ATC160418: Report of the Portfolio Committee on Science and Technology on Budget Vote 30: Science and Technology (2016/17), dated 18 April 2016

Science and Technology

Report of the Portfolio Committee on Science and Technology on Budget Vote 30: Science and Technology (2016/17), dated 18 April 2016.
 

The Portfolio Committee on Science and Technology, having considered Budget Vote 30: Science and Technology and the 2016/17 Annual Performance Plans of the Department of Science and Technology and its entities, reports as follows:

 

1. Introduction

 

The Constitution of the Republic of South Africa, 1996 and the Rules of Parliament mandates the Portfolio Committee on Science and Technology (the Committee) to oversee the activities and performance of the Department of Science and Technology (the Department) and the entities that report to it. Hence, the Committee annually reviews whether the Department and entities’ performance plans are aligned to national strategic objectives and the appropriated budget.

 

The entities that report to the Department are the National Advisory Council on Innovation (NACI), the Technology Innovation Agency (TIA), the South African National Space Agency (SANSA), the National Research Foundation (NRF), the Academy of Science of South Africa (ASSAf), the Council for Scientific and Industrial Research (CSIR) and the Human Sciences Research Council (HSRC). The Department and its entities briefed the Committee on 13 and 14 April 2016, where they provided an overview of the strategic context within which they function, discussed priority performance indicators and their concomitant targets and the 2016/17 budget allocations.

 

1. Strategic Overview of the Department of Science and Technology

 

1. Policy mandate

 

The 1996 White Paper on Science and Technology, which introduced the concept of the National System of Innovation (NSI), informs the Department’s mandate. A coherent and well-co-ordinated NSI would help South Africa achieve its development priorities; hence, the Department currently supports the NSI by:

 

• Co-ordinating the development of country-level policies and strategies, such as the 2002 National Research and Development Strategy (NRDS) and the 2007 Ten-Year Innovation Plan (TYIP), which identify specific priority areas for the country where science, technology and innovation (STI)-related support is required.
• Creating systems and structures to coordinate the STI-related work of Government and agencies.
• Developing measurement systems and undertaking analyses to create an evidence base for improving the performance of the NSI.
• Optimising the governance of publicly funded STI institutions to support Government’s priority outcomes.
• Funding research, development and innovation (RDI) infrastructure.
• Funding human capital development at postgraduate level.
• Unlocking STI resources through partnerships with international, continental and multilateral agencies.
• Supporting the technological competitiveness of firms and industry sectors through focussed research and development (R&D) programmes.

 

Over the next five years, the Department aims to intensify its efforts to exploit and use knowledge for economic and inclusive development, and expand and transform South Africa’s research capability.

 

1. Policy context

 

The National Development Plan (NDP) characterises STI as crucial for development since countries that have effectively alleviated poverty by growing their economies, have done so by investing in and developing strong STI environments and capabilities. Hence, the NDP states that South Africa’s NSI needs to be expanded as well as be more effective and, therefore, be aligned with the sectors that will realise the country’s growth objectives. This requires that South Africa invest more in R&D, that the STI institutional arrangement must improve the link between innovation and the productive needs of industry, and that Government should collaborate with the private sector to raise the level of R&D in companies. Furthermore, public investments in research infrastructure should be focussed on and fulfil the needs of a modern economy.

 

The 2014-2019 Medium-Term Strategic Framework (MTSF) represents the first phase of implementation of the NDP and commits Government to 14 key outcomes. The Department contributes to Outcomes 3, 4, 5, 6 and 10. Furthermore, the Department also supports, through a series of initiatives, the Nine-Point Plan, which seeks to increase the rate of South Africa’s economic growth. Specific areas where the Department contributes to the Nine-Point Plan include:

 

• Revitalisation of agriculture and agro-processing.
• Increasing the impact of the Industrial Policy Action Plan (IPAP).
• Beneficiation of mineral wealth.
• Unlocking the potential of small business and rural and township enterprises.
• Growing the oceans economy through Operation Phakisa.
• Resolving the energy challenge by advancing alternative energy sources.
• Scaling-up private sector participation in R&D.

 

1. 2015-2020 Strategic outcome-oriented goals

 

The Department’s 2015-2020 Strategic Plan introduced a new vision and mission to articulate what the Government wants to achieve through its investments and efforts in STI. To position STI within the framework of the NDP, the Department will direct its efforts and resources toward the following five strategic outcome-orientated goals:

 

• Goal 1: Responsive, co-ordinated and efficient NSI – build on previous gains to create a responsive, coordinated and efficient NSI.
• Goal 2: Increased knowledge generation – maintain and increase the relative contribution of South African researchers to global scientific output.
• Goal 3: Human capital development – increase the number of high-level graduates and improve their representivity.
• Goal 4: Using knowledge for economic development – derive a greater share of economic growth from R&D-based opportunities and partnerships.
• Goal 5: Knowledge utilisation for inclusive development – accelerate inclusive development through scientific knowledge, evidence and appropriate technology.

 

To achieve the five strategic outcome-orientated goals, the Department will pursue, over the medium-term, the following policy initiatives:

 

• Establish a legislative instrument to coordinate the public budget for RDI.
• Enhance the implementation of the Bioeconomy Strategy, using bioinnovation as an instrument to achieve industrial and development goals.
• Strengthen public-private partnerships to enhance innovation-support infrastructure for and expedite the uptake of technologies relating to energy security.
• Strengthen the coordination role of SANSA in relation to all national space activities.
• Strengthen and coordinate the implementation of all existing policies that support the commercialisation of publicly funded R&D activities.
• Continue to implement and enhance the interventions to increase and transform the skills capital of the NSI, as well as building on studies aimed at improving the efficiency and effectiveness of investments in human capital development.
• Continue to provide and grow access to research infrastructure.
• Continue to develop and exploit international STI partnerships, and position the country as a leader in global STI governance.

 

1. Overview of Budget Vote 30: Science and Technology (2016/17)

 

The 2016 National Budget was tabled amid great concerns around South Africa’s growth and investment potential and the crucial need to limit national debt. In light of these fiscal concerns and despite the Department having a huge mandate to fulfil with great expectations for the value that STI will bring to the economy and livelihoods of South Africans; the Department’s budget has decreased by R53 million to R7.429 billion in the 2016/17 financial year. This denotes a decrease in real terms (inflation adjusted) of 6.86%. The Department’s budget allocation is projected to increase to R7.56 billion in 2017/18 and R7.76 billion in 2018/19. Over the medium-term, Cabinet has approved reductions of R414 million in Programmes 2, 4 and 5. In addition, R52.9 million has been reduced from the salaries budget and R16 million has been reduced from the goods and services budget. These reductions form part of the effort to lower the national expenditure ceiling.

 

In terms of economic classification, the apportionment of the Department’s 2016/17 budget allocation of R7.429 billion remains the same and comprises Current payments of R509.7 million (6.86%), Transfers and subsidies of R6.917 billion (93.11%) and Payments for capital assets of R2.3 million (0.03%).

 

1. 2016/17 Budget allocation per Programme

 

The Department’s budget funds five major programmes, namely:

 

• Programme 1 – Administration
• Programme 2 – Technology Innovation
• Programme 3 – International Cooperation and Resources
• Programme 4 – Research, Development and Support
• Programme 5 – Socio-economic Innovation Partnerships

 

These programmes fulfil the Department’s mandate of realising the full potential of science and technology in social and economic development through the development of human resources, research and innovation. The percentage budget allocation to the Programmes (Table 1) and sub-programmes remains virtually the same as in the 2015/16 financial year.

 

Table 1: Budget summary of the Department of Science and Technology

Programme   R’ million	2015/16 Expenditure estimate	2016/17 Expenditure estimate   (percentage of total budget)	Nominal percentage change   2015/16-2016/17	Real percentage change (inflation-adjusted)   2015/16-2016/17
1. Administration	299.8	304.0 (4.09%)	1.40%	-4.88%
2. Technology Innovation	1 008.8	1 007.1 (13.56%)	-0.17%	-6.35%
3. International Cooperation and Resources	122.0	124.5 (1.68%)	2.05%	-4.27%
4. Research Development and Support	4 247.1	4 200.6 (56.54%)	-1.09%	-7.22%
5. Socio-Economic Innovation Partnerships	1 804.5	1 792.9 (24.13%)	-0.64%	-6.79%
Total	7 482.2	7 429.1	-0.71%	-6.86%

 

The budget allocation is aligned to the priorities of strengthening and expanding STI human capital development and ensuring that innovation and knowledge underpin the Government’s growth strategy. Hence, Programmes 2, 4 and 5, as in previous financial years, receive 94.2% of the Department’s total budget allocation. The Department’s 2016/17 Annual Performance Plan (APP) states that, “The most important general factors that might impede performance are insufficient public funding and the suboptimal coordination of STI efforts across Government, as well as the worsening economic climate, which is constraining private-sector R&D activity.” So far, Programmes 2 and 4 have modified their performance targets based on funding constraints. The allocation to Programme 4, which is responsible for STI human capital development, supporting research and enabling knowledge production, decreases the most of all the Programmes by 7.2% in real (inflation-adjusted) terms. This budget decrease may affect the efforts to transform further the STI system. Programme 2’s budget decreases in real terms again (2.93% in 2015/17 and 6.35% in 2016/17). This Programme has to ensure that the knowledge generated from research is exploited for economic gain. Hence, the efforts to develop and/or enhance STI-based industries may be hampered, as well as the opportunities these represent for economic change and growth. Programme 5’s budget decreases by 6.79% in real terms, possibly affecting projects using STI to pilot community-driven, employment creating opportunities and/or industries; further development of the green economy; and efforts to increase the competitiveness of existing industries.

 

1. Programme 1: Administration

 

Programme 1 provides strategic leadership, management and support services to the Department and has five sub-programmes. These are Ministry, Management, Corporate Services, Governance and Office Accommodation. The work of this Programme focuses on administration, and policy and planning. Programme 1’s R304 million allocation will mainly be spent on salaries (R149.8 million) and on Goods and services (R138.99 million). R12.8 million is allocated to Transfers and subsidies to non-profit institutions. The Department has 470 posts and 264 posts reside within Programme 1. The high number of administrative posts versus that of the Department’s core function is due to Programme 1 being responsible for the budgets of and support to the Ministry and Director-General, as well as for the compliance functions related to the legislative instruments governing the operations of the Department and its entities. In 2015, the Department stated that this Programme is understaffed and under-resourced; hence, the intention was to, in the next five years, design and build an administrative unit that fulfils the planning, co-ordination, strategic and governance needs of the Department and the NSI. However, with fiscal consolidation reducing this Programme’s salaries budget by R25.6 million in 2017/18 and 2018/19, the Department may struggle to implement its intention to reposition and redefine the administrative function so that it continues to improve on the support provided. New performance indicators include:

 

• Aligning the planning documents of the entities to those of the Department to indicate how entities contribute to national priorities. The target is 90%.

 

• To assist with corporate governance, Programme 1 has to develop and submit to the Director-General of Science and Technology and the Department of Performance Monitoring and Evaluation (DPME), biannual reports on the Department’s scores for the Management Performance Assessment Tool (MPAT).

 

• Development of a Combined Assurance Model (a model that integrates and aligns processes to maximise governance and risk oversight). The target is to have the Model and Plan approved by the audit and risk committees by March 2017, as well as two performance reports per annum.

 

The Department states that it is has started to reduce the number of performance indicators that it will report on and that these will be taken up in its operational plans. For Programme 1 some of these include:

 

• Within the strategic communication objective, the targets for the production of communication and media plans (eight per annum until 2017/18), and for science and technology (S&T) media monitoring reports (six per annum until 2017/18) are not included the 2016/17 APP.

 

• The percentage of staff submitting performance contracts and reviews on time will not be reported on in the 2016/17 APP.

 

• The annual submission to National Treasury (NT) of the Medium-term Expenditure Framework (MTEF) planning document will not be reported on in the 2016/17 APP.

 

To date, the administrative mechanisms implemented by Programme 1 has ensured clean audits for the Department and its entities, as well as recognition from the Presidency as being one of the best managed national departments.

 

a)         Programme 1 Entity: National Advisory Council on Innovation (NACI)

 

NACI aims to provide evidence-based advice to the Minister of Science and Technology and, through the Minister, Cabinet on STI matters, through the research expertise and engagement with stakeholders. To address the challenges facing the NSI, NACI has adopted four new strategic outcome-oriented goals as the basis for its 2016-2021 Strategic Plan. These in essence comprise building internal capacity, improving operations, and improving data analysis and advice. Key outputs include the formulation of a framework document for the next STI decadal plan, a review report of the 1996 White Paper on S&T, a model for a data innovation portal, and policy advice on STI topics/issues.

 

NACI is funded directly from Programme 1’s budget allocation and for 2016/17 this totals R18.967 million (R18.7 million in 2015/16), which comprises R10.4 million for salaries and R8.5 million for goods and services. To achieve the goals of its new strategic plan, NACI will be assessed as to its current organisational fitness for purpose, and this is expected to result in a new organisational structure.

 

1. Programme 2: Technology Innovation

 

Programme 2 enables R&D in space S&T, energy security, the bioeconomy, and in the emerging and converging areas of nanotechnology, robotics, photonics and indigenous knowledge systems (IKS), and promotes the realisation of commercial products, processes and services from these R&D initiatives. In addition, through the implementation of enabling policies and interventions along the entire innovation value chain, promotes the protection and utilisation of intellectual property (IP), technology transfer and technology commercialisation. Programme 2 has four sub-programmes and one specialised service delivery unit (SSDU). These are Space Science, Hydrogen and Energy, Bioeconomy (now termed Bioinnovation), Innovation Priorities and Instruments (IPI) and the National Intellectual Property Management Office (NIPMO). Programme 2 receives R1.007 billion of the Department’s total allocation, which is R1.7 million less than the 2015/16 allocation. Approximately 94% (R942.7 million) is allocated to Transfers and subsidies, where TIA and SANSA receive the largest allocations. The IPI sub-programme continues to receive the largest share of Programme 2’s budget, that is 52% (R523 million). The IPI sub-programme supports and strengthens the policy initiatives that aim to create and sustain an enabling environment for innovation, technology development and the commercialisation of products from publicly funded R&D. The lowest allocation, approximately 3% (R26.3 million), goes to NIPMO. NIPMO, since its inception, is one of the key NSI instruments that remains critically underfunded. The Department, in its 2016 MTEF bid, requested R150 million for 2017/18 and 2018/19 to cover the general shortfall in funding and for support for the Offices of Technology Transfer (OTT) at Higher-education institutions. The 2016/17 allocation to the OTT at various institutions totals R15 million. Additional funding for NIPMO and the OTT will ensure optimal use of the IP generated from public investment in research and innovation and due to its strategic importance, the Department has, since 2010/11, reprioritised approximately R100 million to fund NIPMO. The remaining funds are relatively equally distributed between the Space Science (R166.9 million), Hydrogen and Energy (R152.6 million), and Bioeconomy (R138 million) sub-programmes.

 

The work done under Programme 2 supports all five of the Department’s strategic objectives and has had significant impact in employing STI to address national challenges. Some of Programme 2’s performance indicators have been modified, and these are:

 

• The number of innovation-enabling programmes implemented has been changed to the number of instruments funded in support of knowledge utilisation. This indicator now comprises more initiatives, including those listed as innovation-enabling programmes. Hence, the target increases from seven to 25.

 

• The number of technology products, processes and/or services commercialised has been changed to the number of commercial outputs in designated areas. Previously, this indicator comprised targets that were outside the Department’s control. With the amendment and inclusion of “designated areas”, the indicator now only refers to areas where the Department has direct control. Namely, space science, energy, bioinnovation, technology transfer and commercialisation, etc. Since the measurement scope has increased, the target changes from four to eight for the 2016/17 financial year.

 

New indicators for Programme 2 are:

 

• Number of regulatory recommendations for decision-support by Government. The Department states that due to the elevation of decision-support tools as an objective, it had decided to highlight regulatory recommendations with which it is directly involved. The 2016/17 target is 27 regulatory recommendations.

 

• Number of decision-support interventions developed and maintained. The 2016/17 target is the maintenance of two decision-support interventions.

 

Table 2 shows performance indicators that have remained the same, but the matching performance targets have changed. Therefore, performance targets originally reported for 2016/17 in the Department’s 2015/16 APP that have changed in the current APP include:

 

Table 2: Changes in reported 2016/17 performance targets

Last year - 2016/17 Target in the 2015/16 APP	Now - 2016/17 Target in the 2016/17 APP
128 knowledge products generated	119 knowledge products generated
4 technology development and innovation policy directives developed and adopted by Government	5 technology development and innovation policy directives developed and adopted by Government
300 new disclosures reported by publicly funded institutions	275 new disclosures reported by publicly funded institutions
7 evaluation and assessment reports developed and approved by EXCO	12 evaluation and assessment reports developed and approved by EXCO
457 postgraduate students supported through Department-funded R&D initiatives	392 postgraduate students supported through Department-funded R&D initiatives
280 trainees supported in strategic and emerging research areas	200 trainees supported in strategic and emerging research areas

 

It is clear from Table 2 that the funding decrease has affected performance targets linked to increasing skills, knowledge and knowledge products. There is now increased focus on using existing knowledge for the development and maintenance of decision-support tools and mechanisms.

 

a)         Programme 2 Entity: Technology Innovation Agency (TIA)

 

TIA aims to support, stimulate and intensify technological innovation to improve economic growth. TIA is positioned as a development finance institution that provides “gap” funding for technology development projects (seen as high-risk investments, hence, there is a lack of commercial funding) with high social and economic impact. TIA’s goals are to; support commercialisation of technological innovations; increase access to infrastructure for technology development; and stimulate an agile and productive NSI. The investment and/or support programmes that will drive TIA’s work are grouped under the Innovation Funding and Pre Commercialisation Support initiative and the Innovation Enabling and Support initiative. Key outputs for TIA include technology development funding that will enhance or develop technology-based companies that will also lead to job creation. As well as, creating an enabling environment for technology innovation that will lead to job creation, increased company turnover and technology support funding for small and medium enterprises.

 

The Parliamentary grant allocation to TIA from the IPI sub-programme is R382.36 million (R385 million in 2015/16). TIA also expects to receive R134 million from other funding sources. Hence, the total 2016/17 budget allocation of TIA is R516.4 million. TIA plans to spend 31% (R159.7 million) of its budget on administration and the remaining 69% (R356.7 million) on investments. The investments budget is further divided into 29% for the Innovation Funding and Pre Commercialisation Support initiative and 40% for the Innovation Enabling and Support initiative.

 

TIA has restructured and reduced staff costs, but according to the Department’s 2016 MTEF bid, faces severe problems to fund its current pipeline of projects.

 

b)         Programme 2 Entity: South African National Space Agency (SANSA)

 

SANSA aims to promote the peaceful use of space, foster international cooperation in space related activities, foster research in space science, advance scientific engineering through human capital development that specifically focuses on the underprivileged and infrastructure development, and facilitate the creation of an environment that is conducive to industrial development in space technologies. In implementing the National Space Strategy, key outputs for SANSA include the provision of space services and products, increasing space R&D, science awareness and outreach activities, funding students and interns, and developing global partnerships. However, given the marginal increase in funding, SANSA has revised downward its performance targets for research productivity, science outreach, space operations income, global partnership income, and total non-ringed fenced revenue from those reported in 2015. Furthermore, the economic study measuring SANSA’s monetised impact has been put on hold.

 

The Parliamentary grant allocation to SANSA from the Space Science sub-programme is R124.9 million (R124.3 million in 2015/16), it also receives a R102.6 million ring-fenced grant for satellite development (Space Engineering programme) and expects to receive R66.6 million from contract income. SANSA’s total funding for 2016/17 is R296 million. Because this sector is dependent on highly specialised skills, which are also in short supply in South Africa, the compensation of employees will remain a key cost driver over the MTEF and will account for R111.7 million of SANSA’s total expenditure. SANSA has five programmes, namely, Administration, Earth observation, Space operations. Space science and Space engineering. Space engineering is allocated the largest share of the budget, R102.6 million, but the satellite build programme is already approximately one year behind schedule. Earth observation receives the second largest share of the budget, R72 million, but approximately R50 million of this allocation is used to acquire satellite imagery. Currently, SANSA’s budget equates to approximately 50% of what it needs. Furthermore, the economic competitiveness support package (ECSP), which funds the Space engineering programme, ends in 2017/18. Hence, over the medium-term, SANSA’s budget will decrease further to R220.6 million by 2018/19. SANSA states that it will strive to mitigate the possible negative effects this may have on achieving the strategic objectives intended to make South Africa a key participant in global space activities. However, with this public agency increasingly dependent on variable, external sources of funding to deliver on objectives that seek to improve the livelihoods of South Africans, the future sustainability of SANSA will require continuous scrutiny; and mandate creep will have to be guarded against.

 

1. Programme 3: International Cooperation and Resources

 

Programme 3 supports South Africa’s foreign policy through science diplomacy. Hence, it develops, promotes and manages international relationships, opportunities and S&T agreements that both strengthen the NSI and enable an exchange of knowledge, capacity and resources between South Africa and its international partners, with a focus on supporting STI capacity building in Africa. Programme 3 has three sub-programmes, namely, Multilateral Cooperation and Africa, International Resources and Overseas Bilateral Cooperation. Programme 3 is allocated R124.5 million (R122 million in 2015/16), with R63.1 million allocated to Current payments and R61.4 million allocated to Transfers and subsidies. The Transfers and subsidies allocation is further broken down into R13.6 million to the NRF who manages bilateral cooperation agreements on behalf of the Department, R39.2 million for International multilateral agreements and R8.5 million for African multilateral agreements. The International Resources sub-programme receives R57.5 million (46%), the largest share of this Programme’s allocation.

 

The performance indicators and targets for Programme 3 have not been changed. Key outputs include securing international investment for STI research and human capital development, securing access to international training programmes and STI infrastructure for South African students, facilitating funding for and supporting regional and continental STI initiatives, and occupying leadership positions and influencing decisions at intergovernmental STI fora.

 

Programme 3 needs a budget that will allow for strategic co-investment with international partners. The Department has shown that for every R1 it invests, it can secure up to R10 from an international partner. Bilateral and multilateral cooperation initiatives also requires South Africa to fund its own costs under bilateral agreements and cover its membership in multilateral organisations. Programme 3 receives a nominal increase in its 2016/17 allocation, but once adjusted for inflation, this represents a real decrease of 4.3%.

 

1. Programme 4: Research, Support and Development

 

Programme 4 seeks to provide an enabling environment for research and knowledge production that promotes the strategic development of basic sciences and priority science areas through science promotion, human capital development and the provision of research infrastructure and relevant research support, in pursuit of South Africa’s transition to a knowledge economy. Programme 4 has four sub-programmes, namely, Human Capital and Science Promotions, Science Missions, Basic Science and Infrastructure and Astronomy. Programme 4’s budget decreases by R46.5 million to R4.2 billion, and allocates R4.15 billion to Transfers and subsidies. The Transfers and subsidies allocation comprises R3.9 billion allocated to the NRF and ASSAf, and R214.5 million to the CSIR for cyberinfrastructure research. All allocations to sub-programmes have decreased and the Human Capital and Science Promotions sub-programme is allocated R2.4 billion, the Basic Science and Infrastructure sub-programme is allocated R988 million, the Astronomy sub-programme is allocated R691.5 million, and the Science Missions (IKS, palaeontology, climate change, and Antarctic and marine research) sub-programme is allocated R164 million. Key investments include increasing the number of MeerKAT antennae installed, increasing the number of postgraduates awarded bursaries, and maintaining the number of researchers awarded research grants and research infrastructure grants.

 

The work done under Programme 4 supports high-level human capital development for the NSI, as well as the transformation of the NSI skills base. Some of Programme 4’s performance indicators have been modified, and these are:

 

• The total number of postgraduate students awarded bursaries now excludes PhD graduates.

 

• The average bandwidth capacity available per South African National Research (SANReN) Network site changes from 3 500 Mbps to 8 000 Mbps. This is to correct a mistake in the Department’s 2015-2020 Strategic Plan.

 

The new performance indicator for Programme 4 is:

 

• Total number of PhD students awarded bursaries through NRF and DST-managed programmes as reflected in the NRF and DST project reports. The 2016/17 target is 3 136 PhD students.

 

Performance indicators that will no longer be reported on in the APP are:

 

• The number of regulations gazetted, and the number of strategy documents approved. These will be taken up in the operational plans of the Department.

 

Performance targets that have changed since 2015/16:

 

• The number of graduates and students placed in DST-funded work programmes has been revised down from 900 to 840 in 2016/17 and to 800 thereafter due to budget cuts made to the DST-NRF Internship Programme.

 

a)         Programme 4 Entity: National Research Foundation (NRF)

 

The NRF promotes and supports research in all fields of science, and provides research funding and platforms through national research facilities and science engagement activities. One of its key goals is to ensure that South Africa contributes at least one percent to global R&D output by 2020 and that this knowledge output benefits society.

 

The NRF’s total revenue for 2016/17 is projected to be R4.4 billion. The total revenue consists of the MTEF allocation (70%), contract income (25%) and self-generated income (5%, generated from entrance fees to the National Zoological Gardens, etc). Expenditure across the NRF’s programmes is projected to be 56% to the Research and Innovation Support and Advancement (RISA) business unit, 27% to the National Research Facilities: Astronomy, 12% to the National Research Facilities: nuclear, biodiversity, conservation and environment, 2% for Science engagement, and 3% for Administration. During 2016/17, R1 billion will be invested in the MeerKAT construction and SKA project costs.

 

Over the medium-term, the projected revenue for the NRF is expected to decrease slightly, due to the ECSP ending in 2017/18. Furthermore, the magnitude of recent fluctuations of the rand may result in an increase in expenditure for foreign currency denominated commitments, for both the NRF and the institutions it funds. Large-ticket items include bursaries and fellowships for international students, the acquisition and maintenance of research infrastructure at national research facilities, the National Equipment Programme (NEP), which funds research equipment at higher education institutions, subscriptions to international research databases and international membership fees. Approximately R150 million is spent on these transactions, which are subject to forex volatility. The change in rates from October 2015 to mid-January 2016 has already significantly reduced the monies available for research funding by approximately R35 million.

 

b)         Programme 4 Entity: Academy of Science of South Africa (ASSAf)

 

ASSAf promotes outstanding achievement in all fields of scientific enquiry, awards excellence, and provides evidence-based scientific advice to Government and other stakeholders. Key outputs include fostering collaborations among global science organisations; promoting young scientists and women for science activities; STI policy advice for Government on climate change, poverty alleviation and health; and improving scientific writing for research publishing. ASSAf has initiated an organisational redesign to enhance its operational efficiency and effectiveness. Hence, it has incorporated the Publications programme into the Scholarly publishing programme, boosting expenditure in the latter programme by approximately 24% over the medium-term. The remaining programmes are Governance and administration, Liaison, and Science advisory. ASSAf is celebrating its 20th anniversary and will be implementing a series of activities to commemorate this.

 

ASSAf is allocated R23 million by the Department and will raise additional revenue from its publications, membership fees and other income. The total projected income for 2016/17 is R24 million. Since ASSAf’s activities are labour-intensive and require highly skilled staff, compensation of employees remains a key cost driver, accounting for approximately 58% of total expenditure over the medium-term. ASSAf stated that, to adequately fulfil its mandate especially in relation to administrative compliance, it needed a 50% increase in funding. ASSAf will be conducting its first formal institutional review during 2016/17, and the outgoing ASSAf Council will be subjected to a formal performance review.

 

1. Programme 5: Socio-Economic Innovation Partnerships

 

Programme 5 seeks to enhance the growth and development priorities of Government through targeted STI interventions and the development of strategic partnerships with all levels of government, industry, research institutions and communities. This Programme has four sub-programmes, namely, Sector Innovation and Green Economy, Innovation for Inclusive Development, Science and Technology Investment, and Technology Localisation, Beneficiation and Advanced Manufacturing. Programme 5 receives R1.79 billion (R1.8 billion in 2015/16) of the Department’s total budget and allocates R1.76 billion to Transfers and subsidies. These transfers comprise R749 million for Departmental agencies and accounts and R996.8 million for Public corporations and private enterprises. The Sector Innovation and Green Economy sub-programme receives 52% (R937 million) of the total allocation to establish high impact science research that will support the growth of environmental technologies and services in South Africa. The Technology Localisation, Beneficiation and Advanced Manufacturing sub-programme receives 27% (R476 million) of the total allocation to identify and grow STI capabilities that will improve the competitiveness of existing industries and facilitate the development of new R&D-led industries. R349.9 million is allocated to the Innovation for Inclusive development sub-programme. This sub-programme supports the use of S&T-based innovations to address the triple challenge of poverty, unemployment and inequality by creating sustainable jobs, building sustainable human settlements and enhancing service delivery.

 

The work done under Programme 5 supports inclusive development, the development of a green economy, exploitation of knowledge for economic benefit, and the development of indicators and instruments to measure and monitor STI investments and the performance of the NSI. One of Programme 5’s performance indicators has been modified:

 

• The number of masters and PhD students fully funded or co-funded in niche areas that support the development of a green economy has now been amended to include honours students.

 

A new performance indicator for Programme 5 is:

 

• Number of learning interventions (seminars) generated. The 2016/17 target is nine. This indicator was erroneously left out of the 2015/16 APP, and the target has been refined by limiting it to seminars.

 

Table 3 shows performance indicators that have remained the same, but the matching performance targets have changed. Therefore, performance targets originally reported for 2016/17 in the Department’s 2015/16 APP that have changed in the current APP include:

 

Table 3: Changes in reported 2016/17 performance targets

Last year - 2016/17 Target in the 2015/16 APP	Now - 2016/17 Target in the 2016/17 APP
5 decision-support systems maintained and improved	7 decision-support systems maintained and improved
80 honours, masters and doctoral students funded in niche areas that support the green economy and sustainable development	55 honours, masters and doctoral students funded in niche areas that support the green economy and sustainable development
8 knowledge and innovation products added to the IP portfolio	4 knowledge and innovation products added to the IP portfolio

 

As for Programme 2, the performance targets in Programme 5 that have increased pertain to decision-support systems and those that have decreased pertain to skills development and knowledge generation.

 

a)         Programme 5 Entity: Human Sciences Research Council (HSRC)

 

The HSRC aims to be a research organisation that advances social sciences and humanities to help address pressing social issues such as inequality and poverty and enhances human welfare and development. Hence, its strategic intent is to address key priorities facing South Africa through its research, and to generate new knowledge that help us understand the changing human and social environment in which we live. Key outputs in relation to its mandate include, fostering public dialogue and producing publications, researching and analysing developmental problems, promoting the African research agenda, developing research capacity for the humanities, and developing policy briefs that will inform Government policy and evaluate its implementation.

 

The HSRC’s total projected income for 2016/17 is R510.5 million, comprising a R290 million Parliamentary grant, R182 million research income and R38 million from other income sources. Due to the high level of skill the HSRC’s mandate requires, salaries is a key cost driver and accounts for R268.3 million of the HSRC’s total expenditure. The second largest expenditure item is project related costs of R141 million. The HSRC also faces the problem of not having the required level of information and communications technologies (ICT) needed for the national research surveys it undertakes, and its funding request submissions for a new building in Pretoria (the existing building does not comply with the regulations for occupational health standards) have been declined over the last ten years. These challenges, in addition to its senior researchers having to look for external research contracts to recover 40% of their salary bill, detracts from the research function, exposes the HSRC to possible mandate creep, and makes it difficult for the organisation to attract and retain scientists.

 

b)         Programme 5 Entity: Council for Scientific and Industrial Research (CSIR)

 

The CSIR’s mandate is to foster industrial and scientific development in the national interest through multidisciplinary research and technological innovation. The CSIR is a science council that is classified as a national government business enterprise. The strategic objectives of the CSIR are:

 

• Conduct high-quality and relevant research and technological innovation to foster industrial and scientific development.
• Build and transform human capital.
• Maintain financial sustainability and good governance.

 

The key scientific and technical performance indicators include publication equivalents, the numbers of peer-reviewed publications, the number of new technologies developed, the number of new patents, the amount of contract income secured, and the amount of income secured from royalties and licences. The key financial and governance performance indicators include the total revenue raised, the investment in equipment and property, the net profit realised, maintaining the CSIR’s Broad-based Black Economic Empowerment rating, and maintaining its current disabling injury frequency rate. The key learning and growth performance indicators include increasing the number of scientific and technical staff who are black, female and have doctoral degrees. During 2016/17, the CSIR will develop and test an additional set of performance indicators. If these indicators meet the standards set by the Auditor-General, it will be included in the 2017/18 Shareholder’s Compact. These proposed additional indicators are:

 

1.       The proportion of Black South African and Female South African researchers at the Principal and Chief Researcher levels. Currently 12% of Principal Researchers and 7% of Chief Researchers are Black South Africans. The comparable figures for female South Africans are 17% and 20% respectively.

2.       The number of small, micro and medium enterprises (SMMEs) receiving technical assistance from the CSIR.

 

The CSIR’s R&D programme supports seven of the 11 focus areas contained in the NDP, and these are:

 

• Economy and Employment – supporting the national effort for re-industrialisation.
• Building a Capable State – focussing on service delivery and associated factors.
• Economic and Social Infrastructure – maintaining and re-building transport, water, energy and information and communications technology infrastructure.
• Transition to a Low-Carbon Economy – improving the measurement and management of national natural resources, understanding the effects of climate change to advise on mitigation and adaptation, and supporting the development of a green economy.
• Transforming Human Settlements – providing urban modelling and policies on spatial priorities.
• Improving Health – supporting the National Health Insurance Initiative, developing technology for diagnostic devices and providing new methods to understand and manage disease mechanisms at cellular and molecular level.
• Building Safer Communities – developing systems for sharing of information across different components of the security forces; and developing protection against cybersecurity threats.

 

The CSIR research agenda within each of these areas of intervention is also influenced by the NRDS and the TYIP.

 

The CSIR derives its revenue from grants from the Department, contract R&D income from public and private sectors both locally and internationally, and income from intellectual property and technology transfer initiatives. The total planned revenue for 2016/17 for the CSIR is R2.6 billion. This comprises R1.9 billion for contract R&D income, a R694.8 million Parliamentary grant and R6.8 million royalty income. The total planned expenditure is projected to be R2.5 billion, leaving a net profit of R57.5 million. Due to the highly skilled nature of the CSIR’s work, compensation of employees remains a key cost driver and, over the medium-term, accounts for approximately 56% of the CSIR’s total expenditure.

 

1. Committee Observations

 

The Committee commended the Department and the entities for the work they do and for formulating coherent strategies and performance plans. In concluding its deliberations on Budget Vote 30: Science and Technology, the Committee noted the following:

 

• Science, technology and innovation plays a crucial role in improving economic performance and social well-being. Hence, the Committee was pleased with the Department’s alignment of its activities in support of the Nine-Point Plan that seeks to stimulate the economy.

 

• That it is crucial that STI be placed at the centre of the work of Government. For the NSI to have an impact on the economy, it must be optimally resourced and co-ordinated. Therefore, the Committee welcomes the Department’s efforts to embark on a process to ensure the development of a coordination instrument to manage effectively and efficiently the RDI public budget.

 

• The Department and the entities have a mandate to deliver on Government’s national priorities. Hence, the Committee expressed its concern regarding the decrease in the Parliamentary grant allocation to TIA, and the below inflation increases to the other entities.

 

• The entities are constrained by a lack of adequate investment. This necessitates them to source external contract funding, which may then deflect the focus of the work done away from national interest to that of the contractor. Furthermore, the primary function of researchers is compromised, as they are now required to undertake administrative tasks such as sourcing contracts and preparing tender documents for research funding.

 

• The difficult economic climate has resulted in slower growth for R&D investment. However, it has been shown that increasing investment in strategic areas of STI helps economies recover faster and puts them in a position for greater benefit when the economy recovers. Since economic growth will be driven by STI, the Committee would like to see an increase in the gross expenditure on R&D and that Government's target of having 1.5 percent R&D expenditure as a proportion of GDP can be realised by 2019, if not sooner.

 

• Central to increasing R&D investment, is the role of industry. It is important that industry co-fund, invest and participate in RDI in the strategic sectors of the economy. The Committee urges the Department to intensify its efforts to increase broader awareness of the incentive and ensure that more companies, especially small and medium enterprises, participate.

 

• The current national Gross Expenditure on R&D is 0.73%. To reach the target of 1.5%, current total expenditure on R&D has to be doubled. The current forex volatility is negatively affecting the activities of the Department and entities since science inflation is higher than standard inflation. Due to the fluctuating exchange rate, more funds are spent on activities such as, subscribing to international journals, importing and maintaining specialised equipment, acquiring satellite imagery, and importing scarce skills. The Committee is concerned that this reduces further the budget available for RDI.

 

• That the construction and installation of the MeerKAT telescope dishes is behind schedule due to problems experienced with integrating the receivers and antennae. Therefore, the performance target had to be reformulated.

 

• Due to the nature of the research process (uncertain outcomes), formulating adequate performance targets has been a challenge for the Department. This uncertainty leads to questions relating to their performance statistics. Therefore, the Department continuously evaluates whether their performance targets are achievable.

 

• Intergovernmental collaborative partnerships are instrumental in ensuring that the work done by the Department and the entities is used and implemented. These relationships are crucial to ensuring that crosscutting activities are better coordinated, not duplicated and resources are not wasted.

 

• Enhanced coordination is also necessary at Executive as well as Parliamentary level among the various portfolio and select committees in instances where science and technology issues are transversal.

 

1. Committee Recommendations

 

The Portfolio Committee on Science and Technology, having considered the proposed Budget Vote 30: Science and Technology, recommends that:

 

• All mechanisms to increase the budget allocation to the Department of Science and Technology be pursued by the Ministers of Science and Technology and Finance.

 

• All efforts to ensure the increased influence of STI on economic planning and growth and the expansion of the NSI be prioritised and expedited. These include the Review of the White Paper on Science and Technology and the formulation of new models for STI public budget coordination. The Committee requests that the Department report on progress on the above activities when they present their 2015/16 Annual Report.

 

• The Department reports to it on the measures to resolve the issues around the R&D Tax Incentive Initiative by end-October 2016.

 

• The Department table, as soon as possible, the 2014/15 and 2015/16 R&D Tax Incentive Programme performance reports. The Committee will schedule a briefing in the 4th Parliamentary term 2016.

 

• The Department table, as soon as possible, a full progress report on the Square Kilometre Array telescope project, which explains the delays and the measures to ensure the ongoing success of this project. The Committee will schedule a briefing in the 4th Parliamentary term 2016.

 

• Government investigates formulating a policy that exempts State-owned entities, with the required expertise, from tendering for government research contracts that fall within their mandate. The Committee will schedule the necessary briefings to facilitate discussion on this matter.

 

• The House adopts Budget Vote 30: Science and Technology.

 

 

The Democratic Alliance has reserved their right to an opinion on the Vote.

The Economic Freedom Fighters indicated that they would not support the Vote.

 

Report to be considered.