Department, ATNS and SAMSA Annual Reports: hearings

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
12 October 2005
DEPARTMENT, ATNS AND SAMSA ANNUAL REPORTS: HEARINGS

Chairperson:

Department Annual Report: powerpoint presentation
Department Annual Report (see Appendix)
Air Traffic and Navigation Services Annual Report (document awaited)
South African Maritime Safety Authority Annual Report (document awaited)
Department Budget Vote 33 (available at www.treasury.gov.za)

SUMMARY
The Department briefed the Committee on its progress in the areas of policy development, service delivery, public entity oversight, and transport regulation. The Department had underspent by R99.8 million on its total budget of R6.8 billion, mainly due to a lack of capacity at provincial level. The Department’s audit report was qualified, and irrecoverable debts of R20.8 million were written off. Members were concerned about the unauthorised expenditure listed in the audit report, and questioned the Department about its high vacancy rate and staff training programmes.

Air Traffic and Navigation Services (ATNS) and the South African Maritime Safety Authority (SAMSA) very briefly sketched their performance in 2004/2005, and the Committee questioned whether SAMSA possessed a clear mandate and purposeful budget.

MINUTES

Department Annual Report briefing
Ms M Mpofu (Department Director-General) briefed the Committee on the Department’s progress in 2004/2005 according to the categories of policy development, service delivery, public entity oversight, and transport regulation. In the area of public entity oversight, the Department had revised and published the Road Accident Fund Amendment Bill, and convened an Interdepartmental Committee for Road Accident Victims.

The National Land Transport Transitional Act (NLTTA) required that provinces create Provincial Land Transport Frameworks (PLTFs) and that municipalities prepare Integrated Transport Plans (ITPs). In 2004/2005 eight provinces completed their PLTFs and 80% of municipalities completed their ITPs. Training workshops were held in all nine provinces to increase awareness of the NLTTA, and parts of the Act were implemented in Bohlabela, Kgalagadi, OR Tambo and Uthungulu District municipalities.

The Department underspent by R99.8 million on its total budget of R6.8 billion, mainly due to a lack of capacity at provincial level. Some of the items on which the Department underspent were: migration to the new National Traffic Information System (NaTIS), for which payments were made late; policy development, for which there was a shortage of staff; and implementation of the NLTTA, for which there was a lack of provincial capacity.

Mr D Pretorius (Department Chief Financial Officer) informed the Committee that the audit report qualified the Department’s financial statements ‘for the first time in many years’. Among the items qualified was an amount of R960 000 for a late interest payment on funding for migration to the new NaTIS system. The Department reported irregular expenditure of R1.25 million in 2004/2005, and unauthorised expenditure of R20.8 million was written off in those cases in which a response was received from the State Tender Board. The Department was in the process of developing a best practice model for Driving License Testing Centres that did not comply with the National Road Traffic Act.

Discussion
Mr L Mashile (ANC) asked how many bicycles were distributed as part of the Department’s non-motorised transport programme. Ms Mpofu replied that 11 000 bicycles were distributed in rural areas where there were no public transport systems. The Department was focussing the programme in the north coast of KwaZulu-Natal and Limpopo Province, and intended the bicycles for schoolchildren, active youth, and, to a lesser extent, economically active citizens. Department reviews of the programme showed a significant demand for bicycles. As some areas lacked maintenance facilities for bicycles, the Department was adopting a dual approach to non-motorised transport whereby systems and infrastructure would be provided together.

Mr Mashile enquired whether the problem with the Department’s fixed assets register occurred at provincial or national level. Mr Pretorius answered that the fixed assets register listed the assets purchased by the Department. A lack of capacity in the finance section resulted in long outstanding debts not being properly followed up. The Department aimed either to recover or write off outstanding debts of R300 000.

Mr Mashile asked which body was responsible for ensuring that Driving License Testing Centres complied with the National Road Traffic Act. Mr Pretorius responded that the Department was an inspectorate for the testing centres with the power to make recommendations but not the power of enforcement. The non-compliance of testing centres was mostly due to mismanagement rather than a lack of funding, and the Department would request that specific shortcomings should be listed on the audit reports of the testing centres, rather than on the Department’s audit report.

Mr Mashile asked whether the Department had taken action against any staff member who had committed it to unauthorised expenditure. Mr Pretorius replied that the Department took disciplinary action wherever possible, and some cases were referred for legal action.

Mr O Mogale (ANC) felt that the Committee could only exercise its oversight function properly if Members received the relevant documents prior to the meeting with the Department so that comparisons could be made with previous reports and financial statements. The Chairperson clarified that this was a matter of Parliament’s document resources as the Department had submitted its Annual Report before the deadline. He agreed that the Committee should be given a second opportunity to engage with the Department’s Annual Report.

Mr Mogale noted that the Department had underspent by R19.9 million on its Arrive Alive programme for April, and queried whether the Department should make this programme year-long. He also commented that the interest payment on a late payment to a service provider, and the irrecoverable debts were unsatisfactory items in the Department’s audit report.

Mr Pretorius responded that the Department’s Arrive Alive team was attempting to make the programme year-long and had extended their contract beyond the Easter period. The interest payment of R900 000 on late payment of a service provider was the result of the Department committing itself to a contract without the available funds.

Writing off debts was not a practise of the Department, and irrecoverable debts were only written off at the recommendation of the state attorney. The R20.8 million for unauthorised expenditure was written off after the Department made a number of representations to the Standing Committee on Public Accounts (SCOPA), yet was unable to recover money from Department officials. As many testing centres had funding difficulties, it could be in the interests of the state to write off the 3% of driving license fees that testing centres were required to pay to the Department.

Mr Mogale stated that the vacancy rate of 39% in the Department was unacceptable. Ms Mpofu explained that new posts had not been filled since the completion of the restructuring and expansion process in the Department, and the vacancy rate was highest at the upper skills levels, where most of the restructuring took place.

The process of filling posts requiring specialised skills took up to a year, and the vacancy rate was exacerbated by the transfer of officials to other government departments. The high degree of mobility of officials was systemic in the public services, and the Department was losing its specialised skills to the private sector and its administrative functions to other government departments. There was currently no framework for regulating the movement of officials across departments.

Mr Mashile enquired whether the Department was running training programmes that allowed it to secure contracts with students completing certain qualifications. What was the status of the Department’s learnership programmes?

Ms Mpofu replied that the Department was directed by a Minmec transport legotla to formulate a training strategy that included a bursary programme. However, labour relations law did not allow employers to bind trainees to contracts or compel them to pay back bursaries. This matter, as well as the relationship between learnerships and community development workers, should be debated across the public services. The Department was running a number of training programmes through its Sector Education and Training Authority (SETA).

Mr Mashile asked whether the Department had resolved the funding difficulties experienced by transport authorities. Mr K Pillay (Chief Director: Public Transport Subsidy Management) answered that the Department established transport authorities to improve the efficiency of transport systems, and these authorities should investigate optimum funding models.

The Chairperson observed that the Road Traffic Management Corporation (RTMC) was unaccounted for, and the memorandums of relations between the Department and public entities had not been reviewed. What was the effect of the credit card drivers’ license manufacturing contract on the Department’s financial statements? Mr M Luyt (Chief Director: Public Entity Oversight) clarified that the Department was in the process of signing performance agreements with public entities.

Mr Pretorius added that the Department was aware when it entered into a contract for credit card license manufacturing that this process would be repeated every five years. Therefore the service provider purchased assets on behalf of the state, and the contract stipulated that the Department would pay less for credit card licenses as the number of licenses required increased.

Air Traffic and Navigation Services Annual Report briefing
Ms A Mlambo (Air Traffic and Navigation Services: Management Accounting) briefly summarised the performance of Air Traffic and Navigation Services (ATNS) in 2004/2005. ATNS recorded the fewest delays and the second lowest tariffs among the world’s 40 commercialised air navigation service providers. However, tariffs increased by 22% in 2004/2005. The increase in operating profit by 92% was mainly attributable to the increase in revenue of 25%, and partly offset by the increase in operating expenses of 15% (including a 16% increase in staff costs).

Discussion
Mr Mashile asked why most parastatal organisations used PriceWaterhouse as their auditors. Ms Mlambo replied that ATNS tendered for auditors according to Public Finance Management Act (PFMA) regulations.

South African Maritime Safety Authority Annual Report briefing
Mr I Blackie (South African Maritime Safety Authority: Chief Financial Officer) said that the South African Maritime Safety Authority (SAMSA) had a high liquidity ratio as it had few liabilities. The audit report was unqualified, and 80% of the matters raised by internal audit had been addressed.

Discussion
The Chairperson noted that SAMSA possessed a large asset base ‘without a purposeful budget’. Mr L Haloudi (SAMSA: Acting Chief Executive Officer) replied that SAMSA was drawing up a budget and investment plan in which it was considering involvement in other African countries. The Chairperson suggested that Mr Haloudi had been appointed as CEO to sort out certain difficulties in the organisation and asked what these difficulties were. Mr Haloudi answered that SAMSA was undergoing continuous restructuring.

Mr Mashile enquired what the status was of the issues relating to internal controls that were identified in the Auditor-General’s report. Mr Haloudi responded that most of these issues had been dealt with.

The Chairperson reiterated that SAMSA seemed to lack a mandate focus, and he queried what the core business of SAMSA was and how it was building capacity for this. Ms Mpofu conceded that the mandate focus of SAMSA was unclear and the Department was in the process of agreeing shareholder compacts with agencies like SAMSA, which might yield further mandates for SAMSA.

Mr Mogale asked how SAMSA were involved in dealing with oil spills. Mr S Modak (SAMSA) replied that, in response to an oil spill, SAMSA would form a joint response committee along with salvage workers, the Department of Environmental Affairs and Tourism (DEAT) and Oil Pollution Control SA (OPCSA). SAMSA chaired this committee, which would determine the appropriate action to be taken. The Chairperson queried whether SAMSA ‘tripped up’ over other agencies in responding to oil spills. Mr Modak answered that the joint response committee was a proven system.

The meeting was adjourned.

Appendix
The Department of Transport - Library

Mission

The NDOT Library's mission is to provide an appropriate, comprehensive and dynamic development information service to library clients in the correct quantity with the required quality.

• To keep SA transport sector abreast of local and international transport issues and trends.
• To enhance the quality of information within the transport arena.
• To take advantage of technological advances to enhance the library, and improve service delivery.

In achieving it's mission the NDOT library undertook to:

• frequently add value to the information by displaying or re-packeging it in a form which suits the people who need it.
• order and finds a wide variety of information materials from local and foreign sources.
• co-operate with other libraries regionally ,nationally and internationally to encourage resource sharing.
• To find ways to respond effectively and innovatively in meeting user expectations

Vision

To create, shape and develop a knowledge environment that will ensure a seamless flow of information. To integrate new technology into current services and to become a fully-fledged virtual library.