Statistics South Africa and National Treasury 2005/06 Annual Reports: briefings

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Finance Standing Committee

09 October 2006
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Meeting report

FINANCE PORTFOLIO COMMITTEE
10 October 2005
STATISTICS SOUTH AFRICA AND NATIONAL TREASURY 2005/06 ANNUAL REPORTS: BRIEFINGS

Chairperson
: Mr N Nene (ANC)

Documents handed out:
Statistics South Africa presentation
Statistics South Africa Annual Report 2005/06 (available at
www.statssa.gov.za).
Analysis of Statistics South Africa Annual Report 2005/2006
Stats SA response to Committee Report on its 2004/2005 Annual Report
Committee Report: Oversight hearing of Statistics South Africa Annual Report 2004/05

 

Analysis of the National Treasury Annual Report 2005/2006 part 1 and part 2
National Treasury 2005/06 Annual Report: Erratum
National Treasury Annual Report presentation
National Treasury Annual Report (available at
www.treasury.gov.za)

SUMMARY
Statistics South Africa and National Treasury briefed the Committee on their 2005/06 Annual Reports. The presentation by Stats SA focused mainly on their strategic overview, organisational performance and the performance of various programmes. Some of the key strategic achievements included capacity building and providing useful information to meet the user’s needs.

The issues raised by Members included the fact that Stats SA failed to achieve their various targets. Members were also concerned with the vacancy rate and asked Stats SA how they planned to resolve this.

The National Treasury presentation focused mainly on the public finance report and how they planned to tackle the vacancy rate. The issues that were raised by Members included supply chain management issues, funding for the 2010 Soccer World Cup, how South Africa would influence the G20 and what influence organisations such as the International Monetary Fund and the World Bank had on South Africa’s monetary policy.

MINUTES
Stats SA Presentation
Stats South Africa was represented by Mr PJ Lehohla (Statistician-General), Dr H Gabriels (Chairperson: Statistics Council), Dr J Arrow (Deputy Director-General: Quality and Integration), Dr L Gavin (Deputy Director-General: Statistical Support and Informatics), Ms N Mokwena (Deputy Director-General: Corporate Services), Dr R Cassim (Deputy Director-General: Economic Statistics), Ms K Masiteng (Deputy Director-General: Population and Social Statistics), Mr T Oosterwyk (Manager: Communications) and Ms A Latief (Chief Financial Officer)

Mr Lehohla begun the presentation by stating that the aim was to highlight progress made in strategic priorities, to report on the performance of Stats SA against stated targets and to highlight challenges and future plans. The key strategic achievements by Stats SA in 2005/06 include the promotion of good governance by reducing the number of emphases of matter, building capacity by providing an internship programme and providing information to meet the user’s needs.

In terms of Economic Statistics, Stats SA conducted statistics on the primary, secondary and tertiary sectors of the economy. The aim was to conduct nine monthly series of statistics; however the series only produced an average response rate of 90%. Stats SA also aimed at providing a general annual household survey on the living conditions of the population, however only one statistical release was published. With regards to quality and integration, Stats SA targeted nine government departments, but only three departments received statistical assessments. In terms of human resource management, Stats SA managed to fill 83% of vacancies and recruited more than 4000 personnel.

Discussion
Mr K Van Wyk (DA) questioned whether the financial statements of Stats SA were in good order as there seemed to be reconciliation discrepancies. He also asked Stats SA to elaborate on how far they are when it comes to moving to an accrual basis of accounting. Stats SA also seemed to have no control over the number of statisticians that are leaving the department; Stats SA should provide solutions to prevent this.

Ms Latief assured Mr Van Wyk that all fixed assets have now been updated. She stated that in terms of creditors Stats SA was moving towards an accrual basis of accounting and has taken into account the roll-overs.

Ms Mokwena stated that the problem regarding leave has been identified and the process of correcting the problems that emanated from leave started in February, and is being corrected.

Mr A Moloto (ANC) stated that one of the reasons why the inflation target was not achieved was due to poor quality of information; therefore Stats SA should provide reasons for the poor quality of information and what was being done to correct this.

Dr Arrow stated that Stats SA had an arrangement with the South African Revenue Service (SARS), which allowed them to gain access to tax records. On the basis of the records a sample was drawn; however the sample turned out to be incomplete. However since this sample process was a learning curve, the next sample will be more accurate.

Dr Cassim stated that in order to improve the survey, they hired a team of experts to visit various firms and engineering associations in order to investigate whether the output has changed. Also in 2007 Stats SA plans on releasing a large sample survey of products, which will determine the new Producer Price Index (PPI).

Mr J Bici (UDM) asked Stats SA to elaborate on what the reduction of emphasis of matter means and why statistics were taken from only three government departments. The presentation stated that there is targeted expenditure on monitoring; however no reasons are provided for the monitoring.

Dr Arrow stated that the 3 departments were targeted because they were the most important. The choices were not accidental but were made as a matter of national priority.

Ms Latief stated that in terms of the matters of emphasis, Stats SA had 10 emphasis of matter which has now been decreased to four. In terms of monitoring Stats SA targets and monitors their internal organisation. It does not monitor governmental or municipal structures in any way

Mr M Johnson (ANC) asked about the issue of co-ordination, and what Stats SA is doing in terms of monitoring co-ordination with regards to relations between the municipal councils and government. Also Stats SA should provide reasons into whether it is possible to monitor delivery growth amongst municipalities.

Dr Arrow stated that when it comes to co-ordination Stats SA has an advantage in that they provide useful information that affect departmental policies. However Stats SA does not have the power to demand consistency on the information provided, it merely provides information.

Mr S Asiya (ANC) stated that all departments should provide follow-ups to concerns raised by the Committee. Stats SA should implement a strategic plan with regards to the input and output as well as the budgeting of the various departments, in order to inform the public on the way forward.

Dr Arrow stated that he understands the frustrations that many of the committees have with delivery, however Stats SA merely provides information to the departments.

Ms J Fubbs (ANC) states that the annual report showed inconsistencies on the number of Memorandums of Understanding. Also Stats SA should provide a clear report into why the target was not achieved with regards to resignations.

Dr Arrow apologised for the lack of clarity and hoped that it will improve in their next report.

Mr K Moloto (ANC) asked Stats SA to elaborate on the amount of R579 000 that was written off due to tax penalties. An explanation should also be given on the under utilised amount for local and foreign aid. Finally Stats SA should elaborate, if possible, on the R73 million contributed to the revenue fund.

Ms Latief stated that the R579 000 was for a tax penalty which was brought to their attention during the 2005/06 financial year. In terms of local and foreign aid, those projects are still ongoing. The R73 million was due to a large number of roll-overs.

Mr B Mnguni (ANC) asked for an update of the process to re-engineer the Producer Price Index (PPI). The report does not provide sufficient information with regards to the vacancy rate, is it possible for Stats SA to give the rate and how they planned to fill vacancies?

Dr Cassim’s response to the question of re-engineering of the PPI was that in order to construct a basket, one has to investigate what is measurable. Once the basket has been measured it is monitored continuously.

Ms Mokwena stated that the vacancy rate is at 17%.

Ms L Mabe (UDM) questioned why the health information target was not achieved. With regards to recruitments and promotion, it is unacceptable that black females are not represented in top management and she asked what the department is doing to address the lack of women in top management.

Mr Moloto asked about the impact immigrants have on the South African population in terms of service delivery. Could Stats SA elaborate if the issue of recruitment is still a problem as they aimed to have 90% of the vacancies filled but only managed to fill 83%?

Ms Mokwena argued that people within the organisation, in terms of promotions, first fill the vacant posts. However the process of filling the vacant positions and the processing of contract workers usually has an impact on the available resources.

Mr Johnson questioned the issue of municipalities’ Millennium Development Goals (MDG) targets and how municipalities hoped to achieve these targets. In terms of the information available on the Stats SA website, Stats SA should elaborate on how the information would impact on the ordinary South African. Finally, if possible could Stats SA elaborate on how they planned to inform people about the Census?

Mr Lehohla stated that the problem with the MDG targets is due to co-ordination; however co-ordination will get better once the targets converge geographically.

Ms Gavin argued that people who access the website are going to use the information. As a matter of fact the website has received a large number of hits, therefore people are using the information.

Mr Oosterwyk stated that before conducting a census, Stats SA appoints publicity officers who travel around various communities and explain to them what the surveys are all about. However some of the obstacles include the fact that sometimes people feel that the questions are too personal, and sometimes the lack of experience of some officers is problematic.

Ms Mabe questioned the relevance of having key information only available on the website, since the people in the rural areas lack internet access. She asked what measures have been put in place to sustain the unqualified audit report.

Ms Gavin argued that the issue of providing key information as broadly as possible is one that Stats SA would need to explore further and they are open to new ideas.

Ms Mokwena stated that when it comes to sustaining an unqualified audit, Stats SA investigates all problems and addresses them before the audit report is issued in order to ensure that the system has fool proof controls.

Ms Latief argued that continuous evaluation was very important as an audit report was an ongoing process.

Ms Fubbs asked why it took so long to establish a joint working party with the Department of Education on the integration and improvement of the quality of registrars of government.

Mr A Harding (ID) stated that government could not function properly without taking the work done by Stats SA seriously and questioned to what extent Stats SA connected the information that has been received from their research to the work that has been done by government departments.

Mr Lehohla stated that the national statistics system is faced with a massive task, where one of the most important priorities is to engage with the various government departments in order to know what data to produce.

Dr Arrow argued that in order to provide accurate figures, Stats SA sets targets which enables the departments to concentrate on the most important national priorities.

Mr S Dithebe (ANC) asked if the motor vehicle loans were actual loans.
.
Ms Latief stated that the motor vehicle guarantees were not loans, merely resources that were provided by Treasury.

National Treasury Presentation
The National Treasury was represented by Mr Lesetja Kganyago (Director General), Mr Ismail Momoniat (Deputy Director-General: Economic Policy Relations), Mr Phakamani Hadebe (Deputy Director-General: Asset & Liability Management), Ms Najwah Allie-Edries (Director-General: Corporate Services), Mr Coen Kruger and Mr Freeman Nomvalo (Director General: Office of the Accounting General).

The Director General stated that the strategic plan for 2005/06 focused on promoting sustainable growth and development, reducing poverty and improving intergovernmental fiscal relations. He stated that in terms of public finance, Treasury supported 51 projects of which 26 are new and 25 are ongoing. There is also a dedicated 2010 World Cup office which has been established in order to support the Local Organising Committee. Treasury also plans to establish a municipal desk in order to take responsibility for projects under the Municipal Infrastructure Investment Unit (MIIU); this will be done in order to improve public-private partnerships.

Mr Kganyago stated that the current vacancy rate is at 18%, this is largely attributed to resignations and the expiration of contracts. The vacancy rate has decreased from the previous year and this is due to the implementation of various strategies aimed at developing staff. These included enhancement of the internship programme, awarding of external bursaries and implementation of a leadership development training programme.

Discussion

Mr Moloto questioned the relations between Treasury and the Reserve Bank and what they are trying to achieve by focusing mainly on inflation targeting. He also questioned why an amount of r1 billion had been returned to the National Revenue Fund.

Mr Kganyago stated that Treasury works closely with the Reserve Bank in order to review the options for inflation targeting. Every year they have to evaluate their options of sticking to within the range of 3-6% which is consistent with the potential growth of the economy.

Mr Nomvalo stated that the R1 billion was as a result of Treasury exercising its oversight over the various government departments. This is due to the fact that Treasury held back funds from provinces that were not performing. However most departments have improved their spending.

Mr Asiya asked for elaboration of supply chain management and for a progress report on its implementation.

Mr Lungiswa Fuzile, National Treasury Head: Intergovernmental Relations, stated that the supply chain management issues will be implemented in a phased manner and the process had begun.

Ms Fubbs said that she was confused by the quarterly reports. She also what measures are in place to achieve output from Development Finance Institutions (DFIs).

Mr Fuzile informed Ms Fubbs that the quarterly report is published information that local government received from municipalities.

Mr Mnguni questioned to what extent South African monetary policy is influenced by organisations such as the World Bank and the International Monetary Fund.

Mr Kganyago stated that one of the key roles of Treasury and the Reserve Bank is to protect the strength and integrity of the Rand from interference.

Mr Johnson asked about measures to combat white owned companies from fronting in Black Economic Empowerment (BEE) deals. He also asked for an explanation regarding the problems experienced with the Special Pensions Fund and the Apex Fund.

Mr Kruger assured Mr Johnson that a forensic audit had been done on various BEE companies and action is taken where they find discrepancies. With regards to the Apex Fund the responsibility has now moved to the Department of Trade and Industry. The Special Pensions Fund had a new chief executive who will deal with the problems.

Mr Dithebe commended Treasury for supporting many public finance projects; however he wanted to know how many of the projects were completed on time. Another area of concern is the under spending by the various departments, Treasury should find a way to combat this. Finally, he wanted to know if the implementation of the various staff development programmes has begun.

Mr Kganyago stated that with regards to the completion of projects, Treasury is behind schedule. This is due to the fact that the big local consulting firms are unsuitable. Therefore Treasury had to find international firms and pair them up with smaller firms that are not working with the Department of Trade and Industry.

Mrs Fubbs wanted to know how South Africa would influence the transformation of governance structures in the G20 since it would soon be part of the G20.

Mr Kganyago replied that over the past six years, South Africa has played a big role as the voice of developing countries at the G8 summits, and will continue to push for greater representation of developing countries at the summits.

Mr Asiya questioned where one would find information regarding the external bursaries.

Ms Allie-Edries stated that the bursaries were advertised in newspapers; so far they have allocated 18 bursaries.

Mr Mnguni argued that the cost of building the stadiums for the 2010 Soccer World Cup has tripled and asked Treasury to provide information on how they planned to overcome this obstacle.

Mr Kganyago stated that the cost of building the stadiums would be announced shortly. However it is important to note that that the building of stadiums should not be the key issue. Rather people should focus on the legacy that 2010 will leave behind. People should focus more on the impact the tournament will have on South Africa’s transport and communication network.

Mr Moloto asked what they were trying to achieve by conducting studies on foreign ownership of South African banks.

Mr Kganyago stated that the study began when Barclays Bank took over ABSA last year. It was to determine the impact of foreign ownership of South African banks.

Mr Johnson stated that the resignation rate was very high and wanted to know what had caused it.

Ms Allie-Edries stated that the resignations were as a result of individuals receiving higher remuneration offers elsewhere.

The meeting was adjourned.

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