Departments of Health and Social Development Annual Reports: briefing

Meeting report

SOCIAL SERVICES SELECT COMMITTEE
15 November 2004
DEPARTMENTS OF HEALTH AND SOCIAL DEVELOPMENT ANNUAL REPORTS: BRIEFING

Chairperson: Ms J Masilo (ANC)

Documents handed out:
Department of Health: Annual Report 2003/04 (available at: www.doh.gov.za)
Department of Health: Presentation on Annual Report 2003/04
Department of Social Development: Presentation on Annual Report 2003/04
Department of Social Development: Annual Report 2003/04 (available at: www.socdev.gov.za)

Department of Social Development delegation: Dr M Mabetoa (Chief Director: Children, Youth and Family), Dr C Kganakga (Chief Director: HIV and Aids), Ms S Luke (Chief Director), Ms D Snyman (Head of Budget Office), Mr C Phakade (Chief Financial Officer), Ms V Nhlapo (Deputy Director-General) and Mr S Jehoma (Chief Director: Grant Administration)
Department of Health delegation: Mr G Muller (Chief Financial Officer) and Ms N Matsau (Deputy Director-General)

SUMMARY
The Committee was briefed by the Departments of Health and Social Development on their Annual Reports. The Department of Social Development achieved an unqualified audit report. The Department of Health received a qualified audit report as it failed to comply with the Public Finance Management Act.

The Department of Social Development reported major under spending by some provinces due to lack of capacity. However, in Gauteng Province the incapacity did not persist throughout the financial year.

MINUTES

The Committee considered the annual reports of the Departments of Health and Social Development. The meeting started later than scheduled because there were insufficient members to form a quorum.

The Chairperson noted that the Committee had been away for two weeks on oversight visits. Hence they had not had sufficient time to read the annual reports. Most members had received the annual reports only a few hours before the meeting.

Ms Matsau said that the Department of Health was not ready to brief the Committee. They had initially agreed to give the briefing on Tuesday 16 November 2004. Unfortunately, on Friday 12 November, they were instructed to conduct the briefing on Monday 15 November instead of Tuesday. The Department of Social Development had the same problem.

The Chairperson apologised for the inconvenience caused. However, it was important that the Departments presented their annual reports on Monday since there was no other time available this year. The only other time would have been next year and this would not have been very suitable because it would have been towards the end of the financial year.

Department of Social Department presentation
Mr Phakade as Acting DG made the presentation. He outlined the vision and mission of the Department. He went on to highlight some of the achievements the Department had made in the year. The Social Assistance Act (SAA) and the South African Social Security Agency Act (SASSA) had been passed by Parliament. Regulations in terms of the Social Assistance Act were expected to be promulgated soon. The SAA provided for the policy shift that reversed the assignment of the administration of the 1992 Social Assistance Act to provinces. An assessment tool for establishing eligibility for disability and care dependency grants were developed. A preliminary study on the nature, causes and needs of child headed households had been completed. A draft policy on the Old Age grant and an initial draft policy on deductions on social grants had been completed.

A total amount of R1, 2 billion was transferred to provinces as conditional grants (seven to eight year olds) for the Child Support Grant. The eligibility criteria and conditions for this grant were uniform in all provinces. However, targets and budget allocations differed because they were influenced by the degree of poverty in certain provinces. The lack of dedicated capacity to implement this project both at national and provincial levels remained a challenge. The lack of birth certificates required for registration of children was another challenge. These problems had since been solved by appointing additional contract staff and conducting joint registration campaigns with the Department of Home Affairs.

The Department had compiled a comprehensive report on social security service delivery. It had also done data interrogation in all nine provinces in order to detect fraud and corruption. A national fraud hotline was launched to facilitate the reporting of fraud. The hotline number was 0800 60 10 11.

Under spending remained a problem in some provinces. The North West province could only manage to spend 48% of its child support grant budget (52% under spending). This was caused by delays in processing of applications due to lack of capacity. The Gauteng province spent 15% of the food emergency relief allocation (85% under spending). This was due to delays with the identification and profiling of households and lack of capacity. Contract staff were appointed only in the second half of the year.

Discussion
Mr B Tolo (ANC) (Mpumalanga) said that the Committee could not fully interrogate the report because it had not had time to study it. He noted that lack of capacity was always cited as a reason for under spending. He asked what was the rationale for transferring large sums of money to provinces knowing very well that provinces could not spend the money. This problem was experienced across all government departments. He wondered why departments did not establish the necessary capacities in provinces before transferring money to them.

Mr Jehoma replied that the Department allocated funds to provinces using information gathered during the 1996 census. There had been serious migration from the Eastern Cape and North West provinces to Gauteng and Western Cape provinces. This had led to serious overspending in Gauteng province. The R1.1 billion initially allocated for the Child Support Grant had to be increased to R1, 2 billion. The target set for children nationally was 929 340 grants and the Department had exceeded it by registering close to one million children. Thus one should not assume that because of under spending there are a lot of children who were supposed to have been registered were not registered. The lack of capacity could be accounted for by the optimum use of resources. The money was allocated in February and the Department had hardly a month to prepare itself for the implementation of the programme. It took about two to three months to recruit additional staff. The necessary capacity was acquired around June or July. The lack of capacity did not persist throughout the year. It was the first time that the Child Support Grant had been extended in the middle of a year.

Dr Kganakga added that the Department was trying to assist provinces to build the necessary capacity. Only a few provinces under spent their budgets. The Department did not wait until there were problems before it assisted provinces. All provinces were trained at the same time. Some provinces did not have non-governmental organisations to assist them in spending the budget. The Department would train NGOs in provinces to ensure that they had the necessary capacity to assist provinces in spending the budget. Large portions of the budget would be disbursed at the beginning of the year as from the next financial year.

Mr Tolo asked if it was true that the National Department had transferred money towards the end of a financial year. This had been cited as one of the reasons for under spending by provinces.

Mr Phakade agreed that in the past monies were transferred very late to provinces but this had since changed. This was addressed by a new policy to earmark transfers in terms of a payment schedule. Unless there were special circumstances, monies should be transferred at the appropriate time. Funds could only be withheld when there was gross, unexplained under spending. There was a debate about whether the money should be transferred in installments. The Department was trying to take steps to ensure that there were no unnecessary delays that could lead to fiscal dumping at the end of a financial year.

Ms Madlala-Magubane (ANC) (Gauteng) asked if the Child Support Grant now covered children who were thirteen years old. She asked the Department to furnish the Committee with documents on the audit of old age homes.

Mr Jehoma replied that the grant was extended to children of nine and ten years in the current financial year. Children up to 13 years would be able to register for the grant as from April 2005.

Mr Tolo asked if the Department was winning the war against fraud in relation to the Child Support Grant. Was there a strategy to ensure that the war was won?

Mr Jehoma replied that fraud was not confined to the Child Support Grant. All other grants had similar problems. The Department was winning the war against fraud. A strategy to combat fraud had been developed two years ago and a national fraud hotline was in place. Numerous investigations had been conducted following reports of fraud. Some cases had been referred to the Scorpions. The Department also conducted regular checks on data and all provinces had units to investigate cases of corruption and fraud.

The Chairperson said that the Committee had discovered that in Kwazulu-Natal some Home Affairs officials has sold application forms for grants for R200. The applicants were forced to sign agreements to the effect that they would pay 10% of the money they would receive to the officials. Some people were getting grants on the strength of false doctor certificates. She asked if the Department was monitoring such criminal and fraudulent acts.

Mr Jehoma replied that the sale of certificates was a problem. It was difficult to trace this especially given the lack of support from the public. The Department was winning the war against corruption but it would take sometime before the problem was eliminated.

Ms H Lamoela (DA) (Western Cape) requested the Department to provide the Committee with the second draft of the national policy on families and the third draft of the integrated strategy on victim empowerment.

The Department agreed to send the documents to the Committee.

The Chairperson said that under spending was a crime. She added that the Older Persons Bill had been deferred until further notice because it was not properly costed.

Mr Tolo asked what would remain of provincial Social Welfare Departments once the national Social Security Agency was in place.

Mr Phakade replied that social security had always received major attention and crowded out welfare services. Provincial social welfare departments would now have opportunities to focus on other issues. There were other issues that provinces and the national Department were supposed to pursue. The Department was finalising a service delivery model for welfare services. It outlined the minimum standards with which government and other stakeholders that delivered welfare services had to comply. There was a general understanding that the Department should not be absorbed by the Department of Health [as prior to 1996].

The Chairperson asked how far the Department had gone in replacing the manual systems in provinces with computerised systems.

Mr Jehoma replied that the Department would be in a position to roll out a common information technology platform once the Agency was established. The manual system would be replaced as from March 2005.

Department of Health presentation
Ms Matsau made the briefing. The Department had a ten point plan which covered the core functions of the Department which included decreasing morbidity and mortality rates, improving the quality of care and revitalising the public hospital services. The Department focused on the integrated management of childhood illnesses with specific focus on polio and measles. A national sexual assault policy had been developed. The number of malaria cases had decreased by 6%. However, the number of fatalities had increased. There was a need to strengthen the TB programme. The detection rate of TB was very high but the cure rate remained low. There were 2 582 facilities providing voluntary counseling and testing and this indicated an increase from 1 500 in 2002/03. More than 30 000 people received counseling on HIV/AIDS and sexually transmitted infections. 70% of them accepted testing. More than 300 clinics in the Eastern Cape, Kwazulu-Natal and Mpumalanga would be upgraded to create additional space for voluntary counseling and testing.

Mr Muller said that the Department had received a qualified audit report because of conditional grants. The Auditor General found fundamental deficiencies and non-compliance with the provisions of the Division of Revenue Act, 2003. Section 21(1)(c) required funds to be withheld in cases where there was significant under spending and non-achievement of objectives. In spite of grants being under spent, transfers were still made. In 18 instances, under spending of conditional grants amounting to R279 million occurred in the provinces for various programmes. Financial and operational monitoring of compliance with regard to conditional grants had not been adequately performed. A fixed asset register was maintained on the LOG-TEK/ LOGIS system but it was not integrated with the Basic Accounting System. Systems to control the movement of assets and to ensure custody and safeguarding thereof were inadequate. There was also non-compliance with the Public Finance Management Act and Treasury Regulation on transfer payments to Non Governmental Organisations (NGOs). NGOs did not supply audited financial statements and quarterly reports as required by the funding agreements. The Department also transferred funds without obtaining assurance that the beneficiary had implemented effective, efficient and transparent financial management and internal control systems. Internal audit was not functioning as was envisaged and risk management was not fully developed.

Discussion
Mr Tolo said that each and every government department had to maintain its assets register and should know all the assets it owned. The Auditor General was right to say that the Department could not give money to NGOs which did not account for their expenditure. It was important to know if the Department got value for money. He added that he was concerned that pharmaceutical companies were charging administration fees for chronic medications and this was affecting consumers very badly.

Ms Matsau replied that pharmacies were not allowed to charge administration fees. The Department found out that pharmacies were charging administration fees after it had a meeting with pharmacists. Pharmacists claimed that they were not able to survive on the single exit price but could not provide evidence to prove this. It was illegal to charge administration fees.

Mr Muller agreed that it was the Department's responsibility to keep its own asset register. The Department did have a register. The only problem was that it was not integrated with the Basic Accounting System.

Mr Tolo asked if it was really illegal to charge administration fees. He felt that there was a loophole in the law that pharmacists were using to charge administration fees.

Ms Matsau replied that the law was very clear on what should happen. There would be some amendments to the law to close the loophole.

Mr Tolo said that the primary health care system was not functioning properly. There were always medicine shortages at clinics. He wondered if it was the fault of the provinces which were not ordering medicines in time. He was tempted to say that the system had failed.

Ms Madlala-Magubane said that it seemed like the Department had not yet developed a strategy to deal with the issue of screening. Many women were dying. The Natalspruit Hospital in Gauteng province was built on a dolomite mine. There was a promise to build another hospital. She asked if the distribution of wheelchairs and hearing aids was the competence of the Department of Health or Social Department.

The Chairperson agreed that there were shortages of medicines in many rural clinics. She said that each time she bought medicines on medical aid, pharmacies charged her R25 per item. She felt that the 4 700 wheelchairs distributed by the Department were a drop in the ocean as there were many disabled people in the country.

Ms Matsau replied that the management of drugs and other stocks in provinces was very poor. There was never a time where there were no drugs in the country. The problem was either provinces did not place orders on time, pay the suppliers or that the suppliers did not deliver on time. The Department was continually monitoring this situation.

The meeting was adjourned.