ATC191029: Budgetary Review and Recommendation Report of the Portfolio Committee on Higher Education, Science and Technology on the 2018/19 Annual Report of the Department of Higher Education and Training and Entities, dated 29 October 2019

Higher Education, Science and Innovation

BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION, SCIENCE AND TECHNOLOGY ON THE 2018/19 ANNUAL REPORT OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING AND ENTITIES, DATED 29 OCTOBER 2019

The Portfolio Committee on Higher Education, Science and Technology (hereinafter referred to as the Committee), having considered the 2018/19 financial and non-financial performance of the Department of Higher Education and Training (hereinafter referred to as the Department), the Council on Higher Education (CHE), the South African Qualifications Authority (SAQA) and the Quality Council for Trades and Occupations (QCTO), 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 Recommendation Report (BRRR), which will provide an assessment on the department’s service delivery performance given available resources; an assessment on the effectiveness and efficiency of the department’s 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), National 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).

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 2018/19 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 2018/19 Annual Report was considered against the background of key government policy documents, including, among others, the Medium Term Strategic Framework (MTSF) 2014 – 2019; the 2018 State of the Nation Address (SONA); 2018/19 Annual Report of the Department and the Committee’s in-year monitoring of the Department’s 2018/19 quarterly financial and service delivery performance in terms of section 32 Reports of the Public Finance Management Act, 1999 (Act No. 1 of 1999) and the Annual Reports the CHE, the SAQA and the QCTO. The Committee had briefing sessions with the Auditor-General of South Africa (AGSA) on the 2018/19 audit outcomes of the Higher Education and Training Portfolio, including the Department of Higher Education and Training on 15 October 2019 and the CHE, the SAQA and the QCTO on 16 October 2019 respectively.

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. 2018 State of the Nation Address (SONA)

During the 2018 State of the Nation Address, Hon C Ramaphosa reaffirmed the fee-free education policy for children of the poor and working class. President Ramaphosa reaffirmed the government’s position that fee-free higher education and training will be available to first-year students from households with a gross combined annual income of up to R350 000 per annum in 2018, and would be phased in over a period of five years.

The President also announced that government would work in partnership with business, organised labour and community representatives to create opportunities for young people to be exposed to the world of work through creating a million internships in the next three years, apprenticeships, mentorship and entrepreneurship.

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

3.1. Evaluation of the response by the Department and Minister of Finance to the Portfolio Committee on Higher Education’s 2018 BRR recommendations

The Committee noted that a commitment to build 12 new Technical and Vocational Education and Training (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 of 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 voted funds has been secured from 2019/20 onwards for the three current sites (approximately R400 million from year 1). The remaining campuses still need to have a sustainable operational budget secured. The Department should pursue discussions with National Treasury and other funders (for example SETAs) to secure the required funding in due course.

The Minister of Finance’s response noted that National Treasury has added R967 million in the 2019 medium-term expenditure framework (MTEF) period (R200 million in 2019/20, R322 million in 2020/21 and R445 million in 2021/22) for the start-up operational costs of all new TVET colleges. Over the medium term, the Department of Higher Education and Training must ensure that these costs are part of plans for the building of any new TVET college to avoid using funds from the National Skills Fund and the sector education and training authorities (SETAs). The TVET subsidy will fund ongoing operational costs and the Department’s baseline will provide for employee compensation.

It is critical to note that whilst the budget for the operationalisation of the three new TVET college campuses, Nkandla and Bhambanana in Umfolozi TVET college and Waterberg in Thabazimbi has been secured from 2019/20 going forward, Cabinet had approved reductions amounting to R300 million as follows: R200 million in 2019/20 and R100 million in 2020/21 for the operationalisation of the other new TVET college campuses indicating that fewer will be operationalised in these years to come than projected.

3.2. 2018/19 Committee Budget Vote Report

Summary of selected 2019/20 Committee Budget Vote Report Recommendations

The Committee considered the strategic plan, annual performance plan and budget of the Department of Higher Education and Training 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.

3.2.1. Establishment of a joint task team comprising of Basic Education, Higher Education and Science and Technology to review the education curriculum in the context of university streams and pathways. The intention was to ensure a seamless education system through integration and linkages.

3.2.2. The Department anticipated a decline in the number of NSFAS funded students in higher education for 2019/20. The Department should engage National Treasury with respect to the need for additional funding to meet the objectives of the post-school education and training sector.

3.2.3. The Department should ensure that the expansion of student accommodation in higher education is expedited, especially in the previously disadvantaged institutions where the demand is much higher.

3.2.4. Enrolment in the TVET sector would remain capped at 710 535 for the 2019/20 MTEF period due to inadequate funding. To address youth unemployment, poverty and inequality, more education and training opportunities should be created. The Department should engage National Treasury on additional baseline funding to increase enrolment in the TVET sector.

3.2.5. The expansion of student housing in the TVET sector should be prioritised given the shortage of student accommodation in TVET colleges. The Department should also build proper infrastructure to enhance quality teaching and learning environment (lecture halls, workshops and laboratories) in the TVET sector.

3.2.6. The curriculum of the CET sector should be reviewed so that it could cater for the specific needs of communities.

3.3.7. CET colleges should be equipped with sufficient infrastructure so that there should be spaces of learning for young people in communities.

4. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2018/19 FINANCIAL AND SERVICE DELIVERY PERFORMANCE

4.1. Overview and assessment of the overall budget and expenditure

Table 1: 2018/19 budget allocation and expenditure

DHET Programme	2018/19 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	per cent
Administration	446 587	(4 807)	441 780	429 682	12 098	97.3%
Planning, Policy and Strategy	79 904		79 904	72 051	7 853	90.2%
University Education	59 250 157	(1 820)	59 248 337	59 229 916	18 421	100.0%
Technical and Vocational Education and Training	10 727 339	17 134	10 744 473	10 725 440	19 033	99.8%
Skills Development	264 489	(1 883)	262 606	259 692	2 914	98.9%
Community Education and Training	2 355 597	(8 624)	2 346 973	2 206 957	140 016	94.0%
Programme sub-total	73 124 073		73 124 073	72 923 738	200 335	99.7%
Statutory Appropriation National Skills Fund Sector Education and Training Authorities	17 479 896 17 479 896		17 479 896 17 479 896	17 479 896 17 479 896		100.0% 100.0%
Total	90 603 969		90 603 969	90 403 634	200 335	99.8%
Departmental receipts Aid assistance			27 674 108 072	64 582
Total Revenue Aid Assistance Total Expenditure			90 739 715	64 582
Total Revenue Aid Assistance Total Expenditure				90 468 216

For the 2018/19 financial year, the Department had a total revenue amounting to R90.740 billion. The budget comprised of R73.124 billion appropriated for the Department, and R17.479 billion from direct charges against the National Revenue Fund for the Sector Education and Training Authorities (SETAs) and the National Skills Fund (NSF), R27.674 million from departmental receipts and (R108.072 million) from aid assistance. The Department’s total revenue for the 2018/19 financial year increased by R22.035 billion from R68.705 billion in 2017/18. The bulk of the increase was mainly due to the additional budget allocation to phase in the implementation of fee free education policy.

4.1.1. Analysis of the 2018/19 expenditure

The overall expenditure at the end of the financial year, excluding the additional revenue from departmental receipts and aid assistance, amounted to R90.404 billion, which represents 99 per cent spending of the 2018/19 final appropriation. The Department’s overall underspending at the end of the financial year amounted to R200.335 million. The underspending increased significantly from R12.019 million incurred in 2017/18. Programme 6: Community Education and Training incurred the highest underspending amounting to R140.016 million, which represent 69.89 per cent share of the Department’s total underspending. Underspending in this Programme increased by R135.324 million from R4.692 million in 2017/18. Programmes 4: Technical and Vocational Education and Training and 3: University Education incurred the second and third highest underspending amounting to R19.033 million and R18.421 million respectively. Both programmes have recorded increase in underspending. Underspending in Programme 1: Administration increased from R3.346 million in 2017/18 to R12.098 million in 2018/19.

4.1.2. Expenditure estimates per economic classification

Table 2: 2018/19 allocation and expenditure per economic classification

Economic classification	2018/19 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	9 380 199	(6 408)	70	9 373 861	9 180 312	193 549
Compensation of employees	8 952 264	(6 150)		8 946 114	8 753 103	193 011
Goods and services	427 935	(258)	70	427 747	427 209	538
Transfers and subsidies	81 208 548	6 300	-	81 214 848	81 209 907	4 941
Payment for capital assets	13 862	70	(70)	13 862	12 022	1 840
Payments of financial assets	1 360	38	-	1 398	1 393	5
Total	90 603 969	-	-	90 603 969	90 403 634	200 335

In terms of economic classification, an amount of R9.373 billion was allocated for current payments. The bulk of the budget on current payments, R8.946 billion was allocated for compensation of employees. The allocation for spending on goods and services amounted to R427.747 million, which represents 4.56 per cent of the total allocation on current payments.

Expenditure at the end of the financial year on compensation of employees amounted to R8.753 billion, with a lower than projected spending amounting to R193.0 million. The lower than projected spending increased significantly from R5.734 million incurred in 2017/18. For goods and services, the actual expenditure at the end of the financial year amounted to R427.209 million with a recorded lower than projected spending amounting to R538 000. In terms of expenditure on line items, travel and subsistence was the highest expenditure line item amounting to R118.615 million within the goods and services category. Expenditure on this line item increased by R38.123 million from R80.492 million in 2017/18. The total amount of R78.241 million was spent on computer services, which represents the second highest expenditure line item, followed by R67.587 million on operating leases.

In terms of transfers and subsidies, the expenditure was in line with the allocation of R81.209 billion, which represents 100.0 per cent of the total budget. Of the total expenditure on transfers and subsidies, R39.845 billion was transferred to departmental agencies and accounts and R36.897 billion was transferred to higher education institutions. The expenditure on payment for capital assets amounted to R12.022 million, which increased R4.943 million from 2017/18 expenditure of R7.079 million.

4.1.3. Virements and shifting of funds

For the year under review, the Department applied virements across four programmes amounting to R17.134 million. 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. The virements were effected from four programmes: Administration: R4.807 million, University Education: R1.820 million, Skills Development: R1.883 million and Community Education and Training: R8.624 million. Funds that were shifted were mainly realised on vacant posts in the staff establishment that could not be filled as projected, and the concomitant savings from this as well as from operational costs for internal Audit that resulted from the late appointment of co-sourced internal auditors, property management that resulted from outstanding invoices for office and the CET function.

4.1.4. Irregular, wasteful, fruitless and unauthorised expenditure incurred in the 2018/19 financial year

Table 3: Irregular, wasteful, fruitless and unauthorised expenditure over a three-year period

Higher Education and Training
	Years
	2016/17	2017/18	2018/19
	R’000	R’000	R’000
Irregular expenditure	94 429	56 785	126
Fruitless and Wasteful expenditure	-	-	11 956
Unauthorised Expenditure	-	-	-

The Public Finance Management Act, 1999 (Act No. 1 of 1999) section 38(1)(c) (ii) states that the accounting officer of 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.

For the 2018/19 financial year, the Department reported irregular expenditure amounting to R126 000 in the current year. Irregular expenditure decreased significantly compared to R56.785 million in 2017/18. The Department also reported fruitless and wasteful expenditure amounting to R11.956 million. This was related to fraudulent salary overpayments to CET colleges employees discovered in 2018/19 in respect of payments made in the latter part of 2017/18 and beginning of 2018/19. The Department reported that the matter was under investigation and steps had commenced with recovery of debt.

4.2. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S SERVICE DELIVERY PERFORMANCE FOR THE 2018/19 FINANCIAL YEAR

4.2.1. Overview of overall service delivery performance

Table 4: Consolidated programme service delivery and financial performance over a three-year period

PROGRAMME

FINANCIAL YEAR

2016/17

2017/18

2018/19

% of targets achieved

Expenditure as a % of final appropriation

Per cent of targets achieved

Expenditure as % of final appropriation

% of targets achieved

Expenditure as a % of final appropriation

per cent

R’000

per cent

R’000

per cent

R’000

Administration

60%

372 713

(98.2%)

75%*

393 112

(99.2%)

70%

429 682

(97.3%)

Planning, Policy and Strategy

100%

56 816 (79.4%)

100%*

66 975

(98.1%)

100%

72 051

(90.2%)

University Education

76%*

80%**

39 515 718 (100.0%)

90%*

68.75%**

41 929 092

(100.0%)

93%

50%**

59 229 916

(100%)

Vocational Education and Training

73%*

8%**

7 029 987 (100.0%)

100%*

70%**

7 521 020

(100.0%)

100%*

27%**

10 725 440

(99.8%)

Skills Development

100%*

80%**

180 635

(99.6%)

100%*

83%**

242 508

(99.7%)

100*

67%**

259 629

(98.9%)

Community Education and Training

71%*

0%**

1 981 693 (99.5%)

100%*

0%**

2 143 153

(99.8)

100%*

50%**

2 206 957

(94.0%)

Total

80%*

53%**

49 137 562

99.9%

94.1%*

67.6%**

52 295 860

(100.0%)

95.6%*

45.7%

72 923 738

(99.7%)

Note: All per cent identified with * in the above table are direct deliverables (interventions by the Department for the Post-School Education and Training System) and ** are system performance targets (expected outcomes resulting from the interventions by the Department).

For the 2018/19 financial year, the Department had a total of 110 targets, comprised of 75 planned targets (direct outputs) across all six budget programmes, 35 systems target implemented by universities, TVET colleges, Community Education and Training (CET) colleges and the Sector Education and Training Authorities (SETAs). The Department’s overall performance on the combined direct and system outputs was 79 per cent (87 targets achieved) of the planned outputs. Of the 75 Departmental targets, 71 (95.6 per cent) were achieved and four (4.4 per cent) targets were not achieved as planned. Performance increased marginally by 1.5 per cent from 94.1 per cent in 2017/18 to 95.6 per cent in 2018/19. Two programmes, University Education and Administration did not achieve 100 per cent of their planned direct outputs.

The overall performance on the Departmental targets has improved marginally. What is notable is that performance in Programme 1: Administration declined by 5 per cent from 75 per cent in 2017/18. Programmes 2: Planning, Policy and Strategy, 4: TVET, 5: Skills Development and 6: CET have maintained their 2017/18 100 per cent achievement on direct outputs.

In terms of the system targets, the consolidated number of targets across the four delivery programmes was 35. Of these, 16 (45.7 per cent) targets were achieved and 19 (54.3 per cent) were not achieved. The Department’s overall performance on system targets declined significantly by 21.9 per cent from 67.6 per cent in 2017/18. All the four delivery programmes recorded a decline in performance on system targets.

4.3. Overview and assessment of the programme budget and expenditure and service delivery performance for the 2018/19 financial year

4.3.1. 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.

4.3.1.1. Overview and assessment of the 2018/19 budget and expenditure

For the year under review, the programme’s total appropriation amounted to R441.780 million. Expenditure at the end of the financial year amounted to R429.682 million, which represents 97.3 per cent of the total budget. The expenditure increased by 9.3 per cent compared to R393.112 million in 2017/18. Spending rate decreased by 1.9 per cent from 99.2 per cent in 2017/19. The programme recorded lower than projected spending amounting to R12.098 million, which represents an increase of 261.6 per cent from R3.346 million in 2017/18.

Sub-programme 2: Departmental Management incurred the highest under expenditure amounting to R6.669 million, followed by sub-programme 1: Ministry by R2.328 million and sub-programmes 4: Office of the Chief Financial Officer and 3: Corporate Services at R1.369 million and R1.217 million respectively. The underspending was due mainly to attrition posts that became vacant during the year and could not be filled as projected and concomitant savings on machinery and equipment as well as cost saving measures that were put in place with regard to the replacement of computer equipment.

In terms of expenditure per economic classification, current payments’ total budget amounted to R435.157 million, of which R247.166 million was allocated for spending on compensation of employees and R187.991 million was for goods and services. Expenditure on compensation of employees amounted R236.926 million, resulting in R10.240 million lower than projected spending. Expenditure on goods and services amounted to R187.810 million, which represents 99.9 per cent spending rate as a per cent of final appropriation.

In terms of spending on line items, 30.67 per cent (R57.615 million) of the total budget on goods and services was spent on operating leases. This was followed by computer services at 16.54 per cent (R31.077 million) and travel and subsistence at 10.84 per cent (R20.363 million). A significant increase in expenditure amounting to R12.570 million was incurred on venues and facilities. Expenditure on this line item increased by 201 per cent from R4.167 million in 2017/18. Similarly, expenditure on legal fees during the year under review increased significantly by 363.7 per cent from R226 000 in 2017/18 to R1.048 million in 2018/19.

Expenditure on transfers and subsidies amounted to R683 000, of which R109 000 was for departmental agencies and accounts and R574 000 was for social benefits. Expenditure on payments for capital assets amounted to R4.212 million and R51 000 was expenditure for payments for financial assets.

4.3.1.2. Overview and assessment of the 2018/19 service delivery performance

During the 2018/19 financial year, the programme had 10 planned targets, of which seven (70 per cent) were achieved and three (30 per cent) were not achieved. The Department filled 93.8 per cent of the funded posts, exceeding the target by 3.8 per cent; the target of average number of days (180) to fill an advertised post was also exceeded as it took 159 days to fill the funded vacancies; an unqualified audit opinion was awarded by the Auditor-General to the Department and that the Information Communication Technology (ICT) procurement plan for the 2019/20 was developed and approved by the Director-General by 1 March 2019.

The following targets were not achieved: The Department planned to have 100 per cent of disciplinary cases resolved within 90 days (actual achievement was 78 per cent). The Department cited the following reasons for underperformance on this target: disciplinary hearings involved different role players, e.g. trade unions, Departmental representatives and that delays were sometimes caused by trade union representatives; chairpersons were appointed on an ad hoc basis and in some instances, they did not prioritise disciplinary hearings; there was a lack of capacity to investigate, initiate and chair disciplinary hearings. In trying to remedy the situation, approval was granted to conduct training on investigating, initiating and chairing misconduct hearings. It is concerning that this target was not achieved despite the mechanisms put in place in 2017/18 to address underperformance in this area, which included a plan to reduce the number of days to resolve disciplinary cases that was developed and approved by the Director-General on 29 September 2017, appointment of additional staff at the DHET Head Office and four additional labour relations officers at Regional Offices and the training of colleges labour relations officers on chairing and initiating misconduct hearings. The Department reported in the 2017/18 Annual Report that colleges would be encouraged to create labour relations positions that will assist in ensuring that cases are finalised within the time-frame.

The Department planned to have 100 per cent of invoices received from creditors paid within 30 days, which the achievement at the end of the financial years was 97.96 per cent. The Department cited non-compliance by managers on the 30-days turnaround time. The target was also not achieved in 2017/18 and to mitigate the challenge, the Department reported that a system for tracking of invoices was developed and approved by the DG on 29 August 2017. Of concern to note is that despite all the mitigation strategies put in place, the target has not been achieved and there are no guarantees that managers will comply with the 30-days turnaround time.

The Department planned to have 100 per cent of audit issues attended to as a per cent of total number of issues received from the Auditor-General. It was cited that audit issues were not prepared on time with the required supporting documentation.

4.3.2. 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.

4.3.2.1. Overview and assessment of the 2018/19 budget and expenditure

This programme was allocated a total budget amounting to R79.904 million. The programme’s expenditure at the end of the financial year amounted to R72.051 million, which represents 90.2 per cent of the total final appropriation. Under-expenditure at the end of the financial year amounted to R7.853 million which represents an increase of 493.6 per cent from R1.323 million in 2017/18. The underspending incurred was mainly due to posts that became vacant during the year, that could not be filled as projected and due to saving on transfer to the India-Brazil-South Africa Trilateral Commission as no invoices were received for service rendered during the financial year 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, an amount of R75.730 million was allocated for current payments, of which R65.841 million was allocated for compensation of employees and R9.889 million for goods and services. Expenditure on compensation of employees amounted to R58.982 million, with lower than projected spending amounting to R6.859 million. Spending on goods and services amounted to R9.854 million, which was in line with the allocated funds.

In terms of spending on line items, the bulk of money, R7.812 million, which represents 79.27 per cent of the total expenditure on goods and services was spent on legal services (R3.931 million) and travel and subsistence (R3.881 million).

Expenditure on transfers and subsidies amounted to R2.785 million, of which R2.770 million was a transfer to Foreign governments and international organisations. The expenditure decreased by R600 000 from R3.393 million in 2017/18. Spending on payments for capital assets amounted to R424 000.

4.3.2.2. Overview and assessment of the 2018/19 service delivery performance

For the year under review, the programme had 11 planned targets and all were achieved. The programme had consistently achieved 100 per cent of its targets for three consecutive years (2016/17 – 2018/19).

The summary of key service delivery achievements includes: production of monitoring and evaluation annual reports on: Implementation of Articulation, Implementation of Open Learning in the PSET, Macro-Indicator Trends on PSET, Implementation of the Recognition of Prior Learning, and Implementation of Social Inclusion in PSET. Two reports, PSET Skills Supply and Demand and an Annual Statistics on PSET were developed to provide management with information and statistics on PSET performance.

4.3.3. 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 and other support to universities, the National Student Financial Aid Scheme (NSFAS) and national institutes for higher education.

4.3.3.1. Overview and assessment of the 2018/19 budget and expenditure

During the 2018/19 financial year, the programme received a total budget of R59.248 billion, which increased by R17.318 billion from the 2017/18 budget allocation of R41.930 billion. The programme’s expenditure at the end of the financial year amounted to R59.229 billion, with a recorded lower than projected spending amounting to R18.421 million. The programme’s underspending increased significantly from R969 000 in 2017/18. The underspending was mainly due to posts on the staff establishment that were not filled as projected and unclaimed transfers by universities. The bulk of expenditure at 100 per cent (R59. 230 billion) as proportion of the programme’s total budget of R59.248 billion was spent on sub-programmes 6: University Subsidies (R36.897 billion) and 3: Institutional Governance and Management Support (R22.266 billion). These sub-programmes are responsible for annual transfers payments to universities, the National Student Financial Aid Scheme (NSFAS) and for monitoring and supporting institutional governance and management and providing sector liaison services respectively.

In terms of economic classification, an amount of R62.111 million was spent on current payments, of which R57.543 million was on compensation of employees and R4.568 million on goods and services. Spending on compensation of employees as a proportion of the total allocation for current payments was 61.76 per cent.

In terms of spending on goods and services per line items, travel and subsistence incurred the highest expenditure amounting to R2.821 million, which represents 62.14 per cent of the total allocation on goods and services. Expenditure on this line item decreased by R555 000 from R3.376 million in 2017/18. Expenditure on communication: R332 000, consumables: stationery, printing and office supplies: R290 000 and operating payments: R219 000 experienced decreased spending compared to 2017/18.

Expenditure on transfers and subsidies amounted to R59.167 billion, of which R22.213 billion was for transfers to the departmental agencies and accounts: the NSFAS, Council on Higher Education (CHE), and the South African Qualification Authority (SAQA), and R36.897 billion was for higher education institutions. Spending on payments for capital assets amounted to R440 000.

4.3.3.2. Overview and assessment of the 2018/19 service delivery performance

The programme had a combined total of 31 planned targets, of which 15 were direct outputs and 16 system outputs. Of the 15 direct outputs, 14 (93 per cent) were achieved and one not achieved and eight (50 per cent) of the 16 system outputs were achieved. The performance of the programme on direct outputs increased by 3 per cent from 90 per cent in 2017/18, whilst the performance on the system outputs has notably decreased by 18.75 from 68.75 per cent in 2017/18.

With regard to performance on direct outputs, the programme developed the following monitoring and evaluation reports on the performance of the university education and got them approved by the Director-General as follows: Higher Education AIDS Programme, Financial health of universities in the 2017 academic year, effective use of the 2017/18 Foundation Provision Grant, Teaching Development Grant, Teaching and Learning Development Capacity Improvement programme, Research Development Grant, Research outputs, BRICS Partnerships, Institutional governance, amongst others.

The target on the development of a report on the 2017 research outputs of 26 universities was not achieved as planned. The report was developed and approved by the Director-General, however, it was published on the Department’s website.

The 2014 - 2019 MTSF committed the Department to increase headcount enrolment in universities and graduate outputs in needed areas such as engineering, health sciences, natural and physical sciences, as well as increasing graduate output of teachers.

Summary of key achievements: 12 590 graduates in engineering sciences from universities (achievement 12 955); 8 490 graduates in Natural and Physical sciences from universities (achievement 8 601), 22 780 graduates in Initial Teacher Education from universities (achievement 25 113); 2 965 Doctoral graduates from universities (achievement 3 057); 45 per cent of university academic staff with doctoral qualifications / PHDs (achievement 46 per cent), 100 additional first time entrants (black and women) to academic workforce in addition to normal replacement and plans (achievement 472).

Under performance was recorded in the following areas:

1 039 500 students enrolled in public higher education studies at universities (2 516 lower than targeted), 10 630 graduates in human health and animal health from universities (174 lower targeted) and 8 366 research masters graduates (356 lower than target); 78 per cent success rate at universities (1 per cent lower than target); 83 per cent higher education under graduate success rate for contact students (1 per cent lower than target); 68 per cent higher education undergraduate success rate in distance learning (2 per cent lower than target), 22 200 first year students in foundation programmes (911 lower than targeted) and 270 000 eligible university students obtaining financial aid (9 998 lower than targeted).

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.

4.3.4.1. Overview and assessment of the 2018/19 budget and expenditure

The programme’s total budget during the year under review amounted to R10.744 billion. The budget increased by R3.223 billion from R7.521 billion in 2017/18. The increase in budget allocation was due to increased baseline allocation for subsidies to TVET colleges as a result of the introduction of Conditional Infrastructure Efficiency Grant (CIEG) to refurbish campus buildings, purchase workshop equipment and maintain existing facilities and increased funding towards the 80 per cent programme funding.

Expenditure at the end of the financial year amounted to R10.725 billion, which was 99.8 per cent share of the total budget. Spending amounting to R10.218 billion was incurred in sub-programme 2: TVET System Planning and Institutional Support. This sub-programme provides support to management and councils, monitors and evaluates the TVET system performance against set indicators, develops regulatory frameworks for the system, manages and monitors the procurement and distribution of learning and teaching support materials, provides leadership for TVET colleges to enter into partnerships for the use of infrastructure and funding resources, and maps out the institutional landscape for the rollout of the TVET college system. The second largest expenditure of R475.338 million was incurred in sub-programme 4: National Examination and Assessment. The sub-programme is responsible for administering and managing the conduct of national assessment in the TVET and Community Education and Training colleges. The programme’s overall underspending at the end of the financial year amounted to R19.033 million, which is the second highest underspending of the six budget programmes. The bulk of the underspending was incurred in sub-programme 4: National Examination and Assessment. The underspending was due to vacant attrition posts, posts on the staff establishment that were not filled as projected and due to projected claims for examiners and moderators in respect of the February/March 2019 examination that were not received as planned.

In terms of economic classification, an amount of R6.415 billion was spent on current payments, of which R6.252 billion was on compensation of employees and R162.948 million on goods and services. Spending on compensation of employees as a proportion of the total allocation for current payments was 97.46 per cent.

In terms of spending on goods and services per line items, expenditure on travel and subsistence amounting to R65.931 million was the single largest expenditure line item within the goods and services category. Expenditure on this line item made up 55.58 per cent of the Department’s total allocation for travel and subsistence. Expenditure on this line item increased significantly by 85.33 per cent from R35.574 million in 2017/18. The second highest expenditure line item was computer services, which incurred spending amounting to R46.386 million. Similarly, expenditure on this line item increased significantly by 105.59 per cent from R22.562 million in 2017/18. An amount of R22.844 million on consumables: stationery, printing and office supplies was the third largest expenditure line item. Notwithstanding the fact that the line item incurred the third largest expenditure during the year under review, spending had actually decreased significantly by R12.100 million from R34.944 million in 2017/18.

Expenditure on transfers and subsidies amounted to R4.308 billion, of which R15.389 million was for transfers to the departmental agencies and accounts: Education, Training and Development Practices Sector Education and Training Authority (ETDP SETA) and R4.288 billion for TVET colleges. Spending on payments for capital assets amounted to R1.328 million.

4.3.4.2. Overview and assessment of the 2018/19 service delivery performance

The programme had a combined total of 31 planned targets, of which 25 were direct outputs and 11 system outputs. All the 15 direct outputs were achieved as planned and the programme maintained 100 per cent achievement on direct outputs. Of the 11 system outputs, 3 (27 per cent) were achieved and eight (73 per cent) not achieved. The performance on system outputs declined significantly by 43 per cent from 70 per cent in 2017/18.

With regard to performance on the direct outputs, the programme developed reports on the implementation of steering mechanisms for the TVET sectors which included: implementation of the revised TVET colleges’ monitoring, evaluation and support model, implementation of Guidelines and Standardised Implementation of Occupational Programmes, implementation of policy directives for TVET College Information Technology Systems. Other reports developed and approved by the Director-General included, four reports on the conduct of public TVET college examination centres during national examinations and assessments for the 2017 academic year, two monitoring and evaluation reports on TVET colleges, a report on the throughput rate for TVET college students for the academic period 2016 to 2018, a report of a roll-out plan for the construction of nine TVET college campuses and a report on the implementation of a National Maintenance Plan for the TVET college sector, amongst others.

In terms of system outputs, the programme achieved the following:

66 per cent N3 certification rates (target exceeded by 10.8 per cent); 66 per cent N6 certificate rates (target exceeded by 30.1 per cent), and 100 per cent of public TVET College examination centres evaluated in conducting national examinations and compliance with national policy was achieved as planned.

Underperformance was recorded in respect of the following targets:

710 535 headcount enrolment in TVET colleges (22 580 below the target). This was attributed to inaccurate reporting by TVET colleges on occupationally directed programmes enrolment; 50 per cent NC(V) Level 4 certification rate (7.2 per cent below the target); 449 697 qualifying students obtaining NSFAS financial assistance per annum (249 358 below the target) and 50 per cent NSFAS funded NC(V) L4 students obtaining qualifications within stipulated time (throughput) (18.3 per cent below the target); 80 per cent of TVET colleges compliant to governance standards by 2019 and increasing every year thereafter (14 per cent below the target) and 600 TVET students enrolled in Foundation Programmes (229 below the target).

4.3.5. 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; Sector Education and Training Authorities (SETAs) Coordination; National Skills Development Services and Quality Development and Promotion.

4.3.5.1. Overview and assessment of the 2018/19 budget and expenditure

The programme’s total allocation for the year under review amounted to R262.606 million. The budget increased by R19.265 million from 2017/18 allocation of R243.341 million. Expenditure at the end of the financial year amounted to R259.692 million, with lower than projected spending of R2.914 million. The bulk of expenditure constituting 84.42 per cent of the programme’s total expenditure was incurred in sub-programme 2: SETA Coordination. The sub-programme is responsible for monitoring and reporting on the implementation of the national skills development strategy (NSDS) at the sectoral level by establishing and managing the performance of service level agreements with sector education and training authorities (SETAs), and conducting trade tests at the Institute for the National Development of Learnerships, Employment Skills and Labour Assessments (INDLELA). Expenditure in this sub-programme increased by R15.511 million from R203.731 million in 2017/18.

The second highest expenditure amounting to R27.380 million was incurred in sub-programme 4: Quality Development and Promotion, which is responsible for transfer of funds to the Quality Council for Trades and Occupations as a contribution to its operations.

In terms of expenditure per economic classifications R124.568 million was spent on current payments, of which R110.825 million was spent on compensation of employees and R13.743 million on goods and services. With regard to expenditure on goods and services per line item, expenditure amounting to R3.705 million was on Inventory: materials and supplies and R1.469 million on property payments. Expenditure on transfers and subsidies amounted to R134.221 million of which the bulk of it, R133.885 million was a transfer to the Public Service Sector Education and Training Authority (PSETA). Payments for payments for capital assets amounted to R902 000.

4.3.5.2. Overview and assessment of the 2018/19 service delivery performance

The programme had a combined total of 14 planned targets, of which eight were direct outputs and six system outputs. All the eight direct outputs were achieved as planned and the programme maintained 100 per cent achievement on direct outputs. Of the six system outputs, four (66 per cent) were achieved and two (34 per cent) were not achieved.

In terms of performance on the direct outputs, the following reports were developed and approved by the Director-General: a report on the implementation of the revised SETA Landscape, four reports on the implementation of the of the National Skills Development Strategy by SETAs, and a report on the implementation of Good Governance Standards by SETAs. The Department also developed a single National Artisan Development Information Management System design. The target to have average of 80 days from trade test application received until trade test conducted at INDLELA was achieved and reduced to 40 days.

The following system targets were not achieved as planned:

22 188 New artisan leaners qualified per annum (19 625) and
615 National Artisan Learners Trade Test pass rate including INDLELA (58 per cent).

4.3.6. 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.

4.3.6.1. Overview and assessment of the 2018/19 budget and expenditure

The programme’s total allocation for the 2018/19 financial year amounted to R2.347 billion. Expenditure at the end of the financial year amounted to R2.206 billion, with a lower than projected spending amounting to R140.016 million. The bulk of the underspending amounting to R126.691 million was incurred in sub-programme 2: CET Colleges Systems Planning, Institutional Development and Support, followed by an amount of R10.401 million in sub-programme 4: Education and Training Development. The underspending was due to posts on the staff establishment of the Department that were not filled as projected, CET lecturers claims not received as projected and concomitant savings on goods and services.

In terms of expenditure per economic classification, R2.085 billion was for current payments, of which R2.037 billion was spent on compensation of employees and R48.286 million on goods and services. The lower than projected spending amounting to R139.886 million was recorded on compensation of employees.

Expenditure amounting to R23.459 million on travel and subsistence was the single highest expenditure line item within the goods and services category. Spending on this line item increased by R4.804 million from R18.655 million in 2017/18. Operating leases costs increased from R1.893 million in 2017/18 to R7.257 million in 2018/19 and this constitute the second highest expenditure line item. Expenditure on transfers and subsidies amounted to R116.731 million, of which the bulk of it (R109.923) was a transfer to CET Colleges and payments for capital assets amounted to R4.716 million.

4.3.6.2. Overview and assessment of the 2018/19 service delivery performance

The programme had a combined total of eight planned targets, of which six were direct outputs and two system outputs. The programme achieved 100 per cent of direct outputs. Of the two system outputs, one (50 per cent) was achieved

During the 2018/19 financial year, this programme had six (6) targets (department direct outputs) and two (2) system targets. The Department achieved 100 per cent of the direct outputs and 50 per cent (1) of system targets.

For the year under review, the Department planned to implement appropriate monitoring instruments for the CET colleges by developing a report on the Implementation of Governance Policies for CET colleges and five monitoring and evaluation reported on the CET colleges. The reports were developed and approved by the Director-General. With regard to the system targets, the planned headcount enrolment in all CET colleges of 320 000 was not achieved. The actual achievement was 126 815 lower than planned. The Department has not been able to achieve this target since 2016/17. Poor advocacy, rigid programmes and unavailability of infrastructure were cited as the causes for under achievement. The NDP committed government to increase youth and adult participation in the CET sector to 1 million by 2030. The current performance trends on this target are very concerning.

4.4. Auditor-General’s Report

For the 2018/19 financial year, the Department received an unqualified audit opinion with findings by the Auditor-General.

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

The AG noted that the systems and processes that enable reliable reporting of achievement against the indicators in programmes 3: University Education, 260 002 eligible university students obtaining financial aid (NSFAS), 4: TVET, 200 339 qualifying TVET students obtaining national student financial aid scheme financial assistance, and 6: CET, 193 185 headcount enrolment in CET colleges were not adequately designed as the indicators description did not specify and adequate source or an adequate collection of data and how the indicator would be calculated. As a result, the AG was unable to obtain sufficient appropriate audit evidence for the reported achievement and 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. This is a recurring finding by the AG.

(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) Expenditure management

The AG found that effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R16.7 million as disclosed in the financial statements (note 26), as required by section 38(1)(c)(ii) of the PFMA and Treasury regulation 9.1.1. The majority of the fruitless and wasteful expenditure was caused by payments made to CET employees without proper approval.

(iv) internal control deficiencies

The AG identified significant internal control deficiencies with regard to payment of shift allowances to CET employees, as an employee was able to circumvent the controls in place and make fraudulent payments. Controls within the Department only detected such instances and did not prevent them.
The AG found that the Department did not have an adequate record management system to ensure that complete, relevant and accurate information was accessible and readily available to support the achievements reported on the annual performance report.
The AG found that management did not perform adequate reviews on the annual performance report submitted for auditing. This led to various misstatements identified on the performance indicators resulting in material findings being reported on performance information.

5. OVERVIEW AND ASSESSMENT OF THE COUNCIL ON HIGHER EDUCATION, THE QUALITY COUNCIL FOR TRADES AND OCCUPATIONS (QCTO) AND THE SOUTH AFRICAN QUALIFICATIONS AUTHORITY (SAQA) 2018/19 ANNUAL REPORT

5.1. Council on Higher Education (CHE)

The Council on Higher Education (CHE) is an independent statutory body established in terms of the Higher Education Act No. 101 of 1997, as amended. The mandate of the CHE as the Quality Council for Higher Education is to advise the Minister of Higher Education and Training on all higher education issues, to promote quality and quality assurance in higher education through its permanent sub-committee, the Higher Education Quality Committee (HEQC), including auditing the quality assurance mechanisms of, and accrediting programmes offered by, higher education institutions, and to monitor the state of higher education and publish information regarding developments in higher education on a regular basis, including arranging and co-ordinating conferences on higher education. The CHE is also established as the Quality Council for higher education with expanded mandate for the Higher Education Qualifications Sub-Framework (HEQSF).

5.1.1. Overview and assessment of the CHE’s 2018/19 budget and expenditure

The CHE’s total revenue for the 2018/19 financial year amounted to R66.825 million, of which 75.9 per cent of it was transfer from the Department of Higher Education and Training. Expenditure at the end of the financial year, including depreciation and amortisation as well as losses from disposal of assets amounted to R60.774 million, which constitutes 91 per cent against lower than projected spending amounting to R6.1 million. The underspending during the year under review decreased significantly from R11.2 million in 2017/18. Spending on employee related costs amounted to R32.279 million, which constitutes 53.1 per cent of the total expenditure amounting to R60.774 million. Goods and services (general expenses) expenditure amounted to R25.615 million.

5.1.2. Auditor-General’s Report

The CHE received a clean audit award from the Auditor-General.

5.1.3. Overview and analysis of the 2018/19 service delivery performance

For the year under review, the CHE had four budget programmes, namely: Institutional Quality Assurance, Qualifications Management and Programme Review, Research, Monitoring and Advice and Administration and Support. The programmes had a combined total of 21 targets, of which 22 (75.9 per cent) were achieved and 7 (24.13 per cent) were not achieved. The CHE’s 2018/19 performance improved from 52.5 per cent in 2017/18.

5.1.3.1. Programme 1: Institutional Quality Assurance

The purpose of this programme is to develop and implement processes to inform, assure, enhance, and promote quality in higher education institutions (HEIs). The programme had six predetermined targets for the year under review. Of the total targets, three (50 per cent) were achieved and three not achieved. The Council approved revised Drafts Audits Frameworks and Manual to assess HEIs quality assurance systems; produced institutional assessments reports of Boston College, City Campus and the Vaal University of Technology; tabled 95 per cent (40) reports at the Higher Education Qualification Committee (HEQC) meeting 12 months after a site visit.

The CHE achieved 69 per cent (against the target of 75 per cent) in the processing of applications tabled at the HEQC within 12 months after the appointment of an evaluator; processes 73 per cent (against the target of 80 per cent) of submitted applications with HEQC outcomes within 18 months after the appointment of an evaluator.

5.1.3.2. Programme 2: Qualifications Management and Programme Review

This programme is responsible for developing qualification standards; and undertaking national reviews in selected programmes and qualification levels. The programme has three sub-programmes, namely: Management of the Higher Education Qualifications Sub-Framework (HEQSF), Development of Qualification Standards and National Reviews.

The programme had five predetermined targets, of which three (60.0 per cent) were achieved and two (40.0 per cent) were not achieved. The predetermined targets that were not achieved included the development of the Higher Education Qualifications Sub-Framework policy and the development/review of Doctoral qualifications and standard.

5.1.3.3. Research, Monitoring and Advice

This programme is responsible for researching and monitoring trends and developments in higher education and fostering critical discourse on contemporary higher education issues and providing advice on strategy and policy. The programme has three sub-programmes, namely: Research, Monitoring and Advice. For the year under review, the programme had five targets, of which four (80.0 per cent) were achieved and one was not achieved. The CHE produced and shared VitalStats, provided advice on two requests: Advice on Recognition of Prior Learning and Advice on the National Qualifications Framework Amendment Bill. The CHE also provided one advice on the wording of the Bachelor of Laws (LLB) in the Legal Practices Act, 2014 (Act No. 28 of 2014). The target to develop and approve the Higher Education Qualification Sub-Framework Policy was not achieved. The project started in September 2019, six months into the financial year because of budgetary constraints. The draft policy was developed but approved as planned.

5.1.3.4. Administration and support

The purpose of this programme is to provide strategic direction, corporate services, enabling systems, structures and facilities in support of the core functions. The programme had five sub-programmes, namely: Human Resources Management, Information and Communication Technology (ICT), Facilities Management, Finance and Supply Chain Management and Office of the Chief Executive Officer. The programme had 13 targets, of which 12 (92.3 per cent) were achieved and one was not achieved. The CHE developed a report on implementation of phase 1 (upgrade of HEQC online system and installation of Office 363 to enhance integration); offered 40 staff training interventions; paid 100 per cent of eligible suppliers within 19 days, held 23 governance meetings; participated in eight international partnerships and cooperation activities or events, participated in two international conferences.

The CHE did not achieve the target to fill 85 per cent of approved posts on its organisational structure, and 81 per cent of the approved posts were filled during the year under review.

5.2. Quality Council for Trades and Occupations (QCTO)

The QCTO was established as a juristic person in 2010 in terms of the Skills Development Act (SDA), 97 of 1998 as amended in 2008. The QCTO is responsible for a part of the National Qualifications Framework (NQF), which is the Occupational Qualifications Sub-Framework (OQSF). The overall mandate of the QCTO is to develop and manage the OQSF of the NQF. This includes the development and quality assurance of occupational qualifications (including trades) and part qualifications registered on the OQSF, with a specific focus on occupational qualifications that addresses the national demand.

5.2.1. Overview and assessment of the QCTO’s 2018/19 budget and expenditure

The Council’s total revenue for the 2018/19 financial year amounted to R123.1 million, which is made of R27.380 million DHET grant, R86.692 million SETA Grant and R9.016 million (finance income, the National Skills Fund and other income). Expenditure at the end of the financial year amounted to R92.618 million, which represents 91 per cent expenditure against the total. The QCTO recorded lower than projected spending amounting to R30.483 million. The underspending during the current year review increased by R4.657 million from R25.826 million in 2017/18. Spending on employee related costs amounted to R49.742 million, which constituted 53.7 per cent of the total expenditure. Goods and services (other expenses) expenditure amounted to R42.876 million.

5.2.2. Overview and assessment of the QCTO’s 2018/19 service delivery performance

During the year under review, the Council had three budget programmes, namely: Administration, Occupational Qualifications and Quality Assurance. The three programmes had a combined total of 22 predetermined targets, of which 13 (59 per cent) were achieved and 13 (41 per cent) were not achieved. The overall performance of the entity declined by 14 per cent from 73 percent achieved in 2017/18.

5.2.2.1. Programme 1: Administration

The purpose of the programme is to enable the QCTO performance through strategic leadership and reliable delivery of management support services. The programme had two predetermined targets and all were not achieved. The ICT implementation plan was approved by the ICT Steering Committee and but was not fully implemented and the annual Marketing and Communication Plan was also approved, but not all activities were executed.

5.2.2.2. Programme 2: Occupational Qualifications

This programme is responsible for ensuring that occupational qualifications registered on the Occupation Qualifications Sub-Framework (OQSF) are available and Skills Development Providers (SDPs) that offer occupational qualifications are accredited within a reasonable period and ensure credibility of providers. The programme had eight (8) predetermined targets, of which four (50per cent) were achieved and four (50per cent) were not achieved.

The Council recommended 76 prioritised occupational qualifications (35 full and 41 part qualifications); realigned 50 historically registered qualifications; approved four reports on the reconstruction of the National Accredited Technical Education Diploma (NATED) Report 190 (N4 – N6) and established a baseline of 74 days to accredit Skills Development Providers offering historically registered qualifications.

The Council was not able to accredit 90 per cent of Skills Development Providers offering Occupational Qualifications within the turnaround time (90 working days). The actual achievement was 31 per cent. The target to have 80 per cent of accredited Skills Development Providers that reported on learner uptake for occupational qualifications and monitored against the QCTO compliance standards was not achieved as planned, citing erroneous setting of the annual target at 80 per cent, instead of 20 per cent.

5.2.2.3. Quality Assurance

The purpose of this programme is to establish and maintain standards for Quality Assurance of Assessments and Certification for Occupational Qualifications on the Occupational Qualifications Sub-Framework.

The programme had 12 predetermined targets, of which nine (75 per cent) were achieved and three (25 per cent) were not achieved. The QCTO processed 100 per cent (173 of 173) of assessment centres accreditation applications within a turn-around time of 30 working days; verified 50 Assessment Centres out of 173 accredited centres; processed and approved three Assessment Quality Partner delegation; quality assured 100 per cent of assessments for historically registered qualifications.

The QCTO was not able to take over 14 quality assurance functions delegated to the SETAs, citing that the revoking was dependent on the Minister of Higher Education and Training approving the QCTO Business Case for revoking of Quality Assurance functions delegated to the SETAs. No approval was granted during the year under review. The QCTO has not taken over the function of certification of historically registered qualifications from the various Quality Assurance Partners and it did not achieve the target to digitise 45 per cent of the learner records due to the position of the Project Manager not filled.

5.2.3. 2018/19 audit outcomes

The QCTO received a clean audit award from the AGSA for the 2018/19.

5.3. South African Qualifications Authority (SAQA)

The South African Qualifications Authority (SAQA) is a statutory body established in terms of the South African Qualifications Act, (Act No. 58 of 1995) as amended by the National Qualifications Framework Act (Act No. 67 of 2008). The NQF Act positions the SAQA as the oversight body of the NQF and the custodian of its values. The SAQA is responsible for coordinating the work of the Quality Councils (Umalusi, Council on Higher Education and the Quality Council for Trades and Occupations) and other NQF partners.

5.3.1. Overview and assessment of the SAQA’s 2018/19 budget and expenditure

For the 2018/19 financial year, the SAQA’s total revenue amounted to R128.663 million. The DHET Grant allocation amounting to R66.719 million accounts for 54.1 per cent of the total revenue of the SAQA and 45.9 per cent (R56.587 million) was from exchange transactions as follows: rendering of services: R50.163 million, rent income: R1.099 million, interest received: R1.878 million, sundry income: R3.354 million, and compensation from insurance: R92 136.

Expenditure at the end of the financial year amounted to R117.417 million, which constitutes 95 per cent against the total revenue. Underspending at the end of the financial year amounted to R11.257 million. Spending on employee related costs amounted to R86.284 million and goods and services (general expenses) expenditure amounted to R25.979 million).

There was an underspending of 27 percent due to employee-related costs of R3.2 million mainly due to vacancies during the year. The vacancy rate at the end of the year under review remained at 4 per cent due to the fact that one of the employees passed away, four retired and 14 resigned. During the year under review, the SAQA appointed 18 new employees and 19 employment contracts were terminated.

5.3.2. Overview and assessment of the SAQA’s 2018/19 service delivery performance

SAQA had six budget programmes, namely: Administration, Registration and Recognition, National Learners Record’s Database (NLRD) and Verifications, Foreign Qualifications Evaluation and Advisory Services, Research and International Liaison. The six programmes had a combined total of 52 deliverables, of which 50 (96.1 per cent) were achieved and two were not achieved. Five of the programmes achieved 100 per cent of the predetermined targets and programme 1: Administration and Support did not achieve all the set targets.

5.3.2.1. Programme 1: Administration and Support

This programme covers the activities of the Executive Office and Directorates. The Strategic Objectives are: Executive Office: to provide bold and competent leadership in the implementation of the National Qualifications Framework (NQF) Act to the advantage of lifelong learners, to facilitate and support the implementation of the NQF policies in a simple, coherent and integrated manners and to coordinate the work of the NQF partners; Financial and Administration: to maintain an effective and efficient financial management system; Human Resources: to provide strategic and operational human resource support to the SAQA; Information Technology: to develop an effective and efficient IT system that supports the SAQA: Advocacy, Communication and Support: to inform the public about the NQF, the SAQA and related matters; and advisory services to enable the public to navigate the NQF.

The programme had 27 targets of which 25 (92.6 per cent) were achieved and two (7.4 per cent) were not achieved.

During the year under review, the SAQA monitored implementation of the NQF Implementation Framework 2015 – 2020 through an update of the Tracking Grid; produced and submitted a Progress Report on simplifying the NQF to the Minister; developed a new Action Plan for Articulation which was approved by the Board; produced a report on the implementation of collaboration between the SAQA and the Quality Councils; approved 100 percent of staff contracts; assessed 100 per cent of staff, reviewed and updated the Succession Plan, and migrated the Information Technology from DocBox to IBM Connections. The SAQA did not meet the target to maintain over 90 per cent rating for awareness, understanding and value among policy makers and policy implementers. However, it achieved 90 per cent.

5.3.2.2. Programme 2: Registration and Recognition

The programme is responsible for registering nationally relevant and internationally comparable qualifications and part-qualifications that meet national criteria and articulate across sub-frameworks; and recognising professional bodies and registering professional designations. The programme had five predetermined targets and were all achieved. The SAQA monitored all qualifications registered from 2009 and compiled a list of registered qualifications with no learner enrolments after two years of registration and submitted it to the relevant Quality Councils; processed 100 per cent of applications for recognition from professional bodies and registration of their professional designations and monitored 100 per cent of professional bodies that were recognised in 2013/14 financial year against the policy and criteria.

5.3.2.3. Programme 3: National Learners Records Database (NLRD)

The programme is responsible for maintaining and further developing of the NLRD’s functionality, which serves as the key national source of information or human resource and skills development in terms of policy, infrastructure and planning. The programme is also responsible for verifying the authenticity of national qualifications through its Verification Project. The programme had eight predetermined targets and all were achieved. The SAQA uploaded 100 per cent of all data from the Quality Councils that criteria; made available all seven searchable databases at least 95 per cent of the time and produced one report per quarter on learner achievements added to the NLRD.

5.3.2.4. Programme 4: Foreign Qualifications Evaluation and Advisory Services

The programme is responsible for evaluating foreign qualifications against set criteria, including verification of the authenticity of qualifications and comparison of foreign qualifications with similar qualifications on the South African NQF. The programme had three targets and all were achieved. The SAQA produced a monitoring report on the implementation of the amended Policy, with specific reference to the framework for the recognition of deviations and exception; registered and activated 100 per cent of all compliant applications for further processing and produced an annual trends report on misrepresented foreign qualifications.

5.3.2.5. Programme 5: Research

The programme is responsible for conducting evidence-based research to evaluate the impact of the NQF and inform the development and further implementation of the NQF. The programme had four predetermined targets and all were achieved as planned. A report on progress made with current partnership (Durban University of Technology) and a draft Concept Paper for the SAQA’s 2021 NQF Impact Study were produced. The SAQA produced on Bulletin.

5.3.2.6. Programme 6: International Liaison

The programme is responsible for liaising with international partners on matters concerning qualifications frameworks and sharing best practice within the NQF family. The programme had five targets and all were achieved. The SAQA produced two documents on international best practice; produced one benchmarking report and participated in 12 international forums. The SAQA convened 12 stakeholder workshops against the target of one.

5.3.3. 2018/19 audit outcomes

The SAQA obtained an unqualified audit award without findings during 2018/19.

6. OBSERVATIONS

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

6.1. Programme 1: Administration

6.1.1. The Committee welcomed the improvement by the Department in the submission of annual financial statements that were free of misstatements and the unqualified audit award from the Auditor-General. However, repeat irregular expenditure incurred as a result of non-compliance with supply chain management procedures in the procurement of services was noted with grave concern.

6.1.2. The Committee expressed a grave concern with regard to the fraudulent and wasteful expenditure amounting to R24 million incurred by the Department due to a fraudulent payment made to CET college employees. Of great concern is that R11.9 million of the R24 million paid fraudulently to the CET employees is still to be recovered and one of the official who was responsible for this irregularity had resigned and no arrests have been made. Moreover, it is also alleged that this official has taken the Department to the Public Protector demanding that his/her pension benefits be released.

6.1.3. Repeat audit findings on the poor record management and lack of information to support reported performance information in University Education, TVET and CET programmes were also noted with concern.

6.1.4. The high number of auditees within the higher education portfolio, which are still not able to submit annual financial statements free of misstatements and lack of implementation of action plans to address prior year audit findings as reported by the AGSA is disconcerting.

6.1.5. There has been an improvement in the filling of funded vacancies within 180 days as opposed to the previous financial years. 93.8 per cent of funded vacancies had been filled against the target of 90 per cent. The Committee was seriously concerned about the delays by the Ministry in the filling the three Deputy Director-General (DDG) positions in Planning, Policy and Strategy, Technical and Vocational Education and Training and Community Education and Training programmes. The DDG position for the CET was advertised on 5 November 2017 while for the Planning, Policy and Strategy and the Technical and Vocational Education and Training the posts were advertised on 1 June 2018 and 10 June 2018 respectively, but the process has not been finalised.

6.2. Planning, Policy and Strategy

6.2.1. The Department did not have clear timeframes to address all the targets that have not been achieved for 2018/19.

6.2.2. The Department does not have systems in place to monitor and track the progress of beneficiaries of the skills development interventions to determine their absorption into the labour market.

6.3. Programme 3: University Education

6.3.1. The Committee was concerned about universities that are not meeting the governance standards and those experiencing governance and management challenges.

6.3.2. The programme did not achieve some of its system targets, especially in the NDP related priorities. Of great concern is that the targets to have 270 000 eligible university students obtaining financial assistance. This was attributed to serious deficiencies in the systems and capacity of the NSFAS during the 2017 student funding cycle.

6.3.3. The shortage of suitable and convenient student accommodation in higher education institutions remains a concern. Overcrowding, mainly in historically disadvantaged institutions (HDIs) where up to seven students share a single room is concerning. Nonetheless, the Committee welcomed the Department’s intervention to partner with the Development Bank of Southern Africa (DBSA) and other private financial institutions to raise funds to expand student accommodation. The Department received funding to build 30 000 beds over the 10-year period from Treasury. However, through its partnership with the private sector, it plans to build additional 200 000 beds for universities taking into consideration the notion of a student village.

6.3.4. The National Student Financial Aid (NSFAS) plays a critical role in the funding of students from poor and working class families to access education and training opportunities in the post-school education and training sector. However, the entity was unable to table its Annual Report 2018/19 at the end of September 2019 as required by the PFMA. The delays were due to outstanding audit issues. The Committee was gravely concerned about this development given the significant role of the entity in the PSET system. The AGSA undertook to finalise the outstanding matters and sign off the financial statements by the end of October 2019.

6.3.5. Student drop-out and below average undergraduate success rates in higher education, especially in distance learning, despite the significant investment in the sector remains a concern.

6.4. Programme 4: Technical and Vocational Education and Training

6.4.1. The regressed performance of the programme on system outputs relating to the National Development Plan from 70 per cent in 2017/18 to 27 per cent in 2018/19 is of great concern.

6.4.2. The 2018/19 audit outcomes of the TVET sector are not satisfactory, despite the slight increase (3 to 6) in the number of TVET colleges receiving unqualified audit opinions with no findings. The annual financial statements preparation remains a concern in the TVET sector, as material adjustments were effected to the financial statements submitted for audit at forty TVET colleges. Three TVET colleges were unable to submit their financial statements due to a variety of reasons. The Committee remains concerned with the financial management capacity of TVET colleges despite some of them having internal audit units. Moreover, the withdrawal of the South African Institute of Chartered Accountants (SAICA) Chief Financial Officer (CFO) to support TVET colleges has had a negative impact on the management of their finances.

6.4.3. The delays in the issuance of outstanding NC(V) and Report 191 certificates due to eligible candidates in the TVET sector remains a concern. Compounding the situation is the recurring failures of the State Information Technology Agency (SITA) to consolidate datasets of the different examination cycles so that the Department can issue the correct certificates. The Committee undertook to engage further on this matter with the Department, Umalusi and SITA.

6.4.4. The underspending of the conditional infrastructure efficiency grants (CIEG) by TVET colleges on infrastructure development, repairs and maintenance remains a concern. Compounding the situation has also been the delays in the completion of the new TVET college campuses due to disruptions by disgruntled community members and business forums.

6.4.5. The overall performance of the TVET sector in relations the NC(V) certification rates is unsatisfactory. This is compounded by the shortage of suitably qualified lecturers in the TVET sector and the requisite equipment to enable learners to undertake their practical exercises.

6.4.6. The curriculum of the TVET sector is archaic and no longer relevant to meet industry skills needs. This negatively impacts the absorption of TVET graduates into workplaces.

6.4.7. The poor administration and disbursement of student funding and allowances by NSFAS to students in the TVET sector remains a serious concern. TVET colleges continue to experience challenges with respect to the submission of correct registration data for disbursement of allowances. Moreover, some of these institutions do not have the requisite capacity to administer NSFAS funding for students.

6.5. Programme 5: Skills Development

6.5.1. The Committee was concerned about inadequate oversight by the Skills Development Branch over its entities. The Committee noted internal control deficiencies in the National Skills Fund, especially inadequate project management and inadequate supporting evidence to allow the AGSA to confirm the occurrence of expenditure for the skills development activities that the NSF has advanced towards.

6.5.2. The annual financial statements of the 15 SETAs were submitted with material misstatements and the inability of the SETAs internal controls to identify the misstatement independent of the AGSA audit process was disconcerting.

6.5.3. The Committee expressed serious concern with the increase in irregular expenditure from R353 million in 2017/18 to R1.2 billion in 2018/19 and noting that this could have been avoided if action plans developed to address the prior findings were implemented and monitored regularly. Of great concern was that R1.1 billion of the irregular expenditure was incurred by four SETAs, Construction SETA, Energy and Water SETA, Media, Information and Communication Technologies and the Services SETA.

6.5.4. The Committee was concerned about lack of tracking mechanism by the SETAs to track graduate destiny of their skills development interventions.

6.5.5. The need for skilled and capable artisans in a developmental state to grow and sustain the economy is essential. However, the target on the number of new learner artisans qualified was not achieved and this remains a concern given the shortage of artisans.

Inadequate coordination of the skills development interventions by SETAs remains a concern and their impact on the lives of the beneficiaries is inadequate.
TVET colleges have been prioritised by government as institutions that can play a major role in closing the skills gap and to grow and sustain the economy through the training of artisans and other mid-level skills. However, the inability of the industry to open more spaces for TVET students to undertake work integrated learning (WIL) to complete their qualifications remains a concern.

6.6. Community Education and Training

6.6.1. The year on year decline in the headcount enrolment in the Community Education and Training sector is a cause for concern, including the current academic offerings with limited skills development focus.

6.6.2. Inadequate funding allocation for the sector has had an adverse impact on its growth and relevance to address the needs of those who are not in education, employment or training.

6.6.3. The general public does not seem to be knowledgeable about the role and mandate of CET colleges. These institutions are located within communities and mainly operate from schools due to limitations of infrastructure in the CET sector.

6.7. Council on Higher Education

6.7.1. The entity achieved a clean audit opinion for the second consecutive financial year which is commendable.

6.7.2. The entity recorded an underspending of R6.1 million during the year under review, although it had budget constraints which also impacted on its ability to execute its mandate meaningfully. The underspending has been mainly attributed to the late allocation of R7.7 million additional funding by December 2018.

6.7.3. The delays in the filling of vacant funded posts remains a concern for the entity. Compounding the situation has been the staff turnover (14 per cent in 2018.19) and resignations of senior management personnel. One of the reasons cited for the exodus of staff is the lack career opportunities at senior management level of the entity.

6.7.4. The entity has been subjected to litigations emanating from the private higher education providers due to its accreditation processes. As a result, its expenditure on legal fees has been highlighted as a concern by the Committee. However, the entity has assured the Committee that its accreditation processes are sound, and its winning most of legal cases with costs and the expenditure on legal fees decreased during the year under review.

6.7.5. The underperformance, particularly in the institutional quality assurance is concerning. One of the reasons cited for this underperformance is the CHE’s reliance on peers in higher education to undertake institutional audits.

6.8. South African Qualifications Authority

6.8.1. The clean audit achieved by the entity for the year under review was commended, including the achievement of key deliverables.

6.8.2. The 14 resignations that were recorded at the entity during the year under review were noted as a concern.

6.8.3. The entity experienced an underspending amounting to R11.9 million during the year under review, although it experienced budget constraints.

6.8.4. The Committee expressed concerns with regard to the number of people submitting fraudulent or misrepresented qualifications to obtain senior management posts, particularly in the public sector, and the inadequate verification systems in the public sector to identify fraudulent qualifications prior the appointment of candidates into permanent posts.

6.8.5. The Committee expressed concerns with what appears to be a confusion in the recognition of short learning courses offered by both private and public training providers. The main confusion is attributed to the fact that short learning courses are not required by law to be registered in the National Qualifications Framework (NQF), as such, employers do recognise them for employment purpose. An example was given regarding the Microsoft certificate which is internationally recognised, but not registered on the NQF.

6.8.6. The proliferation of bogus private education and training institutions was noted as a serious concern. Compounding the situation is that many young people who do not get admission into universities or TVET colleges fall victims of these bogus institutions that are mainly profit driven.

6.9. Quality Council for Trades and Occupations

6.9.1. Then entity received a clean audit for 2018/19 which is commendable. However, the clean audit did not translate into improved service delivery, as performance of the QCTO 59 per cent for the period under review.

6.9.2. The entity had a high vacancy rate of up to 63 per cent. This is mainly attributed to the delays in the filling of posts due to uncertainties in the transfer of the quality assurance function from the SETAs to the QCTO.

6.9.3. The curriculum of the TVET sector is deemed as being outdated and no longer relevant to the needs of the modern economy and a developmental state. In this regard, the QCTO plays a critical role in the development and accreditation of vocational and occupational skills that are needed by industry, and should assist in the process of the review of the curriculum for the TVET sector to be linked with industry needs.

6.9.4. The entity was unable to cope with the volumes of new applications for accreditation due to lack capacity.

7. RECOMMENDATIONS

The Committee, having assessed the Annual Report 2018/19 of the Department and entities recommends that the Minister of Higher Education and Training and the Minister of Finance should consider the following recommendations:

7.1. Programme 1: Administration

7.1.1. The Department should pursue a criminal case against the officials implicated in the fraudulent payment to CET employees and ensure that R11.956 million lost fiscus is recovered as a matter of urgency.

7.1.2. Proper systems should be put in place to address repeat material findings in respect of the usefulness and reliability of the reported information in University Education, TVET and CET programmes, which occurred due to lack of poor record management and lack of evidence to support the reported performance achieving.

7.1.3. The Department should expedite investigation processes in the irregular expenditure and implement consequences management against officials who are responsible for the irregularity.

7.1.4. The AGSA and the Department should work with the entities within the portfolio to address capacity challenges, as well as the strengthening of the internal control environment so that the entities to reduce reliance on the audit process to identify and address misstatements in the annual financial statements.

7.1.5. The Ministry should expedite a process of filling the three Deputy Director-General positions in Planning, Policy and Strategy, TVET and CET programmes as the process had started in November 2017 for the DDG CET and June 2018 for both the DDGs for the Planning, Policy and Strategy and the TVET.

7.2. Programme 3: University Education

7.2.1. The Department should strengthen its oversight function over the NSFAS to ensure that systems are put in place to address deficiencies with regard to funding allocations to universities and disbursements of allowances to students timeously and to ensure that expansion of access to education and training of students from the poor and working class families is not hindered.

7.2.2. The Department should strengthen oversight role over the universities to address governance and management challenges and ensure that the core work the universities, teaching and learning, research and community engagement is not compromised.

7.2.3. The Department, working with universities should put mechanisms in place to address areas of underperformance in the system targets.

7.2.4. Notwithstanding the reality that the AGSA does not audit the 26 public universities that receive a significant portion of their funding from state subsidies, these institutions should be held accountable for the utilization of public funds. In this regard, the AGSA should analyse and consolidate the audit reports of universities and submit to the Committee for its scrutiny.

7.2.5. Universities receive the biggest portion of funding in the entire PSET sector. In this regard, the undergraduate success rates and throughput rates should be above average given the significant investment government has made in this sector.

7.2.6. The Administrator at the NSFAS should be supported to turnaround the entity so as to improve the disbursement of funds and allowances due to eligible students. It is unacceptable that students who qualify for NSFAS funding do not get their allowances due to anomalies in the IT systems of the entity.

7.2.7. Student safety and security at institutions of higher learning is of paramount importance, however, the incidence of violence and killing of students within university campuses is concerning. In this regard, the Department should put measures in place to assist Universities in becoming safe spaces for teaching and learning.

7.2.8. The Department working in collaboration with the universities and other relevant stakeholders in the higher education sector should consider the possibilities of reviewing the curriculum of higher education to make it more relevant to the needs of a developmental state and to respond to the notion of fourth industrial revolution (4IR) and preparation of jobs for the near future.

7.2.9. Notwithstanding the significant progress made by the Department in securing additional funding to expand student accommodation in higher education, the private sector should be pursued to invest more resource towards the expansion of student housing in higher education.

7.2.10. The Department should consider the possibility of expanding its programme on the development of young and in particular, black female academics in preparation for future South African universities.

7.3. Programme 4: Technical and Vocational Education and Training

7.3.1. The Department should ensure that the Sedibeng, Taletso and Tshwane North TVET colleges submit their 2018/19 outstanding annual financial statements for auditing.

7.3.2. The Department should put measures in place to ensure adherence by all TVET colleges to the submission of the annual financial statements within the legislated time frame.

7.3.3. Consequence management should be implemented against the 22 TVET colleges which are repeat offenders in terms of audit findings and a report be submitted to the Committee.

7.3.4. The withdrawal of the South African Chartered Accountant (SAICA) Chief Financial Officers from the TVET colleges and the impact on the financial management within the sector was noted with concern. The Department should expedite a process of filling the outstanding eight chief financial officer posts at colleges.

7.3.5. The Department should put mechanisms in place to address the regressed performance of the programme on system outputs relating to the National Development Plan, which declined from 70 per cent in 2017/18 to 27 per cent in 2018/19.

7.3.6. TVET colleges should be supported to become institutions of choice for young people to acquire new skills to grow and sustain the economy. In this regard, additional funding should be allocated to increase enrolment, expand infrastructure and improve the remuneration of TVET lecturers to attract suitably qualified personnel at these institutions.

7.3.7. The Department working in collaboration with the AGSA should convene capacity building workshops on financial management in each province to train and develop TVET college employees in financial management skills. This will enable employees in finance units of these institutions to understand the AGSA’s audit processes and have the requisite skills to submit financial statements free of material misstatements.

7.3.8. The Department should consider the possibility of establishing formal partnerships with industries and the private sector in general, so that there is a seamless articulation of students from colleges to industry for working integrated learning purposes. Students should not be disadvantaged by a curriculum that is designed to make work integrated learning (WIL) compulsory to attain a qualification.

7.3.9. The R1.3 billion allocated to the TVET sector for infrastructure development and maintenance is commendable. However, the inability of TVET colleges to comply with the required standard operating procedures (SOPs) of the Department for receiving funding for infrastructure development is concerning. Thus, the Department should put measures in place to ensure that TVET colleges are capacitated to submit the relevant information needed to receive funding to expand their infrastructure.

7.3.10. The Department working collaboration with the SITA and Umalusi should find a sustainable solution to eradicate the certification backlog and to ensure that students in the TVET sector receive their certificates within three months after completing the exams.

7.3.11. Irregularities in the disbursement of NSFAS funding and allowances due to qualifying students in the TVET sector should be speedily resolved.

7.3.12. The curriculum of the TVET sector should be reviewed urgently to align it with the needs of the industry and the economy. This will enable TVET colleges to be institutions of choice for young people and given that Grade 9 pupils will not receive a formal general education and training certificate (GETC) qualification which will enable them to access vocational and occupational skills offered by TVET colleges.

7.3.13. The Department should speedily resolve the delays with the completion of the new TVET college campuses. Moreover, interactions with the local communities and business forums should be prioritised prior the commencement of the infrastructure projects to prevent unnecessary disruption and ensure that there is a common understanding between the community and the relevant contractors.

7.3.14. The Department should prioritise the expansion of the training of TVET college lecturers in universities.

7.4. Programme 5: Skills Development

7.4.1. The Branch should strengthen its oversight role over the entities that report to it and ensure that action plans developed to address audit findings are implemented.

7.4.2. The Department should ensure that the SETAs that incurred irregular expenditure during the year under review expedite the investigation processes into the irregular expenditure and implement consequence management.

7.4.3. The Department working with the National Skills Authority and the SETAs should develop a tracking mechanism to track graduate destiny of their skills development interventions.

7.4.4. Artisan training and development is critical to grow the economy, and the Department should strive for improvement in the number of new artisan learners that are enrolled and qualified per annum.

7.5. Community Education and Training

7.5.1. The Department should address the relevance of the curriculum offered in the CET sector so as to ensure skills development interventions to support local economic growth.

7.5.2. The Department should strengthen its advocacy strategy to attract youth, adults to enrol in the CET learning centres and to partner with SETAs to deliver relevant skills.

7.5.3. Notwithstanding the current fiscal constraints, National Treasury should increase the baseline funding for the sector so that the mandate of the sector and its policy priorities could be realised.

7.6. Council on Higher Education

7.6.1. The entity plays a significant role in the promotion of quality in higher education and advising the Minister on all matters related to higher education. In this regard, it is critical for the entity to improve its capacity to deliver on this important mandate through the filling of funded vacancies.

7.6.2. Articulation of TVET graduates into higher education institutions should be seamless as envisaged in the White-Paper for Post-School Education and Training. In this regard, the CHE working in collaboration with other quality councils such as the QCTO and Umalusi should ensure that the curriculum design of the TVET sector promotes smooth articulation of TVET graduates into higher education.

7.6.3. The CHE should consider the possibility of undertaking research to look into the remuneration of Vice-Chancellors of universities with the objective of providing advice to the Minister on possible regulation of this matter.

7.7. South African Qualifications Authority

7.7.1. The entity should expand its advocacy and outreach programme to educate the public about the significance of the National Qualifications Framework (NQF).

7.7.2. The entity should improve its staff retention strategy to minimise the staff turnover.

7.8. Quality Council for Trades and Occupations

7.8.1. The filling of vacant funded posts should be prioritised as a matter of urgency to improve the overall performance of the entity which was at 59 per cent during the year under review.

7.8.2. The entity plays an important role in the accreditation of qualifications within the occupational qualifications sub-framework (OQSF). In this regard, it is critical for the entity to have the requisite capacity to deal with the volumes of applications for accreditation from skills development providers.

7.8.3 The entity should expedite the processes of purchasing its own premises given the high rental fee amounting to R8 million per annum that is being incurred annually.

8. REPORTING REQUIREMENTS

Entity	Reporting Matter	Action required	Time-Frame
DHET	Recurring audit findings on the usefulness and reliability of reported performance information	DHET to develop and implement action plan to address the audit findings and submit it to the Committee for the purpose of quarterly monitoring	Internal Audit and Audit Committee of the DHET to report to the Committee quarterly in 2020/21
	Irregular expenditure and fruitless and wasteful expenditure	To expedite the investigation and implement consequence management DHET to open a criminal case against the official implicated in the fraudulent payment made to the CET lecturers and to recover the outstanding R11 million	DHET to report to the Committee on the outcomes of disciplinary case at the next quarterly report, 2020/21.
	Implementation of the 2019 BRR Recommendation	DHET to implement the BRR Recommendations	DHET to provide updates to the Committee on the implementation of BRR Recommendations quarterly, 2020/21
	Non-achievements of the targets	Progress made on targets not achieved	DHET to report to the Committee quarterly, 2020/21
TVET Colleges AGSA / DHET	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 and implementation of consequence management	At the next quarterly reporting in 2020/21 and during oversight visits to colleges.
TVET Colleges AGSA / DHET	Sedibeng, Tshwane North and Taletso TVET colleges	DHET to ensure that the outstanding Annual Financial Statements are submitted to the AGSA	AGSA/ DHET and the colleges to report to the Committee on progress in the submission of the AFSs and on the audit outcomes of these colleges
NSFAS/ AGSA	Outstanding Annual Financial Statements	2018/19 Annual Report to be tabled in Parliament. Consequence management should be meted against the NSFAS officials who are responsible for the Report not finalised and tabled in Parliament on time.	AGSA to report to the Committee on the Audit outcome of the NSFAS 2018/19 Annual Financial Statements, November 2019. The NSFAS to appear before the Committee on its 2018/19 Annual Report, November 2019. The NSFAS to appear before the Committee quarterly on progress made in restoring governance and management at the Entity and funding allocation to universities and disbursements of allowances to students.
CETA EWSETA MICT Services SETA	Irregular expenditure of R1.1 billion	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 SETAs to conduct investigations and implement consequence management	At the next quarterly reporting in 2020/21 and during oversight visits, 2020/21 SETAs to report to the Committee on the outcomes of the investigation and implementation of consequence management

9. CONCLUSION

For the 2018/19 financial year, the Department had a total revenue amounting to R90.740 billion. The budget comprised of R73.124 billion appropriated for the Department, and R17.479 billion for direct charges against the National Revenue Fund for the Sector Education and Training Authorities (SETAs) and the National Skills Fund (NSF), (R27.674 million) from departmental receipts and (R108.072 million) from aid assistance. The Department’s total revenue for the 2018/19 financial year increased by R22.035 billion from R68.705 billion in 2017/18. The bulk of the increase was mainly due to the additional budget allocation to phase in implementation of fee free education policy.

For the 2018/19 financial year, the Department had a total of 110 targets, comprised of 75 planned targets (direct output) across all six budget programmes 35 systems target implemented by universities, TVET colleges, Community Education and Training colleges and the Sector Education and Training Authorities (SETAs). The Department’s overall performance on the combined direct and system outputs was 79 per cent (87 targets achieved) of the planned outputs. Of the 75 Departmental targets, 71 (95.6 per cent) were achieved and four (4.4 per cent) targets were not achieved as planned. Performance increased marginally by 1.5 per cent from 94.1 per cent in 2017/18 to 95.6 per cent in 2018/19. Two programmes, University Education and Administration did not achieve 100 per cent of their planned direct outputs.

The Department has received an unqualified audit opinion for 2018/19 with matters of emphasis raised by the Auditor-General. Of serious concern to the Committee is the inability of the Department to correct the recurring findings that had been raised by the AG in the previous year in particular the non-compliance to supply chain management and procurement processes. Compounding the situation is the irregular expenditure incurred amounting to R138 million for the Department alone. Moreover, there seems to be a lack of consequence management against officials involved in irregularities, and the delays in the finalisation of misconduct hearings. The Committee expressed serious concern about the R1.2 billion irregular expenditure incurred by entities reporting to the Department, in particular the four SETAs with a combined irregular expenditure amounting to R1.1 billion.

Monitoring and evaluation over the entities that account to the Department is an ongoing concern. These institutions are required to submit reports to the Department on the utilisation of public funds on a quarterly and annual basis. Despite these reporting mechanisms, non-compliance remains a concern. The Committee called upon the Department to change the status quo and ensure that the officials who are tasked to serve the public undertake their duties with due diligence and respect of the law.

In relation to public entities, the failure by NSFAS to submit its Annual Report within the legislated date was noted as a grave concern. In this regard, the Committee requested the AG to ensure that the process to address the outstanding audit issues is finalised by the end of October 2019 as committed so that the entity’s performance can be scrutinised by Parliament. In relation to the CHE, SAQA and the QCTO, the Committee commended these institutions for achieving clean audits for 2018/19. Concerns were mainly related to the delays in the filling of vacancies, which resulted in savings for these entities, and also underperformances in certain key delivery programmes, especially with regard to the CHE and the QCTO.

The Democratic Alliance have reserved their right to an opinion on the Report.

Report to be considered.

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ATC191029: Budgetary Review and Recommendation Report of the Portfolio Committee on Higher Education, Science and Technology on the 2018/19 Annual Report of the Department of Higher Education and Training and Entities, dated 29 October 2019

Higher Education, Science and Innovation

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