ATC200715: Report of the Portfolio Committee on Home Affairs: 2020/21 Special Adjusted Budget Vote 5 - Department of Home Affairs, dated 7 July 2020
REPORT OF THE PORTFOLIO COMMITTEE ON HOME AFFAIRS: 2020/21 SPECIAL ADJUSTED BUDGET VOTE 5 - DEPARTMENT OF HOME AFFAIRS, DATED 7 JULY 2020
The Minister of Finance delivered the Special Adjusted Budget on 24 June 2020. The Special Adjusted Budget focused on the government response strategy to the novel Corona Virus (also known as COVID-19) pandemic. COVID-19 has had devastating effects throughout the world, and South Africa has not been spared. The pandemic has forced many countries into lockdowns, consequently slowing down public and private economic activities. At the time of writing, South Africa was on level 3 national lockdown after President Ramaphosa invoked the National Disaster Act (No 57 of 2002) as a response to Covid-19 on 26 March 2020.
As of 7 July 2020there were 215,855 recorded infections in South Africa with 3,502 deaths. The economic impact due to the pandemic is equally devastating. The global economy is expected to contract by 5.2 per cent, while South Africa's economic growth has been revised from the initial expected growth of 0.9 per cent, to contract by 7.2 per cent in 2020. In addition, South Africa's official unemployment rate has increased by 1 per cent to 30.1 in the first quarter of the year while the Gross Domestic Product (GDP) continued to contract for the third consecutive quarter, falling by 2 per cent.
It is evident from these economic indicators and the Special Adjusted Budget, that COVID-19 will have a significant impact on public service delivery by government. It could be deduced that due to the national lockdown, many government departments are unlikely to have met their first quarter targets, which in turn, will have a negative impact on the achievement of Annual Performance Plans for 2020/21.
Despite the Coronavirus pandemic, Parliament is still expected to continue with its oversight function to ensure effective budget spending and safeguarding service delivery. This Special Adjusted Budget report is based on briefings received by the DHA, IEC and GPW and related deliberations on 7 July 2020 and the Special Adjustment Budget presented by the Minister of Finance on 24 June 2020.
- THE IMPLICATIONS OF THE COVID-19 PANDEMIC ON THE MANDATE OF THE DHA
The Department is operating with a skeleton staff in compliance with national lockdown regulations. During national lockdown level 1 and 2, the Department was only offering the following services:
- Issuance of uncollected Identification Documents,
- Issuance of temporary Identification Certificates,
- Registration of birth and death,
- Reissue of birth and death certificates,
- Issuance of passports to those in export and cargo transport.
The Department has added the marriage services by appointment only in the national lockdown level 3. The limited services already had an impact on the Departments ability to achieve some of its Quarter Four targets, and there is a high probability that it may affect the Department's ability to achieve its set targets for the 2020/21 financial period. For instance, the Department will not be able to meet its objectives for issuing 3 million Identification Cards in this financial year because the services are still not yet offered.
Immigration Issues, Government had initially closed 35 of the 53 land ports of entry as a precaution to respond to COVID-19, leaving open only the ports of entry important for the movement of goods such as the Beitbridge and Lebombo Border Posts. After the announcement of national lockdown, all borders were closed to ordinary peoples' movement, and only a few are open for the transportation of essential goods. Subsequently, visas to all other countries were revoked when the country entered into the national lockdown as no one is allowed to enter or exit the country, except in exceptional circumstances such as repatriation and emergency medical grounds.
Holders of temporary residence visas, which expired from mid-February 2020, and had not renewed their visas before the national lockdown, will not be declared illegal or prohibited persons and a blanket extension till end of July 2020. Additionally, those who opt to return to their countries of origin or residence after the lockdown instead of renewing their visas will not be declared undesirable upon departure. In essence, all immigrants who are legally in the country in possession of necessary documents will not be penalized if their documents expired during the national lockdown. No foreign national will be allowed unless in exceptional circumstances.
On 23 May 2020, the Department had announced that South Africans who wish to leave the Republic are permitted to depart only for work; study; family reunion; take up permanent residency and receive medical attention.
Budget and spending implication, COVID-19 has forced many governments departments to restructure their budget allocation for the 2020/21 financial year even before the announcement of the Special Adjusted Budget. The Department had already diverted R 9 million of its 2019/20 budget for COVID-19 related expenditure such as the procurement of Personnel Protective Equipment. The Special Adjusted Budget reduces the Department's allocated budget at the start of the financial year by R562 million. This budget reduction could have a significant impact on the Departments ability to achieve some of its annual targets, however the Department indicated, the Pandemic related lockdown would have far more of an effect given the restrictions on services and reduced service delivery related revenue.
- ANALYSIS OF THE REVISED BUDGET ON EACH PROGRAM
The Special Adjusted Budget has significantly reduced the Department's budget allocation when compared to the two previous allocations. The 2019/20 final adjusted allocation was R 9.52 billion and the main appropriation in 2020/21 was R 9.02 billion. The Special Adjusted Budget further reduces the Department's allocation to R 8,46 billion, or by R562 million. The Special Adjusted Budget could potentially have posed a significant risk in the Department's ability to achieve its annual performance plans and the five years' strategic objectives. The DHA, however opted for a targeted approach rather than a blanket17% cut across all branches and earmarked funds.
Rather than a one-size fits all approach, the targeted approach focused on the following budget cuts:
- Where no contractual commitments were made
- No new staff appointments were made
- Where upgrades and improvements could be delayed
- Where service delivery is least affected (accommodation, travel and subsistence, uniforms; ID for Africa);
- Where payments can be delayed (Property)
In nominal terms (without considering inflation), the Special Adjusted Budget reduced the Department's allocation by R 562 million when compared to the 2020/21 main allocation, and a further R 1.06 billion when compared to the previous year. When inflation is considered, the Department's budget is reduced by R 856.6 million (-9,22 per cent) when compared to the main allocation and R 1.4 billion (-14,767 per cent) when compared to the previous year in real rand value. The most substantial reduction was at Immigration Affairs, where the reduction amounts to R 256.8 million. The Administration Programme and Citizen Affairs had their allocation reduced by R 183.04 million and R 122.11 million, respectively.
The Citizen Affairs programme retained its 55 per cent share of the total budget. There was an increase in terms of percentage share for Immigration Affairs up from 15 per cent in 2019/20, to 18 per cent whereas there was a decline of 2 per cent for Administration from 28 per cent in 2019/20 to 26 per cent in 2020/21 financial year.
When the Special Adjusted Budget is compared to 2019/20 financial year in real terms, the Department's overall budget is reduced by R 1.397 billion (14,7 per cent). Despite the significant reduction in allocation, the Immigration Affairs programme still shows a marginal real increase of R 5,6 million (0,44 per cent). Both Administration and Citizen Affairs programmes now have a much-reduced allocation in the Special Adjusted Budget when compared to 2019/20. The Administration Programme budget was reduced by R 445,8 million (17,7 per cent) in real terms, while the Citizen Affairs programme experienced the most substantial budget reduction by R 956,9 million (17 per cent).
The Administration Programme was allocated R2 349,1 billion in the main appropriation. The amount is reduced by R 183 million (5.4 per cent) in the Special Adjusted Budget to R 2.17 billion. In this programme, the main cost drivers are the Compensation of Employees (COE) and Goods & Services, which are classified under the current payments, and it is a centralised budget for the Department. COE was allocated 42.8 per cent (R3.89 billion) of the entire main budget at the start of the 2020/21 financial year. The COE budget is reduced by R 100 million to R 3.79 billion (44,8 per cent) in the Special Adjusted Budget. The Department has suspended the appointment of new staff until later in the financial year. Most of the Department's reduction came from Goods & Services, which was reduced by R427 million in the Special Adjusted Budget to R 2.3 billion. The Department is engaging the Department of Public Works and Infrastructure to renegotiate the reduction of office space rentals to compensate for the reduced budget.
The Civil Affairs Programme was allocated R5.067 billion in the main appropriation. The amount is reduced by R122 million (2,4 per cent) to R 4.94 billion in the Special Adjusted Programme. The main cost drivers in terms of economic classification in this programme is the transfer subsidy to the Electoral Commission, which was allocated R 2.23 billion in the main appropriation.
The Immigration Affairs Programme was allocated R 1.29 billion in the main appropriation. This programme had the most substantial reduction with its budget being reduced by R 256.85 million (19,8 per cent) to R 1.357 billion in the Special Adjusted Budget. Some of the reduced allocations were earmarked for the Passenger Name Recognition System, which was allocated R150 million and is suspended until the 2021/22 financial year.
The IEC budget has been reduced by R 35 million in the Special Adjusted Budget. Despite the reduced budget; the IEC reported to be on track in preparations for the 2021 Local Government Elections. The work would however be additional work to be done to amend the Electoral Act (No 78 of 1998) as per the June 2020 Constitutional Court Judgment in the New Nation Movement Vs President of the Republic of South Africa, which has not been budgeted for. Despite the budget cuts, the IEC was able to maintain the three programmes as presented before the Committee.
The IEC is funded for 90 percent of their staff component and will retain the full additional allocation for the voter management devices. The devices are critical for the successful delivery of the Local Government Election since voters are registered in the correct ward. There would still be two registration weekends ahead of the Local Government Elections, however, the IEC would review this if there would be additional budget cuts. The IEC is targeting to register around 25 million voters.
None of the necessary by-elections or other small elections administered by the IEC would be set aside despite the increased time allowed by the electoral court to complete these.
The GPW did not receive funds from the National Treasury (NT), however, the Minister of Public Service and Administration has instructed all government departments to review their Annual Performance Plans (APP). The GPW indicated that that GPW remains in good financial health despite significant reduced revenue.
The financial situation of the GPW is dependent on the operations of the DHA. For instance, the productions of passports for April, May and June 2020 were projected at zero percent and the projection will decrease to 10 percent of the initial target for July, August and September 2020. It would further decrease to 40 percent of targets for the rest of the financial year.
In terms of the projected production of the Smart ID Cards, it was reported that the production decreased to 10 percent of planned projections for April, May and June 2020. For July, August and September 2020 the projection of the Smart ID Cards will be decreased to 33,3 percent and for the remainder of the financial year, it would decrease to 50 percent. These projections are depended on what happens at the DHA.
GPW had initially budgeted R580 million for capital expenditure and the amount has been decreased to R300 million. The GPW is also projecting a loss of R83 million.
Regarding the Department of Home Affairs, the committee welcomes the assurance that despite its R562 million budget reprioritization, measures have been put in place to ensure budget cuts will not drastically affect service delivery in the short term. The department’s approach will ensure that cuts are not based on a one-size-fits-all approach, but are targeted to minimize impact on service delivery. This includes delaying some projects that can be dealt with later or where no contractual commitments have yet been made. The committee will await an approved revised medium-term strategic framework strategy and 2020/21 annual performance plans to evaluate the direct impact of budgetary cuts on the department’s targets, reported to be available by the 8th of July as required by Parliament.
In response to issues raised by the Committee the DHA indicated:
- The DHA was not considering opening the opening of offices on Saturdays and the DHA was in consultation with the unions.
- The training budget is not affected and the DHA would continue to offer training to officials of the DHA.
- The opening of the borders would be considered when the lockdown is at the lowest level because of the risk of international travel.
- The amended plans would be updated as soon as the Minister of Home Affairs has approved them on 8 July 2020.
- The budget cuts would not affect the procurement of PPEs and the budget for the PPEs is R40 million.
- The extension of the validity of the visas would be announced as soon as possible when the DHA has advised the Minister of Home Affairs.
- The one-stop border infrastructure would not be affected because it is budgeted for outer years.
- The allocation of R180 million came from SAPS for Passenger Name Recognition (PNR).
- In terms of increasing operational capacity, the DHA was balancing saving lives versus protecting livelihoods.
- VFS is opened as of 1 July 2020 for collections.
- The DHA has never closed down the reissue of birth certificates during the lockdown.
- On the issue of truck drivers, the Minister could not attend any single meeting because of the clash of schedules. Why would employers be employing undocumented immigrants? The Department of Labour must visit the companies to find out why they employ undocumented immigrants. The Minister reported that the DHA does not condone the burning of trucks.
- On the BMA, the DHA is awaiting the President to assent the Bill and the DHA is busy working on preparations.
The Portfolio Committee on Home Affairs has welcomed progress by the Electoral Commission of South Africa (IEC) in preparation for the 2021 local government elections. This progress is particularly praiseworthy in light of the uncertainty caused by the Covid-19 pandemic and funding pressures arising from the reprioritization of budgets to fund the fight against the disease.
Given the R52 million decline in Electoral Commission funding, in a pre-election year, the Committee noted the consideration of e-voting as a means to increase operational efficiencies and potential to drive down election costs.
The committee further welcomed the securing of funding to procure new Voter Management Devices (zip zips), which will be critical for the successful delivery of the 2021 local government elections. The committee is hopeful that the IEC will receive the necessary support to implement this project from the DHA and the National Treasury, as it is critical in delivering credible elections.
Despite this, the committee expressed concern on the implication of budgetary cuts in the IEC’s outreach programmes. While the committee is cognizant that some programmes have to be compromised, it called for a re-imagined and amplified process of stakeholder engagement using traditional and social media. All effort must be made to actively promote awareness and participation in electoral processes.
Regarding the Government Printing Works, the committee noted that because GPW is a revenue generating entity, it is not required to cut its baseline. Despite this, the committee notes the impact Covid-19 will have on GPW’s projected sales numbers, as production of items like passports decreases.
The GPW responded to questions indicating all the passports and IDs that were applied for before the lockdown, were dispatched to the DHA and they will not distribute funds to NT as initially planned because of their loss of revenue.
- The Committee commended the efforts of the DHA in targeting its significant Special Adjustment Budget reduction in such a way as to minimize the impact on service delivery.
- The Minister shouldcontinue to consider both in favour of saving lives and the need for protecting livelihoods in its plans.
- The DHA should present its revised Annual Performance Plan to the Committee.
- The IEC should consider online and conventional media alternatives to compensate for loss offace to face outreach programmes.
- The IEC should prepare a briefing on different policy options to implement the Constitutional Court Ruling in the matter of the New Nation Movement and others vs the IEC and others.
- The IEC should brief the Committee with the Municipal Demarcation Board on the completion of the demarcation process.
- The GPW should keep the Committee informed of changes to its plans based on revised reductions in its revenue from services to the DHA and others.
Report to be considered
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