Members met with the Departments of Home Affairs, Housing, Land Affairs and Agriculture in order to discuss their departmental expenditure for the 2007/08 financial year. Each department provided a summary of expenditure, an analysis and reasons for current expenditure variances in departmental vacancies, procurement and virements, and the budgetary challenges.
Members asked the Department of Home Affairs to comment on the posts that were not filled and the timeframes that were for filling the posts. Members also sought clarity on the upgrading of the Hanis system. Members noted that one of the reasons for the under expenditure on capital projects was the non installation of the passport machine. The asked for clarity on whether the passport machine was supposed to be placed under transfers. There was concern around the ID smart card still outstanding, and members felt that it was a worrying factor. There was also discussion on the refugee issue and the Department was asked whether it did budget for the influx.
Members asked the Department of Housing to provide clarity on the spending on generators. Members also asked the Department to state whether there were reasons for the low allocation in the policy research and planning divisions. The Department was asked to comment whether there were any plans to improve on the Department’s relationship with the State Information Technology Agency and what work was being done by this Agency. Members also asked for clarity on Thubelisha Homes and whether the Department had decided to take the entity off the system completely.
Members asked the Department of Agriculture to comment on the foreign missions, the sheep shearing project and achievements, the loss of staff and exit interviews, relationships with the Department of Public Service and Administration and Department of Public Works. The underspending and the virements were cited as problematic, and Members commented that the Department was slow to make payments for agricultural disasters, and did not seem to be doing enough on land care. Further questions related to Ncera Farms. The Department was asked to provide some written responses by 11 June.
The Department of Land Affairs had noted that its major challenge was the shortage of financial resources to finalise outstanding claims and reach the redistribution target by 2014. Members asked for comment on the amounts that were needed, the new structure in respect of posts and staff, why there was significant under spending, the need of funding for land acquisition, and the number of vacant posts and resignations. They also commented on the slow responses from land affairs officials on land restitution, the spikes in expenditure, and the lack of response to the problems of farm evictions and settlement of displaced communities.
Department of Home Affairs (DHA) Presentation
Mr Mavuso Msimang, Director General, Department of Home Affairs and Mr Sagaran Naidoo, Acting Chief Financial Officer, Department of Home Affairs, in their presentation outlined the expenditure trends, and challenges that faced the Department. They noted that the key areas in which there was underspending included the compensation of employees, which was mainly attributed to the slow filling of vacant posts as a result of the changes to the organisational structure, and outstanding claims regarding foreign missions. Other notable areas of under expenditure included goods and services and payment of capital assets. Under spending in goods and services was mainly due to the non-finalisation of the Smart ID card project, as well as the passport system for which only preparations for implementation had been done. Underspending in the payment of capital assets was due to the fact that the construction of new buildings which had been budgeted for did not materialise. Some of the key challenges that were faced by the Department included the funding for all initiatives that may not be secured in line with the business case costing. The under spending on Information Technology (IT) projects and the dependency on Department of Public Works to finalise the infrastructure timeously were also listed as problematic.
Mr C Wang (ANC) asked for clarity on the upgrading of the Home Affairs National Identity System (Hanis).
Mr Naidoo replied that when this system was planned for implementation, a live site would be prepared which should have been followed by a disaster recovery site soon after. However the disaster recovery site came only 6 years after the live site had been prepared, and the Department found itself in an abnormal situation. The Department however had already upgraded its live site to the same version as the disaster recovery site.
Mr M Swart (DA) noted that one of the reasons for the under expenditure on capital projects was the non- installation of passport machines. He asked for clarity whether the passport machine was supposed to be placed under transfers. The issue of the ID smart card still remained a worrying factor and the Department should comment on when the smart card was to be implemented.
Mr Naidoo replied that the passport issue was addressed on slide 7 of the presentation. The Department had allocated R110 million over to government printing works for the installation of a new passport machine.
Ms R Mashigo (ANC) asked for clarity on the posts that were not filled and what the timeframes were for filling the posts.
Mr Msimang replied that National Treasury was asked to give the Department an exemption for not filling in the posts until the new turnaround structure had been in place. The Department needed to have people of a high calibre working in the front line and the new structure was set to be completed within the next two months. Therefore the Department did not want to fill positions now that might be changed in the next few months.
Ms N Mfeketo (ANC) asked whether the current xenophobia issue changed the Departmental budgeting strategy for the next financial quarter.
Mr Swart added that the main problem with refugee and asylum seekers was there was no one at the border who could determine their asylum status and whether they qualified for refugee status.
Mr Msimang replied that the Department had budgeted for the immigration of refugees. The budget was being rolled out at refugee reception offices through out the country and the Department felt that it could handle the case load. Some had suggested that refugee camps be set up, but government did not want refugees to be placed in camps. The current legislation also prevented the Department from determining the status of an asylum seeker at the ports of entry. Once people presented themselves as asylum seekers at the ports of entry, they were simply given a permit which gave them time to go and report to a home affairs office for a proper determination.
Mr Msimang added that no one knew how many illegal immigrants came into the country. The borders were not the responsibility of the Department of Home Affairs. The Department therefore should not be held responsible for people who were in the country illegally. If people were found in the country illegally they were processed out of the country. However there had been a capacity problem with in the processing out of individuals.
Ms Fubbs asked for comment on certain financial transactions, such as the drawing of funds and on the exact status of the smart card. The Departmental expenditure for repair and maintenance was too low, and clarity should be provided on what was happening to the section.
Mr Naidoo replied that financial transactions needed to be approved by National Treasury. There was a lack of understanding within the Department on how the funds were to be drawn and it was felt that the practice must come to an end as it was merely an inter- Departmental practice. In respect of repair and maintenance he said that the Department could employ its own maintenance people; however there needed to be certain approvals from the Department of Public Works. The issues surrounding the repair and maintenance had been raised with the Standing Committee on Public Accounts Committee (SCOPA) and the Home Affairs Portfolio Committee. Both Committees had agreed to intervene with Department of Public Works on behalf of the Department of Home Affairs. From a financial perspective, the R144 million allocated for smart cards had been moved to goods and services by National Treasury, and the Department was allowed to use it on a case by case basis. However National Treasury had later stated that the R133 million balance was only to be used for smart cards.
Mr Msimang added that the Department had a tender already issued for the start of the smart card, and was anticipating that the pilot process would begin at the end of the year. The smart card process would take at least five or six years.
Ms Fubbs said that she understood that the Director General had been at the Department for only a short period. However the Committee could not accept the fact that someone could not be held responsible for matters of the past. The Department should provide a written report on the Hanis system and the report should be sent to the Committee by Wednesday 11 June. The Committee also needed to have an audit of all the critical posts that had been filled, and whether the individuals who occupied the posts met the criteria of what was being advertised.
Mr Wang asked the Department to comment on the spending on foreign missions, and the scale that it reached. The Department should also touch on how the expenditures in the foreign missions were allocated and whether the exchange rate affected the spending.
Mr Naidoo replied that Department of Foreign Affairs would set up an office in foreign missions and at times Foreign Affairs officials would work in those foreign missions on behalf of the Department of Home Affairs. The Department was affected by the exchange rate and was allowed to take out protection against the volatility of the exchange rates.
Mr Swart noted that each year there were items in the budget that were never spent. There was no point in budgeting for items that would never be spent. The Department should also comment on when the passport system would be on Track and Trace.
Mr Msimang replied that the report on the Hanis system would be provided in writing. The Department would also include the qualifications of employees in a written report. The Committee should note that the challenge was not the qualifications but the motivation. The Track and Trace was currently used to track IDs and passport applications, and in due time it would be used to track other applications also.
Department of Housing (DOH) Presentation
Mr Itumuleng Khotsoane, Deputy Director General, Department of Housing, and Mr Mziwonke Dlabantu, Chief Financial Officer, Department of Housing, provided a summary of expenditure by programme, an analysis and reasons for current expenditure variances in Departmental vacancies, procurement and virements. The presentation also touched on the provincial transfer expenditure and outcomes and the medium-term budgeting challenges and risk. It was noted that the Department spent R8,5 billion out of its allocation of R8,9 billion. The expenditure represented nearly 96% of the voted funds. Unspent funds amounted to R396 million. The Department had under spent on the compensation to employees by R555 000 and this was mainly due to vacant positions that were not filled during the year. On goods and services the total under-spending amounted to R15.8 million.
The Department said that in April 2008 there were 406 posts, of which 79 were vacant, representing a vacancy rate of 19%. There was also a rationalisation of the housing institution, as a result of the closure of Thubelisha and Servcon Housing Solutions, and the proposed establishment of a new Housing Development Agency. There was also an improvement of access to housing finance and the facilitating a single housing market by monitoring trends in housing investment.
Mr Swart noted that page 4 of the presentation said that the reasons for under spending arose in goods and services. He asked for a report on what happened and what was outstanding. There should also be a report on the stalled projects, and why they were stalled.
Mr Khotsoane replied that a breakdown of the stalled projects would be forwarded to the Committee. The costs of the projects would also be included
Mr G Schneemann (ANC) referred to page 31 of the presentation, noting that there were a number of vacant posts and some of them had been recently approved. The Department was asked when the vacant posts would be filled and at what level were those vacant posts. The Department should also comment on how the vacant posts impacted on service delivery. He said that the Department had reported that it was planning on increasing housing delivery targets. The Department should therefore state how they were going to meet the targets, and whether the issues related to lack of capacity brought forward by the vacant posts. It was also noticeable that parts of the presentation had massive increases in spending at various periods. Clarity should be provided on whether there was adequate planning.
Mr Khotsoane replied there were 2.1 million South Africans who were poorly housed. Many of them were from low income housing. The state was constructing just over 200 000 houses per year, whereas the private sector was providing 80 000 homes. The Department was creating partnerships with various institutions in working to achieve various targets. The spending spikes were a result of poor planning and the Department acknowledged that. The Departmental response was to build in-house capacity in order to respond to the challenges that were faced in the provinces. Many provinces approved their tenders at the beginning of the financial year but started to spend very late. The Department hoped to eliminate the spikes in the future and was not happy with the current situation.
Ms Mashigo asked the Department to comment on the bursary scheme underspending. She asked if the Department had a shortage of students to support.
Mr Khotsoane replied that with regard to bursaries the Department could not spend an amount of R5 million, which was set aside for capacity building programmes.
Ms Mashigo asked the Department to state how many institutions or markets were there for generators.
Mr Wang asked the Department to provide clarity on the spending on generators.
Mr Khotsoane said that there had been a lack of oversight from the Department when they realised that generators had to be bought. The generators cost R2 million and they were being used for back up.
Ms Mashigo asked, in respect of the monitoring mechanisms, whether there was a special spending budget for the renovation of poor quality houses. It came out on several occasions that foreigners were given houses that were meant to be for people on the housing list. The Department should state whether there were adequate monitoring mechanisms to address the matter.
Mr Khotsoane said that in regard to the poorly-built housing, the MECs and the Minister had developed a policy which would make provision for the use of the housing grant to rebuild some of the houses. As part of the broader work, the Department was following up with contractors who poorly built the homes. It should be noted that the Department did not give houses to foreigners. Houses were allocated to South Africans who were above the age of 18, and who could prove that they had dependents. There were some instances where immigrants who had been naturalized through proper processes qualified for housing. The Department checked all IDs and also checked with the Unemployment Insurance Fund (UIF). The Department would soon be starting an occupancy audit, in order to determine whether the people who were living in the allocated homes were the original recipients of those homes.
Ms Fubbs asked for clarity on the payment schedules on slide 36 of the presentation. The Department should state whether there were reasons for the low allocation in the policy research and planning divisions. The Department should also state whether there were any plans to improve on the Department’s relationship with the State Information Technology Agency (SITA).
Mr Dlabantu replied that SITA provided the Department with information technologies, and one of the programmes that the servers were running was the housing database. He noted that some of the sub standard houses were built prior to 2004. In respect of the policy planning unit, the Department concentrated on policy development up to 2004. The Department realised that there was a problem of planning, and a new planning unit was implemented, which performed strict monitoring on the planning.
Ms Fubbs sought clarity on the procurement. Small companies found it difficult to proceed on certain projects as the Department took a long time to sign off payments. The Department should also comment on the payment for furniture and audio visual equipment.
Mr Schneemann asked for a written answer on the interventions that had been undertaken to prevent the spikes in spending. He also asked that in respect of the monitoring and evaluation, the Committee should be given a written response on expenditure patterns.
Mr Swart asked for comment on Thubelisha Homes, and asked if this entity had been completely removed from the system.
Mr Khotsoane replied that the Thubelisha homes project was coming to an end. A framework had been prepared and was presented to the Portfolio Committee on Housing and it was expected that Thubelisha Homes would cease processes in the next few months. Legal processes would then follow for the dismantling of the entity. There needed to be more interventions, which now had been made, in terms of building capacity and procurement of land
Mr D Dlali (ANC) asked for clarity on the issue of the vacancies. The Department should also clarify the issue of outsourcing the internal audit plan because the situation was worrisome. The issue of virements was also worrisome and the Department should state whether these resulted from the budgeting process. The report indicated that R6 million had been spent on non statutory personnel, and he asked for clarity on this.
Mr Khotsoane replied that the Department prioritised posts that needed to be filled. The posts were top management and director positions. The Department had personnel who were in non-statutory positions and they had to receive a non-statutory pension. The matter was a Public Service and Administration policy and the payment was retrospective.
Mr Dlabantu added that in respect of the internal audit, the unit consisted of a number of people, and the audit committee had various processes in determining the jobs that needed to be performed internally. It was difficult to acquire the skills, and it cost the Department a lot of money to outsource them. In respect of virements, it was correct to say that virements were not advisable, especially when they were abused. However it should be noted that, given the circumstances, priorities changed. Virements should only be used in extraordinary cases.
Ms Fubbs stated that all reports in writing should be forwarded to the Committee by Wednesday 11 June.
Department of Agriculture (DOA) Presentation
Dr Emily Mogajane, Acting Director General, Department of Agriculture and Mr Tommie Marais, Chief Financial Officer, Department of Agriculture, outlined expenditure trends, virements, vacancies and transfer payments. They noted that the Department spent 96% of its total allocated budget. The Department also had R69.7 million, which was allocated for virements. There was a high vacancy rate within the Department and the Department was working on improving its retention policies. Transfer payments during the financial year were made to provinces and to public entities such as the Agricultural Research Council, National Agricultural Marketing Council and Ncera farms. It was noted that the Department hoped in future to increase the number of black entrepreneurs in agricultural production, trade, and the land reform project.
Mr Wang asked for clarity on the foreign missions and the exit interviews. The Department should also state whether the South African sheep shearing team won anything.
Mr Marais replied that the Department had five foreign missions in different parts of the world and they were part of the South African Embassy in the respective countries.
Ms Mogajane replied that the exit interviews were a very big challenge, as the Department had become a ground for training for individuals who went to the private sector. The intention of the sheep sheering project was to improve the quality of wool.
Ms Noncedo Vutula, Chief Director: Sector Services Programme, Department of Agriculture, added that the Department supported emerging farmers in participating in sheep sheering competitions, and in the last competition a farmer from Eastern Cape won
Ms Mashigo asked for comment on the role of the Department of Public Service and Administration (DPSA) and the Department’s relationship with Department of Public Works.
Mr Isaac Miti, Chief Director, Human Resources, replied that DPSA gave guidance on the Departmental policies, and most of the polices were based on the frameworks of the DPSA as far as human resources was concerned.
Mr Marais added that the Department did have problems with the Department of Public Works pertaining to several maintenance projects, and this affected the departmental budget.
Mr Dlali said that the first problem was the issue of the surpluses and the Department needed to urgently address the matter. He saw virements as another major problem, since they seemed to result from bad planning. The Department should comment on transfer payments outlined on page 10 of the presentation and clarity should be provided on the amounts. The Department was very slow in making the payments for agricultural disasters, and he asked the Department to comment on what had been done to address the matter. Clarity should also be provided on the issue of land care, as there was a budget for land care and it seemed as if nothing was done with it.
Mr Dlali added that some of the Departmental programmes did not seem to be working as a result of under expenditure. The Department should provide information on when the funds would be spent. With Ncera farms the purpose was to transfer skills from the managing agent to local farmers. The money, however, seemed to be going only to the managing agent and not to the farmers. The Department should also comment on the managing fees and capacity building and the measures that had been in place to monitor the price of fertilisers.
Ms Mogajane replied that investment in agriculture had decreased since 1992. The Department invested in many initiatives that were meant to rehabilitate some of the agricultural schemes, and that these were mainly focused on high capital production. The escalating food prices also caused a major challenge to the country and there was an inter-departmental task team which came up with short term intervention measures to assist the vulnerable groups.
Mr Marais explained that the surplus was as a result of the high vacancy rate and it should be noted that it was impossible for the Department to spend every cent, but the Department tried its very best.
Ms Mogajane admitted that the virements were a big challenge. The Department was now implementing a system that would ensure that the matter did not recur in the next financial year.
Mr Mkhalipi stated that the broader problem with virements was that they had an effect of becoming a problem. Once virements was allowed into the budgeting process and passed, they usually tended to turn into something else.
Mr Dlali asked whether the Department had employees who were part of the non-statutory forces
Mr Marais replied that he had no idea what Mr Dlali was asking. The issue did not even appear on the Department’s budget.
Mr Marais said, in respect of the virements, that the transfer payments had to be paid to relevant farmers in the Eastern Cape. The paper work was taking a long time, and National Treasury had been asked to roll over the relevant funds for this reason. Slow payment was a budgetary problem and the Department had one chance in the financial year to request National Treasury for additional funds. Due to the various processes that had to be undertaken it took a long time to get the funds approved.
The Chairperson asked for clarity on how long it took for the money to get to distressed farmers.
Ms Mogajane replied that the slowness of the disaster delivery process differed from one province to another, depending on capacity. The Department was trying to improve on the matter, which was of serious concern, because it affected farmers’ production.
Mr Dlali asked whether there were systems or legislation in place that were meant to address the matter.
Ms Mogajane replied that the Department tried to improve systems, such as bringing in experts to municipalities who advised farmers on the best way forward and evaluated what should be done when it came to disasters and improving on efficiency. She said that in respect of land care the Department would forward a detailed budget to the Committee
The Chairperson asked for the information pertaining to the land care to be forwarded by Wednesday 11 June.
Ms Mogajane said that in respect of Ncera farms, the Department was working on an exit strategy and information would be forwarded to the Committee. The Department was importing a lot of fertilizers to the country and this was costly. The Department was talking to National Treasury on the matter and there needed to be targeted programmes that supported emerging farmers, so that they could produce their own fertilizers.
Mr Mkhalipi asked for comment on the relationships with international organisations.
Mr Jan Venter, Director, Budgets and Debt recovery, DOA, replied that there were a number of organisations to which the Department belonged and had to pay membership fees. Some of the organisations that the Department belonged to were for participation in the setting of standards.
Department of Land Affairs (DLA) Presentation
Mr Thozi Gwanya, Director General, Department of Land Affairs, outlined the 2007/08 un-audited Financial Performance, under the topics of spending, virements, March Spike, procurements, vacancies, the medium term budget and the medium term challenges. He said that there was under spending of R22 million for Land Reform. This was due to the reclassification of expenditure from transfers and subsidies. The major challenge that faced the Department with regard to accelerated land delivery was the fact that there were insufficient financial resources. The Department required R17 billion to finalise outstanding claims and R70 billion to reach the redistribution target by 2014. The high land prices were also a major challenge to the Department. Capacity constraints similarly created a problem.
Mr Swart asked for comment on the R70 billion that was named as being needed for the land distribution targets by 2014. The Department should comment on whether allowance had been made for inflationary pressures as the price of land increased.
Mr Gwanya replied that the Department did cater for the inflationary pressures and had taken into account the fact that land prices would increase.
Mr Mkhalipi noted that page 13 of the presentation referred to a new structure of the Department. He asked for clarity on what the challenges were. Clarity should also be provided on what was meant by section 42 files.
Mr Gwanya replied that a new structure had been created. The structure was meant to address the issue of posts and had been approved by the DPSA. The implementation of the structure was dependent on National Treasury providing funds to fill the posts.
Mr Gwanya explained that the Section 42 files were settlement matters. Section 42 of the relevant legislation allowed the Minister to settle the claims. He noted that the targets for redistribution had been revised
Mr Dlali asked for clarity on the under spending, and asked why this was so large.
Mr Gwanya said that the low spending related to the payment of service providers, and the Department discovered very late that it could not spend the money. The Committee should note that the Public Finance Management Act (PFMA) punished heavily on overspending, and this encouraged under spending.
Mr Dlali said that it seemed as if National Treasury did not understand the concept of a developmental state when it came to appropriating funds for land acquisition.
Mr Gwanya responded that the Department had interacted with Treasury and there was new legislation coming that would allow the Department to buy land and movable equipment.
Mr Dlali said that the issue of vacant posts was worrisome and was a serious problem in the Department.
He also asked for an explanation why there was a high number of resignations. In respect of capacity constraints he said that departments would always state that there was this problem, but did not give reasons for it.
Mr Gwanya pointed out that page 10 of the presentation showed that there was movement in the Department towards filling of posts. Something had been done to address the vacant posts. On the issue of resignations he commented that it was very difficult to stop people from resigning, but the Department was addressing the matter by making sure that there was a staff retention strategy. In respect of the capacity constraints, the Department believed it would address the issue of capacity with the new Departmental structure that was set to be implemented shortly.
Mr Dlali asked that the Department should state whether there were any monitoring systems in place for land restitution. There had been a wide range of slow responses from land affairs officials when it came to land restitution, and the Department should comment on the matter.
Mr Gwanya replied that on 4.2 million hectares of land had been redistributed. The challenge around distribution was section 25 of the Constitution, which was the property clause. Most of the land transfers took place from 1999 to date, and there were various grants in place that were aimed at addressing the issue of land reform. One of the grants was the Settlement Land Acquisition Grant (SLAG). Many people improperly used the SLAG grant and the Department had therefore decided to keep it on hold. The Department had now revised the guidelines for the use of the SLAG grant and it would be reintroduced soon.
The Department had discussed the issue of a land reform strategy with various stakeholders and believed it could address the issue. The budget for land acquisition was inadequate and the Department needed more funds to buy more land, given the increase in land prices. Mr Gwanya said that in respect of the slow response of officials, the Department had held a senior management meeting and this matter was discussed at great length. The matter had also been raised at the leadership level of the Department.
Mr Dlali also said that clarity should be provided on the reason behind the volatile expenditure.
Mr Gwanya explained that it should be noted expenditure there was an average of 98% expenditure each year since 2000, except for 2005, when the amount under spent had related to land restitution claimants who did not have approved business plans.
Ms L Chikunga (ANC) said that it was unacceptable that Departmental officials were not held into account for their omissions.
Ms Mashigo noted that many people were evicted from farms and there were no adequate measures to assist displaced communities. Members of the communities would write letters and there would be no response from the Department.
Mr Gwanya replied that he took note of the comments and took personal responsibility for sending responses to the displaced communities. There was a fraud and complaints line that was linked to the Public Service Commission. The Department followed up on the complaints and gave reports to the Commission.
The meeting was adjourned
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