ATC150623: Report of the Portfolio Committee on Higher Education and Training on the Strategic Plan 2015/16 – 2019/20 And Annual Performance Plan 2015/16 of Culture, Arts, Tourism, Hospitality and Sport Sector Education and Training Authority (Cathsseta) and Safety and Security Sector Education and Training Authority (Sasseta), dated 17 June 2015
Higher Education
REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING ON THE STRATEGIC PLAN 2015/16 – 2019/20 AND ANNUAL PERFORMANCE PLAN 2015/16 OF CULTURE, ARTS, TOURISM, HOSPITALITY AND SPORT SECTOR EDUCATION AND TRAINING AUTHORITY (CATHSSETA) AND SAFETY AND SECURITY SECTOR EDUCATION AND TRAINING AUTHORITY (SASSETA), DATED 17 JUNE 2015
The Portfolio Committee on Higher Educationand Training, having met with CATHSSETA and SASSETA, reports as follows:
1. Introduction
The Portfolio Committee convened a meeting with CATHSSETA and SASSETA on 29 April 2015 to consider their Strategic Plan 2015/16 – 2019/20 and Annual Performance Plan 2015/16. This report accounts for work done by the Portfolio Committee during assessment of their plans. The report further makes financial and non-financial recommendations for consideration by the Minister of Higher Education and Training.
2. Background
The CATHSSETA and SASSETA were established in terms of the Skills Development Act No. 97 of 1998 (as amended) with the mandate to promote skills development in theculture, arts, tourism, hospitality and sportsector and safety and security sector respectively. The Minister of Higher Education and Training relicensed the SETAs for the five year period from1 April 2011 to 31 March 2016, to operate within the skills development framework as articulated in the National Skills Development Strategy (NSDS) III framework and other policies and strategies. The SETAs are public entitiesthat fall under Schedule 3A of the Public Finance Management Act (PFMA), No 1 of 1999 and they are funded through the 1 percent skills levy paid by employers to the South African Revenue Service (SARS).
3. Policy mandates
3.1 National Development Plan (NDP) Vision for 2030
The NDP sets out a vision for the country for the next 15 years through its Vision 2030. The NDP identifies skills development and education as a critical enabler for economic development. The Plan states that SETAs should play a more effective role in the production of skills that are required to meet the immediate needs of the employers. The Plan accepts that education, training and innovation are not a solution to common national problems but they are rather critical in building national capacity to solve problems. The Plan sets out the role for SETAs as facilitators of skills development in the following areas:
- Skills development for existing businesses;
- Unemployed people who wish to obtain employment in the sector and emphasis on internships; and
- Training should cover levels of the National Qualifications Framework (NQF) required by the sector.
3.2 Medium-Term Strategic Framework (MTSF) 2014 – 2019
The MTSF 2014 - 2019is a five year strategic plan of governmentand itforms the first five-year implementation phase of the NDP. Therefore, this requires that the work of all national and provincial departments, municipalities and public entities should be aligned with the NDP vision and goals. The aim of the Framework is to ensure policy coherence, alignment and coordination across government plans as well as alignment with the budgeting process. The Framework states that there should be an improved interface between SETAs, workplaces and education and training institutions (Technical and Vocational Education and Training Colleges, universities and Adult Education and Training institutions). The interface is to support greater opportunities for work-based training and experience, with 140 000 work-based learning opportunities planned for 2019. The Framework further targets for an increased partnerships between SETAs and employers for placement.
3.3National Skills Development Strategy (NSDS III)
The NSDS III acts as the overarching strategic guide for skills development and provides direction to sector skills planning and implementation in the SETAs, and the framework for the skills development levy resource utilisation by the SETAs and the National Skills Fund. The strategy also sets out the linkages with, and responsibilities of, other education and training stakeholders. It responds to pressing challenges that impact on the ability of the economy to expand and provide increased employment opportunities. The key driving force of the strategy is to improve the effectiveness and efficiency of the skills development systems and effective response to the needs of the labour market and social equity.
The NSDS III has eight goals for implementation by the SETAs which are:
- Establishing a credible institutional mechanism for skills planning;
- Increasing access to occupationally-directed programmes;
- Promoting the growth of a public FET college system that is responsive to sector, local, regional and national skills needs and priorities;
- Addressing the low-level of youth and adult language and numeracy skills to enable additional training;
- Encouraging better use of workplace-based skills development;
- Encouraging and supporting cooperatives, small enterprises, worker-initiated, non-governmental organisations (NGOs) and community training initiatives;
- Increasing public sector capacity for improved service delivery and supporting the building of a developmental state; and
- Building career and vocational guidance.
3.4 White Paper on Post-School Education and Training
The White Paper articulates a vision for an integrated system of post-school education and training, with all institutions playing their role as parts of a coherent but differentiated system. In terms of the White Paper, SETAs will continue facilitating development of skills for those in existing enterprises and skills pipeline in workplace. This means that SETAs will ensure that the skills requirements of their respective industries are understood and catered for by different providers as contemplated in the policy document. Given this important role of delivering services to the people, it is of critical importance for SETAs to be well capacitated and efficient to deliver on their mandates.
3.5 Human Resource Development Strategy for South Africa (HRD-SA) 2010 – 2030
The HRD Strategy for South Africa (2010 – 2030) is a call to action. Its primary purpose is to mobilise multi-stakeholder participation, and to encourage individuals and organisations to take on the challenge of improving the human resource stock of the nation. The document sets out collective commitments for sectors of the society in skills production. Since SETAs are public entities responsible for skills development, they should ascribe to the goals of the HRD Strategy which are: to urgently and substantively reduce the scourge of poverty and unemployment in South Africa; to promote justice and social cohesion through improved equity in the provision and outcomes of education and skills development programmes, and to substantively improve national economic growth and development through improved competitiveness of the South African economy.
4. Overview and assessment of the Strategic Plan 2015/16 – 2019/20 and Annual Performance Plan 2015/16 of CATHSSETA and SASSETA
4.1 CATHSSETA
4.1.1 Mandate
The purpose of CATHSSETA is to contribute to the South African economy through facilitation of skills development in the relevant sub-sectors. CATHSSETA is comprised of the following sub-sectors; Culture, Arts and Heritage, Tourism and Travel Services, Hospitality, Sport, Recreation and Fitness, Conservation, Gaming and Lotteries. It draws its legal mandate from the following statutes; the Constitution of the Republic of South Africa, Skills Development Act of 1998, Skills Development Levies Act of 1999, Learnership Regulations of 2006, National Qualifications Framework Act of 2008 and Public Finance Management Act of 1999.
4.1.2 Vision, Mission and Values
The vision of CATHSSETA is to be a leader in skills development within its diverse sector. The mission is to facilitate skills development through strategic partnerships for CATHSSETA to contribute to economic growth. The values of CATHSSETA are; service excellence, fairness and transparency, respect, accessibility, integrity and stakeholder orientation.
4.1.3 Strategic Outcome Oriented Goals
The mandate as legislated, policy instruments and government priorities have guided the development of the CATHSSETA goals and goal statements, namely:
(i) Strategic Goal 1: Improve stakeholder participation in CATHSSETA sector skills development activities. The goal statement is to position CATHSSETA as a credible and authoritative voice on skills demand and interventions and solutions that are required to address skills needs within the sector.
(ii) Strategic Goal 2: Develop sector capacity to deliver skills development programmes informed by sector research and business intelligence. The goal statement is effective stakeholder management and partnering initiatives between CATHSSETA, employers, private providers, government, other SETAs and sectorial bodies and relevant institutions, resulting in increased capacity to meet industry skills needs throughout the country.
(iii) Strategic Goal 3: Coordinate delivery of learning interventions. The goal statement is to position CATHSSETA as a credible and authoritative voice on skills demand and on learning interventions required to address skills needs within the sector.
(vi) Strategic Goal 4: Improve CATHSSETA competence in delivering to the mandate. The goal statement is to promote public accountability and achieve high standards of corporate governance and efficient resource utilisation to ensure optimal organisational performance and service delivery.
4.1.4 Strategic Objectives
a) Programme 1: Administration
The purpose of this programme is to enable CATHSSETA to deliver on the mandate by proving leadership, sound financial management, organisational management and administrative support. The programme is made up of the following sub-programmes: marketing and communications, finance, human resources and information technology. The strategic objective over the next 5 year are to; comply with supply chain management performance imperatives, comply with financial performance imperatives,create an environment that enables performance, comply with Occupational Health and Safety Act, promoteCATHSSETA to stakeholders and to ensure Information Communication Technology (ICT) system. The budget for this programme is R22.8 million.
b) Programme 2: Governance
The purpose of this programme is to enable CATHSSETA to deliver on its mandate through the provision of corporate governance support services that ensure accountability. This programme is made up of the board services, office of the Chief Executive Officer and board structures. The strategic objectives over the next 5 years are to; achieve special projects milestones, ensure good governance at CATHSSETA, comply with applicable legal imperatives, minimise impact of risk, resolve audit findings, achieve predetermined strategic objectives, comply with corporate governance imperatives and achieve customer satisfaction. The budget for this programme is R12.7 million.
c) Programme 3: Planning
The purpose of this programme is to provide performance information services that assists management decision-making that will lead to the achievement of CATHSSETA predetermined strategic objectives. This programme is made up of the following units; research unit, strategy and annual performance planning unit, monitoring and reporting unit and evaluation unit. The strategic objectives over the next 5 years areto; commission CATHSSETA sector research, submit approved strategy reports to the DHET and submit strategy performance reports to DHET. The budget for this programme is R12.7 million.
d) Programme 4: Skills Development
The purpose of this programme is to facilitate the delivery of CATHSSETA core mandate of skills development in the CATHSSETA sector. This programme is made up of the three sub-programmes; quality assurance, learning interventions and grants and special programmes. The strategic objectives over the next 5 years are to; build qualifications that are fit for purpose,improve training provider compliance with legislated requirements, improve capacity of Technical and Vocational Education and Training (TVET) Colleges to deliver skills development interventions, increase the number of learners enrolled in Professional Vocational Technical and Academic Learning (PIVOTAL) programmes, implement sector skills development plans, contribute to skills development in the public sector, increase support to sectoral small businesses and improve payment of mandatory grants. The budget for this programme is R231.4 million.
4.1.5 Budget
The total revenue for 2015/16 is R280 million, R168.9 million is from discretionary grant levy income, R68.2 million from mandatory grant levy income, R35.8 million from general fund (administration) and R6.9 million from interest. The bulk of the expenditure for 2015/16 is for discretionary grants (R175.8 million), mandatory grants (R68.2 million) and administration expenditure (R35.8 million). There is no surplus for 2015/16.
4.1.6 Reasons for CATHSSETA to be placed under administration
CATHSSETA was facing challenges of consistently not meeting its predetermined objectives and there were serious allegations made against some board members and senior management. The board commissioned Grant Thornton to conduct a forensic investigation into the allegations made and to make recommendations. Unfortunately, the board could not act on the findings and recommendations of the report as some of its members were implicated.The Minister instructed the board to resolve the challenges. The infighting within the board affected the performance of CATHSSETA wherein the targets were not met on a quarterly basis. For the 2013/14 financial year, CATHSSETA received a qualified audit with matters of emphasis. Due to dysfunctionality, the Minister instructed the Director-General (DG) to put CATHSSETA under administration and an Administrator was appointed on 16 October 2014.
4.1.7 Achievements of the Administrator in the first five months of administration
Since the Administrator took over governance of the SETA, the following achievements were recorded: investigations and outstanding disciplinary cases were concluded, contracts were reviewed, the CEO and CFO were suspended and subsequently resigned, interim governance structures were established, and the Strategic Plan 2015/16 – 2019/20 and APP 2015/16 were revised.
4.1.8 Strategic challenges of CATHSSETA
Notwithstanding the recorded achievements, the entity is still facing the following challenges: Levy income is minimal relative to the actual demand for skills across the sectors, wide and diverse sectors dependent on a variety of occupations (qualifications), poorly managed business contracts, lack of provincial footprints, inability to match service delivery and financial challenges, and delivering consistent compliance with governance imperatives.
4.2 SASSETA
4.2.1 Mandate, vision and mission
The legislative mandate of SASSETA is derived from the following legislations; the Constitution of the Republic of South Africa, Skills Development Act of 1998 as amended, Skills Development Levies Act of 1999, National Qualifications Authority of 2008, Employment Equity Act of 1998 and Public Finance Management Act of 1999 as amended. The vision of SASSETA is to be a leader in skills development and training for safety and security. The mission of SASSETA is to be an education and training authority that ensures quality provision of skills development for South African citizens in the safety and security environment through effective and efficient partnerships.
a)Programme 1: Office of the Chief Executive Officer
The purpose of this programme is to provide strategic direction to SASSETA with regard to implementation of its strategic priorities in the Sector Skills Plan (SSP) and Strategic Plan and Annual Performance Plan. The strategic objectives over the next 5 years are to; ensure that acorporate governance framework for the institution is in place,develop and implement Sector Skills Plan and strategic plan of the SETA by 2019/20,establish SASSETA footprint at provincial level to improve delivery services by 2020,increase sustainable environment for service delivery partners through capacity-building, partnership, collaboration and agency agreements,and establish partnerships with universities and TVETcolleges.
b) Programme 2: Office of the Chief Operations Officer
The purpose of this programme is to co-ordinatestrategic planning implementation within SASSETA. The strategic objectives over the next 5 years are to; improveStrategic and Annual Performance Plans and reports as per National Treasury prescripts and guidelines,comply with National Treasury Budgeting and Planning Frameworks related time lines, establish transparent contract management systems, establish governance systems within SASSETA, ensure compliance to legal framework,develop Risk Management Strategy that addresses the control environment of SASSETA by 2018/19 and develop, implement and renew organisational structure.
c) Programme 3: Finance
The purpose of this programme is to design and implement financial controls that ensure good financial governance and financial viability of SASSETA. The strategic objectives over the next 5 years are to; increase transparency, good governance, with effective management of resources; establish and maintain appropriate asset management and Supply Chain Management systems.
d) Programme 4: Corporate Services
The purpose of this programme is to provide effective and efficient corporate human capital, integrated marketing and communication and information technology administrative support to the entity. The strategic objectives over the next 5 years are to; implement and review Human Capital Management Strategy in the SETA by 2019/20, increase implementation of an integrated ICT system,establish an effective marketing and communication of SASSETA and establish the document management system.
e) Programme 5: Skills Planning and Research Monitoring
The purpose of this programme is to develop a credible institutional mechanism for skills planning to provide reliable information in supply and demand for skills in the Safety and Security sector. The strategic objectives over the next 5 years are to;establish a credible institutional mechanism for continuous skills planning, establish partnerships with universities for labour market research and commissioned research by 2019/20, build capacity within five government departments for skills planning and submission of Workplace Skills Plans (WSPs) or Annual Training Reports(ATRs) and monitor and evaluate all discretionary grants projects by 2019/20.
f) Programme 6: Skills Implementation
The purpose of this programme is to facilitate the delivery of quality Learning Programmes, especially targeting the scarce and critical skills within the sector. It also identifies skills development provision, challenges and interventions to ensure access to quality and relevant education and training in the sector including rural areas. The strategic objectives over the next 5 years are to;develop training partnership agreements with universities and TVET Colleges, implement the training targets and Service Level Agreement (SLA) signed with the Department of Higher Education and Training, and provide support to Trade Unions, Non-Governmental Organisations (NGOs), Community Based Organisations (CBOs), Non-Levy Paying Enterprises (NLPE), and Small Medium Micro Enterprises (SMMEs).
4.2.3 Budget
The total revenue for 2015/16 isR320 million and it will increase to R380 million by 2017/18. The bulk of the budget is from discretionary levy income of R149 million followed by general fund of R109 million. In terms of expenditure for 2015/16, R201 million is allocated for discretionary grants and R40 million for mandatory grants. The allocation for payroll cost for 2015/16 is R42 million and R34 million for other operational expenditures.
4.2.4 Reasons for SASSETA to be placed under administration
On 12 February 2015, SASSETA was placed under administration (Government Gazette No 38466). The Minister and Director-General took the decision based on poor performance of SASSETA, irregularities identified and non-compliance with the Skills Development Act of 1998.
4.2.5 Key problems and challenges facing SASSETA
Based on the analysis of the Administrator, the key challenges identified were; problems regarding the general governance, inadequacies in the planning and reporting processes within SASSETA, problems in the budget structure, mismanagement of discretionary funds and serious irregularities in a number of contracts entered into, lack of effective contract management, irregularities in the appointment of staff within SASSETA, non- compliance with the Public Finance Management Act and other National Treasury requirements, lack of understanding of the security sector and ineffective stakeholder management.
4.2.6 Interventions to address the challenges
In addressing the challenges within SASSETA, the Administrator embarked on the following; revision of planning processes and the budget programme structure,development of a roll-out plan to address decision-making process and procedures, revision of the commitment register, reformatting of the contracting documentation and processing, complete overhaul of all other policies and procedures and putting in place financial controls and monitoring systems.
5. Observations
5.1 CATHSSETA
- The Committee was seriously concerned that the board of CATHSSETA put their individual interests above the organisation’s interest. It was further noted with concern that public funds were spent on some board members families.
- The Committee was concerned with the Department’s inadequate oversight and monitoring role over SETAs particularly on governance and administrationas evidenced by underperformance and misappropriation of funds by senior management and board of CATHSSETA in 2013/14.
- The Administrator was commended for the progress made since his appointment in October 2014 particularly on the revised Annual Performance Plan (APP) for 2015/16 which was in line with National Treasury regulations, except few indicators that were non-compliant.
- The Committee was concerned with the lack of presence of nature conservation service providers and CATHSSETA particularly in rural communities where nature conservation was implemented and, direct impact of nature conservation to the development of rural communities.
5.2 SASSETA
- The Committee rejected the Annual Performance Plan (APP) 2015/16 of SASSETA since it had targets and performance indicators that did not meet National Treasury specific, measurable, achievable, relevant and time-bound (SMART) principles. SASSETA was requested to submit an addendum to the 2015/16 APP with revised targets and indicators that met National Treasury SMART criteria.
- It was noted with concern that the board spent R9 million for three forensic audit investigations, of which the recommendations were never implemented. The Committee proposed further investigation on theprevious board members who commissioned these forensic investigations to determine whether there was misuse of public funds and serious action be taken against them.
- The Committee noted with concern the delays by the Department in taking action against SASSETA board which had serious challenges raised by the AGSA in the 2013/14. The Department only placed SASSETA under administration in February 2015.
- It was noted with concern that the board entered into many contracts without following proper supply chain management processes which resulted in over-commitment of R300 million.
- The Committee was concerned with certification backlog, though the Administrator committed to issue all outstanding certificates within a period of six months.
- The Administrator was commended for the progress made since her appointment especially on reviewing and cancellingcontracts that were awarded irregularlyand for putting proper financialmanagement systems within SASSETA.
- The Committee was concerned with the poor financial reporting included in the 2015/16 APP of SASSETA. The financial report was not articulate particularly on budget allocation per programme of SASSETA.
6. Summary
CATHSSETA and SASSETA were the only two SETAs placed under administration among the 21 SETAs in 2014/15. Furthermore, these two SETAs were also among the eight that had performance indicators and targets in their 2015/16 APP which did not meet the National Treasury SMART principles as audited by the AGSA. CATHSSETA did submit an annexure to the 2015/16 APP with revised targets and performance indicators and SASSETA was in the process of revising it’s 2015/16 APP.
The Committee was seriously concerned with non-compliance particularly with supply chain management processes by the senior management and board of both SETAs. The reports given by the Administrators showed that the boards of CATHSSETA and SASSETA failed to exercise their fiduciary duties and misusedorganisational funds for personal interests. The delay to take early action by the Department’s SETA Coordination Unit that is responsible for monitoring and evaluation of SETA performance was a concern to the Committee. The board of SASSETA commissioned three forensic audit investigations which did not have much impact on improving the performance of the SETA though public funds were spent on these investigations. The board also rushed through entering into contracts that resulted in over commitment of funds.For CATHSSETA, the board did not implement the findings and recommendations of the Grant Thornton Forensic Audit Report because some of its members were implicated in the findings.
It is important to note that in both SETAs, public funds were utilised without following proper supply chain management processes.The Committee was optimistic that the appointment of the Administrators would turn around the performance of these SETAs and restore their dignity and stakeholder confidence going forward.
7. Recommendations
The Committee recommends that the Minister of Higher Education and Training considers the following:
- The Department should improve its monitoring and evaluation function over SETAs to ensure good governance and implementation of skills development projects;
- The Department should explore the possibility of reviewing the Skills Development Act to address the legislative gaps particularly on powers and functions of the SETA boards, and possible appointment of an independent assessor before a SETA is placed under administration;
- The Department with both CATHSSETA and SASSETA should ensure that there are serious consequences against senior managers and board members who benefited from contravening supply chain management processes in awarding contracts. Furthermore, the board members who were implicated in the findings of the Forensic Audit reports should not be given an opportunity to serve in other governance structures be it a SETA or any other public entity;
- SETAs should develop effective monitoring and evaluation systems to determine whether funds allocated for discretionary and mandatory grants reach the intended beneficiaries. This will assist to determine the impact of projects implemented by SETAs to reverse the country’s skills shortage;
- The Department should monitor that SETAs undertake comprehensive sector skills needs analysis to determine the skills shortage in each sector;
- SETAs should consider screening employees or service providers before they can be awarded employment or contracts to be prevent fraud; and
- The CATHSSETA and SASSETA Administrators should submit quarterly progress reports to the Committee.
Report to be considered.
Documents
No related documents