ATC130530: Report of the Select Committee on Labour and Public Enterprises on its Strategic Planning Workshop, dated 15 May 2013

Report of the Select Committee on Labour and Public Enterprises on its Strategic Planning Workshop, dated 15 May 2013

1. Background

The President of the Republic of South Africa, Mr Jacob Zuma, in his State-of-the-Nation Address early this year, made the point that the National Development Plan (NDP) contains all the necessary guidelines for South Africa that will lead to realising the country’s service delivery objectives. He went on to say that the NDP proposes interventions that can put the economy on a better footing, serving as a national guideline for all government departments in their efforts to provide services to the people as well as in tackling poverty, unemployment and inequality.

The President’s statement compelled government departments to align their Strategic Plans and Annual Performance Plans ( APPs ) with the National Development Plan. Parliament on the other hand had to strengthen its oversight mechanisms over the executive to ensure, among other things, that the vision contained in the National Development Plan is achieved.

2. Introduction

The Select Committee on Labour and Public Enterprises, as the legislative arm of government entrusted with the oversight responsibilities of the Departments of Labour, of Communications and of Public Enterprises, convened its strategic planning workshop on 6 March 2013 at the Pepper Club Hotel in Cape Town .

The purpose of the workshop was to (1) understand how departments have aligned their key policy objectives, both short and long term with those of the President’s State-of-the-Nation Address and those of the National Development Plan; (2) identify challenges faced by departments and any legislative gaps responsible for the slow delivery of services to the people; and (3) develop priorities for the oversight programme of the Committee as Parliament approaches the end of the fourth term. The Committee was briefed by the Department of Labour and the Department of Public Enterprises on 6 March 2013. The Department of Communications briefed the Committee on 24 April 2013.

3. Presentation by the Department of Labour

3.1 Alignment with the NDP and the State-of-the-Nation Address

The Director-General (DG) gave a brief overview of the department’s vision, key focus areas and strategic plan. In the presentation the DG identified some of the challenges facing the department and how the department plans to address them. The department’s presentation was structured into four parts, as follows:

§ Alignment of the department’s key objectives with the key priorities of the State-of-the-Nation Address;

§ Planned legislation by the department to be tabled in the 2013/14 financial year;

§ The department’s Operational Plan as part of the department’s overall Strategic Plan;

§ Challenges facing public entities and their mandates.

In aligning the department’s key objectives with those of the State-of-the-Nation Address, the department plans to focus on “A Responsive Labour Market” aspect of the address. These issues are focus areas with which the department is already dealing, according to the DG. The list below contains some of the key actions the department plans to focus on with respect to the short-term goals outlined in the State-of-the-Nation Address:

§ Develop proposals for an acceptable minimum standard of living and proposals on how to achieve this over time;

§ Give a subsidy to the placement sector to identify, prepare and place matric graduates into jobs;

§ Adopt an approach to handling probationary periods that reflect the intention of probation;

§ Simplify dismissal procedures for non-performance or misconduct, especially for smaller firms;

§ Strengthen dispute resolution mechanisms in the labour market with a view to reducing tension and violence.

With regard to addressing focus areas contained in the National Development Plan, Department of Labour Plan will pay attention to the following areas:

§ Creating decent work;

§ Social protection;

§ Revised Broad Based Black Economic Empowerment Codes of Good Practice

§ Youth employment incentives;

§ Assistance to Marikana victims;

§ Social stability;

§ Peace and stability in the agriculture sector;

§ Strengthening collective bargaining;

§ An integrated response to TB and HIV infection in the workplace.

The Department of Labour has created a number of initiatives within the framework of the Decent Work Country Programme (DWCP) to reduce the high rate of unemployment in the country. The department is currently discussing the DWCP profile and the document will be published before the end of the 2013/14 financial year. The department is also part of the stakeholders expected to conclude an Accord in relation to the following: improved training and work experience for young people; National Youth Service programme; employment set-asides for young people in key sectors; youth co-operatives and youth-owned small businesses to promote youth involvement in the economy.

3.2 Legislation to be tabled in Parliament

The department is planning to bring before Parliament the following legislative amendments:

§ Amendment of the Unemployment Insurance Act (No. 63 of 2001);

§ Promulgation of the Employment Services Act (No. 38 of 2012);

§ Amendment of the Compensation for Occupational Injuries and Diseases Act (No. 130 of 1993);

§ Amendment of the Occupational Health and Safety Act (No. 85 of 1993);

§ Amendment of the Basic Conditions of Employment Act (No. of 1997);

§ Amendment of the Employment Equity Act (No. 55 of 1998);

§ Amendment of the Labour Relations Act (No. 66 of 1995).

Since the list is long, the department is planning to fast-track at least four amendment bills to be processed in Parliament before the end of the fourth Parliament term. These are; the Labour Relations Act, Employment Equity Act and Conditions of Employment Act.

3.3 Strategic Plan – Operational Plan of the Department of Labour

The Department of Labour will focus mainly on Outcome 4: Decent employment through inclusive economic growth, and two other outcomes: Outcome 11. Create a better South Africa and contribute to a better and safer Africa and World; and Outcome 12: An efficient, effective and development orientated public service and an empowered and inclusive citizenship. To address these strategic priorities, the Department has identified the following strategic goals:

§ Implementation of Decent Work Country Programme (DWCP);

§ Rebuilding Public Employment Services;

§ Strengthening of the Department of Labour’s inspectorate division;

§ Strengthening social security including reintegration of workers into the labour market and restructuring the Sheltered Employment Factories;

§ Give value to social dialogue in the formulation of sound and responsive legislation and policies to attain labour market flexibility for competitiveness of enterprises which is balanced with the promotion of decent employment;

§ Strengthen the institutional capacity of the Department to improve service delivery and access to services provided by the department.

4. Key challenges facing the Department of Labour

§ information Technology systems are not utilised and services are provided manually;

§ Ensuring that amendments to BBBEE-codes do not contradict Labour Relations Act or Employment Equity targets;

§ To many farmers are applying for exemption from the minimum wage determination for the farming industry;

§ Farmers are applying for work permits to employ foreign labourers (who actually have less qualifications than those trained in the country);

§ Occupational Health and Safety Act that still have to be considered by Cabinet;

§ The development and implementation of the Fraud and risk strategy for the department;

§ Ensuring compliance with Employment Equity legislation in the labour market through the inspectorate division;

§ New sectors such as Call Centres will have to comply with minimum wage determination the department will have to address matters like this one where new sectors emerge;

§ The emergence of new unions and their recognition changing the labour market landscape;

§ Employment of people with disabilities, a challenge in meeting the targets by employers;

§ A different meeting to unpack the concept of “decent work”.

5. Presentation by the Department of Public Enterprises

The Director-General of the Department of Public Enterprises gave a panoptic view of the department’s strategic plan, and how the department in its operational plan has aligned its projects to give meaning to the National Development Plan. The presentation was structured into five parts; namely the policy framework, strategic plan priorities for 2013/14, resourcing of the department, legislation programme and challenges.

5.1 Policy framework

The department’s vision is aimed at driving investment, productivity and transformation in the DPE’s state-owned companies, their customers and suppliers to unlock growth, drive industrialisation, create jobs and develop skills. According to the Director General (DG), the vision shares the same objectives of the National Development Plan (NDP). He made an example of the Department’s build programme (the construction of both Medupi and Kusile power stations, as well as Transnet’s infrastructure build programme), pointing out that they will help put the economy on job creating growth as envisaged by the National Development Plan.

5.2 Alignment

The establishment of the Presidential Information Co-ordinating Committee (PICC) is fundamental for improved coordination in the design and delivery of infrastructure projects. This also means that the alignment of all government’s projects into an overarching developmental strategy that speak to the National Development Plan’s Vision 2030.

The Department is working towards developing a transformation strategy that will guide State owned companies (SOC) on: (1) integration of small enterprises/BBBEE into SOCs value chain of suppliers; (2) expansion of the SOCs skills development programmes to support the development of critical skills; as well as (3) driving youth empowerment programmes within SOCs .

With regard to the role of SOCs in supporting the implementation of government programmes, the department will focus on the following:

§ Development of long-term strategies to ensure that SOCs remain sustainable and are able to support government’s objectives and;

§ To ensure that their balance sheets enable them to effectively execute their mandates.

The department has finalised the process of establishing the Project Management Office (PMO) in an effort to improve capacity to oversee State-owned companies’ build programme.

5.3 Priorities for the Department of Public Enterprises

§ The Department will intensify its focus on the successful implementation of the infrastructure programme as led by both Eskom and Transnet. Key priorities also include;

§ Strengthening capacity of the Department to oversee the infrastructure build programme

§ Facilitate creation of a supportive policy environment for State-owned companies to increase investment into the economy;

§ Promote increased localisation of procurement spend through the Competitive Supplier Development programme (CSDP);

§ Explore ways to support State-owned companies that are facing financial challenges.

6. Resourcing the Department of Public Enterprises

The mandate of the Department has expanded over the past few years in line with the role played by State owned companies in supporting government’s infrastructure roll-out plan. In line with the above developments, the Department’s staff complement has increased from 168 in 2009 to 210 in the 2012/13 financial year. The department is exploring ways to retain skilled personnel beyond increases in remuneration packages.

6.1 Challenges facing State-owned companies

6.1.1 The Department of Public Enterprises

The Department is faced with the challenge of retaining skilled staff who are sometimes poached by State-owned companies the department oversees.

6.1.2 Alexkor

Identification and funding of new mining ventures for the future sustainability of Alexkor as a sustainable business entity.

6.1.3 Broadband Infraco

Broadband’s funding requirements to enable the company to execute its mandate of making broadband services accessible to underserviced and underdeveloped areas.

6.1.4 Denel

Successful implementation of the company’s turnaround strategy for sustainability purposes, as well as fast-tracking the finalisation of the Defence Review Strategy. The latter will enable the department to determine Denel’s strategic role in arms manufacturing.

6.1.5 Eskom

Funding challenges as a result of the National Energy Regulator of South Africa’s (NERSA) decision to grant Eskom 8% tariff increase instead of the 16% Eskom applied for. This includes Eskom’s ability to maintain adequate energy supply to meet demand by energy consumers. Furthermore, the restructuring of the electricity industry as contemplated in the Independent System and Market Operator’s Bill and the impact it may have on Eskom’s balance sheet.

6.1.6 Safcol

Continuing land claims against Safcol’s plantations continue to delay the company’s future investments.

6.1.7 South African Airways

Rising fuel prices and the impact this has on the company’s profit margins

Recapitalisation of the airline to support the acquisition of new aircraft

6.1.8 South African Express Airways

Delays in tabling the entity’s annual reports and the company’s weak internal controls remain a challenge.

6.1.9 Transnet

Delays in the finalisation of the Rail Policy Act that may affect the company’s operations

7. Legislative programmes and challenges

7.1 The Shareholder Management Model

The Department of Public Enterprises is planning to introduce what it calls, Government’s Shareholder Management Bill for State-owned companies, and the period at which this will be done is the second semester of the fourth Parliament, and a letter has already been sent to the President in respect of the intended Bill.

The legislation is aimed at defining DPE’s mandate, entrenching Government shareholding and ownership on State-owned companies reporting to it, and also to streamline the relationship between DPE and its SOCs .

7.2 Repeal of the Overvaal Resort Act (No. 127 of 1993)

The department plans to engage the Companies Intellectual Property Commission (CIPC) and the Office of the Master of the High Court for appointment of the Liquidator for the liquidation of the Overvaal Resort.

The Department will also prioritise engagement with the following pieces of legislation:

§ The National Rail Policy Act

§ Independent System and Market Operator (ISMO)

This includes seeking funding allocations for energy generation beyond 2017 as outlined in the Integrated Resource Plan policy document.

8. Presentation by the Department of Communications

The Department of Communications’ Strategic Plan was presented by the Acting Director-General in the absence of the Director-General who tendered her apology. The Acting DG browsed through the Department’s vision, mission and mandate, pointing out that the Department’s vision is to create ICT conditions that will make South Africa to be a global leader in the development and use of Information Communication Technology (ICT). The Department’s mission, according to the Acting DG is to make South Africa to be an inclusive information society through world class ICT technologies. The mandate is to create a vibrant ICT sector that ensures all South Africans have access to affordable and accessible ICT services. The Acting DG however structured his presentation into ten parts, namely;

§ Legislative programme

§ Broadcasting Digital Migration

§ Broadband

§ Community Radio Stations

§ ICT Rural Development

§ E-Skills

§ International Programme

§ ICT SMMEs Development

§ SOEs oversight

§ Budget versus expenditure

The Acting DG gave a brief performance overview of each of the issues listed above, explaining in detail the issues that required clarity.

9. The legislative programme

The Acting DG subdivided his legislative programme presentation into four parts; ICT policy review, lending, borrowing and investment policies, Electro-communication Amendment Bill and ICASA Amendment Bill that were both at an introduction phase at Parliament.

The ICT Policy Review is a culmination of the ICT Colloquium that was held on the 19 ^th and 20 ^th of April 2012. The purpose of the colloquium was a pro-active consolidation of expert views on ICT policy for the benefit of South Africa ’s ICT sector as a constantly changing sector. In her foreword of the ICT Policy Review Framing Paper, the Minister, Dina Pule points out that, “Technology has changed the way we communicate and will increasingly affect how we access Television, radio, information, education, entertainment and services in general . These changes are set to accelerate - increasingly blurring the traditional distinction between broadcasting and telecommunications.” And to speed up the process the Minister has appointed an ICT Policy Review Panel in an effort to tackle challenges brought about changes in the ICT landscape.

The lending, borrowing and investment policies of the department refer in particular to the corporatisation of the Post-bank. And to date, policies on lending, borrowing and investment policies by the Post-bank have been approved by Cabinet, and have been submitted to the Speaker of Parliament for consideration by the legislature.

The Electronic Ccommunications Amendment Bill has been introduced to Parliament however the Acting DG indicated to the committee that the department will have to brief the committee of the amendments on a later date so as to enable the committee to participate effectively in the processing of the amendment Bill. The same applies to the Independent Communications Authority of South Africa (ICASA) Amendment Bill.

9.1 Broadcasting Digital Migration

The Acting DG pointed out that all the basics for Digital Migration were in place, this include the local digital content strategy, the issuing of the RFI for local Set Top Boxes (STB) manufacturing. He however noted that the court case brought against the department regarding the management of STB control mechanism was delaying the process. The other challenge is funding as South African Broadcasting Corporation (SABC) cannot implement the digital migration without sufficient funding.

9.2 Broadband

A broadband study was conducted and a report on baseline data on broadband coverage, penetration, speed and cost has been developed. Following that, a draft Broadband implementation plan has been developed as part of SIP 15. The Acting DG also made mention of the fact that about 54% of the identified schools were connected. These are however connection points only as computers are to be provided by the Department of Basic Education as per agreement between the two departments. The department has however taken it upon itself to provide computers soon after installing connectivity points once the funding it requires is provided.

9.3 Community Radio Stations

An impact Assessment report of Community Radio stations’ support programme has been developed and the Terms of Reference to appoint a service provider to roll-out the infrastructure to community radio stations have also been developed. The project is part of promoting the African languages on the one hand while building a content inventory for stations on the other. About 40 rural based radio stations were ring-fenced and arranged according to all official languages and taken on a mentorship training programme on script development for documentary and drama. All District Municipalities will at least have one Community Radio Station, and will be supported through the Department’s Community Broadcasting support programme.

9.4 ICT Rural Development

A baseline study for ICT Status in provinces report has been completed and this includes the benchmarking report. Business plans for about 61 rural sites has also been developed.

9.5 E-Skills

The Department’s e-Skills Institute has created an environment for e-skills collaboration across business, government, education, civil society, organised labour and international development agencies.

The Institute has also undertaken a collaborative review of its National e-Skills Plan of Action ( NeSPA 2010) and developed NeSPA 2013 to guide its efforts over the next two years and align them with the NDP-Vision 2030. The biggest success according to the department however is the fact that the Minister has signed off the Integrated Entity ( IE) which is now well positioned to harness existing resources in the country to develop new approaches to the coordination of appropriate capacity development using its multi-stakeholder platform to contribute to the massification of e-skills delivery at all levels. The target is to increase the levels of e-astuteness of 10 m South Africans over the next five years and thus build an informed consumer base for new ICT enabled service delivery processes of government, business, education and civil society.

9.6 International Programme

The Acting DG explained South Africa ’s involvement in ICT international forums and the manner in which the country interacts with other international stakeholders. He however pointed out that there seem to be an orchestrated agenda against South Africa ’s international standing in ICT that profiles Kenya as the leading African country in the continent. Despite these efforts, South Africa was elected to the African Union Communication Information Technology (AU-CIT) Steering Committee, and was also appointed to Chair key Committees in both the Communication Administration (CA) and Post Office Council (POC) as member of the UPU Bureau.

9.7 ICT SMMEs Development

The e-Commerce Platform as a marketing tool has benefited Small, Medium and Micro Enterprises (SMMEs) especially in Limpopo and the Eastern Cape . As a result of the e-Commerce Platform SMMEs were able to populate their business offerings, thus expanding their market reach in a highly competitive global market. SMMEs from other provinces are prioritised for the 2013/14 financial year. Furthermore, the Department’s partnership with the Centre for Small Business Development at the University of Johannesburg , conducted a workshop in 2012 to build capacity on the use and benefits of ICT tools. Over 236 entrepreneurs benefited from the programme, mostly from townships around Gauteng province.

9.8 State-owned enterprises ( SOEs ) oversight

A project to review the Articles of Association of State owned enterprises ( SOEs ) under the jurisdiction of the Department of Communications was undertaken, which was followed by the drafting of a Memorandum of Incorporation for SABC, South African Post Office, Sentech, Nemisa and UAASA. Quarterly monitoring of SOEs has been undertaken and all quarterly reports reviews and feedbacks given to SOEs to rectify areas identified as challenges. However, it must be noted that failure of SOEs to comply with deadlines for submission of documents as well as failure to achieve certain targets set in Corporate/Strategic Plans is proving to be a challenge.

10. Budget expenditure for 2012/13

The Department of Communications approximated R1, 6 billion from National Treasury for the financial year 2012/13 and transferred about R1, 2 billion of this amount to the relevant SOEs , as indicated in the table below:

Table 10. (a)

Entity name	Transferred amount	Expenditure %
USAASA	59 801	100%
USAF-	43 977	100%
Set Top Boxes	230 000	100%
ICASA	405 797	100%
SABC	154 152	100%
Channel Africa	43 292	100%
Sentech	165 834	100%
NEMISA	34 116	100%
SAPO	51 965	100%
SABC: Production	10 000	100%
Community Radio	8 000	95%
.za Domain Name Authority	1 500	100%
Membership fees	21 383	100%
NEPAD	0	0%
Skills Development Levy	0	0%
TOTAL	1 229 818	100%

The Department identified about five of its key priorities for the 2012/13 financial year as part of its Strategic Plan, and these are;

§ Broadband

§ Broadcasting Digital Migration

§ E-Skills

§ Post-bank

§ ICT Policy Review

Other key priorities

§ Public and Community Broadcasting

§ ICT Research

§ Radio Frequency Spectrum

§ Cyber Security

The department identified the following as strategic risks associated with its key priorities:

§ Delays in meeting national and international timelines on Broadcasting Digital Migration;

§ The possibility of delays in finalising the ICT Policy Review within committed timelines;

§ The inability to achieve 100% Broadband penetration by 2020;

§ The human resource skills capacity constrains;

§ The optimal functioning of State owned enterprises under the jurisdiction of the department as the service delivery arm of government;

§ Budgetary constrains that might affect certain projects carried out by the department e.g the digital migration project.

Of great concern however to the Department of Communications is the funding shortfall identified in some of the SOEs required to fulfil their mandates. Below is the table showing the extent of the shortfall among DOC’s SOEs :

Table 10. (b)

Entity name	Amount requested	Funds allocated	Shortfall
ICASA	406 111	132 000	274 111
SABC	7 326 318	138 000	7 188 318
Sentech	308 000	0	308 000
USAASA/USAF	2 695 382	0	2 695 382
SAPO	5 068 001	0	5 068 001
MEMISA	55 652	0	55 652
E-Skills	884 136	0	884 136
ICT Rural Connectivity	3 020 000	0	3 020 000
Community Broadcasting Support	131 000	0	131 000

11. Oversight priorities for the Select Committee on Labour and Public Enterprises

In light of the departments’ strategic plans’ (and annual performance plans) presentations before the Select Committee, the Committee resolved to align its oversight responsibilities with those outlined in the President’s State-of–the-Nation Address, and for long term purposes those contained in the National Development Plan, and also to ensure that departments that fall under its oversight jurisdiction also align their operational plans to achieve Vision 2030 as espoused in the country’s National Development Plan. Thus, as the Select Committee approaches the end of the fourth parliament, its focus will mainly focus on the following key areas:

11.1 Department of Labour

§ The processing of the Department of Labour’s amendment bills;

§ Overseeing the Decent Work Country Programme as well as job creation and youth employment set-aside-incentives (especially the Accord signed by the department and various key stakeholders on skills and employment);

§ Monitoring the skills development programme across provinces;

§ Overseeing the strengthening of the department’s inspectorate services to improve compliance by employers;

§ Overseeing and monitoring the Compensation Fund’s turnaround strategy.

11.2 Department of Public Enterprises

§ Overseeing the introduction and processing of the Shareholder Management Bill by the Department of Public Enterprises;

§ Financial sustainability of State-owned companies including monitoring their turnaround strategies;

§ Overseeing the infrastructure build programme especially the construction of both Medupi and Kusile power stations. This includes Transnet’s infrastructure programme by ensuring that all these projects are completed on time.

11.3 Department of Communications

§ The processing of the Department of Communication’s amendment bills;

§ Monitoring the outcome or recommendations of the ICT Policy Review;

§ Monitoring the corporatisation of the SA Post-bank;

§ Overseeing and monitoring the digital migration process from analogue to digital;

§ Ensuring through oversight that the digital divide is narrowed by making ICT services accessible to rural communities across provinces;

§ Monitoring the establishment of community radio stations

The Committee will ensure regular interaction with the respective departments through reports, parliamentary presentations and updates on turnaround strategies. This will be done taking into account the interests of provinces and the people in those regions. Furthermore, the Committee’s oversight visits will always attempt to reach as many stakeholders as possible including relevant community leaders to assess the impact of service delivery by the relevant departments. The intention will be to ensure that the relevant departments deliver on their mandates to improve the peoples’ lives for a better life for all.

12. Conclusion

As Parliament approaches the end of its fourth term, legislative oversight over the executive arm of government is likely to be more vigorous and intense as government would like to ensure that all targets are met. Departments on the other hand will have to improve the pace of service delivery as a way of concluding their five-year strategic plans, this include processing outstanding Bills. In other words, both the legislature and the executive arm of government will be a little busier as the country approaches the end of the fourth Parliament.