Medium Term Budget Policy Statement: Department submissions

Meeting report

JOINT BUDGET COMMITTEE
28 October 2004
MEDIUM TERM BUDGET POLICY STATEMENT: DEPARTMENT SUBMISSIONS

Chairpersons: Mr N Nene (ANC), Mr B Mkhaliphi (ANC, Mpumalanga)

Documents handed out
Medium Term Budget Policy Statement 2004 (offsite link)
Department of Safety and Security submission
Department of Correctional Services submission
Department of Defence submission
Department of Justice and Constitutional Development submission
Defence briefing
Institute for Security Studies

SUMMARY
The Departments of Safety and Security, Correctional Services and Defence presented their response to the Medium-Term Budget Policy Statement 2004. The South African Police Service (SAPS) welcomed the proposed improved remuneration of police and the prioritisation of combating crime and improving safety and security. The Department of Correctional Services expressed its concern that the improvement in policing and increased personnel in the SAPS would have a knock-on effect and that it lacked the resources to deal the situation. There was further concern at the lack of parity in remuneration between the two Departments. The Department of Defence pointed out that its budget had been cut, but that the demand for force deployments had not taken account of this. Particular concern was expressed over the need for scarce skills and rural allowances for health professionals in the SANDF. The Committee expressed concern at the apparent lack of dialogue between the members of the cluster, and emphasised that this needed to be made a priority.

MINUTES
Mr Nene emphasised that the Committee was taking a cluster approach to the hearings. He welcomed the chairpersons of the Portfolio Committees on Correctional Services and Safety and Security and said that they had been invited because it was the Portfolio Committees that would deal with the micro issues of the budget policy.

Department of Safety and Security submission
Minister Nqakula presented the adjustment estimates of national expenditure 2004 and the impact of the Medium Term Budget Policy Statement (MTBPS). The adjustment was mainly necessitated by the shifting of funds between votes. R30 million would be transferred from the Department of Transport as a once-off contribution for security infrastructure at the Cape Town Metro Rail Project, to be implemented by the Division: Protection and Security Services. R33,494 million would be transferred from the Department of Health for the medico-legal mortuaries. These funds would ensure the transfer of fully equipped and maintained mortuaries from the South African Police Service (SAPS) to the provincial Departments of Health at some time. An amount of R246 000 would be transferred to the Department of Public Works for leasing of accommodation for the Firearm Control Project Office.

The MTBPS in relation to Safety and Security included the medium term policy aim of improving remuneration for police and combating crime and improving safety and security. The key priorities of the SAPS Strategic Plan were in line with this aim. These included the enhancement of service delivery, the combating of serious and violent crimes, dealing with organised crime and combating crimes against women and children and the establishment of the protection and security division. The key priorities further supported the SAPS in working with the other departments in the Justice, Crime Prevention and Security cluster. The 2005 Medium Term Expenditure Framework (MTEF) would build on the policy priorities laid down in the 2003 and 2004 budgets and again prioritised the continued expansion of capacity in the safety and security sector to prevent and combat crime. Specific provision was made for the appointment of 9 090 additional personnel over the MTEF period, to be added to the 37 760 additional personnel provided for in the pre-adjusted baseline allocations. There was a need to reduce the police officer : population ratio. This process had been started. In 2002/03, the ratio was 1:438, and was 1:420 in the current phase. At the end of the MTEF period, it was envisaged that this would have dropped to 1:372, and the eventual aim was 1:300. The international average was 1:461. Provision was also made for amounts to be allocated over the medium-term to improve remuneration and address grade promotion and progression and the retention of scarce skills. Further modernisation of vehicles and the expansion of the vehicle fleet were required in relation to the growth in additional personnel. The ideal would be a ratio of one vehicle to two police officers. In addition, there was a process of renewing and extending end user equipment and network infrastructure in the IT arena. Cabinet approval had been obtained for the establishment of the Division: Security and Protection Services and funds had been provided to initiate the implementation of the pilot projects. These included Johannesburg International Airport, rail transport, Durban harbour, the border at Beit Bridge and all high courts. In conclusion, the SAPS had confirmed that the MTBPS addressed its needs as identified.

Discussion
Mr Nene commended the Department on having spent its full allocation for the previous financial year and asked how it had managed it.

Mr S Schutte (Assistant Commander: SAPS) replied that it was the second consecutive year in which approximately R1 000 had been deposited back into national revenue. Financial IT systems enabled close tracking of expenditure through the financial year, and on a monthly basis.

Dr S Cwele (ANC) referred to the additional funds to be allocated to improved conditions of service, especially in respect of scarce skills. The same programme had been implemented in the Department of Health, but Minister Manuel had said that most of the money had eventually gone to general health workers. He asked what plans the Department had to prevent this.

Minister Nqakula replied that one of the places that the SAPS had been unable to retain staff had been the forensic laboratories. Excellent scientists were being trained in the laboratories, then scooped by other entities. The SAPS would try to meet some of the other remuneration packages.

Mr Schutte added that the scarce skills policy was currently being refined in the forensic science environment and other occupational cores.

Dr Cwele referred to the Security and Protection Services Division, and the fact that people were being received from other Departments as well as by recruitment. What plans were in place to avoid getting dead wood from the other Departments as this was a critical initiative?

Minister Nqakula said that there had been very intense discussions with the SANDF in this regard and a core of people had been identified. He could confirm that they were not dead wood, but very good material. In terms of general recruitment, a premium was placed on the quality of people recruited. The unit was also responsible for the protection of VIPs and it was essential that it was a very good division.

Dr P Rabie (DA) referred to the crime intelligence programme and its budget of R112 million. He asked whether this was a business model or one proven overseas.

Minister Nqakula replied that international experience was constantly checked, and good aspects were converted to South African conditions.

Dr Rabie asked the approximate cost of a bulletproof vest and asked how many were currently required.

Mr Schutte replied that bulletproof vests consisted of inner and outer sections and plates, and said they cost between R1 700 and R4 000 for a full set. Between forty and fifty million were purchased annually and they were one of the SAPS's highest priorities.

Mr V Ndlovu (IFP) referred to the R260 000 to be transferred to the Department of Public Works and said that buildings were often left to deteriorate. He asked whether this project had a deadline and whether the Department of Safety and Security would own the building.

Minister Nqakula replied that the buildings were owned by the Department of Public Works and leased to the various Departments, hence the transfer of funds. He was not certain when Departments would own their own buildings.

Mr T Ralane (ANC, Free State) referred to the ENE (medium term) 06/07 and asked whether the Department was on track with its employment strategy.

Minister Nqakula replied that the SAPS was on track with what was required. In fact at the end of the financial year 07/08, there would be more than 160 000 members of the Service.

Mr Ralane said that the Minister had not addressed issues relating to crime in rural areas. The Select Committee had recently visited Coffee Bay and had heard about organised criminal activities where people were arrested but not prosecuted, or were simply not arrested. Special vehicles were needed for such areas and he asked the Department's priorities for rural areas.

Minister Nqakula replied that he understood the problems. There were police stations where the problems were human weaknesses. A pilot project had been launched in the Eastern Cape, where a particular vehicle had been manufactured specifically for the police. The vehicle could go into any area including hostile terrain, and this was ideal for rural areas. One vehicle had been given to each area in the Eastern Cape in the pilot project. When a person was arrested, the responsibility for that person shifted to the courts. South Africa had a very democratic system of governance, so people were not always remanded in custody but were often set free on bail or on their own recognisance. He expressed a preference for this rather than the old regime of detention without trial.

Mr S Asiya (ANC) said that he understood the Department was receiving monies from other Departments and asked if it would be able to spend it before April so there was no rollover. He asked whether other Departments were dumping their surplus on the Department.

Minister Nqakula reassured the Committee that the money would be spent as it was going into identified projects and was equal to what was required. Even the Public Works money was an ongoing item.

Mr Asiya emphasised that the situation on Metro Rail trains was slightly better than it had been, but that the implementation of the security programme by next year was crucial.

Minister Nqakula replied that the SAPS really wanted to improve safety on the trains in Cape Town. There was currently a programme involving civilians and certificates had recently been awarded to over three thousand civilians who had participated. There had been a lot of improvement and safety on the trains would be even better with the new contingent in place.

Mr D Bloem (ANC) expressed concern that the vacancies in the CID Department should also be addressed. Officers in his area were complaining that they could not deal with cases, owing to the large number of vacancies.

Minister Nqakula replied that where a vacancy existed, station commissioners could fill it, and they did not have to wait for the national office. He asked members of the Committee to make this more widely known in their constituencies.

Mr Schutte pointed out that these posts had already been funded so there was provision to fill those places.

Department of Correctional Services (DCS) submission
Mr P Gillingham (CFO) discussed the Department's strategic realignment since 2000. Rehabilitation had been placed at the centre of all DCS activities, internal strategic planning had been overhauled, Unit Management had been mainstreamed, a new corporate culture had been established to support rehabilitation and correction and correction had been viewed as an holistic process, involving the community.

Challenges facing the DCS included improved human resource capacity, correction, development and care services, improvement management of security and facilities, improved administration and institutional capacity, the anti-corruption strategy and improved management of accommodation. Policy initiatives for the medium term included the implementation of the White Paper on Corrections as approved by Cabinet, the phasing out of the existing overtime arrangement and the implementation of a seven day establishment, the implementation of nutritional services and offender accommodation.

In terms of the MTBPS, the shift to rehabilitation and social reintegration was a challenge to DCS and the current MTEF baseline was not based on the new strategic direction, and this led to a risk of implementing the White Paper over a period of longer than ten years. Negative consequences of the non-alignment of the MTEF baseline with the White Paper implementation plan would be that the process of rehabilitation would be hampered, there would be a negative impact on effective corrections and an increased risk of overcrowding. In terms of human resources, the provisions of the 2005 medium term budget policy framework would have a significant impact on DCS. The expanded policing capacity would result in a higher rate of arrests and hence in awaiting trial detainees, the improved salaries for police would have a negative impact on the moral of correctional officers, improvement in the efficiency of the courts would give rise to a need for more correctional officers to rehabilitate offenders and there was a consequent increased risk to members owing to the increased member: offender ratio. The phasing out of the existing weekend (overtime) arrangement and the implementation of a seven day establishment and the filling of vacancies would address compliance with essential service needs, would have a positive impact on unemployment and job creation and would have a positive impact on rehabilitation.

Discussion
Mr D Botha (ANC, Limpopo) referred to the budget rollovers, and asked why these had happened.

Mr Motseki (Deputy Commissioner) replied that the rollover had arisen because of engagements between the Treasury and the Department. Approval had been given for the building of four prisons, but a feasibility study had been requested. The money had been allocated but the feasibility study had meant that it could not be spent at that time. There was a long-term plan for the upgrading of facilities by the Department of Public Works. There was a joint plan over the MTEF period.

Mr Gillingham said that the money had been rolled over, not just because of the feasibility study, but because existing PPP contracts were being renegotiated.

Mr G Schneeman (ANC) referred to prison breakouts and asked what plans had been made to address this, for example with upgrading of facilities in the smaller towns.

Mr Motseki replied that DCS was currently targeting specific areas where it had been vulnerable. He felt that if employees followed policies, escapes would be impossible, and suspected that some escapes were generated from within the system. The Department was in the process of vetting employees and would try to recruit and train them adequately.

Dr Rabie said that, in the adjustment estimate of national expenditure, mention was made of four new generation prisons. Mr Gillingham had said that prisoners remained members of syndicates while in prison. He asked whether the new prisons would be built in rural or semi-urban areas, and suggested that rural areas would be preferable.

Mr Gillingham said that the current allocation for building was for Krugersdorp, Nigel, Kimberley and Leeuwkop, to assist with the existing facilities. The new generation facilities would be in other areas.

Mr Ralane asked about the financial implications of phasing out weekend overtime.

Mr Gillingham replied that there was an envisaged intake of 3 000 persons per annum, and the salary component of this was R401 million. The project would be phased in over three years.

Mr G Schneeman (ANC) asked for data on the overcrowding problem.

Dr Cwele referred to overcrowding and asked whether the task team had produced a progress report. There were constant complaints about awaiting trail prisoners but these only constituted about a third of the problem.

Mr Schutte said that there were a number of forums in the clusters and a lot of communication taking place.

Mr Gillingham said that the task team had been instructed to report back to the Portfolio Committee and offered to make this report available to the Joint Budget Committee. It was agreed that a written report would be submitted by 2 November 2004.

Dr Cwele said that some services had been privatised or were run in partnership with private enterprises. He asked how much of the budget went to those facilities and how much of the prison population was housed in these facilities.

Mr Gillingham said that Bloemfontein and Machado were the only two private facilities, and R562 million was budgeted for them. DCS was trying to renegotiate these contracts.

Dr Cwele referred to the Department's earnings of R2,7 million of which it had retained just under R1 million. He asked for some details on prison labour.

Mr Gillingham said that income was generated from the sale of items produced. DCS received R309 000 back and this was paid out in gratuities for the prisoners doing the work.

Ms F Nyanda (ANC, Mpumalanga) referred to employment and asked what criteria were applied when posts were advertised. In some provinces, people applied but had to pay to get the job. She said it was common to have to pay R3 000 in Mpumalanga.

Mr Motseki said it was regrettable that some employees had extorted money for posts. Posts had been centralised to do away with the problem and he was certain that it had not taken place in respect of current recruitment. This was another reason for the prioritised management of corruption.

Ms Mabe (ANC) said there was a serious problem in terms of management of overtime. She asked how the change would be implemented without standing on the toes of the unions.

Mr Motseki replied that the issue of overtime had not been easy to deal with. The average payment for a week's work was less than the average pay for overtime, and employees had included this in their long-term plans. In addition to the Treasury cutting back on the overtime allocation, the Department had felt it could not treat weekends as overtime. Work had to be done over weekends, particularly in respect of rehabilitation. It had been generally established that nine thousand people could be employed over the next three years. It had not, however, been easy to deal with labour. An agreement had been entered into to ensure that the allocated budget was run with for the rest of the year and no tension was anticipated with labour.

Mr Ralane asked the financial implications of breakouts and escapes.

Mr Ralane said that the members of the cluster had seemed to be communicating last year, but that this did not appear to be happening at present, as was shown by the anticipated negative effect on correctional officers of the increase in police salaries. He asked what was being done to balance the problems.

Mr Ndlovu asked why the Department had raised the salary comparison.

Mr Motseki replied that the Departments were working in one cluster and that all impacted on one another. Increased arrests placed a higher burden on correctional services and led to overcrowding. The issue of the safety of correctional officers was also a problem. It was thus unavoidable to have comparisons. It had been raised in this forum because the Department was appealing to the Cabinet to have some parity between the salaries of police and correctional services. The Department was engaging Treasury on this matter.

Ms J Sosibo (ANC) asked whether electronic monitoring was still being used and how much money had been allocated to it.

Mr Gillingham replied that this was a very sensitive issue. A pilot project had been undertaken in the Pretoria area, where people were tagged to monitor their movements. Tagging could tell about the person's movements, but gave no idea of what s/he was doing. It had been referred back for re-investigation.

Department of Defence (DoD) submission
Mr J Grundling (CFO) said that continuous interaction between Defence and other departments in the Justice and Protection services existed through the JCPS and IRPS clusters. This interaction led to the setting of objectives and themes as well as the identification of challenges per cluster. The decline of the budget in real terms as well as in terms of government expenditure and the GDP signalled a declining priority. The demand for force deployments had not taken account of this reality and the DoD had requested additional funding against the background of returning R1 billion to the NRF owing to favourable exchange rates. It was clear from the composition of the Defence budget that the personnel component represented a substantial part of the budget and should be rectified to ensure a proper balance between employees, goods and services and payment for capital assets. This was one of the objectives of the updating of the White Paper on Defence.

Defence had requested R59 279 million to implement the scarce skills and rural area allowance for selected health professionals but no additional funds had been approved, as the request was not deemed unforeseeable and unavoidable. Because of the consequent inability to implement the allowances for military health functionaries, military health was experiencing similar challenges to the Department of Health regarding the retention and availability of health professionals to be deployed in rural areas and current serving health professionals had indicated an intention to leave Defence for employment with reduced obligations and more lucrative remuneration packages. In view of the declining budget but growing demands on outputs, Defence had submitted four policy options for funding for the 2005/06 MTEF period: ammunitions disposal, maintenance and repair of facilities, integration of the corvettes and submarines and compliance with national health legislation. Other budgetary pressures related to those programmes that were experiencing rapid increases in outputs but where the resultant costs could not be accommodated within the baseline. These programmes were administration (Defence foreign relations), air defence, military health support and peace support operations.

In terms of the White Paper on Defence, the Defence Review and current deployments, Defence was under-funded with the result that the 2005/06 MTEF plan was neither affordable nor sustainable. It was foreseen that the updating of the White Paper on Defence and the Defence Review would have a crucial impact on the budget composition. The effective, efficient and economic implementation of the result of the updated White Paper on Defence and Defence Review would require a collaborative effort between members of the legislature, executive and administration. Additional funding would make compliance with legislative imperatives possible and empower Defence to fully support government initiatives, priorities and objectives.

Discussion
Mr Ralane said that it was approximately three months from the end of the financial year and Defence seemed likely to underspend. If expenses were as reflected in the preliminary outcomes, there would not be overspending. He asked what plans existed for revising strategic plans to address these issues.

Mr Grundling replied that in the 1997/98 Defence budget, there had been R427 million overspending because of a policy cut. From then, Defence had spent to within 0.07 of its budget. Last year, there had been overspending of R41 million on peace support, and R16 million had had to be returned. There were six months to go to the end of the financial year and there was considerable constructive defence expenditure in the last two or three months of each financial year. Nearly 40% of the budget was capital. There were also big maintenance contracts and contractors were paid according to milestones. There was a need to re-prioritise in order not to overspend. The Department accepted that a peace dividend had to be paid, but policy needed to take account of allocations, as there appeared to be a mismatch.

Dr Cwele asked what the skills were that were mentioned in respect of military health. A comparison had been made with the Department of Health, but they had special skills. He asked whether rural clinics were run, and if not, why there was a need for a rural allowance.

Mr Grundling replied that the 350 000 people mentioned in the report were given a comprehensive medical service. There were also specialist medical units, for example for maritime medicine. The rural allowance was required because sick bays, dental clinics and health clinics followed the deployment of units and bases and these were not necessarily in big cities. Defence had been involved in the human resources commission of the Department of Health when discussing the provision of incentives.

Mr Nene suggested that some of the issues would also have to be pursued at Committee level. The Budget Committee would be looking closely at cash flow projections.

Mr Ralane felt that the problem was that the Department was talking in isolation of the cluster. Some tradeoffs were needed in terms of government priorities. He felt that Committees needed to demand visible integration in the clusters. This had been successfully achieved the previous year, but had fallen off this year. The issue should perhaps be raised with the Ministers. In respect of cash flow, the revision of strategy plans became very important.

Mr Nene said that he would like to see integration going beyond this process and felt it might solve some problems. Integration was needed, not only at this level, but also at executive level.

The meeting was adjourned.