ATC130627: Report of the Portfolio Committee on Higher Education and Training on the Strategic and Annual Performance Plan 2013/14 of the Transport Education and Training Authority (TETA) and Services Sector Education and Training Authority (SSETA), dated 19 June 2013

REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING ON THE STRATEGIC AND ANNUAL PERFORMANCE PLAN 2013/14 OF THE TRANSPORT EDUCATION AND TRAINING AUTHORITY (TETA) AND SERVICES SECTOR EDUCATION AND TRAINING AUTHORITY (SSETA), DATED 19 JUNE 2013

The Portfolio Committee on Higher Education and Training, having considered the Strategic and Annual Performance Plan (APP) 2013/14 of the Transport Education and Training Authority (TETA) and Services Sector Education and Training Authority (SSETA) reports as follows:

1. Introduction

The Portfolio Committee on Higher Education and Training considered the Annual Performance Plan and Medium Term Expenditure Framework (MTEF) Budget 2013/14 of TETA and SSETA on 05 June 2013. This report captures a summary of the presentations made by both SETAs to the Committee, focusing primarily on the Annual Performance Plans 2013/14 which were presented in conjunction with the Strategic Plans that were tabled in Parliament on 08 April 2013 for consideration and reporting by the Committee. The report further recaptures observations and recommendations made by the Committee during deliberations on some of the key aspects of the presentations.

2. Background

The Strategic and Annual Performance Plans of public entities were extremely valuable sets of information to the Committee in exercising its oversight role. Engaging with public entities on these documents was very critical in scrutinising allocations of public funds and monitoring their utilisation. The annual performance targets of the entities were also scrutinised to ensure that they were in line with the Department’s mandate of expanding access to post school education and training opportunities for the young people of the country. Moreover, effective oversight and transparency were requirements for effective accountability which was the responsibility of the Committee. This was the overarching role of the Committee to invite public entities to account before it.

Portfolio Committee on Higher Education & Training:

Present: Ms N Gina (ANC), Mr S Makhubele (ANC), Adv I Malale (ANC) (Chairperson), Prof S Mayatula (ANC), Mr C Moni (ANC), Ms D Sibiya (ANC), Dr L Bosman (DA), Prof A Lotriet (DA), Mr N Bhanga (COPE), Mr A Mpontshane (IFP) and Mr J Dikobo (AZAPO).

Apologies: Ms D Chili (ANC) and Mr S Radebe (ANC).

Support Staff: Mr A Kabingesi (Committee Secretary), Ms M Modiba (Content Adviser), Mr L Komle (Researcher), Ms T Majone : Committee Assistant, Ms F Goduka : Executive Secretary and Mr F Mohale: Media Officer.

The following were present:

Transport Education and Training Authority (TETA):

Ms M Anno-Frempong : Chief Executive Officer (CEO), Mr J Dube : Chairperson, Mr G Jacobs: Chairperson Human Resource & Finance Sub-Committee, Mr O Siyenge : Board Member, Ms V Mesatywa : Ministerial Appointee, Mr R Tsolo : Acting Chief Operations Officer, Mr S Ndukwana : Chief Financial Officer, Mr M Duma : Skills Development Manager, Ms E Montshiwa : Monitoring and Evaluation Manager.

Services SETA:

Dr S Moon: Administrator, Ms L Bogoshi : Chief Operations Officer (COO) and Ms C Simons: Chief Financial Officer (CFO).

Department of Higher Education and Training:

Mr C Mtshisa : Acting Deputy Director-General Skills, Mr M Lumka : Chief Director SETA Coordination, Mr Z Hlongwane : Director Public Entities, Ms S Mutinhima : Deputy Director, Ms N Nqaba : Parliamentary Liaison Officer Minister’s Office, Ms P Sekgobela : Assistant Director General’s Office and Mr B Bingwa : Intern.

Other guests:

Mr J van Rensburg : Journalist SABC, Mr D Preva : Multimedia Reporter BDFM, Ms M Doyle: Monitor Parliamentary Monitoring Group (PMG), Mr A Jeftha : Director Allan Jeftha Attorneys, Ms Z Keto : Senior Liaison Manager Auditor General of South Africa (AGSA) and Ms A Hendricks: Monitor SABINET.

3. Summary of presentations

3.1 Transport Education and Training Authority (TETA)

Ms M Anno-Frempong : CEO led the presentation which highlighted the following key issues:

· In terms strategic goal 1 research; a research and development manager was appointed to implement research and development strategy, sub-sector scarce skills were researched and R21 million was allocated for this programme.

· In terms of strategic goal 2 middle level skills; learner access to FET colleges and higher education and training institution was increased, multi-year funding for full qualification would be offered (R71 000 per student), roadshows would be conducted in rural areas and R381 million had been allocated for this programme.

· Strategic goal 3 is Education and Training Qualification Authority (ETQA); qualification for the taxi industry would be implemented, 5 occupational qualifications would be developed, capacity building and training would be offered to accredited providers and assessors.

· 8 FET colleges in collaboration with the Department of Transport would provide National Certificate Vocational NC( V) programmes in transport related qualifications and become Institutes of Sectoral Occupational Excellency ( ISOEs ). Each FET college was allocated R1 million for this programme.

· In terms of creating employment, R210 million had been set aside for learnerships , skills programmes, lay-off scheme and 1000 graduates would be placed.

· In terms of career guidance; R71 million was allocated for this programme, 10 000 booklets would be distributed to various provinces, Grade 9 learners would be included in this programme and teacher development projects.

· In terms of organisational development; R29 million was set aside for this programme, a wellness company was appointed to provide wellness services, the restructuring process was underway and staff skills audit would be conducted.

· TETA was appointed as a lead SETA in Limpopo to support FET colleges. In terms of rural development, various districts were supported on various skills development programmes.

· In terms of the 2013/14 budget; the levy income of TETA was R518 million, administration costs was R64.8 million, discretionary grant R129 million, mandatory grant R324 million and the total income was R555 million. The costed Annual Performance Plan 2013/14 was R732 million with additional funding expected to be funded from cancellation of contracts.

3.2 Fidentia Curatorship

Mr A Jeftha : Director Allan Jeftha Attorneys led the presentation which highlighted the following key issues:

• The board of TETA approved R200 million to be invested in Fidentia in 2006. TETA received monthly statements from Fidentia CEO Arthur Brown. A request for payment was submitted to Fidentia and only R15 million was paid to TETA, and R185 million balance remained outstanding. No further payments were made by Fidentia despite numerous requests from TETA.
• A claim of R185 million was submitted to the curators and curators paid R33 million to TETA. No further payments had been made since then and a number of assets would be sold to settle the remaining balance.
• It emerged that funds were misused and no investment was made by Fidentia . Arthur Brown was pleaded guilty to fraud and was fined R150 000 by the Court. TETA suffered a loss but had carried out its mandate with lesser funds.

3.3 Services SETA

Dr S Moon: Administrator led the presentation which highlighted the following key issues:

• The Committee was informed that an investigation by an independent consulting firm on allegations of irregularities relating to mandatory grant was completed and the case was referred to the Hawks. Unfortunately, there hasn’t been progress in the case thus far. Sensitive forensic audit documents relating to the case were available for the Committee to scrutinise after the meeting.
• The strategic plan of SSETA was approved only in January 2012 with two months left to the end of the financial year and all these developments led to huge delays in roll out of 2012/13 programmes.
• The new board would commence with its fiduciary duties as of 1 ^st July 2013. The process of appointment of new board members would be completed in the next two weeks. SSETA was successfully restructured in 2012 and a new COO and CFO had been appointed.
• The backlog of artisan certification remained a concern for SSETA. Of the 500 artisans trained, 2000 remained without their trade test certificates owing to poor monitoring by previous management. Remedial project of addressing this challenge was underway.
• A new model had been developed to deliver on the mandate of SSETA as required by the NSDS III. The previous model was onerous and SSETA did not have a direct link with service providers. During the period 2007 – 2010, SSETA paid out R1.6 billion in contracts to 150 companies and R800 million went to 20 intermediaries.
• In terms of budget; the total revenue for the 2013/14 financial year was R1.5 billion, investments R47 million, prior year surplus R415 million and skills development penalties R15 million. The expenditure included; employer grants R256 million, administrator expenditure R127 million and discretionary projects R1.1 billion.

4. Observations

Transport Education and Training Authority (TETA)

4.1 The Committee noted the following concerns:

• How the R185 million outstanding balance would be recouped remained a serious concern.
• The fact that TETA submitted Strategic and Annual Performance Plan 2013/14 to Parliament without a signature was inappropriate.
• The school adoption programme was currently inadequate and needed to expand to other 6 provinces.
• Outstanding certificates for learners that completed learnerships remained a serious challenge since these learners cannot move on with their lives.
• Inadequate implementation of RPL in the transport sector.

4.2 The Committee noted the following progress:

• The envisaged placement of 1000 graduates to various workplace opportunities.
• The multi year funding for full qualification where students would be funded at R71 000 per annum.
• The proposed express parcel delivery for the taxi industry.

Services SETA

4. 3 The Committee noted the following concerns:

• The backlog in issuing of outstanding trade tests certificates to 2000 artisans.
• Delays in the appointment of the new board members expected to commence with their duties on 1 July 2013.
• Enormous challenges that remained in SSETA while the period of the administrator was prolonged.
• The late approval of SSETA strategic plans for 2011/12 and 2012/13 would have a knock-on effect to the roll out of 2013/14 programmes.
• Inadequate monitoring and evaluation in SSETA was a challenge and its performance during the NSDS II could not be assessed because of inadequate data.

4.4 The Committee noted the following progress:

• Development of new policies and procedures that were aligned to the new model of delivery which replaced the use of intermediaries.
• Building of internal capacity through the appointment of CEO, CFO and COO.
• Collaboration with 12 FET colleges and Memorandum of Understanding ( MoU ) that was signed.
• Long term agreements signed with municipalities and local businesses for rural development projects.

5. Resolutions

The following formed part of the key resolutions:

• TETA should compile and submit a comprehensive report explaining all the activities, decisions, people involved, as well as the entity's plans and progress in its quest to recoup the funds. The comprehensive report should include; current investments of TETA with any financial institution and the legal costs incurred since the beginning of the Fidentia case.

• The Committee resolved to work with the office of the Auditor General of South Africa (AGSA) to monitor the performance and financial records of SETAs for proper accountability.

6. Recommendations

The Committee recommends that the Minister should:

• Finalise the appointment of Service SETA board members without delays.

7. Conclusion

The Committee emphasised the importance of accountability to the public funds that were managed by SETAs to deliver on the mandate of the NSDS III. In its quest for robust oversight, the Committee warned SETAs against any practices of maladministration or misuse of public funds as it would work closely with the AG to monitor their performance.

With regards to TETA, the Committee sought for a comprehensive report on what transpired since 2006 up until now. Although it seemed that recouping R185 million balance from the curators would take a long process, the Committee requested Allan Jeftha lawyers to work closely with the curators on this matter. As much as TETA carried on with its mandate with lesser funds, the Fidentia fraud affected its image and relationship with stakeholders. TETA was in a process of engaging with its stakeholders countrywide to regain their confidence and deliver its mandate. The Annual Performance Plan 2013/14 presented to the Committee was in line with NSDS III deliverables although some of the key projects would not be expanded owing to budgetary constraints.

Services SETA had been under administration for almost two years. The extent of irregularities and corruption in SSETA was attributed as the main reason the period of the administrator was prolonged. During his tenure, the administrator developed a new delivery model which would replace the use of intermediaries who benefited more than R800 million in the use of the previous model from 2007 – 2010. The change had not been easy owing to resistance both internally in the SSETA and externally amongst stakeholders who used SSETA as an ATM or business opportunity. The envisaged take over of the new accounting authority from 1 July 2013 dons a new era for SSETA which aimed to achieve its targets of 2016.