ATC171129: Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s 2017/18 Mid-Year Performance, dated 29 November 2017
Joint Standing Committee on Financial Management of Parliament
Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s 2017/18 Mid-Year Performance, dated 29 November 2017
The Joint Standing Committee on the Financial Management of Parliament, having considered the Parliament of the Republic of South Africa’s 2017/18 mid-year report, reports as follows:
1. INTRODUCTION
1.1 Section 4 of the Financial Management of Parliament and Provincial Legislatures Act (No 10 of 2009) provides for the establishment of an oversight mechanism to maintain oversight of the financial management of Parliament. The Joint Standing Committee on the Financial Management of Parliament (the Committee) was established in terms of the Joint Rules of Parliament. The Committee has the powers afforded to parliamentary committees under sections 56 and 69 of the Constitution.
1.2 Parliament’s 2017/18 mid-year performance report was tabled and referred to the Committee on 2 November 2017 for consideration in terms of section 54(2) of the Act. The Acting Secretary to Parliament—the accounting officer—and her senior management team appeared before the Committee in a meeting held on 16 November 2017 where the institution’s performance and expenditure for the period under review was interrogated.
1.3 This report should be read along with Parliament’s 2014-2019 Strategic Plan, the 2017/18 Annual Performance Plan and budget, as well as the 2016/17 Annual Report.
1.4 This report comprises three parts: Part A, containing a summary of the institution’s financial and performance information for the period under review; Part B, containing the Committee’s observations; and Part C, containing the Committee’s recommendations.
PART A: PERFORMANCE AT THE END OF THE SECOND QUARTER OF THE 2017/18 FINANCIAL YEAR
2. Mandate
2.1 Parliament derives its mandate from:
- chapter 4 of the Constitution of the Republic of South Africa, 1996 (Act No 108 of 1996), which sets out its composition, powers and functions;
- the Financial Management of Parliament and Provincial Legislatures Act, 2009 (Act No 10 of 2009) which regulates the institution’s financial management;
- the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No 9 of 2009) which provides procedures to amend money bills; and
- the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act of 2004 (Act No 4 of 2004) which defines and declares the national and provincial legislatures’ powers, privileges and immunities.
2.2 Mission and vision
2.2.1 The institution identified six values according to which it conducts its business: openness; responsiveness; accountability; teamwork; professionalism; and integrity.
2.2.2 In pursuit of its vision to be “activist and responsive” so as to improve the quality of life in South Africa and to ensure enduring equality, the institution has, as its mission, to provide, amongst others, “an innovative, transformative, effective and efficient parliamentary service and administration that enables Members of Parliament to fulfil their constitutional responsibilities”.
2.3 Strategic Priorities 2014-2019
2.3.1 The institution’s five strategic priorities are:
- strengthening oversight and accountability;
- enhancing public involvement;
- deepening engagement in international fora;
- strengthening co-operative governance; and
- strengthening its legislative capacity.
2.3.2 To achieve the above, the 5th Parliament adopted the following strategic outcome-oriented goals:
- to enhance Parliament’s oversight and accountability over the work of the executive to ensure implementation of the objectives of the Medium Term Strategic Framework (MTSF) 2014-2019;
- to co-operate and collaborate with other spheres of government on matters of common interest and ensure co-operative and sound intergovernmental relations;
- to enhance public involvement in the processes of Parliament to realise participatory democracy through the implementation of the public involvement model by 2019;
- to enhance parliamentary international engagement and co-operation;
- to enhance the ability of Parliament to exercise its legislative power through consolidation and implementation of integrated legislative processes by 2019 in order to fulfil its constitutional responsibility; and
- to build a capable and productive parliamentary service that delivers enhanced support to Members of Parliament in order that they may efficiently fulfil their constitutional functions.
3. Financial Performance in the period under review
At the end of the period under review, Parliament had spent R1.091 billion or 94 per cent of the budgeted R1.180 billion resulting in under expenditure of R89 million. In terms of the 2017/18 annual budget of R2.430 billion, including Direct Charges, Parliament had spent 44.89 per cent at the end of the second quarter of the 2017/18 financial year. Table 1 below gives an overview of Parliament’s expenditure performance as at 30 September 2017.
Table 1: Expenditure performance as at 30 September 2017
|
|
1 April to 30 September 2017 |
Annual |
||||
|
|
Budget R’000 |
Expenditure R’000 |
Percentage Spent |
Variance R’000 |
Budget R’000 |
Percentage Spent |
|
Strategic Leadership and Governance |
53 796 |
49 227 |
92% |
4 569 |
110 638 |
44.49% |
|
Administration |
90 444 |
73 021 |
81% |
17 423 |
177 066 |
41.24% |
|
Core Business |
284 895 |
265 281 |
93% |
19 614 |
585 354 |
45.32% |
|
Support Service |
178 800 |
158 685 |
89% |
20 115 |
372 762 |
42.57% |
|
Associated Service |
326 137 |
330 680 |
101% |
(4 543) |
628 839 |
52.59% |
|
Total |
934 071 |
876 894 |
94% |
57 178 |
1 874 659 |
46.78% |
|
Direct Charges |
246 326 |
214 459 |
87% |
31 867 |
556 288 |
38.55% |
|
Total |
1 180 353 |
1 091 353 |
92% |
89 045 |
2 430 947 |
44.89% |
Source: Parliament of the Republic of South Africa (2017)
3.1 Expenditure performance
The details in terms of the expenditure per programme are provided in paragraphs 3.1.1 to 3.1.11.
Strategic Leadership and Governance
3.1.1 At the end of the period under review Parliament had spent R49.228 million or 92 per cent of the projected R53.796 million, resulting in an under expenditure of R4.569 million.
3.1.2 In terms of the programme’s annual budget of R110.638 million, Parliament spent 44.49 per cent by the end of September 2017.Parliament reported that where there were indications of possible under and overspending reprioritisation would be done in line with section 18(2)(a) of the Act.
Administration
3.1.3 At the end of the period under review, Parliament reported an expenditure of R73.021 million or 81 per cent of the projected R90.444 million was recorded resulting in an under expenditure of R17.423 million.
3.1.4 In terms of the programme’s annual budget allocation of R177.066 million, Parliament had spent 41.24 per cent at the end of September 2017. Parliament reported that where there were indications of possible under and overspending reprioritisation would be done in line with section 18(2)(a) of the Act.
Core Business
3.1.5 At the end of the period under review, Parliament had spent R265.281 million or 93 per cent of the projected R284.895 million. This resulted in an under expenditure of R19.614 million.
3.1.6 In terms of the programme’s annual budget of R585.353 million, Parliament had spent 45.32 per cent. Parliament reported that where there were indications of possible under- or overspending. reprioritisation would be done in line with section 18(2)(a) of the Act.
Support Services
3.1.7 At the end of the period under review, Parliament had spent R158.685 or 89 per cent of the projected R178.800 million. This resulted in an under expenditure of R20.115 million.
3.1.8 In terms of programme’s annual budget allocation of R372.762 million, Parliament had spent 42.57 per cent. Parliament reported that where there were indications of possible under- or overspending reprioritisation would be done in line with section 18(2)(a) of the Act.
Associated Services
3.1.9 At the end of the period under review Parliament had spent R330.680 or 101 per cent of the projected R326.137. This resulted in over expenditure of R4.543 million.
3.1.10 In terms of the programme’s annual budget of R628.839 million, Parliament had spent 52.59 per cent. Expenditure at the end of the first quarter for the 2017/18 financial year was R165.773 million or 26.36 per cent. Parliament reports that it would overspend by about R43 million on members’ facilities (R24 million) and transfers to political parties (R19 million) at the end of the 2017/18 financial year.
3.1.11 With regard to the under expenditure on Direct Charges, Parliament reported that it would underspend by R105 million by the end of the financial year. This was due to Members’ remuneration having been overstated since as far back as the 2009/10 financial year as a result of the payment of loss of office gratuities to non-returning Members. The projected unspent funds would be surrendered to the National Revenue Fund (NRF) at the end of the 2017/18 financial year in terms of section 23(4) of the Act. In 2015/16 and 2016/17 R62.836 million and R93.310 million were surrendered to the NRF respectively.
3.2 Expenditure per Economic Classification
Table 2 below provides as overview of the expenditure per Economic Classification as at 30 September 2017.
Table 2: 2017/17 Second Expenditure per Economic classication
|
|
April to September 2017 |
Annual |
||||
|
Budget R’000 |
Expenditure R’000 |
% spent |
Variance R’000 |
Budget R’000 |
% spent |
|
|
Compensation of Members |
246 326 |
214 459 |
87% |
31 867 |
556 288 |
38.55% |
|
Compensation of Employees |
466 915 |
450 005 |
96% |
16 910 |
988 078 |
45.54% |
|
Goods and Services (Annual Performance Plan, APP) |
163 679 |
120 544 |
74% |
43 135 |
288 360 |
41.80% |
|
Goods and Services (Members’ entitlements) |
86 991 |
88 751 |
102% |
(1 760) |
160 000 |
55.47% |
|
Transfers |
212 027 |
214 444 |
101% |
(2 417) |
414 690 |
51.71% |
|
Capital |
4 460 |
3 150 |
71% |
1 310 |
23 531 |
13.39% |
|
Total |
1 180 398 |
1 091 353 |
92% |
89 045 |
2 430 947 |
44.89% |
Source: Parliament of the Republic of South Africa (2017)
3.1 In terms of the expenditure performance per economic classification, Parliament anticipates underspending of R34 million under Compensation of Employees at the end of the 2017/18 financial year due to resignations. Furthermore, it was anticipated that under Goods and Services (APP) and Capital Expenditure there would be further underspending of R6 million and R2 million respectively. Parliament reported that where there were indications of possible under- or overspending. reprioritisation would be done in line with section 18(2)(a) of the Act.
- Performance across programmes
The institution only succeeded in meeting 7 (or 68 per cent) of the 11 targets it had set for the period under review. The APP sets out a total of 29 annual targets,16 of which are annual targets and will only be reported on at the end if the financial year. Two indicators in the APP—the percentage of population accessing information on Parliament, and percentage of population familiar with the workings of Parliament—had no targets as they were consolidated into an awareness indicator.
|
Programme |
Mid-year targets achieved |
Mid-year targets not achieved |
Annual targets |
Total number of targets per programme |
|
1.Strategic Leadership and Governance |
2 |
1 |
- |
3 |
|
2. Administration |
1 |
1 |
3 |
5 |
|
3. Core Business |
2 |
2 |
6 |
10 |
|
4. Support Services |
- |
- |
5 |
5 |
|
5. Associated Services |
2 |
- |
2 |
4 |
|
Total |
7 |
4 |
16 |
27 |
4.1 Programme 1: Strategic Leadership and Governance
4.1.1 This programme is aimed at providing political and strategic leadership; governance and institutional policy, executive communication and co-ordination; overseeing the development and implementation of the strategic plan, annual performance plan, and budget as well as the Parliamentary Budget Office and the Office Supporting Institutions Supporting Democracy.
4.1.2 Two of the three targets under this programme were achieved at the end of the period under review. The target related to the number of analytics reports presented by the Parliamentary Budget Office to the Finance and Appropriations Committees in both Houses was exceeded by 3 i.e. 13 analytics reports were submitted.
4.1.3 The target that was not met related to the percentage of governance documents tabled in terms of the Act. Only seven of the targeted ten documents were tabled on time. The deviation was due to weaknesses in the coordination of the consideration of governance documents.
4.2 Programme 2: Administration
4.2.1 The purpose of this programme is to provide strategic leadership support and management, support institutional policy and governance, provide development programme for Members of Parliament, overall management and administration, internal audit and financial management, and Register of Members’ Interest.
4.2.2 Only one of the two targets under this programme was achieved. The target relating to the number of capacity building programmes for members was exceeded. The targets not achieved related to the percentage of compliance with prescripts and regulations: only 10 of the 12 documents were submitted on time. 4.2.3 Parliament submitted its first quarter performance report for 2017/18 one day late due to lack of administrative coordination. Furthermore, only 94 per cent of suppliers were paid within 30 days due to ineffective invoice processing mechanisms.
4.3 Programme 3: Core Business
4.3.1 This programme includes procedural and legal advice; information and research; as well as language, content, and secretarial and legislative drafting services for meetings of the National Assembly, National Council of Provinces and the Committees; and to provide analysis, advice and content support for parliamentary international engagement.
4.3.2 Only two of the four targets under this programme were met. The targets which were not met relate to the percentage of documents available and activities undertaken as per the Service Charter, and the percentage of international instruments monitored for domestication and implementation.
- In terms of the Service Charter, Parliament reported staff vacancies and lack of co-ordination as the main reasons for not meeting the target. Even though this target was not met holistically, 9 out of the 12 indicators were at 100 per cent performance. Availability of minutes, reports and interpretations underperformed, but 100 per cent compliance was reported as far as the production of House papers, procedural advice, legal advice, policy advice, research, information requested, translations, and documentation all achieved 100 per cent.
- With regard to international instruments, the deviation was due to the method of calculation and evidence not being well defined. The technical descriptor would be reviewed to address this matter.
4.4 Programme 4: Support Services
4.4.1 This programme is aimed at providing institutional communication services, human resource management, information communication technology, institutional support services and Members’ support services.
4.4.2 There were no mid-year targets under this programme. Parliament reported on progress made against the annual targets.
4.5 Programme 5: Associated Services
4.5.1 The purpose of this programme is to provide travel, communication and other facilities for Members of Parliament to fulfil their duties as elected public representatives; and to provide financial support to political parties represented in Parliament, their leaders and constituency offices.
4.5.2 This programme had two targets for the period under review and both were achieved. The target relating to the average number of days to reimburse members was exceeded whilst transfers to political parties achieved 100 per cent.
PART C: OBSERVATIONS AND RECOMMENDATIONS
6. Observations
6.1 Compliance with prescripts and regulations
6.1.1 The Committee notes with concern Parliament’s reported non-compliance with prescripts and regulations in terms of the payment of suppliers within 30 days after receipt of invoices.
6.1.2 The Committee notes a continued trend of late submission of governance documents in terms of the Act. The Committee is of the view that Parliament, as the overseer of the Executive, should lead by example and emphasises a need for urgent improvements in this regard.
6.1.3 The Committee notes the discrepancies between the targets as contained in the 2017/18 APP and the mid-year performance report. The total number of targets under Programme 3 is seven, however Parliament reported on only four targets. The targets relating to the Legislative Model, Public Participation Model, and Co-operative Government Mechanism were reported as annual targets. The Committee is of the view that any amendments to APP targets should be reported and explained in the quarterly, mid-year and annual performance reports to ensure good governance in terms of monitoring and accountability.
6.1.4 Parliament reports that it could not measure 16 (55.7 percent) of its set targets because they are annual targets. This is a cause for concern. Firstly, it is unclear how Parliament is able to monitor progress in terms of achieving its annual targets, if it is not tracking progress periodically. This may be an indication that Parliament does not have activity plans and operational plans as such plans would detail what had to be done by when, how and by whom. Such information would make it possible to measure performance at any time, including, quarterly.
6.1.5 The Committee notes the non-alignment between the root cause/s for non-achievement of some targets and the mitigation plans provided to the Committee. This concern was also raised with regard to the previous financial year’s performance outcomes. For example, Parliament reported that it could not achieve targets for timeous submission of minutes and reports. The under-performance was ascribed to a lack of adequate support at Committee meetings. In order to mitigate this non-achievement, Parliament has proposed the implementation of better planning and consequence management for failures to adhere to deadlines. In the Committee’s opinion, the reasons for the under-performance are ambiguous. In addition, the mitigation plan does not address the reasons non-achievement. There is no clear correlation between lack of adequate support at committee meetings and implementation of consequence management for failure to adhere to deadlines.
6.2 Expenditure and Institutional Performance
6.2.1 The Committee notes that Parliament has recorded an under expenditure of R89.045 million at the end of the period under review. The year-to-date expenditure at the end of the second term of the 2017/18 financial year was 44.89 per cent.
6.2.2 Whist the Committee notes the reported reasons for the under expenditure, it emphasises the importance of expenditure in terms of projections during the course of the financial year. Of particular concern is the reported lack of adequate capacity, which is cited as one of the main reasons for under performance. Whilst the Committee notes the reported budgetary constraints, it emphasises the need for adequate capacity to achieve the targets outlined in the APP.
6.2.3 The Committee notes with concern the disjuncture between budget expenditure at the end of the period under review and the number of targets achieved. Whilst Parliament managed to spend 94 percent against its allocated budget for the first two quarters of the financial year, it only managed to achieve 68 per cent of its targets. The Committee notes that Parliament has reviewed its Strategic Plan and 2017/18 APP.
6.2.4 The Committee notes with concern the number of resignations during the first two quarters of the 2017/18 financial year, which will result in an under expenditure of about R34 million on Compensation of Employees at the end of the financial year. The unspent funds will be used to offset the projected over-expenditure that is anticipated under the Goods and Services (Members’ Entitlements). The Committee further notes that Parliament is in the process of filling 71 vacant positions.
6.2.5 The Committee is concerned about plans to use the unspent funds from Compensation of Employees to defray over-expenditure under Goods and Services, whilst Parliament has overspent on Compensation of Employees over the previous financial years. Of similar concern, Parliament has frozen a significant number of vacancies.
6.2.6 The Committee is concerned that the funding for the Parliamentary Budget Office and the Office Supporting Institutions of Democracy were not part of the baseline allocations. The Committee views these offices as important to the fulfilling of the institution’s mandate and therefore a lasting solution should be found to address their funding requirements. The matter should be raised with National Treasury, and addressed expeditiously.
7. Recommendations
The Committee having engaged with Parliament on its mid-year performance, reports as follows:
7.1 The Executive Authority should ensure that annual performance plans and budgets are properly aligned, and that performance targets are specific, measurable, achievable, realistic and time-bound (SMART). This issue was also raised in the Committee report on Parliament’s Annual Report for 2016/17 and should be addressed expeditiously.
7.2 The Executive Authority should ensure that the issue of Parliament’s baseline funding, especially with regards the adequate resourcing of the Parliamentary Budget Office and the Office Supporting Institutions of Democracy, is addressed urgently.
7.3 The Executive Authority should ensure that any amendments to the targets set out in the APP are reported and explained in the quarterly, mid-year and annual performance reports. This would allow for monitoring and accountability.
7.4 Parliament should measure all its targets periodically so that annual targets too could be reported on on a quarterly basis.
7.5 Parliament should craft mitigation plans which are relevant and address the root cause/s for not achieving targets.
Report to be considered.
Documents
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