Africa: Annual Report briefings; Committee Report on Arts and Culture Budget: discussion

Arts and Culture

29 May 2006
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Meeting report

ARTS AND CULTURE PORTFOLIO COMMITTEE
30 May 2006
SOUTH AFRICAN STATE THEATRE; ASSOCIATION OF PROFESSIONAL ORCHESTRAS OF SOUTH AFRICA: ANNUAL REPORT BRIEFINGS; COMMITTEE REPORT ON ARTS AND CULTURE BUDGET: DISCUSSION

Acting Chairperson:
Mr M Sonto (ANC)

Documents handed out:
Presentation by the South African State Theatre (PowerPoint)

Presentation by the Association of Professional Orchestras of South Africa
The Budget Vote Report
Minutes of the meeting
The proposed Committee Programme for 2006
A letter from the Department to the Acting Chairperson, Mr Sonto

SUMMARY
The Association of Professional Orchestras of South Africa (APOSA) briefed the Committee on its functions and objectives. Most importantly, it approached the Committee to plead for funding for the Johannesburg Philharmonic Orchestra (JPO) as it received no financial support from the Department of Arts and Culture. Committee Members were briefed on the objectives, mission and core values of the JPO. It therefore requested the Committee’s support so that it could acquire this much needed funding to ensure its survival. Members wished to know if the JPO had been funded in the past and what the reasons were for the refusal of funding. The Committee also sought clarity regarding whether the Department provided this funding or the National Arts Council. More information on the formation of APOSA and the JPO was also requested as well as whether other provinces were included and whether the JPO endeavoured to collect indigenous classical music. The Committee requested the JPO’s financial statements to assist Members when engaging with the National Arts Council.

The South African National State Theatre briefed the Committee on its activities and programmes over the previous financial year as well as its strategies and development and marketing plans for the future. The success of the development, advancement and empowerment programmes depended on the financial support from the Department and its funding agencies. The State Theatre’s financial statements for the 2004/2005 financial year were also presented to the Committee. Committee Members had a number of queries regarding these financial statements. Members wished to know what the source was of its finance income and how it planned to cover its deficit in the future. Members also requested the State Theatre’s audit report and more information on the emphasis of matter. The Committee hoped to do follow-ups on issues in the future and to address matters of interest to the government and the State Theatre.

Committee Members had a number of queries regarding the adoption of the Budget Vote Report. Most importantly, Members argued that some of the entities that the Committee had met with during the present budget vote year had not been included in the report. The Committee agreed to make amendments to the Budget Vote Report and to adopt it at the following meeting. 

MINUTES
Briefing by the Association of Professional Orchestras of South Africa (APOSA)
Mr S Bokaba (Chairman) briefed the Committee on APOSA’s functions and its objectives. It acted as an employer association for the Cape Philharmonic, Chamber Orchestra of South Africa, the Eastern Cape Philharmonic, the Free State Symphony and the Johannesburg Philharmonic Orchestra (JPO). Its objective was to lobby for funding and to share resources where possible.

More specifically, Mr Bokaba approached the Committee with special pleas for funding for the JPO. The Department funded two orchestras, the KwaZulu-Natal Philharmonic and the Cape Philharmonic to the extent of R3.77 million each. A similar amount was allocated to Gauteng but was diverted to another jazz project in Cape Town.

The JPO was formed by a group of musicians in 2000 following the demise of the National Symphony Orchestra. It strived to be South Africa’s foremost philharmonic orchestra and performed music that incorporated the greatest accomplishments of classical and South African genres. One of the missions of the JPO was to capture indigenous music and orchestrate it as well as provide opportunities for South African musicians particularly from disadvantaged backgrounds. This was why the JPO’s association with the South African Music Education Trust (SAMET) was crucial.

Mr Bokaba also presented the JPO’s mission and core values that underpinned its approach to business. He felt that it was vital the JPO received the support of the central government through the Department. The support of the Committee was requested so that the JPO could receive funding in order to ensure its financial sustainability and to become a permanent city orchestra.

Discussion
Mr B Biyela (ANC) wished to know if money had been allocated to the JPO in the past.

Mr Bokaba answered for the last three years money had been allocated to Gauteng. But during his interaction with the Department the latter had stated that there were too many musicians and orchestras to give money to. However, it was important to note that there was only one philharmonic orchestra in Johannesburg. The JPO had therefore not received any of the money allocated for the last three years. The JPO had been informed by the National Arts Council (NAC) at the beginning of the year that it would receive funding but this had not actually happened. It seemed the only way to obtain funds was for the Minister to give the green light for this allocation. This had obviously not occurred and the JPO therefore continued to live from hand to mouth in order to survive.

Mr N Maluleka (ANC) asked if the JPO had also approached the provincial government for funding and if so had this funding also been refused? He also wanted to know if the JPO endeavoured to collect indigenous classical music as he felt that some of the local pieces were real classical works.

Mr Bokaba replied that the JPO had approached the provincial government and had not been successful. The JPO had also done a great deal for local music and had performed a number of indigenous works on tour internationally. It also continually commissioned South African composers to write original songs and the JPO then served as a vehicle for these works. It encouraged the young composers to write music especially based on their experiences and also continued to play the old classics along with its international repertoire.

Ms D Van der Walt (DA) wished to know what amount of funding the JPO had applied for and what were the reasons given by the NAC to deny this funding. The Committee had been briefed in the past by the NAC and had been presented with a list of entities that it funded. It was important for the Committee to have this information when it made enquiries with the Minister as orchestras played an important role in South African music.

Mr Bokaba answered that the KwaZulu-Natal and Cape Philharmonic Orchestras who had each received R3.77 million never applied to the Department and had instead received this funding automatically. In contrast the JPO had to apply for funding and there was usually only a fifty percent chance that this application would be successful. The JPO had applied to the NAC for R4 million and had only received R300 000. The JPO had not enquired why its application had been denied as it expected that it would merely be told that the NAC had limited funding.

Ms P Tshwete (ANC) thanked Mr Bokaba for the informative briefing. She acknowledged that APOSA acted as an employer association for orchestras from three or four provinces. She wished to know why orchestras from the other provinces were not included by APOSA.

Mr Bokaba replied that orchestras in South Africa were mainly situated in the larger cities such as Cape Town, Port Elizabeth, Bloemfontein and Pretoria and this was due to a number of historical reasons. Anyone who wished to play in an orchestra therefore had to move closer to these cities in order to be accepted. However, through the South African Music Education Trust a number of music education projects had been started in the rural areas and the result was that a number of music students had been taught over the last ten years across South Africa. Hopefully these students would start their own ensembles in these areas so that there would be a number of ensembles spread across the country.

Ms D Ramodibe (ANC) noted that the KwaZulu-Natal Philharmonic orchestra had been omitted from the group of orchestras that fell under APOSA. However, the Cape Philharmonic that had also received R3.77 million in funding from the Department had been included in the list. She sought clarity on why the KZN orchestra had been omitted as well as how and from where the other orchestras on this list received funding.

Mr Bokaba explained that APOSA had been formed at the beginning of the previous year and an invitation had been extended to all existing orchestras to be included under this organisation. APOSA had mainly received responses from orchestras that had not been receiving any funding. However, the Cape Philharmonic Orchestra although it received funding from the Department also joined the list as it had wished to aid APOSA. An invitation to join had also been extended to the KZN Orchestra and its board was still deciding on how to respond to this invitation. However, APOSA was still a new organisation and it hoped to include all the orchestras in the future.

Mr Bokaba added that membership would not only be limited to professional orchestras only. Other entities such as universities that offered music courses, music publishers and youth orchestras would also be included as all of these contributed to South Africa’s vibrant music sector. Lastly, he highlighted that APOSA was also part of the international alliance of professional orchestras.

Mr Maluleka wished to know if he was correct in believing that money had been allocated to Gauteng orchestras but that it had been diverted to Abdullah Ebrahim’s jazz project situated in Cape Town.

The Acting Chairperson also wished to know where this understanding was derived from and whether the refusal of funds to the JPO had been communicated in writing.

Mr Bokaba answered that this had not been communicated in writing. However, anyone could approach the NAC to find out which entities it funded and this was made available in writing. Informal meetings with the NAC and interaction with senior officials of the Department had also given rise to the understanding that Gauteng orchestras were being denied any funding. He had even met with the Minister during the previous year who had reiterated that this funding would not be made available.

The Acting Chairperson sought further clarity on this issue and wished to know if Abdullah Ebrahim was based in Cape Town. If this was the case, he wanted to know how Gauteng funding had been diverted to Cape Town.

Mr Bokaba responded that he did not have any real answers but it seemed clear that the Department was not going to support the Gauteng province in any way. He was unsure of the Department’s policies regarding orchestras.

Ms Van der Walt did not believe that the other orchestras received funding directly from the Department but rather acquired it through the NAC. Was this understanding correct?

Mr Bokaba agreed that the Department funded orchestras through the NAC.

Ms Van der Walt therefore reiterated that it was important to identify the reasons for the NAC’s refusal of funds. She also wished to know if SAMET received any funding other than the funds received from the private sector.

Mr Bokaba replied that most of the funding received by SAMET was from the private sector. However, provincial governments had also become interested in providing funding. For example the North West provincial government provided fifty percent of the funding in its province. The Minister, Mr Pallo Jordan, had also donated half a million rand to SAMET during the previous year and had done the same this year. However, SAMET still encountered problems in its performance sphere.

Ms Tshwete noted that JPO shared its offices with SAMET. She wished to know if this meant that the JPO also shared funding with SAMET.

Mr Bokaba answered that the JPO only shared resources with SAMET. Both organisations were situated under the same roof but had separate boards. However the Chairman of the JPO had taken a recent decision that these organisations should share a Chief Executive Officer who would focus on education and performance at the same time. This would give the JPO a unique advantage over other orchestras.

The Acting Chairperson stated that the background of the JPO showed that it was an offspring of the National Symphony Orchestra and had emerged from the latter’s demise. He sought more detailed information on how the JPO was formed. Was it formed by people emerging from the demise and if so what was the reason for this demise? Were these people also not tainted by this occurrence? He was trying to understand the reasons why the JPO had not received funding.

Mr Bokaba responded that during 1999 and 2000 the government closed many orchestras down including the National Symphony Orchestra which was only given a few months notice. A number of musicians were therefore jobless and those who were of a similar standard regrouped and formed the JPO. This was a section 21 company and the musicians were therefore the owners themselves and a number of outsiders also served on the board. Mr Cyril Ramaphosa had also recently agreed to become a patron of the JPO in order to play a role in its future fundraising drives. However, since its formation, the JPO had approached the Government and asked for assistance as it had encountered a number of challenges. On the other hand the Natal Philharmonic Orchestra had not closed down during this period and no explanation was given for this occurrence. The Cape Town Symphony Orchestra closed down but almost immediately the Cape Town Philharmonic Orchestra emerged. Musicians from Gauteng and the North West province formed the JPO but it had not been successful in receiving any assistance from the Government.

The Acting Chairperson thanked Mr Bokaba and stated that the current situation faced by the JPO had been made crystal clear to Committee Members. He realised that the JPO had a lack of funding but he still wanted to know how it managed to survive.

Mr Bokaba acknowledged that he should have presented the JPO’s financial statements to the Committee. The orchestra had four seasons where each season consisted of five weeks every year. It cost R250 000 to operate each week and funding was provided by the private sector. However, if the government provided funding the JPO would be able to operate as a full-time orchestra and it could then collaborate with other musicians around the country at no extra cost and could commission composers and musicians to write new music. For example Kabelo had recently approached the orchestra to create a link between classical music and kwaito. In between these seasons the JPO relied on corporate gigs to survive.

The Acting Chairperson stated on behalf of Committee Members that the financial statements would assist the Committee when it possibly engaged with the NAC which was the conduit for these funds. He therefore requested that the financial statements be sent to the Committee Secretary so that they could be distributed to the Members at a later stage.

Briefing by the South African State Theatre (SAST)
Mr A Sekhabi (Artistic Director and Acting Chief Executive Officer) briefed the Committee on the State Theatre’s activities over the last year. Over the last few months the “Phantom of the Opera” brought in 175 000 people into Pretoria and the State Theatre had also managed to fill its smaller theatres with two shows during the term.

The State Theatre had continued with it’s Adult Basic Education and Training (ABET) programme and had a number of training programmes lined up for the New Year. The Gauteng Public Works Department had started the task of restoring the building and a grant from the Japanese Government has led to new sound equipment worth around R2.5 million.

The South African State Theatre’s residency programme as well as its co-productions and collaborations were also presented. Its strategic direction with its key objectives and its service delivery improvement programme were also discussed. The State Theatre also had an information technology resource strategy as well as an artistic policy. It had a number of purposes and it facilitated artistic entertainment through a variety of productions. Mr Sekhabi also briefed the Committee on the State Theatre’s development and marketing plans saying the only way to sustain the industry was to nurture young talent. The success of the development, advancement and empowerment programmes depended on the financial support from the Department and its funding agencies.

Ms K Pienaar (Chief Financial Officer) presented the State Theatre’s financial statements for 2004/2005 to the Committee. She took over from the previous CFO a month before the end of the 2004/2005 financial year. The total revenue of the South African State Theatre was R44 million. This was made up of other revenue received which totalled R22, 729 million and the total grants received from the Department of Arts and Culture which totalled R21, 857 million. The State Theatre incurred a number of operational costs, the bulk being administration costs which totalled R28 million and this included audit fees which added up to R435 000. Other expenses totalled R9.6 million which consisted mainly of the normal critical operational costs and staff costs totalled R25, 464 million. The South African State Theatre’s financial statements showed that it had a deficit of R7.5 million.

Discussion
Ms Van der Walt enquired if the grants received by the South African State Theatre were provided by the NAC. She also wished to know what the source was of the finance income received by the State Theatre which totalled R406 000. If this source was interest, which banks had the State Theatre invested in? She also was unsure of what Satchmo’s was which was a source of revenue in the financial statements.

With regards to the audit fees, Ms van der Walt wanted to know if the State Theatre employed both external and internal auditors. How many members made up the board and were they remunerated per sitting or did they receive a fixed income? Lastly she noted that the staff costs made up twenty five percent of the total costs. This was in order as it was under thirty six percent of the total costs.

Ms Pienaar replied that the finance income was interest and it was from a fixed deposit at ABSA bank which was one of the top four banks in South Africa. The State Theatre had to invest its money as it received its operational grants every quarter and had to reap the interest from these investments for cash flow purposes. Satchmo referred to in the financial statement was the State Theatre’s staff bar. After certain functions audiences were also invited to enjoy the entertainment area of this bar. The audit fees consisted of both internal and external audit fees. These fees had increased due to internal auditors coming on board recently. The board consisted officially of eight members who were required to attend three meetings a year.

Ms Ramodibe noted that the financial statements included an audit fee. However, the audit report had not been presented to the Committee. Without this report Members could not detect the accurateness of the financial statements.

Ms Pienaar highlighted that the income statement had been derived directly from the Annual Report of the State Theatre. This Annual Report also included the Audit Report and it had been sent to the Committee Members.

Ms Tshwete was confused as the financial statements presented only covered the year 2005 and not the current year.

Ms Pienaar confirmed that these financial statements only covered the year 2005. The statements for 2006 had not been audited yet.

Ms N Mbombo (ANC) sought further clarity on the travel costs that were included in the financial statements.

Ms Pienaar explained that these travel costs referred to the cost incurred when staff members travelled overseas to conduct production investigations and to see how other theatres operated. It also included systems analysis and the travel costs of staff that travel within the country if it is work related. The allowance provided to staff travelling in the country was R196 per day.

Ms Ramodibe noted that a deficit existed. How was the State Theatre planning to cover this deficit?

Ms Pienaar replied that the deficit of R7.9 million referred to the obligations to ex-employees of the State Theatre. This amount would therefore be revalued at the end of every financial year. She had done so recently and this amount had been reduced by R3.1 million.

Ms Van der Walt noted that the audit report had moved from one that was qualified to one with an emphasis of matter. She requested more detail be given on this emphasis of matter.

Ms Pienaar answered that there were four emphasis of matter. Firstly, the State Theatre had been late with its financial statements. This would not happen again as the two previous CFOs had left the State Theatre in the dark and this meant that a number of items had not been in place by the 31 March target date. Secondly, a fraud prevention plan had not been put in place. The internal auditors had created a plan and had put it in place by the middle of March. Thirdly, bank reconciliations which were supposed to be done on a weekly basis were being done on a monthly basis. However, as from 1 April 2005 these bank reconciliations have been done every week and have been signed by Ms Pienaar and the Chief Executive Officer. The last matter of emphasis was the progress with the Standing Committee on Public Accounts (SCOPA). This was out of the State Theatre’s hands as it was a problem that was inherited and it could do nothing about it.

The Acting Chairperson thanked the South African National State Theatre. He stated that the Committee would follow the usual route of discussing the presentation and would then make any follow-ups if they were necessary. The Committee would try to address issues of interest to government and to the State Theatre in the future.

Adoption of the Budget Vote Hearings Report and the Minutes of the meeting on 23 May 2006
The Acting Chairperson asked the Committee if there were any matters that were outstanding regarding the budget report. He noted that the report showed that the Committee had met with seven of the twenty-seven entities that fell under the Department.

Ms Van der Walt felt that these entities should not meet with the Committee after the budget vote had already occurred. These entities should rather present their case before the budget vote took place. It was also bad that only seven out of twenty-seven entities made submissions to the Committee.

Mr Maluleka pointed out that the Committee had met with some of the other entities during the previous year, after the previous budget vote, and therefore within this budget year.

Ms Van der Walt agreed with Mr Maluleka that other entities had met with the Committee towards the end of last year and that these meetings fell within the present budget report.

The Acting Chairperson responded that this budget report reflected the meetings held with entities from the beginning of March 2006 up to the present.

Mr Maluleka argued that the meetings held with entities in the previous year also fell in this 2005/2006 Budget. Did this not mean that these meetings should be included in this Report or did the Report rather correspond with the Committee’s Programme for 2006?

Ms T Cawe (Committee Secretary) replied that the entities that met with the Committee at the end of the previous year presented their Annual Reports and Financial Statements. However, the Committee then decided that it should call entities that had not appeared in front of it to make a presentation to Members. The Committee had also acknowledged that due to time constraints it would not be able to meet with all twenty-seven entities and would therefore only meet with a few of them.

Ms Van der Walt suggested that the wording in the Report should therefore be changed from “the following entities participated in the budget hearings” to “apart from the entities that did presentations to the Committee in 2005, these entities made presentations to the Committee in 2006.” This change was important as the Committee could not cut out those entities that had made presentations during the previous year as many of them had been required to furnish information on their strategic budget plans at that time. These entities formed part of the present financial year.

The Acting Chairperson agreed that the continuation of Committee meetings with public entities needed to be reflected. The Committee had met with a number of the larger entities during the previous year who spoke about the smaller entities who met with the Committee during this year. However he also agreed with Ms Cawe that the Committee would not be able to meet with all twenty-seven entities. He enquired whether Committee Members agreed with the proposed sentence change in the Budget Report so that it represented a flow from the previous financial year.

Ms Van der Walt argued that it should not represent a flow from the previous financial year. She reiterated that the meetings held with the entities that occurred after the previous budget vote fell into the present budget vote period. She also highlighted that a financial year consisted of twelve months and it would therefore be possible to meet with all twenty-seven entities as this would mean only two to three meetings a month. However, a number of entities that had appeared in front of the Committee during the present financial year had not been included in the present budget report.

Ms Tswete proposed that the list of entities that met with Committee during the previous year should be checked and those that had been omitted from the budget report should be added to the list.

Ms Cawe replied that the previous budget report that included these entities had been adopted at the end of 2005 under Ms Jacobus, the former Chairperson. She enquired whether she should combine this report with the present budget report so that one report would be created that included all these entities.

The Acting Chairperson concurred that these budget reports should be combined.

Mr Maluleka highlighted that the previous report had already been adopted by the Committee and dispensed with. This meant that it could not be altered or combined with the present budget report.

The Acting Chairperson proposed that the current budget report be adopted with amendments. Members could then go through the report afterwards and propose amendments to the Chairperson or to Ms Cawe and these could then be added at a later stage.

Mr Maluleka felt that this proposal was problematic as in principle it would be wrong to adopt a report and then change it at a later stage. The Committee should rather adopt the report once all the amendments had been made.

The Acting Chairperson agreed and proposed that the Committee go through the report conventionally, make amendments and then adopt it. However, he asked the Committee if it wished to do this at a later stage. Members could first study the report, come to the following meeting with amendments and the report could then be adopted.

The Committee agreed to come to the next meeting with proposed amendments and to adopt the budget report.

Ms Cawe requested that the Members read through the report and then send any proposed amendments to her before the next meeting so that the corrections could be made before the meeting and the budget report could then be ready for adoption.

The minutes of 23 May 2006 Committee meeting were adopted with grammatical corrections.

The Acting Chairperson warned Members in advance that the meeting held on 6 June 2006 would deal with the Committee Programme for the rest of the year. Members were requested to look at the proposed programme and make any necessary changes so that it would be ready for submission at this meeting.

The meeting was adjourned.



 

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