Terms of Reference to Chapter Nine and Associated Institutions and Outline of the Review Process

AD HOC COMMITTEE ON THE REVIEW OF STATE INSTITUTIONS SUPPORTING CONSTITUTIONAL DEMOCRACY
20 October 2006
TERMS OF REFERENCE TO CHAPTER NINE AND ASSOCIATED INSTITUTIONS AND OUTLINE OF THE REVIEW PROCESS

Chairperson: Prof K Asmal (ANC)

Documents handed out:
Opening statement by Professor Kadar Asmal
Terms of reference

SUMMARY
The Independent Communications Authority of South Africa, the Office of the Auditor General, the Office of the Public Protector, the South African Human Rights Commission, the Independent Electoral Commission, the Commission for Gender Equality, the Public Service Commission the Cultural, Religious and Linguistic Rights Commission, the Financial and Fiscal Commission and the National Youth Commission were represented at the second meeting of the Committee. The Chairperson by way of introduction sketched the background to the upcoming review of these Chapter 9 institutions and then proceeded to introduce the terms of reference for the process. Institutions raised concerns around amongst others departments as well as Parliament’s failure to implement the recommendations they made. The Democratic Alliance was resolute that the review should also evaluate the appropriateness of institutions submitting budgets to their line ministries rather than directly to National Treasury. The Committee intended to have completed their final report by no later than 30 June 2007.

MINUTES
Opening remarks
The Chairperson in his opening statement (see document) remarked on the rationale that informed the decision to include the Chapter 9 institutions in the Constitution rather than in normal legislation. He explained why it was thought that a review of these institutions should be made, why Parliament would conduct the review and what the fundamental issues of concern were. He commented that the significance of Chapter 9 institutions was not always clear during times of democratic order and normalcy. During times of difficulty, when danger loomed and ‘’fear stalks the land’’, such countervailing institutions were of importance in the protection, not of democracy but of ordinary lives. He said that reviews were not necessarily an indication of crisis; they could also be a sign of self-confidence. Public comments were of utmost importance as a measure of the efficiency and relevance of these institutions. The Committee’s review would be comprehensive with each member being assigned two institutions to research and consider how to structure and review.

Discussion of the Terms of Reference
The Chairperson took members and representatives from the Chapter nine institutions through the terms of reference that would govern the activities of the Committee.

The Chairperson said that in most cases Parliament instituted an ad hoc committee to appoint commissions and their secretariats. He had been surprised to learn that in the case of the Commission for Gender Equality (CGE) the Department of Justice and Constitutional Development performed this task. This illustrated that there was no coherence in appointment and employment arrangements. This variance extended to the manner in which posts were advertised. He was also astounded that in some cases Parliament did not know what commissioners’ and executives’ salaries were.

Mr Shauket Fakie (Auditor General) wondered whether the Committee would also consider the staff establishment of the institutions in particular its adequacy and appropriateness.

The Chairperson said that such a review would be left to the internal arrangements of the institutions. Though this was Parliament’s task everyone would agree that it did not have the capacity to undertake such an enormous task. He added that accountability and oversight was a real problem and the Committee would focus its review in terms of appointments on commissioners and secretariats.

The Chairperson said that it was important that the Committee consider what kinds of systems were in place to manage the tensions between Commissioners (appointed by Parliament) and the executive of the institutions.

Mr Jody Kollapen (Chairperson: SAHRC) assumed that in reviewing the governance arrangements of the institutions there would also be a comprehensive review of their legal frameworks which in some cases contained certain inconsistencies and contradictions.

Mr Mongezi Guma (CRL Rights Commission: Chairperson) noted that what was missing from the review was an assessment of the nature of the relationship between institutions and their “sponsoring departments” which in many cases encumbered the work of the institution. He said it was necessary to establish who was responsible for determining that relationship.

The Chairperson said that this concern was covered by paragraph 2(d) and said that th Committee would ensure that the matter was addressed.

Prof S Sangweni (Chairperson: PSC)) pointed out that when considering Parliament’s oversight role and the independence of the institutions the Committee should also carefully consider to what extent recommendations made by the institutions were implemented. He said that there was usually a disjuncture between the recommendations institutions made and whether they were implemented. He suggested that this disjuncture might be due to the fact that they did not have sufficient clout.

The Chairperson explained that in most cases the institutions’ main function was to make recommendations and agreed that the Committee would have to consider the quality of responses to recommendations. The Committee would also carefully investigate what became of the reports the various institutions submitted to Parliament as well as to consider the responses ministers made to such reports and recommendations.

Adv Tseliso Thipanyane (Chief Executive Officer: SAHRC) felt that it was quite important to carefully consider the funding models of the institutions. He hoped that the Committee would also look at how Parliament funded these institutions. The SAHRC had to be funded by Parliament, yet Parliament has no capacity to do so. The Committee should also consider the role Parliament played in this regard.

The Chairperson assured him that members would look at the whole complex manner in which all the institutions were funded as well as the funding processes that were adhered to. While he was minister he had been amazed at the requests for increases in the salaries of commissioners and chief executives that had been made directly to the Cabinet. Currently funding came from departments. Ideally the institutions and National Treasury should agree upon the funding.

Ms Joyce Piloso-Seroke (Chairperson: CGE) requested the Committee to also consider the funding that each of the institutions received. The discrepancies in this area remained a problem.

The Chairperson agreed that there were enormous discrepancies. There was no systematic evaluation of funding; the evaluation differed from one institution to the next. In total the State spent about R3,8 billion on these institutions. The office of the Auditor General and the Independent Electoral Commission (IEC) received the largest amount while the remaining R2,5 billion went towards the other institutions. He added that a careful consideration of whether this money was well spent would also be done.

Ms D Smuts (DA) agreed that the issues of funding were fundamental. One of the useful outcomes of the review would be to get some clarity if not uniformity on what the Constitutional Court had said in dealing with the NNP vs IEC case: Judge Langa had said that a line ministry could not control of a Chapter 9 institution because this mitigated against the entire rationale for independence. Parliament had to perform this task even if it meant that all legislative and policy arrangements, public practices and magistrate’s conventions would have to be adjusted and brought in line with the new Constitutional prescripts. Dr Bam had recently, during an informal get together, said that the IEC now prepared its budget and submitted it directly to National Treasury thus circumventing the line department. The Minister of finance then submitted their budget to Parliament.

She said that greater clarity was needed in the case of the electronic communications regulator, ICASA’s budgetary difficulties. She argued for a convention whereby should institutions need more funding they could approach National Treasury directly. Ms Smuts was also very interested in what budgetary practice each institutions followed.

Saying that the Member had made her point, the Chairperson declared that the Committee would discuss this issue at a later stage. Each institution would meet with the Committee to share their budgetary process. The Committee would also need to know what salaries the executive earned.

He felt that Ms Smuts had focused one just one judge’s judgment; the Committee would look at the matter in its entirety. He agreed that funding was a very important element and an investigation thereof should be accompanied by a very close scrutiny of expenditure. National Treasury did a line by line assessment of budgets; national departments were not necessarily that thorough.

The Chairperson wondered who apart from the Independent Communication Authority of South Africa (ICASA) received money from licenses and transfers.

Mr Paris Mashile (Chairperson: ICASA) wondered whether benchmark studies could also made of how other institutions such as ICASA were funded.

Mr Terence Nombembe (Deputy Auditor General) wondered what the impact of the review might have on the legislative framework that governed each of the institutions. He was curious as to whether the Committee would be championing amendments to the legislation or whether each the institutions would have to do that on its own.

The Chairperson explained that the Committee would, that coming Wednesday, pass a questionnaire of about 15 questions that would be sent to the different institutions. It would contain several questions related to whether officials were satisfied with the manner in which the institutions were structured.

He said that there might be a need to make some general amendments to existing legislation. There might also be a need for constitutional amendments against which he cautioned, saying that such amendments should be taken very carefully.

Referring to work the IEC did outside of South Africa’s borders, Ms Pansy Tlakula (Chief Electoral Officer: IEC) asked whether the Committee would be mandated to consider the impact that huge international demands, which had not been anticipated when legislation was passed, had on the IEC.

The Chairperson acknowledged the legitimacy of this question and said that the Committee would certainly investigate such concerns too. He added that one would also have to consider commissioners’ and executive members’ frequent overseas visits and whether these could be justified. Issues of absenteeism would also have to be addressed.

Dr Setai (Chairperson: FFC) said that the FFC was also required to assist in the New Partnership for Africa’s Development (NEPAD) related maters despite the fact that such activity did not fall within its mandate.

The Chairperson reminded all present that South Africa was still being treated with much respect by the rest of the world. He thought that this status should not only be recognised in the legislation but also within the budget.

The Chairperson said that Parliament had added this paragraph thus including associated institutions within the review.

Mr Fakie noted that the Committee’s review would be conducted in reference to other organs of the State. He asked whether the terms of reference would also include the old Rule 66 of Parliament which was aimed at passing a substantive motion in the House when allegations were made against Chapter 9 institutions. He wondered whether the Committee would review this particular provision.

The Chairperson said that the provision would remain because it was important that Parliament should be involved in the process so as to ensure accountability and to address matters when misconceived, vicious statements were made about the Chapter 9 institutions.

Ms Pumla Madiba (CEO: CRL Rights Commission) said that in the communication the institutions had received from the Committee reference had been made to the fact that the review would also look at whether the institutions were suitable to the South African environment. She said that this raised questions around what the South Africa environment was.

The Chairperson noted that environments changed. The issue of language rights and culture were also tied up with the question of self determination. South African society had changed much in the last decade and it was up to the institutions to assess and determine the nature of the society at any given point in time. The Committee could not give them the answers. Their reports should cover the distinctive changes within society and how they related to those changes.

Ms Chana Majake (CEO: CGE) wondered whether the impact of Chapter 9 institutions would be assessed and was curious as to what scientific process and methodology would be used to assess the different institutions.

The Chairperson answered that it was in the institutions’ own interest to carry out such evaluation. He said that whether the institutions had evaluated impact would be one of the questions asked in the questionnaire. The Committee had agreed that there would be an opinion survey too. It was good that the media were present so that it could be reflected that Parliament was starting to look at Chapter 9 institutions. He added that nothing in a democracy was self evident – evaluation and interrogation was important.

Referring to untrue statements that had been made in the media, Mr Guma raised a concern around the amount of import that was given to anecdote rather than tested information.

The Chairperson said that institutions made hundreds of recommendations that were never responded to or acted upon. One government department for instance had received qualified audit reports for 10 years running! This illustrated that departments and accounting officers took very little responsibility as far as implementation of recommendations (which by their very nature were not binding) was concerned.

Mr Kallopen agreed that one could not make one’s recommendations binding. One could however make it obligatory for some departments to respond to recommendations. The South African Human Rights Commission had a provision requiring a response within a certain period of time.

The Chairperson wondered what Parliament’s role was in cases where there was a continuous line of failure to respond to recommendations.

Adv Thipanyane said that he hoped that the Committee would under Paragraph 2 (b) also look at Parliament and how it responded to the many recommendations that organization had made. The SAHRC would not make further recommendations to parliament because their recommendations were not responded to.

The Chairperson asked whether the recommendations were made to the Speaker or to the portfolio committees.

Adv Thipanyane responded that in terms of the Constitution the SAHRC was accountable to Parliament and therefore had to report to it. Their reports were sent to the Speaker and they expected that Parliament received the recommendations.

The Chairperson was pleased that institutions were already making useful recommendations. The Committee would look into the matter that had been raised. He added that Parliament was setting up a resource centre where annual and special reports would be kept for up to five years. The centre would serve the office of the Speaker.

Mr J van der Merwe (IFP) said that it was important to remember that Parliament and the Speaker were not above the law. If the SAHRC wrote to the Speaker and she ignored them they should report her to the Public Protector. He had for instance reported the Minister of Justice “who has not done her work for three years” to the SAHRC.

Ms Piliso-Seroke was also concerned about what happened to the Commission’s reports once they had been submitted to Parliament.

The Chairperson responded that the day before he received thirty-five reports. He added that it was not very easy to evaluate an annual report if departments did not include what they had said the previous year.

Mr T Delport (DA) sensed that the Chairperson’s recommendations and views were not always taken seriously. He wondered whether the Auditor General could inform the Committee as to his expectations of a department that had year upon year received qualified reports. He said that in the interest of bolstering democracy and governance institutions should bear in mind that the departments they assessed also looked at them for their reactions to poor assessments and failure to respond to recommendations. If no action could be taken there was no need to respond.

Mr van der Merwe wondered whether the institutions could from own initiative from take action when they saw clear abuse of power and waste of money. He had read that Ministers had spent much money on parties at their annual budgets, MEC’s also spent much money, huge bonuses and salaries were being paid to CEOs and Government ignored high court judgments. The public did not appear to know where to take their complaints.

Mr Fakie responded that it was important that repeated qualifications be read and understood within the context within which they were made. Some of the audit qualifications were very technical in nature because his office audited to international standards and often technical issues resulted in the qualification. When his office qualified an audit report, the qualification often emanated from a technical auditing point or a technical accounting point of view.

He added that there were also those qualifications that resulted from a very blatant disregard of accounting treatment. This was a very basic aspect and therefore of greater concern. Members also had to bear in mind the accounting framework according to which departments prepared their accounts changed year after year. Every single year National Treasury put out new guidelines and new disclosure requirements with the intention of getting departments to move from a cash basis of accounting to an accrual basis of accounting. Each year the bar was being raised in terms of the requirements and often departments got qualifications because they were not able to meet with the increased requirements. Qualification was thus not necessarily based on the original problem. He agreed that it was necessary to find those issues that were repeated year after year and then to find a means of addressing them.

He pointed out that the Auditor General could only make recommendations and could not take any actions around wastage, inefficiency around how public resources were being utilised or whether there was a disregard for certain accounting treatment. They could only make and try to monitor these recommendations. They needed to find a mechanism of how to monitor these recommendations. Parliament normally endorsed the recommendations and sometimes added additional ones. A follow up and monitoring system would put more pressure on departments and entities to act on recommendations. The Auditor General however had no authority to take action. Parliament approved the budget granted by Treasury. He advised that Parliament could perhaps request a breakdown of the budget so that they could have a clear picture of how money would be spent before they approved it. He cautioned that once a budget was approved and the department spent within the framework of the budget there was nothing that could be done.

Mr Lawrence Mushwana (Public Protector) said that a specific provision allowed his office to initiate an investigation when there was an allegation of abuse of power or maladministration. His only concern related to their capacity to locate each and every such case. He assured members that there where his office became aware of such cases they reacted. He added that many such cases were unfounded but needed to be investigated when they were reported to determine whether they were spurious or not.

Adv Masutha said that the Committee should welcome criticism by the Chapter 9 institutions as far as Parliament’s ability to fulfill its own constitutional mandate in terms of oversight. He felt that Adv Thipanyane’s comment should be taken seriously and looked at more closely.

The Chairperson agreed that the issue should be addressed and did not think that there would be a simple solution.

Ms Smuts was pleased that the review had passed from the Executive to Parliament. She hoped that Paragraph 2(b) of the terms of reference did not imply possible constitutional amendments. The Constitutional Court judgment in its certification said that each body had to be dealt with according to its nature. This was why the two watchdog bodies - the Auditor General and the Public Protector – were required to have a 60% supporting vote from the National Assembly at the time of their appointment. The appointment mechanism was set out in the Constitution and she hoped that not too much enquiry would go into that.

She hoped that now that the review had passed to Parliament and the ball was in the Committee’s court they could help the Committee to take the process forward by perhaps giving concrete proposals on the structures in Parliament that should hold them to account. Each institution was appointed to a portfolio committee that understood the work the institutions. In some cases however an institution like the SAHRC should surely have to report on socio economic rights to other committees as well. She wondered whether the institutions were reporting to enough committees of Parliament and asked whether there was space for a separate committee that would interact with them in a corporate and collective sense.

Prof Hugh Corder from the University of Cape Town’s Law Faculty had proposed that a single committee could do all of the holding to account, assessment, budgetary evaluations etc. At that stage everyone felt that the matter was not quite resolved and she herself had felt that they could function without the portfolio committees. She wondered whether there was a space for a supervising committee which would look at appointments, removals from office and most of all budgeting and funding.

The Chairperson said that those questions had already been referred to and would also be addressed in the questionnaire. He assured Ms Smuts that everything about the appointment system would be on the table for closer scrutiny.

The Chairperson then detailed the process the Committee would follow during the review. In the coming week the Committee would meet with research institutions and the Chapter 9 institutions would be welcome to send representatives. The Committee would also in the following week send out the questionnaire which institutions should complete by 15 December but not later than 10 January 2007. It would be comprehensive questionnaire and the Committee would like replies. He added that it would be in every body’s best interest if they were answered as comprehensively as possible. He added that the Committee intended to publish the names of the Departments who have responded to the questionnaire.

Each member of the Committee would take consider and interact with two institutions. Some institutions were very technical in nature while others were very broad and general. In February the Committee would start meeting with each of the institutions individually. The meetings would not be less than three or four hours, in some cases they may be the whole day. At that time the Committee would have not only read the responses to the questionnaire but would also have interacted with the annual and special reports.

Individual meetings with approximately eight ministers would follow. The Committee would then ask for written submissions from non-governmental organisations (NGOs) and would select the ones to meet with. The Committee would then be able to meet what the general public to find out what their experience of the institutions were. If the institutions had letters of commendations or complaint they should share these with the Committee so that Members would have an idea of the kind of responses they have been getting. The Committee hoped to finish its work by April so that it would have at least a month in which to write the reports and have discussions. At this stage the Committee might have to call the institutions back.

The report by its very nature would be between 150 and 200 pages and the Committee intended to stick to the deadline despite that the pressures the beginning of the year normally held for Parliament and government departments.

Mr Guma thanked the Chairperson for the clarification of the process. He said that it would be helpful if the Committee could invite institutions well in advance so that they could adjust their plans appropriately. He requested the Committee to once they had finalised their research call the institutions back as a group to test its findings.

The Chairperson responded that the Committee would not be treating the review as an academic exercise. Members were parliamentarians not consultants. He urged institutions to treat the review with utmost urgency; everything else except the most important aspects of their responsibilities should be set aside until the review had been finalised.

Ms Tlakula asked whether selected members of the Committee would go to institutions to do the individual assessments.

The Chairperson said that at the first stage the Committee would meet with the chief executives and the chairpersons. If a member of the Committee thought it necessary they were mandated to investigate further.

Mr Kollapen said that while he understood that most of the work would be happening in Cape Town, he felt that it would be valuable for members who had been assigned to certain institutions to go and visit those institutions to get a feel for the day to day activities at these institutions.

He said that the SAHRC had always welcomed the idea of review. As an independent institution they took their independence and accountability seriously but did not think that they were so independent that they “lived somewhere in splendid isolation”. They took accountability seriously but were concerned that they were unable to be held properly accountable if they reported to Parliament for two hours once a year. This was not due to lack of will but rather due to a process that failed to work effectively. Given the amount of money that the Government spent on these institutions South Africans were entitled to ask the fundamental questions around whether they were getting value for money, whether institutions were functioning optimally and whether current external and internal arrangements were the best possible.

The SAHRC intended to participate fully. Collectively the Chapter 9 institutions occupied an important space in the architecture of the democracy. The outcome of the review should not expressly or otherwise reduce that space. In saying that the space should be kept or increased one should jealously guard it. One should obviously interrogate whether the space was used effectively and that was what he understood the purpose of the review was. He hoped that the Members’ colleagues outside of the Committee shared the sentiments the Committee had expressed.

Mr Mushwana echoed the sentiments expressed by the Mr Kollapen. It was his office’s undertaking too to give the Committee its cooperation. This review was something it had been waiting for, for quite some time and it had openly resisted the suggestion that the review be conducted by the Minister. His office was pleased that finally the process would be conducted by an appropriate body. His office would be particularly interested in the process since it would indicate whether the institution served its purpose or not. For the past four years they had tried to reach out to where the people were and they had been unable to. The review would assist them in achieving their goals.

Ms Piliso-Seroke said the Commission welcomed the review which was long overdue. They had year after year been reporting to Parliament of the many challenges they were faced with as well as with suggestions for strengthening the Chapter 9s. They were pleased that that the opening remarks had made mention of the fact that the CGE had waited for six months before Commissioners were pointed. This had been discussed in Parliament and it had caused much uncertainty and insecurity. The GCE did not know whether they belonged or not. The CGE would also cooperate with the Committee.

Ms Tlakula also thanked the Committee and pledged their cooperation. The IEC was going through its own internal review so this review would be very helpful. She highlighted that the IEC despite being excited about being involved outside of South Africa’s borders was challenged by some of the demands that were made on it.

Prof Sangweni underscored what had already been said. The PSC also welcomed the review and hoped that it would bear weight in addressing some of the serious concerns. He hoped that through the review institutions would be strengthened so that they would be able to strengthen the developmental state.

Ms Margaret Bethlehem (CRL Rights Commission) welcomed the review as an opportunity that would hopefully provide them with a permanent home – they were currently under the DPLG while many think that they should perhaps feature under the Department of Arts and Culture.

The Chairperson thanked everyone for their participation.

The meeting was adjourned.