Briefing by Department on 2005/6 Final Expenditure Figures

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Justice and Correctional Services

02 May 2006
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JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE
3 May 2006
BRIEFING BY DEPARTMENT ON 2005/6 FINAL EXPENDITURE FIGURES

Chairperson:
Ms F Chohan-Kota (ANC)

Documents handed out
Presentation by CFO on Final budgetary figures for 2005/6 financial year
Chairperson’s response to Sunday Times letter on Department underspending
Sunday Times article "Justice bosses cooked books" – 9 April 2006
Sunday Times letter to Chairperson on Department underspending
Budget Reprioritisation Process 2005/6
Spreadsheet detailing Department’s re-prioritisation per programme for 2005/6

SUMMARY
The meeting served as a follow-up to an earlier meeting with the Department in February in which it presented its expenditure for the first nine months of the 2005/6 financial year. The Department’s outgoing CFO presented the Department’s final 2005/6 expenditure figures, which now included expenditure 4th quarter expenditure.

In February the Department had projected an underspending of R120 million, which grew to R309 million as at 26 April 2006. The final underspend figure for 2005/6 was however reduced to R20 million, with R289 million of the R309 million being requested as roll-overs from the National Treasury due to the finalisation of projects that resulted in the increased financial commitment. The reasons for the underspending were outlined, which included the delays in the finalisation of the monies-in-trust project, savings on personnel costs due to vacant posts within the Department and delays in the procurement process. The meeting also provided the Department with the opportunity to respond to allegations made in a Sunday Times front page article that the Department had "cooked its books" and that it had lied to the Portfolio Committee. The outgoing CFO explained in great detail the Department’s re-prioritisation process and the rationale behind each re-prioritisation. He concluded that the Department had thus acted within the Public Finance Management Act, which was confirmed by a representative from National Treasury. It was explained that the Department had made full disclosure to the Committee during the meeting in February.

The Chair agreed on both counts, and admonished the authors of the article in the strongest terms for the "drivel" they had written. She hoped that the Sunday Times would be big enough to print an apology, because the article had done "enormous damage to people in their careers".

The Department’s Medium Term Expenditure Framework (MTEF) allocations from 2005/6 to 2008/9 were briefly outlined, and the Department’s 2006 Estimates of National Expenditure (ENE) allocations were clarified

MINUTES
Briefing by Department on Final Budgetary Figures for 2005/6
Mr Alan Mackenzie, outgoing Chief Financial Officer (CFO), outlined the Department’s 2004/5 Annual Report expenditure overview per programme and the unaudited and preliminary information on the 2005/6 budget and expenditure overview. Contrary to newspaper articles, the Department had circulated only one set of financial statements at the meeting with the Committee in February 2006 at which the Department’s financial statements and audit reports published by the Office of the Auditor-General were distributed and discussed. The primary issue, which was a big risk for the Department in 2006, was the introduction of asset registers that had never existed before. This was important for the Department’s shift from the cash accounting process to the accrual accounting process.

He indicated that, as at 26 April 2006, the Department had reported an underspending of R309 million, R289 million of which was being requested from National Treasury as a roll-over. The roll-over was essentially a situation in which the Department had to estimate in advance the specific projects that would actually become payable within that financial year. On the very last day of March this year, the last day of the financial year, an amount in the region of R200 million became payable. For the Department to have accurately predicted in February what would in fact become payable on the last day in March, could easily be dismissed as luck, save for the fact that it involved a "huge amount of intelligence" coupled with years of experience and intuition.

This resulted in a net surplus to be surrendered back to National Treasury of R20 million, which amounted to 0.37% of the Department’s total budget. This marked a significant reduction from the Department’s anticipated underspending figure of R120 million forecast on 7 February 2006. The reduction was due to the finalisation of projects which resulted in increased commitments.

The Chair stated that it was important that Mr Mackenzie spoke to these issues in an illustrative way so that those reporting on the meeting’s proceedings properly understood the subject matter.

Mr Mackenzie explained that the Department’s Unfunded Priority Projects (UPPs) and re-prioritisation were explained in detail, which including re-prioritisation on x-ray machines and metal detectors for court security, office furniture for the Masters Office and offices for the State Attorney Offices and IT roll-out to ensure connectivity of all courts to a central database. He explained that the high expenditure in the last quarter of the financial year was due to various projects and items that became due and payable at that time. The major reasons for underspending were explained, which included the savings on personnel expenditure due to vacancies and staff turnover within the Department, the delays in the final approval of the Monies in Trust project, infrastructure projects that were still in progress and the delays in procurement processes.

He explained that it was management’s roll to assess those projects that would not be fully expended on during the current financial year, and to then select another priority from the list of UPPs. The list itself was constantly evaluated by Mr Mackenzie and the Director-General.

The Chair suggested that it would be prudent to entertain questions from the Committee on this portion of the presentation, before the portion dealing with the MTEF allocations be engaged.

Discussion
The Chair noted that the Department would be requesting National Treasury to approve funds in the amount of R289 million to be rolled over into the next year, but stated that the issue ultimately was that such a request could only be made if the Department had already committed those funds.

Mr Mackenzie explained that the roll-over related to cases in which the Department had already contracted for goods and services in all respects of that contract, but that the supplier might not yet have provided in full its part of the contract by actually supplying the goods contracted for. For example, over R100 million of the R200+ million that became payable on 31 March 2006 was for transcription services, and some was also for the monies-in-trust project management suite. Tenders for the project management suite closed at the end December 2005 and an independent panel of adjudicators decided that none of the bids that came through via the publicly advertised tender were adequate. Consequently, other suppliers were invited to submit bids in a closed tender process. Those bids were received by the Department and were again put forward for evaluation. One of the suppliers was chosen in a process that spanned a number of months. The product was actually supplied before the year end. The entire process was thus completed in the current financial year, but an aspect of the process had not yet been delivered. He explained that the process was not irregular because proper procedures were followed, and it was definitely not unauthorised expenditure because it was budgeted for.

The re-prioritisation to the transcription services was to enable the overdue digitisation of an outdated service. The question then was whether it was value for money or, as the media article put I, whether it amounted merely to fiscal dumping. The fact of the matter was that modernised transcription was critically needed by the Department. As to the question whether the Department gave notice of the need for the upgrading of its transcription services, the item had been on the UPPs list for years as a critically defined need but the Department never had the money to upgrade it. It had now come into the money, re-prioritised for it, anticipated a cost of R177 million but was then able to sign off on R138 million. On 31 March 2006 a total of R138 million was then awarded legitimately and having followed the proper process.

The actual digitising of the courts via the transcription services has not yet been taken delivery of, even though it had been contracted for. The delivery will happen later this year. In the new financial year the cycle of delivery will be completed and, if National Treasury approved it, it would not be reflected as expenditure in the new year but rather be accounted for against the Department’s cash budget.

He informed Members that the Minister of Finance had clearly articulated his goal to phase out roll-overs completely, which involved the total phasing out of the cash accounting model and shifting to the accrual model. This would result in the alignment of both budgetary accounting and financial accounting, and in that framework there would be no scope for roll-overs. At the moment roll-overs were the reality of the current dual-reporting framework.

The Chair asked when the Department began tracking the re-prioritisation needs.

Mr Mackenzie replied that it began doing so in September.

The Chair asked Mr Mackenzie to explain the slide entitled "UPPs (Red) stacked upon Budget Allocations (Blue)".

Mr Mackenzie explained that the Department’s under-expenditure fell from a figure of R120 million projected in February 2006 to R20 million at the moment. The final under-expenditure figure was thus negligible. The blue portion on the slide indicated what the Department needed and currently had the money for, whereas the red represented the items the Department needed but did not currently have the money for and which Parliament had already been informed of. He stated that he was explaining this to address the allegations in the Sunday Times article that there had been irregular and fiscal dumping by the Department. It was not correct to say that the Department had spent funds on items that it had not budgeted for. Mr Mackenzie, visibly incensed by the accusations in the article, stated that he had been advised that the article was defamatory and that he should consider taking legal action against the publication. The State Law Advisors (SLA) however advised him that he could not institute legal action because the article did not mention his name specifically. It was an impeachable offence for the article to intimate that the Director-General had lied to this Committee during its meeting in February, and his integrity must be recovered.

The fact of the matter was that the document which the Sunday Times article based its figures of R840 million on was still a work in progress. It reflected the monthly figures up to the end of December 2005, which was month number 9 in the 2005/6 financial year. That document thus reflected the figures for the first three-quarters of the 2005/6 financial year alone. However the slide in the presentation entitled "DoJ&CD – Monthly Expenditure Trend" indicated the Department’s expenditure for the entire 2005/6 financial year, the last quarter included. It reflected an ‘explosion’ in expenditure by the Department in the last quarter of the financial year, which occurred each year as a matter of course. It was due mostly to interdepartmental accounts which were only settled in March, i.e. in the last month of the last quarter of the financial year.

The R840 million underspend referred to in the Sunday Times article was calculated based on a linear projection of the Department’s aggregate monthly expenditure for the first three quarters of the 2005/6 financial year, and ignored the explosion in the Department’s expenditure in the last quarter of each financial year. He stated that it would have been "grossly incompetent" for the Department to do what the Sunday Times article had done had it reported an underspend of R840 million to the Committee at the meeting in February. Instead the Department evaluated its midway schedule, together with its list of UPPs, and identified the projects that it would be able to reprioritise and added these to the list. Once that was done, the figures indicated a projected underspend of R386 million, which it included in its figures.

The following slide in the presentation outlined the specific items that caused the high expenditure in the last quarter of the 2005/6 financial year. The following two slides explained the Department’s provisional and unaudited figures and linked back, Rand for Rand, with the Department’s UPPs indicated in the slides entitled "2005/6 Budget Re-prioritisation" which outlined the specific reasons for the underspending.

Ms S Camerer (DA) stated that it was a pity that Members did not have a copy of the comprehensive list of UPPs. It was a fact that the Department needed resources, and the Committee had always been an ally in requesting funds from National Treasury. The Committee has never had reason in the past to doubt the work produced by the Department’s officials. She asked the Department to explain why the R840 million was not explained as comprehensively at the meeting with the Committee in February, as that would have prevented much of the confusion which had now arisen.

Secondly, she asked the Department to explain why the scale of the underspending was greater than initially predicted.

Mr Mackenzie replied that the scale of underspend was exactly 0.37% of the Department’s total budget. The final underspend at the end of the 2005/6 financial year was R20 million, and in his opinion that was incredibly good. This was especially good given that the Department’s figures were calculated mostly on a manual system. The R840 million contained in the Sunday Times article was arrived at by using a linear projection based on figures from the early stages of the 2005/6 financial year. It was however fundamentally incorrect to use a linear projection to predict future figures because it was not correct to take the average expenditure figures for one month and project it for the full year, as that did not take into account the nearly double expenditure that took place each year in the last quarter of the financial year. The linear projection could however be used on a month-to-month basis during the current financial year to project the Department’s cash flow for the next month, which would be sent to National Treasury. The fact of the matter was that the large scale underspending reflected in the Sunday Times article was incorrect, and the figure of R840 million "was never going to be". The anticipated underspend figure dropped to R120 million at 7 February 2006, when the Department met with this Committee.

The Chair explained that Ms Camerer was asking why the Department did not include the figures for the third quarter of the 2005/6 financial year when it briefed the Committee in February. She reminded the Committee when she requested the Department to provide the details of that under-expenditure during that meeting, the Department informed the Committee that the figures were not yet ready. The Chair then requested the Department to brief the Committee on the final figures in a follow-up meeting, which was the meeting being held on that day. She did not thus agree with the media reports that alleged that the Committee was lied to. That was a true representation of the events as they transpired, and stated that the PMG minutes could be checked for the truth.

Mr L Joubert (DA) contended that the UPPs listed in the slide entitled "UPP’s (Red) stacked upon budget allocations (Blue)" should be closer aligned to the Department’s budget.

Mr Mackenzie responded that biggest single jump in Department expenditure in the 2004/5 year was the finalisation of a complete security survey for courts, which resulted in a massive jump in security related expenditure. The Committee had the complete details of that expenditure. The UPPs were really a very loose "thumbsuck", and his intention was to have a legislative costing unit which would be headed by Mr Gordon Hollamby. The unit would work with the Committee on the Department’s legislative priorities, which would ensure that the UPPs could be firmed up and become actual tender numbers rather than projected figures that could not be based on any scientific calculation.

Mr J Jeffrey (ANC) asked the Department to highlight the "luxury items" mentioned in the Sunday Times article.

Mr Mackenzie replied that the specific re-prioritisations were outlined in the three slides entitled "2005/6 Budget Re-prioritisation", and indicated that the total re-allocated amount stood at R380 million. He was not sure how the Sunday Times got hold of the figures but it must have been an official who attended the small Departmental committee meeting, because it was at those meetings that he directed officials to look at the Department’s needs with regard to vehicles and laptops. Furthermore, those three slides were not presented at that small committee.

The digitisation of the courts from the use of manual records to laptops was overdue. The Department will be purchasing 80GB portable digital drives and laptops, which would be used by selected teams to visit every court and scan the manual records. The data would then be sent back to the CFO’s office where it would be converted into the standard electronic format and used to compile the Department/s financial statements.The laptops and digital drives would thus be used to produce the financial statements. The Department would have to purchase 52 laptops. It would have to establish teams to do the scanning and collection of data, which would then use the laptops.

The Finance operations managers had been using the little Fiat 1400s approximately three years ago, which have been driving around in the clusters since that time and had accumulated high mileage. The project mentioned above required the establishment of another team that would have to visit each court in country and he suggested that the Department purchase those Fiats, which could be used by the new teams. The vehicles listed in the first "2005/6 Budget Re-prioritisation" slide in the presentation referred to the 70 vehicles purchased for the National Prosecuting Authority (NPA). The bottom line was that the Department currently had an exhausted fleet. It purchased vehicles largely in the last quarter of the financial year because it wanted to budget properly.

That slide also indicated that R10 million was reprioritised for the State Attorneys offices. They have however contracted for or spent one cent of that re-prioritisation, and the funds have thus not yet been used. He stated that that the unspent R10 million was one of the reasons for the final unspent amount for the 2005/6 financial year of R20 million, as explained earlier.

The last slide entitled "2005/6 Budget Re-prioritisation" indicated the final re-prioritised amount approved by the Director-General, in the amount of R380,7 million. The full amount was however not spent, as R20 million remained unspent.

Ms C Johnson (ANC) stated that in terms of the financial prescripts all government departments were allowed to do such projections, and it fell within the legal framework. She stated that she could not find anything illegal or improper in the Department’s actions and asked National Treasury to confirm her view.

Secondly, she asked the Department to indicate whether it was granted a formal opportunity to respond to the Sunday Times article.

Mr Mackenzie replied that he was never approached by a member of the media, either by phone or otherwise. Despite the fact that at that stage he was still the CFO of the Department.

The Chair stated that she had invited Mr Mbete from National Treasury to this meeting specifically to respond to this matter

Mr Mbete requested that the Department first explain the actual shifting.

The Chair agreed.

Mr Mackenzie replied that the Department complied with Section 6(3)(1) of the Public Finance Management Act (PFMA) in applying to National Treasury for the re-prioritisation, which it subsequently granted. The spreadsheet document detailing the Department’s re-prioritisation per programme for 2005/6 contained a column called "Virement: Treasury" in which National Treasury would indicate the extent to which the Department had overstepped in spending on each of the items listed. The entire column was however empty, because the Department had complied fully.

The PFMA also required the Department to notify National Treasury and the Justice Ministry within seven day, which the Department complied with fully and in fact notified within six days.

The largest portion of the earmarked funds was in the amount of R100 million for the Monies-in-trust project, which some people presumed were earmarked, because that project had not yet kicked in. The truth of the matter was that National Treasury did not earmark those funds as a specific item under Section 6(3) that could not be used for any other purpose.

However Part II of Chapter 5 of the PFMA dealt with virements of the National Treasury regulations. It stipulated that government departments were allowed to use their savings towards the defrayment of other projects, but that that re-prioritisation must not exceed 8% of the total amount appropriated in the Department’s main budget. The spreadsheet document reflects that the Department had not exceeded that 8% virement threshold.

Lastly, Section 6(3) stipulated that the accounting officer must submit a report containing the prescribed particulars of the re-prioritisation within seven days, which the Department complied with. The Sunday Times article however misunderstood the chain of governance. It was true that this Committee was the ultimate governance Committee that the Department needed to keep informed and report to. The Department did not however have to report to the Committee on its day-to-day decisions, as the Director-General was responsible for that. It was the Director-General who approved the re-prioritisation, within the strict prescripts of Section 63 of the PFMA. The Department was in the practice of keeping this Committee completely informed of its progress.

Mr Mbete stated that National Treasury’s involvement was governed by Section 43 of the PFMA. He stated that the resulting virements did not offend that section at all. The increase in transfers to the Public Protector, the Special Investigative Unit and the Legal Aid Board was effected after the Department got approval from National Treasury. The re-prioritisation was done within the prescripts of the law and will be included in Audited Report to be tabled by the Department in September 2006.

The Chair asked whether the re-prioritisations created any problems in terms of the National Treasury regulations.

Mr Mbete replied that the regulations were covered by the PFMA. He reiterated that the re-prioritisations were all above board.

Ms Camerer asked whether the approval granted by National Treasury covered the items requested for roll-over as contained in the document prepared by Mr Hollamby entitled "2005/6 Budget Reprioritisation Process".

Mr Mbete responded that National Treasury was still busy considering the Department’s request for roll-overs.

The Chair stated that the contention in the Sunday Times article that the re-priorisations had no basis was interesting, in view of the explanations and condonement given by the Department and National Treasury respectively. The Chair asked Mr Mbete to indicate whether the media had consulted him as to whether the re-prioritisations were in fact above board.

Mr Mbete answered in the negative. He stated that National Treasury as a whole was not consulted either. He reiterated that National Treasury was satisfied with the way the Department was handling its finances.

The Chair informed the meeting that no member of the media had consulted her either.

Ms Camerer asked the Department to indicate the full amount for which National Treasury approval for roll-overs was still outstanding.

Mr Mackenzie responded that the total amount stood at R289 million.

The Chair requested the Department to explain the precise items on which the Department underspent R309 million, as well as the areas where underspend was identified but which were day-to-day items not programmes and those that would both increase going forward and that would re-occur in future.

Mr Mackenzie replied that the major reasons for the underspending involved competing items, which were listed in the slide entitled "major reasons for underspending". He stated that that the issue of the magistrates salaries required an explanation. Since the time at which all the magistrates salaries were set to the same level, approximately five years ago, the magistracy’s funding envelope has been underfunded. Over the years the Department has worked with National Treasury and has now reduced the funding cap via extra allocations from National Treasury. There was however still a gap.

The Department’s latest information allowed it to arrive at a best estimate of R190 million. A team was currently in place and was working on unpacking the difference between judges and magistrates salaries. The Department overspent on judges’ salaries to the tune of R64 million and by R127 on magistrates’ salaries. In rounded figures that overspending amount has grown from R60 million for both judges and magistrates salaries in the previous financial year. The reason for the doubling of the overspend on the magistrates salaries was due to the decision taken in the previous financial year to grant magistrates car allowances.

The overexpenditure on the judges and magistrates salaries did not have to be funded by the Department, whereas in the past over-expenditure on magistrates salaries had to be made good by the Department and National Treasury was responsible for the overspend on the judges salaries. The shift resulted in a significant extra allocation via an alternate channel from National Treasury, because National Treasury would henceforth be responsible for the extra expenditure for both the magistrates and judges salaries.

The monies-in-trust funds were not ring-fenced, and amounted to R100 million on the Department’s books. National Treasury would be meeting with the transaction advisors’ legal team today. And a draft strategy on the monies-in-trust project would be available on Tuesday next week. The contracts will be finalised and the PPP tenders will be published for comment. All those funds would then kick in in the current financial year.

The Department also saved funds on vacant personnel posts, which resulted in a reduction in operational costs. Because the Department appointed court managers it did not have sufficient funds to buy the luxury Fiats. A fully-documented needs analysis was done to identify the number of vehicles needed. Most were deployed in the rural areas, and were primarily 1400 or 1600 utility vehicles. He encouraged the Committee to monitor the number of vacancies with the Department and the rate at which they were filled.

Further reasons were infrastructure projects that were still currently in progress, and anticipated Bills that had not yet been finalised. These included the Sexual Offences Bill and the Child Justice Bill.

Another reason was the delays in the procurement process, which in turn cause a problem with connectivity. The Department had reserved R100 million in the previous financial year to resolve this problem, but the SITA Act changed the dispensation by requiring all technology tenders to now go to SITA itself. The SITA officials arrived at the Department building and transported those tender bids from the Department’s premises under lock and key back to the SITA offices. SITA then decided who would receive the tender. The Department could thus not fund that re-prioritisation. SITA give the undertaking that, together with Telkom, it would provide connectivity by the end of March 2006. The process was still however underway, and the deadline has now been extended to the end of August 2006.

The Chair agreed that the Committee must play a more active role in deciding which UPPs were more important. She suggested that the CFO might at some point this year formally address this Committee and inform Members of the progress made with regard to UPPs and its thoughts on the UPPs at that point in time, so that the Department and the Committee could interact and share views. There was very little value in maintaining the current practice in which the Department informed the Committee every year after the fact.

Mr Mackenzie responded that the Department had in fact done this in 2002 when the Deputy Minister of Justice, the then Chairperson of this Committee, pleaded with this Committee in a heated debate, to set the Childrens Bill above the introduction of equality officers atop the UPP list.

The Chair stated that she was irritated by the Sunday Times article because it was clearly "drivel" written by people about things they knew absolutely nothing about. The Committee now had a better sense of the facts after the input provided by the Department at this meeting. She found it interesting that neither herself, as Chairperson of the Parliamentary Committee mentioned in the article, nor Mr Mackenzie as the official responsible, was approached on this Parliamentary process. For the Sunday Times to tell Parliament that it had been lied to was beyond belief. The Chair proceeded to read the article that appeared on the front page of the Sunday Times on 9 April 2006.

She could not imagine how Mr Mackenzie must have felt when he read the article, having read the accusations contained therein. This Committee has never shunned the opportunity to criticise the Department when it was deserved. It had never pulled its punches when addressing problems within the Department. Yet it had never done so if it was undeserved. The very reason why the Parliamentary media core never picked up on the Sunday Times story was because they understood that that was not what happened in the Committee meeting in February. She was informed by Ms Camerer that the Sunday Times journalist in question had asked her for copies of documents distributed at that meeting held on 7 February 2006 and that she gave it to them, which she was correct in doing because they were public documents. They were however in possession of the document prepared by Mr Hollamby entitled "Budget Re-prioritisation Process 2005/6", which reflected an underexpenditure of R401 million by the Department in the first six months of the year. They then clearly used the linear projection, which Mr Mackenzie explained at pains earlier was the incorrect approach, and arrived at the projected underexpenditure by the Department for the 2005/6 financial year of the R800 million reflected in the article.

We must reflect very seriously about where we were and where we’re going to. Since her appointment to this Committee she has witnessed positive developments within the Department. It had changed from eleven badly mismanaged and disorganised Justice Departments into a single unified Department that has come a long way since then. It has since extinguished its Apartheid debt, and received an unqualified audit report from the Office of the Auditor-General for the first time two years ago. For people to then begin criticising and ultimately defaming our institutions when it was not called for did not help build the country, and was definitely not the model of the "good South African" called upon by former President Nelson Mandela. The article was completely and utterly irresponsible to say very least. She agreed that the article was completely defamatory and stated that she was happy to testify on Mr Mackenzie and the Director-General’s behest.

She was convinced that the source of the information provided to the Sunday Times must come from within the Department itself. She was not surprised because there were officials who were clearly unhappy with the positive changes that were being made in the Department, and were clearly out for themselves. She wanted it known that she was not frightened by emails sent to her anonymously which accused the Director-General of being "evil incarnate". Although she did not really know the Director-General well because he was only recently appointed, she has however not seen a more hardworking person. She stated that she did not normally compliment officials while on a public platform, but she appreciated the hard work done by the Director-General and the efforts he was making to change the problems currently experienced b the Department.

She stated that the Committee would monitor the areas in which the Department underspent and it would not hesitate to call the Department before the Committee again if it was not doing its job properly. When it did so its aim was not to destroy the reputations of officials, but was instead done with a view to correcting problems. The Director-General had the Committee’s full support in this matter until the Chair was provided with evidence of anything untoward.

It was hoped that after this meeting the Sunday Times would be big enough to print an apology, because the article had done "enormous damage to people in their careers". She hoped that this incident would not repeat itself and that the input provided at the meeting assisted in clarifying the facts. She availed the assistance of the Committee.

Secondly, the Chair stated that it would have been nice if Mr Mackenzie could have left the Department with a headline that sang his praise, after four years of service to the Department, yet instead only the Sunday Times article in question could be offered. She conveyed the Committee’s heartfelt thanks for all his hard work over the last four years. The Department had been through enormously tough times during those four years and it met many obstacles along the way, but all the anonymous emails he received never dampened his commitment to strengthening the Department. The Committee would however be seeing Mr Mackenzie from time to time as he was still working on the monies-in-trust project. On behalf of the Committee and the country she thanked Mr Mackenzie for all his hard work and wished him well for the future.

Adv M Simelane, Director-General of the Department, thanked the Chair for her supportive words. The Department has always believed that the Committee was there to support it, and the Department in turn believed it was responsible to account for public funds. He stated that he was committed to strengthening the Department. The Department was as transparent as possible so that it could be criticised where warranted, but it should also be given credit when it was deserved. National Treasury has been extremely supportive, and the Department has been fortunate. It was however a pity that the issues were reported so out of context by the Sunday Times article.

He stated that the Department would formally be paying tribute to Mr Mackenzie. As to the allegations in the anonymous emails about Mr Mackenzie, he stated that he has never seen evidence of racism. Both he and Mr Mackenzie shared the same management style as they were both committed to getting things done. He has in fact reinvigorated many people who came to accept that the Department was the wrong place to be. Notwithstanding the Sunday Times article, people were supportive of the Department, and he personally took strength from them and would continue to push forward.

The Chair welcomed Ms S Gomm, the Acting CFO, and stated that the Committee was there to assist her in any way possible.

Briefing by Department on MTEF allocations
Ms Gomm completed the presentation began by Mr Mackenzie, and dealt very briefly with the Department’s MTEF allocations from 2005/6 to 2008/9. She provided a few clarifying remarks on the Department’s 2006 Estimates of National Expenditure (ENE) allocations. The Department’s court services budget allocation per province were outlined, as well as the transfer payments to the Department’s public entities and Constitutional institutions and the allocations to the NPA. She added that the figures indicated that the percentage growth in the allocation to the provinces would increase, whereas the allocation to the national Department would increase over the MTEF. This was due to the decision to decentralise courts to the regional heads.

Discussion
The Chair noted that Members had no questions on Ms Gomm’s presentation.

Concluding remarks
The Chair stated that once the regional offices delegations had become finalised the Department must provide the Committee with the documentation. Secondly, the Committee must be kept abreast of the underspends on the vacant posts in the various line items within the Department alluded to. By July or August this year Ms Gomm must brief the Committee on its status by way of projected expenditure, but that time taking into account the possibility of increased expenditure in the final fourth quarter.

Lastly, the devolution of the maintenance and repair of the Department’s capital infrastructure from the Department of Public Works has caused a huge increase in the Department’s expenditure, which was nearly double the figure for its current administration programme vote, and the Committee must now keep a very close eye on it. The Department had now taken on a huge responsibility and it could not afford to not deliver on this item. This development will be revisited over the next few months, and the Committee would need a full presentation on the Department’s new capital infrastructure budget.

Mr Mbete stated that, from National Treasury’s point of view, over the next three years it would grant the Department additional funding to the tune of R1,8 billion. This was done very deliberately to strengthen the country’s criminal justice system. Page 111 of the Budget Review reflected that the number of cases tried by the Department has decreased, and National Treasury has thus increased the allocation to the Department aimed at increasing that number because that was the Department’s primary function. This would allow the Department to appoint approximately 800 more court officials over the next three years. The situation will be monitored over the next three years.

The Chair informed all present that the Committee had addressed many of the issues raised today during the budget hearings it held with the Department earlier this year. During those meetings the Committee did cautioned the Legal Aid Board that they were receiving huge allocations but were not spending them in the proper areas, and they were advised to spend funds on infrastructure. It was particularly heartening that National Treasury has increased the funding to the Legal Aid Board because the Committee raised this very issue during last year’s Budget Review. Furthermore, she stated that the Criminal Justice Review process should provide synergy between the different government departments involved.

The meeting was adjourned

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