ATC141024: Budgetary Review Recommendation Report of the Portfolio Committee on Transport, Dated, 22 October 2014
Transport
Budgetary
Review Recommendation Report of the Portfolio Committee on Transport, Dated, 22
October 2014
The
Portfolio Committee on Transport, having considered the performance and
submission to National Treasury for the medium term period of the Department
and its entities, reports as follows:
1.
INTRODUCTION
In his
address to the Presidential Infrastructure Coordinating Commission (PICC), the
President said: "At a close of our second decade of Democracy, it is clear
that we need to change the gear. All South Africans need to work together in a
concerted effort to improve service delivery, bolster job creation and expedite
economic transformation". These words of the President resonate with the
National Development Plan (NDP) that calls for Government to drive policy
agenda that includes, but not limited to, a need to have a long-term National
Infrastructure Plan that will change the structure of the economy, job creation
and skills development.
1.1
MANDATE OF THE COMMITTEE
The prime
mandate of the Committee is governed by the Constitution of the Republic in
respect of its legislative and oversight responsibilities as public
representatives. It is required to consider legislation referred to it and
consider all matters referred to it in terms of the Constitution, the Rules of
the National Assembly or resolutions of the House. It is also required to
respond to matters referred to it by Government within its mandate. In
addition, the Committee is entrusted with considering the budgets, Strategic
and Annual Performance Plans of the Department and entities that fall within the
transport portfolio.
1.2
PURPOSE OF THE BUDGETARY REVIEW AND RECOMMENDATION REPORT
Section
77(3) of the Constitution stipulates that an Act of Parliament must provide for
a procedure to amend money bills before Parliament. This constitutional
provision gave effect to the Money Bills Amendment Procedure and Related
Matters Act (No. 9 of 2009). The Act gives Parliament powers to amend money
Bills and other legislative proposals submitted by the Executive whenever the
Executive deems it is necessary to do so. The Act therefore makes it obligatory
for Parliament to assess the Departments budgetary needs and shortfalls
against the Departments operational efficiency and performance.
This review seeks to establish whether the
Department of Transport and entities have achieved their aims and objectives,
as set out in their Strategic Plans, as well as whether they continue to fulfil
their constitutional mandates. The focus will be on highlighting the key
achievements made, as well as challenges encountered during the 2012/13 and 2013/14
financial years, as reported in the Departments and entities 2012/13 and 2013/14
Annual Reports and Annual Performance Plans.
1.3
METHODOLOGY
The Committee engaged with the Department and
its entities from 14 to 17 October 2014 on their performance and audit outcomes
for the period under review. The Committee met with the following entities:
1.
Air Traffic and Navigation Services (ATNS)
2.
Airports Company South Africa (ACSA)
3.
Cross-Border Road Transport Agency (C- BRTA)
4.
Passenger
Rail Agency of South Africa (PRASA)
5.
Ports
Regulator
6.
Railway Safety Regulator
(RSR)
7.
Road
Accident Fund (RAF)
8.
Road
Traffic Infringement Agency (RTIA)
9.
Road
Traffic Management Corporation (RTMC)
10.
South
African National Roads Agency Limited (SANRAL)
11.
South
African Civil Aviation Authority (SACAA)
12.
South
African Maritime Safety Authority (SAMSA).
The report details
the analysis of the 2012/13 and 2013/14 Annual Reports and Financial Statements,
strategic objectives, budget allocation and financial performance and the
recommendations made by the Portfolio Committee on Transport.
The Budgetary Review
and Recommendation Report is based on information accessed through:
-
The 2013 State
of the Nation Address (SONA)
-
The Department
of Transports Strategic and Annual Performance Plans (APPs) for
2012/13
and 2013/14
-
The Department
of Transports Annual Report and Financial Statement for 2012/13 and 2013/14
-
The Strategic
Plans and the Annual Performance Plans of the entities that fall under the
Department of Transport, as well as their Annual Reports and Financial
Statements for 2012/13 and 2013/14
-
Quarterly
reports of the Department
-
The report of
the Auditor General of South Africa on the audit outcomes of the
Department
-
National
Treasury Section 32 Reports
-
The NDP.
2.
OVERVIEW OF THE KEY RELEVANT POLICY FOCUS
AREAS
During the 2013/14
financial year, the Department focused on optimal performance of deliverables
in terms of the Medium Term Strategic Framework (MTSF) priorities to address
Governments broad national objectives. The Departments service delivery
targets for the Medium Term Expenditure Framework (MTEF) were guided by the
outcomes-based performance management approach of Government. Twelve (12) key
outcomes were identified to be implemented through inter-governmental
cooperation. The Department contributes to three (3) outcomes which are
economic infrastructure development, creation of employment through economic
growth and contribution to rural development.
In the development of its
policies and programmes, the Department has to be directed by Governments key
policies, namely, the NDP, the PICC and, in particular, the Strategic
Integrated Project (SIP 4) of the PICC, the SONA and the 2014-2019 electoral
mandate. The mandate focuses on a number of priorities, but of more relevance
to the transport sector is the radical economic transformation, rapid economic
growth and job creation.
The 2013 SONA highlighted
the following strategic objectives that were pertinent to the transport sector:
·
Shifting the transportation of coal from road to
rail in Mpumalanga in order to protect the provincial roads.
·
Improving the movement of goods and economic
integration through a Durban-Free State-Gauteng logistics and industrial
corridor.
·
Upgrading Mthatha Airport runway and terminal and
the construction of the Nkosi Dalibhunga Mandela Legacy Road and Bridge.
·
Fast-tracking of roads in the North West.
·
Integrating different modes of transport (bus, taxi
and train) in Cape Town, Nelson Mandela Bay, Rustenburg, eThekwini and Tshwane.
·
Improving commuter rail network.
In terms of the
outcomes-based performance management framework adopted by Government, the
Department contributes mainly to the development of an efficient, competitive
and responsive economic infrastructure network (outcome 6). To achieve this
outcome, the Department has been mandated to focus on:
·
Maintaining road infrastructure.
·
Upgrading rail infrastructure and services.
·
Constructing and operating public transportation
infrastructure.
These policy priorities are
in line with what the National Development Plan (NDP) proposes pertaining to
social and economic development. Indeed, the NDP maintains that sound economic
infrastructure is a precondition for economic growth and that the countrys
transport infrastructure is a
necessary
condition for attaining this objective.
The major recommendations
of the NDP are to improve public transport planning and integrate it with
spatial planning. It also puts emphasis on asset management and institutional
arrangements to ensure safe, reliable and affordable public transport and
renewal of the commuter rail fleet. In this regard, the NDP accentuates the
need to focus on the Durban-Free State-Gauteng Logistics and Industrial
Corridor, incentivise public transport and focus on integrating various
transport modes. The need to invest massively in transport is recognised as is
the need to carefully prioritise these investments.
Over the Medium Term
Strategic Framework, the Department of Transport has undertaken to improve
access to economic opportunities, social spaces and services by bridging
geographic distances affordably, reliably and safely, as spelled out in the
NDP.
Infrastructure development
plays a critical role in the drive towards job creation and economic stimulus.
It is against this PICC has identified projects aimed at rehabilitating and
upgrading existing infrastructure, as well as providing new infrastructure. In
this regard, 18 SIPs have been developed and approved by Cabinet and the PICC.
PRASA, one of the entities reporting to the Department of Transport, has been
designated as manager or coordinator for the Integrated Urban Space and
Public Transport Programme, namely SIP 7.
3.
THE DEPARTMENT
OF TRANSPORT
The Department of Transport
(DoT) is entrusted with maximising the contribution of transport to the
economic and social development goals of the country by providing fully
integrated transport operations and infrastructure. The main roles of the DoT
and its public entities pertaining to the transport sector are:
·
Policy and strategy formulation in all
functional areas;
·
Substantive regulation in functional areas
where the DoT has legislative competence;
·
Implementation in functional areas where the
DoT has exclusive legislative competence;
·
Leadership coordination and liaison in all
functional areas;
·
Monitoring, evaluation and oversight in all
functional areas; and
·
Stimulating investment and development across
all modes.
The functional and modal areas are:
·
Civil Aviation (Air Transport);
·
Rail Transport;
·
Maritime Transport;
·
Road Transport; and
·
Public Transport.
In an endeavour to
discharge its mandate effectively and efficiently, the Department has organised
itself into the following programmes:
·
Administration;
·
Integrated Transport Planning;
·
Rail Transport;
·
Road Transport;
·
Civil Aviation;
·
Maritime Transport; and
·
Public Transport.
In terms of the
Departments structure, it was suggested that it boded well for the creation of
jobs, the development of the countrys urban and rural communities, as well as
the improvement of logistics. It stands to reason that no economy can thrive
without developed road, rail, maritime and aviation infrastructure networks.
Indeed, no economy can develop unless its transport sector plays its part in
facilitating the movement of people, goods and services throughout the economy.
4.
OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE
4.1
Overview
of Vote allocation and spending
Programme
|
2012/13
|
2013/14
|
||||
Final Appropriation
|
Actual Expenditure
|
Expenditure Percentage
|
Final Appropriation
|
Actual Expenditure
|
Expenditure Percentage
|
|
Administration
|
390 899
|
359 589
|
92.0%
|
333 440
|
315 578
|
95%
|
Integrated Transport Planning
|
110 094
|
103 480
|
94.0%
|
74 913
|
66 373
|
89%
|
Rail Transport
|
10 297 633
|
10 286 554
|
99.9%
|
11 232 843
|
11 232 840
|
100.0%
|
Road Transport
|
18 230 705
|
18 229 358
|
100.0%
|
19 897 209
|
20 665 564
|
104%
|
Civil Aviation
|
520 807
|
411 788
|
79.1%
|
245 515
|
148 602
|
61%
|
Maritime Transport
|
137 097
|
124 666
|
90.9%
|
103 557
|
102 271
|
99%
|
Public Transport
|
9 959 993
|
9 812 787
|
98.5%
|
10 514 190
|
10 505 616
|
100%
|
|
39 647 228
|
39 328 222
|
99.2%
|
42 401 667
|
43 036 844
|
101%
|
4.2
FINANCIAL PERFORMANCE 2012/13
At the end of 2012/13, the
Departments financial state of affairs was as follows:
Of the R39.6 billion of the
adjusted budget for 2012/13, the Department underspent by R319 million,
representing an under-expenditure of 0.8%. A transfer payment from the Public
Transport Infrastructure and Systems Grant (PTISG) amounting to R103.7 million
was stopped due to consistent underspending by a municipality. In addition,
R104.8 million was underspent against an additional amount allocated on the
adjusted budget for the upgrade of the Mthatha Airport because of the timing of
the expenditure. These two items made up 65% of the under-expenditure.
Projects amounting to R73.4
million were delayed or could not be completed. Invoices were late in the
amount of R18.3 million and savings of R9.5 million were realised on goods and
services and R1.9 million on capital expenditure.
Fewer taxis were scrapped
than had been budgeted for, resulting in R5.9 million not being spent.
Compensation of employees was underspent by R1.5 million due to the posts that
could not be filled.
Programme
1: Administration
Invoices to the tune of
R235 000 were not received from suppliers for the development of a Monitoring
and Evaluation Tool. Similarly, invoices amounting to R3 million for
operational plans done for the Africa Cup of Nations tournament were not
received. Finally, invoices to the tune of R6 million for the Departments
contribution towards the upgrade of premises were not received.
Funds were committed but
remained unspent for the supply and installation of a PABX system (R5.7
million), supply and installation of microphones in Board Rooms (R468 000),
supply and installation of door numbers and names (R615 000), the development
of a policy for the Road Accident Benefit Scheme (R6.1 million), the
appointment of transaction advisors for new premises (R3.6 million) and a
public-private-partnership for a new fleet management service contract (R4.8
million). Transfers to universities and technikons were underspent by R424 218
because one university discontinued its programme.
All of the above was
requested to be rolled over to the next financial year. The programme saved
R554 000 on the procurement of furniture and equipment because posts could not
be filled.
Programme
2:
Integrated Transport Planning
The programme underspent on
the development of a Transport Sector Economic Regulator (R686 000),
consolidating the National Transport Databank (R2 million), completing a study
on the Macro Economic Impact of Transport (R628 000), developing a Macro
Planning Framework (R1.5 million), developing a Transport Greenhouse Inventory
(R1 million) and developing an Energy Consumption Framework (R1.5 million).
R326 000 was underspent
because vacant posts could not be filled. The programme also saved R703 000
on the procurement of furniture and equipment because posts could not be
filled. A rollover of R1.5 million was requested to develop a Transport Rural
Accessibility/Multi Deprivation Index for South Africa.
Programme
3: Rail Transport
The programme underspent R8
million on a feasibility study for the Moloto Corridor, which was committed and
requested as a rollover. It also underspent R1.5 million set aside to develop a
Service Level Agreement with PRASA to facilitate an institutional reform for
rail. R638 000 intended for the development for a Rail Policy and Act was not spent.
The programme saved R70 000 on the procurement of furniture and equipment
because posts could not be filled and saved R894 000 on operational
expenditure.
Programme
4:
Road Transport
The Road Transport
programme underspent R485 000 because posts could not be filled. It saved R89
000 on the procurement of furniture and equipment as a result of vacant posts
not being filled.
Programme
5: Civil Aviation
An amount of R104.8 million
was underspent on the upgrade of the Mthatha Airport Runway because the timing
of expenditure was miscalculated on the Adjusted Budget allocations. The
programme also underspent R2.9 million on funding the Regulating Committee for
determining tariffs for ACSA and ATNS. R2.2 million was underspent on the
establishment of an Aviation Safety Investigation Board. A further R1.325
million was underspent on the establishment of an Appeals Committee. These
amounts were requested to be rolled over to the next financial year.
Programme
7: Public Transport
The programme underspent
R103.7 million on the Public Transport Infrastructure and Systems Grant as
funds had not been transferred to the City of Johannesburg due to consistent
under-expenditure. The programme also underspent R5.9 million because fewer
taxis were scrapped than had been anticipated.
Funds amounting to R7
million were committed but remained unspent for developing a National Public
Transport Regulator, implementing the Taxi Recapitalisation 2020 Strategy (R6
million), the oversight of Integrated Rapid Public Transport Networks (R5
million) and the development of National Land Transport Information Systems
(R15 million). These funds were requested as rollovers to the next financial
year.
In addition, R1.5 million
budgeted for the development of a Scholar Transport Framework was underspent.
Another R1.5 million was underspent on a Migration Plan for Scholar Transport
and R1.7 million on implementing the
Shova
Kalula
programme in provinces.
4.2.1
REPORT
OF THE AUDITOR-GENERAL (previous financial years)
1.
Department
1.1
Predetermined
Objectives
The AG made the findings on
these in 2009/10, 2010/11 and 2013/14.
1.2
Compliance with Laws and Regulations
The AG raised found that
there was non-compliance with laws and regulations in 2010/11, 2011/12, 2012/13
and 2013/14.
2.
RTMC
In 2011/12 and 2012/13, the
RTMC received an unqualified audit opinion with findings on predetermined
objectives and compliance.
2.1
Predetermined Objectives
Issues were raised in this
regard in 2009/10, 2010/11, 2011/12, 2012/13 and 2013/14.
2.2
Compliance with Laws and Regulations
Matters of non-compliance
were identified by the AG in 2009/10, 2010/11, 2011/12, 2012/13 and 2013/14.
3.
C-BRTA
3.1
Predetermined Objectives
Issues were raised in this
regard in 2009/10/ 2010/11, 2011/12 and 2013/14. Regarding 2013/14, the AG
contended there was inadequate review performed on the annual performance
report.
3.2
Compliance with Laws and Regulations
Matters of non-compliance
were identified by the AG in 2009/10, 2010/11, 2011/12, 2012/13 and 2013/14.
4
.
SAMSA
4.1
Predetermined Objectives
The AG made findings in
this regard in 2010/11, 2011/12 and 2013/14
4.2
Compliance with Laws and Regulations
Matters of non-compliance
were identified by the AG in 2009/10, 2010/11, 2011/12, 2012/13 and 2013/14.
5.
Ports Regulator
5.1
Compliance with Laws and Regulations
Matters of non-compliance
were identified by the AG in 2009/10, 2010/11, 2011/12, 2012/13 and 2013/14.
6.
SANRAL
6.1
Compliance with Laws and Regulations
Matters of non-compliance
were raised by the AG in this regard in 2012/13 and 2013/14.
7.
RSR
7.1
Compliance with Laws and Regulations
Issue of non-compliance
were raised by the AG in this regard 2009/10, 2010/11, 2011/12, 2012/13 and
2013/
4.3
FINANCIAL PERFORMANCE 2013/14
For the 2013/14 financial
year, the Department of Transport spent R43 billion, whilst having an available
budget of R42.4 billion, meaning that it overspent by R632.1 million. The major
over-expenditure to the tune of R852.2 million was on the Road Transport
Programme. This was attributed to the cost of the electronic national
administration traffic information system (eNaTIS) maintenance and operations
that had been charged to expenditure.
This was done because the
Department was unable to recover the revenue from vehicle licence transaction
fees from the RTMC to cover this cost. Such revenue is earmarked for the
purpose and the Department is entitled to it for as long as the contract for
the maintenance and operation of the eNaTIS lies with the Department, This
represents an issue for the Department and the failure to resolve this will
result in the contravention of section 39(1)(b) of the PFMA.
Programme
1: Administration
During the year under
review, the Administration programme was allocated R333.4 million. At the end
of 31 March 2014, the programme had spent R315.6 million, representing 95% of
its budget allocation.
An amount of R10 million
was underspent on marketing and advertising. However, R5.8 million was saved
on the lease of accommodation because the premises were not fully occupied for
the year as had been budgeted for.
The main cost drivers were
the compensation of employees owing to the fact that 50.9% of the Departments
employees are in this programme and consultants in the Communication
sub-programme to assist the Department with the October Transport Month and the
Arrive Alive campaigns.
Programme
2: Integrated Transport Planning
The Integrated Transport
Planning programme received R74.9 million during the year under review. At the
end of the reporting period, the programme had spent R66.4 million or 89%,
indicating an under-expenditure by R8.5 million. Under-expenditure to the tune
of R8.2 million was attributed to the delays and late awarding of bids in
the following projects:
·
Greenhouse Gas Inventory (R1.3 million);
·
Transport Energy Consumption Study and Reduction
Strategy (1.7 million);
·
Global competitiveness by reducing transport costs
on rail and pipelines (R1 million);
·
Rural accessibility/Multi-deprivation index (R1.2
million); and
·
Impact of freight accidents in South Africa (R3
million).
All these projects were
requested to be rolled over to the next financial year.
The programme underspent
R0.3 million on furniture and equipment because less posts were filled than had
been budgeted for.
Programme
3: Rail Transport
For the 2013/14 financial
year, the budget allocation for the Rail Transport programme was R11.2 billion.
At the end of the financial year, the programme had spent 100% of its budget
allocation.
Funds were reprioritised to
fund a feasibility study on the Moloto Rail Corridor and the programme ended up
underspending R3 000 on projects during the year under review.
Programme
4: Road Transport
Programme 4 had been
allocated R19.9 billion but had spent R20.7 billion or 104% at the time of the
reporting period, translating into an over-expenditure by 4%. The programme
overspent R852.2 million because the cost of maintenance and operations of the
eNaTIS had been charged to the expenditure. In addition, the programme
underspent R83.5 million owing to the last two tranches of transfer payments
due to the RTMC which had not been paid. Finally, the programme underspent R0.4
million on furniture and equipment because less posts were filled than had been
budgeted for.
Programme
5: Civil Aviation
The Civil Aviation
programme had been allocated R245.5 million but had only spent R148.6 million
or 61% of its budget allocation by the end of the financial year. This means
that R96.9 million could not be spent. This was due to the upgrade of the
Mthatha Airport runway which had been over-budgeted for.
Programme
6: Maritime Transport
During the year under
review, the budget allocation was R103.6 million and at the time of reporting,
R102.3 million or 99% thereof had been spent. The under-expenditure was thanks
to an amount of R1.3 million on foreign membership fees which had not been
claimed.
Programme
7: Public Transport
The Public Transport
programme had been allocated R10.5 billion and it spent 100% of its budget
allocation. However, the programme underspent R8.6 million on a number of
projects due to delays and late awarding of bids. The projects in question
were:
·
Review of Rural Transport Strategy (R0.5 million);
·
National Guiding Framework for Network Development
(R0.8 million);
·
Shova Kalula
Bicycle Project
(R2 million);
·
Scholar Transport Policy (R0.4 million);
·
Limpopo Intervention (R0.9 million); and
·
National Land Transport Act Amendment Bill (R4
million).
At the end of 2012/13, the
Departments financial state of affairs was as follows:
Of the R39.3 billion of the
adjusted budget for 2012/13, the Department underspent by R319 million,
representing an under-expenditure of 0.8%. A transfer payment from the PTISG
amounting to R103.7 million was stopped due to consistent underspending by a
municipality. In addition, R104.8 million was underspent against an additional
amount allocated on the adjusted budget for the upgrade of the Mthatha Airport
because of the timing of the expenditure. These two items made up 65% of the
under-expenditure.
Projects amounting to R73.4
million were delayed or could not be completed. Invoices were late in the
amount of R18.3 million and savings of R9.5 million were realised on goods and
services and R1.9 million on capital expenditure.
Fewer taxis were scrapped
than had been budgeted for, resulting in R5.9 million not being spent.
Compensation of employees was underspent by R1.5 million due to the posts that
could not be filled.
5.
OVERVIEW AND
ASSESSMENT OF SERVICE DELIVERY PERFORMANCE
5.1
A Synopsis of the Departments Key
Performance Achievements for 2013/14
Without giving an
exhaustive list, the Department reported its achievements during the year under
review as follows:
·
The National Household Travel Survey was concluded.
·
A final report on the study on the harmonisation of
transport standards within the Southern African Development Community (SADC)
had been submitted.
·
A Road Infrastructure Safety Framework was
developed.
·
The maintenance and rehabilitation of provincial
roads through the Provincial Roads Maintenance Grant (PRMG) continued.
·
The Airlift Strategy was completed and was
reportedly en route to Cabinet at the time of the tabling of the Annual
Report.
·
The Aviation Appeals Committee was established and
was reportedly fully operational.
·
A Draft Maritime Transport Policy was completed and
an internal consultative process was in in progress at the time of the
tabling of the Annual Report.
·
Bilateral air services consultations were conducted
with Niger, Mozambique and Gabon.
·
A business model for cooperatives for small bus
operators was work-shopped in all provinces.
·
A study on the status of regional infrastructure
had been completed.
·
Broad-Based Black Economic Empowerment (B-BBEE)
verifications were conducted in seven of the nine provinces.
·
An Aviation Appeals Committee was established.
5.2
PROGRAMME PERFORMANCE: Achievement of
Planned Targets (Predetermined
Annual
Targets vs Actual Performance)
5.2.1
Programme 1: Administration
The programme is
responsible for coordinating and providing key administrative support services
to the Department in support of the Office of the Director-General (DG),
Ministry, Cabinet and Parliament. The programme has four sub-programmes:
·
DG Administration Support Services;
·
Strategic Planning and Cluster Coordination;
·
Internal Audit; and
·
Transport Information Systems.
Although the Department
achieved most of its planned targets under this programme, there were
challenges in the following areas:
o
Implementation of resolutions taken at DGs meeting
by 100%.
Notwithstanding the fact
that the Department had set the target at 100%, there was 90% adherence thereto
owing to capacity constraints.
o
26 quality audits reports (2 IT [Information
Technology], 9 performance and 15 assurance audits)
This planned target was
achieved by 50% as the Department contended at the time of tabling its Annual
Report that a total of thirteen (13) audits were conducted and reports
issued. The reason provided for the deviation was that the planned performance
audits were only 4 and not 9, as per the Departments APP.
o
Risk Register updated on Barnowl
At the time of tabling its
Annual Report, the Department reported that the Barnowl system still had to be
set up and installed on user desktops. It added that presentations had been
made to the Risk Management and Security Committee (RS & SC) meetings for
approval and buy-in from all stakeholders (internal audit and IT). Moreover,
the Department maintained that the project only started in Quarter 3 due to
capacity constraints within Risk Management Unit.
o
Completed strategy to institutionalise the eNaTIS;
established necessary systems, services and supported structures; merged and
integrated eNaTIS infrastructure (Data centre, Disaster recovery site, Network,
Bespoke applications,) with DoT IT infrastructure and Card Production Facility
infrastructure; Compile master systems architecture including DoT IT, eNaTIS
and card production facility, Migrate DoT IT and CPF to eNaTIS architecture.
All the aforementioned
planned targets were not achieved due to reprioritisation.
o
Contract Management System in use
At the time of tabling its
Annual Report, the Department reported that monthly contract reports had been
sent to the Executive, top and senior managers. However, the contract
management system was not yet operational due to lack of information and
technology support.
o
Assets verified once per year
The Department reported
that the full asset count could not be carried out as the upgrading of the
Forum Building made it difficult to do so.
o
Assets reconciled each month
Asset reconciliations were
reportedly done for each Quarter but the capacity constraints prevented
monthly reconciliations.
5.2.2
Programme 2: Integrated Transport
Planning
The programme is entrusted
with managing and facilitating national strategic planning for new projects. It
also conducts research and formulate national transport policies, including for
the cross-modal areas of logistics. In addition, the programme coordinates
international and inter-sphere relations.
Under this programme, most
of the planned targets could not be achieved:
o
National Transport Master Plan (NATMAP)
strategic alignment to Strategic Management
Committee (SCM) directives
The Department indicated
that Cabinet had taken a decision to review and update NATMAP 2050. It was
further resolved that there had to be consultation with the PICC.
o
Develop long-term planning procedure policy
framework recommendations
The project was cancelled
and the Department contended that it would be dealt with in line with the
development of the Multi-Modal Transport and Coordination Act.
o
Launch of the National Transport Planning Forum
At the time of tabling its
Annual Report, the Department reported that it had revised the final draft of
the Memorandum of Understanding (MoU) and had received the concept document. It
further asserted that the launch had been delayed owing to further
consultations with stakeholders on the draft final concept document and MoU.
o
Implement 5 hubs: Polokwane, Mafikeng, Upington
Airfreight, Tshwane and Nelspruit
The project was
discontinued/stopped based on the assessment of the chief directorates [
sic
] performance and resources.
o
Final Report on mapping and developing key
corridors, sub-corridors with associated key nodal points for integration of
information flow (O-D pairs) between modes, Final Report on developing and
mapping out key centres of production to support key rural economic modes,
continuous updating of the National Freight Databank on an annual basis, Final
Report on developing rural specific indicators and targets to monitor freight
performance within Integrated Development Plan (IDPs) and Integrated Transport
Plans (ITPs), approval of the framework/plan on developing an integrated
national inter-modal facility infrastructure framework/plan and the approval of
the report identifying and developing strategic rural freight logistics
infrastructure
All the aforementioned
targets were not met because the projects had been discontinued/stopped. The
Department reported that the decision to do so had been taken upon assessment
of the chief directorates performance and resources.
o
Private sector participation strategy, consolidated
investment plan, approval of project prioritisation model, project funding
plans and approval of funding models to give technical support to Governments
SIP 2: Durban-Free State-Gauteng Logistics and Industrial Corridor
Although the Department reported
that it had,
inter alia
, signed the
MoU with the Development Bank of Southern Africa (DBSA) and had completed the
prioritisation model, it stated that
the
Private Sector Participation Strategy could not be completed due to capacity
constraints.
o
Develop financial and non-financial support
framework for the South African Network for Women in Transport (SANWIT), revive
SANWIT nationally and organise an activity/event on women empowerment in August
2013
At the time of reporting,
the Department maintained that the draft framework for women in transport had
been developed. However, there was a lack of financial and human resources
support from the DoT provinces.
5.2.3
Programme 3: Rail Transport
The programme is
responsible for facilitating and coordinating the development of sustainable
rail transport policies, rail and economic and safety regulations,
infrastructure development strategies and systems that reduce costs and improve
customer services. The programme also monitors and oversees RSR and PRASA.
Moreover, it focuses on the implementation of integrated rail services planned
through the lowest competent sphere of government.
One of the achievements
under this programme was the overhaul and upgrading of 598 coaches during the
year under review against the target of 450 coaches. This aside, the following
targets could not be achieved:
o
Implementation of Service Level Agreement (SLA) and
introduction of Regional SLAs
At the time of reporting,
the Department stated that it had finalised the SLA, in line with the
Performance Monitoring and Evaluation and was awaiting approval by PRASA and the
DoT. There was, however, no reporting on the introduction of Regional SLAs.
o
Public White Paper, Promulgate Act with a view to
developing a Rail Transport Policy
The Department reported
that it had concluded and presented the Green Paper to Cabinet in November 2013
and Cabinet resolved that further consultation had to take place between the
DoT and the Department of Public Enterprises (DPE).
o
Ministerial Task Team members appointed to perform
the functions of the interim Rail Economic Regulator
The target could not be
achieved owing to delays at the DPE in signing the MoU.
o
Reduction in accidents and incidents by 5%
The Department argued that
it could not achieve the target due to a prolonged procurement process.
5.2.4
Programme 4: Road Transport
The programme deals with
safety and security on public roads by the regulation of road traffic
management and ensuring maintenance and development of an integrated road
network through the development of roads-related safety standards and
appropriate guidelines, including environmental and road disaster management
frameworks. It also oversees that roads-based agencies implement strategic
priorities of the DoT and Government and ensures that provincial road
expenditure is implemented in accordance with Government.
The programme reported on
57 planned annual targets and there were challenges in attaining the following:
o
Roads blacktop patching (m² - 1 433 200)
The Department had set
itself a target of patching the roads at 1 433 200 m². However, at the
time of the tabling of its Annual Report, it reported that it had patched
997 608. 93 m² of roads. The reason for the deviation was that a bigger
target had been set due to the quantification of potholes.
o
Rolling out of Non-Motorised Transport (NMT)
infrastructure and facilities to 12 municipalities
The Department reported
that it had supported provinces and municipalities in the planning and
provision of NMT infrastructure and facilities. In this regard, it had
participated in Polokwane PIURMP and the City of Johannesburg Cycling
infrastructure and initiatives. The other municipalities were not covered due
to budget constraints.
o
Finalise NMT Facility Guidelines
Only a literature review
was finalised and this was attributed to the late approval of the project
hence the late appointment of a service provider.
o
Finalise NMT Policy
At the time of reporting, a
draft policy had been developed and inputs from stakeholders had been
incorporated. The reason for the non-achievement of the target was the
prolonged consultations delaying progress on the project.
o
Registration of the public-private partnership
(PPP) funding with Treasury to have a local bicycle manufacturing plant
established
The Department reported
that it had submitted the proposal for funding based on the PPP model to
Treasury and had been supported. It added that the project had been put on
hold for 2013/14 due to the unavailability of funds.
o
Development of legislation to implement periodic
motor vehicle testing for vehicle testing for vehicles 10 years and older every
24 months
The Department asserted
that the incorporation of comments from stakeholder consultations had been
finalised. However, the publication of the regulations had been withheld. At
the time of tabling its Annual Report, the Department averred that the process
was pending review of current legislative framework to address fraud and
corruption within the testing station environment.
o
Amend the National Road Traffic Act incorporating
safety requirements in all motor vehicles
The draft amendments had
been reportedly made and safety requirements in all motor vehicles had been incorporated
and published for comments. At the time of tabling its Annual Report, the
Department reported that it was awaiting the approval of the amendment by the
Traffic Legislation Technical Committee (TLTC) for submission and approval by the
Minister.
o
Implementation of enabling legislation for the
national roll-out of the Administrative Adjudication of Road Traffic Offences
(AARTO)
The Department contended
that consultations with NEDLAC on the draft AARTO Act and Regulation had been
finalised. However, the implementation could not happen due to prolonged
stakeholder consultations.
o
Develop Road Infrastructure Safety Framework
It was reported that a
draft framework had been developed and the Department was awaiting COTO
[Committee of Transport Officials] sub-committee approval.
5.2.5
Programme 5: Civil Aviation
The programme is tasked
with facilitating the development of an economically viable transport industry
that is safe, secure, efficient, environmentally friendly and compliant with
international standards through regulation and investigation. It also oversees
aviation public entities.
The following targets could
not be achieved during the year under review:
o
Develop final draft of the Airfreight Strategy
The project was stopped
due to the unavailability of funds. It is worth noting that the same target,
though it was framed slightly different as Developed Airfreight Strategy, could
not be achieved in 2012/13 and the explanation provided then was that the
delay is due to the lack of funding.
o
Ratification of Convention on Compensation for
damage caused by aircraft to third party
The Convention could not be
ratified due to a conflict with legal opinions and SA [South Africas]
position on ratification.
o
Fully functional Independent Aircraft Accident and
Incident Investigation Body (IAAIIB)
The Department reported
that the draft Terms of Reference for the appointment of the service provider to
amend the Civil Aviation Act had been finalised. It also stated that the
establishment of the IAAIIB had been delayed by the process of the amendment of
the Act.
It was further contended
that a signed MoU between the Director of the SACAA and the Minister of
Transport on the functional independence of the SACAA Accident and Incident
Unit existed.
o
Formulation of National Aviation Disaster Plan
The Department maintained
that a general Disaster Management Plan exist [
sic
] for all spheres of government and therefore there was no
need to draft a disaster management plan for aviation.
5.2.6
Programme 6: Maritime Transport
The programme is entrusted
with coordinating the development of a safe, reliable and viable maritime
transport sector through the development of policies. It also monitors and
oversees maritime public entities.
The following targets could
not be achieved under this programme:
o
Quarterly Ports Coordinating Committee
(PCC) meetings at all commercial ports
The Department reported
that the framework had not yet been developed and that the commencement of the
process
[
was
]
wholly dependent on the finalisation of the Maritime Transport
Policy.
o
Review of the SAMSA Act
It was maintained that the
project had been stopped by SAMSA and that the commencement of the project
[
was
]
wholely
[
sic
]
dependent on the finalisation of the Maritime Transport Policy.
o
Study on the effectiveness of administration and
services of current ship registry
No progress was reported in
this regard.
o
Study on carbon footprints in South African
Maritime domain
The Department reported
that the Position Paper had not been achieved and that the Terms of Reference
of the study were to be amended.
o
Complete business case on ship acquisition and
operations
No progress was reported
and the Department stated that the target had not been met due to capacity
constraints.
o
White Paper on Maritime Policy Shipping
No progress was reported in
this regard.
5.2.7
Programme 7: Public Transport
The programme is
responsible for developing norms and standards, as well as regulations to guide
the development of public transport for rural and urban passengers. It also
regulates inter-provincial public transport and tourism services. Moreover, it
monitors and evaluates the implementation of the Public Transport Strategy and
the National Land Transport Act (No. 5 of 2009).
The following planned
annual targets could not be achieved:
o
Approved process National Land Transport Act (NLTA)
Amendment
Bill through Parliament
At the time of tabling its
Annual Report, the Department contended that the Bill had been finalised with
inputs from stakeholders and had been submitted for processing to SLA and
NEDLAC. It attributed the delays of achieving the target to stakeholder consultation.
o
Roll-out of the National Public Transport
Transformation Plan (NPTTP) in provinces
The Department argued that
the NPTTP had to be reviewed and resubmitted to National Treasury for
consideration and funding. It further stated that bidders had been invited to
bid for the services of assisting the Department to conduct a status quo
assessment and a scoping exercise on the current subsidised bus services in the
country. This was to form part of a review of the NPTTP in determining an
estimated funding requirement for overhauling the entire bus system.
The Department further
asserted that the NPTTP had not been funded in the financial year and had to
be reviewed and costed for resubmission to National Treasury for
consideration.
o
7 800 taxis scrapped
During the year under
review, 3 426 taxis were scrapped owing to the unaffordability of new
taxi vehicles.
o
Approved National Scholar Transport Policy by
Minister and Cabinet
The Department reported
that the Draft Policy had been approved by the Forum of South African
Directors-General (FOSAD) and Ministers and Members of the Executive Council
(MinMEC). It further stipulated that the Policy had been withdrawn from
Cabinet for further consultation.
5.3
REPORT OF THE AUDITOR-GENERAL (AG) 2013/14
The Department received an
unqualified audit opinion for the eighth consecutive year. However, the AG made
material findings pertaining to the following selected programmes:
Programme
3: Rail Transport
Usefulness
of reported performance information
The AG found that a total
of 80% of the indicators were not well-defined. In addition, the AG found that
the reviews of the APP were not effective.
Programme
4: Road Transport
Usefulness
of reported performance information
A total of 29% of the
indicators were not well-defined. Moreover, the reviews of the APP were not
effective.
Programme
7: Public Transport
Usefulness
of reported performance information
A total of 26% of the
indicators were not well-defined. In addition, reviews of the APP were not effective.
Compliance
with Legislation
The AG found that the
financial statements submitted for auditing were not prepared in accordance
with the prescribed financial reporting framework, as required by section 40(1)
of the Public Finance Management Act (PFMA) (No. 1 of 1999).
Expenditure
Management
·
The AG established that effective steps were not
taken to prevent unauthorised, irregular, fruitless and wasteful expenditure,
as required by section 38(1)(c)(ii) of the PFMA and Treasury Regulation 9.1.1.
·
Contractual obligations and money owed by the
Department were not settled within 30 days or an agreed period, as required by
section 38(1)(f) of the PFMA and Treasury Regulation 8.2.3.
·
Money was spent without the approval by the
Accounting Officer, as required by Treasury Regulation 8.2.1 and 8.2.2.
Asset
and Liability Management
The Department was
committed to liabilities for which money had not been appropriated, in
contravention of section 38(2) of the PFMA.
Human
Resource Management and Compensation
Management of Vacancies
·
Positions in senior management were vacant for more
than 12 months.
·
Vacant positions in senior management were not
advertised within 6 months.
No improvement was made in
this regard as the AG had made a similar finding in 2012/13.
Appointment
Processes
·
New appointee did not have the required
qualifications and experience for the position.
·
The prescribed selection and approval processes
were not followed for the appointment.
Procurement
and Contract Management
·
During the year under review, an amount of R484 236 295
(41%) of irregular expenditure was incurred as a result of the contravention of
Supply Chain Management (SCM) legislation.
·
A further R475 443 063 that was incurred
in prior years was also identified.
Leadership
·
Reviews of the APP were not effective.
·
Failure by those charged with governance to
exercise oversight responsibility over performance reporting and compliance
with laws and regulations.
Similarly the AG, had found
in 2013 that the accounting officer had not taken effective and appropriate
steps to prevent irregular expenditure, as per the requirements of section
38(1)(c) of the PFMA. In addition, the AG had found that there had been a lack
of coordination and effective leadership on a major capital project that involved
different tiers of Government.
Financial
and Performance Management
·
Management did not prepare regular, accurate and
complete performance reports that were supported by reliable information.
·
Material misstatements in the financial statements
submitted for audit were identified by the auditors and this was as a result of
a lack of training on the new Modified Cash Standard to be applied due to the
delay in the roll-out of these standards.
·
Inadequate filing system to ensure that schedules
supporting the financial statements and reports are easily retrievable, when
required.
·
Lack of standard operating procedures or documented
system descriptions for the accurate recording of actual achievements and
technical indicator descriptions for the accurate measurement, recording and
monitoring of performance.
·
Inadequate controls over the processing of payments
within the time frames, as required by the Treasury Regulations.
·
Failure in the operation of effectively designed
controls to ensure that payment vouchers complied are duly signed off by the
delegated official.
Human
Resource Management
During the year under
review, the Department had 822 posts on its establishment. Of these, 613 were
filled. The vacancy rate stood at 25.42%. Conversely, in 2012/13, the Department
had 775 posts on its establishment and 566 thereof had been filled. The vacancy
rate stood at 26.96%. The highest vacancy rate was in the Rail Transport
Programme which stood at 36.58%. This was followed by the Maritime Transport
Programme and Road Transport Programme which stood at 34.09% and 31.93%
respectively. The Public Transport Programme had the lowest vacancy rate at 15.58%.
As at 31 March 2014, the
annual turnover rate within the Department was at 9.01%. Of this, the highest turnover
rate comprised highly skilled production (Levels 6-8) which stood at 11.17%.
The main reason for staff leaving the Department was resignation (3.8%),
followed by transfer to other Public Service Departments (2.47%).
6.
OBSERVATIONS
The Committee raised the
following observations in its meetings with the Department, public entities and
AG:
6.1
Predetermined Objectives
The Committee noted that
the performance indicators of the Department were not well defined and targets
were not specific. The Committee noted that targets were not met in the
Integrated Transport Planning, Civil Aviation and Rail programmes. In the
2012/13 financial year, 21 out of 31 targets were not achieved in the Integrated
Transport Planning programme leading to underspending in the programme area.
The reported performance
information was not valid, accurate and complete when compared to the source
information or evidence provided. These findings had been raised with the
Department and entities in previous financial years. This matter extended to
entities of the Department such as the C-BRTA, RTMC and SAMSA.
The Committee further
queried whether the Department and entities aligned their Strategic Plans and APPs
with the NDP. There was a need for the Department to align these reports with
the NDP.
6.2
Supply Chain Management
During its meetings with
the Department and entities, the Committee noted the lack of effective controls
to ensure compliance with internal policies with
regard to supply SCM. The Committee was not convinced that a
dequate
monitoring controls were in place to ensure adherence to the internal policies
and procedures, as well as compliance with laws and regulations. The report of
the AG noted findings in this key focus area for SAMSA, SANRAL, PRASA and the
Department.
6.3
Human
Resource Management
The
Committee noted
that the Department had a vacancy rate of 25% and that v
acant posts were not advertised within 6 months after becoming vacant
and these posts were not filled within 12 months. The Committee was of the
opinion that the Department lacked e
ffective HR management to ensure that
adequate and sufficiently skilled resources were in place. This affected
service delivery in the Department and entities. The limited staff capacity as
a result of low budget at the Ports Regulator resulted in a slow pace of
implementation of some programmes of the Regulator.
6.4
Information
Technology (IT) Controls
The
Committee noted the c
hallenge in the Department with IT management
controls and the impact thereof on confidentiality, integrity and availability
of financial information. The Committee will engage with the Portfolio Committee
on Public Service and Administration, as well as Performance Monitoring and
Evaluation on the ICT management.
6.5
Material Misstatements to Financial Statement
The Committee noted the opinion from the AG that internal
controls implemented were not effective in ensuring that the financial
statements submitted for auditing were free from misstatements in the
disclosure notes. There is a need for a turnaround strategy by the Department
to address this finding.
6.6
Financial Health of Entities
The
Committee was particularly concerned about the uncertainty that existed
pertaining to whether the following entities would be able to fund their future
obligations: SAMSA, C-BRTA, RAF and the Ports Regulator. Funding available to
the Ports Regulator was not sufficient for it to fully discharge its mandate.
Due to funding challenges, the RTIA employed new staff at a snails pace and it
was unable to procure the relevant IT support systems. There was a need for the
Department to develop a funding plan to ensure the financial sustainability of
the entities.
6.7
Legislative
Delays
The
Committee noted the impact of delays in the processing of legislation on the Department
and entities. During the interactions with entities, it became apparent that
delays in the processing of legislation were negatively affecting the ability
of entities to optimally fulfill their mandates. In the case of the RAF, the
Committee noted that legislative delays had a material financial impact (R14
billion growth in liabilities in one year).
Amendments to the Ports Regulator Act were required in order to give the
Regulator more powers and resources to execute its mandate. PRASA had a clear
outlook in terms of its strategic objectives, but the Department should provide
clarity in terms of policy imperatives. The delay in the implementation of the
Adjudication of ARTO Act and data management remains a concern.
The
Committee requested in its BRR interaction that the Department provide the
Committee with a status report on outstanding legislation.
6.8
National Scholar Transport Policy
The
Committee noted
that the National Scholar Transport Policy had been withdrawn in the
period under review leading to under-expenditure in the programme area. The
Committee agreed that the provision of transport falls within the competence of
the Department of Transport. The Committee will meet with the Department to
expedite the finalisation of the policy to ensure that it is implemented
without undue delay.
6.9
Lack of a Comprehensive National Road Safety Strategy
The
Committee noted that there was no uniform National Road Safety Strategy
applicable to the transport entities. There was a need for the Department to
develop an all-encompassing and holistic Government road safety approach that
would spell out the roles and responsibilities of the various DoT agencies and
sister Departments in a manner that would seek to achieve complementarity and
not competition.
6.10
Integrated Transport Planning
The
Committee noted the absence of integrated transport planning at national,
provincial and municipal levels. The Department should brief the committee on its
plans to achieve transport integration.
6.11 Operation Phakisa
As
the project was launched during the BRRR meetings, the Committee did not have
sufficient time to engage with the Department and SAMSA on it. The Committee
will therefore engage with the Department and entity on a regular basis on the
maritime programme.
7.
RECOMMENDATIONS
The Committee recommends
that the Minister ensure the following:
7.1
That adequate reviews
are performed to ensure that targets are in line with the SMART
principle.
Performance indicators
should be clear and easy to understand and controls should be put in place to
ensure that information reported by the public entities is valid, adequate
and complete.
|
7.2
The Committee was concerned that recommendations on findings
that had been made by the Auditor-General in previous financial years had not
been implemented and therefore recommends that recommendations made by the
Auditor-General be implemented. Action plans and their implementation by the
Department and entities are to address the critical audit findings. The Committee
reiterated during its deliberations that audit committees in the Department and
public entities should monitor risks and quarterly progress. The finance
departments of the Department and entities should further be capacitated with
the appropriate skills to prepare credible financial statements.
7.3
That established controls and processes are adhered to at all
times in the Department and entities when procuring goods and services. The
contract management system should be implemented to allow for a full asset
count. Officials in the SCM units should be adequately trained on the latest
applicable prescripts. Adequate corrective measures should be put in place to
address transgression of the applicable prescripts.
7.4
That the eNaTIS system
transfer progress plan be monitored. The Committee will request regular
feedback on the progress made to take over the system from the service provider.
7.5
The advertising and filling of vacant posts, especially key
vacant posts, be prioritised in the Department and that the prescribed
recruitment processes be followed at all times.
The Portfolio Committee will monitor the progress of the Department in
filling key vacancies.
7.6
The
Committee further recommends that the Minister monitor the process with regard
to oversight over the public entities and would request regular feedback on key
concerns at these entities.
7.7
That the financial sustainability of
entities be prioritised. The Minister has to ensure that entities have adequate
human and financial resources available to achieve predetermined objectives
.
The Committee will engage with
National Treasury on this matter.
7.8
That the
Strategic and APPs of the Department and entities are aligned to the NDP.
7.9
Legislative
delays should be addressed as a matter of urgency. The Committee will
regularly request updates
from the Department on outstanding legislation.
7.10 The Committee commends
the unqualified and clean audits received by the Department and its entities,
but recommends an increased focus on service delivery.
8.
SUMMARY OF
REPORTING REQUESTS
The Committee requested
additional matters for the Department to report on:
Reporting matter
|
Action required
|
Timeframe
|
Turnaround strategy to address AG recommendations
Plan on introduction of new
rolling
stock
|
Written plan from PRASA
|
Within 90 days of the adoption of this report by the National
Assembly.
|
Development of draft Funding Strategy
|
Written plan from Ports Regulator and follow-up meeting with Committee
|
Within 90 days of the adoption of this report by the National Assembly.
|
Development of draft Funding Strategy
|
Written plan from C-BRTA and follow-up meeting with Committee
|
Within 90 days of the adoption of this report by the National Assembly.
|
Legislation status report
|
Written plan from the Department of Transport
|
17 October 2014 (the Department provided the information as requested)
|
Report on Upper Airspace Management in Southern African Development
Community (SADC) region
|
Written plan from the Department of Transport
|
Within 90 days of the adoption of this report by the National Assembly.
|
Procurement Plan for 2015/16 Financial Year
|
Written plan from the Department of Transport
|
Within 90 days of the adoption of this report by the National Assembly.
|
Turnaround strategy to address AG recommendations
|
Written plan from RTMC
|
Within 90 days of the adoption of this report by the National
Assembly.
|
9.
CONCLUSION
As we begin the third decade of our democracy, the Committee has lessons
that must be consolidated so as to deepen our oversight role, improve our
systems of operation, with the objective of deepening the understanding of
building a democratic society, that will participate in shaping the future
together with the Committee and are able to be champions of shaping their own
destiny.
10.
APPRECIATION
The Committee would like to
acknowledge the Department and entities for presentations made on their 2013/14
Annual Reports and Financial Statements.
The Committee notes that there is room for improvement in service
delivery as we move South Africa forward.
Report to be considered.
Documents
No related documents