Department Budget and Strategic Plan 2007/8: briefing

SCIENCE AND TECHNOLOGY PORTFOLIO COMMITTEE
6 March 2007
DEPARTMENT BUDGET AND STRATEGIC PLAN 2007/8: BRIEFING

Chairperson: Mr E Ngcobo (ANC)

Documents handed out:
DST Budget and Strategic Plan 2007/08-2009/10
Toward a National Foundation for Technological Innovation
National Human Capital for Science, Engineering and Technology Plan

SUMMARY
The Department of Science and Technology presented an overview of its initiatives, the business plan and budget for the 2007/08 year and the ten-year strategic plan. The presentation further covered detail on two of the key initiatives: the Foundation for Technological Innovation and the plan for increasing Human Capital. 

Members asked for clarification of the roles and functions of proposed organizations; human capital initiatives; the desirability of producing large numbers of doctoral graduates; the application of research technology to poverty alleviation and the long term framework for science and technology in South Africa.

MINUTES

Introduction by Chairperson

The Chair opened the meeting by welcoming the Department of Science and Technology’s (DST) Deputy Minister, Derek Hanekom, who sat in on the meeting. The Chair reminded the Department that Members should have copies of the presentations beforehand to allow them to engage constructively.  Clarification was sought from the Department on whether the Square Kilometer Array (SKA) initiative would be left out of the discussion. 

Dr Phil Mjwara (Director-General) explained that the SKA project was a large one which the Department felt warranted a separate meeting in order to fully discuss it.  He asked the Chair’s permission to omit its discussion from the meeting.

The Chair agreed but warned that effort needed to be put in to find time to have the SKA discussion at a later date.  The following key messages from the President’s State of the Nation Address were then highlighted for deliberation during the meeting:

-Upholding standards
-Continuous consultation with the masses in bringing government closer to the people to improve feedback mechanisms
-Effective use of Sector Education and Training Authorities (SETA)
-Social investment initiatives
-Assessing the second stage of the National Security Strategy
-Unpacking the codes of good practice in broad based economic empowerment initiatives
-Monitoring the recapitalisation of further education and training and increasing funding for tertiary institutions and students

Briefing by the Department
Dr Mjwara explained that the presentation dealt with the strategic plan and budget in order to highlight the thinking in the Department on the direction of Science and Technology over the next ten years.  It was important to focus on human capital development, bridging the gap between research results and benefits for society and ensuring that the activities of the DST linked up with other government Departments.  The proposed Public Benefit Fund would be introduced.

A mapping exercise was carried out on the Department’s Research and Development (R & D) Framework to identify areas where intensification of efforts and initiatives were needed.  It emerged that the Department was achieving results in terms of research but that intervention was needed in converting research into technological advances of benefit to society.  The Foundation for Technological Innovation was proposed as a funding agent to ensure that funds were available to convert applied research into technology, operating mainly in the private sector.  The Foundation for Public Benefit was proposed to consolidate the current Poverty Alleviation Project.  Also proposed were Competency Centres which were explained as distinct from Centres of Excellence.  The latter were focused on the publication and generation on new knowledge, whereas the Competency Centres would be aimed at increasing the number of patents generated. A ten-year plan was in the process of being developed which would be shared in full with the Committee at a later date. 

Dr Mjwara briefed the Committee on the achievements of the Department over the last year and on the changes to the budget, as shown in the presentation.  In summary, the main focus of the Department for the years ahead would be on contributing to the economic growth of the country, with emphasis on converting research into innovation and the development of human resources.

Mr Dhesigen Naidoo (Deputy Director-General: International Cooperation and Resources) presented the proposed National Foundation for Technological Advancement.  The impetus for the initiative came from South Africa’s history, in terms of the National Research and Development Strategy, and, more recently, from a large scale review made up of a system wide meta-analysis of individual reviews conducted by each sector, an independent review of the system for European Union funding and a review by international peers.  A ten-year plan for the National System of Innovation (NSI) was devised.

While the Department was improving the production of knowledge in the community, it was necessary to convert this into meaningful interventions which would give rise to economic growth.  In ‘normal’ economies this would happen naturally with private sector enterprises seizing on ideas and furthering innovation.  However, in South Africa there was a need for the public sector to intervene in this regard.

It was shown that in terms of basic research, the Department had both interventions and funding in place.  Also, in terms of the transfer and proliferation of technology there were funding structures set up but it was specifically here that poverty reduction efforts were necessary.  The Public Benefit Fund was proposed as a consolidating instrument in these efforts.  The Foundation for Technological Innovation (FTI), on the other hand would bridge the gap between applied research and transfer and proliferation. 

The objectives of the FTI were elucidated as shown in the presentation and the business plan was explained.  In terms of International Benchmarking it was specifically pointed out that while clear benefits were seen in other developing nations, such as India, China and Korea, which had implemented similar systems, even highly functional first world countries were still using this kind of intervention in order to maintain their competitive edge.  The legislative timetable and development modality was also outlined.

Dr Bethuel Sehlapelo (Deputy Director-General: Technology Missions) presented the plan for increasing the number and productivity of researchers in South Africa.  In comparison with other countries, South Africa fared poorly in terms of production of PhDs, outputs of research, i.e. publication of journals, and registration of patents.  The packaging of knowledge into patents from which value could be extracted was seen as the main emphasis of the initiatives of the DST.
The goals and planned interventions were explained.  Included in these interventions was increasing access to both Masters and PhD programmes, making these more attractive to potential students and exploiting international training potential. 

It was noted that monitoring and evaluation of the interventions were necessary and specific key indicators were identified.  It was also acknowledged that the process was complicated and areas still to be interrogated were highlighted.  The timeline for implementation of these interventions was then outlined, with a final draft aimed for June 2007.

Discussion
The Chair voiced disappointment that two important points had been omitted in the initiatives: political strategy and tactics and scarce and strategic skills.  However, on the whole the initiatives were pronounced as excellent.

Mr P Nefolovhodwe (AZAPO) asked whether the Public Benefit Fund would house all the poverty alleviation programmes currently scattered in pockets throughout governmental departments as this current strategy was not efficient.

Mr Nefolovhodwe was pleased with the proposed FTI as currently there was no conversion of technological knowledge into practical reality.  He asked whether this would also be housed in the public sector as one holistic strategy.  The only reservation was that previously private sector input took the benefits of such innovation out of the reach of ordinary communities and reassurance was sought that this intervention would be different.

Mr B Mnyandu (ANC) commended the concept of an FTI because dissertations and theses would then add value to knowledge and there would be a strengthened need for new knowledge and thus an impetus to further study.  The quality of PhDs would also be greatly improved and instead of just a continuation of knowledge, as was largely the case at present, there would be a greater generation of new knowledge.  He asked whether the role of the research chairs at universities would focus on that production of knowledge.  The information on products developed in South Africa had not been forthcoming but with the FTI hopefully this would be rectified.

The Chair questioned the establishment of the FTI in the private sector as opposed to the public.  If this was the case it would give government less control in directing it towards their goals.

Mr Naidoo responded that it was impossible to unify all the poverty activities across government but that the Public Benefit Fund would offer the possibility of co-coordinating the activities around technology.  Neither organisation would be merely private enterprises as wealth creating schemes but will be established within the private sector as a modality to get support and funding.  The effects of building a human capital base and the ability to produce benefits for society must mutually reinforce each other and this institute would provide the monitoring capacity to do so.

In terms of the NSI, the Chair stated that the Department should look closely at how the Chinese model of corporate innovation had been successful, specifically in the development of second economies.  Since the challenge of poverty reduction had to be urgently addressed, it was necessary to use such models.  In addition, similar systems to the Competency Schools had been implemented very successfully in Singapore and the Department should also look at how they had achieved this.

Mr Naidoo said the Department was looking closely at the implementation of Competency Centres elsewhere in the world and learning not only what drove its success but also what constraints were faced.  The South African model would be enriched by this process.

The Chair asked whether it would not be more efficient to house the Public Benefit Fund and the FTI together as one entity with two divisions.  This would decrease the risk of unhealthy competition between the organizations.

Dr Mjwara said that the Department had deliberately separated the two organisations in order to allow each to focus completely and not be distracted by governance issues.

Mr S Nxumalo (ANC) asked for elaboration of the tax incentives.

Dr Mjwara explained that there was a 150% tax deduction on R & D and a differential tax claim on scientific equipment.

Mr Nxumalo asked if there was a committee or board which looked at what would be happening in 20 years’ time or whether South Africa would merely follow the rest of the world.

Dr Mjwara said the DST did not have this capacity at present but were looking at the development of one.

Mr Nxumalo was concerned that while this was the year to intensify the fight against poverty, the Department’s interventions were not specifically geared towards this goal.  The constituents’ needs had to be met with tangible measures, especially those who could not read or write.  Members needed something they could take back to these constituents.

Dr Sehlapelo responded that initiatives were in place that could be relayed to the community, for example there were youth initiatives, such as the Olympics, which identified rising stars from typically rural areas and took them through high school and tertiary education.  There were also numerous bursary programmes accessible to poorer communities.

Mr S Dithebe (ANC) asked whether, in terms of the Centres of Excellence, the number of focal points would be increased or whether there would just be an increase in number.

Dr Sehlapelo replied that there were currently seven Centres of Excellence and that the idea was to concentrate efforts in research areas as identified by strategic discussions.  This would mean an increase in the number of focal areas.

Mr Dithebe queried whether these initiatives were aimed at ensuring sustainable livelihoods in communities and whether it really would be sustainable.

Mr Dithebe asked why there had been no change in the budget for Indigenous Knowledge Systems (IKS) and why there had also been no change in funding of research towards the AIDS vaccine.  He found the latter particularly concerning in view of the International AIDS Vaccine Initiative’s announcement that a vaccine was just ten years away.

Dr Sehlapelo explained that last year the IKS budget had been grouped with other concerns.  The Treasury had not given the Department the budget asked for.  The Department was currently preparing to repackage the IKS business plan and include it in the ten-year plan mentioned.  It will then be put to the Treasury again.  Similarly, there had been no change in the budget for AIDS vaccine research as the Treasury had not approved this.  DST would be formulating new motivating strategies and proposing these to Treasury again.

Prof I Mohamed (ANC) was disappointed that the Intellectual Property Rights legislation had taken so long to finalise.

Dr Mjwara assured the Committee that the legislation was now ready and would be consolidated shortly.

Prof Mohamed was also concerned that the expenditure on R & D had been halted at 0.8%of Gross National Product (GDP) for some time now.  While South Africa would eventually reach the targeted 1%, by this time other countries would already have increased by much more.

Dr Mjwara agreed that there had been such a halt and recognised that the 1% goal was merely an intermediate one for 2008.  He was confident that with the 2005/6 tax incentives now coming into effect, it would increase to more than 1% by 2008.

Prof Mohamed was concerned at the poor funding of universities when compared to other allocations.

Mr J Blanche (DA) remarked that South Africa was actually doing quite well in terms of patent registration when compared with countries such as India which were much larger.  He felt that the comparison as shown in the presentation was not an equal one.

Mr Nefolovhodwe noted that even with PhDs, people from previously disadvantaged backgrounds were often still disadvantaged and unemployed.  The necessary preoccupation with life pressures left these people unemployable and attempts had to be made to bridge the gap in social circumstances and creating mechanisms to ensure that graduates can be employed.

Prof Mohamed felt that the insistence on PhD output might not be the only way in terms of finding people to do research.  Other people, such as Masters candidates should also be given recognition.

Mr Blanche was concerned that the aim of producing 6 000 PhD graduates per year seemed impossible when the country could not produce 6 000 electricians per year.  It was felt that the focus should actually be on the electricians instead of the PhDs.

Mr Blanche also felt that the Department should monitor the number of PhD graduates who leave the country as a result of Black Economic Empowerment (BEE).  All PhD graduates should be kept in South Africa.

The Chair felt that his observations of what had been omitted by the Department had been accurate and had been touched on by the Members’ questions and comments.  The Department was not seen to be directly addressing the issue of scarce skills.  There are large projects such as the Gautrain and the development of nuclear power stations which require strategic skills. 

In addition, a PhD did not necessarily confer strategic skills and it was therefore necessary to look into quality, strategic PhDs.  Collaboration with the Department of Education and other stakeholders would be necessary and instruments to monitor this process would be necessary.  The question of awarding PhDs could become political as it could be withheld for strategic reasons.  Therefore it was imperative to have an instrument which would guard against suppression of knowledge and not just increase funding to increase numbers of PhDs.

The presentation had rightly highlighted the benefit of international training of PhD candidates where South Africa lacked capacity, but this was too narrow a benefit.  International collaboration was also vital for exposure to advanced scientific equipment, the international scientific community and global knowledge which could then be ploughed back into the country.  It was not just about capacity, but also about widening the scope of knowledge.

In answer to the concern regarding scarce and strategic skills, Dr Sehlapelo explained that each Department involved in the human capital chain had a specific mandate in which they took the lead.  The production of researchers was the mandate of the DST while High School interventions and Industry interventions such as the production of electricians, both of concern to DST, was the mandate of the Department of Education and the Department of Labour respectively.  DST would partner with these Departments to ensure that the challenges outside of their sphere were attended to but these were not the main focus. 

In terms of the employability of PhD graduates, according to research the likelihood of such a graduate being unemployed was far lower than that for a BSc or Masters graduate.  In addition, the Department had articulated research programmes specifically aimed at creating employment for researchers, bringing this likelihood down to nearing zero.  There were interventions in place to deal with even BSc graduates who remained unemployed.

Mr Blanche suggested that when foreign companies built factories in South Africa an agreement should be reached by which these companies then train the employees in the parent company before deploying them in South Africa.  He explained a similar agreement between India and the UK in which British owned factory and power station employees are trained in the UK.

Dr Mjwara added that it was not a BSc or Masters that would increase our knowledge base to the desired levels but PhDs.  The ten-year plan would look at mega projects in this regard.

The Chair asked whether the initiatives outlined formed part of the ten-year plan and whether there were more initiatives not mentioned.

Dr Mjwara replied that the current restructuring did form part of the ten year plan but that there was also much more which would be shared at a later stage.

The Chair wanted to know who Infraco was and how it was associated with DST.  Clarification was also requested on whether the South African National Energy Research Institute (SANERI) was an entity of DST.

Dr Mjwara replied that Infraco was a company set up by the Department of Public Enterprises which looked at developing communications infrastructure.  DST was linking up with this company as a means to further the research network and connect South Africa to the international scientific community.  The Department did contribute to SANERI but there was also an arrangement with the Department of Minerals and Energy (DME) with which Dr Mjwara was not familiar.

Mr Hanekom then explained that since SANERI was shared between the two Departments, DST had allowed the DME to place the organisation under the Central Energy Fund instead of the Council for Scientific and Industrial Research (CSIR).

The Chair asked why the previous priorities identified by the Department, such as astronomy, the geographic advantage period and the human sciences period, were not mentioned in the presentation.

Dr Mjwara replied that they had been omitted as those priorities were not new initiatives but were already in the system.

In closing, the Chair repeated that the initiatives were indeed excellent ones but voiced a final concern that they might come to nothing if the current role-players’ contracts expired and others cancelled them.  It was necessary to ensure the permanence of these initiatives.

Dr Mjwara responded that the entire knowledge base would create a permanent sustainable structure and that the ten-year programme had been specifically devised so that future role-players had a continuous framework in which to work.

The meeting was adjourned.