ATC181017: Budgetary Review and Recommendations Report of the Portfolio Committee on Higher Education and Training, dated 17 October 2018

Higher Education, Science and Innovation

BUDGETARY REVIEW AND RECOMMENDATIONS REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING, DATED 17 OCTOBER 2018

The Portfolio Committee on Higher Education and Training (hereinafter referred to as the Committee), having considered the 2017/18 financial and non-financial performance of the Department of Higher Education and Training (hereinafter referred to as the Department, reports as follows:

 

1. INTRODUCTION AND MANDATE OF THE COMMITTEE AND THE DEPARTMENT

1.1. Introduction

Section 42(3) of the Constitution of the Republic of South Africa, 1996 bestows the oversight function over the national executive to the National Assembly (NA). The National Assembly Committees are required in terms of Section 5 of the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009) to annually assess the performance of each national department, and to thereafter submit a Budgetary Review and Recommendations Report, which will provide an assessment on the department’s service delivery performance given available resources; an assessment on the effectiveness and efficiency of the departments use and allocation of available resources; and may include recommendations on the forward use of resources.

1.2. Mandate of Committee

Section 55(2) of the Constitution of the Republic of South Africa, 1996 stipulates that “the National Assembly (NA) must provide for mechanisms (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of (i) national executive authority, including the implementation of the legislation; and (ii) any organ of state”.

The Committee oversees the implementation of the following Acts as amended:

Higher Education Act, 1997 (Act No.101 of 1997), Nationa

l Student Financial Aid Scheme Act, 1999 (Act No. 56 of 1999), Continuing Education and Training Act, 2006 (Act No. 16 of 2006), National Qualifications Framework Act, 2008 (Act No. 67 of 2008), Skills Development Act, 1998 (Act No. 97 of 1998), Skills Development Levies Act, 1999 (Act No. 9 of 1999) and General and Further Education and Training Quality Assurance Act, 2001 (Act No. 58 of 2001). The Department of Higher Education and Training oversees the SETAs and the National Skills Fund (NSF) in terms of the Skills Development Act and the Skills Levies Act.

 

1.3. Purpose of the BRR Report

The purpose of this report is to account in accordance with Rule 339 of the Rules of the National Assembly for work done by the Committee in considering the 2017/18 Annual Reports of the Department and entities which were tabled in accordance with Section 40 (1) of the PFMA; and as referred in terms of National Assembly Rule 338 by the Speaker to the Committee for consideration and reporting in terms of Rules 339 and 340 respectively.

1.4. Method

The Department’s 2017/18 Annual Report was considered against the background of key government policy documents, including, among others, the Medium Term Strategic Framework (MTSF) 2014 – 2019; the 2017 State of the Nation Address (SONA); 2017/18 Annual Report of the Department and the Committee’s in-year monitoring of the Department’s 2017/18 quarterly financial and service delivery performance in terms of section 32 Reports of the PFMA. The Committee had briefing sessions with the Auditor-General of South Africa (AGSA) on the 2017/18 audit outcomes of the Higher Education and Training Portfolio and the Department of Higher Education and Training.

 

2. OVERVIEW OF THE KEY RELEVANT POLICY FOCUS AREAS

2.1. Relevant Government policy documents

2.1.1. The National Development Plan (NDP), Vision 2030

The NDP provides the framework for achieving radical socio-economic agenda. It identifies decent work, education and the capacity of the state as particularly important priorities. For the post-school education and training sector, the NDP envisages that by 2030, South Africans should have access to education and training of the highest quality. The education, training and innovation system should cater for different needs and produce highly skilled individuals; and that those who qualify through the post-school system should have adequate skills and knowledge to meet the current and future needs of the economy and society.

2.1.2. The 2014 – 2019 Medium Term Strategic Framework (MTSF)

The 2014-2019 MTSF, which is a five-year strategic plan of government, forms the first five-year implementation phase of the NDP. 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 MTSF is structured around 14 priority outcomes. The Department is responsible for Outcome 5: “A skilled and capable workforce to support an inclusive growth path”.

In terms of the implementation of Outcome 5, the following MTSF sub-outcomes have been identified for this Outcome:

• A credible institutional mechanism for labour market and skills planning;
• Increased access and success in programmes leading to intermediate and high level learning;
• Increased access to and efficiency of high-level occupationally directed programmes in needed areas; and
• Increased access to occupationally directed programmes in needed areas and thereby expanding the availability of intermediate level skills with a special focus on artisan skills.

 

2.1.3. 2017 State of the Nation Address (SONA)

 

On 9 February 2017, the President Mr Zuma in the State of the Nation Address outlined government policy priorities for the 2017/18 financial year. For the PSET sector, the President announced that government provided funds to ensure that no student whose combined family income of up to R600 000 per annum will face fee increases at universities and TVET Colleges for the 2017 academic year. The president stated that all students who qualify for NSFAS and who have been accepted by universities and TVET Colleges would be funded.

The Department of Higher Education and Training has reiterated government's commitment to funding the 2017 fee adjustments for the poor, working class and missing middle students at universities and TVET Colleges. For the 2017/18 financial year, an amount of R2.5 billion was allocated to cover fee increases for 2017 academic year, up to a maximum of 8 percent, for students who come from households earning less than R600 000 per annum.

It was during the financial year under review that the government pronounced the gradual implementation of fee-free education for poor and working class and its implementation commenced in the fourth quarter (January – March 2018) of 2017/18. The fee free education for poor and working class will be phased in over a period of five years. This introduced fully subsidised free higher education and training for poor and working class South African students enrolled at public universities and TVET Colleges. The implementation of the policy at universities started with the first year entering students in the 2018 academic year. The policy also makes provision for continuing students who are funded by NSFAS to have their loans converted into grants from 2018 onward.

Of significance to note is that government committed itself to increasing spending on universities as a percentage of the Gross Domestic Product (GDP) from 0.68 percent to 1 percent over the next five years.

3. SUMMARY OF THE PREVIOUS KEY FINANCIAL AND NON-FINANCIAL PERFORMANCE RECOMMENDATIONS OF THE PORTFOLIO COMMITTEE

3.1. 2017 BRR Recommendations and the response by the Minister of Higher Education and Training

This section briefly summarises the 2017 recommendations and subsequent progress and challenges in the 2018/19 financial year.

3.1.1.    The Committee reiterated that the Department should put mechanisms in place to ensure that capacity in the Human Resource Unit was increased as well as to ensure that an e-Recruitment system is implemented to improve the turnaround times to fill advertised posts within 180 days. The Department was also urged to put mechanisms in place to ensure that disciplinary cases were resolved within 90 days. The Department reported that capacity in the Human Resource Unit was increased. Two additional posts were created (Assistant Director and Personnel Practitioner) to enhance the performance and to improve the turnaround times. The Department was in the process of sourcing e-Recruitment system which would improve the turnaround times to fill advertised posts within 180 days. The Department planned to roll out a national training for Initiators and disciplinary cases chairpersons in order to comply with the 90-days turnaround time and has increased capacity of labour relations practitioners by appointing an additional four assistant directors in four provinces.

3.1.2.    The Committee recommended that the number of universities offering accredited TVET College lecturer qualifications be increased to ensure the necessary capacitation of TVET lecturers. The Department was urged to ensure that the target of having 10 universities offering TVET College Lecturer Qualifications be realised. The Department reported that 14 universities were being supported to develop and offer qualifications for TVET College lecturers.

3.1.3.    The Committee recommended that the Department should improve performance on the system performance indicators for TVET and CET Colleges. The Department reported that the CET sector was grossly underfunded, improvement of performance on system indicators translate to improving quality of provision through adequate and relevant Learning and Teaching Support Material, programme diversification to move away from purely academic programmes, suitable infrastructure and standardised conditions of service for the lecturers. The issues indicated require adequate funding, which is currently not available.

3.1.4.    The Department was urged to work with the SETAs to ensure that the MTSF target of having TVET lecturers undergoing specified hours in their industry for specified periods every two years from 2019 is realised. The Department noted the recommendation and indicated that the problem was caused by lack of human and financial resources to cater for the appointment of personnel who can, on a temporary periodic basis, replace TVET lecturers while they undergo industry training.

3.1.5.    The Committee noted that a commitment to build 12 new TVET College campuses by 2020 was made by government. However, only one new TVET College campus was completed and two were nearing completion and their operationalisation costs were funded through the skills fund. This had a negative impact on its sustainability and the rolling out the skills development interventions. The Committee recommended that voted funds be provided for sustainable ways of funding the operationalisation of all the 12 new TVET College campuses. Funding from National Treasury has been secured from 2019/20 onwards for the three current sites (approximately R400 million from year 1). The remaining still needs to have a sustainable operational budget secured. The Department would pursue discussions with National Treasury and other funders (for example SETAs) to secure the required funding in due course.

3.1.6.    The acute shortage of community education and training delivery sites and lack of online learning opportunities for those who are not able to access appropriate study programmes, should be addressed. The Department reported that there were 3 276 Community Learning Centres (CLCs) that serve as delivery sites under CET Colleges. The CLCs do not have the infrastructure capacity to offer online studying opportunities. The Department would build capacity in CET Colleges between 2018-2020.

3.1.7.   The funding challenges in the TVET sector have led to the downward revision of targets for the remainder of the MTSF. TVET headcount enrolments have been revised downwards from 1. 2 million to a capped figure of 710 535. Without an increase in the baseline funding for enrolments, downward revision will continue to occur in order to maintain and improve the provision of quality teaching and learning in Colleges utilising limited allocated funds. The Department reported that additional baseline funding for the TVET system would be forthcoming from 2018/19, however the enrolment numbers would only increase in approximately 5-years’ time when the 80 percent programme funding level has been obtained. For the next Medium Term Expenditure Framework (MTEF), it was estimated that the enrolments will still be capped at 710 535.

3.1.8.    The Committee noted that due to budgetary constraints, the target of building residences at TVET Colleges to accommodate 5 000 students by 2020 was discontinued for the remainder of the MTSF. The TVET sector did not have an infrastructure grant which created provision for the building in the TVET sector and strongly relied on the funding of the National Skills Fund (NSF). This impacted on the NSF’s ability to fund skills development.  The Department reported that no additional capital funding for the TVET system would be forthcoming soon. The new Capital Infrastructure grant (applicable from 2018/19) would only be used to cover repairs and maintenance of existing infrastructure, and no new capital projects (such as student accommodation) would be possible in the Medium Term Expenditure Framework (MTEF).

 

3.2. Evaluation of the response by the Department and Minister of Finance to the Portfolio Committee on Higher Education’s 2017 BRRR recommendations

The Portfolio Committee on Higher Education and Training noted the challenges arising from the underfunding of the Post-School Education and Training (PSET) system, in particular, the funding shortfalls for the Technical and Vocational Education and Training (TVET) Colleges programme funding and for NSFAS TVET College bursaries as well as the Community Education and Training sector, as contained in the findings. Furthermore, the Committee notes the implications of the underfunding on the PSET system as a whole in meeting the government’s MTSF commitments. Consequently, the Minister of Finance and the Minister of Higher Education and Training recommended that consideration be given both in relation to funding and the steps to be taken to ensure that the commitments in the NDP/MTSF will be achieved by 2019/20.

The Minister of Finance’s response noted that the President’s announcement on free higher education for TVET and Universities has resulted in R67.2 billion being added to the Department of Higher Education and Training’s baseline over the 2018 Medium Term Expenditure Framework (MTEF), R22.8 billion specifically for the TVET College sector. For Community Education and Training, the Department should use all available resources allocated for the sector, including the funding from the skills development levy institutions to improve delivery as efficiently as possible within available resources over the medium term.

The Minister of Finance also responded to the recommendation of the Standing Committee on Appropriations, which recommended in its 2017 BRRR that National Treasury should consider developing cost-control instruction notes for infrastructure projects at higher education institutions, similar to the cost-control instruction notes governing school building construction.

In response to the recommendation, the Minister of Finance noted that infrastructure grants to higher education institutions are subject to rigorous performance and financial monitoring and oversight by the Department of Higher Education and Training to ensure that these grants are used efficiently and for the intended purpose. Monitoring takes place throughout the year and independent external auditors provide annual audited progress reports on institutional expenditure. National Treasury will work with the Department of Higher Education and Training to strengthen the existing expenditure processes by exploring the development of cost-control instruction notes for infrastructure projects.

3.3. 2018/19 Committee Budget Vote Report

Summary of selected 2018/19 Committee Budget Vote Report Recommendations

The Portfolio Committee on Higher Education and Training considered the strategic plans, annual performance plans and budgets of the Department of Higher Education and Training and its entities as referred by the Speaker terms of Rule 338 of the Rules of the National Assembly. The Committee reported in accordance with Rule 340 and made the following recommendations.

3.3.1.    The Department’s programme 1: Administration budget was reduced by R28.2 million over the MTEF period. Despite the assurance by the Department that the reduction will be accommodated by cost-containment measures, the operational budget of the Department has been constrained and the reduction will further exacerbate the current challenges. Without adequate funding, the Department will continue to experience capacity constraints to implement the planned targets, especially in the corporate services sub-programme. Additional funding should be considered to improve the administrative capacity of the Department.

3.3.2. The filling of Deputy Director General (DDG) positions for programmes 3, 4 and 6 should be fast tracked.

3.3.3.    The marginal budget increase for the Social Inclusion in Education sub-programme will impact negatively on the achievement of transformation in the PSET sector and the goals of equity and redress. Additional funding for this sub-programme should be considered to support the social inclusion policy implementation, including for monitoring and evaluation.

1. Given the new fee-free education policy and additional funding to progressively increase the university subsidies to 1 percent of the GDP, the Department should finalise the funding framework for the university sector. Furthermore, the Department should expedite policy development to regulate the new funding policy, including the ethical conduct policy for NSFAS beneficiaries to curb the corrupt use of allowances by both TVET College and university students.
2. The commitment to enrol 1.25 million students in TVET Colleges will not be met within the Medium Term Strategic Framework (MTSF) due Department retaining the cap of headcount enrolment 710 535. This restricts the Department’s ability to work towards realising the NDP target of increasing participation rates in TVETs to 25 percent, which would accommodate about 1.25 million enrolments by 2030. As the Department is working towards introducing the revised budgeting, enrolment and strategic planning processes in Colleges, it must address the resource-related and efficiency factors inhibiting the desired growth in the sector. It must also ensure the finalisation of the draft policy for administration/management of student admission to TVET Colleges.
3. The budget reduction in sub-programme 3: National Skills Development Services of R2.3 million in 2018/19 is of concern, given the critical role of the sub-programme to manage projects identified in the national skills development strategy, and its role to advise the Minister on the national skills development policy and strategy. The budget reduction will have an adverse effect on the work of the branch. Additional funding should be considered to ensure that the sub-programme achieves its mandate.
4. Workplace training and work- integrated learning (WIL) must be at the core of the training system.  Partnerships remain central to workplace training. Measures should be put in place to encourage more universities to build strong partnerships with TVETs, industry and SETAs as highlighted in the third National Skills Development Strategy. There is a need to improve the data supply to assess the accuracy of reporting mechanisms and impact of the mandatory grant that SETAs give to employers.
5. The establishment of financial management systems and procurement management at CET Colleges should be expedited. The harmonization of the conditions of service of CET educators should be prioritised and progress on the post-establishment for CET Colleges should be reported to the Committee.

 

4. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2017/18 FINANCIAL YEAR FINANCIAL AND SERVICE DELIVERY PERFORMANCE

4.1. Overview and assessment of the overall budget and expenditure

Table 1: 2017/18 budget allocation and expenditure

DHET Programme	2017/18 FINANCIAL YEAR
	Adjusted Appropriation	Virement	Final Appropriation	Actual Expenditure	Variance	Expenditure as % of final appropriation
	R’000	R’000	R’000	R’000	R’000	%
Administration	400 356	(3 898)	396 458	393 112	3 346	99.2
Planning, Policy and Strategy	68 298	-	68 298	66 975	1 323	98.1
University Education	41 931 721	(1 660)	41 930 061	41 929 092	969	100.0
Technical and Vocational Education and Training	7 460 198	61 438	7 521 636	7 521 020	616	100.0
Skills Development	249 357	(6 016)	243 341	242 508	833	99.7
Community Education and Training	2 197 709	(49 864)	2 147 845	2 143 153	4 692	99.8
Programme sub-total	52 307 639		52 307 639	52 925 860	11 779	100.0
Statutory Appropriation National Skills Fund Sector Education and Training Authorities	16 293 801           16 293 801	-           -	16 293 801           16 293 801	16 293 561           16 293 561	240           240	100.0           100.0
Total	68 601 440		68 601 440	68 589 421	12 019	100.0
Departmental receipts   Aid assistance			29 663     73 650	85 921
Total Revenue       Total Expenditure			68 704 753
				68 675 342

 

The Department received a total budget amounting to R68. 601 billion. The budget comprised of R52.307 billion appropriated for the Department and R16.293 billion from direct charges against the National Revenue Fund for the Sector Education and Training Authorities (SETAs) and the National Skills Fund (NSF). The Department received R103.313 million from the departmental receipts (R29.663 million) and aid assistance (R73.650 million), which increased the total revenue of the Department to R68.705 billion for the 2017/18 financial year. The department receipts and aid assistance for the 2017/18 financial year decreased by R35.9 million from R139.312 million in 2016/17.

 

 

 

 

4.1.1. Analysis of the 2017/18 expenditure

The Department’s overall expenditure at the end of the financial year, excluding the additional revenue from departmental receipts and aid assistance, amounted to R68.589 billion. This represents a 100 percent spending as a percentage of the 2017/18 final appropriation. The Department’s overall underspending at the end of the financial year amounted to R12.019 million. The underspending decreased by R38.7 million from R50.717 million incurred in the 2016/17 financial year. Programme 1: Administration and programme 6: Community Education and Training incurred the highest underspending at R3.3 million and R4.6 million respectively. Both programmes have recorded underspending compared to R10.6 million and R6.9 million recorded in 2016/17 respectively.

 

4.1.2. Expenditure estimates per economic classification

Table 2: 2017/18 allocation and expenditure per economic classification

Economic classification	2017/18 FINANCIAL YEAR
	Adjusted Appropriation	Shifting of funds	Virement	Final Appropriation	Actual Expenditure	Variance
	R’000	R’000	R’000	R’000	R’000	R’000
Current payments	8 669 644	(8 718)	(83)	8 660 843	8 651 940	8 903
Compensation of employees	8 282 307	(11 946)	(3 411)	8 273 772	8 268 038	5 734
Goods and services	387 337	3 228	(3 494)	387 071	383 902	3 169
Transfers and subsidies	59 922 245	8 718	-	59 930 963	59 930 309	654
Payment for capital assets	9 551	-	-	9 551	7 079	2 472
Payments of financial assets	-	-	83	83	93	(10)
Total	68 601 440	-	-	68 601 440	68 589 421	12 019

 

In terms of economic classification, an amount of R8.660 billion was allocated for current payments. The bulk of the budget on current payments, R8.274 billion was allocated for compensation of employees. This represented 95.5 percent of the total expenditure on current payments for the year under review. Allocation for spending on goods and services amounted to R387.071 million, which represented 4.5 percent of the total expenditure on current payments.

 

With regard to spending, the actual expenditure on compensation for employees amounted to R8.268 billion, with a lower than projected spending amounting to R5.7 million. For goods and services, the actual expenditure at the end of the financial year was R383.9 million with a recorded lower than projected spending amounting to R3.169 million. In terms of expenditure on line items, travel and subsistence was the highest expenditure at R80.492 million. The expenditure on operating leases (R55.948 million) was the second highest line item expenditure, followed by R54.365 million on computer services and R46 million on consumables: stationery, printing and office supplies.

 

In terms of transfers and subsidies, expenditure was in line with the allocation of R59.930 billion. Of the total expenditure on transfers and subsidies, R31.580 billion was transferred to higher education institutions and R26.695 billion to the departmental agencies and accounts. Expenditure on payment for capital assets amounted to R7.079 million.

 

4.1.3. Irregular, Wasteful, Fruitless and Unauthorized Expenditure incurred in the 2017/18 financial year

Table 4: Irregular, wasteful, fruitless and unauthorised expenditure over a three-year period.

Higher Education and Training
	Years
	2015/16	2016/17	2017/18
	R’000	R’000	R’000
Irregular expenditure	31 308	63 817	228
Wasteful and fruitless	-	-	-
Unauthorised Expenditure	-	-	-

 

The Public Finance Management Act, 1999 (Act No. 29 of 1999) section 38(1)(c) (ii) states that the accounting officer for a department, trading entity or constitutional institution must take effective and appropriate steps to prevent unauthorised as well as irregular, fruitless and wasteful expenditure resulting from criminal conduct.

The Department incurred irregular expenditure amounting to R228 000. Irregular expenditure decreased significantly from R63.817 million incurred in 2016/17. Irregular expenditure was incurred resulting from not following the correct procurement procedures when procuring media services. An investigation was conducted by Internal Audit and based on the available documentation, it was found that requisite Supply Chain Management (SCM) processes were not followed and the Department failed to comply with Section 3.3.3. of national treasury practice note 8 of 2007 by failing to obtain three quotations.

The Department reported that poor planning was the root cause for its failure to obtain the requisite services timeously. Neither SCM nor any other unit within the Department were consulted during this process. It was also reported that Internal Audit recommended that disciplinary action be considered against the involved officials for not following the required SCM processes. The matter had been referred to the Labour Relations unit within the Department for appropriate procedure and action in terms of Government’s disciplinary procedure.

For the 2017/18 financial, the Department did not incur unauthorized fruitless and wasteful expenditure.

4.1.5. Virements and shifting of funds

For the 2017/18 financial year, the Department applied virements across its programmes amounting to R61.4 million. The virements amount decreased by R16.8 million from R78.2 million in 2016/17. The virements were applied for the purpose of defraying excess expenditure in programme 4: Technical and Vocational Education and Training for examination and moderation related costs as well as contingent liability to the Government Pension Fund in respect of top-up cases for the TVET College staff. The virements were effected from four programmes: Administration: R3.898 million, University Education: R1.660 million, Skills Development: R6.016 million and Community Education and Training: R49.864 million. Funds that were shifted were mainly realised on vacant posts in the staff establishment that could not be filled as projected, that resulted in concomitant savings from this as well as from operational costs within programme 6: Community Education and Training.

 

4.2. Overview and assessment of the programme budget and expenditure for 2017/18 financial year and service delivery performance

 

4.2.1. Programme 1: Administration

The purpose of this programme is to provide strategic leadership, management and support services to the Department. The programme has six sub-programmes, namely: Ministry, Department Management, Corporate Services, Office of the Chief Financial Officer, Internal Audit and Office Accommodation.

 

4.2.1.1. Overview and assessment of the 2017/18 budget and expenditure

The programme’s total adjusted appropriation amounted to R400.356 million, which decreased to R396.458 million after virements amounting R3.898 million were applied. The Department also applied shifts amounting to R12.260 million from three sub-programmes, Departmental management, Corporate Services and Office of the Chief Financial Officer.  Shifts from these sub-programmes were applied to increase allocations in sub-programme 1: Ministry by R4.516 million, Office Accommodation by R7.679 million and Internal Audit by R65 000.

 

Expenditure at the end of the financial year amounted to R393.112 million, which represented 99.2 percent of the total final appropriation of R396.458 million. Expenditure increased by 5.2 percent compared to R372.713 million in 2016/17. The programme’s overall underspending at the end of the financial amounted to R3.346 million, which is the second largest under expenditure incurred by the Department’s programmes in 2017/18. Corporate services sub-programme incurred the highest under expenditure of R1.651 million, followed by internal audit by R753 000 and departmental management and office of the chief financial officer at R377 000 and R308 000 respectively. The underspending was due mainly to attrition posts that became vacant during the year that could not be filled as projected and cost saving measures that were put in place with regards to the replacement of computer equipment.

 

In terms of expenditure per economic classification, current payments’ total budget amounted to R391.845 million, of which R213.783 million was allocated for spending on compensation of employees and R178.062 million was for goods and services. Expenditure on compensation of employees amounted R212.9 million, resulting in R853 000 lower than projected spending. Expenditure on goods and services amounted to R177.138 million, which resulted in an underspending on goods and services amounting to R924 000.

 

In terms of spending on line items, R52.527 million was spent on operating leases and R31.3 million on computer services, which increased by R5.979 million from 2016/17; R17.9 million was spent on travel and subsistence, which decreased by R2.565 million from R20.497 million in 2016/17. Spending on audit costs (external) amounted to R12.384 million and R8.133 million was spent on consultants: business and advisory services which increased significantly by R7.446 million from R687 000 in 2016/17. The programme also recorded a significant decrease in spending on agency and support/outsourced services which decreased from R13.070 million in 2016/17 to R2.6 million; expenditure on legal service decreased from R5.580 million in 2016/17 to R226 000 in 2017/18; expenditure on contractors decreased from R1.871 million in 2016/17 to R51 000 in 2017/18 and catering (Department services) decreased from R1.159 million in 2016/17 to R209 000 in 2017/18.

 

Expenditure on transfers and subsidies amounted to R975 000, of which R54 000 was for departmental agencies and accounts and R921 000 was for social benefits. Expenditure on payments for capital assets amounted to R1.983 million, which decreased by R3.043 million from R5.026 million in 2016/17.

4.2.1.2. Overview and assessment of the 2017/18 service delivery performance

For the year under review, the programme had 12 targets spread across its six sub-programmes. Of these, nine (75%) were achieved and three (25%) were not achieved. The Department filled 94.8 percent of the approved funded posts; the revised human resource plan was developed and approved by the Director-General (DG) on 28 June 2017; a plan to improve HR recruitment and selection process was approved by the DG on 29 September 2017; 100 percent implementation of the Information Technology Communication (ICT) improvement initiatives was achieved and the system for tracking received invoices was developed and approved during the financial year.

 

The three targets that were not achieved as planned include: resolving 100 percent of disciplinary cases within 90 days; average days (180) to fill an advertised post and to achieve 100 percent of invoices received from creditors paid within 30 days. With regard to not meeting the target of filling advertised posts within the regulated time, the Department continuously reported that it has been receiving high volumes of applications for the advertised posts and the delays in capturing the applications. It was noted that all posts, including TVET Colleges posts were advertised and filled at the Head Office. The Department had incurred quarterly underspending on compensation of employees. In mitigating the recurring challenges, the Department reported that a plan to improve human resource recruitment and selection processes was developed and approved by the DG on 29 September 2017. The Department also procured an external service provider to capture the applications.

 

With regard to non-achievement of the target to resolve 100 percent of disciplinary cases within 90 days, the Department indicated that this was caused by a shortage of trained chairpersons to preside over the disciplinary cases. During the 2017/18 fourth quarter reporting on 23 May 2018, the Department reported that postponement of cases was also a cause for not meeting the target. The Department mitigated the challenges through the development of a plan to reduce the number of days to resolve disciplinary cases, which was approved by the DG on 29 September 2017. The Department also employed four additional labour relations officers at regional offices and trained Colleges labour relations officers on chairing and initiating.

 

The target to have 100 percent of the invoices received from creditors paid within 30 days was also not achieved. The Department achieved 97.96 percent and the deviation of 2.04 percent was due to a delay in the processing of the invoices that were rejected due to wrong banking details, which must be corrected through the system before the payments could be reprocessed. The Department has a system for tracking invoices, which was approved by the DG on 29 August 2017.

 

4.2.2. Programme 2: Planning, Policy and Strategy

The purpose of this programme is to provide strategic direction in the development, implementation and monitoring of departmental policies and in the human resource development strategy for South Africa. The Programme has six budget sub-programmes, namely; Programme Management: Planning, Policy and Strategy; Human Resource Development Strategic Planning and Coordination; Planning, Information, Monitoring and Evaluation Coordination; International Relations; Legal and Legislative Services and Social Inclusion in Education.

 

4.2.2.1. Overview and assessment of the 2017/18 budget and expenditure

This programme was allocated a total budget amounting to R68.298 million. No virements were applied in this programme. Shifting of funds amounting to R731 000 were applied from three sub-programmes: Programme Management: Planning, Policy and Strategy: R30 000, Human Resource Development, Strategic Planning and Coordination: R483 000 and Planning, Information and Evaluation Coordination: R218 000. 99.7 percent of the shifted funds were allocated to International relations (R240 000) and Legal Services (R498 000).

 

The programme’s expenditure at the end of the financial year amounted to R66.975 million, which represented 98.1 percent of the total final appropriation. Under-expenditure at the end of the financial year amounted to R1.323 million, which was mainly due to posts that became vacant during the year, that could not be filled as projected and the favourable Rand/Euro exchange rate that was applicable when payments were made to the Commonwealth of Learning. In terms of expenditure on economic classification, the programme’s expenditure at the end of the financial year amounted to R63.240 million of the R64.139 million allocated for current payments. Of this, R52.063 million was expenditure on compensation of employees, with an underspending amounting to R636 000, and R11.177 million was expenditure on goods and services.

 

In terms of spending on line items, 77.2 percent (R8.634 million) of the total expenditure on goods and services was spent on legal services (R5.658 million) and travel and subsistence (R2.976 million). The programme also realised a significant decrease in spending on minor assets, catering, consumable supplies, transport provided: departmental activity, and training and development. Expenditure on transfers and subsidies amounted to R3.393 million and on payments for capital assets amounted to R341 000.

4.2.2.2. Overview and assessment of the 2017/18 service delivery performance

This programme had a total of 12 targets planned for the year under review. The programme achieved 100 percent of the targets. This programme has maintained its record of achieving all the planned targets as it did achieve 100 percent of the targets in 2016/17.

 

The summary of key service delivery achievements include: a list of occupations in high demand was developed and approved by the DG on 28 February 2018; a draft National Qualifications Framework (NQF) Amendment Act Bill was developed and approved by the Minister on 28 October 2018 for public comments and the final NQF Amendment Bill was prepared and approved by cabinet for submission to parliament on 28 February 2018; five monitoring and evaluation reports were developed and approved by the DG as follows: an annual report on the Implementation of Social Inclusion in PSET, an annual report on the implementation of open learning in PSET, an annual report on the implementation of career development services, a status report on the International Relations Implementation Report, a report on investment trends in the post-school education and training. The Department had a career development institutional and implementation report developed and approved by the DG on 31 March 2018; a communication strategy for student support services and annual statistics on PSET was approved by the DG on 28 February 2018.

 

4.2.3. Programme 3: University Education

The purpose of this programme is to develop and coordinate policy and regulatory frameworks for an effective and efficient university education system and to provide financial support to universities, the National Student Financial Aid Scheme and national institutes for higher education.

4.2.3.1. Overview and assessment of the 2017/18 budget and expenditure

The university education programme received a total budget of R41.930 billion after virements amounting to R1.660 million were applied from three sub-programmes, University - Academic Planning and Management: R450 000, University – Financial Planning and Information Systems: R1 million and University – Policy and Development R210 000. Shift of funds amounting to R1 million were effected from two sub-programmes, University – Financial Planning and Information Systems (R87 000) and University Policy and Development (R918 000). The funds were shifted to three sub-programmes as follows: Programme Management: University Education: R330 000, University – Academic Planning and Management: R20 000 and Teacher Education: R655 000. Expenditure at the end of the financial year amounted to R41.929 billion. 99.87 percent (R41.874 billion) of the programme’s total expenditure was incurred in two sub-programmes, University Subsidies (R31.606 billion) and University – Academic Planning and Management (R10.268 billion). The programme’s underspending at the end of the financial year amounted to R969 000, which decreased significantly compared to R15.969 million in 2016/17.

 

In terms of expenditure per economic classification, R57.681 million was on spent on current payments, of which R52.129 million was on compensation of employees and R5.552 million was on goods and services. With regard to line item expenditure on goods and services, the highest expenditure of R3.376 million was on travel and subsistence. Expenditure on communication amounted to R389 000, followed by R342 000 on consumables: stationery, printing and office supplies and R291 000 on venues and facilities. Expenditure on transfers and subsidies amounted to R41.871 billion, of which R10.225 billion was for transfers to the departmental agencies and accounts and R31.580 billion was for higher education institutions. Expenditure on payments for capital assets amounted to R193 000.

 

4.2.3.2. Overview and assessment of the 2017/18 service delivery performance

For the 2017/18 financial, the programme had 20 targets (Department direct outputs), of which 18 (90%) targets were achieved and two (10%) were not achieved. The programme’s performance for the 2017/18 increased by 14 percent from 76 percent targets achieved in 2016/17.

 

Summary of key service delivery achievements:

The Department developed the central applications service policy and had it approved by the Minister on 23 May 2017; reviewed the National Student Financial Aid Scheme Act, 1999 (Act No 56 of 1999); 15 monitoring and evaluation reports were developed and approved by the DG during the financial year as follows: a report on the HEAIDS programme for the 2016/17 financial year, a report on the financial health of universities in the 2016 academic year, a close-out report on the effective use of the Research development grant for the period 2014/15 to 2016/17, an implementation report on teaching and learning development capacity improvement programme, an annual report on the effective use of the infrastructure efficiency grants for 24 universities, a report on the 2016 research outputs of universities, an annual report on the effective use of new universities’ earmarked grants, a report on the 2017 BRICS partnerships. An updated cohort study report including the 2016 audited data was developed and approved by the DG.

The two targets that were not achieved were: non-completion of the national plan for PSET and the finalisation of the policy framework on collaboration between professional bodies, government departments and quality councils. A draft policy framework on collaboration between professional bodies, government departments and Quality Councils was developed and finalised, but not approved by the Minister, as planned. The Department reported that the Chief Director responsible for developing the policy framework resigned in June 2017 and this resulted in project management challenges and the new manager given the responsibility was not able to adhere to the timelines and project plan to ensure completion by the end of March 2018.

With regard to the national plan for the PSET, the Department reported that by the delay in the finalisation of Presidential Report on fee-free higher education and training was due to the late submission of the Final Report to the President at the end of August 2017. It was released to the public in November 2017. The process for developing government’s response to the report was only completed in early December 2017 and announced on 16 December 2017 by the President. The Department indicated that the outcome of the Fees Commission was a central element in enabling targets to be identified for the NPPSET. The delays also contributed to delayed public comments and consultation process and changes in the Ministry and the need to have the Minister’s concurrence.

The Department reported that an engagement with the Minister was planned in the first quarter of the 2018/19 financial year. Key policy decisions will be made were to be discussed and on the basis of the engagement, a further draft of the NPPSET would be produced for final consultation and approval by the Minister.

This programme is also responsible for implementing targets related to sub-outcome 3 of Outcome 5: “Skilled and capable workforce to support an inclusive growth path”. This sub-outcome is responsible for increasing access to and improving efficiency of high level occupationally-directed programmes in needed areas. The 2014 -2019 MTSF committed the Department to increase graduate outputs in needed areas such as engineering, health sciences, natural and physical sciences, as well as increasing graduate output of teachers.

The programme had 16 system targets which were implemented by universities. Of these, 11 (68.7%) were achieved and five (31.3%) were not achieved as planned. The programme’s performance for the 2017/18 on the system targets had regressed from 80 percent achieved in 2016/17.

Summary of key achievements: 20 800 graduates in Initial Teacher Education from universities (achievement 22 123); 2 700 Doctoral graduates from universities (achievement 2 797); 7 600 research masters graduates (achievement 7 968); 78 percent success rate at universities (achievement 78%); 83 percent higher education under graduate success rate for contact students (achievement 83%); 68 percent higher education undergraduate success rate in distance learning (achievement 68%), 45 percent percentage of university academic staff with doctoral qualifications / PHDs (achievement 45%), 100 additional first time entrants (black and women) to academic workforce in addition to normal replacement and plans (achievement 549), 18 500 first year students in foundation programmes (achievement 20 685) and 205 000 eligible university students obtaining financial aid (achievement 225 950).

Under performance was recorded in the following areas:

• 995 000 students enrolled in public higher education studies at universities (19 163 lower than targeted). The Department reported that the deviation was attributed to the decline in enrolments at the University of South Africa (UNISA) due to the implementation of their admissions criteria and a new on-line registration system. This target was not achieved in the 2015/16 financial year and the causes were attributed to the changes in the UNISA’s admissions policy. The Portfolio Committee on Higher Education and Training observed challenges with UNISA’s registration process during the 2018 academic year and it was concerned that the IT-related challenges would impact negatively on the achievement of the target on the number of students enrolled in public higher education studies at universities for 2018.
• The targets related to increasing access to and efficiency of high level occupationally-directed programmes in needed areas were not fully achieved as planned.
  •  13 000 graduates in engineering sciences from universities (614 lower than targeted). The Department reported that universities were reporting that they were not meeting their enrolment targets due to fewer students entering universities from basic education with the requisite mathematics results. This challenge was also reported to the Portfolio Committee on Higher Education and Training during its oversight visit to the University of Fort Hare in January 2018. The University reported that it was not meeting its enrolment targets for the first-entering students in science and agriculture-related programmes. They attributed that to low pass rates in maths and science in basic education.
  • 10 400 graduates in human health and animal health from universities (313 lower targeted) and 8 300 graduates in natural and physical sciences (207 below target).

4.2.4. Programme 4: Technical and Vocational Education and Training

The purpose of this programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programme assessment practices and systems for technical and vocational education and training. The programme has five budget sub-programmes. The sub-programmes are: Programme Management: Technical and Vocational Education and Training; Technical and Vocational Education and Training System Planning and Institutional Support; Programmes and Qualifications; National Examination and Assessment and Financial Planning.

4.2.4.1. Overview and assessment of the 2017/18 budget and expenditure

For the 2017/18 financial year, the programme’s total allocation amounted to R7.521 billion after virements amounting to R61.438 million were applied. Two sub-programmes, Programmes and Qualifications and National Examination and Assessment received additional allocation of R2.696 million and R59.022 million respectively. Shifts amounting to R3.025 million were applied from three sub-programmes, Programme Management: TVET (R480 000), National Examination and Assessment (R589 000) and Financial Planning (R1.956 million). The shifts were applied to increase allocation in two sub-programmes, TVET System Planning and Institutional Support which received R1.008 million and Programmes and Qualifications which received R2.017 million.

 

The programme’s expenditure at the end of the financial year amounted to R7.521 billion, which was 94.18 percent (R7.083 billion) of the total expenditure incurred in sub-programme 2: TVET System Planning and Institutional Support. The second largest expenditure of R413.832 million was incurred in sub-programme 4: National Examination and Assessment. The programme recorded an underspending amounting to R616 000.

 

In terms of expenditure per economic classification, R6 billion was expenditure for current payments, of which R5.585 billion was for compensation of employees and R141.769 million was for goods and services, which decreased by R3.6 million from 2016/17. In terms of spending on goods and services per line items, the highest expenditure of R35.574 million was spent on travel and subsistence. The spending on travel and subsistence decreased by R5.943 million from R41.517 million in 2016/17. The second largest expenditure of R34.944 million was on consumables: stationery, printing and office supplies. Expenditure increased significantly by R15.055 million from R19.889 million in 2016/17. Expenditure of R29.936 million on venues and facilities was the third largest programme expenditure, followed by R22.562 million on computer services. Expenditure on computer services in the 2017/18 financial year decreased significantly from R59.608 incurred in 2016/17.

Expenditure on transfers and subsidies amounted to R1.519 billion, of which R14.411 million was for the departmental agencies and accounts and R1.495 billion was for transfers to non-profit organisations (TVET Colleges). Payments for capital assets amounted to R549 000.

4.2.4.2. Overview and assessment of the 2017/18 service delivery performance

For the year under review, the programme had 28 targets (department direct outputs), of which all (100%) were achieved as planned. The performance improved significantly from 73 percent in 2016/17.

 

The targets that were achieved included, amongst others: development of performance reporting policy for TVET Colleges, development of a policy for TVET College finance management; a policy on South African Institute for Vocational and Continuing Education and Training (SAIVCET); development of a policy for administration/management of student admission for TVET Colleges; a reviewed departmental policy framework on TVET qualifications; development of a report on the monitoring and evaluation of TVET Colleges; a report on the implementation of Student Support Services plans in TVET Colleges for the previous academic year; a reviewed funding framework for TVET Colleges; a report on the conduct of public TVET College examination centres during national examinations and assessments; a report on the implementation of teaching and learning support plans in TVET Colleges for the previous academic year; a report on sampled TVET Colleges for the previous academic year 2016 evaluated for compliance to recommended governance standards; a report on the performance of students in Colleges for the previous academic year; a report on the implementation of strategy on strategic partnerships with key stakeholders; four quarterly reports on certification backlog eradication; a report on the implementation of the IT examinations service system; a plan for t TVET College lecturer development; a roll out plan for the construction of nine TVET College campuses; an infrastructure funding model for the TVET College sector; an infrastructure maintenance plan for TVET College sector and national infrastructure asset management system for the TVET Colleges.

In addition to the department direct outputs, the programme was also responsible for targets relating to sub-outcome 2: Increased access and success in programmes leading to intermediate and high level learning. The programme had 10 targets, of which seven (70%) were achieved and three (30%) were not achieved as planned. The performance improved significantly by 62 percent from 8 percent in 2016/17.

Summary of key achievements: 30 percent NC(V) Level 4 certification rate (target exceeded by 11.7 %); 55 percent N3 certification rates (target exceeded by 10.8%); 100 percent of public TVET College examination centres evaluated in conducting national examinations and compliance with national policy was achieved as planned; a baseline of 33.47 percent throughput rate for NC(V) Level 4 was established, a baseline of 33.47 percent throughput rate of funded NC(V) students obtaining qualifications within stipulated time was established.

Underperformance was recorded in respect of the following targets:

• 710 535 headcount enrolment in TVET Colleges and the performance was 6 830 below the target. This was attributed to lower enrolment by TVET Colleges in occupationally directed programmes.
• The target to have certificates issued to qualifying candidates within three (3) months of publications of examination results was not achieved. The Department reported that the delays in issuing certificates within a 3-months’ time-frame is predominantly due to TVET Colleges failing to submit ICASS and ISAT marks on time, as well as inaccurate submissions by TVET Colleges. This directly impacts the resulting process which delays the issuing of certificates.
• 100 percent of TVET institutions evaluated on the implementation of proposed best practice policies and guidelines issued by the Department of Higher Education and Training. The target was not achieved due to the majority of Colleges experiencing cash-flow challenges due to a delay in NSFAS payment. This affected compliance ratings relating to the approved governance standards. Financial policy implementation by Colleges was slower than expected and the audit outcomes for first time auditees by the Auditor-General have regressed from the previous year, which was expected.

 

4.2.5. Programme 5: Skills Development

The purpose of this programme is to promote and monitor the National Skills Development Strategy and to develop a skills development policy and regulatory framework for an effective skills development system. This programme has four sub-programmes, namely: Programme Management – Skills Development; SETA Coordination; National Skills Development Services and Quality Development and Promotion.

 

4.2.5.1. Overview and assessment of the 2017/18 budget and expenditure

The programme’s total allocation for 2017/18 amounted to R243.341 million after virements amounting to R6.016 million were applied. Virements were applied from three sub-programmes, namely Programme Management: Skills Development (R100 000), SETA Coordination (R3.126 million) and National Skills Development Services (R2.790 million). Shifts amounting to R10 000 were applied from sub-programme 3: National Skills Development Services to sub-programme 4: Quality Development and Promotion.

 

Programme expenditure at the end of the financial year amounted to R242.508 million, with lower than projected spending of R833 000. Expenditure of R203.731 million in sub-programme 2: SETA Coordination is the highest expenditure constituting 84.01 percent of the programme’s total expenditure. The second highest expenditure amounting to R26.930 million was incurred in sub-programme 4: Quality Development and Promotion.

 

In terms of expenditure per economic classifications R110.604 million was spent on current payments, of which R99.166 million was on compensation of employees and R11.438 million was on goods and services. With regard to expenditure on goods and services per line item, R2.635 million was spent on Inventory: materials and supplies, R1.979 million on travel and subsistence and R1.434 million on communication. Expenditure on transfers and subsidies amounted to R131.361 million and R542 000 was spent on payments for capital assets.

 

4.2.5.2. Overview and assessment of the 2017/18 service delivery performance

This programme had eight (8) targets (department direct outputs), of which all (100%) have been achieved. The programme maintained the 100 percent performance recorded in 2016/17. The programme has recorded the following key achievements: the review of the National Skills Development Plan was completed and approved by the DG 28 March 2018; four reports on the implementation of the National Skills Development Strategy (NSDS) by the SETAs were developed and approve by the DG in quarter 1, 2, 3 and 4; average of 100 days from trade test application received until trade test conducted at INDLELA was exceeded by 31 days and a report on the implementation of a security infrastructure Development plan at INDLELA was developed and approved by the DG on 28 February 2018.

 

The programme is also responsible for targets related to sub-outcome 4: Increased access to occupationally directed programmes in needed areas, thereby expanding the availability of intermediate level skills with a special focus on artisan skills. The programme had six (6) targets, of which five were achieved and one was not achieved. The achieved targets include the following: 130 000 work-based learning opportunities (target exceeded by 32 659); 21 110 new artisans qualified per annum (target exceeded by 41); 27 750 new artisan learners registered nationally per annum (target exceeded by 4 580); 60 percent national artisan learners self-employed (achievement 60%) and 60 percent proportion of SETAs meeting standards of good governance (target exceeded by 40%).

 

One target that was not achieved as planned is 58 percent of national learner trade test pass rate (including INDLELA). The performance was 4 percent below the target. The Department reported that INDLELA still tests a lot of self-funded candidates who broadly do not have sufficient workplace training experience as compared to those who go through formal SETAs or industry artisan training programmes.

4.2.6. Programme 6: Community Education and Training

The purpose of this programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programme assessment practices and systems for community education and training. The programme has four sub-programmes, namely: Programme Management: Community Education and Training; Community Education and Training Colleges Systems Planning, Institutional Development and Support; Financial Planning; and Education and Training and Development Support.

4.2.6.1. Overview and assessment of the 2017/18 budget and expenditure

For the 2017/18 financial year, the programme’s total budget amounted to R2.147 billion after virements amounting to R49.864 million were applied from two sub-programmes, CET Systems Planning and Institutional Development and Support (R32.589 million) and Financial Planning (R18.275 million). An amount of R3.012 million was shifted from sub-programme 1: Programme Management: CET (R378 000) and sub-programme 4: Education and Training and Development support to increase the allocation to sub-programme 2: CET Systems Planning and Institutional Development and Support by R849 000 and sub-programme 3: Financial Planning by R2.163 million.

 

Expenditure at the end of the financial year amounted to R2.143 billion, recording a R4.692 million underspending. The underspending was mainly due to claims in respect of CET lecturers that were not received on time, as well as uncertainties relating to the division of posts in Regional Offices as well as the post-provisioning norms. Underspending decreased significantly from the R10.626 million incurred in 2016/17. The highest underspending of R2.765 million was incurred in sub-programme 2: CET Systems Planning and Institutional Development and Support, followed by R1.230 million in sub-programme 3: Financial Planning.

 

In terms of expenditure per economic classification, R2.029 billion was for current payments, of which R1.992 billion was spent on compensation of employees and R36.828 million on goods and services. Expenditure of compensation of employees constituted 92.98 percent of the programme’s total expenditure for the 2017/18 financial year. In terms of spending on goods and service (per line item), the highest spending of R18.655 million was on travel and subsistence, followed by R3.898 million on consumable: stationery, printing and office supplies and R3.229 million on venues and facilities. An amount of R1.729 million was expenditure on Consultants: Business and Advisory Services. The programme recorded a marked increase in expenditure on legal services, which increased from R151 000 to R782 000. Expenditure on transfers and subsidies amounted to R110.096 million and payments for capital assets amounted to R3.471 million.

4.2.6.2. Overview and assessment of the 2017/18 service delivery performance

For the year under review, the programme had six (6) targets (department direct outputs), of which all (100%) were achieved as planned. The Department developed service delivery framework for the CET Colleges (approved by the DG on 24 September 2017); a reporting policy for CET Colleges was developed and the funding framework for CET Colleges was reviewed, which were approved by the Minister on 13 March 2017 and 3 November 2017 respectively. The Department also developed two reports on the implementation of the teaching and learning support framework which were approved by the DG on 24 September 2017 and 11 January 2017 respectively. A monitoring and evaluation report on the CET College system performance was approved by the DG on 9 February 2018.

 

In addition to the department direct outputs, the programme was responsible for the sub-outcome 2: Increased access to programmes leading to intermediate and high level learning. The programme had two system targets to be implemented by the CET Colleges and none of them were achieved.

• 310 000 headcount enrolment in all CET Colleges (actual achievement was 273 431). This target has not been achieved since it was set. The Department attributed the underperformance to a poor learners’ advocacy and recruitment strategy. The NDP committed government to increase youth and adult participation in the CET sector to 1 million by 2030. This is to expand access to and success for post-school youth and adults who wish to raise the bar for further learning, improve skills to bolster employability and/or facilitate progression to opportunities in the TVET College and university education sectors. The current performance trends on this target are very concerning. 
•  38 percent certification rates in formal CET qualifications performance. The performance was 2.1 percent below the target. The underperformance was attributed to insufficient learning and teaching support materials due to lack of funding. The current system of procurement through TVET Colleges was not responsive to the sector.

 

4.3. Auditor-General’s Report

For the 2017/18 financial year, the Department received an unqualified audit opinion with findings by the Auditor-General.

4.3.1. Emphasis of matter

There were material findings on the following:

(i) Usefulness and reliability of reported information in the following programmes

• Programme 3: University Education: The AG was unable to obtain sufficient appropriate audit evidence for the reported achievement of the indicators in terms of the system targets due to a limitation placed on the scope of his work. The AG was unable to confirm the reported achievements by alternative means. The AG was unable to determine whether any adjustments were required to the reported achievements on the 225 950 eligible students obtaining financial aid and 549 additional first-time entrants (black and women) academic workforce in addition to normal replacement and plans.
• Programme 4: Technical and Vocational Education and Training: The AG was unable to obtain sufficient appropriate audit evidence for the reported achievement of the indicators in terms of the system targets due to a limitation placed on the scope of his work. The AG was unable to confirm the reported achievements by alternative means. The AG was unable to determine whether any adjustments were required to the reported achievements on four performance indicators: 225 557 qualifying TVET students obtaining financial assistance, 41.7 percent NC(V) L4 certification rates, 65 percent N3 certification rates and 66.1 percent N6 certification rate. This is a recurring finding.
• Programme 6: Community Education and Training: The AG was unable to obtain sufficient appropriate audit evidence for the reported achievement of the indicators in terms of the system targets due to a limitation placed on the scope of his work. The AG was unable to confirm the reported achievements by alternative means. The AG was unable to determine whether any adjustments were required to the reported achievements on two indicators, 273 431 headcount enrolments in all CET Colleges and 35.9 percent certification rate in formal CET qualifications. This is also a recurring finding as in 2016/17 the AG was unable to obtain sufficient appropriate audit evidence for the reported achievement on the same indicators due to the unavailability of data.

 

 

 (ii) Adjustment of material misstatements

The Auditor-General identified material misstatements in the annual performance report submitted for auditing. These material misstatements were in the reported performance information of programmes 3: University Education, 4: TVET, and 6: CET. Management subsequently corrected some of the misstatements. The AG also raised material findings on the usefulness and reliability of the reported performance information.

(iii) Compliance with legislation

There were no material findings identified by the AG with regard to non-compliance with legislation.

(iv) Leadership

• Oversight responsibility: The Auditor-General reported that the Department’s leadership did not exercise adequate oversight, specifically regarding reporting on the predetermined objectives by the Department as well as the related controls. This resulted in material misstatements identified through audit. Some of the misstatements were subsequently corrected, but other misstatements led to the material findings.

   

(v) Financial and performance management

• Proper record keeping: The Department did not have appropriate record management systems to ensure that complete, relevant and accurate information was accessible and readily available to support the performance information records. As a result, there were significant delays during the audit process as sufficient documentation was not submitted on initial requests for information.

 

• Regular, accurate and complete financial and performance reports: The Department did not adequately review the reporting on predetermined objectives prior to submission for audit. This was evidenced by the material misstatements identified through the audit process, some of which were not adequately corrected by management resulting in the material findings.

 

 (vi) Governance

• Risk management activities and risk strategy: The AG reported that risk identification and assessment was performed, however, the details of the operational risk were not properly and timeously communicated to essential parties within the Department in order to allow effective responses and to put mitigating controls in place. Therefore, the institution’s risk communication and reporting process could not support the enhanced decision making and accountability through dissemination of relevant, timely, accurate and complete information.

 

 

 

 

 

 

5. OBSERVATIONS

The following formed part of the Committee’s key observations:

 

5.1. Programme 1: Administration

5.1.1.    The programme’ s objective is to ensure effective resource management within the Department through sound human resource management practices, including staffing, human resources development, performance management, labour relations and administrative system. The Committee noted that the Department has made progress to fill vacancies within 180 days to fill an advertised post. However, the target was still not achieved. During the 2017/18 financial year, the Department advertised 41 senior management posts, of which 21 posts were not filled within six months of becoming vacant, but within 12 months. The remaining 20 posts could not be filled within 12 months of becoming vacant. The Committee has again raised concerns with delays in filling the vacant posts, particularly since the Department was experiencing HR capacity challenges.

5.1.2.    The target to resolve 100 percent of the disciplinary cases within 90 days was not fully achieved. The Department reported to the Committee in August 2017 that irregular expenditure amounting to R288 000 was incurred due to lack of obtaining the requisite services timeously was a direct result of poor planning. Neither Supply Chain Management nor any other unit within the Department were consulted during this process. It was also reported that Internal Audit recommended that disciplinary action be considered against the involved officials for not following the required Supply Chain Management processes. The matter had been referred to the Labour Relations unit within the Department for appropriate procedure and action in terms of Government’s disciplinary procedure. The Department reported during the consideration of the 2017/18 Annual Report that the matter was still with the labour relations. The Committee raised concerns about poor consequence management.

5.1.3.    The Committee acknowledged improvement in the audit findings of the Department for the 2017/18 financial year. Of significance to note was that there were no audit findings pertaining to compliance with legislation. However, the Committee was seriously concerned that there were material findings in relation to the usefulness and reliability of the reported performance information on programmes 3: University Education, programme 4: Vocational Education and Training and Programme 6: Community Education and Training. The AG was unable to obtain sufficient appropriate audit evidence for the reported achievement of the indicators in terms of the system targets due to limitations placed on the scope of his work. The AG cited lack of appropriate record management systems as a contributory factor. It is concerning that some of the findings identified by the AG are recurring.

 

5.2. Programme 2: Planning, Policy and Strategy

5.2.1.    Implementation of articulation across the National Qualifications Framework sub-frameworks is still not seamless. Articulation is implemented through memorandum of agreements/understanding between universities and TVET Colleges. Whilst these agreements are critical in facilitating lifelong learning, they are not removing articulation barriers of TVET students who graduated from a College that did not sign a memorandum of agreement with a specific university.

 

5.3. Programme 3: University Education

5.3.1.    The NDP has stated that for the increase in graduates to be meaningful, the quality of education needs to improve and that many of the graduates must be in critical skills categories such as science, engineering, actuarial science, medicine, financial management, and chartered accountancy. Furthermore, the Department is committed by the MTSF sub-outcome 3 of Outcome 5: “skilled and capable workforce to support inclusive growth path” to increase access to and efficiency of high-level occupationally directed programmes in needed areas. The programme has not fully achieved targets related to graduate outputs in engineering sciences and human and animal health sciences. The Department cited the low number of Grade 12 learners passing with requisite results to enter universities. The Committee was gravely concerned that targets in science, technology, engineering and mathematics programmes are key to economic growth and targets are not met due to the poor outcomes in the schooling system.

5.3.2.    The Labour Market Intelligence Partnership Report on Skills Supply and Demand in South Africa found that, currently, around 140 000 Grade 12 students complete Grade 12 with bachelors passes, and of these, around 50 000 students pass maths with a score higher than 50 percent. This forms a relatively small pool of students who can potentially access university and science based TVET programmes in comparison to the skills demand of the country.

5.3.3.    The enrolment target of 995 000 for students enrolled in public higher education studies was not achieved. A similar trend was observed in the 2015/16 financial year where the target was not achieved. This was attributed to the University of South Africa (UNISA)’s implementation of new admissions criteria and a new on-line registration system. UNISA is the main distance learning university and it is dependent on the effective functioning of its ICT system for its processes. However, the persistent ICT challenges are impacting negatively on the right of access to higher education for many prospective students. The Committee after its oversight visit to UNISA in January 2018 recommended that the University resolve the ICT related challenges urgently to enable more eligible students to register for the 2018 academic year. The Committee recommended the Department to engage with UNISA to address the challenges.

5.3.4.    The Department’s expenditure at the end of the 2017/18 financial year was 100 percent. Despite the 100 percent spending at the end of the financial year, the Committee’s in-year monitoring of the Department’s performance in terms of section 32 of the PFMA revealed consistent delays in the transfer of the Infrastructure Efficiency Grant to universities. Consequently, the Department incurred lower than projected quarterly spending as follows: first quarter:  R442.2 million, second quarter: R1.5 million and third quarter: R1.7 billion. Similar underspending trends were observed in 2016/17.  The Department reported that the delays in the transfer of these funds to universities did not have any impact on the institutions’ operations. The Committee is concerned that this has an adverse impact on the rollout of infrastructure development projects at the universities, especially in addressing the challenge of student housing.

5.3.5.    The implementation of the fee free education policy is a policy shift which seeks to provide access to education and training by alleviating financial barriers to access. It is hoped that this policy will contribute to addressing skills shortages in the country, addressing high unemployment and poverty rates. The Department’s delay in developing a policy framework to regulate the funding of students and to address ethical consideration in the utilisation of the allowances, is regrettable.

5.3.6.    The public institutions of higher learning receive a special allocation to fund students living with disabilities. However, TVET Colleges do not receive such funding. Access to education and training at TVET Colleges for students living with disabilities is limited by lack of funding. There are no policy guidelines for TVET College with regard to funding of students with disabilities.

 

 

5.4. Programme 4: Technical and Vocational Education and Training

5.4.1.    The programme’s performance in terms of direct outputs and system targets had improved significantly compared to performance in the prior years. Notwithstanding the improved system performance (from 8 percent in 2016/17 to 70 percent in 2017/18) lack of proper records to allow the AG to confirm the reported achievements, is of great concern.

5.4.2.    The Audit outcomes of the TVET Colleges remain an area of concern, especially the number of Colleges with negative audit outcomes. The sector is critical in addressing the skills deficiencies in the country and the regression in internal controls when it comes to leadership, financial and performance management and governance was noted with grave concern.

5.4.3.    The Committee expressed a concern about the non-compliance of Sedibeng and Tshwane South TVET Colleges with the deadline for submission of the annual financial statements.

5.4.4.    The Committee observed that many of TVET Colleges are lacking in administrative and financial capacity.

5.4.5.    The target to have 710 535 headcount enrolments in TVET Colleges was not achieved as planned. This target has not been achieved since the commencement of the implementation of the MTSF 2014 – 2019 from 2015/16 financial year. It is important to note is that there were three targets within this main target of the 710 535 headcount enrolments. A total of 429 638 headcount enrolments were state-funded and the target was achieved as planned. The second portion of 235 110 headcount enrolments were College-funded and the target was exceeded. The third portion of 45 785 headcount enrolments were to be funded from other sources. The current state-funding to the TVET Colleges can only fund 429 638 headcount enrolment and 280 897 headcount enrolment should be funded by the Colleges or other sources. The decline in headcount enrolments at TVET Colleges and in occupationally directed programmes was noted as a concern. The setting of targets based on the hope that the Colleges will secure the necessary funding, especially for occupational programmes is concerning.

5.4.6.    The target to have certificates issued to qualifying candidates within three (3) months of publications of examination results, was not achieved. The Department reported that the delays in issuing certificates within a 3-months’ time-frame was predominantly due to TVET Colleges failing to submit ICASS and ISAT marks on time, as well as inaccurate submissions by TVET Colleges. This directly impacted the resulting process which delays the issuing of certificates.

5.4.7.    The Department experienced two paper leaks during the November 2017 examination cycle. Irregular conduct during examinations pose a risk to the credibility of TVET examinations and also impact on the release of results, which are critical to enable NSFAS to make funding decisions. It also delays the progression of students.

5.4.6.    Funding allocation for the TVET National Examination and Assessments is inadequate. The Department applies virements from other programmes on an annual basis to cover the funding of this function.

5.5. Programme 5: Skills Development

5.5.1.    The programme recorded a significant improvement in both department outputs and system outputs. Budget allocation of R243.341 million enabled the programme increase access to occupationally directed programmes in needed areas and thereby expanding the availability of intermediate level skills with a special focus on artisan skills. The programme achieved 100 percent of the departmental outputs and 83.3 percent of the system targets.

5.5.2.    Though the SETA achieved 100 percent proportion of SETAs meeting standards of good governance, the Committee was concerned about the audit regression of some of the SETAs and an increase in fruitless and wasteful expenditure.

5.5.3.    The programme has consistently underachieved on the target to have 58 percent of national learner trade test pass rate (including INDLELA). The Department explained that INDLELA still tests a lot of self-funded candidates who broadly do not have sufficient workplace training experience as compared to those who go through formal SETAs or industry artisan training programmes.

 

5.6. Programme 6: Community Education and Training

5.6.1.    The performance of the programme on system targets has not improved since 2016/17. The programme has not fully achieved the targets which are critical to increasing access and success in programmes leading to intermediate and high level learning.

5.6.2.    The decline in the headcount enrolment in the Community Education and Training sector is a cause for concern. Statistics South Africa (Statssa)’s 2018 First Quarter Youth Unemployment Report, published in May 2018 revealed that 3.3 million (32.4%) out of 10.3 million South African young people aged between 15-24 were not in employment, education or training. The CET Colleges have been established to provide education and training opportunities for youth and adult persons who require these opportunities to raise their skills levels. However, for the past three academic years (2015, 2016 and 2017), enrolments declined from 285 000 in the 2015 academic year to 272 431 with a further decline in 2017 to 262 156.

 5.6.3.   The quality of education outputs is also dependent on the quality of educators. The Department reported that 38.5% (6405) of the lecturers in the CET system were under qualified as their Relative Education Qualification Value (REQV) includes REQV 10 (3092), REQV 11 (2187) and REQV 12 (1126), which was below the required benchmark of REQV 13. This has a direct impact on the success and throughput rates.

5.6.4.    The CET Colleges have not realised their legislative mandate to meet the education and skills needs of the local communities. Though the White Paper for Post-School Education and Training committed that the CET Colleges would be provided with adequate infrastructure and a critical mass of full-time staff, and would be expanded by adding new campuses where this was necessitated by increasing enrolments and programmes. This has not been realised. The CET Colleges still experience infrastructure challenges, resulting in inadequate teaching hours.

5.6.5.    There is currently inadequate partnerships between the CET Colleges and the Sector Education and Training Authorities to offer occupational programmes. This makes the diversification of programmes difficult.

5.6.6.    The CET Colleges do not have financial management capacity to manage and report on their own funds. Their funds were transferred to the TVET Colleges to procure for them. However, this arrangement has resulted in unintended consequences, with a low certification rate in formal CET qualifications.

5.6.7.    The programme received a total budget of R2.147 billion for the 2017/18 financial year. 92.9 percent of the total programme budget was the expenditure on compensation of employees. Expenditure on goods and services amounted to R36.828 million and expenditure on transfers and subsidies amounted to R110.096 million. The NDP has identified the limited budget allocation for the adult education and training was limited and below international standards.  The Department also noted that the challenge of the CET sector is gross underfunding, improvement of performance on system indicators translate into improving quality of provision through adequate and relevant Learning and Teaching Support Material, programme diversification to move away from purely academic programmes, suitable infrastructure and standardised conditions of service for the lecturers. The issues indicated require adequate funding, which is currently not available.

6. RECOMMENDATIONS

The Committee, having assessed the Annual Report 2017/18 of the Department and AG report recommends that the Minister of Higher Education and Training and the Minister of Finance should consider the following recommendations:

 

6.1. Programme 1: Administration

6.1.1.    Notwithstanding the progress made towards filling advertised vacancies within 180 days and to resolve disciplinary cases within 90 days, the targets were still not achieved despite the plans to improve human resource recruitment and selection processes to reduce the number of days to resolve disciplinary cases been developed and approved the Director-General on 29 September 2017 and 31 December 2017 respectively. The Committee reiterates that the Department should implement these plans effectively and efficiently.

6.1.2.    The Department should expedite the disciplinary cases of officials responsible for incurring the irregular expenditure and implement consequence management.

6.1.3.    The Department should develop and implement an action plan to address the audit findings for the 2017/18 financial year and ensure that there is no recurrence in 2018/19.

6.1.4.    The Department should also implement consequence management against line function managers who fail to monitor implementation of Action Plans.

1. The Department strengthen internal control measures that result in deficiencies that resulted in the findings in the annual performance report as well as findings on compliance with legislation.
2. To avoid material misstatements identified through the audit, the leadership of the Department must put in requisite controls to enable them to exercise sufficient oversight, specifically regarding reporting on the predetermined objectives by the Department as well as related controls.
3. The Department must work on establishing a system that enables it to have appropriate record management systems to ensure that complete, relevant and accurate information that is accessible and readily available to support the performance information records.
4. Mechanisms must be put in place to ensure that the Department reviews sufficiently the reporting on predetermined objectives prior to submission for audit. This will enable it to submit regular, accurate and complete financial and performance reports.
5. Timeframes that are set by the Department must be committed to, to enable it to properly and timeously communicate with essential parties within the department to allow effective responses and putting in mitigating controls on areas affected by the identified risks. So that the institution’s risk communication and reporting process supports the enhanced decision making and accountability through the dissemination of relevant, timely, accurate and complete information.
6. Staff shortages in the Compliance Unit which have a severe impact on the ability of the unit to properly perform its requisite functions, such as the conclusion of all verification procedures related to audit actions, as well as assist to minimize the limitations of scope during requisite departmental audit processes. As well as staff shortages and a lack of requisite financial and project management skills in the Project Coordination Unit which coordinates the management and oversight of designated departmental projects funded through the National Skills Fund (NSF), must be funded to ensure that these Units carry out their core functions.
7. Subsequent to the conclusion of the migration process, human resource capacity remains a challenge. The Department must ensure that the lack of adequate capacity within the Regional Offices which impact on amongst other things how best colleges develop and coordinate the implementation of requisite policies and resolutions must be resolved.

 

6.2. Programme 2: Planning, Policy and Strategy

6.2.1.    The Department should ensure seamless articulation across the National Qualification Framework sub-frameworks, in particular for TVET College graduates to access higher education. Oversight over implementation of the 2017 Articulation Policy should be strengthened.

6.2.2.    Notwithstanding the strides made by the Department and the South African Qualifications Authority (SAQA) in the development of the Recognition of Prior Learning (RPL) Policy and pockets of best practice being identified, generally, an implementation of RPL across the PSET sector is insufficient. Compounding the situation are the barriers to articulation across the National Qualifications Framework Sub-Frameworks. The Department, working with all relevant stakeholders should ensure that RPL is implemented across the PSET sector and adequate resources are availed to ensure access to lifelong education and training opportunities.

6.2.3.    The Strategic Policy Framework on Disability for the Post- School Education and Training system, which is necessary to drive the improvement of access to and success in post- school education and training (including private institutions) for people with disabilities is in place by the end of 2018 / January 2019. However, the management of disability rights in respect of the sector remains fragmented and divergent from existing transformation and diversity programmes at institutional level. This fragmentation and divergence is associated with the varied allocation of resources to address disability- related issues. This policy framework should be implemented to transform and redress these challenges and ensure acceleration of full inclusion, integration and equality for persons for disabilities in the PSET system.

6.2.4.    The shift in governance of all public colleges, specifically Agricultural and Nursing colleges under provincial authority, to a national competence in line with the Constitution of the Republic of South Africa needs to be finalised.

1. Extensive work has been concluded on the incorporation of Agricultural Colleges into the Post- School Education and Training sector. This has revealed that this process will have financial and human resource implications. The integration is important in terms of skills and curriculum development. Due diligence has been concluded, the final edited report must be concluded to ensure that the modalities around this shift are engaged to sure how best this shift process can be facilitated.

6.3. Programme 3: University Education

6.3.1.    The higher education sector is not meeting its targets in the high-level occupationally directed programmes in needed areas engineering sciences, human and animal health sciences. The Department cited the low number of Grade 12 learners passing with requisite results to enter universities. This trend will impact negatively on the production of skills to support key economic sectors like mining, manufacturing, agriculture, Information Communication Technology and skills to transition the country into the fourth industrial revolution.  The South African health system is in dire shortage of health professionals and the inadequate graduate numbers in both human health and animal sciences will further compound the challenges. The 2014 – 2019 MTSF mandates the Department of Higher Education and Training to support basic education, by producing 20 000 teacher graduates per year by 2019. The Department has exceeded the 20 000 annual target. Given the current challenges of quality basic education, special attention should be given to improve the quality of teacher education at universities, especially in STEM related programmes and foundation phase to improve quality of literacy and numeracy of learners at foundation phase.

6.3.2.    The Department of Higher Education and Training working with the Department of Basic Education in their joint programme should relook at the target on graduates in Initial Teacher Education and to allocate a portion of this target to graduates in maths and science. 

6.3.3.    The Department through the career development services should expand its advocacy to raise awareness of the importance of the STEM related subjects amongst the school learners.

6.3.4.    The Department should monitor UNISA to stabilise its admission policy and to address the IT related challenges which impact on the achievement of headcount enrolment of students at universities.

6.3.5.    The delays in the transfer of the Infrastructure Efficiency Grant observed by the Committee during the three quarters of 2017/18 was concerning given infrastructure challenges at universities. The Department to explore a more efficient process of administering the university infrastructure grants and to table a more representative payment schedule for the infrastructure grant to avoid repeated deviations from the projected expenditure.

6.3.6.    The Department should expedite the process to develop a policy framework to regulate the funding of students and to address ethical consideration in the utilisation of the allowances so that proper guidelines are ready for the 2019 academic year.

6.3.7.    The Department should expedite the development of a funding policy for students with disabilities at both TVET Colleges and universities.

6.3.8.    Engagements on the policy decisions and outstanding matters related to the development of the National Plan for Post- School Education and Education should be linked to strict timeframes which will enable it to thoroughly consult and improve the NPPSET so that it is finalized with the 2018/19 financial year. The implementation of this plan remains important in guiding the work of the Department and the PSET system till 2030.

6.3.9.    Student accommodation in the Post- School Education and Training sector remains a growing concern. This has been repeatedly mentioned during the Committee’s oversight visits. Student accommodation should be expanded to accommodate increased enrolments in the PSET sector.

6.3.10.  The incidents of gender-based violence at institutions of higher learning is increasing at an alarming rate. The inadequate policies and systems put in place at some of the institutions to address this scourge is concerning. The Department should ensure that all universities develop and implement policies to address gender-based violence by 2019 and to make institutions conducive for teaching and learning for all students and staff. In addition, the Department should strengthen its oversight to monitor and assess implementation of these policies.

6.3.11.  Notwithstanding the appointment of an Administrator to take over governance and management at NSFAS, the Department should strengthen its oversight over NSFAS to ensure that the entity delivers on its legislative mandate and implement the AG recommendations.

 

6.4. Programme 4: Technical and Vocational Education and Training

1. The NDP/MTEF target is to have 1,2 million students enrolled in the TVET Colleges by 2019/2020. The current MTEF baseline funding for the sector will not cater for increased enrolments to the NDP/MTSF targets. To meet this target and to correct the ‘inverted pyramid’ PSET system, additional funding from the fiscus should be allocated to address the skills shortages in the country.
2. The decline in headcount enrolment at TVET College, especially in occupationally directed programmes is concerning. Of great concern is that these critical programmes meant to address the shortage of intermediate skills to support economic growth are not funded from the fiscus. Whilst acknowledging the current economic constraints, consideration for additional baseline funding to fund headcount enrolment, in particular for occupational directed programmes.
3. The Department should ensure that data integrity of the TVET sector becomes a priority to bring certainty to performance reporting and the impact of this sector.
4. The Department should strengthen its oversight role over the TVET Colleges to ensure credible examination data is submitted for resulting and certification. Furthermore, the Committee reiterates that consequence management should be implemented against Colleges who fail to submit ICASS and ISAT marks on time.
5. Irregular conduct during examinations pose a risk to the credibility of TVET examinations and also impact on the release of results, which are critical to enable NSFAS to make funding decisions and delays the progression of students. The Department should strengthen its internal controls to curb leakages of examination papers.
6. The Department should work with the TVET Colleges to strengthen the internal controls in the areas of leadership, financial management and governance. The Department should also strengthen its oversight over Sedibeng and Tshwane North TVET Colleges to comply with the deadline for the submission of the annual financial statements.
7. The Department must strengthen the coordination of working relations and systems between TVET colleges and NSFAS to ensure that cash flow challenges are mitigated. This is significant because it affects compliance ratings of the approved governance standards.
8. Measures must be put in place in TVET Colleges to ensure that they implement policies that ensure that areas such as a demand-driven curriculum, are in place and that systems are in place to improve efficiencies. This is pursuant of the ANCs National Elections Manifesto of continuing to improve governance and administration of TVET colleges and adopt quality assurance measures, especially relating to curricula and training.
9. The review of the content of the curriculum of the NC (V) has been ongoing on subject reviews on Automotive Language, Life Orientation, Mathematic Repair, 3 subjects in the Electrical Infrastructure Construction specialisation, and in Office Administration.  Funding has constrained the review of the Engineering and Related Design specialization, wherein extensive and intensive reconstruction is required. However, a more holistic and extensive review needs to be undertaken on the NC(V) qualification policy as it will have implications for curricula across all nineteen specialisation of the NC(V).
10. Notwithstanding the tightening of the financial management regulations for TVET Colleges, the Committee observed that this has not translated into improved audit outcomes of many TVET Colleges. The Department should strengthen its oversight role over TVET Colleges and provide support to improve administrative and financial management capacity of the Colleges.
11. The AG was unable to obtain sufficient appropriate audit evidence for the reported achievement of the indicators in terms of the following system targets: 225 557 qualifying TVET students obtaining financial assistance, 41.7 percent NC(V) L4 certification rates, 65 percent N3 certification rates and 66.1 percent N6 certification rate. This was due to a limitation placed on the scope of his work. The Department should ensure that there is proper recording keeping to allow the AG to confirm the reported achievements by alternative means.

 

6.5. Programme 5: Skills Development

6.5.1.    There is a structural mismatch between labour market demand and supply as well as high unemployment rate. There should be a targeted effort by the SETA in partnerships with the TVET Colleges to provide new occupationally directed programmes developed by the Quality Council for Trades and Occupations targeting low skilled workers. This will address the high number (3.3 million) of young people not in employment, education or training.

6.5.2.    The Department should strengthen its oversight over the SETAs to address the audit findings and strengthen their internal control environments. The SETA standards of good governance should also focus on compliance with laws and regulations. In addition, quarterly reports submitted by the SETAs to the Department should be thoroughly scrutinised to identify and provide corrective measures where there are areas of weakness.

6.5.3.    The Department should ensure that Artisan Recognition of Prior Learning (ARPL) is expedited to address the historical unfair discrimination of skilled and competent persons who do not possess a trade certificate to access the labour market.

6.5.4.    Sufficient workplace training experience is important for candidates who go through trade testing to qualify to be an artisan. Challenges related to the quality and capacity of self- funding candidates in relation to the sufficient workplace training experience need to be addressed to ensure that are at the level of those candidates who go through formal SETAs or Industry artisan training programmes which are meant to contribute to the NDP targets of 30 000 annually by 2030.

6.5.5.    The 2014 – 2019 MTSF’s target of 30 percent of the TVET College lecturers placed in a workplace exposure every year by 2019 has not been met in the past three years (2015/16, 2016/17 and 2017/18), due to the lack of funding. The target could only be implemented in the 2018/19 financial year and it was reduced to 20 percent. The Department should ensure that the National Skills Accord social partners work together to address constraints to accessing workplace exposure by lecturers, as this will improve the role and performance of the TVET Colleges as committed in the Accord.

1. The National Skills Development Strategy (NSDS) III Goal 4.3: commits the SETAs to promote the growth of a public TVET College system that is responsive to sector, local, regional and national skills needs and priorities. However, the Auditor-General has noted that some SETAs did not support skills development for strengthening the capacity of TVET College such as management development, teaching and learning facilities enhancement and curriculum alignment to industry needs. The Department should ensure that SETAs do implement all the goals of the NSDS III.
2. The Auditor-General also found that the SETA- DHET service level agreements only focus on workplace integrated learning, partnership and lecturer development are silent on strengthening other capacity needs of the TVET Colleges, such as management and governance development, enhancement of teaching and learning facilities and curriculum enhancement. A review of the service level agreements should be undertaken to address the gaps identified by the AG and to ensure that all areas of promoting the growth of public TVET Colleges are addressed. Furthermore, the Department should ensure that SETAs skills development interventions are implemented in accordance with the signed service level agreements and are aligned to the DHET’s annual performance plan. 
3. The Auditor-General identified delays in the transferring of skills development funds to TVET Colleges, which had implications on projects start times and securing of relevant capacity to implement the projects. The Department has not met the headcount enrolment of 45 787 in TVET Colleges (funded from other sources). The fewer enrolments could be attributed to delays in the transfer of funds from the SETAs. The Department should ensure that skills development funds from SETAs are transferred to the Colleges timeously and funding should be planned according to the MTEF so that Colleges can plan properly with funding certainty.  
4. The National Skills Accord social partners have committed to making internships and placement opportunities available within workplaces. The annual targets set by the Department have been exceeded. However, there are many graduates who require placement for work-integrated learning to complete their qualifications and those who completed their qualifications looking for internships to acquire work experience to improve their chances of employability. It is critical that the SETAs encourage employers in their sectors to increase access to work placements. 
5. Some of the concerns related to the under- achievement of some SETAs is due to the shortage of places for experiential learning. The role of both state and private sector by granting access to the workplace for experiential learners remains critical to the success of the work of the SETAs. More effort and systems need to be in place to ensure that partnerships between SETAs and government departments increase their capacity for experiential learning. Noting that the Workplace Based Learning and the Strategy for Turning the Public Sector into a Training Space have been concluded. The finalizing of the SETA Workplace Based Learning Programme Agreement Regulations must be concluded
6. The Department should ensure that SETAs through their Education and Training Quality Assurance (ETQAs) and the Quality Council for Trades and Occupations strengthen oversight over the skills development providers to ensure improved quality training in learnerships and other skills development interventions so that learners are not trained for unemployment.

6.6. Programme 6: Community Education and Training

6.6.1.    The NDP has set a target of 1 million enrolments in the CET programmes by 2030. The programme performance has not improved in the past three years. Instead the programme has experienced a decline in headcount enrolments, which the Department attributed to the stigma of the sector, poor advocacy and a lack of diversification of programmes. The Department should put mechanisms in place to ensure learner retention and for the diversification of programmes to include occupational skills in response to local economic needs.

1. Noting that the Department has no authority over the infrastructure through which it delivers CET programmes. The Department must look at alternative means to either address the limitations in infrastructure in the CET sector which hampers the offering of appropriate and quality programmes needed and simultaneously achieve the targets of the NDP or look at how the protocols entered into with provincial educational departments can be reviewed to ensure challenges that relate to the unsuitability of some of the schools used for CET education, training, development, access to facilities, limited time for tuition and suitability of furniture for adults and school structure for programme diversification.
2. The Department should also address the challenge of CET lecturers who are underqualified. This will improve the quality of teaching and learning.
3. The current baseline funding for the CET sector is grossly inadequate to enable the sector to execute its mandate as per the White Paper for the Post-School Education and Training. Additional funding to address the infrastructure challenges and to provide adequate learner teacher support material (LTSM) for the sector in order to improve certification rates should be considered. Currently, over 90 percent of the allocated funding is for compensation of employees.
4. The Department should capacitate CET Colleges with financial management to manage and report on their finances.
5. The AG found that performance on the two system targets was not auditable, given the lack of sufficient appropriate evidence for the reported achievements of indicators.  The Department should ensure that there is a proper recording keeping to allow the AG to audit the reported achievements. The Minister of Finance in his response to the Committee’s 2017 Budgetary Review and Recommendations Report, stated that the Department should use all available resources allocated to the sector, including the funding for the skills development levy institutions to improve delivery as efficiently as possible within available resources over the medium term to address funding challenges within the Community Education and Training. The Committee reiterates that the Department should look into this provision by the Minister of Finance to reprioritise funding to address the severe underfunding of the CET sector, especially areas to improve quality of teaching and learning and management and governance and diversification of programmes.
6. The Portfolio Committee on Higher Education and Training will confer with the Standing Committees on Appropriations and Finance in terms of the Money Bills Act.

6.7. 2017 BRR Recommendations

The Committee made the following recommendations in 2017, but they were not responded to adequately and further recommends that the Minister considers:

1. Apprenticeship model into the TVET and the skills system: funding is required to ensure that infrastructure and the facilities are in place in order to improve artisan development. Presently only 30 percent of the artisan development funding comes from the Voted Fund.  The other 70 percent, which drives the operational activities of NAMB, artisan development and World Skills South Africa, are funded from the National Skills Fund. Artisan development will further improve if all its activities were funded from the Voted Fund. 
2. Centres of Specialisations: Support needs to be given to the twenty colleges identified as Centres of Specialisation to ensure their sustainability as they are critical in developing the capacity to deliver particular priority artisan qualifications. Funding is needed to support these Centres of Specialisation to sustain their expansion. Implementation of the plans to support Centres of Specialisation Colleges should be expedited and adequate resources should be availed.
3. Funding challenges related to TVET enrolments: Without an increase in the baseline funding for enrolments, downward revision will continue to occur in order to maintain and improve the provision of quality teaching and learning in colleges utilising limited allocated funds.
4. TVET foundation programmes: Universities receive grants to support their foundation programmes to ensure improvement in their success and throughout rates. This is not the case with TVET colleges as a result of the non-availability of funds the target of 5000 students entering the foundation programmes in the TVET sector over the MTSF and the envisioned success rate of the fifty percent success has been discontinued. The Department will pilot the enrolment of 600 students in nine colleges. Additional funding from the fiscus should be considered to fully rollout the programme to all TVET Colleges as this will improve throughput rates.

 

 

 

 

7. REPORTING REQUIREMENTS

Entity	Reporting Matter	Action required	Time-Frame
DHET	Recurring audit findings	The DHET to develop, implement and monitor an action plan to address the recurring findings, including suggestions for targets setting as well as IT inadequacies leading to the unavailability of information and submit it to the Committee	Internal Audit and Audit Committee of the DHET to report to the Committee quarterly in 2019/20
	Irregular expenditure	To expedite the disciplinary case referred to the Labour Relations with disciplinary case	DHET to report to the Committee on the outcomes of disciplinary case at the next quarterly report, 2019/20.
	Implementation of the  2018 BRR Recommendation	DHET to implement the BRR Recommendations	DHET to provide update to the Committee on the implementation of BRR Recommendations quarterly, 2019/20
	Information management system for TCET and CET sector	DHET to develop information management system for the TVET and CET sectors	DHET to report to the Committee quarterly, 2019/20.
	Non-achievements of the targets	Progress made in addressing the AG findings and progress made on targets not achieved	DHET to report  to the Committee quarterly
TVET CGC	Audit findings	Action plan to address the AG findings should be developed, implemented and monitored   Internal audit and audit committees should appear before the Committee to report progress on the implementation of the action plans	At the next quarterly reporting in 2019/20 and during oversight visits.
NSFAS	Audit findings	NSFAS Administrator to develop, implement and monitor an action plan to address the recurring findings and submit it to the Committee	Internal Audit of NSFAS to report to the Committee quarterly, 2019/20
AGSA	Audit outcomes	Audit outcomes of the outstanding TVET Colleges	AGSA to report to the Committee in the next quarterly meeting in 2019/20.
AGSA	Audit outcomes	Audit meeting with NSFAS	AGSA to report to the progress with commitments on working with NSFAS to address the system challenges, 2019/20.
TETA W&RSETA MQA LGSETA FASSET SASSETA	Audit findings	Action plan to address the AG findings should be developed, implemented and monitored   Internal audit and audit committees should appear before the Committee to report progress on the implementation of the action plans	At the next quarterly reporting in 2019 and during oversight visits, 2019/20
BANKSETA EWSETA FASSET INSETA MQA SASSETA	Irregular expenditure	SETAs to conduct investigations and implement consequence management	SETAs to report to the Committee on the outcomes of the investigation and implementation of consequence management at the next quarterly report, 2019/20
CATHSETA BANKSETA LGSETA PSETA W&RSETA	Fruitless and wasteful expenditure	SETAs to conduct investigations and implement consequence management	SETAs to report to the Committee on the outcomes of the investigation and implementation of consequence management at the next quarterly report, 2019.

 

8. CONCLUSION

For the year under review, the Department’s total budget amounted to R68.601 billion, including direct charges against the National Revenue Fund and excluding an amount of R103.313 million from departmental receipt and aid assistance. Expenditure at the end of the year amounted to R68.589 billion, which constituted 100.0 percent of the total allocation. The recorded underspending amounted to R12.019 million, of which R3.346 million was incurred in Administration, R1.323 million in Planning, Policy and Strategy and R4.692 million in the Community Education and Training programmes. The underspending in the Administration programme was mainly due to attrition posts that became vacant during the year that could not be filled as projected as well as cost saving measures that were put in place with regards to the replacements of computer equipment. In the Planning, Policy and Strategy programme, the underspending was mainly due to posts that became vacant during the year that could not filled as projected and favourable Rand/Euro Exchange rate that was applicable when payments to the Commonwealth of Learning were made. For the CET programme, the underspending was due mainly to claims in respect of CET lecturers that were not received on time, as well as uncertainties regarding the division of posts in Regional Offices and post provisioning norms. The Department incurred irregular expenditure amounting to R56.785 million, which decreased by R7.032 million from R63.817 million in 2016/17. Irregular expenditure was due to non-compliance with laws and regulations

 

The Department’s performance on the direct outputs for the year under review improved significantly by 14.1 percent from 80 percent in 2016/17 to 94.1 percent in 2017/18. Similarly, performance on system targets increased from 53 percent in 2016/17 to 67.7 percent in 2017/18.  Performance increased by 14.1 percent from 80 percent in 2016/17 to 94.1 percent in 2017/18. Four programmes, namely, Planning, Policy and Strategy, Technical and Vocational Education and Training, Skills Development and Community Education and Training achieved 100 percent of the department direct outputs. Two programmes, University Education and Administration achieved, 75 percent and 80 percent respectively.

 

Of concern is that the performance of university education programme decreased from 80 percent in 2016/17 to 68.75 percent achievement in 2017/18. The underperformance was recorded in the number of students enrolled in public higher education studies at universities, the number of graduates qualifying in engineering sciences at universities, the number of graduates qualifying in human and animal health from universities and the number of graduates qualifying in natural and physical sciences from universities. TVET programme has recorded a significant improvement in both department direct outputs and system targets. Notwithstanding significant improvement from 71 percent to 100 percent in Department direct outputs for the CET programme, the programme underperformed in system targets. The Committee recommended to the Department to address the data integrity challenges.

 

Report to be considered.