ATC130510: Report of the Standing Committee on Finance on Budget Vote 13: Statistics South Africa for the 2013/14 Financial Year, dated 09 May 2013

REPORT OF THE STANDING COMMITTEE ON FINANCE ON BUDGET VOTE 13: STATISTICS SOUTH AFRICA FOR THE 2013/14 FINANCIAL YEAR, DATED 09 MAY 2013

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 2013/14 financial year of Statistics South Africa (Stats SA), reports as follows:

1. Introduction

On 07 May 2013, the Minister in the Presidency: National Planning Commission, the Statistician-General and senior officials of Statistics South Africa (Stats SA) briefed the Standing Committee on Finance on the Strategic Plan for the 2012/13 - 2016/17 period and the work programme for the 2013/14 financial year.

The aim of Stats SA is to provide relevant and accurate statistics by corresponding with internationally approved practice to inform users of the dynamics of the economy and society. It is mandated through the Statistics Act [No.6 of 1999] to coordinate statistical production among organs of the state, the private sector and any other institutions to facilitate proper planning, decision making and monitoring and evaluation of policies and projects. Establishment of institutions such as the National Planning Commission and the Department of Performance Monitoring and Evaluation in the country magnifies the importance and demand for the Department to provide even more statistics that measure government policy implementation and thus influence policy development. The demand for accurate, relevant and timeous data expands even to regional and local levels of government such as municipalities to improve services delivery.

The State of the Nation Address (SONA) 2013 indicated that Census 2011 successfully outlined the progress of service delivery by reporting on various factors, such as the number of households with access to electricity. Access to electricity currently stands at 85 per cent, which indicates that only 15 per cent of the population is without electricity. Government is confident of the path ahead concerning electricity provision for SA citizens.

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 2013/14 which will be discussed in this report.

The Stats SA budget is divided into 7 programmes, namely, Administration; Economic Statistics; Population and Social Statistics; Methodology and Standards; Statistical Support and Informatics; Corporate Relations and Survey Operation.

2. Policy Priority of the Department

The National Development Plan (NDP) aims to contribute towards the developmental and transformation process of South Africa , to overcome social challenges such as inequality, poverty and unemployment. Stats SA is required to work with all stakeholders in the country to provide accurate, quality statistical information on economic, demographic, social and environmental factors for proper NDP implementation. The institution has identified the following strategic priorities.

· Expand the statistical information base by increasing its depth, breadth and geographic spread;

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

· Enhance public confidence and trust in statistics;

· Improve productivity and service delivery;

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

· Promote international cooperation and participation in statistics.

3. Budget Analysis

Stats SA’s overall allocation for 2013/14 amounts to R1.73 billion, which is 0.16 per cent of the national budget and 1.3 per cent less than the previous year’s allocation in nominal terms. However, in real terms the institution’s allocation has declined by 6.5 per cent if inflation is considered. The 6.5 per cent real decrease in the institution’s budget is attributed mostly to declines of Programme 7: Survey Operations (41.9 per cent), Programme 3: Population and Social Statistics (5 per cent) and Programme 6: Cooperation Communication (4 per cent) due to the completion of Census 2011 project. On the other hand, Programme 4: Methodology and Standards’ budget has increased by 8.3 per cent.

Table 1 below illustrates the overall budget allocation for Stats SA.

Table 1: Overall Vote 13 Budget allocation

Source: National Treasury (2013)

4. Expenditure trends

The spending focus over the medium term will be on expanding the statistical information base and increasing the supply of official statistics to inform evidence-based decision making, with emphasis on the following:

• Maintaining the production of macro-economic statistics on a monthly, quarterly, annual and periodic basis;
• Improving the production of social and population statistics;
• Transforming the national statistics system as a strategic priority;
• Researching and implementing improved data collection methodologies and standards for statistical surveys;
• Improving the coverage of dwelling frames;
• Improving the accessibility of data;
• Enhancing the department’s information systems and IT infrastructure; and
• Building capacity in programmes to address the shortage of specialised skills in the department.

Spending fluctuated between 2009/10 and 2012/13 as a result of Census 2011 survey, which was conducted in October 2011 and the results released in October 2012. This caused spending to increase significantly in 2011/12, as the department received an allocation of R2,2 billion for Census 2011 related activities.

The census and other periodic surveys were also responsible for the fluctuations in the number of personnel employed. The number of filled posts decreased by 888 in 2012/13 as the contract posts created for Census 2011 enumerators fell away and the focus shifted to the processing and disseminating of the results. The number of permanent personnel employed is expected to increase over the medium term as part of an effort to reduce the number of consultants and contract workers used for fieldwork.

The 28.8 per cent increase projected in spending on goods and services in 2014/15 relates to an additional allocation of R139 million for the new building that is expected to be built through a private-public partnership (PPP). The new building will provide enough space to house all the department’s head office employees, who are currently housed in three different buildings.

Cabinet approved budget reductions of R173 million (1 per cent), R395 million (2 per cent) and R62 million (3 per cent) over the medium term. In addition to these reductions, the department will reduce spending on compensation of employees, as there were delays in filling vacant posts, and on non-core goods and services. Some of the reductions will be reprioritised towards improving service delivery and achieving key strategic priorities.

5. Key priorities for 2013/14

Stats SA will focus on the following key priorities during the 2013/14 financial year:

5.1 Expand the statistical information base through

• Innovating collection methods;
• Increasing usage of administrative records; and
• Implementing international standards for statistics.

5.2 Enhance public confidence and trust through

• Connecting people with statistics (Umkhanyakude project); and
• Collaborative mapping for the spatial information framework.

5.3 Improve productivity and service delivery

• Implementing a corporate governance framework; and
• Commencing with the construction of the new building.

5.4 Accelerate the implementation of SANSS through

• Designation of statistics as official; and
• Technical support and advice to organs of state.

5.5 Invest in learning and growth through

• Talent management and succession planning;
• Modernising business processes; and
• Building a training institute (national accounts project; internship; certificate and diploma in official statistics).

5.6 Participate in international statistical development

• Improving Civil Registration and Vital Statistics on the continent; and
• Leadership in Strategy for Harmonising Statistics in Africa and Implementation of the Statistics Charter.

6. Programme Analysis

Programme 1: Administration

This programme manages the Department and provides overall centralised support services. The programme coordinated the compilation of the 2012/13 work programme, quarterly reports on organisational performance and the 2010/11 annual report. A Strategy in Action programme was rolled out with the intention of communicating the new strategic direction to different levels across Stats SA. Managers were trained to communicate the new strategic direction and Stats SA’s value system.

The programme received the largest portion of the budget allocation at 28.4 per cent, followed by Corporate Operations, which received 27.1 per cent of the budget. The corporate services sub-programme received R220.3 million, which is 44.7 per cent of the programme budget; followed by office accommodation with an allocation of R127 million, which is 26 per cent of the programme allocation. This is due to the department’s process to acquire more office space both at head office and in regions for 2014/15. New premises will be acquired through the PPP programme currently in progress. The office accommodation sub programme budget includes an allocation for consultants that are working on the new building projects. The increase in the compensation of employees’ budget was due to the fact that 126 vacancies were filled during the 2012/13 financial year.

Programme 2: Economic Services

This programme produces economic statistics to meet user requirements, which are private sector, public sector or any other stakeholder. These statistics inform economic planning, monitoring and decision-making. The programme provides accurate, relevant and timely economic statistical information through the application of internationally recognised practices. Quarterly and annual Gross Domestic Product (GDP) estimates provide information on 10 sectors of the economy as well as regular statistical releases on employment and earnings, industry and trade, and financial statistics. The programme also provides information for inflation targeting and on the changing cost of living by improving the measurement of price changes in the economy. This is done through the publication of monthly statistical releases on the Consumer Price Index (CPI) and Producer Price Index (PPI).

The programme budget for 2013/14 is R217 million, which is a nominal increase of 3 per cent and a real increase of 2.4 per cent from the 2012/13 budget. The economic analysis and research sub-programme budget recorded the largest nominal increase of 41 per cent, which in real terms is an increase of 34 per cent. The management for economic services and national accounts sub-programme budgets declined by 21 per cent and 17 per cent, respectively. The budget for consultancy fees has increased significantly from R2.6 million to R6.5 million from the last financial year, to work on the national accounts capacity building project.

Programme 3: Population and Social Statistics

This programme produces population, demographic, labour market and social statistics in line with internationally recognised practices. These statistics inform social and economic development planning, monitoring and decision-making by providing accurate, relevant and timely statistical information. This is done by publishing regular information on the labour market, vital registrations, poverty levels, living conditions and service delivery as well as population dynamics and demographic trends.

The programme budget for 2013/14 is R110 million and the change from the previous budget has been moderate. The Poverty and Inequality Statistics sub programme has been allocated R29 million, which is the largest share of the programme budget, at 27 per cent. The health and vital Statistics sub programme budget recorded the highest increase of 36 per cent from the previous financial year, followed by the demographic analysis programme with an increase of 22 per cent.

The department aims to increase focus on the production of information, thus the above stipulated sub-programme budgets have increased. Health and vital statistics publish statistics on births, deaths, marriages, divorces, tourism and migration based on administrative records. On the other hand, poverty and inequality statistics budget decreases by 9.8 per cent in nominal terms. This is due to the goods and services budget decreasing by 9.3 per cent, from R15 million in the previous financial year to R8 million in the current financial year.

Programme 4: Methodology and Standards

This programme provides expertise on quality and methodology for official statistics, standards for conducting surveys and a business sampling frame. It also assists to improve the comparability and accuracy of statistical information by reviewing and evaluating methodological compliance in survey areas annually and applying appropriate quality criteria, standards, classifications and procedures. It ensures the provision of accurate and reliable statistical information by drawing annual samples for all economic surveys based on a sound business sampling frame.

The budget has increased by 14.4 per cent from the previous financial year, which is an 8.3 per cent increase in real terms. The survey standards and programme management for methodology and standards sub programmes increased by 71 per cent and 28 per cent respectively in nominal terms. The methodology and evaluations sub programme received the largest portion of the budget allocation (R41 million or 51 per cent) followed by the business register sub-programme at R29 million or 36 per cent. Under survey standards, more permanent positions will be filled to increase capacity to develop standards, classify and define surveys executed by the department.

Programme 5: Statistics Support and informatics

This programme facilitates service delivery programmes through the use of technology in the production and use of official statistics. It promotes and provides better access to official statistics and ensures a reliable sampling frame for household surveys by updating the spatial frame and database annually. The programme also supports the production of official statistics by continuously upgrading Information Communications Technology (ICT) infrastructure, and ensuring 90 per cent network availability.

The budget has increased by 9.1 per cent from R187 million in the 2012/13 financial year, to R204 million in the 2013/14 financial year. This is attributed to geography services that increased by 43 per cent and public services that increased by 26 per cent in nominal terms, business modernisation also increased by 33 per cent due to the increased focus given to mapping and information services in the Medium Term Expenditure Framework (MTEF) period.

Programme 6: Corporate Relations

This programme provides statistical information to support policymakers. It manages stakeholders and interacts with international statistical agencies. It provides effective communication activities to increase awareness and the use of official statistics by maintaining and improving stakeholder relations and managing external and internal communications.

Annually, stakeholder workshops are conducted in all provinces to inform and consult with stakeholders on statistical matters. The programme improved website visitor sessions through publicity campaigns and interactions with stakeholders. It also provides an integrated data collection service that ensures timeliness and accuracy, and disseminates quality statistics through statistical technical support services to provincial and local stakeholders. The programme ensures alignment with international standards, best practice and statistical skills development by increasing participation, sharing and learning in international statistical initiatives on an on-going basis.

Programme 7: Survey Operations

This programme provides collection and processing support to produce official statistics. The programme also aims to ensure the efficiency and effectiveness of survey operations by coordinating and integrating household survey operations (quarterly labour force survey, the general household survey and the income and expenditure survey) annually. This program strives to improve the quality of editing and processing data by standardising and optimising the use of technology (such as scanning and handheld devices) annually.

This programme received an allocation of R159 million, which is a decline of 38 per cent from the R259 million that was allocated for the 2012/13 financial year. This is mostly due to the 59 per cent decline in the population Census sub-programme as it was completed in 2011.

7. Deliberations

Following the interaction with Statistics South Africa (Stats SA), the Standing Committee on Finance:

• Commended Stats SA for its innovation, specifically with regard to the Census Roambi application for smartphones;
• Expressed its appreciation for Stats SA’s encouraging and detailed work plan;
• Noted the encouraging work done on PPI and CPI and noted that the increase in prices of goods and services negatively affect poor people ;
• Encouraged Stats SA to look at the implementation and limitations imposed by the Act, as it did not seem to support their priorities ;
• Noted the skills shortage in South Africa , and encouraged Stats SA to allocate a budget for skills transfer and support to departments and municipalities. This was discussed in the context of departments and municipalities not making adequate use of the Census 2011 figures for decision-making;
• Noted that the budget of Stats SA will make it difficult for targets to be achieved;
• Noted that methods employed and sources used by municipalities for statistics collection needed to be improved;
• Noted the reduction in allocations for non-profit organisations, and wanted to know what impact this would have on their operations;
• Sought clarity on Stats SA's role as secretariat of the Millenium Development Goals project, and wanted to know what their involvement was;
• Noted the allegations made by a senior staff member of Statistics South Africa with regard to the Census 2011, and wanted to know if there was any truth to the allegations and if the quality of the Census results has been adversely affected as a result;
• Sought clarity on plans to avoid the problems encountered with Census 2011;
• Requested Stats SA’s view on the use of the narrow definition of unemployment, as opposed to the broad definition, as the official definition of unemployment;
• Expressed concern over the use of the narrow definition given the high number of South Africans classified as discouraged work seekers. The Committee strongly suggested that Stats SA revert back to the broad definition of unemployment;
• Noted Stats SA’s view on the youth wage subsidy, and asked whether it had statistics supporting National Treasury’s contention that a person with work experience has a better chance of being employed;
• Wanted to know when the Business Register will be finalised, and why the target date for its rollout was delayed;
• Asked for reasons why Stats SA’s budget was less than the previous financial year allocation, despite the requests for increases in the previous year;

• Wanted to know what steps were taken to prevent a repeat of the previous financial years’ qualified audit outcome;
• Wanted to know when permanent positions will be filled so as to phase out the extensive use of consultants;
• Wanted to know if there was communication and coordination between Stats SA and other statistics agencies when statistics are released;
• Sought clarity on Stats SA’s use of outside consultants;
• Sought an explanation for the possible risks and constraints if Stats SA did not implement SNA2008 and ISIC4;
• Sought clarity about the comments made by the Acting Chairperson of the FFC and asked whether Stats SA and the FFC had engaged on the matter;
• Requested an action plan from Stats SA of how they intend to address the budgetary challenges that they faced in the current financial year.

8. 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:

· The Census Roambi application for smartphones was being expanded to other series that were produced, and changes were updated as information was released;

· Indicated that, with regard to the definition of unemployment, South Africa followed the International Labour Organisation trends in terms of the official definition. The ILO definition did not take into account differences in legislation and methodology between countries. Within the South Africa context, the issue of self-definition became a factor. The amendments to the labour laws that were currently before Parliament would begin to address some of the differences in definition;

· The Business Register project is collaboration between the South African Revenue Service (SARS), the Companies and Intellectual Property Commission (CIPC) and Stats SA, and that the CIPC experienced internal challenges, resulting in the delay. Stats SA indicated that this has to be a well co-ordinated effort from all three entities. There was an undertaking that the revised date for the finalisation of the Business Register would be communicated during the Stats SA Budget Vote debate;

· The allegations from the senior staff member were investigated by a team of outside experts that were contracted by the Statistics Council, that reported directly to the Council. The Council addressed the claims publicly. The Stats Council is legislatively mandated to undertake a quality assurance process and this was competed to their satisfaction;

· Explained that the qualified audit awarded to it in the previous financial year had been as a result of the inordinate volumes of transactions required for processing as a result of the Census 2011;

· Indicated that it had put corrective measures in place to avoid a repeat of the qualified audit outcome received in the previous financial year, and were confident that proper financial governance would be restored;

· Indicated that there are efforts underway to fill permanent positions within the establishment. It also indicated that outside consultants were carefully selected based on the work to be undertaken;

· Indicated that statistics need credibility, the Act could be strengthened to include statistics agencies and companies not covered by the Act. It was also noted that while the Act gave the Statistician-General a great deal of power, it was important that these powers be supported by outputs with credibility;

· For Stats SA to be competitive in the statistics it produces, it has to use the latest models in order to keep the statistics reliable and valid. In this regard, the current System of National Accounts and ISIC systems being used excluded newer areas for measurement in light of the changes in the global economy over the past two decades;

· With regard to Stats SA’s role in terms of the MDGs, they explained that they acted as the secretariat in terms of managing the qualitative information only;

· Noted that while there had been no actual surveys, the current unemployment figures pointed to the potential impact of a youth wage subsidy;

· Noted that while the meeting with the FFC had not taken place yet, it was aware that the Community Survey had not adequately dealt with the detail of municipal information as well as migration patterns. Regardless, there was an understanding that the outputs were still useful. It was also noted that the Acting Chairperson of the FFC had called for a proper census to be conducted every five years as required by the legislation. The committee was requested to provide guidance in this regard.

9. Recommendations

Based on the deliberations with the Statistics South Africa, the Standing Committee on Finance recommends that the Minister in the Presidency: National Planning Commission should ensure that Statistics South Africa:

9.1 In conjunction with t he South African Revenue Service and the Companies and Intellectual Property Commission report to the house at least twice a year to report on progress made until the finalisation of the single business registration project is completed;

9.2 Investigates the inclusion of an analysis of broad unemployment by "population group", "sex", "industry" and "age" in the Labour Force Survey and reports to the House on this process within six months of the adoption of this report by the House;

9.3 Provide the House with a comprehensive plan on the utilisation of human and financial resources in order to have a population census every five years, this plan should be presented within six months of the adoption of this report by the House;

9.4 Should provide the House with proposed amendments addressing any limitations imposed by the Statistics Act in terms of statistical coordination, in order to strengthen the Act. These proposed amendments should be presented within six months of the adoption of this report by the House;

9.5 Should provide the House with a detailed plan on how it intends to increase its personnel pool in order to increase its skills base, within 60 days after the adoption of this report by the House;

9.6 Adheres to the procedures defined in the act in terms of the release of census results; and

9.7 Should encourage government departments and entities of all 3 spheres of government to use census results as a basis to inform evidence based decision making.

10. Conclusion

The Standing Committee on Finance, having considered Budget Vote 13: Statistics South Africa recommends that the House supports Budget Vote 13: Statistics South Africa.

Report to be considered.