ATC120509: Report: Budget Vote 13: Statistics South Africa For The 2012/13 Financial Year, Dated 09 May 2012

Finance Standing Committee

Joint Report of the Portfolio Committee on Water and

REPORT OF THE STANDING COMMITTEE ON FINANCE ON BUDGET VOTE 13: STATISTICS SOUTH AFRICA FOR THE 2012/13 FINANCIAL YEAR, DATED 09 MAY 2012

 

The Standing Committee on Finance, having considered Budget Vote 13, the Strategic Plan for the 2011/12- 2015/16 period and the work programme for the 2012/13 financial year of Statistics South Africa (Stats SA), reports as follows:

 

1. Introduction

 

On 24 April 2012, the Minister in the Presidency: National Planning, the Statistician-General and senior officials of Statistics South Africa (Stats SA) briefed the Standing Committee on Finance (the Committee) on the Strategic Plan for the 2011/12 - 2015/16 period and the work programme for the 2012/13 financial year.

 

Stats SA draws its mandate from the Statistics Act, No. 6 of 1999 (Stats Act). Stats SA is responsible for the collection, production and dissemination of official and other statistics. It aims to expand and deepen the evidential knowledge base to enable society to understand the socio-economic phenomena across time. Statistics SA does this by providing a relevant and accurate body of statistics to inform users of the dynamics of the economy and society by applying internationally acclaimed practices.

 

The main objective of the Strategic Plan is to define the roadmap for establishing a sound statistical system for South Africa . In accordance with its mandate, Statistics South Africa has identified certain key priorities for 2012/13 which will be discussed in this report.

 

The Medium Term Expenditure Framework (MTEF) shows that Stats SA’s budget is divided into 7 programmes, these programmes are the following:

 

· Programme 1: Administration

The purpose of the Administration Programme is to manage the department and provide centralised support services.

 

· Programme 2: Economic Statistics

The purpose of the Economic Statistics Programme is to p roduce economic statistics to meet user requirements.

 

· Programme 3 - Population and Social Statistics

The purpose of the Population and Social Statistics Programme is to p roduce population, demographic, labour market and social statistics to meet user requirements in line with internationally recognised practices.

 

 

 

 

· Programme 4 - Methodology and Standards

The purpose of the Methodology and Standards Programme is to p rovide expertise on quality and methodology for official statistics, standards for conducting surveys and business sampling frame.

 

· Programme 5 - Statistical Support and Informatics

The purpose of the Statistical Support and Informatics is to e nable service delivery programmes through the use of technology in the production and use of official statistics, and to promote and provide better access to official statistics.

 

· Programme 6 - Corporate Relations

The purpose of the Corporate Relations Programme is to p rovide statistical information to support policy makers, to manage stakeholders and to interact with international statistics agencies, as well as providing effective communication services.

 

· Programme 7 - Survey Operations

The Purpose of the Survey Operations Programme is to provide collection and processing support to produce official statistics.

 

2. Presentation by Statistics South Africa

 

The Statistician-General reported that South Africa suffers triple challenges, namely, unemployment, inequality and poverty. Modern states require systems of evidence to bring about desired change. System of planning is a roadmap to achieve long-term goals, and system of statistics provides evidence to inform planning, monitor progress, and evaluate performance. A platform for a planning, monitoring and evaluation environment is adequately anticipated in the Stats Act, with section 14 introducing statistical coordination within the South African National Statistics System (SANSS).

 

2.1 Strategy

 

The changing information requirements for statistics demand that quality and relevance should guide the transformation of statistics in the public domain, irrespective of whether it is produced as official statistics by other organs of state, or by private entities. This transformation involves collaboration and partnership between producers of statistics and is aimed at making statistics ready for decision making, planning, monitoring and evaluation.

 

Stats SA developed six strategic objectives that will drive strategic change and address the information, quality and skills gaps in statistical systems, namely to:

· Expand the statistical information base by increasing its depth, breath and geographical spread;

· Enhance public confidence and trust in statistics;

· Improve productivity and service delivery;

· Lead the development and coordination of statistical production within the South African National Statistics System (SANSS);

· Invest in the learning and growth of the organisation; and

· Promote international cooperation and participation in statistics.

 

Stats SA translated the measurement of priority outcomes, together with international frameworks for statistical reporting, as well as the needs of users into the following 10 statistical themes that constitute the universe of statistical production in South Africa :

 

· Economic Growth and Transformation;

· Prices;

· Employment, job creation and decent work;

· Life circumstances, service delivery and poverty;

· Population Dynamics;

· Safety and Security;

· Sustainable resource management;

· Health;

· Education; and

· Rural development, food security and land reform

 

2.2 Analysis

 

Stats SA is in its third year of implementing their strategic plan that was adopted by Parliament in 2010. It undertook a critical review of how far they came in implementing the new strategic direction. Below is a summary of the current strategic objectives of Stats SA.

 

2.2.1 Expand the statistical information base by increasing its depth, breath and geographical spread

 

This strategic objective aims to address the statistical information gap in order to respond adequately to the information requirements in the statistical system within the 10 statistical themes as outlined above. Stats SA’s contribution to the statistical information base relates mainly to conducting business and household surveys and, to a lesser extent, making use of administrative records to inform outcomes on a national and provincial level. Stats SA plays a dual role, that of producer and coordinator to expand the statistical information base. In terms of ten statistical themes, Stats SA does the following

 

· Economic Growth and Transformation

Official statistics are arranged and structured according to international frameworks and standards, and this is important as it promotes quality statistics. This quality is manifested in terms of data comparability, coherence and international best practices. These frameworks are supported by international organisations such as the Organisation for Economic Co-operation and Development ( OECD), United Nations Statistics Division ( UNSD) and International Monetary Fund (IMF), which are critical role players in the global economy. Stats SA’s interaction with other countries, investment and economic growth is reliant on accurate and comparable statistics. This forms the basis for robust decision making on economic growth. Stats SA produces macro economic indicators to inform economic and social development by publishing monthly, quarterly, annual and periodic industry and trade statistics on nine sectors of the economy, financial statistics on eight sectors of the economy and annual financial government statistics. These statistics and others are used to compile quarterly and annual gross domestic product ( GDP ) within the framework of the system of national accounts.

· Prices

 

Stats SA set out to re-engineer the Producer Price Index ( PPI ) within its strategic plan. Resources were prioritised to fund this activity. The new PPI will be launched during the 2012/13 financial year . Further improvements include industry - based PPI’s, which require additional funding over the medium term. Stats SA conducts a five-yearly Income and Expenditure Survey (IES), and the expenditure module is used to determine the weights of the Consumer Price Index ( CPI ) .

 

· Employment, job creation and decent work

 

Stats SA conducts a quarterly labour force survey and a quarterly employment survey to provide information on the labour market dynamics in South Africa . The labour force survey introduced a new survey methodology and was stabilized to produce up - to - date and accurate labour market information. The quarterly employment survey measures formal employment levels in the non-agriculture sector and is dependent on samples drawn from the business register.

 

· Life circumstances, service delivery and poverty

 

Stats SA conducts a Living Conditions Survey (LCS) every five years. It is a multi-topic poverty survey that contributes to wards understanding the poverty profile in South Africa , and it monitors levels of poverty over time. Stats SA intends to introduce a continuous household survey that collects detailed expenditure information for both the IES and LCS. Stats SA will continue to conduct the annual general household survey to collect statistics on various social matters. This information is disseminated on a national and provincial level to inform monitoring of progress. To broaden the domain of statistical production to inform socio-economic planning and monitoring, the strategic plan outlines the introduction of an integrated household survey programme.

 

The main producer of statistics at a lower level is municipalities. Output information to inform service delivery is based on administrative records kept by municipalities. The new strategic direction aims partnering with municipalities to provide technical support to improve data flow, analysis and use of statistics as evidence in planning, monitoring, reporting and decision making.

 

· Population Dynamics

 

Stats SA conducted a population census in 2011 , results of which are expected to be released in October 2012. Census information forms the baseline for any statistical system. The population count and demographic profile of South Africa is used as a denominator in the statistical environment to measure development and progress. It provides information at a micro level that informs planning, monitoring, evaluation and decision making at any level.

 

The census received sufficient funding over the past few years to execute its mandate and became the instrument through which statistical infrastructure was established. The census of 2001, the community survey of 2007 and the census of 2011 built Stats SA that now consists of nine provincial offices, 56 district offices and 60 satellite offices. The census provided the necessary funding for growing Stats SA . The funding earmarked for the census is coming to an end after the dissemination of census results in the 2012/13 financial year .

 

· Safety and Security

 

In 2011, Stats SA introduced a Victim of Crime Survey that is an important part of the crime statistics subsystem. The main producer of crime statistics in South Africa is the South African Police Service (SAPS). The production of crime statistics is based on administrative records from local police stations and through administrative records of the courts. SAPS approached Stats SA to assist in improving the quality of crime statistics. Stats SA developed a five - phase approach to provide technical support and statistical advice, and full time resources have been allocated for the above - mentioned support. It is a long term project and will only achieve the necessary results over the medium term.

 

· Sustainable resource management

 

Statistics related to this objective is governed through the system of environmental economic accounts (SEEA). Stats SA followed the 1993 SEEA in its existing activities in the form of publications on water, minerals and energy. Stats SA’s role in implementing SEEA is mainly a coordinating role, as the required basic statistics fall outside the scope of national statistics offices. The full development of SEEA requires increased capacity in Stats SA to interact and advise other role players in the statistics system. The actual compilation of the accounts will be undertaken by Stats SA.

 

 

 

 

· Health

 

Stats SA produces annual statistics on causes of death, which is a key indicator of the health profile of South Africa . This series is based on sources of data received from the Department of Home Affairs. The main producer of health statistics is the Department of Health through the district health information system, as well as the demographic and health survey. The Department of Health deprioritised the undertaking of the demographic and health survey, but Stats SA is of the view that this survey is important in providing national outcome data on the health profile of South Africa and therefore proposes to undertake the functions and funding of this survey in the future.

 

· Education

 

Stats SA produces annual statistics on education through the general household survey. The population census is a valuable source of information on the education levels of the population. The main producer of education statistics is the Department of Basic Education through the education management information system and annual surveys. Stats SA have been in a longstanding partnership with the Department of Basic Education. Statistical education standards have been developed by the Department of Basic Education in partnership with Stats SA, and discussions on the continent are ongoing in this regard. The Department of Basic Education requested Stats SA to support it in the self-assessment phase of its registers against South African Statistical Quality Assessment Framework ( SASQAF ) in order to identify quality gaps, and to certify education statistics as official.

 

 

· Rural development, food security and land reform

 

The status of agricultural statistics in South Africa is a highly uneven effort in terms of coordination among data producers. There is a variety of data producers, with each producing data in a specific area of interest. There is a lack of information concerning the size of South Africa ’s total agricultural land, the number of livestock and human population deriving a livelihood from small - scale farming. Often, conflicting data is disseminated, crea ting uncertainty in the sector, and important characteristics of the sector that need to be measured are not being addressed as it should. Stats SA conducted a n agricultural census in 2007, with a funding from the Department of Agriculture, and all farms registered for tax were covered.

 

2.2.2 Enhance public confidence and trust

 

This objective aims to address the quality gap in the statistical system. The following are three focus areas for improving the quality of statistical information.

 

 

· Quality Management System

 

Quality is a central concern for the production of official statistics. Stats SA developed numerous quality tools and practices for statistical production within itself .

 

· Busi ness Register

 

The Business Register forms the pillar of the business sampling frame which is used to draw samples for most economic statistics produced by Stats SA.

 

The Business Register is derived from the various tax registers of SARS and maintained on a monthly basis based on source data from the VAT register. It covers all businesses - including small, medium, large and complex businesses registered at SARS. Stats SA is of the view that a census of businesses must be conducted to cover all entities that are economically active in South Africa , and not only those that are registered at SARS.

 

An inter-departmental Business Registration Reform Project (BRRP) was established between Stats SA, the Department of Trade and Industry, SARS and National Treasury . D edicated full-time resources were assigned to this project.

 

· Dwelling Frame

 

The aim of this project is to collect special information on every dwelling structure in South Africa . Stats SA, as at April 2012 , collected 10.6 million geo-referenced points containing features such as street names, number, place name, unit count and feature use.

 

2.2.3 Lead the development and coordination of statistical production in the SANSS

 

Stats SA argues that it needs to invest in building adequate capacity to guide and govern statistical production in South Africa . Statistical coordination areas include the following :

 

· Statistical planning and reporting which aims to coordinate statistical plans across organs of state to enable the Minister in the Presidency: National Planning Commission to approve/disapprove the inception, variance or discontinuance of statistical series that inform planning, monitoring and evaluation, and policy development,

 

· Statistical production system which aims to govern statistical information systems in organs of state to produce official or good quality statistics, and provide technical support and advice at national, provincial and local levels,

 

· Governance mechanisms which aims to coordinate partnerships across users and producers of statistics to ensure no duplication of effort and standardisation of statistical practice across sectors. The Statistics Council has an oversight responsibility and is required to advise the Minister in the Presidency: National Planning Commission and the Statistician - General on statistical matters, including statistical coordination across organs of state, and

 

· Auditing statistical quality which aims to certify statistics as official which provides assurance for the quality of statistics that informs evidence-based decisions.

 

2.2.4 Invest in the learning and growth of the organisation

 

Stats SA’s corporate governance steadily improved over the p revious few years. It received its fifth consecutive unqualified audit for the 2010/11 financial year. An audit monitoring system has been implemented to continuously monitor the implementation of internal and external audit recommendations which has contributed to improved governance.

 

In terms of human resource management practices, the vacancy rate reduced to 14, 6 per cent as at the end of the 2011 calendar year . Succession planning and retention remains a challenge and needs to be addressed urgently. Stats SA has numerous capacity-building initiatives in place to address the skills gap internally, including an internship programme, a foreign study programme, and partnerships with local universities.

 

2.2.5 International environment

 

South Africa is recognised as a critical role player in the statistical development in Africa . South Africa chaired the African Symposia on Statistical Development (ASSD) since its inception in 2006 to date, the Statistics Commission for Africa and PARIS21 for a number of years.

 

Stats SA actively participated in building statistical capacity on the continent. The ISIbalo Capacity Building Programme was initiated by Stats SA and hosted two I si balo Young African Statisticians Conferences.

 

Stats SA assisted the African Union and the Economic Commission for Africa to compile standards and guidelines for the implementation of the Charter and to develop an action plan for the implementation of the Strategy for Harmonisation of Statistics in Africa . South Africa has been nominated as the leading country for the African Group on Harmonisation of Statistics, as well as for the African Group on National Accounts.

 

 

 

 

 

 

2. 3 Key priorities for the 2012/13 financial year

 

The annual performance plan (the plan) indicate s the following priorities that the organisation will focus on during the 2012/13 financial year :

· Publish the Census 2011 results ;

· Publish the results of the re-engineered PPI ;

· Publish reweighted and rebased CPI ;

· Create an enabling regulator environment for statistical production and coordination ;

· Coordinate the production of education, crime and vital and health statistics within South African National Statistics System (SANSS) ;

· Build spatial information frame ;

· Business registration reform ;

· Integrate communication , marke ting and stakeholder management ;

· Integrate survey operations ;

· Participate in st atistical development in Africa ; and

· Build statistical capacity by-

o Establish the Isibalo Institute ;

o Develop national accounts capacity ; and

o strengthen analytical and methodological capability .

 

2.4 Medium Term Estimates

 

The baseline allocation in the Estimates of the National Expenditure amounted to R1.6 billion for the 2012/13 financial year , R1.7 billion for the 2013/14 financial year and R2 billion for the 2014/15 financial year . The plan cited that the lack of funding over the Medium Term Expenditure Framework period implies that the economic statistics programme risk s becoming irrelevant to inform economic growth and price stability.

 

In terms of the programme allocation, the Corporate Relations programme and Administration programme received the highest allocation of R454.6 million and R445.8 million for the 2012/13 financial year, which is 26.4 per cent and 25.8 per cent , respectively.

 

In terms of the economic classification, current payment received the largest allocation amounting to R1.6 billion for the 2012/13 financial year, which was largely made of goods and service s amounting to R475.9 million and compensation of employees amounting to R1 . 2 billion. The plan indicted that , due to the labour intensive nature of the survey activities, the Stats Sa’s main cost drivers is spending on compensation of employees. The travel and subsistence budget to support these activities across the country is also a significant cost driver of the Stats SA’s operations.

 

The plan indicated that the Stats SA received an additional allocation of R75 million over the medium term for improved conditions of service and R139 million for office accommodation in the 2014/15 financial year . The Stats SA has identified saving of R21.5 million over the medium term from spending on compensation. The plan further mentioned that between the 2012/13 and 2014/15 financial years , R44 million, R50 million and R52 million are allocated to consultants to provide technical expertise and support in the analysis and evaluating of census results, including building internal capacit y.

 

The plan cited further that the spending focus over the medium term w ould be on:

· Processing data and disseminating the results of Census 2011 from November 2012;

· Maintain the production of macroeconomic statistics on a monthly, quarterly, and annual basis;

· Improving the production of social and population statistics;

· Transforming the national statistics system as a strategic priority;

· Improving the coverage frame;

· Improving the accessibility of data;

· Enhancing the department’s information system and information Technology (IT) infrastructure ; and

· Building capacity in programmes to address shortage of specialised skills in the department .

Table 1 below, the Medium Term Expenditure Framework (MTEF) illustrates the total allocation to each programme.

 

Table 1: The Medium Term Expenditure Framework (MTEF)

Programmes	Medium term estimates
	201 2 /1 3	201 3 /1 4	201 4 /1 5
	R'000	R'000	R'000
Administration	444.5	476.5	649.6
Economic Statistics	213.9	226.6	238.2
Population and Social Statistics	122.0	125.3	130.4
Methodology and Standards	80.2	85.6	91.9
Statistical Support and Informatics	200.3	214.2	225.5
Corporate Relations	454.6	480.3	509.9
Survey Operations	206.0	124.5	130.1
Total	1 721.6	1 733.0	1 975.6
Change to 2011 budget estimate	23.3	15.3	-

Source: Statistics South Africa Work Programme, 2012/13

 

3. Deliberations

 

Following the interaction with the Statistics South Africa, the Standing Committee on Finance made the following comments:

 

· The Committee commended Stats SA for its comprehensive work done on Census 2011 and good plans for the coming years .

· The Committee sought clarity on Stats SA's budget figures, especially accommodation as presented in the strategic plan , and the year on year increases of 12 per cent in 2012/13 and 23 per cent thereafter in the strategic objectives over the MTEF .

· T he Committee wanted to know the difference between statistics from SARS and that of Stats SA in particular with regard to the number of tax payers and the number of businesses registered .

· The Committee sought clarity on Stats SA's estimation and size of the informal sector and the number of immigrants in South Africa .

· T he Committee wanted to know why five of the nine provinces did not achieve statistically significant results for their unemployment rates.

· The Committee wanted to know what Stats SA’s staff establishment and retention strategy was , and to what extent Stats SA absorbed staff recruited for the Census 2011 into the organisation.

· The Committee wanted to know about the authenticity and legitimacy of statistics issued by other bodies, but quoting Stats SA as the legitimate source, while the information was not officially issued by Stats SA.

· The Committee wanted to know what steps were taken against people who did not cooperate with the Census enumerators.

· The Committee asked Stats SA on its key priorities for the following year with reference to re-engineering PPIs and the reweighted CPIs , and to expand on why and how it would differ.

· The Committee noted that it was the responsibility of all Members of Parliament and all key role players in society to internalis e the National Development Plan, and that Stats SA had a responsibility to express its needs.

· The Committee sought Stats SA’s view on the continued questioning of the credibility of South Africa 's statistical information that was issued by them.

 

4. Responses by Stats SA

 

With regard to questions raised and comments made by the Standing Committee on Finance, the Stats SA responded/commented as follows:

 

· Stats SA indicated that the strategic plan did not sufficiently impact on what the detailed demands of the organisation were.

· Stats SA noted that the difference between statistics from SARS and that of Stats SA were because tax returns may reflect the same individual twice. Stats SA had done some work to harmonise these figures .

· Stats SA reported that it measured the informal sector through the quarterly labour force survey for which it had a very detailed methodology. However, there was not a register of the informal sector since its members were usually below the tax net in terms of turnover. The only way in which this information could be gathered was through a survey such as the quarterly labour force survey. Stats SA followed up on these households that had indicated a form of business activity.

· Stats SA indicated that, in terms of employment statistics, discussion facilitated by a think-tank in which a number of people participated, including labour economists and other economists, from both academia and the private sector. Stats SA and SARS numbers needed to be expanded.

· Stats SA indicated it had a very robust method by which it ran its measurements. This method was peer reviewed, with assistance from experts from across the world on re-engineering the quarterly labour force survey in order to run it twice a year. An increase in the sample phase might be welcomed to try and achieve statistical significance, particularly in provinces where it was not achieved.

· Stats SA reported that it had about 4 000 staff members, with a vacancy rate of about 8 per cent . One of the measures that it had taken in the 2012 calendar year was to deliberately not recruit more people. However, beyond 2012 , Stats SA would reprioritise. To retain staff, Stats SA had an internal training programme.

· Stats SA indicated that South Africa had the best position in the world in terms of the separation of political power from the production of statistics.

· Stats SA reported that it was an international best practice to update the price indices in terms of the basket of goods that was being priced on a periodic basis and it was time to change the basket of the CPI. The PPI would be dismantled into five separate indices, resulting in a greater correlation with the CPI.

· Stats SA indicated that peer reviews that took place both within the United Nations (UN) system an d by the International Monetary Fund (IMF) by the standardised data dissemination system were fundamentally important. It was important for Stats SA to issue statistics that was needed for informed policy making.

 

5 . Recommendations

 

Based on the de liberations with the Stat istics S outh A frica , the Standing Committee on Finance recommends that the Minister in the Presidency: National Planning should ensure the following :

 

5.1 That the Stat istic s S outh A frica , together with S outh A frican R evenue S ervices , provide the House with a status and progress report on the Business Registration Reform Project , within 30 days after the adoption of this report by the House .

 

5.2 That the Stat istic s S outh A frica works with the South African Local Government Association to expedite its initiative of capacitating municipalities on statistics collection.

 

5.3 That the Statistics South Africa provides the House with a detailed report of the spending requirements that justify the budget increase of 12 per cent in 2012 and 23 per cent in 2013 over the Medium Term Expenditure Framework, within 90 days after the adoption of this report by the House.

 

5. 4 That the Stat istic s S outh A frica provides the House with detailed reports on how they measure the size of the informal sector, migration into and within South Africa , and urban rural migration , within 9 0 days after the adoption of this report by the House .

 

5. 5 That the Stat istic s S outh A frica provides the House with a detailed plan on how it intends filling outstanding vacancies, and also their strategy of retaining skills within the organisation (retention strategy) , within 6 0 days after the adoption of this report by the House .

 

6 . Conclusion

 

T he Standing Committee on Finance, having considered Budget Vote 1 3 : Statistics South Africa , recommends that the House support s Budget Vote 1 3 : Statistics South Africa .

 

 

Report to be considered.