ATC200903: Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s performance in the third and fourth quarters of 2019/20, dated2 September 2020
Joint Standing Committee on Financial Management of Parliament
Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s performance in the thirdand fourth quarters of 2019/20, dated2 September 2020
The Joint Standing Committee on the Financial Management of Parliament, having considered the Parliament of the Republic of South Africa’s performance in the third and fourth quarters of 2019/20, reports as follows:
1. INTRODUCTION
1.1 Section 4 of the Financial Management of Parliament and Provincial Legislatures Act, No 10 of 2009 (the FMPPLA) provides for the establishment of an oversight mechanism to maintain oversight of the financial management of Parliament. The Joint Standing Committee on the Financial Management of Parliament (the Committee) was established in terms of the Joint Rules of Parliament. The Committee has the powers afforded to parliamentary committees under sections 56 and 69 of the Constitution.
1.2 Parliament’s reports on its performance in the third and fourth quarters of 2019/20 were tabled on 27January 2020 and 6 May 2020 respectively. Both were referred to the Committee for consideration in terms of section 54(2) of the FMPPLA. The acting Secretary to Parliament—the accounting officer—and her senior management team appeared before the Committee in meetings held on 10 March 2020and 28 May 2020 at which the institution’s performance and expenditure for the period under review were interrogated.
1.3 This report should be read with the Strategic Plan of the Fifth Parliament and the 2019/20 Annual Performance Plan and budget, as well is the Committee’s reports on Parliament’s quarter 1 and mid-year performance.
1.4 This report comprises three parts:
- a summary of the institution’s financial and performance information for the period under review (Part A);
- Committee observations (Part B); and
- Committeerecommendations (Part C).
Part A
2. Mandate
2.1 Parliament derives its mandate from:
- Chapter 4 of the Constitution of the Republic of South Africa, 1996, No 108 of 1996, which sets out its composition, powers and functions;
- the FMPPLAwhich regulates the institution’s financial management;
- the Money Bills Amendment Procedure and Related Matters Act, 2009, No 9 of 2009 which provides procedures to amend money bills; and
- the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act of 2004, No 4 of 2004 which defines and declares the national and provincial legislatures’ powers, privileges and immunities.
2.2 Mission and vision
2.2.1 The institution identified six values according to which it conducted its business in the Fifth Parliament: openness; responsiveness; accountability; teamwork; professionalism; and integrity.
2.2.2 In pursuit of its vision to be “activist and responsive” so as to improve the quality of life in South Africa and to ensure enduring equality, the institution had, as its mission, to provide, amongst others, “an innovative, transformative, effective and efficient parliamentary service and administration that enables Members of Parliament to fulfil their constitutional responsibilities”.
2.3 Strategic Priorities 2014-2019
2.3.1 The institution’s five strategic priorities for the Fifth Parliament were:
- strengthening oversight and accountability;
- enhancing public involvement;
- deepening engagement in international fora;
- strengthening co-operative governance; and
- strengthening its legislative capacity.
2.3.2 To achieve the above, the Fifth Parliament adopted the following strategic outcome-oriented goals:
- to enhance Parliament’s oversight and accountability over the work of the executive to ensure implementation of the objectives of the Medium Term Strategic Framework (MTSF) 2014-2019;
- to co-operate and collaborate with other spheres of government on matters of common interest and ensure co-operative and sound intergovernmental relations;
- to enhance public involvement in the processes of Parliament to realise participatory democracy through the implementation of the public involvement model by 2019;
- to enhance parliamentary international engagement and co-operation;
- to enhance the ability of Parliament to exercise its legislative power through consolidation and implementation of integrated legislative processes by 2019 in order to fulfil its constitutional responsibility; and
- to build a capable and productive parliamentary service that delivers enhanced support to Members of Parliament in order that they may efficiently fulfil their constitutional functions.
3. Financial Performance
3.1 Overview
3.1.1 At the end of the third quarter, Parliament hadspent R492,621 million or 99 per cent of its budget for that quarter. In respect of Direct Charges (spending relating to Members’ remuneration), R174,886 million or 94 per cent was spent.
3.1.2 In the fourth quarter the institution had a budget of R753,007 million, of which R643,7 million or 85 per cent was spent. In respect of R149, 758 million allocated to Direct Charges only R130, 059 million or 87 per cent was spent.
3.1.3 Table 1 below illustratethe budget and actual expenditure, across each programme,at the end ofthe third quarter
|
Programme |
October 2019 – December 2019 |
Annual Budget (R’000) |
Year to date |
|||||
|
Budget (R’000) |
Actual (R’000) |
Variance (R’000 |
% |
Actual & Projections (R’000) |
Variance (R’000) |
% |
||
|
Strategic Leadership and Governance |
25,160 |
24,456 |
704 |
97 |
105,217 |
105,217 |
0 |
100 |
|
Administration |
34,270 |
33,680 |
590 |
98 |
167,646 |
167,646 |
0 |
100 |
|
Core Business |
154,200 |
152,437 |
1,763 |
99 |
643,322 |
643,322 |
0 |
100 |
|
Support Services |
90,100 |
88,620 |
1,480 |
98 |
434,799 |
434,799 |
0 |
100 |
|
Associated Services |
193,500 |
193,428 |
72 |
100 |
730,376 |
749,200 |
(18,824) |
103 |
|
Sub-Total |
497,230 |
492,621 |
4,609 |
99 |
2,081,360 |
2,100,184 |
(18,824) |
101 |
|
Direct Charges |
187,000 |
174,886 |
12,109 |
94 |
600,518 |
627,396 |
(26,878) |
104 |
|
TOTAL |
684,230 |
667,507 |
16,723 |
98 |
2,681,878 |
2,727,580 |
(45,702) |
102 |
Table 1
3.1.4 Table 1 shows the performance for the third quarter against the annual budget. It also illustrates that for Quarter 3, Parliament has spent R667, 507 million or 97,6 percent against the quarterly budget of R684 230 million. The actual expenditure (R633 088 million) equals24,8 percent of the R2 681 878 billion for 2019/20. At the end of the third quarter, Parliament had spent R1,925 447 billion or 71,8 per cent of the annual budget.
3.1.5 The R667 507 million (97.6 percent) spent in the third quarter, reflects fairly when compared to the overall over-expenditure of 103 percent recorded in Quarter 1, and 98.4 per cent recorded in Quarter 2.
3.1.6 Importantly, Programme 5: Associated Service and Direct Charges, is projected to overspend by the end of the financial year. The projected overspending for the Associated Services (R18, 824 million) is due to the medical aid contributions for former members of Parliament and Provincial Legislatures, and Members’ entitlements. The projected over-expenditure recorded under Direct Charges is due to the payment of loss of office and exit gratuities to non-returning members after the 2019 national general elections.
3.1.7 Table 2 below illustrates the budget and actual expenditure, across each programme, at the end of the fourth quarter.
|
Programme |
January 2020 – March 2020 |
Annual |
||||||
|
Budget R’000 |
Actual R’000 |
Variance R’000 |
% |
Annual Budget R’000 |
Actual R’000 |
Variance R’000 |
% |
|
|
Strategic Leadership and Governance |
32,736 |
28,097 |
4,639 |
86 |
105,217 |
98,312 |
6,905 |
93 |
|
Administration |
47,165 |
32,570 |
14,595 |
69 |
167,646 |
144,560 |
23,086 |
86 |
|
Core Business |
209,294 |
157,918 |
51,376 |
75 |
637,822 |
583,050 |
54,772 |
91 |
|
Support Services |
148,462 |
106,725 |
41,737 |
73 |
430,198 |
380,794 |
49,404 |
89 |
|
Associated Services |
165,592 |
188,339 |
(22,747) |
114) |
740,476 |
740,469 |
7 |
100 |
|
Sub-Total |
603,249 |
513,649 |
89,600 |
85 |
2,081,359 |
1,947,185 |
134,174 |
94 |
|
Direct Charges |
149,758 |
130,051 |
19,707 |
87 |
600,518 |
621,961 |
(21,443) |
104 |
|
TOTAL |
753,007 |
643,700 |
109,307 |
85 |
2,681,877 |
2,569,146 |
112,731 |
96 |
Table 2
3.1.8 Table 2 shows the performance for the fourth quarter, against the annual budget. It also reveals that in Quarter 4, Parliament had only spent R643 700 million or 85,5 percent against the quarterly budget of R753 007 million. This means that, at the end of the 2019/20 financial year, Parliament had spent R2 569 146 billion or 96 per centof its R2,681 879 billion annual budget. If one excludes, the Direct Charges or Compensation of Members, Parliament has spent R1 947 185 billion, or 94 per cent of its annual budget. This signifies an underspending of R134 174 million.
3.1.9 The R21 443 million (or 4 per cent) over-expenditure on Direct Charges is also noted. The institution ascribed the over-expenditure to the payment of loss of office and exit gratuities to the non-returning members after the 2019 general elections.
3.2 Expenditure (per economic classification)
Compensation of employees
3.2.1 At the end of the third quarter the institution had spent just under 100 per cent of the compensation of employees-budget. The institution reported then that it would in all likelihood overspend on this item by R4,011 million by the end of the financial year. The projected over-expenditure was expected to be as a result of the payment of medical aid contributions for former members of Parliament and provincial legislatures. At the time of reporting 297 former members had decided to remain as members of the Parmed Medical Aid. Parliament contributed to their monthly premiums.
3.2.2 By the end of the fourth quarter, however, spending on compensation of employees stood at R267,246m or 87 percent of the quarterly budget i.e. at the end of the financial year, 97 per cent of the annual budget had been spent. The under-expenditure is ascribed to resignations that resulted in vacancies that had not been filled by the end of the quarter.
Goods and services
3.2.3 At the end of the third quarterexpenditure on goods and services in relation to the annual performance plan, stood at R42, 968 million or 95 percent of the quarterly budget. The under-expenditure was ascribed to delays in the submission of invoices by service providers and the Department of International Relations and Cooperation. At the end of the third quarter the institution did notproject any over/ under expenditure at the end of the financial year.
3.2.4 In respect of goods and services related to Members’ entitlements, expenditure stood at R53, 203 million or 101 per cent at the end of the third quarter. The institution anticipated a shortfall of R14, 813 million by the end of the financial year. The shortfall would be funded from virements made in line with section 22 of the FMPPLA.
3.2.5 At the end of the fourth quarter, however,overall expenditure on goods and services stood at R122,703 million or72 percentof the quarterly budget i.e. by the end of the financial year the institution underspent on this item by R91,655million. The under-expenditure is ascribed to the cancellation of projects within the Legislative Sector Support Division (LSSD), outstanding travel-related invoices, cost-cutting in repsect of events, smaller Taking Parliament to the People-related events, and the impact of the national lockdown implemented as the result of the COVID19 pandemic (delays in submission of invoices by service providers due to the nationwide lockdown, and the cancellation of a number of public hearings).
Transfer payments
3.2.6 At the end of the third quarter the institution reported that it had spent the R118, 456 million quarterly budget for transfer payments - transfers to political parties represented in Parliament – in its entirety. Then it was anticipated that, by the end of the financial year, the institution would have spent the entire annual budget for this item.
3.2.7 By the end of the fourth quarter the institution had, as expected, succeeded in spending R117, 948 million or 99 percent of the quarterly budget. At the end of the financial year, the institution had spent99 per cent or R469, 509 million of the annual budget.
Capital expenditure
3.2.8 By the end of the third quarter the institution had spent R1,182 million or 96 per centof its capital expenditure allocation for that quarter. Then it was anticipated that, by the end of the financial year, the institution would have spent the entire allocatedbudget.
3.2.9 By the end of the fourth quarter, however, expenditure stood at onlyR5,753 million or 60 percent of the quarterly budget i.e. by the end of the financial year, the institution had spent 71 per cent of the R13,441 million of its annual budget. The under-expenditure was ascribed to, amongst others,delays in the submission of invoices for computer equipment, and the handing over of the purchasing of an additional floor of the 90 Plein Street Building to Parliament.
4. Performance information
4.1 Programme 1: Strategic Leadership and Governance
Purpose
4.1.1 The purpose of the programme is to provide political and strategic leadership, governance and institutional policy, executive communication and coordination, and to oversee the development and the implementation of Parliament’s strategic plan, APP and Budget. The programme caters for the Office of the Speaker of the National Assembly and the Office of the Chairperson of the National Council of Provinces, Parliamentary Budget Office (PBO), Treasury Advice Office, and the Office for Institutions Supporting Democracy (OISD).There are four indicators under this programme, i.e. one relating to the PBO, and three relating to the OISD. Forboth quarters only three of the targets were met or exceeded.
4.1.2 In the third quarter the PBO produced 12 analytical reports, thereby doubling its expected performance; and in the fourth quarter it succeeded to deliver 7 instead of 6 reports. The over-performance was the result of an increase in the number of requests for analyses from parliamentary committees. The institution reports that the demand is difficult to project, hence the frequent positive variances in respect of the PBO.
4.1.3 In both quartersISD-related matters were analysed and reported on within seven days, and one report was produced in each quarter.
4.1.4 In both quarters the institution under-performed in respect of ISD-related strategic, procedural and legal advice and support within the stipulated seven-day timeframe. Although all advisory reports were provided, one in the third quarter and another in the fourth quarter, were not provided within the stipulated timeframe.
4.2 Programme 2: Administration
4.2.1 The programme is aimed at providing strategic management, institutional policy and governance, development programmes for parliamentarians, overall management and administration, financial management and internal audit, and a registry of Member’s interests. The programme comprises the Office of the Secretary to Parliament, Legislative Sector Support, Strategic Management and Governance, the Financial Management Office, Internal Audit, and the Registrar of Member’s Interests.
4.2.2 The programme has two indicators relating to the Legislative Sector Support programme. One target is measured quarterly, and another is measured annually. The success as far as delivering one development programme for members will only be measured at the end of the financial year.
4.2.3 The institution succeeded to produce, as planned, one report on the implementation of the Sector Strategy. Processes are underway to develop a draft Sector Strategic Plan, which will draw on the strategic plans produced by Parliament and the nine provincial legislatures.
4.3 Programme 3: Core Business
4.3.1 The programme is aimed at providing procedural and legal advice, analysis, information and research, language, content and secretarial and legislative drafting services for meetings of the National Assembly, National Council of Provinces and their committees. It also provides for public education, information and access to support public participation, and analysis, advice and content support to parliamentary international engagement. It comprises the National Assembly Table, the NCOP Table, Core Business Support, Knowledge and Information Services, and international Relations and Protocol.
4.3.2 The service charter comprises advisory information produced to support plenary and committee deliberations. The institution reports that in the third quarter 99,63 per cent of the information was available as per Service Charter levels i.e. 5,63 per cent above the target. In the fourth quarter, the institution exceeded the target by 1,42 per cent.
4.3.3 Parliament’s performance in respect of the percentage of the population having access to participate in parliamentary processes, and the percentage of the population participating in parliamentary processes is measured annually and was not reported on at the end of the third quarter.
4.3.4 At the end of the fourth quarter, the institution reported that the 11 per cent target in respect of access to participate in parliamentary processes was exceeded by 3 per cent. This target measures stakeholders’ knowledge about how to participate in parliamentary processes, and at the end of the quarter, 3 percent fewer participants had responded that they did not know how to participate in parliamentary processes.
4.3.5 The 6 per cent target in respect of actual participation in parliamentary processes was exceeded by 1,2 per cent. There was improved actual participation in the following activities: public education workshops, parliamentary sittings and committee meetings, tours, submission of petitions and visits to parliamentary democracy offices. Almost 10 per cent fewer respondents said they had never participated in activities of Parliament.
4.4 Programme 4: Support Services
4.4.1 This programme provides facilities and support services to Parliament. These include institutional communication services, human resource management, information communication technology, institutional support services, and Members’ support services. All the targets under this programme are measured annually and were not reported on in the third quarter.
4.4.2 The annual target in respect of the percentage of overall improvement in client satisfaction with service levels was 62 percent, and was exceeded by 1,83 per cent. Respondents were highly satisfied with ICT, procedural advice, cleaning and maintenance, language and library services.
4.4.3 The 27 per cent targeted in respect of the percentage of the population that is aware of the business of Parliament, was not met. Only 23 per cent awareness was reported. The under performance is ascribed to the fact that the independent survey only measured the awareness of those who felt they know Parliament fairly or extremely well. Those who knew only a little about the business of Parliament were excluded.
4.4.4 The 80 per cent targeted in respect of the percentage of of employees and members with universal access to integrated information services was exceeded by 5,3 percent. The over-performance is ascribed to the implementation of iProcurement, electronic submission of staff disclosures (on the ERP), the implementation of the ARIS business process mapping tool and the hosting of meetings via the Microsoft Teams virtual platform.
4.4.5 The target to increase levels of client satisfaction with the physical work environment was exceeded by 1 per cent and stood at 69 per cent at the end of the fourth quarter. The over-performance is ascribed to improved human resource management focussing on skills, and better stakeholder management.
4.4.6 The targeted 1 per cent performance in respect of increasing the availability of strategic competencies, talent and skills on the Talent Management Index was exceeded by 8 per cent. This much above average performance was ascribed to improved recruitment and selection processes, and more active participation by employees in various training programmes.
4.5 Programme 5: Associated Services
4.5.1 This programme provides for travel, communication and other facilities for parliamentarians to enable them to fulfil their duties as elected representatives, and for financial support to political parties represented in Parliament, their leaders and constituency offices.
4.5.2 There are two targets in respect of this programme. In both quartersthe institution succeeded in ensuring that all payments (including transfer payments) were made as per policy requirements.
4.5.3 The institution could not meet the target in respect of the number of days it took to reimburse members in the third quarter: instead of the targeted 2,5 days, it took the institution an average of 4,19 days to process the reimbursements. The under-performance was ascribed to the high volumes received prior to the December 2019 leave period. In the fourth quarter, however, additional capacity to process claims resulted in a 1,91 day average turnover, exceeding performance by 0,59 per cent.
Part B
5. Observations
5.1 Performance reporting and monitoring
5.1.1 The Committee again emphasises that in order to perform its oversight effectively, it must be able to track all targets on a quarterly basis.While the Committee acknowledges the institution’s efforts to provide progress reportson the achievement of annual targets, the reporting remains inadequate. Consideration should be given to identifying quarterly milestones for each annual target, and to using those as quarterly targets.
5.1.2 In addition to the above, the Committee remains concerned that targets focus on quantifying services, rather than measuring the quality of services provided. If parliamentarians’ low satisfaction with parliamentary services is to be addressed, future annual performance plans must focus on the quality of all services provided.
5.2 Direct Charges: Loss of office payments and exit gratuities
5.2.1 The significant over-expenditure on the remuneration of former parliamentarians (exit gratuities and loss of office payments) due to the larger than anticipated number of members who exited Parliament after the 2019 national general elections, remains a cause for concern.As reported previously, the institution hasapproached the National Treasury for funds to cover theR111,987 million shortfall that resulted from the unexpected over-expenditure but only received R73 million.At the time of reporting, the difference of R38 987 million (from R11,987 million) had not yet been paid to Parliament.
5.3 Parmed Medical Aid Scheme
5.3.1 The Committee remains concerned about Parliament’s responsibilities in respect of the medical aid contributions of former members of Parliament and provincial legislatures. Parliament is responsible for a portion of their contributions, which placed a burden on its budget.
5.4 Critical Vacancies
5.4.1 The Committee has noted with concern the long delays in the filling of critical vacancies such as the Secretary to Parliament, the Chief Financial Officer, the Treasury Advice Office, and the Director of the PBO. Each of these posts is critical to the functioning of the institution. In the case of the Treasury Advice Office, the long delay in establishing it, posed a direct threat to the institution’s financial management.
5.5 Public Participation
5.5.1 The 4 per cent reduction in the percentage of people who areaware of the business of Parliament is noted. Members were, however, unclear as to how this outcome was arrived at, and questioned whether the questionnaire/survey that was used.conducted had been adequate. The institution should perhaps give consideration to measuring awareness of the business of Parliament through other means too.
5.5.2 The Committee is also concerned aboutParliament’s continued reliance on pay-to-view channels for the broadcast of parliamentary committee meetings and plenaries, whichresulted in the exclusion of a large sector of the population from participating inParliament’s business. Information relating to Parliament’s activities should be shared on platforms that are accessible to most of the population.
5.6 Infrastructure management
5.6.1 The Committee has noted that the Department of Public Works and Infrastructure (DPWI) remains responsible for Parliament’s maintenance and infrastructure needs, and remains concerned about various long-standing maintenance and infrastructure-related challenges. Of particular concern is Parliament’s capacity to provide power during load-shedding periods, and the slow progress in respect of attending to maintenance issues.
Part C
6. Recommendations
The Executive Authority should respond to the following recommendations within 30 days of the tabling of this report.
6.1 The Committee recommends that all key performance indicators of the Sixth Parliament should be measured ona quarterly basis, and should focus on the quality of the deliverables rather than only on their quantity and the time in which they were delivered. All future annual performance plans should be developed accordingly.
6.2 The Committee recommends that the Executive Authority’s engagements with the Minister of Finance National around the funding the R38 987 million shortfall in respect of exit gratuities for non-returning members of Parliament be intensified.
6.3 The Committee recommends that the institution should fully explore ways in which its responsibilities in respect of the medical aid contributions for formermembers of Parliament and provincial legislatures may be rationalised. The possibility of each of the ten legislatures taking responsibility for the contributions of their former members must be explored. To this end, the Committee should be provided with a breakdown of the cost across Parliament and the nine provincial legislatures. The nine provincial legislatures should provide the Committee with their responses to the proposal that they should bear responsibility fo the contributions of their former members.
6.4 The Committee recommends that every avenue be explored to ensure that the majority of the population is able to access information about Parliament and broadcasts of parliamentary committee meetings and house sittings.
6.5 The Committee recommends that the critical posts referred to in paragraph 5.4.1 above are filled as a matter of urgency and before the end of the 2020/21 financial year. The Committee should be provided with monthly progress reports in this regard.
6.6 To date, the DPWI’s services in respect of Parliament’s infrastructure and maintenance needs have been wholly inadequate. The Committee recommends that Parliament gives serious consideration to taking over the responsibility for its maintenance and infrastructure from the DPWI.
Report to be considered.
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