ATC201119: Budgetary Review and Recommendation Report of the Portfolio Committee on Higher Education, Science and Technology on the 2019/20 Annual Report of the Department of Higher Education and Training and Entities, dated 18 November 2020

Higher Education, Science and Innovation

BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION, SCIENCE AND TECHNOLOGY ON THE 2019/20 ANNUAL REPORT OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING AND ENTITIES, DATED 18 NOVEMBER 2020

The Portfolio Committee on Higher Education, Science and Technology (hereinafter referred to as the Committee), having considered the 2019/20 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

1.1. Introduction and mandate of the Committee

The National Assembly (NA) 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.

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”.

1.2. 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 the work done by the Committee in considering the 2019/20 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 the National Assembly Rule 338 by the Speaker to the Committee for consideration and reporting in terms of Rules 339 and 340, respectively.

1.3. Method

In considering the Annual Reports, the Committee had briefing sessions with the Auditor-General of South Africa (AGSA) on the 2019/20 audit outcomes of the Higher Education and Training Portfolio, including the Department of Higher Education and Training on 4 November 2020 and the CHE, the SAQA and the QCTO on 10 November 2020, respectively.

2. RELEVANT POLICY FOCUS AREAS

2.1. National Development Plan

The government has categorised education as one of the Apex priorities. The National Development Plan (NDP) recognises that the education system will play a greater role in building an inclusive society, providing equalopportunities and helping all South Africans torealise their full potential, in particular thosepreviously disadvantaged by apartheid policies,namely black people, women and people withdisabilities. The Plan further states that South Africa has set itself the goals of eradicating poverty, reducing inequality, growing the economy by an average of 5.4 %, and cutting theunemployment rate to 6% by 2030. Education, training and innovation are critical to the attainment of these goals. In working towards attaining these goals, it is therefore critical that South Africans should have access to education and training of the highest quality. The education, training and innovation system should be able to 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.

2.2. White Paper for Post-School Education and Training

In 2013, the Department adopted the White Paper for Post-School Education and Training, which articulates a vision for an integrated system of post-school education and training, with all institutions playing their role as parts of a coherent but differentiated system. The White Paper sets out strategies to expand the current provision of education and training in South Africa, to improve its quality, to integrate the various strands of the post-school system. The main policy objectives are:

A post-school system that can assist in building a fair, equitable, non-racial, non-sexist and democratic South Africa;
A single, coordinated post-school education and training system, expanded access, improved quality and increased diversity of provision; and
A post-school education and training that is responsive to the needs of individual citizens, employers in both public sectors, as well as broader societal and development objectives.

2.3. 2014 – 2019 Medium Term Strategic Framework

In responding to the imperatives of the NDP, the Department’s plans and activities were informed by the policy priorities as contained in the 2014 – 2019 Medium-Term Strategic Framework (MTSF). For the previous five-year term, the Department was responsible for Outcome 5: “A skilled and capable workforce to support an inclusive growth path”.

2.4. 2019 State of the Nation Address (SONA)

The President, in his 2019 State of the Nation Addresses (SONAs), both February and June, emphasised that education and skills development must be prioritised. At the centre of efforts to achieve higher and more equitable growth, and to draw young people into employment and to prepare the country for the digital age, there must be the prioritisation of education and the development of skills. The President stated that the government has committed to contribute R100 billion into the Infrastructure Fund over a 10-year period and as a first step, the government planned to expand projects underway, such as student accommodation.

In line with the government’s commitment to the right of access to higher education for the poor, fee-free higher education for qualifying first-year students was introduced in 2018. The policy is being phased in over a five-year period until all undergraduate students who qualify in terms of the criteria could benefit, and the government plans to prioritise stabilising the business processes of the National Student Financial Aid Scheme (NSFAS) to ensure that it is properly capacitated to carry out its critical role in supporting eligible students.

3. RESPONSE TO THE PREVIOUS FINANCIAL YEAR RECOMMENDATIONS OF THE PORTFOLIO COMMITTEE AND THE SELECTED 2020/21 BUDGET VOTE 17 REPORT RECOMMENDATIONS

3.1. 2019 Budgetary Review and Recommendation Report

The Minister of Finance responded, in the National Treasury’s 2020 Budget Review, to the recommendations of the Committee’s 2019 Budgetary Review and Recommendation Report as follows:

3.1.1. The Committee recommended that the Ministry should expedite the process of filling the three Deputy Director-General (DDG) positions in the Planning, Policy and Strategy; Technical and Vocational Education and Training (TVET); and Community Education and Training (CET) programmes as the process started in November 2017 for the Deputy Director-General of CET and June 2018 for both the Deputy Director-General of Planning, Policy and Strategy and TVET.

Minister of Finance’s response: The National Treasury has previously raised the issue of filling these posts with the Department.

3.1.2. The committee notes that, 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 resources towards the expansion of student housing in higher education.

Minister of Finance response: Since 2018, the Student Housing Infrastructure Programme has received additional funding through the Budget Facility on Infrastructure. The programme is estimated to cost R96 billion over the next 10 years to build about 300 000 beds. Construction of residences is underway at Fort Hare and Nelson Mandela University, funded by government, development finance institutions and private finance. The Development Bank of Southern Africa (DBSA), together with the Department of Higher Education and Training, is facilitating the programme. Moreover, the current public-private partnership (PPP) regulations are being reviewed to address the shortcomings of the current framework and increase the PPP pipeline. Most universities continue to establish partnerships and elicit sponsorships to fund infrastructure projects.

3.1.3. The committee noted that notwithstanding the current fiscal constraints, the National Treasury should increase the baseline funding for the CET sector so that the mandate of the sector and its policy prioritiescan be realised.

Minister of Finance response: The Department of Higher Education and Training should investigate whether funds from its baseline canbe redirected to this sector. In the 2019 Adjusted Estimates of National Expenditure, the departmentdeclared underspending of R129.6 million for compensation of employees due to vacant posts. The abilityto spend additional allocations is relevant in determining whether to provide more funding.

3.1.4. The committee recommended that the filling of vacant funded posts by the Quality Council for Trades and Occupations (QCTO) 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.

Minister of Finance response: The National Treasury agreed with the recommendation. The QCTO has underspent on the compensationof the employees’ budget by an average of R16.5 million over the past three financial years, indicating that ithas funds to fill critical posts. The entity is in the process of filling the posts.

3.1.5. The committee recommended that the QCTO expedite the process of purchasing its own premises given thehigh rental fee amounting to R8 million per annum.

Minister of Finance response: The National Treasury agreed with the committee’s recommendation that the QCTO should expedite thepurchase of its own premises. It should be noted that R12 million from the reserve fund was approvedand earmarked to procure the QCTO’s premises in 2018/19.

3.2. 2020/21 Committee Budget Vote 17 Report

Summary of the selected 2020/21 Committee Budget Vote 17 Report Recommendations

The Committee considered the new 2020/21 – 2024/25 Strategic Plan, and 2020/21 Annual Performance Plan (APP) and budget of the Department of Higher Education and Training made the following recommendations:

3.2.1. The Department should ensure that all the outcome indicators and targets outlined in the 2019 – 2024 MTSF are reflected in its 2020 – 2025 Strategic Plan and are implemented annually.

3.2.2. The Department working in collaboration with the SAQA and the three Quality Councils should put in place mechanisms to ensure that all institutions of higher learning are implementing articulation policy and consequence management should be implemented against those who are not compliant. Furthermore, the Department should ensure that the MTSF target to have 95 % of universities sign agreements with TVET colleges to recognise their qualifications is implemented and this should be monitored and reported to Parliament annually.

3.2.3. The Minister should consider formulating a policy for the equalisation of stipends paid to the university and TVET college students.

3.2.4. The Department working in collaboration with institutions of higher learning other stakeholders in the built environment should ensure that consequence management is implemented against construction companies that do not complete infrastructure projects and those that do shoddy work.

3.2.5. The process with respect to the review of the curriculum of the TVET sector should be expedited so that learners are offered programmes that are aligned to industry requirements.

3.2.6. The Department ought to improve its oversight and monitoring functions over the work of the SETAs and make sure that all the newly appointed SETAs Accounting Authorities (AAs) are held into account for the governance and performance of their respective SETAs.

4. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2019/20 FINANCIAL PERFORMANCE

4.1. Overview and assessment of the overall budget and expenditure

Table 1: 2019/20 budget allocation and expenditure

APPROPRIATION PER PROGRAMME	FINAL APPROPRIATION R’000	ACTUAL EXPENDITURE R’000	VARIANCE R’000	% SPENT
Administration	447 245	421 571	25 674	94.3%
Planning, Policy and Strategy	79 274	73 663	5 611	92.9%
University Education	73 458 286	73 437 596	20 690	100.0%
Technical and Vocational Education and Training	12 392 962	12 318 662	74 300	99.4%
Skills Development	295 412	291 167	4 245	98.6%
Community Education and Training	2 366 531	2 269 795	96 736	95.9%
Total: Departmental Voted Funds	89 039 710	88 812 454	227 256	99.7%
Statutory Appropriation	18 283 844 18 283 844	18 283 844 18 283 844	- -	100.0%
(National Skills Fund and SETAs)	18 283 844 18 283 844	18 283 844 18 283 844	- -	100.0%
Total	107 323 554	107 096 298	227 256	99.8%

Departmental receipts Aid Assistance	22 759 52 999	48 535
Departmental receipts Aid Assistance	22 759 52 999	48 535
Total Revenue	107 399 312	107 144 833

Source: DHET 2019/20 Annual Report

The Department’s final appropriation for 2019/20amounted to R107,32 billion, comprised of R89,03 billion of voted funds and R18,28 billion of direct charges against the National Revenue Fund. The final appropriation excludes revenue amounting to R75,75 million from Departmental receipts and aid assistance. Of importance to note is that revenue from Departmental receipts and aid assistance decreased by R32,31 million from R108,07 million in 2018/19.

At the end of the 2019/20 financial year, the Department had spent R107,09billion, excluding the additional revenue from departmental receipts and aid assistance, which represents 99.8% of the available budget. The Department recorded an underspending of R227,25 million from voted funds, which translate to 0.26% of the available budget for the 2019/20 financial year. Underspending increased by R26,92 million from R200,33 million in 2018/19. Programmes 6: Community Education and Training (CET) and Programme 4: Technical and Vocation Education and Training (TVET) incurred a combined underspending amounting to R171,03 million, which translate to 76.2% of the total underspending.Overall underspending was attributed to, amongst others, unspent funds related to vacant posts in the Department, posts on the staff establishment of the Department that were not filled on times, claims that were not received from the CET for remuneration, as well as examiners and moderators in respect of February/March 2020 examinations as projected, the DBSA did not claim earmarked allocation for the management fees regarding the Student Housing Infrastructure Programme (SHIP) in full, and a favourable Rand/Euro exchange rate which was applicable when payments were made to the Commonwealth of Learning.

4.1.2. Expenditure estimates per economic classification

Table 2: 2019/20 allocation and expenditure per economic classification

APPROPRIATION PER ECONOMIC CLASSIFICATION	FINAL APPROPRIATION R’000	ACTUAL EXPENDITURE R’000	VARIANCE R’000	% SPENT
Current payments	10 125 734	9 909 400	216 334	97.9%
Compensation of employees	9 469 258	9 367 405	101 853	98.9%
Goods and services	656 476	541 995	114 481	82.6%
Transfers and subsidies	97 181 419	97 177 311	4 108	100.%
Payments for capital assets	14 241	7 9 26	6 315	55.7%
Payment for financial assets	2 160	1 661	499	79.9%
Total	107 323 554	107 096 298	227 256	99.8%

Source: DHET 2019/20 Annual Report

The Department had spent R9,36 billion on compensation of employees against the available budget of R9,46 billion, representing 98.9% spending of the budget. Underspending on compensation of employees amounted to R101,85 million, translating into 1.1% of the available budget. Underspending on compensation of employees decreased significantly by R91,15 million from R193,01 million in 2018/19 and wasattributed to unfilled vacancies, natural attrition and claims that were not received from the CET for remuneration.

Expenditure on goods and services amountedR541,99 million against the budget of R656,47 million, translating into an underspending of R114,48 million. Underspending on goods and services increased significantly from R538 000 in 2018/19 to R114,48 million in 2019/20. The underspending was mainly due to funds set aside for the feasibility study of the Head Office Building that was not claimed as projected. The Department also cited the delays in finalisation of litigation matters, which often were protracted and delays by Counsel who were briefed to file their invoices with the State Attorney offices as well as dormant litigation matters wherein applicants or plaintiffs seem to have lost interest on the matters. Other contributing factors include: Management fees for the SHIP that were not claimed as projected, travel and subsistence claims for February/March 2020 examinations not received as projected, invoices not received and paid as projected and savings on the examination and administrative services. The main cost drivers in goods and services werecomputer services, travel and subsistence, operating leases, consumables: stationery, printing and office supplies.

In terms of transfers and subsidies, the Department had spent R97,17 billionagainst the available budget of R97,18 billion, translating into 100% spending. Expenditure on payment for capital assets amounted to R7,92 million, against the budget of R14,24 million, translating into 55.7% spending on the available budget. Underspending on payment for capital assets at the end of the financial year amounted toR6,31 million.

During the 2019/20 financial year, virements were applied within the Department to the amount of R24,48 million, translating into an increase of R7,34 million compared to R17,13 million in 2018/19. Virements were applied across three programmes as follows: University Education: R2,520 million to Administration; TVET: R3,60 million to Administration; CET: R18,35 million to Administration: R2,82 million, Planning, Policy and Strategy: R1 million and Skills Development R14,53 million.

The virements were applied to finance excess expenditure on Office Accommodation in the Administration programme; to fund a budget shortfall on leave gratuity payments in the Planning, Policy and Strategy programme; and to fund a budget shortfall for claims in respect of Special Projects not paid by the National Skills Fund in Skills Development programme. Funds that were shifted were mainly realised on vacant posts on the staff establishment that could not be filled as projected and the concomitant savings that resulted from this, savings on the operational costs for Examinations and Administration function and the Community Education and Training function.

Programme 1: Administration

The purpose of this Programme is to provide strategic leadership, management and support services to the Department. The programme spent R421,57 million against the budgetof R447,24 million, representing the spending rate of 94.3%. The programme’s underspending amounted to R25,67 million, which was ascribed to delays in the filling of vacant posts. The Department’s overall vacancy rate, including frozen posts at the end of 2019/20was 9.2%. Skills Development, University Education and Administrations programmes had the highest vacancy rates at 25.6%, 21.5% and 19.8% respectively. Highly skilled supervision (Levels 9 -12) and Senior Management (Levels 13 – 16) had the highest vacancy rates at 19.6% and 40.4% respectively.

Programme 2: Planning, Policy and Strategy

The purpose of the Programme is to provide strategic direction in the development, implementation and monitoring of Departmental policies and the Human Resource Development Strategy for South Africa. The programme spent R73.66 million at the end of the 2019/20 financial year, resulting in underspending of R5.61 million. The lower than projected spending in this programme was mainly due to the delays in receiving invoices from the India-Brazil-South Africa Trilateral Commission (IBSA), for services rendered for legal and legislative services, and the favourable exchange rates at the time the transfer to the Commonwealth of Learning were made.

Programme 3: University Education

The Programme aims to develop and coordinate the policy- and regulatory framework for an effective and efficient university education system. Furthermore, it provides financial support to universities, the National Student Financial Aid Scheme (NSFAS) and the National Institute for Higher Education (NIHE). At the end of 2019/20, the programme had spent R73.43 billion, which resulted in an underspending of R20.69 million. The lower than projected spending wasascribed to the delays in the filling of vacant posts and delays in receiving invoices from the DBSA for the SHIP management office.

Programme 4: Technical and Vocational Education and Training

The purpose of this Programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programmes, assessment practices and systems for TVET. At the end of 2019/20, the programme’s expenditure amounted to R12,31 billion, translating in the underspending amounting to R74,30 million. The underspending was attributed to the delays in receiving invoices for various goods and services items such as computer services, training and development, office stationery, printing supplies, venues and facilities, as well as, travel and subsistence expenditure for examiners and moderators.

Programme 5: Skills Development

The purpose of the Programme is to promote and monitor the National Skills Development Strategy (NSDS III) and to develop a skills development policy and regulatory framework for an effective skills development system. The programme had R291,16 million against the budget of R295,41 million, translating into an underspending of R4,24 million. The underspending in this programme was mainly related to the SETA coordination and National Skills Development Services sub-programmes respectively.

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’s expenditure at the end of 2019/20 amounted toR2,26 billion, which resulted in an underspending of R96,73 million. The underspending in the programme wasmainly on the compensation of employees due to delays in the filling of vacant posts and claims from CET college lecturers that were not received by the end of the 2019/20 financial year.

4.1.3. Irregular, wasteful, fruitless and unauthorised expenditure incurred in the 2019/20 financial year

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. The total irregular expenditure recorded amounted to R138.23 million, and the bulk of it was from the previous financial years. During the financial year under review, the Department incurred R45 000 of irregular expenditureand this was mainly due non-compliance with correct procurement procedures when procuring consultant services.

The Department had not incurred fruitless and wasteful expenditure during the year under review. An amount of R9.593 million reflected on Note 26 of the Notes to the Financial Statements (2019/20 Annual Report) relates to fraudulent salary overpayments to CET College employees was incurred in the previous financial year. The Department reported that the matter was still under investigation.

4.1.4.Auditor-General’s Report on the financial statements of the Department

For the 2019/20financial year, the Department received an unqualified audit opinion by the Auditor-General of South Africa (AGSA). The audit outcomes of the Department have improved significantly. There were no material findings on the financial statements of the Department.

4.2. Overview and assessment of the Department’s programme performance for the 2019/20 financial year

4.2.1. Overview of overall programme performance

The Department’s Programmes, with their related achievement against the performance targets (direct outputs and system targets) for the 2019/20 financial year, are shown in Table 3. Overall performance for the previous financial years is shown at the bottom of Table 3.

Table 3: The Department’s programme performance for the 2019/20 financial year

PROGRAMMES

APP Targets 2019/20

Achieved

Not Achieved

% Achieved

Budget Spent

1. Administration

86%

94.3%

2. Planning, Policy and Strategy

89%

92.9%

3. University Education

16*

12*

90%

75%*

99.9%

4. Technical and Vocational Education and Training

29%

44%*

99.4%

5. Skills Development

80%

50%*

98.6%

6. Community Education and Training

100%

0%*

95.9%

TOTAL

29*

17*

12*

78%

59%*

99.8%

2018/19

95.6%

45.7%*

99.7%

2017/18

94.1%

67.6%*

100.0%

2016/19

80%

53%*

99.9%

2015/16

75%

51%*

98.8%

Note: All percentages identified with * in the above table are system performance targets (expected outcomes resulting from the interventions by the Department).

During the year under review, the Department had a total of 69 predetermined targets, comprised of 40 Departmental direct outputs and 29 system targets. The system targets were spread across the four delivery programmes as follows: University Education: 16, TVET: 9, Skills Development: 2 and CET: 2.The Department achieved 31 of 40 direct outputs, translating into 78% achievement. Performance regressed significantly from 95.6% in 2018/19 to 78% in 2019/20. Programme 4: TVET has recorded a significant regression in performance on direct outputs from 100% in 2018/19 to 29% in 2019/20. In relation to system targets, the Department achieved 17 of the 29 targets, translating into 59% achievement.

The performance targets that were not achieved as planned included:

Programme 1: Administration

The purpose of this programme is to provide strategic leadership, management and support services to the Department.

Percentage (100%) of invoices received from creditors paid within 30 days. The Department attributed the underachievement on miscommunication with regard to the processing of transactions and authorisation due to large volumes of work. It reported that managers were sensitized to monitor and enforce compliance on the 30-day turnaround processes to officials through monthly 30-day memoranda and Departmental Newsflashes on an occasional basis.

Programme 2: Planning, Policy and Strategy

Policy Framework on Gender-Based Violence (GBV) in the PSET system gazetted. The Policy Framework on Gender-Based Violence in PSET was not gazetted as planned. The Department that Cabinet was scheduled to approve the GBV Policy on 28 March 2020, and completed documents were submitted on 17 February 2020. However, the meeting was cancelled due to the lock down/State of Disaster.

Programme 3: University Education

Draft Regulatory Framework for university fees approved. It was reported that a first draft of a proposed framework was developed. A working group between the Department and Universities South Africa (USAf) was constituted and identified the comprehensive data required to make decisions on a Fee Regulatory Framework for the system. The information required, has been analysed for trends by four system analysts. The task team agreed on a central fee increase for a period of three years to increase stability of institutions. It was further noted that a first draft will be consulted with the sector in the first quarter of the new financial year, once approved by the Minister.
In terms of system targets, the Department did not achieve the following:
- Graduates in Human Health and Animal Health from universities (11 000);
- Success rates at universities (78%);
- Universities offering accredited TVET College qualifications (10); and
- Students in foundation programmes (35000).

The Department ascribed the non-achievement of 35 000 students in foundation programmes to the withdrawal of funding for the University of South Africa (UNISA) due to the inability of the Institution to offer the programmes. It was also reported that the Vaal University of Technology (VUT) had not achieved the Departmental approval for their foundation programmes, thus no Higher Education Management Information System (HEMIS) foundation students were recorded in 2018. Notably, over the 2014 – 2019 MTSF, the Department achieved this target only in 2018/19. The target had not been achieved in four financial years.

Programme4: Technical and Vocational Education and Training

Percentage (70%) of TVET maintenance expenditure achieved in terms of approved infrastructure maintenance plans developed. The actual performance was 21.7% (R133.20 million). The low expenditure by TVET colleges was ascribed to the majority of the approved work packages totalling to above the R500 000 procurement threshold, thus requiring formal tender processes. The tender processes, take onaverage, 3 to 4 months to conclude, which entails all process steps ranging from Bid Specification,Bid Evaluation and Bid Adjudication. It was further reported that there was a lack of commitment by College Principals to prioritise the relevantprocurement processes to enable quicker turn-around time frames. In remedying the situation, the Department reported that training of College staff was ongoing to help with the development of maintenance packages and writing of the tender specifications.
Period it takes to issue certificates to qualifying candidates following the publication of results (3 months). It took the Department more than 3 months to issue certificates. This was attributed to the restricted movement of persons and goods between metropolitan and districts during the Covid-19 lockdown period. As such certificates for the November 2019 examinations could not be dispatched to different TVET and private colleges as the dispatch period fell within the Covid-19 lock down period. The Department indicated that the certificates would be dispatched to various colleges following the lifting of the Covid-19 lock down Period.
Revised TVET Funding norms approved. The Department reported that the draft revised funding norms were developed based on the available public comment it received, and that theinitial delays were experienced in publishing the draft funding norms for public comment, which only closed on 10 January 2020. Additionally, there was insufficient public inputs and comments received, and National Treasury submitted its formal input only on 20 March 2020. This caused delays in the finalization of the final revised funding norms as concurrence by the Minister of Finance was still pending.
Continuing Education and Training (CET) Act regulations for TVET colleges developed and approved by the Minister. The Department stated that the proposed CET Act Regulations had been developed. However, based on consultation with the Office of the Chief State Law Adviser, a formal legal opinion was issued indicating that the proposed CET Act Regulations were Ultra Vires to the CET Act. Thus, the TVET Branch would have to reconfigure the proposed Regulations to possible Determinations to be issued by the Minister in 2020/21.

The programme had 9 system targets, of which four were achieved and five were not achieved as planned. The unachieved targets included:

Headcount enrolments in TVET colleges (710 535). The achievement was 92% and the Department reported that colleges gradually adapted to plan enrolment within the available funding.
TVET students enrolled in foundation programmes (4000). The Department said the reason for the variance was that the data provided was unaudited from the TVET Management Information System (TVETMIS). There were colleges that did not declare their enrolment data on the TVETMIS and it was in the process of verifying and auditing the data.
TVET throughput rate (NC(V) L4) (33%) and funded NC(V) L4 TVET throughput rate (36%). It has been recommended that research be undertaken to identify factors that lead to candidates not completing their NC(V) level 4 within the stipulated period. This has been placed on the research agenda of the Research Coordination unit in the Department.
TVET lecturers undergoing specified hours of work in their industry for specified periods (33%). The Department stated that most TVET colleges struggled to place their lecturers in industry for workplace exposure. Colleges indicated that the first quarter of the academic year is not a suitable period for lecturer placements. Colleges targeted to place lecturers, by the end of each quarter, during college closures. Other contributing factors were that the SETAs and TVET colleges only submitted their reports after the end of the financial year, during April. The submission to the DG would be ready after all the reports from TVET colleges and SETAs have been collated. This should be by the end of March 2020. A vibrant awareness programme to inform TVET lecturers about the obligation to be placed in industry was underway or proposed. The finalisation of the Public College Administrative measures, which amongst others sought to regulate lecturer conditions of service had to be expedited.

Programme 5: Skills Development

Number (30 000) of new artisan learners registered. It was noted that the availability of the workplaces for the 2019/20 financial year associated with the struggling economy had an impact.Only four out of 17 SETAs met their registration targets.The change of reporting format in the introduction of the Workplace-BasedLearning Programme Agreement Regulation (WPBLPAR) and the roll-out of the Artisan Recognition of Prior Learning (ARPL) process had an unintended negative impact on the registration of learner agreements.The COVID-19 pandemic impacted on the reporting and submission of fourth-quarter data and the Portfolio of Evidence (POE) by the SETAs and the Institute for the National Development of Learnerships, Employment Skills and Labour Assessments (INDLELA), thus under-reporting may have occurred in the last quarter.
The system target that was not achieved is Work-Based Learning opportunities (165 00). The Department reported thatthe COVID-19 pandemic impacted on the reporting and submission of the fourth quarter data by the SETAs. As this is an annual target, and once the submission of the last quarter data is completed, data would then be verified and quality assured prior to submitting POE.

Programme 6: Community Education and Training

The programme had two system targets and both were not achieved.

Headcount enrolments in all CET colleges (340 000). The underachievement was ascribed to poor planning at the college level – colleges did not provide centres with enrolments targets. The Department stated that the usage of varied admission tools by colleges compromised enrolment data storage and hampered proper reporting and poor return rate of reporting tools where only 50% of the Community Learning Centres submitted their enrolment data. Additionally, poor advocacy to attract students to CET colleges, as well as limited access to infrastructure, were contributing factors to the underperformance.
Certification rates in formal CET qualifications (45%). The underachievement was ascribed to the inadequate budget to provide sufficient Learning and Teaching Support Materials (LTSM) for students. The Department stated the lack of suitably qualified lecturers in CET colleges resulted in a lack of capacity to deliver programmes/courses offerings.

4.3. Selected performance against the MTSF sub-outcomes.

The Department continued to support national priorities by implementing programmes to achieve Outcome 5: A skilled and Capable workforce, sub-outcomes, and selected performance in relation to these outcomes included:

Sub-outcome 1:A credible institutional mechanism for the labour market and skills planning

The Department produced two reports, Skills Supply and Demand and Statistics on PSET to inform policy development, enrolment planning and funding within the Post-School Education and Training (PSET) system.

Sub-outcome 2:Increased access and success in programmes leading to intermediate and high-level learning.

307 409 qualifying TVET students obtained the NSFAS assistance.

National Certificate Vocational [NC(V)] Level 4 certificate rate was 53.9% against the target of 50%.
N3 and N6 Certification rates of were achieved at 83.2% and 87.10%, respectively, against the target of 65%.

Sub-outcome 3: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.

1 088 568 students were enrolled in public higher education studies at universities.

The university system produced graduates as follows: 13 891 in Engineering Sciences from universities;9 270 in Natural and Physical Sciences from universities;28 408 in Initial Teacher Education from universities; and 8 610 Research Masters graduates.
Success rates at higher education undergraduate (contact) were 82%.
University academic staff with PhDs was 48% against the target of 46%.
393 781 eligible university students obtaining financial aid.

Sub-outcome 4: 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.

Artisan pass rate averaged 69.8% against the target of 65%.
24 059 artisans were qualified, against the target of 24 000.
81% of national artisan learners were found to be employed or self-employed.

4.4. Auditor-General’s Report on the performance of the Department of Higher Education and Training

The AG made a finding with respect to the usefulness and reliability of reported performance information on programme 4: TVET. The AG noted that it was unable to obtain sufficient appropriate audit evidence for the reported achievement of the target (307 409) for qualifying TVET students obtaining National Skills Financial Aid Scheme (NSFAS) financial assistance. This was due to limitations placed on the scope of its work. Therefore, it was unable to confirm the reported achievement by alternative means, as well as to confirm whether any adjustments were required.

The AG also noted that the Department’s leadership did not exercise adequate oversight, specifically regarding reporting the predetermined objectives of the department as well as the related controls, resulting in material misstatements identified through the audit. The Department did not have a proper records management system to maintain information that supported the reported achievement in the annual performance report. This included information that related to the collection, collation, verification, storage and reporting of actual performance information. The Department did not perform adequate reviews over the reporting of predetermined objectives prior to submission for audit. This is evident from the material misstatements identified through the audit process.

5. ENTITIES OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING

For the Quality Assurance Councils, including the South African Qualifications Authority, both the NDP and the 2014 -2019 MTSF make a call for the education, training and innovation system, which should cater for the different needs and produce highly skilled individuals and for the production of graduates of the post-school system to have adequate skills and knowledge to meet the current and future needs of the economy and society. The White Paper for Post-School Education and Training further commits them to ensure that there are no dead ends within the post-school education and training system.

5.1. Council on Higher Education (CHE)

The mandate of the CHE is advising the minister on all higher education matters upon request and at its own initiative; to monitor the state of higher education and publish information regarding developments in higher education regularly, including arranging and coordinating conferences on higher education issues; promoting and assuring quality through the Higher Education Quality Committee (HEQC), including auditing the quality assurance mechanisms of, and accrediting programmes offered by higher education institutions; and publishing information regarding the developments in higher education and promoting the access of students to higher education institutions.

5.1.1. Overview of the CHE’s 2019/20 performance

During 2019/20, the activities of the CHE were informed by the four strategic goals which were implemented under the four budget programmes. The CHE had a total of 28 targets, of which 24 were achieved, translating into 85.5% achievement. The entity’s performance improved by 9.6% from 75.9% in 2018/19. Summary of programme performance for the 2019/20 is shown in Table 4 below.

Table 4:The CHE’s programme performance for the 2019/20 financial year

Programme	APP Targets 2019/20	Achieved	Not achieved	% Achievement
1. Institutional Quality Assurance	5	5	0	100%
2. Qualifications Management and Programme Reviews	5	2	3	40%
3. Research, Monitoring and Advice	5	5	0	100%
4. Administration and Support	13	12	1	92%
Total	28	24	4	85.5%

The performance targets that were not achieved as planned included:

Qualifications Management and Programme Reviews

Qualification Standard developed/reviewed and completed. The CHE stated that the three Qualification Standards for Bachelor of Commerce, Bachelor of Library and Information Science, and Bachelor of Sports Coaching were developed/reviewed and completed, but they were not tabled at the HEQC meeting for final approval due to the Covid-19 crisis.
Approved activities report on Doctoral Qualifications – Phase 2. The CHE stated that approved activities report on Doctoral Reviews – Project Plan was approved. However, most institutions could not submit Self-Evaluation Reports (SERs) in time and the submission date was extended. Site visits and other processes of the review could not proceed without the SERs.
Complete Phase 1 of the National Review of Bachelor of Laws (LLB) degree programmes offered by private higher education institutions. The underachievement was ascribed to the non-submission of the SERs timeously for site visits and other review processes to be undertaken.

Administration and Support

Filling of vacancies so that up to 85% of approved posts on the organisational structure have incumbents. (44 employees). The underachievement was ascribed to a moratorium placed on the filling of permanent positions on the organisational structure pending the finalisation of the new Quality Assurance Framework (QFA).

5.1.2. Overview of the CHE’s budget allocation and expenditure in 2019/20

For the 2019/20 financial year, the CHE’s total revenue amounted to R78,70 million, which is comprised of R59,13 million: Government Grant and Subsidies and R19,56 million from other income from cost recovery related to private accreditation (R8 79 million), interest received (R1,73 million), roll-over funds of surplus funds from prior year (R4,50 million), University of Johannesburg for QAF (R3,0 million) and University of Pretoria (R267 330). The CHE had spent R68,47 million, representing 87% of spending against the available budget. The underspending at the end of the financial year amounted to R10,22 million, which was ascribed to underspending on employee costs due to eightfunded vacant posts not filled timeously. The CHE indicated that there were some unforeseen delays to fill the posts during the year under review. Underspending was also incurred in goods and services under the National Standards and Reviews and Institutional Audit programmes. Site visits were not undertaken due to postponement of the submission of the SERs and the subsequent postponement of the submission date. Due to less travel, the allocation of the National Skills Fund (NSF) conditional grant was underspent. There were also no or less travel for the period under review, as well as less Institutional Audit Committee payments made for the period under review.

The CHE was awarded a clean audit by the AGSA for the 2019/20 financial year for the third consecutive year since 2017/18. The CHE’s financial statements for the 2019/20 financial year were freeof material misstatements.

The AGSA noted the following:

Underspending of the budget: As disclosed in the statement of comparison of budget and actual amounts, the public entity materially underspent on the budget by R10.2 million as it relates to unadjusted surplus funds.

Internal control deficiencies: The significant deficiencies in internal control relate to leadership. The entity did not have sufficient monitoring controls to ensure the proper implementation of the overall process of budgeting. It was noted that the entity had surplus funds for the past two financial years.

5.2. Quality Council for Trades and Occupations (QCTO)

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 address the national demand.

5.2.1. Overview of QCTO’s 2019/20 performance

During 2019/20, the activities of the QCTO were informed by the two Strategic Outcomes

Oriented Goals (SOOGs), namely, SOOG1: Competent people in priority trades and occupations and SOOG2: Creating a sustainable organisation. The QCTO had three budget programmes, namely:Administration, Occupational Qualifications and Quality Assurance. The overall performance of the QCTO for the 2019/20 financial year was 75%, achieving 15 of the 20 planned targets. The entity’s performance improved significantly by 16% from 59% in 2018/19. Summary of programme performance for 2019/20 is shown in Table 4 below.

Table 5:The QCTO’s programme performance for the 2019/20 financial year

Programme

APP Targets 2019/20

Achieved

Not achieved

% Achievement

1. Administration

50%

2. Occupational Qualifications

50%

3. Quality Assurance

92%

Total

75%

The performance targets that were not achieved as planned included:

Programme 1: Administration

Information and Communication Technology (ICT) MSP implementation Plan fully implemented annually. It was reported that the ICT implementation Plan was approved by the ICT Steering Committee, but not fully implemented. The QCTO stated that not all activities as per the approved plan were executed, and this was attributed to tendering processes that were not yet concluded at year-end and the national lockdown, which impacted and delayed implementation of some of the scheduled projects. The outstanding activities would be prioritised in the 2020/21 financial year.

Programme 2: Occupational Qualifications

80% of occupational qualifications and part qualifications with learner uptake quality assured against the QCTO Compliance Standards. The QCTO noted that the increasing uptake on occupational qualifications made this target resource-intensive and online monitoring with a risk-based approach would be adopted.
90% of the Skills Development accreditation applications for offering occupational qualifications and part qualifications processed within the turnaround time of 90 working days. The underachievement was ascribed to the QCTO’s inability to appoint adequate suitably qualified verifiers on time, as well as the increasing the number of applications due to the revoking of functions from the SETAs and the National Artisan Moderation Body (NAMB) The QCTO stated that it has established a verifier databank of industry experts which has increased its capacity to process accreditation applications within the stipulated timeframes. This database was still insufficient and the QCTO was still in a search for subject matter experts.
50% of historically registered qualifications with learner uptake quality assured against QCTO compliance standards. The QCTO ascribed the underachievement to a large number of uptake on historical qualifications, which made this target resource intensive. The QCTO would adopt online monitoring with a risk-based approach.

Programme 3: Quality Assurance

60% of learner records digitised against number agreed on the project plan. The underachievement was mainly due to a service provider for digitisation not appointed. The project delayed and the National Skills Fund (NSF) changed the request in place. The QCTO stated that the Project plan for actual digitisation would commence following the appointment of a service provider.

5.2.2. Overview of the QCTO’s budget allocation and expenditure in 2019/20

For the 2019/20 financial year, the QCTO’s total revenue amounted to R128,48 million, which comprised of R26,05 million: DHET Grant allocation, R90,34 million SETA Grant allocation, R5,42 million finance income, R1,45 million NSF funding and other income amounting to R5,20 million. At the end of 2019/20 financial year, the QCTO had spent R118,98 million, representing 93% of spending against the available budget. The underspending at the end of the financial year amounted to R9,50 million. Underspending was mainly due to additional R10 million unbudgeted revenue from interest and rendering of services. Three tenders were also cancelled due to non-acceptable bids.

The QCTO was awarded a clean audit by the AGSA for the 2019/20 financial year for the fourth consecutive year.The AGSA did not make findings with regard to the annual financial statements, predetermined objectives and compliance with legislation. The AGSA did not identify deficiencies with internal controls.

5.2.3. The QCTO’s future financial outlook

The entity’s budget allocation for 2020/21 and the outer years has been significantly cut. The revenue for 2020/21 decreased by 35.5% to R82,5 million and the salary bill for the entityamounts toR65 million. Rental and other fixed costs amount to R14 million and only R3,5 million will be left to cover all other expenses. In trying to implement cost-containment measures, the QCTO froze all recruitment and salary increments and the entity was in the process of securing a loan to purchase its own premises. This would reduce the rental fees significantly. The entity is gravely concerned about its future funding as it has a significant mandate to provide the necessary skills required to promote the economic recovery of the country.

5.3. South African Qualifications Authority (SAQA)

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 National Qualifications Framework (NQF) partners.

5.3.1. Overview of the SAQA’s 2019/20 performance

During 2019/20, the SAQA had six budget programmes with a combined total of 41 targets. The overall performance of the SAQA for the 2019/20 financial year was 98%, achieving 40 of the 41 planned targets. Summary of programme performance for 2019/20 is shown in Table 6 below.

Table 6:The SAQA’s programme performance for the 2019/20 financial year

Programme	APP Targets 2019/20	Achieved	Not achieved	% Achievement
1. Administration and Support	18	18	0	100%
2. Registration and Recognition	4	4	0	100%
3. National Learners' Record Database	7	7	0	100%
4. Foreign Qualifications Evaluation and Advisory Services (FQEAS)	3	2	1	67%
5. Research	4	4	0	100%
6. International Liaison	5	5	0	100%
Total	41	40	1	98%

The performance target that was not achieved was in relation to providing advice to the Minister of Higher Education and Training on all requested matters, or as and when deemed necessary. The variance was mainly due to fact that the SAQA did not receive requests for advice from the Minister.

Selected programme performance against the planned targets:

Programme 1: Administration and Support

Produced the reports for the Minister on Implementation of the Ministerial Guidelines, Simplifying the NQF; and the NQF family’s contributions to implementing the Articulation Policy.
Produced a report on the effectiveness of collaboration between the SAQA and the Quality Councils’ System of Collaboration for the Minister and also amended the System of Collaboration.
Updated the List of Misrepresented Qualifications and produced bi-monthly reports on Misrepresented Qualifications for the Minister. It recorded 881misrepresented qualifications: 591national; 290foreign and170SAQA Certificates of Evaluation.
The SAQA was awarded a clean audit by the AGSA for the 2019/20 financial year.

Programme 2: Registration and Recognition

During 2019/20, the SAQA processed 100% of applications for the recognition of professional bodies and registration of their professional designations and further recognised three professional bodies and registered 18professional designations
Monitored professional bodies that were recognised in 2017/18 and evaluated them against the policy and criteria.
Renewed the recognition of eightprofessional bodies that were recognised in 2014/15 andde-recognised two professional bodies that failed to meet the SAQA’s policy and criteria.

Programme 3: National Learners' Record Database

Processed 100% (136 313) of applications received for the verification of national qualifications and produced a progress report.
Recorded 528 510 learners and 754 044 qualifications awarded on the NLRD.

Programme 4: Foreign Qualifications Evaluation and Advisory Services (FQEAS)

Produced a monitoring report on the implementation of the approved Addendum on Asylum Seekers and Refugees.
Produced the annual trends report on misrepresented foreign qualifications.

Programme 5: Research

Disseminated the summary report on the 2017 NQF Impact Study and produced a progress report on the 2021 NQF Impact Study.
Produced a SAQA Bulletin on Inclusivity.

Programme 6: International Liaison

Produced two documents on international best practice.
Produced a report on the benchmarking of the South African Level Descriptors to the World Reference Levels.
Produced one trends report: The extent to which NQFs are based on learning outcomes: Trends in eight Southern African Development Community(SADC) countries

5.3.2. Overview of the SAQA’s budget allocation and expenditure in 2019/20

For the 2019/20 financial year, the SAQA’s total revenue amounted to R134,16 million, which is comprised of R69,89 million: Government Grant, R39,69 million from Foreign Qualifications Evaluation Fees, and R11,38 million from National Qualifications Verification Fees. The other income was from professional bodies, interest received, sundry income, rental income, University Qualification Registration Project (UQRP) and others. The SAQA had spent R129,69 million, representing 97% of spending against the available budget. The underspending at the end of the financial year amounted to R4,47 million, translating into 3.3% of the total available budget. Underspending was ascribed to cost-saving measures implemented by the directorates. The entity’s management decided to publish bulletins and articles online, instead of manual and this saved approximately R500 000. The SAQA also utilised social media platforms for advertising and the saving on this line item amounted toR400 000.

5.3.3. 2019/20 audit outcomes

The SAQA obtained a clean audit award without findings during 2019/20. The AGSA indicated that the financial statements present fairly, in all material respects, the financial position of the SAQA as at 31 March 2020. The SAQA’s financial performance and cash flows for the year then ended in accordance with the Standards of Generally Recognised Accounting Practice (Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No.1 of 1999) (PFMA).

The AGSA did not identify any material findings on the usefulness and reliability of the reported performance information for Programme 2. Furthermore, the AGSA did not identify any material findings on compliance with the specific matters in key legislation set out in the general notice issued in terms of the Public Audit Act (PAA), 2018 (Act No. 5 of 2018). No significant deficiencies in internal control.

5.3.4. The SAQA’s future financial outlook

The entity is struggling to balance its 2020/21 budget because it could not generate revenue from service delivery, mainly due to lockdown. The SAQA received 44% of its budget from Government Grant allocation and 56% is generated through services it renders. The entity reported that it had numerous meetings with the Department and the Minister of Higher Education, Science and Innovation on its current financial position. However, the meetings did not yield desirable outcomes, compelling it to plan on retrenching 71 staff across salary bands to balance the budget. A balanced budget was sent to the Minister in September 2020 and it was still awaiting budget approval.

The government grant allocation to the entities was cut by R15,108 million for the 2021/22 financial year and further cuts were projected for the outer years of the 2021/22 MTEF period. For 2020/21, the SAQA has a R10,697 million budget deficit, despite operational budget been cut to the bone. The entity hoped to balance its budget once the staff retrenchments have been finalised.

6. OBSERVATIONS

The Committee, having considered and deliberated on the 2019/20 Annual Reports of the Department, the CHE, the SAQA and the QCTO made the following key observations and findings:

6.1. Programme 1: Administration

6.1.1.The delays in the filling of senior management positions within the DHET were noted with concern, especially that the Department has had three acting Deputy Director- Generals (DDGs) for three programmes, TVET, CET and Planning, Policy & Strategy for a few years. The delays in the filling of vacant positions at TVET colleges,in particular at senior management level have caused leadership instability at most colleges, with some colleges having had three acting Principals in a period of five years. The Department indicated that its organisational structure was only approved in 2019, and prior that there was no approved organogram. The Department was also implementing e-recruitment strategy to expedite the filling of vacant positions.

6.1.2. The Minister appointed the acting CFO, Ms Makukule in the Department of Higher Education and Training, who is appointed substantively as the CFO in the Department of Science and Innovation. The Committee was concerned about the legalities of appointing a substantive CFO to act in the same position in another Department. The Department stated that the CFO was appointed temporarily because the DHET CFO was suspended at the peak of audit and there was an urgent need to appoint an acting CFO to enable the Department to complete the audit process. The Committee resolved to enquire from the Department of Public Service and Administration.

6.1.3. The delays in the finalisation of investigations into the irregular expenditure that was incurred in 2016/17 as well as delayed implementation of consequence management was of great concern. The Department ascribed the delays in investigations to the consultations with National Treasury. It also reported that criminal cases were opened against those who were involved in irregular activities in the Department and two cases were also with the Directorate for Priority Crimes Investigation (Hawks).

6.1.4. The Committee expressed a concern with respect to inadequate capacity in the Labour Relations Unit of the Department, which impacted the its ability to resolve cases within 90 days.

6.2. Planning, Policy and Strategy

6.2.1. The inadequate oversight over the PSET institutions by the DHET was noted with concern. The presentation by the AGSA on the 2019/20 audit outcomes of the HET Portfolio showed inadequate compliance to legislative prescripts by entities under the DHET’s portfolio. Some of the entities (NSFAS, Taletso TVET college and VUT) were repeat offenders in terms of failing to comply with the submission of their annual financial statements within the legislated timeframes.

6.2.2. The Committee was concerned about the employment of people who were fingered in the investigative reports for misconduct, including financial misconduct and maladministration within the PSET institutions is of great concern.

6.3. Programme 3: University Education

6.3.1. The inadequate accountability by universities in terms with regard to their finances, partly due to the gaps in legislation, which exclude them from reporting in terms of the compliance standards of the Public Finance Management Act, 1999 (Act No 1 of 1999) was noted with concern. It was noted that the Higher Education Act, 1997 (Act No. 101 of 1997) as amended puts an obligation on the Minister to make regulations for universities. However, the existing reporting requirements are below the PFMA standards of compliance. The Department indicated that there are regulations for universities which were gazetted by the Minister and drafted in consultation with the AGSA. Universities had their own SCM policies and are expected to comply with them. The Department has also created a macro infrastructure framework where universities must account monthly on their infrastructure delivery.

6.3.2. The Committee expressed a concern with what appeared to be abuse of institutional autonomy by some universities that want to evade accountability for their actions. The Committee indicated that universities received 52% of their budgets from the public purse. Thus, they should be accountable to the public on the utilisation of funds appropriated by Parliament. The Department indicated that universities were being held into account for the use of public funds, and instances where there is misuse of such funds, the Minister intervenes.

6.3.4. The Committee expressed its concern with what appeared to be regression of performance of those public institutions that were placed under administration. The observation arose from the fact that two institutions (VUT and NSFAS) that are under administration failed to submit their annual financial statements to the Auditor-General. Of great concern was that the term of the NSFAS Administrator is coming to an end on 31 December 2020 and the Committee may not be able to consider the Annual Report of entity before the term ends.

6.4. Programme 4: Technical and Vocational Education and Training

6.4.1. The TVET branch was once again the least performing branch out of the six branches of the Department. There were seven (7) targets for 2019/20, and only two (2) were achieved. The Committee was of the view that the continuous delays in the filling of senior management posts at colleges contributed to the underperformance performance of system targets in this branch. The Department indicated that 41 TVET colleges were ready to implement the decentralised recruitment system aimed at expediting the filling of vacancies at these institutions, which was delayed by the national lockdown.

6.4.2. The Committee expressed its concern with respect to the poor audit outcomes of TVET colleges for 2019. It was further noted that the financial management of most TVET colleges was still concerning, despite the few colleges that showed improvements. The Department was also concerned about those colleges which regressed.

6.4.3. The Committee was of the view that the leadership of the Department did not provide the necessary support to TVET colleges to function effectively. The Department indicated that it provides support to TVET colleges that were struggling to meet their obligations through site visits.

6.4.4. The underspending amounting to R74 million incurred in this programme was noted as a concern. The Department indicated that the underspending was incurred due to savings on compensation of employees in regional offices.

6.4.5. The inadequate capacity in the examination unit of the Department was noted as a concern, as well as the outstanding certificates due to qualifying candidates in the TVET sector.

6.4.6. The delays in the delivery of infrastructure development projects in the TVET sector were noted as a serious concern, given that money was made available to these institutions, and yet they failed to meet the requirements to execute these projects, which are critical for expansion of access and capacity in the sector. The Department ascribed delays to the majority of the approved work packages totalling to above the R500 000 procurement threshold, thus requiring formal tender processes. The tender processes take, on average,three to four months to conclude, which entails all process steps ranging from Bid Specification, Bid Evaluation and Bid Adjudication.

6.5. Programme 5: Skills Development

6.5.1. The Committee expressed its concern with the respect to the audit outcome of the SETAs for 2019/20. The inadequate compliance to supply chain management and other similar prescripts by SETAs was noted as a serious concern.

6.5.2. The Committee expressed its concern with regard to the impact of the four months’ skills payment holiday to the skills development interventions of the SETAs and the National Skills Fund.

6.6. Community Education and Training

6.6.1. The Committee was of the view that the CET programme needed more investment and resources in order to fulfil its mandate.

6.6.2. The CET incurred an underspending amounting to R96 million and this was noted a serious concern given that this programme was already underfunded, but it could not spend all the budget.

6.7. Finances

6.7.1.The Committee noted that the Department had an unqualified audit opinion for 2019/20 without material statements on its annual financial statements. The audit outcomes of the Department have improved significantly.

6.7.2. The overall underfunding of the DHET, including the R1 billion budget cut from Vote 17 and shifted to the Department of Public Enterprises during the second adjustment appropriation was noted as a concern. Compounding the situation is that the budget cuts would impact on the expansion of infrastructure development projects, especially in the TVET sector.

6.7.3. The Committee expressed its concern with respect to the delays by the NSF in paying its outstanding debts to the DHET. The DHET indicated that it paid for some of the projects in advanced and reclaimed the balance from the NSF. However, the NSF delayed in honouring their debt commitments. Going forward, the DHET would request the National Skills Fund (NSF) to commit funding in advance to avoid this situation.

6.8. Council on Higher Education

6.8.1. The clean audit award received by the CHE for 2019/20 was commended by the Committee.

6.8.2. The withdrawal of the R25 million funding injection to alleviate the funding constraints of the CHE as confirmed by the Department on 26 June 2020 was noted with great concern. The Department indicated that the said allocation was pronounced through a Ministerial Statement. However, the approval was meant to be done through Treasury. Due to the impact of the Covid-19 pandemic and other competing needs, Treasury did not approve the transfer of this funding from University subsidies. Instead, it was recommended that the money be transferred towards interventions meant to save the 2020 academic year in the PSET system. The Department did not anticipate any prospects of capital injection to the CHE’s budget in the short term period, given that there is room in its current budget for reprioritisation.

6.8.3. The entity indicated that its financial position was not worse as compared to the SAQA. Nonetheless, it was trying to achieve its key deliverables under difficult circumstances, and the APP would be revised to align with the available budget.

6.9. South African Qualifications Authority

6.9.1. The Committee conveyed its appreciation to the outgoing SAQA Chairperson and the board for the sterling work undertaken and good governance during their tenure, which has seen the entity achieving two consecutive clean audits.The entity achieved a clean audit for 2019/20 and also achieved 98% of its annual targets.

6.9.2. The Committee applauded the entity for promoting gender equity and gender transformation, especially at senior management level. 84% of the entity’s staff comprised of Black African females and 88% Black African males.

6.9.3. The Committee enquired from the DHET about the plan to assist the entity with additional funding to avoid job losses. It was noted that the public sector had been cushioned for a long time with regard to retrenchments, therefore, the situation at the SAQA needs urgent intervention to save jobs. The Department indicated that it recognised the role the SAQA plays in terms of delivering its mandate and it also met with the entity to discuss the precarious financial situation and the need for long-term financial sustainability. The Department had also raised its concern about the management of resources at the entity given that its budget was unbalanced. The entity was also advised to cut on non-essentials and that proposal was implemented. The Department advised the SAQA not to implement retrenchment of employees as engagements were underway to salvage the situation. However, the Department was also mindful that there was no additional funding from the fiscus to bail out the entity.

6.9.4. The Committee was concerned that several engagements between the SAQA, the Department and the Minister did not yield the desired outcomes for the entity.The SAQA had hoped that the DHET would provide additional funding as an interim relief to mitigate against its financial constraints. However, additional funding was not provided, instead, the DHET and Treasury cut the entity’s budget by 2% as opposed to 10%.

6.9.5. The Committee noted that the lockdown period had severely impacted the revenue streams of the entity, especially the Verification and Evaluation of Foreign Qualifications services. The Committee was concerned about the staff on contract in this Unit. The SAQA indicated that it had expanded the verification function due to the expanded mandate arising from the NQF Act as amended and since it is a huge income-generating stream. However, it was unable to convert the temporary staff into full-time employment given the precarious financial situation.

6.9.6. The Committee noted with concern that the SAQA received 52% of its total budget from government grant in 2019/20 and this declined to 44% in 2020/21 and currently has a budget deficit of R10,697 million. In addition, the entity’s revenue-generating streams were severely impactedby national lockdowns. The entityhas other plans for alternative funding sources and have been actioned, however, they will take time to materialise and bear fruits.

6.9.7. The loss of three skilled and capable black female senior managers (HR Director, Director for Registration and Recognition and the CFO) was noted as a serious concern. The entity indicated that it mourned the loss of black women in key strategic positions. However, due to financial constraints, young black professionals were resigningfrom the SAQA for better opportunities. The entity was unable to retain its talent due to the funding constraints. For the past two years, the entity was unable to pay performance bonuses and salary increases to its senior management staff.

6.9.8. The Committee was concerned about the uncertainties faced by the SAQA in delivering on its mandate, especially the expanded mandate due to the NQF Amendment Act. Though the SAQA has developed the registers for fraudulent and misrepresented qualifications/part-qualifications the effectiveness of the registers depends on human capacity, of which the entity was struggling to retain.

6.9.9. The Committee was concerned that the SAQA was not able to fill the vacant post of the CEO. Despite having conducted the interviews, the appointment of the suitable had to be abandoned, given that there is currently no funding for new incumbents. The current acting CEO will continue in the acting position.

6.9.10. The low staff morale at the entityat the SAQA, given the looming retrenchment of 71 employees was noted with concern. The entity indicated it had no choice but to opt for the retrenchment of staff given that the possibilities of additional funding to save jobs were slim. The costs of the retrenchment of employees to the SAQA amounted to R12 million, and 71 employees would be retrenched as opposed to 145 which was previously anticipated. Further delays from implementing retrenchments would put the entity in a worse financial situation whereby it would exist to pay salaries and not able to fulfil other key deliverables.

6.10. Quality Council for Trades and Occupations

6.10.1. The Committee congratulated the newly appointed Council of the QCTO and also thanked the previous Council for its leadership and good governance, which has contributed to the entity achieving four consecutive clean audits.

6.10.2. The impact of the four-month skills contribution holiday, and the further budget cuts of the skills levies in the second adjustment appropriation and the impact of the QCTO funding as it receives a portion of its budget from the skills levies. The entity indicated that it had a budget amounting to R82 million and 80% of this budget is allocated for compensation of employees. Under normal circumstances, organisations spend 62% on employee costs. The impact of the skills levies payment holiday would affect the income of the entity.

6.10.3. The delays in the approval of the entity’s business case by the DHET and its financial requirements were noted as a concern. The entity indicated that the business case required it to be funded at R250 million in order to take back the quality assurance function from the SETAs. The DHET had approved the QCTO’s vision 2020. The QCTO had engagements with the SETAs and other quality assurance partners and was also entering into service level agreements (SLAs) with the SETAs by revoking some of the functions delegated to them.

6.10.4. The delays in the purchasing of the new office space were noted a concern, given the high rental fees. The entity indicated that it was waiting for the few documents from the Department, and was also looking at getting additional funding to complete the process.

7. CONCLUSION

For the 2019/20 financial year, the Department’s final appropriation for 2019/20 was R107,32 billion, comprised of R89,03 billion of voted funds and R18,28 billion of direct charges against the National Revenue Fund, excluding additional from Departmental receipts and aid assistance. At the end of the financial year, the Department had spent R107,09billion, translating into a 99.8% spending rate against the available budget. The Department recorded an underspending of R227,25 million from voted funds, which translate to a 0.26% of the available budget for the 2019/20 financial year. Underspending increased by R26,92 million from R200,33 million in 2018/19. The Department applied virements to the amount of R24,48 million. Virements were applied across three programmes as follows: University Education: R2,520 million to Administration; TVET: R3,60 million to Administration; CET: R18,35 million to Administration: R2,82 million, Planning, Policy and Strategy: R1 million and Skills Development R14,53 million.

The Department achieved 31 of 40 direct outputs, translating into 78% achievement. Performance regressed significantly from 95.6% in 2018/19 to 78% in 2019/20. Programme 4: TVET has recorded a significant regression in performance on direct outputs from 100% in 2018/19 to 29% in 2019/20. In relation to system targets, the Department achieved 17 of the 29 targets, translating into 59% achievement.

The Department was awarded an unqualified audit opinion by the AGSA. The annual financial statements of the Departments were free of material misstatements. The AGSA did not make findings on compliance with legislation. However, the AGSA made a finding with respect to the usefulness and reliability of reported performance information in programme 4: TVET. The AGSA noted that it was unable to obtain sufficient appropriate audit evidence for the reported achievement of the target (307 409) for qualifying TVET students obtaining National Skills Financial Aid Scheme (NSFAS) financial assistance. This is a recurring finding. The AGSA noted that the Department’s leadership did not exercise adequate oversight, specifically regarding reporting the predetermined objectives of the department as well as the related controls, resulting in material misstatements identified through the audit.

The outstanding audits of the TVET colleges, Services SETA, the National Skills Fund, the Vaal University of Technology (VUT) and the NSFAS were noted with serious concern. The Committee strongly expressed its displeasure with Taletso TVET college, the NSFAS and the VUT as they failed to submit their Annual Financial Statements for the second consecutive year. The Committee urged the AGSA and the Department to follow-up on the outstanding audits to ensure that they are finalised and tabled in Parliament, in particular, the NSFAS Annual Report for 2019/20.

The Committee was also concerned about the increase in irregular and fruitless and wasteful expenditure incurred by some of the SETAs, such as Construction Education and Training Authority (CETA), Media, Information and Communication Technologies Sector Education and Training Authority (MICT SETA), Services Sector Education and Training(SSETA), Chemical Industries Education and Training Authority (CHIETA), Health and Welfare Sector Education and Training Authority(HWSETA), Culture, Arts, Tourism, Hospitality and Sports Sector Education and Training Authority(CATHSSETA) and Wholesale and Retail Sector Education and Training Authority (W&RSETA). The Committee indicated that it will invite some of the SETAs to appear before to present their Annual Reports in the new financial year.

The Committee commended the CHE, the QCTO and the SAQA for improved non-financial performance and for receiving clean audits for the 2019/20 financial year. Of great concern was the financial position of the three Entities due to budget cut effected by government on their baseline funding. The Committee was gravely concerned about the financial sustainability of the SAQA, given that it was not able to balance its 2020/21 budget and had to resort to retrenching 71 staff members across salary levels. The Committee was concerned about the loss of skilled and capable people, and the impact on the mandate of the entity.

8. RECOMMENDATIONS

The Committee, having assessed the Annual Report 2019/20of the Department and entities recommends that the Minister of Higher Education, Science and Innovation and the Minister of Finance should consider the following recommendations:

8.1. Programme 1: Administration

8.1.1. The Department should expedite the investigation into and implement consequence management onthe remaining cases of irregular expenditures. Moreover, the Department should ensure that consequence management is implemented against officials who fail to comply with applicable legislation and other SCM regulations. Criminal cases should also be instituted against the officials whose actions and decisions cause financial losses to the DHET.

8.1.2. The Department should take appropriate action to ensure that identified deficiencies in internal controls are addressed by management to mitigate against recurrence of the findings with regard to the usefulness and reliability of the reported performance information. Management should also develop an action plan to respond to address the findings raised by the AGSA.

8.1.3. The filling of the DDG posts for the Planning, Policy & Strategy, TVET and CET programmes should be expedited, and the Committee has been making this recommendation for the past three years. The prolonged acting periods in these programmes are not in line with the Public Service Regulations and also affect the stability of the respective programmes. In addition, the filling of the CFO position permanently should be expedited.

8.1.4. The Labour Relations Unit of the Department should be capacitated to ensure that it is able to resolve disciplinary cases within 90 days.

8.2. Programme 2: Planning, Policy and Strategy

8.2.1. The Department should improve its overall oversight function over the public entities in its portfolio,in particular those which incurred irregular expenditure amounting to R1 billion mainly due to expenditure incurred in contravention key legislation.

8.2.3. The Department should ensure that people who were fingered in the investigative reports for financial misconduct and related matters as well as those who resign before they get charged and dismissed should not be allowed to be employed or serve in any form within the PSET system.

8.3. Programme 3: University Education

8.3.1. Universities receive 52% of their budget from the public purse and 80% of the DHET’s overall budget is allocated to the university education programme. The DHET should ensure that universities are held accountable for their actions, especially in supply chain and procurement processes. The standard of compliance for universities should be in line with the PFMA standards.

8.3.2. The Committee should convene engagements with the relevant stakeholders in the PSET system to discuss the notion of institutional autonomy, which is being used by other institutions to evade accountability.

8.4. Programme 4: Technical and Vocational Education and Training

8.4.1. The Department should ensure that the implementation of the financial management training programme for staff in TVET colleges is expedited to improve the overall audit outcomes of the sector. The internal audit units of colleges should also be capacitated to minimise the overreliance on the AGSA to pick-up financial misstatements.

8.4.2. The Department should ensure that the TVET colleges (Orbit, Taletso, Tshwane South and Northern Cape Urban) submittheir 2019 annual financial statements audits do so before the end of 2019.

8.4.3. The Department should provide additional support and necessary training to TVET colleges with respect to their execution of infrastructure development projects. The continuous underspending of the conditional infrastructure efficiency grants (CIEG) in the sector remains an ongoing concern, mainly due to inadequate project management skills from colleges.

8.4.4. The Department should ensure that the target of clearing the certification backlog by end July 2021 is not shifted to another date. A long term sustainable solution is required to ensure that the Department complies with its policy of issuing certificates within three months after the release of examination results.

8.4.5. The leadership of the Department should ensure that a culture of accountability is entrenched, in particular, in this programme so that it can improve its performance and meet its set targets.

8.5. Programme 5: Skills Development

8.5.1. The Department should closely monitor the SETAs that have been identified as repeat offenders with respect to their audit outcomes for 2019/20 and also ensure that consequence management is implemented.

8.6. Community Education and Training

8.6.1. The Department should engage Treasury with respect to the need for additional baseline funding to support the CET programme to fulfil its mandate and to address infrastructure-related challenges.

8.7. Council on Higher Education

8.7.1. Consideration for additional funding to the CHE be made, given that the confirmed R25 million has been withdrawn and the planned activities would have to be scaled down due to funding constraints.

8.7.2. The filling of vacant positions should be prioritised by the entityto ensure that critical posts have incumbents to support the fulfillment of the Entity’s mandate adequately.

8.8. South African Qualifications Authority

8.8.1. The Minister further engages with the SAQA so that a solution can be found to avoid the looming retrenchments of 71 employees. Furthermore, funding lifeline be provided to the SAQA to enable it to buy time to implement its planned strategies that would sustain the entity going forward.

8.9. Quality Council for Trades and Occupations

8.9.1. The DHET should expedite the process of approving the business case of the entity so that it is able to take over the quality assurance function delegated to the SETAs and Professional Bodies.

8.9.2. The process of purchasing the new premises of the QCTO be expedited so that the entity is able to save from rental costs.

8.9.3. The DHET should consider allocating additional funding to the entity given that 80% of its budget is spent on compensation of employees. Additional funding will enable the entity to reduce its compensation costs and invest in other key delivery areas in support of its mandate.

9. REPORTING REQUIREMENTS

Entity	Reporting Matter	Action required	Time-Frame
DHET
	Irregular expenditure and fruitless and wasteful expenditure	DHET to expedite the remaining investigations and implement consequence management	DHET to report to the Committee on the outcomes of disciplinary case at the next quarterly report, 2021/22
	Filling of vacancies	DHET to expedite the filling of vacancies	DHET to provide updates quarterly, 2021/22
	Implementation of the 2020 BRR Recommendation	DHET to implement the BRR Recommendations	DHET to provide updates to the Committee on the implementation of BRR Recommendations quarterly, 2021/22
	Review of the university regulations to the PFMA standards	DHET to review the university regulations to ensure they reports as per the PFMA standards	DHET to provide updates to the Committee quarterly, 2021/22
AGSA / DHET	Outstanding Audits: Entities: National Student Financial Aid Scheme, NSFAS, the National Skills Fund and Safety and Security SETA. Universities:Vaal University of Technology TVET Colleges: Taletso, Orbit, Tshwane South and Northern Cape Urban	DHET to ensure that the outstanding Annual Financial Statements are submitted to the AGSA	AGSA and DHET to report to the Committee on progress in the submission of the AFSs and on the audit outcomes.
NSFAS/ AGSA	Outstanding Annual Financial Statements	2019/20 Annual Report to be tabled in Parliament.	AGSA to report to the Committee on the Audit outcomes of the NSFAS 2019/20 Annual Financial Statements, February 2021 The NSFAS to appear before the Committee on its 2019/20 Annual Report, February 2021
SETAs CETA, MICT SETA, SSETA, CHIETA and HWSETA CATHSSETA and W&RSETA	Irregular expenditure Fruitless and wasteful expenditure	Action plan to address the AG findings should be developed, implemented and monitored SETAs to conduct investigations and implement consequence management	At the next quarterly reporting in 2021/22 SETAs to report to the Committee on the outcomes of the investigation and implementation of consequence management

Report to be considered.

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ATC201119: Budgetary Review and Recommendation Report of the Portfolio Committee on Higher Education, Science and Technology on the 2019/20 Annual Report of the Department of Higher Education and Training and Entities, dated 18 November 2020

Higher Education, Science and Innovation

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