Committee Report on Department 2006/07 Budget and 2006/07 – 2010/11 Strategic Plan: adoption

PORTFOLIO COMMITTEE ON CORRECTIONAL SERVICES
19 MAY 2006
COMMITTEE REPORT ON DEPARTMENT 2006/07 BUDGET AND 2006/07 – 2010/11 STRATEGIC PLAN: ADOPTION

Chairperson: Mr DV Bloem (ANC)

Documents handed out:
Report of the Portfolio Committee on Correctional Services on 2006/07 Budget Vote 20 and the 2006/7 – 2010/11 Strategic Plan of the Department of Correctional Services (available at Committee Reports)

SUMMARY

The Committee discussed its report on the 2006/07 budget of the Department of Correctional Services (DCS). Some Members felt that the Committee did not have sufficient information on the construction of new prisons using the Public Finance Model to approve the Department’s budget.
After a lengthy discussion it was decided to approve the report, but to insert a demand that the Department brief the Committee about the Public Finance Model before 12 June.

MINUTES

The Committee discussed its report on the 2006/07 budget of the Department of Correctional Services (DCS).

Ms S Seaton (IFP) remarked that she had concerns about a number of aspects emanating from the budget. She suggested that either the Committee not pass the budget or ask the Minister to postpone the debate on whether or not to pass the budget, until such time that the Committee had sufficient information at their disposal to assess the budget. She stressed that it would be wrong for the Committee to approve the budget when its own report stated:

“At present, due to insufficient information, the Committee cannot make a decision on whether to support or not to support the construction of the new prisons using the Public Finance Model (PFM). The Committee requires a full written report and verbal briefing by the DCS highlighting the comparative cost implications, in both the short and long term, for building using conventional processes, the PFM or the PPP routes.”

Mr J Selfe (DA) concurred with Ms Seaton. He reiterated the fact that the Committee did not have sufficient information to be able to pass the budget. He drew the attention of the Committee to a paragraph in the report that read as follows: “Part of the allocation for Nigel and Klerksdorp will be used for procuring the services of a transaction advisor as Nigel and Klerksdorp will be constructed using the Project Finance Model (PFM), that is, enter into a PPP arrangement for design by concept, construction, finance and maintenance of the centres and DCS will be responsible for the operations.”

Mr Selfe added that the report stated that there was R1.2 billion which was originally budgeted for the construction of new prisons. That part read as follows: “Of this R1.2 billion for Capital Assets an amount of R982.9 million was allocated to Capital Works. Of this R982.9 million for Capital Works, an amount of R390 million was allocated in 2005/06 for the construction of the four new prisons.”

Mr Selfe explained that the Committee did not know anything about the PFM. In addition, not a single Member of the Committee knew how to cost it or how it worked. He emphasised the point that the Committee did not have enough information at this stage to report to Parliament, and therefore, he suggested that the Committee not approve the budget. He suggested that the DCS be called back to address the reservations and questions of Members.

Ms W Ngwenya (ANC) suggested that the Committee first go through the report page by page before deciding if it wanted to adopt or reject the report.

Mr NB Fihla (ANC) wondered if the Committee would not be jumping the gun if it decided to postpone the debate or reject the report without first going through the report page by page.  

Ms Seaton asked what point would be served by going through the report page by page, if the Committee were not going to accept it. She made it clear that she was not prepared to accept the report until the Committee was provided with the necessary information. She further reiterated her view that the Committee should ask the Minister to postpone the budget vote debate.

Mr Selfe explained that the difficulty with going through the report page by page was that it lacked important information which did not allow one to formulate a sensible view of the report. He added that this hindered a coherent debate on the report.

Mr S Mahote (ANC) remarked that he thought it was wise to first go through the report page by page before deciding whether to adopt or reject it. He added that this was why the Committee had convened the meeting. Further, he did not think there was anything wrong with the report. However, by going through the report page by page, he would benefit from the observations of other Members and notice important aspects he might have missed.

Mr Fihla explained that the Committee had been discussing the issue of insufficient information for a while now. He added that the Committee went to great lengths to call the DCS, even the Minister and the National Treasury to let them know that the Committee was not happy with the report. He pointed out that the Committee told the Minister and the Treasury when they came before it that it wanted assurances on the soundness of the Department’s report. Mr Fihla added that if the Members had any problems with the report they should have raised them then. 

Mr Selfe said the Committee deserved to see more information elaborating on the paragraph that read: “The bids received for the tenders on the four new prisons were much higher than the anticipated costs outlined by the Department of Public Works....”

Mr Selfe added that the report listed the department’s budget programmes. He pointed out that the item entitled “Facilities” was problematic and he required more explanation of the quoted figures.

Ms Seaton pointed out that she had problems with one of the department’s objectives listed in the report. The department’s goal read as follows: “Improvements to security in prisons including biometric access and movement control systems, inmate tracking, the vetting of correctional officials and a minimum security standards policy.” She pointed out that this goal also fell under the programme “Facilities” which was questionable. 

Mr Selfe questioned a paragraph that read as follows: “The Facilities Programme is the only one that receives a decrease in allocation for 2006/07. While this would generally be a positive aspect of the budget as it would acknowledge the fact that DCS can never build itself out of the overcrowding problem, it is of some concern in that the DCS and the President have stated that four new prisons will be built by 2008....”

Mr Selfe pointed out that a paragraph in the report summed up his problem with the report. That paragraph read as follows: “At present, due to insufficient information, the Committee cannot make a decision on whether to support or not to support the construction of the new prisons using the Public Finance Model (PFM). The Committee requires a full written report and verbal briefing by the DCS highlighting the comparative cost implications, in both short and long term, for building using conventional processes, the PFM....”
 
Mr Selfe explained that the heart of the problem was that the Committee had been asked to pass a budget for the construction of prisons using a model which the Committee knew nothing about. He added that if the Committee took the decision to pass the budget, it would be committing the taxpayers to long-term expenditure in terms of a model on which it had insufficient knowledge about.

Mr Fihla remarked that the Department of Public Works and the Treasury would not have vouched for the Public Finance Model if there was something wrong with it.

Ms Seaton made it clear that if the Committee were to pass the budget, it would not only be irresponsible, but that it could be held accountable for misappropriation of funds.

Mr Selfe pointed out that Mr Fihla’s point was valid, although it did not go to the heart of his argument. He explained that Mr Fihla was correct in saying that all the relevant departments had come before the Committee to present their plans. He added that in those presentations the DCS pointed out that it wanted to build four new prisons, but it did not have enough money to do so. To build the new prisons, they have had to adopt a different way of building these four prisons through the Public Finance Model, a model that the Committee did not know anything about.

Mr Mahote suggested that the Committee approve the budget and then call whomever it felt should brief them about the details of the PFM.

The Chairperson reminded the Committee that the report needed to be tabled in Parliament by 3pm that day (Friday, 19 May 2006), in order for the Committee to have the debate the following Tuesday (23 May 2006). He suggested that instead of rejecting the entire report, the Committee should insert a clause in the report stating clearly that the Committee gave the Department a deadline to appear before it with a detailed explanation of what the PFM is.

Ms Seaton asked what would happen if the Committee approved the budget with suggested amendments, but the Department did not comply within the deadline.

Mr Selfe also suggested that the Department be called back to inform the Committee about the PFM. Further, until such time that the Department briefed the Committee about the PFM, no funds should be released for the construction of new prisons.

Ms Seaton explained that once the Committee passed the budget, there was no way that the Committee could actually control the funds thereafter. She pointed out that this was the problem.

The Committee agreed to adopt the report with the suggested amendments, and it was further agreed that the Department must brief the Committee about the PFM before 12 June 2006.

The meeting was adjourned.