Department Budget hearings

Meeting report

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
2 March 2005
DEPARTMENT BUDGET HEARINGS

Chairperson: Ms T Tshivase (ANC)

Documents handed out:
PowerPoint presentation by Department Director-General
Department budget 2005/06

SUMMARY
Officials from the Department of Social Development (DSD) responded to Members’ questions arising from the presentation given by the Director-General on the previous day. The role and establishment of the South African Security Agency (SASSA) - which would come into existence on 1 April 2005 and be fully operational by April 2006 - was addressed, together with the status of its legislation. The status of disability and basic income grants was clarified. Problems of fraud in grant applications, problems experienced at pay points and problems and proposals for the food distribution programme were highlighted. Questions were asked about the equitable share system, particularly in relation to under-budgeting and overspending on conditional grants. The use of consultants, particularly in relation to IT systems, was questioned and explained. The Population Development Unit (DSD) reported on its work in areas including the Child Support Grants, which were the subject of further questions. The Department also gave a short presentation on the new service delivery model. Questions on the position of NGOs were raised and discussed. The shortage of skilled social workers was discussed, and the Department explained the steps being taken to address the problem.

Further issues relating to future reporting, delivery of services and planning were raised by Members who requested that the Department attend a future meeting to continue these discussions.

The meeting adjourned without a final decision on Budget Vote 19.

MINUTES
Mr C Pakade (DSD Chief Financial Officer) corrected an error in relation to the Special Allocation figures for 2007/2008. The projected loveLife groundbreaker figure should read R40 million, and the total operational budget would be adjusted accordingly.

Department briefing
Mr S Jehoma (Chief Director: Grant System and Administration, DSD) addressed the meeting on the establishment of the South African Social Security Agency (SASSA). He emphasised that this would be done in three phases. The first phase involved establishment of the Agency and a team of programme managers would be appointed by 1 April 2005. The second phase would involve establishment of systems, procedures and policies for the transfer of functions to SASSA, and ringfencing of finances and existing staff who would also transfer to SASSA, while improving the delivery of social security by the Provinces. The third phase would include the rollout of the new IT systems, the incorporation of all structures and a transition so that SASSA would be fully operational by March 2006. By then, standardisation of policies, procedures and systems would result in effective and efficient service.

Discussion

SASSA: Enabling legislation, reporting procedures and administration budget
Mr M Masutha (ANC) asked for clarification on the Department’s legal obligations after 1 April, when SASSA would be established. He queried whether the Social Assistance Act and the SASSA Act would be fully operative and whether the Department had undertaken a full assessment of the legal implications. Since the Department assumed legal responsibility to pay grants in the transitional phase, he would presume that liability for errors also followed, and he asked if the Department had authority to enforce compliance with procedures to avert claims.

Mr M Masutha pointed out that the Committee’s oversight function would change substantially in view of the changed responsibilities of Provinces and SASSA. He queried how often the Committee would receive reports on progress. He was concerned that the budget, although providing for steady growth in the administrative areas, did not seem to reflect the increased costs of administration linked to the hugely increased numbers of grants to be administered.

Mr S Jehoma (DSD) replied that the Department’s legal team was in the process of a full analysis of potential risks and liabilities. The Department was presently discussing Regulations to the legislation with Provinces, so that it was anticipated that the legislation (apart from Section 3 of the SASSA Act) would come into force very shortly. Section 3 dealt with delivery, which would be handled by the Provinces until April 2006. Committees would indeed be required to exercise greater oversight functions, in view of the delegation to the MECs. He confirmed that the legislation would also provide the Department with the mechanisms to ensure compliance and thus enhance the monitoring of service delivery. Although there were no sanctions for poor delivery, the administrative budget did allow for incentives such as increased staffing allocations to Provinces that improved their service or brought down their operational costs.

Mr S Jehoma stated that the Act provided for quarterly reports, but that reports on progress of the SASSA set-up would be provided to the Committee on a regular basis.

The budget provided for a steady growth in grant administrative costs, but increases were spread across the programmes, as improved service delivery was a component of all programmes. The R90 million budget for SASSA was included in the budget for Programme 4 (Social Assistance). Mr C Pakade (Chief Financial Officer, DSD) stated that National Treasury had been involved in the budgetary calculations for all budgets now presented, and was committed to ensuring the success of the programmes. Money would be transferred to SASSA for Programme 3 (Grant Systems and Social Delivery) and Programme 4 (Social Assistance) once SASSA’s accounts were open.

Basic Income Grant and Disability Issues
Mr L Nzimande (ANC) queried what the Department was doing to clarify the definitions and effect of disability grants, and what was being done about the basic income grant.

Mr S Jehoma (DSD) stated that the definition of "disability" had not yet been finalised and although he could not give an exact timeframe for completion, he could assure Members that the Department was committed to reaching finality. Disability grants had not lapsed, but since last year the Disability Management Initiative had been informing beneficiaries that they must, within three months, have their condition and status reassessed, to qualify for permanent disability grants. For this purpose DSD and the Department of Health had arranged for additional medical staff. The Management Information System was able to compile statistics of the types of disabilities and the medical practitioners assessing the cases, and exploitation of the system was now being identified and corrected.

On the question of the basic income grants, Mr Jehoma stated that the Department had co-ordinated a Commission of Enquiry that had made recommendations on a comprehensive social security system, but the final decisions rested with the policy makers, not with the Department.

Mr M Waters (DA) queried whether those who fell within the definition of "disabled" due to HIV or Aids were obliged or encouraged to enrol in the treatment campaign, Mr Jehoma replied that no such obligation existed.

Fraud Issues
Mr M Waters (DA) referred to a previous briefing which had announced a campaign to clamp down on fraud. He queried how many grants had been stopped, and whether there had been charges laid against individuals or officials. Mr S Jehoma (DSD) reported that he was unable to give statistics on the number of charges or the number of grants stopped. The initiative was intended to provide Provinces with mechanisms and measures to identify fraud, but the full reporting systems would be properly operational from 1 April. In due course the Minister would be publicising results and cost savings made from the exercise.

Mr M Masutha asked where integrity of data started, and whether grants were processed on the basis of information given by applicants, or whether there was an independent verification process.

Mr S Jehoma (DSD) conceded that there was currently a range of weaknesses within the data system, but that R20 million had been budgeted for improvement of IT systems, training of personnel, and increased staff to alleviate pressure. At present there was no independent verification process, but the future norms and standards process should address these issues.

Pay points
Mr M Waters pointed out that long queues still existed at pay-points, and asked how minimum standards for pay points were to be assessed and maintained.

Ms H Bogopane-Zulu (ANC) added that there were instances where no payments were made at all if the responsible staff member was away from office. Any new systems must be structured so that there was always consistency, despite any intervening circumstances.

Mr L Nzimande asked for clarification on the position of existing cash-payment contractors.

Mr M Masutha pointed out that the Act provided that SASSA should be the "sole provider", and queried whether that definition would exclude use of contractors.

Mr S Jehoma (DSD) replied that the Department did not wish to disrupt the current system unduly, and had to bear in mind that different areas had different needs. Whatever systems were adopted, they would have to comply with the need for effectiveness and efficiency. Some pay points would have to close. New points would have to comply with norms and standards for location, shelter, ablution facilities and access to water.

Mr Jehoma agreed that the term ‘sole provider’ still needed to be clarified. However, SASSA would not have capacity in the short and medium term to undertake all payments itself. Therefore contractors would be used, but contracts would be reviewed and there would not merely be a continuation of the present (often unsatisfactory) system. A payment model was being developed that would ensure an integrated quality of service. SASSA technically bore the responsibility for payment, and would therefore still be accountable, even if it was in fact delegating the setting up of ATMs, provision of security and vehicles and payment processes.

The Chairperson reported that some beneficiaries – particularly the elderly – were subjected to undue influence by cash-payment contractors, and persuaded to channel their grants into other schemes. She asked whether these difficulties had been addressed.

Mr Jehoma reported that the new Act allowed SASSA to regulate deductions from payment of the grants, so that there was less likelihood of undue influence, and all contractors would be placed under strict conditions relating to the type of other work they could undertake, or the types of additional services they could offer to beneficiaries.

The Equitable system: Under-budgeting and over-spending
Mr M Masutha asked for clarification on the under-budgeting in some provinces and over-spending by others. He queried whether refunds could be made and if Provinces would be able to retain savings for use in other activities.

Mr L Nzimande reported that some Provinces had complained that they had been operating on deficits in trying to meet their obligations to provide services. He queried how the equitable share principle would address these problems. He also asked how the equitable share would affect new applications and whether they would be dealt with on a "first-come, first-served" basis.

Mr S Jehoma (DSD) answered that previously Provinces had been allocated amounts but might have had to "top up" from their Provincial budgets. The Division of Revenue Act had made provision for under-expenditure in one province to be able to be moved to another Province. National and Provincial Treasuries had agreed to top up any shortfall so that the Provinces did not lose when the focus shifted to SASSA.

The Department was attempting to make its budgeting more accurate as well as improve its delivery. For future applications, there would be a real risk of national overspending, as it was notoriously difficult to budget accurately for Social Security. Backlogs, demographics, health, mortality rates and numerous other factors affected the spending. Other countries had handled shortfalls by separating out the "big money" (the entitlement to benefits and the administrative costs) from shortfalls. Shortfalls would arise either from incorrect handling by the Accounting Officers (which would be dealt with appropriately) or from under-budgeting, which would then need to be addressed by the fiscus.

Despite the risk, it would be easier to control over or under-spending at source. Overall funding would be held in one source. Transfers of money would be made to Provinces on a weekly basis into an account reserved only for payments. On a daily basis it would be possible to monitor the balances in each account held by Provinces. The new regulations required that quarterly reports be given to the Select Committee on Finance and the NCOP, but reports could be drawn more often from the system.

Mr C Pakade (DSD) added that daily reports would help the Department to calculate the next month’s spending more accurately. A national team, who would be available to travel to Provinces, would be appointed to manage the conditional grants, troubleshoot any problems as they arose, and assist in handling backlogs.

IT Systems and use of consultants
Ms H Bogopane-Zulu (ANC) pointed out that the current IT systems were open to many types of abuse, but improved IT systems could be used as a management tool by SASSA. She questioned the use of consultants, indicating that often the simpler systems were fully workable and suggested that perhaps the Department was seeking solutions in the wrong places.

Mr S Jehoma (DSD) agreed that the IT systems needed major overhaul. R20 million had been budgeted for a data quality improvement project and work was being done on better interface between other governmental bodies. The Social Assistance Act also provided that confidential information could be released by those agencies to combat fraud and abuse

On the use of consultants, Mr Jehoma stated that procurements could only be done after a feasibility study and analysis. Mr Jehoma stated that the use of consultants was being phased out as in-house capacity was increased. At present three Department staff managed 30 consultants. Other countries’ models had been studied, and recommendations made to Treasury, but there was presently debate between the Department and Treasury as to what exactly could be done. An upgrade of the IT system alone, without upgrade of skills, would not address the problems.

Unit for Population Development: Role and function.
Mr M Masutha reminded Members that demographic shifts made it very difficult to budget accurately and asked what role the Population Unit played in examining demographic trends.

Ms J Chalmers (ANC) asked whether any studies had been done on the number of families whose breadwinner had died, the impact of the death, the age of the household head, and whether such families were receiving grants.

Mr L Swart (Director: Population and Development, DSD) replied that over the last five years his Unit had concentrated on developmental issues and research. He cited a number of publications and fields of trend analysis, which included disability, impact of service delivery, HIV and Aids, poverty alleviation, life expectancy, youth numbers and expectations, and statistics on economically active groups. His Unit was also busy with compiling the register of orphaned and vulnerable children (in conjunction with the Departments of Home Affairs and Education), and had also worked in the areas of child-headed households. A study on youth expectations and youth integration in the economy was under way.

The Unit did not generate statistics for the Department, but did utilise data from Statistics SA to inform policy and support implementation processes.

Child Support Grants
Ms H Bogopane-Zulu queried what studies had been carried out on the child support grants as she believed that there was great abuse of the system, with the existence of the grant seemingly increasing teenage pregnancies.

Mr S Jehoma replied that there would always be a minority who abused any system but he doubted whether the existence of the grant would be an incentive that would radically alter patterns of behaviour. Ms Bogopane-Zulu took issue with this, and stressed that youth-behaviour patterns were the vital component.

Mr L Swart (DSD) stated that the Population and Development Unit had participated in a study on fertility rates with the Department of Health, and the final report would be available soon. 150 recipients of the child-support grant (identified through the SOFPEN database) had been identified for study. They fell in the 16-20 years age group, and the study would include an investigation into perceptions and motivation for applying for grants, the impact of the grant, and what use was made of the funding. If necessary, this could be followed by a national population survey.

Mr K Morwamoche (ANC) questioned the use of consultants in this study, as he felt the information was readily available from hospitals and clinics. Mr L Swart (DSD) replied that his Unit lacked capacity in quite specific areas of expertise, but would be working very closely with the consultants.

Development: The new service delivery model
Ms N Kela (Chief Director: Welfare Services and Transformation, DSD) reported that her Unit focused on development and delivery of social services, excluding social security. Over the last ten years the emphasis on social security had meant that social services had not received as much funding or attention from Government or NGOs.

The new service delivery model tried to address these issues, to develop policy and a legislative framework for improvement, to enhance community development, and comply with international frameworks. Social integration was an important component. Where grants were awarded, the recipients’ circumstances would be fully addressed to identify the reasons for their needs (which would help in identifying future programmes) and to assist the recipients in integrating successfully in society.

Social services were presently under-resourced, but the service delivery model was aiming at minimum standards in infrastructure, equipment and information management systems. The service delivery model clarified the roles, implementation process and change control processes in the shift from Provinces to SASSA, and Provinces were being asked to implement the service delivery model in conjunction with other policies. Client satisfaction surveys would give some feedback and better incentives would assist in producing better service, but clearer contracts and internal performance management systems would also be part of this process.

Other Departments and NGOs were involved in programmes, at national, local and provincial levels. Many NGOs had claimed that they were unable to deliver because of lack of funding and skills shortage, particularly of social workers. In the past there had also been no monitoring of their services, nor had they been accountable. The new model investigated how and when contributions were made (including the question of improved social worker salaries) and what processes should be implemented.

Mr M Waters asked how budgets could be drawn up for NGOs in view of their constantly changing status. Ms N Kela (DSD) replied that the Policy on Financial Awards proposed a multi-year funding process, and took account of priorities, identified from time to time by Government. The Department had a four-year programme to build the capacity of smaller NGOs

Mr M Masutha asked whether there was a plan to support the new policies with new legislation or to examine whether they dovetailed with existing legislation. He pointed out that some legislation made provision for a range of services to be provided by NGOs and asked if the Department had been involved in costing exercises in respect of those clauses. He asked specifically whether legislation was contemplated for the food distribution scheme, which involved constitutional issues, as he was aware that it had been run only as a pilot project.

Ms N Kela (DSD) replied that in many cases the legislation did not reflect the current position. A directive had been given to broaden the scope of new policies with a view to introducing legislation. Costing of legislation had been built in to all the models.

On the question of food relief, there were no plans to introduce legislation. The food relief programme was initiated in response to a particular problem, in 2002, of spiralling prices and shortages. The Department was now investigating a new conditional grant, linked to the equitable share that would not concentrate only on food relief, but would enable Provinces to respond to needs in a more flexible way.

Ms I Direko (ANC) suggested that the Department examine the mechanics of the food relief, as she stated that there were many abuses of the system, and that NGOs should be more closely involved in the distribution programme. Mr C Pakade (DSD) replied that the new model would allow for greater co-operation with relevant NGOs, and would set up mechanisms for feedback and accountability.

Social workers
Mr M Waters pointed out that the stated ratio of social workers was one social worker to 5 000 per head of population, which would give a total of 8 964 social workers. This differed substantially from the recommended international ratio of 1: 1500. He pointed out that there were in fact only 2461 social workers in the Department. He asked what measures had been taken to attract and keep social workers in the Department’s service.

Ms N Kela replied that social workers were classified as a scarce skill and there were indeed great discrepancies in the ratio numbers, but that even if the ratios improved, it was still vital to look at service norms and standards. The Public Service Commission was busy drafting job descriptions for social workers, and were considering in-house training, working conditions and salaries. Consideration also needed to be given to attracting students to the field. Mr C Pakade (DSD) added that the current budgetary increases would affect current social workers only and would not improve the ratios. Budgeting was often a political exercise involving competing demands and although the Department was involved in the provincial and national Treasury recommendations, the Budget Council made the final decisions on allocation.

Ms I Direko asked whether there was any incentive scheme to attract social workers to rural areas where the greatest needs arose. Ms N Kela stated that any such incentives would need to be supported by the Committee in order to re-budget but were certainly possible in theory.

Combined services
Mr L Nzimande expressed disquiet about the combination of health and welfare services.

Ms N Kela replied that combined services had engendered detailed debate and there were questions whether social services would warrant a separate department, once the social security function was removed. The Department was negotiating for a budget increase on the basis that despite the establishment of SASSA there was a huge area of work, which would need to be addressed.

General
Mr M Masutha asked if the Department could give an indication of what new programmes were proposed.

Ms I Direko (ANC) stressed that in all areas the focus should now be on delivery. She felt there had been too much emphasis on investigation and consultation while not enough attention had been given to the urgency of actual delivery to combat problems.

Ms H Bogopane-Zulu felt that more creative long-term solutions needed to be found, as she felt that the current system was at best merely patching-up problems and needs as they arose. She asked that the Minister and the Director-General together engage in discussions with the Committee where all concerns could be aired.

No final vote was taken on the budget, as there were still further issues to be addressed by the Department.

The meeting was adjourned.