy (EFF, Limpopo) stated that the information would be a tool with which to ensure better functions of the departments. It would lead to delivery and good governance by the government.

Ms S Sithole (ANC, North West) referred to Mr Farmer’s question about where the Committee should focus its attention. She emphasised that monetary accountability should be taken very seriously, especially when one hears of money that has not been allocated or recovered. No one knows where the money is for particular projects. She referred to a project where women were given seeds to plant to feed their families, but the project had collapsed, and there was no explanation as to what had happened. If the Committee could try to bring those projects back, it could provide healthy food for people.

The Chairperson agreed with Ms Sithole that the matter should be brought to the attention of the relevant department.

Ms M Ndlangisa-Makaula (ANC, Eastern Cape) said that she had been partly covered by Members who had spoken before her, but the presentation was an eye-opener to new Members of the NCOP. She agreed with Ms Sithole that the departments did not always present the real state of projects, so the Committee’s oversight should be greater and go down to the grassroots level because money was involved, and the purpose of her being there was to change the people's lives. She always had a query when the audit outcome was too nice but not the things on the ground. The Committee’s oversight should focus on looking at the audit outcomes versus the service; the money should do something to change people's lives rather than just account to the Auditor General.

Mr M Modise (ANC, Gauteng) welcomed the report from the AG, noting that her fellow presenters were all women. He understood the report as saying that the government was not doing what it was supposed to be doing and provided recommendations for the Committee to deal with the matters. Staff shortages might be an issue resulting in those problems. He did not want to speak about individual reports because all the reports were crying for one thing: consequence management, i.e. accountability.  What was a possible solution? He reminded his colleagues that they were there as lawmakers, not as rubber stampers, and so did the AG believe that if Parliament were to change legislation and amend certain laws, the AG would be able to hold the departments accountable. In 2020 and 2021, the whole country was glued to the television when the President spoke on the lockdown; now, when the AG is on television, everyone wants to know what the AG is going to say on TV. He was particularly interested in the comments on his municipality. He agreed that a clean audit did not necessarily mean that things were okay, even though his experience in a local municipality and provincial government was that clean audits were celebrated. He would love to leave the meeting with an assignment to empower the AG to hold the departments accountable. Talking about the situation would not help anyone, so lawmakers should amend legislation to assist the Office of the AG.

The Chairperson requested the AG and her colleagues to respond.

The AG began her response with Mr Modise’s input. Neither she nor her colleagues had spoken about a need to change legislation. Looking at the laws related to AGSA, she did not believe there was a need to change legislation. Looking at the state of financial and performance management in government, she was yet to be convinced that an investment in changing legislation was required. Often, a great deal of time was expended on changing legislation so that it met the highest and most noble expectations, but not enough time was spent figuring out whether or not the legislation was being implemented in the way that it should be and why that was not the case. She found that most provincial governments, national governments, state-owned entities and municipalities did not operate within the rule of the law. If there were a thing not right about procurement legislation, Parliament spent its time amending it. But if she were in the shoes of legislators, she would not spend time doing that; she would say that the law was 80% what was desired but ask if it was being implemented. Time was scarce, and one should spend one’s assets more efficiently and effectively by figuring out why and how people continued to flout the existing laws. So that was what she would do if she looked at the Audit Act.

She pointed out that economic development would touch on trade policy, local economic development, black economic empowerment, local content and reindustrialising the economy. She had found that often those things were flouted, not that they did not exist; they did. When things were supposed to be implemented at the point where it mattered, the person who was deciding a procurement allocation was flouting that law. So, the issue was not about the nature of the laws but about a culture of flouting the law. The people who should have skills to implement the law as designed and who should have a posture and a dedication to living and operating within the spirit of the law, the systems and processes and standard operating procedures that made for predictable implementation of the law, the monitoring disciplines that checked whether or not those things were being observed and where there were transgressions from what was being said, there was action, so that over time, the internal control was perfected. Where there were transgressions, people were held accountable and faced consequences. She had not yet seen anybody in the country being held liable for flouting employment equity legislation, but it always happened. No one had been held accountable for flouting local content policy, which was important for job creation or for flouting black economic empowerment legislation. Yet that happened all the time.

Those things - the professionals, the skills base, the technology, the monitoring control capability - ensured that what was desired and hoped for was being delivered through promulgating different Bills and putting them in an Act. The AG said that the flouting of procurement laws was observed in all the entities in the unqualified zone. She could say that, without any fear of contraction, about at least 90% of those in the unqualified zone. Some might be small issues about not submitting the right quality financial statements when the order began. But the vast majority were about procurement legislation that had been flouted. That flouting had happened by the time the audit took place, and the opportunity was lost. The local content ambition around where to buy trains had been floated, and that opportunity was gone. When the AG told a Committee that the local content about preserving the jobs of people who manufactured power cables had been flaunted, that opportunity was gone. The jobs were preserved in China and not in South Africa. She was harping on the point because changing the laws related to the AG would not hit the thing that needed attention. The AG could offer support in a complimentary way by telling Members that something was being flouted, which was the weakness that allowed things to happen repeatedly. Those were the recommendations AGSA gave to the accounting officer, the Minister and Parliament. If they were implemented consistently over time, they would get to a point where compliance with the law was more the norm than not.

The AG said that AGSA was given the new powers effective 1 April 2019. The laws applied across all audits, not just local government, and those powers say that in an audit, which was after the transaction had happened if the AG found an instance where there was non-compliance with the law or where there was fraud or theft, or where there was a breach of fiduciary duty, the AG had to flag it if that non- compliance had a direct impact of financial loss or harm to the public or harm to an institution. If the AG saw that connection, it had to be flagged differently so that the accounting officer knew it was urgent and had to be dealt with. It was the job of the accounting officer (AO) to deal with the audit findings. The AO had to investigate further to understand what had happened. The AO had to take the outcome of the investigation and implement the Civility Action, which some of her colleagues had talked about; they must safeguard resources by checking on money that had been lost, cancelling contracts where money was being lost, preventing further losses, by reporting matters to law enforcement where there were instances of criminal activity.

She explained that when her colleagues said they had raised material irregularities, they said they had flagged the most serious things. For example, during the audit at the National Lottery Commission, the auditor saw a contract for R9 million, which looked non-compliant. On inspection, the auditor found that R6 million of that R9 million had been paid out and was gone, but there was no sign of the supposed skills on the ground. It was raised as a material irregularity, meaning it was a problem, and the Commissioner had to get the money back. The NLC would investigate and then take the action it should. The AG could not replace the accounting officer. The Public Finance Management Framework of the country placed the duty and authority for running that institution in the hands of the accounting officer, the Head of Department, the DG, the Medical Manager, etc. and if they did what they were supposed to, as with the NLC which had to get the money back, go into the environment and figure out how it had happened, and put in place controls so that it would not happen again and the people had to be disciplined. With the NLC, it was an old transaction: R6 million had been paid, and there was no sports field, so the money would unlikely be found, especially as the length of time expanded. One had to figure out who the accounting officer had allowed it to happen in the first instance and why they had taken so long to recover the money they knew had been lost. And why were they waiting for the AG to tell them that was irregular? Where were their internal controls? Where was the internal auditor? How were they running the institution they misfired in relation to what the law required of them? She told the Committee that when such institutions sat in front of the Committee, those were the questions Members had to ask.

The AG stated that her team did a tremendous amount of good work highlighting those things and getting people to deal with those matters. The NLC had cancelled the payment for R3 million. If the AG had not raised it, it was highly likely they would have paid the R3 million. So, the auditor saved R3 million and hoped to save R6 million, but it was not in the hands of AGSA to do it all. They had to keep chasing the accounting officers to do their part.

The AG said that, in the end, the issue was about who those accounting officers continued to do that, what skills they had and whether they understood the work they were supposed to do. One had to ask whether a functioning internal audit supported them. Was the AO really up for the task without a functioning internal audit in a municipality or a complex institution such as NLC? She could not imagine a private sector institution that did not have a decent internal order function. The institutions were complex. When Members heard the input and raised questions about the Compensation Fund or the UIF, the audit reports showed the amount of money being lost, how much was being recovered, and the big gap. A small sliver had been recovered, and that little green part of the gap on the graph was tiny relative to what had been lost. That told one that those institutions did not have leaders who were decisive in preventing problems and acting on them as soon as they arrived. The law then said that once the accounting officer continued to fail, AGSA could take binding remedial action. She could refer matters to law enforcement and ultimately issue a certificate of debt, but AGSA had to follow a regimented process that allowed for fair administrative action. She was finding that sometimes her Office had to refer matters for investigation, and she had done that. Matters were raised with the Hawks, the SIU, the Public Protector and the National Treasury, depending on the issue. For example, the SIU was currently investigating the NLC. But the information provided had to be acted on. When the AG arrived at personal liability, the accounting officer was long gone, and somebody else was acting. They did not stay to face the music.

The AG suggested that the Committee seek answers from those who employed them. If she employed an accounting officer and was responsible for overseeing and supervising their work and was slow or indecisive about monitoring how they did their work, quite often, the employee was also gone. The Committee should also worry about competence, ethical posture, and stability. Looking at the UIF and the Compensation Fund, one saw a turnabout of not just Ministers over many years but also the Commissioner or the DG. Similarly, at the NLC, there had been a turnover of key players over time, which delayed the ability to get money back. and worse still, it enhanced the culture of impunity because people knew they could do whatever, run off, and often be allowed to take up a position elsewhere. In articulating the AGSA's position and enforcement powers, the AG explained that she did her best to get the people who had to safeguard the institutions to do just that.

Regarding the Committee Members, she said that her team had given recommendations so that when the entities appeared before the Committee, Members could chase them up. AGSA continued to follow up, but Parliament had powers, responsibilities and authority that AGSA did not enjoy. In response to the question about the laws or the authority that the committee had, she advised the Committee to spend some time with the legal advisors and Committee content advisors. She believed that the law would allow the Committee to engage with accounting officers and executive authorities that executed government programmes on behalf of the people, using resources that Parliament had appropriated to them. She so should be able to hold them accountable. Unfortunately, because there were many institutions and issues, the Committee's ability to prioritise and stick with a few things would stand between what Members hoped for and what was ultimately achieved.

The AG explained that the auditors who audited AGSA did not engage in the work of auditing other government institutions. It was a key part of the governance framework, so the process of finding those auditors was all about making sure that it was a set of auditors that had the competence and the independence that was required, and part of independence was that the firm could not work for the AGSA; that firm could not be a supplier. So, the audit was conducted by an international firm with good capability but which had decided to act as AGSA auditors and forego the opportunity to work on AGSA's behalf. Regarding support from AGSA, it was the institution’s job to support oversight and to be available to support the work of Parliament members. However, the decisions about what to do about SAPO, SABC, the Post Bank or any other institutions were policy decisions, and AGSA could not be involved in that process. AGSA could tell Parliament how those institutions were running and provide some insight on whether or not the ambitions set out in the policy were being met. Ultimately, the Committee would ask the executives questions about what to do, and a decision would be made.

The AG said that as the auditors were presenting, she realised that she had got the gender thing wrong for the meeting. She found that happening all the time, inadvertently, and she had little to say about that other than that there were women across the structures in AGSA, and many of the big business units were headed by women. That was the benefit of a concerted effort to invest in transformation within the office over many years, sustain it, and ensure that people were given opportunities and that the women continued to impress. The men were good. She did have men in the team, and they were pretty good.

Linking to the comments about clean audits, she said that AGSA had quite deliberately shaped its strategy. She understood that it was unhelpful to allow others to entrench a culture where they chased clean orders and were celebrated for clean orders but did not do the work that they were supposed to do. Her office shaped its messages and analysis by looking at the good practices amongst the clean orders and how they translated to service delivery. Members would find that the wider clean audits had the least problems in terms of financial management and performance. They could talk about how to share performance so that it met ambitions because the bases were in place. It was also a conversation that could be had with people with the highest likelihood of rising to the performance challenge. She worried that too often, people trivialised things like disclaimers, adverse audit opinions, or qualified audit opinions, saying, “Well, you know, our people don't eat clean audits. We're not worried about clean audits; we are worried about service delivery.” AGSA went to the ground to inspect what happened around service delivery with institutions that had disclaimers as audit opinions. One could see a direct line between better governance and service delivery on the one hand and poor governance and lack of delivery on the other. It was not an accident that the Compensation Fund had a disclaimer audit opinion, and it was not an accident that municipalities, unfortunately, especially in the North West, had disclaimers of audit opinion. One could link it to dysfunction.

The AG stated that AGSA was deliberately shaping its work while using its mandate by going to the ground to see whether the sports field was there. It was a financial management issue because, if it were not there, it meant the books were wrong. A balance sheet should not say the money was spent on an item when it was not there. That was wasteful expenditure. AGSA was pushing to improve its audits by going to the ground and giving better insight to the people overseeing the institutions to understand what was happening and where to focus their attention. It had been a very deliberate investment over many years. She gave Members comfort by explaining that her staff did not go to audit state projects just as auditors who were bean counters as she was. It was difficult for a bean counter to tell if a construction project was going well. She could tell one whether the sports field was there but not how it related to the bill of quantities. AGSA had been deliberate about investing in diverse skills to ensure it had quantity surveyors and engineers to help auditors assess those things and provide information about the link between debits and credits on the one hand and service delivery on the other hand.

The AG concluded her input by saying the Committee could count on the team to continue to provide clear, credible information, informed by or based on technical analysis, independently done by a committed set of people. Her staff was unbiased. They were informed by what they saw themselves, incorporating everything they knew. They were not perfect, but they tried very hard to maintain the integrity of what they did and to maintain the support that Members would need to conduct their work effectively. The Committee Members might not see much of her, but they did not need her there because the people who had the content were always available and probably gave them much more depth than she would.

The Committee Members applauded the AG's input.

The Chairperson thanked the AG for her input. She said something very true about the integrity of AGSA; the Chairperson thought that the integrity of the Committee was just as important, and as such, it had to go out and hold the departments and institutions accountable. The AG had said the instability of staff was an issue, and the Committee had to reach out to the departments to see how to assist them with staff retention and ensure stability and continuation. She was happy to see all the ladies from AGSA and thanked all for a fantastic report. Many questions would emanate from the reports, but the Committee would take the AG up on the availability of her office to give pointers from which the Committee could work.

Legacy Report
The Chairperson called for the committee staff to present the legacy report. She asked Members to see what could be taken from the legacy report of the Sixth Parliament into the Seventh Parliament. It was a guidance document for the Committee. She reminded Members that to be able to leave a legacy, the Committee had to focus on a few key projects. It was no use identifying 20 projects, only completing one project.

The Content Advisor briefed Members on the Legacy Report. He explained that although it was a legacy report from the previous Committee, that Committee was differently constituted or composed compared to the current Committee. He was the content advisor looking after three or four departments with some of the entities. Members would also find the experience of being responsible for several departments quite different from the experiences of their counterparts in the National Assembly. So, the workload in the NCOP was different. He also noted that the issues the AG had raised from a policy and budget point of view were the same as issues in the legacy report, such as the Department of Labour’s Compensation Fund and the UIF. The report highlighted and flagged it as an issue that the two entities from the Department of Labour had to follow up on. The Content Advisor had been able to lift issues from the report that aligned with those issues raised by the AG, as well as issues arising from tourism and across sectors in terms of cross-fertilising investments, particularly concerning infrastructure. Because Tourism could not function without investment in roads and infrastructure, energy and other economic and social infrastructure, he highlighted the issues of investment in businesses, how departments collaborated, and understanding that a lack of investment in a particular sector could impact other sectors.

Some of the issues that the committee needed to look at where the industrial parks and the special economic zones. Some industrial parks were mentioned in the Annual Performance Plans as they were not functioning. The Auditor’s report suggested a need to look at another model of partnerships. That was also highlighted in the legacy report, so some of the issues AG raised were more than just issues of financial governance. The legacy report spoke of the need to lift the performance of SA tourism so that it could respond to its legislative mandate.

Finally, the legacy report raised several pieces of legislation that the Committee had completed, which were central to the functioning of businesses or industries. Nine pieces of legislation were processed and completed: the copyright legislation, the Companies Amendment Bill, etc.

A key issue was the impact of COVID-19 on the functioning of the Committee. Some oversight visits could not be undertaken, international travel for study visits was curtailed and so on. One of the recommendations was that Parliament needed to establish a virtual monitoring and evaluation system. If institutionalised monitoring and evaluation on a virtual level did not occur, Parliament would not be able to respond to some of the issues raised. That meant building the capacity and capability to track the performance of the departments. There was a need for capacity and capability building of technical teams in Parliament to support the Members in executing their functional and constitutional responsibilities. Technical capability should be provided so that members can engage with the departments on a more technical level. Committees needed to institutionalise the resolution-taking mechanism to track issues and projects the Committee had committed to.

The Content Advisor added how the Committee had been conducting its business by using an integrated regional development perspective to manage its oversight. When the District Development Model was introduced, the NCOP was already going to a particular province, going to a particular region, and tracking the linkages with other regions. The Committee engaged with departments at the national and provisional levels and local governments to assist or influence departments to channel resources to a particular problem at a particular level or region and then to consider the spillover effects to another region. A matter for consideration was how the Committee could assist or catalyse a department at various levels to respond so that the impact of resources allocated to the overall economy would be evident at a regional level.

The Chairperson thanked the Content Advisor.  She assumed all Members had received and studied the Legacy Report. She had served in that Select Committee in the Sixth Parliament and could attest that there were many things that the Committee did not get to, which was why the Committee could not institute the same culture as the Sixth Parliament. She invited Members to engage with the Content Advisor so that the Committee would have something concrete as a legacy at the end of the term. Oversight would be done locally between 21 and 25 October 2024, and the focus had to be on what generated job creation and what generated the economy. all five departments in their portfolio were critical in that respect. Members also had to consider when planning oversight that they had to take account of their sister committee.

Mr Modise said that going through the report, he thought the Chairperson, who had five years’ experience in the Committee as a previous Member, knew what the previous Committee had wanted to do when it started, how far it had gone, and what was outstanding. From what was outstanding, she could suggest a way forward. He was prepared to lobby the Committee to agree to piggyback on the past five years of experience to establish a programme that would make an impact.  

Mr Pienaar asked about the nine Bills that had gone through the NCOP and become law. They originated from the NA and then came to the NCOP. How many of those nine did the NCOP amend? For too long, the NCOP had been rubber-stamping the work of the National Assembly. Bills came to the NCOP just to be approved. The presence of the NCOP had not been felt in law-making. The NCOP needed to play its part; it needed to contribute.

The Content Advisor stated that the National Gambling Amendment Bill was not approved because issues were raised about it, and technical negotiations were held around that bill. The Copyright Amendment Bill and the Performers Protection Amendment Bill initiated a lot of engagement and intervention from a technical point of view following the NCOP's interrogation of the Bills, which had brought in external experts to assist the Committee in doing its own oversight of the legislation.

The Committee Secretary supported what the Content Advisor was saying. The two pieces of legislation he referred to, the Performers Protection and Copyright Amendment Bill, were section 76 bills, meaning they also went to the provinces. Extensive amendments came from provinces as far as those two Bills were concerned. Before the Committee even started interacting with that Bill, the Committee invited technical experts to take Members through the highly technical issues contained in those Bills. The Committee also invited all nine provincial legislature committees to form part of that engagement so they could all learn from it. Those Bills were sent to the President for assent but had not yet been signed into law. The National Gambling Bill was supposed to go for mediation in the Sixth Parliament, but the matter was not resolved in the Sixth Parliament.

Mr van den Berg agreed that the atmosphere was different. When he entered the system, he felt that everyone was throwing work at everybody, and no one could zoom into something, focus and finish. So, the atmosphere would be different, and it would not be “business as usual.” The Committee should focus on fewer projects and do it right. And that went for the whole of South Africa, every department. Once there was focus and they dotted their i’s and crossed their t’s, the country would start moving ahead.

He added that when entering the parliamentary system, he kept hearing about special economic zones (SEZs) and industrial parks (IPs). Coming from the local government, he could tell them it was a disaster, and there was absolutely zero economic activity going on in those centres. His message to the Committee was to prove they worked or no longer support them. Oversight should focus on SEZs and industrial parks. The Committee had also spoken about agriculture and tourism, and there were suggestions for focusing on that and fisheries. Once one gets tourism right, that might lead to fixing everything that leads to having a good tourism experience. When Tourism worked out, the rest of the country could support the success of the Tourism Department, which was better than the millions and billions of Rand spent on SEZs and industrial parks where people were not paying back loans. He also asked that they put COVID behind them. It had been a great excuse for many things, but now they had to tread their own path.

Mr Mabilo said that first and foremost, he wanted to second the proposal made by Mr Modise formally.
The matter of industrial parks was coming up very strongly. The Committee had posed questions to the Minister as Members were very concerned about the industrial parks. It was coming up in the legacy report, meaning they had to address the matter in their programme. Concerning the capacity building for Members, he welcomed it. The Chairperson cautioned members about the international study tour. However, he was interested in knowing what they would be looking at to benchmark the industrial parks, not that he was saying that a study tour was an immediate requirement. His last point related to tracking the performance of the departments. Could the Content Advisor clarify what he was saying about monitoring? If it would improve the performance of departments, he supported it because it was part of the Committee’s oversight work. Given the Committee's load, a mechanism to track the departments would be helpful.

The Content Advisor said that the previous Chairperson had delayed the issue of the checking mechanism because of the time needed to develop a very solid checking mechanism. He suggested they check the resolution taken by the previous Committee. It was something that he would like, at the end of the term, to say they had done. Concerning the benchmarking question, they had been considering Germany, looking at how they perform, and then seeing how SA could adjust. Perhaps for the industrial parks and the special economy zones, the Committee should see how they perform and manage and maybe consider a different model in terms of partnerships and so on. They could also look at incentives. However, very strong consideration was given to bringing in the private sector. The Department of Trade, Industry and Competition (DTIC) drove the current model. In his view, the DTIC had been unable to retain the demand, and industrial parks were not moving as expected everywhere. [The Content Advisor did not speak into the microphone; consequently, his input was indistinct.]

The Chairperson responded to Mr Modise, explaining that in the Sixth Parliament, Industrial Development Zones (IDZs) and SEZs were on the table because they were worth generating. The problem was that when the Committee visited an SEZ or an Industrial Park, Members engaged with the business people who had little businesses running in the industrial parks. When the Committee returned to Parliament, it was discussed, and that was it. The Chairperson, in her personal capacity, would go back and then speak to the people and was then able to engage with the Department on the issues. The new Committee had to adopt a different approach to doing oversight. It was no use just checking out the good stories. Members had to be able to spend time speaking to people who had little business within the SEZ or IDZ. Members should also go to the IDZs and SEZs that were functioning. She visited the IDZ in Saldanha Bay, which is a good example of how an IDZ should work. But it was no good if the Committee did not hold the Department to account, despite what Members found during oversight visits.

She said that the Committee had to decide what was very important because everything was job-generating and economy generation on the tourism side. There were many failed projects the Northern Cape and the Committee had picked up two or three, but to date, there has not been a proper report back from the Tourism Department regarding the areas visited and the projects. In the past, the Tourism Department made money available for many projects, which started very well but then collapsed, and the people quit. Questions were raised with that Department, but again, no response was received.

The Chairperson agreed that the tracking mechanism was something they lacked, and it was lacking in every single department. She noted that when the Committee looked at the co-ops and small businesses, they could call on Members with business experience, such as Mr Pienaar and Mr van den Berg, who had been businessmen – she did not know what Mr Mabilo had done before his political career. They were fortunate enough to be able to speak on co-ops and small, medium, and micro enterprises. The government was failing those businesses, and the Committee was also failing them because, when doing oversight, Members noted their concerns and gave them to the Department but did not follow up. There were so many co-ops and small businesses in the rural areas, with the majority being run by women who had to keep a family running. The environment was so bad that the mothers went out to try and support the family. However, the support they received was minimal. The support looked very good on paper, but in practice, it was not, so the Committee had to sit down with the departments about what they found. The Committee had to decide on one province for oversight – it was a waste of time travelling from one province to another -  and once the province was identified, ask for feedback from the provincial legislature about the problems they had identified. However, from her experience, she warned members not to always believe what the provinces said because there was a gap between what was on paper and what was in practice.

The Chairperson requested the Committee Secretary to explain how oversight processes worked in the previous Committees.

The Committee Secretary stated that in the sixth term of Parliament, that Committee had shared oversight with another committee, the Select Committee on Transport, Public Enterprise and Public Works. Because the departments that they were responsible for were so diverse, they were always able to find meeting points and, therefore, always able to conduct joint oversight visits. 21 to 25 October 2024 was an oversight period dedicated to the NCOP. Their sister Committee for the Seventh Parliament was Agriculture, Mineral Resources, and, she thought, Fisheries. Again, there would be several areas within that Committee and their sister Committee that would overlap. Usually, on the first day of oversight, the two Committees would meet with all the Departments, which could be five Departments. For the rest of the week, Committees would alternate oversight visits, one in the morning and one in the afternoon. There was always sufficient time to do oversight visits, which worked well.

The Content Advisor said that when he had raised the issue of the development model, it was to say that the Committee looked across the spectrum when crafting a programme that would speak to the issues that the Committee wanted to address in a specific sector but also looked at the processes. Members appreciated what was happening in another portfolio and the linkage between sectors. The Committee should look at the regional focus. They did not go to the Department itself.  

Mr Modise asked whether the Committee had an opportunity to have a public meeting during the NCOP oversight visit.

The Chairperson replied that, unfortunately, the Committee could not do so. That was why there was stakeholder engagement, as the Committee had to build a support base.

Mr Modise said that public meetings were one way of holding departments accountable. He was going to end up sounding like a broken record, but the Members made a commitment that things were going to change in the Seventh Parliament; it was going to be different from the previous Parliament, and therefore, they should not allow themselves to be pushed by officials into what they had to do and how they had to do it because the Members did the work and not the officials. 21 to 25 October 2024 was oversight week, giving the Select Committee five days to oversee five departments. The National Assembly had one department per Portfolio Committee. How effective was the NCOP expected to be? If, in the morning, the Committee wanted to do small-scale fishing in the Western Cape as part of its oversight and wanted to visit everywhere in the Western Cape, including I&J, Lucky Star and all the big vessels that one saw when going to a fishing village, but the Committee had to work with another Committee where Members might want to go to the Eastern Cape, how did they balance that? And why did they have only one week to do all those things with five departments while the National Assembly Portfolio Committees had only one department? Second, if they could not engage with the community where they were going, what was the point of going there because that was where the issues were?

He said calling the community to a meeting would have a big impact. He was not sure who was responsible for media and communications; however, if they were going to do oversight from 21 to the 25 October 2024, as soon as the Portfolio Committee had agreed on where to go, there should be communication in that province, in that local municipality, with the municipality and the local media announcing that the Portfolio Committee of Parliament was coming. Why did they take Parliament to the people when they did not engage with the people? What was the point? Who were they going to talk to?

Mr Modise said that his view was that they should begin immediately after the decision had been taken to get the message out there. Everyone needed to know that Parliament was coming. The Chairperson ought to be on TV and radio, with details of when, where, and what they wanted to find out when they got there, as well as when they would be meeting with the community. That was the only way they were going to get it right.

The Committee Secretary informed Mr Modise that one of the flagship programmes of the NCOP was taking Parliament to the people. When Parliament went to the people, they did exactly what Mr Modise spoke about: the NCOP went to a community for a week, during which public meetings were held. If Mr Modise was talking about engagement, that was one of the things that the NCOP did. Maybe oversight visits could be improved so that instead of going to a department project, the Committee should engage with the beneficiaries. That happened in the previous term of Parliament because not just the department, district municipalities and local municipalities were invited to the sessions. After all, the Committee wanted as many stakeholders as possible, but ultimately, the issues lay with the project's beneficiaries. For example, the department could tell a wonderful story of how it had given so much and provided so much support. In contrast, the beneficiaries might be faced with a road that was not accessible as a result of a dysfunctional relationship between the district municipality and the local municipality. She believed that oversight could be strengthened by asking for a list of beneficiaries of the projects to be visited.

The Committee Researcher stated that he liked the idea of doing things differently. He welcomed Mr Modise’s point about meeting people on the ground, but as the Secretary had pointed out, a programme did that. However, the Committee could invite the beneficiaries. Because there might not be enough time to engage the beneficiaries, the Committee needed to consider sending an advance team of staff members to engage with the beneficiaries and report back to the Committee before going to that particular site. The matter had been elusive since he began working in Parliament in 2010.  Committees went through the processes of gathering issues and overseeing departments, moving from province to province, but it was like throwing water into a leaking basin. The fact that Parliament could not develop a monitoring and evaluation framework was a big problem. Perhaps the Seventh Parliament would solve that problem.

A Committee staff member said that there would be a communications person from the Communications Department of Parliament with the Committee on the oversight visit to liaise with the media, newspapers and so on. When oversight visits were conducted, the provincial legislature members and local government members joined them on the oversight visits as it was important for the Committee not to step on the toes of provincial portfolio committees and not to do their job. That became a problem when the Committee went on oversight visits and tried to facilitate communication between the municipal and local levels. So now, the district department, district municipalities, and local municipalities are presented to the provincial departments and other national departments. So, whatever problems were highlighted, the departments were there, and the Committee tried to address those issues and then figure out how it could assist the local government or address the differences between the local government and the provincial department.

The Content Advisor presented a practical example. In his previous committee, members dealt with Eskom, where Eskom had built its power station. Apparently, it was on a graveyard, so they had to call the community and the traditional leaders. However, they also had to call small business people because the construction contract determined that the constructor had to allocate a certain amount of money to contract local business people and labour. There were several complaints from the community that the Chinese company did not employ local people, and a company from the Eastern Cape had brought its people so that the local community did not get jobs. So the Committee called everyone, starting from the local municipality, the traditional leaders, local business people in one meeting, and the executives, to a meeting. All stakeholders, even the members of the community, could be involved.

The Chairperson appreciated the inputs. It was clear that public engagement was essential. Whether staff should go out first would depend on the budget and Parliament's take on the proposal. Nevertheless, Committee staff had to engage diligently with the provincial officials to get all the required information and ensure that the reading material was not given to Members when they walked into the meeting with the legislature members and officials. Members needed to be on par with why they were on the oversight visit. The public had to be there, particularly the beneficiaries. As she and Mr Modise had said, there would be a change in how the Committee conducted oversight. She agreed with Mr Modise, with all due respect to the staff who did immense work, but Members were the ones who had to implement it so that culture change took place. Noting that the meeting had gone over time. However, that was often necessary with their workload, so the Chairperson said she would engage people on the topic and get back to members for a discussion before the oversight visits took place. As a last point, the Chairperson acknowledged that engagement with the Legacy Report would be completed at a future meeting.

The meeting was adjourned.