REPORT
OF THE PORTFOLIO COMMITTEE ON ARTS AND CULTURE ON BUDGET VOTE 14: DEPARTMENT OF
ARTS AND CULTURE, DATED 10 JULY 2014
The Portfolio Committee on Arts and Culture, having considered
the 2014/15 budget and the Annual Performance Plan (APP) of the Department of
Arts and Culture, Vote 14, reports as follows:
1
Introduction
1.1
The Portfolio Committee on Arts and Culture
(hereafter referred to as the “Committee”) considered the 2014/15 budget of the
Department of Arts and Culture (hereafter referred to as the “Department) as
part of its oversight function over the Department as mandated by the Public
Finance Management Act (Act No 1 of 1999) and Money Bills Amendment Procedure
and Related Matters Act (Act No 9 of 2009). The Department briefed the
Committee on its 2014/15 budget on 01 July 2014.
2
Background
2.1 The aim of the report is to present an
intensive analysis of the 2014/15 budget of the Department of Arts and Culture.
This will assist the Committee to fulfill its monitoring and oversight
functions effectively. This analysis particularly enables the Committee to
monitor and oversee the Department’s expenditure of public funds and the impact
of service delivery.
2.2
Information contained in the report is based on
the Department’s 2014/15 APP, 2014/15 budget, as well as the 2014 Estimates of
National Expenditure (ENE) as tabled in the National Assembly.
2.3 The Report presents a
programme-by-programme summary of the Department’s budget, an overview of the
key observations and recommendations made by the Committee.
3
Committee
Observations
3.1 The Department derives its mandate from
the Constitution of the Republic of South Africa (Act No. 108 of 1996) with
specific focus on language and culture, access to information and, to some
extent, education.
3.2 The work of the Department is central to
the implementation of Chapter 15 (Transforming society and uniting the
country), of the National Development Plan (NDP) Vision 2030. The President of
Republic of South Africa has assigned the Department the responsibility to lead
Outcome 14 (Nation Building and Social Cohesion)
of the 2014-2019 Medium Term Strategic Framework.
3.3 Through the implementation
of the Mzansi Golden Economy (MGE) strategy, a strategy developed during the
2009-2014 term, the Department aims to contribute to national priorities of job
creation and economic development.
3.4 Going forward into the medium-term, the
Department further aligns its work with the NDP as well as the Medium Term
Strategic Framework through contributing to quality education and rural
development.
3.5 The Department will work towards
achieving the above plans by continuing with programmes which places artists in
schools to improve the teaching of arts in basic education and by building
arts, culture and heritage infrastructure in rural areas. This infrastructure
includes community libraries, arts centres, building heritage infrastructure
and monuments.
4
Budget
Overview
4.1
Strategic
Goals of the Department of Arts and Culture
The Department of Arts and Culture aims to achieve the
following objectives:
·
Job
creation
Create 150,000 decent jobs in the arts,
culture and heritage sector by 31 March 2016.
Implement targeted programs that are geared
towards human capital development in the arts, culture and heritage sector by
2014.
Enhance access by citizens and public
institutions to accurate, reliable and timely information in their language of
choice through the provision of archives, libraries, and language services.
Entrench linguistic diversity in a manner that
facilitates equitable cultural expression by citizens and communities.
Enhance capacity of the sector through equitable and
sustainable development, protection and preservation of arts, culture and
heritage (through policy development, legislative promulgation and
implementation).
Align public sector art, culture and heritage
institutions around a shared vision, common mandate and strong governance and
accountability.
4.2
Overview
of the 2014/15 Budget
National Treasury has approved the revised budget programme structure
which came into effect at the beginning of the 2014/15 financial year. This
approved budget programme structure takes into account new developments in the
form of the emphasis on nation building, social cohesion and job creation, as
well as ensuring that the Department’s organisational structure is aligned with
its strategy. The number of budget programmes has decreased from six in the
2013/14 financial year to four in 2014/15.
For the 2014/15 financial year, the total budget allocation is R3.5
billion. Relative to the 2013/14 financial year, during which the budget was
R2.9 billion, this translates into an increase of 20.9 per cent. The actual
increase, after the projected inflation rate of 6.2 per cent is taken into
consideration, is 13.9 per cent (or R404.1 million). Approximately
R2.8 billion, or 80 per cent, of the total budget allocation is spent by the
entities of the Department, namely on transfer payments to entities, provinces,
etc., while R698 million, or 20 per cent, is spent by the Department.
The Department’s spending focus over the medium-term will be on
implementing the MGE, nation building and social cohesion strategies through
Programmes 2 and 3.
In the current budget Programme 4 receives the largest portion of the
budget in 2014/15. The total allocation for this programme is R2.2 billion, or
61.4 per cent of the total budget allocation. This is due to the Department’s
continued efforts to increase access to community library services and heritage
institutions. Programme 3, which receives the second largest allocation, sees
the implementation of the MGE strategy as well as the Department’s contribution
to human capital development through awarding sector-specific bursaries.
Infrastructure spending is another driver of spending over the
medium-term. With the implementation of new construction projects, spending on
legacy projects is expected to increase from R71.2 million in 2013/14 to R82.1
million in 2016/17. A number of small projects on upgrading, restoration and
maintenance of existing arts, culture and heritage infrastructure are to be
carried out over the medium-term at an estimated total cost of R1.2 billion.
It should be noted that Cabinet approved budget reductions of R10.6
million over the medium-term. These
reductions have mainly been introduced in spending on the MGE strategy projects
and the transfer to the National Arts Council.
4.3 Programme Analysis
Table
1: Programme allocations over the medium-term
Programme |
Medium-term expenditure estimates |
||
R thousand |
2014/15 |
2015/16 |
2016/17 |
Programme 1: Administration |
228.3 |
239.8 |
253.6 |
Programme 2: Institutional Governance |
99.8 |
104.7 |
110.6 |
Programme 3: Arts and Culture Promotion and Development |
1032.9 |
1091.1 |
1139.6 |
Programme 4: Heritage Promotion and Preservation |
2163.8 |
2536.2 |
2681.4 |
TOTAL |
3524.7 |
3971.8 |
4185.2 |
Figure
1: Budget allocation per programme for 2014/15
A. Programme 1: Administration
The purpose of this programme is to provide leadership, management and
support functions of the Department. In the 2014/15 budget, this programme now
features a sub-programme titled Office of the Chief Financial Officer. The
budget allocation for Programme 1 reflects a percentage change of -2.5 per cent
(or R5.8 million) for the 2014/15 financial year. However, the real percentage
change is -8.2 per cent over the same period. This represents a real decrease
amounting to R19.1 million.
B. Programme 2: Institutional Governance
This programme will coordinate and manage all cross-cutting functions of
the Department and its public entities and provide support and oversight to
these public entities. Programme 2 is a new programme in the 2014/15 budget.
Its introduction to the budget programme structure speaks to one of the
Department’s strategic goals over the medium term which seeks to align public
sector art, culture and heritage institutions around a shared vision, a common
mandate, and strong governance and accountability. It will potentially address the
recommendations made by the Committee in its 2013 Budgetary Review and
Recommendation Report (BRRR) which expressed concerns about legislative and
financial compliance, skill shortages, performance and general cooperation
between the Department and its entities. The programme is allocated R99.8
million for the 2014/15 financial year.
C. Programme 3: Arts and Culture Promotion and Development
The purpose of Programme 3 is to promote and develop arts, culture and
languages. From Figure 1 above, it can be observed that this programme received
the second largest allocation of the total budget, i.e. R1.0 billion or 29.3
per cent.
Programme 3 will, inter alia,
implement the MGE strategy and build capacity in the arts and culture sector by
awarding bursaries. The budget allocation for this programme is divided amongst
its sub-programmes as follows:
Table 2: Programme 3: Arts
and Culture Development
Sub-programme |
Budget |
Percentage of total
programme budget |
R thousand |
|
|
1: National Language Services |
49 160 |
4.8% |
2: Pan South African Language Board |
83 497 |
8.1% |
3: Arts and Cultural Development |
335 487 |
32.5% |
4: Performing Arts Institutions |
319 161 |
30.9% |
5: National Film and Video Foundation |
111 588 |
10.8% |
6: National Arts Council |
91 865 |
8.9% |
7: Capital Works of Performing Arts Institutions |
42 118 |
4.1% |
TOTAL |
1 032 876 |
100.0% |
Sub-programme 3: Arts and Culture Development receives 32.5 per cent of
the programme budget. This sub-programme implements the majority of projects
for the MGE strategy and supports the creative industries in a number of ways
including stakeholder forums, providing training and supporting projects.
Sub-programme 4: Performing Arts Institutions receives the second
largest portion of the programme budget, i.e. 30.9 per cent. This sub-programme
transfers funds primarily to performing arts institutions for operations and
capital works.
D. Programme 4: Heritage Promotion and Preservation
The purpose of Programme 4 is to preserve and promote South African
heritage, archival and heraldic heritage, and funding of libraries.
Programme 4 enjoys the bulk of the total budget amounting to 61.4 per
cent or R2.2 billion. This is understandable as Programme 4 and Programme 3 are
the two programmes which most directly speak to the Department’s mandate and
the aim of the budget vote.
Programme 4 is structured essentially to:
·
transform heritage and heraldry landscape;
·
award bursaries for heritage studies;
·
promote national identity, nation building and
social cohesion;
·
facilitate the creation of jobs within the sector;
and
·
transform heritage, archives and library sectors.
Table 3: Programme 4:
Heritage Promotion and Preservation
Sub-programme |
Budget |
Percentage of total
programme budget |
R thousand |
|
|
1: Heritage Promotion |
74 047 |
3.4% |
2: National Archive Services |
46 234 |
2.1% |
3: Heritage Institutions |
594 702 |
27.5% |
4: National Library Services |
104 755 |
4.8% |
5: Public Library Services |
1 039 825 |
48.1% |
6: Capital Works |
192 326 |
8.9% |
7: South African Heritage Resources Agency |
47 417 |
2.2% |
8: South African Geographical Names Council |
8 575 |
0.4% |
9: National Heritage Council |
55 917 |
2.6% |
TOTAL |
2 163 798 |
100.0% |
The bulk of the budget for Programme 4, i.e. 48.1 per cent (just over R1
billion) is allocated to Sub-programme 5. This sub-programme transfers funds to
provincial departments for the community library services conditional grant for
constructing and upgrading libraries, employing staff and procurement of
library materials. This budget allocation is in line with the Department’s
strategy to align its work with the NDP.
Sub-programme 3 provides funds for declared cultural institutions and
heritage bodies that work towards heritage preservation, protection and
promotion. This sub-programme is allocated 27.5 per cent (R594.7 million) of
the total budget for the programme which is transferred in full to heritage
institutions.
5 Committee Findings
5.1 Technical errors
Upon examining the Department’s APP, the Committee has identified the
following critical issues of concern:
5.1.1 The
Department has an indicator entitled “Governance of DAC public entities
strengthened”. The target for this indicator however excludes the analysis of
draft APPs of entities. As a result of this exclusion the following entities
did not comply with the National Treasury Framework for Strategic Plans
and Annual Performance Plan:
NO. |
ENTITY |
NON
COMPLIANCE |
1. |
National Heritage Council |
Not signed off by the Chairperson of Council. |
2 |
William Humphreys Art Gallery |
Sign off page not signed by the Chairperson of
Council. |
3. |
Pan South African Language Board |
No sign off page. Even though the entity did
not have a Board at a time of submitting the 2014/15 APP the CFO and other
required personnel should have signed. |
4. |
Robben Island Museum |
APP not signed by the CFO. |
5.1.2 The
document has a number of acronyms that are not explained or written in full
when initially used in the document. The APP is a public document which is
meant to be read or understood by every citizen. Unexplained acronyms make the
document difficult to read and comprehend.
5.1.3 The
Department’s indicator on the “Number of jobs created” does not have quarterly
targets. Instead the Department sets itself a target to report on a number of
jobs created. Since the Department has already set a target for the indicator
it should then indicate how it would achieve it during each quarter.
5.1.4 The
Department’s target on the “Number of jobs created” sub target for the
performing arts institutions has two different targets, 11 000 and 16 000.
5.1.5 The
Department’s target for the “Number of touring ventures” is six (6). But the
APP does not indicate quarterly targets for this indicator.
5.1.6 The
Department’s target on “Number of public art projects initiated” has an
inconsistency in the wording of the target. The indicator refers to the term
“initiated” while the target uses the term “implemented”. This could cause
confusion as these terms have different meanings.
5.1.7 The
Department’s indicator on “Number of artist placed in schools” has an annual
target of 240. However, the fourth quarter refers to “9 programmes supported
and implemented”. How is this related to the indicator? There is also an inconsistency
with target in the indicator protocol and mapping template.
5.1.8 The
Department’s indicator on “Creative Industries Strategy reviewed” sets a target
to develop a strategy. Reviewing and developing have different meanings.
5.1.9 The
Department’s indicator on “Number of exhibitions platforms supported” has no
clear targets for craft and films.
5.1.10 Department’s
indicator on “Ministerial Arts and Culture awards conducted” indicated that
there is a target for second, third and fourth quarters. Would the Department
be hosting these awards for three quarters for R1 million?
5.1.11 There
is a general inconsistency between targets set in the programme performance
indicators and annual target for 2014-2017 section with annual targets and
quarterly targets for 2014/15 financial year, and indicator protocol and
mapping template.
5.1.12 Programme
4: Indicator on job creation has two different targets, 3912 and 10268.
5.1.13 In
some instances National Treasury selected performance indicators in the ENE
differ from APP indicators. This makes oversight difficult if the two documents
are not synchronised.
During the course of the budget processing the
Committee raised its concerns about the accuracy of the APP. The Minister has
provided an undertaking that all errors will be rectified and the corrected
version of the APP will be submitted to the National Assembly by not later than
31 July 2014.
5.2 Operational and Strategic Challenges
During the process of considering the Department’s
2014/15 APP the following operational and strategic challenges were identified
by the Committee:
5.2.1 The Department has a
budget of R3.5 billion. However, the Department is planning to spend 98 per
cent of its budget. This will result in an under expenditure of approximately
R70 million. It is important to note that while the Department plans not to
spend its entire budget it rebuffed funding requests from Arts and Culture
organisations that could not be catered for by the existing funding structures
of the National Arts Council or the National Heritage Council such as a
the District Six Museum.
5.2.2 Since 2012 the Department
has been unable to appoint a permanent Chief Financial Officer. The position of
a CFO is crucial in ensuring financial compliance by the Department and its
entities.
5.2.3 The National Archives are
an intellectual hub of knowledge management in the country. The position of a
National Archivist has been vacant for over two years. This has the potential
to compromise the Department’s ability to provide strategic leadership in the promotion
of access to information and archiving of the nation’s treasures.
5.2.4 Funding patterns of entities currently
reflect historical distribution of the Department’s resources. Funding
structure is based on the infrastructural size of the entity without examining
impact on designated groups.
5.2.5 After having read the
APPs of entities, it emerged that their outputs are not linked to key
government priorities, i.e. some entities’ APPs do not even recognise the
existence of the NDP.
5.2.6 There is a clear
indication that most entities are struggling to maintain a balance between
operational and personnel costs. In some instances entities project that their
operational costs will exceed 80 per cent of their budget. This has a potential
to compromise service delivery as core functions will suffer at the expense of
escalating personnel costs.
5.2.7 Moreover, it also emerged
that most entities have not been able to maximise their ability to raise
additional funds. These entities thus rely entirely on the Department’s subsidy
for survival.
5.2.8 In its presentation to
the Committee on 01 July 2014, the Department indicated that it intends to make
budget cuts in respect of Non Profit Institutions by the 2016/17 financial
year.
6 Recommendations
The Committee welcomes the
Annual Performance Plan and 2014/15 budget of the Department of Arts and
Culture. The Committee further recommends the following:
6.1 The Department must spend 100 per cent of its 2014/15 budget
allocation.
6.2 The
Department should prioritise the appointment of the Chief Financial Officer as
a matter of urgency.
6.3 The
Department should prioritise the appointment of the National Archivist as a
matter of urgency.
6.4 More
governance monitoring to be provided to departmental entities, particularly
with regard to the development of the Annual Performance Plans and Strategic
Plans.
6.5 The
Department should consider developing customised national indicators for
entities in order to ensure that the work of entities are in line with
government’s priorities such as the National Development Plan.
6.6 In the light of scarce resources it is
crucial that the Department develops a shared service model in provinces such
as Free State, Northern Cape and KwaZulu-Natal.
6.7 The Department to invest in the Business
Development Approach of entities so that they are able to raise more funds on
their own rather than to depend entirely on the state’s subsidy.
6.8 The
Department should reconsider budget cuts in respect of Non Profit Institutions,
i.e. Blind South Africa and National Library for the Blind. These budget cuts
should be possibly absorbed elsewhere in the budget other than institutions
that target people with disabilities.
7 Conclusion
The Portfolio Committee acknowledges the
importance of the mandate of the Department of Arts and Culture in building and
uniting South Africa. It further acknowledges that creative industries have a
major role to play in job creation. The Committee recommends that the House
adopts the Budget Vote of the Department of Arts and Culture.
Report
to be considered