ATC201125: Budgetary Review and Recommendations Report (BRRR) 2020 of the Portfolio Committee on Public Service And Administration on Statistics South Africa: Dated 25 November 2020

Public Service and Administration, Performance Monitoring and Evaluation

BUDGETARY REVIEW AND RECOMMENDATIONS REPORT (BRRR)2020 OF THE PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATION ON STATISTICS SOUTH AFRICA: DATED 25NOVEMBER 2020

 

  1. BACKGROUND

The Portfolio Committee on Public Service and Administration (hereinafter referred to as the Portfolio Committee) having considered the directive of the National Assembly, which is in line with Section 5 of theMoney Bills Amendment Procedures and Related Matters Act, No. 9 of 2009 to consider and report on the Annual Report of the Statistics South Africa. It should be noted that Statistics South Africa operates independently from the Executive. The BRR Report is tabled as follows:

 

  1. INTRODUCTION

Parliament derives its mandate from the Constitution of the Republic of South Africa. The strategic objectives of the Portfolio Committee are informed by five strategic goals of Parliament. The functions of the Portfolio Committee on Public Service and Administration are as follows:

  • Participating and providing strategic direction in the development of the legislation and thereafter passing the laws,
  • Conducting oversight over the Executive to ensure accountability to the Portfolio Committee towards achieving an effective, efficient, developmental and professional public service,
  • Conducting public participation and engaging citizens regularly with the aim to strengthen service delivery; oversee and review all matters of public interest relating to the public sector,
  • Monitoring the financial and non-financial aspects of departments and their entities and ensuring regular reporting to the Committee, within the scope of accountability and transparency,
  • Supporting and ensuring the implementation of the PSC recommendations in the entire public service
  • Participating in the international treaties which impact on the work of the Committee.

 

  1. PURPOSE OF THE BUDGETARY REVIEW AND RECOMMENDATIONS REPORT

Section 5 of theMoney Bills Amendment Procedures and Related Matters Act, No. 9 of 2009 the National Assembly, through its Committees, must annually compile Budgetary Review and Recommendations reports (BRRR) that assesses service delivery and financial performance of departments and may make recommendations on forward use of resources. The BRRR is also a source document for the Committees on Appropriations when considering and making recommendations on the Medium Term.

Moreover, the Money Bills Amendment Procedures and Related Matters Act, section 5 (3) highlights focus areas on the budgetary review and recommendation report as:

  • Providing an assessment of the department’s service delivery performance given available resources;
  • Providing an assessment of the effectiveness and efficiency of the departments use and forward allocation of available resources; and
  • Including recommendations on the forward use of resources

 

3.1Method

The Portfolio Committee on Public Service and Administration compiled the 2019/20 BRRR using the following documents:

  • The National Development Plan: Vision for 2030.
  • Medium Term Strategic Framework 2015-2020.
  • State of the Nation Address 2019.
  • Strategic Plans of the Statistics South Africa 2015-2020.
  • National Treasury (2019) 4th Quarter Expenditure Report 2019/20 Financial Year
  • Annual Performance Plans 2019/20 of the Statistics South Africa.
  • Annual Report 2019/20of the Statistics South Africa.
  • Auditor-General South Africa’s outcomes of audit findings 2019/20.
  • The Portfolio Committee met with the leadership of the Statistics of South Africa

 

  1. NATIONAL DEVELOPMENT PLAN VISION 2030

The National Development Plan highlights the need for South Africa to build a state that is capable of playing a developmental and transformative role. This requires the state to formulate and implement policies that support that role. The NDP and the Medium Term Strategic Framework are informed by statistical information provided by Statistics South Africa, which publishes more than 200 statistical releases per year. The publications present statistical research that measures the development and transformation of the economy and society in a range of context.

Changing economic and societal realities have expanded the demand for statistical information: more detailed statistics are needed and more frequently if policies are to be responsive and effective. Statistics in the public domain must be of high quality. Responding to the increased demand for high quality statistics will require a national effort, and collaboration and partnerships between the producers and the users of statistics.

 

  1. MANDATEOF THE STATISTICS SOUTH AFRICA

Statistics South Africa is a national government department accountable to the Minister in the Presidency: Planning, Monitoring and Evaluation. The department’s activities are regulated by the Statistics Act (1999), which mandates the department to advance the production, dissemination, use and coordination of official and other statistics to assist organs of state, businesses, other organisations and the public planning, monitoring and decision making. The Act also requires that the department coordinate statistical production among organs of state in line with the purpose of official statistics and statistical principles.

However, there is a legislation reform on the cards for the institution. This legislative reform will inform the full planning cycle of government, from planning to evaluation, including the implementation of the Spatial Data Infrastructure Act. Stats SA has started the legislative review process.

  1. STRATEGIC PRIORITIES

Statistics South Africa aims to contribute towards realisation of the ideals of the National Development Plan (NDP) by providing accurate data policy implementation to overcome social challenges such as inequality, poverty and unemployment. Stats SA works in conjunction with all stakeholders in the country to provide accurate statistical information on economic, demographic, social and environmental factors for proper NDP implementation. The institution has identified the following strategic priorities, which are:

  1. To promote and inform the nation through an expansion of statistical products and services.
  2. To increase statistical trust through sound quality principles that are in line with international standards. This will ensure that users of statistics products have confidence and trust official statistics.
  3. To promote partners in statistics, international cooperation and participation in statistics.
  4. To invest in the learning and capable organisation.
  5. To promote statistical leadership through investment in schools and tertiary programmes to increase statistical skills at grass roots level.

                                                        

  1. DEPARTMENT PROGRAMME PERFORMANCE

7.1 Statistics South Africa

7.1.1 Budget Allocated and Expenditure 2019/20

Out of the allocation of R2 514 billion, the Department spent R2 553 billion or 101.6 per cent of its 2019/20 budget allocation as at the end of March 2020. The higher than anticipated spending was mostly reported under the compensation of employees’ budget at 61 per cent or R1 533.5 billion of the overall budget, and goods and services’ budget at 27 per cent (R678.8 million). The main cost drivers of the total Vote budget are:  Statistical Collection and Outreach (R700.2 million); Administration (R682.1 million); Survey Operations (R310.0 million) and Statistical Support and Informatics (R283.9 million). Overall targets achieved were at 91 per cent.

 

The overspending was mainly due to budget reductions on compensation of employees, which resulted in Stats SA not being able to afford the costs of filled positions, notwithstanding the fact that recruitment has been placed on hold since October 2016. The bulk of the budget was allocated in the administration programme with R682.1 million, followed by Statistical Collection and Outreach with R700.2 million and Statistical Support and Informatics with R283.9 million.

The Department has a total budget of R10.7 billion over the MTEF period, of which R7.5 billion is earmarked for operational expenditure and R3.2 billion for spending related to Census 2021. Conducting the census is expected to drive an increase in spending at an average annual rate of 29.3 per cent, from R2.3 billion in 2018/19 to R4.9 billion in 2021/22. Spending on compensation of employees is expected to increase at an average annual rate of 5.6 per cent, from R1.4 billion in 2018/19 to R1.7 billion in 2021/22. However, the budget allocation for 2019/20 was R2 514 billion.

Stats SA achieved 91% of its targets as set out in the Annual Performance Plan whilst under tremendous financial and human resource constraints. The Department has not been able to fill any key management or other critical posts since October 2016, with the exception of that of the Statistician-General in November 2017.

Human capital remains the most valuable asset in Stats SA. In order to achieve organisational strategic objectives, Stats SA needs employees with the necessary skills and competencies.  Stats SA place an emphasis on capacity building programmes for employees at all levels. The increase in the vacancy rate was as a result of the department’s inability to recruit permanent staff due to prior year budget cuts, which were in excess of the actual costs of filled posts.This has placed the quality of basic statistics at risk, even as the Department has done everything possible to remain professional. However, Stats SA continues recruiting contract positions for surveys, as and when required during the financial year.

Vacancy rate was above 20.5% (721 posts) acceptable level in the public service. The total number of employees was 2790 in Stats SA. The increase in the vacancy rate as a result of the department’s inability to recruit permanent staff due to prior year budget cuts, which were in excess of the actual costs of filled posts, has placed the quality of basic statistics at risk. However, recruitment for contract positions for surveys, as and when required, continued during the financial year. Stats SA has experienced highest percentage of 41.4% in 2019/20 financial year.

 

 

Table 1: Appropriation per programme (R’000)

Programme R'000

Final Appropriation

Actual Expenditure

Transfer and subsidies

Payments for capital assets

1. Administration

682.1

424.1

0.4

257.5

 

2.Economic Statistics

277.8

277.7

0.0

0.1

3. Population and Social Statistics

176.8

176.3

0.0

0.5

4. Methodology, Standard and Research

83.5

83.4

-

0.1

5. Statistical Support and Informatics

283.9

260.3

-

(23.6

  1. Statistical Collection and Outreach

700.2

695.3

0.0

4.9

  1. Survey Operations

310.0

225.4

1.2

83.5

Total

 2 518.4

2 142.5

1.6

370.2

Source: National Treasury 2019

7.2 Programme Performance

Statistic South Africa has seven programmes, namely:

  1.  Programme 1: Administration

The purpose of the programme is to provide strategic leadership management and support services to the department, and capacity building. This programme aims to lead the development and coordination of the statistical production system among organs of state. Secondly, the programme provides direction and leadership through driving strategic and operational planning and monitoring. It also provides corporate support services on an ongoing basis.

 

The programme has achieved 87% of its annual targets as scheduled in the Work Programme and 13% were not achieved. The programme has contributed to providing strategic direction to the organisation, planning and monitoring its performance, leading the development and coordination of the national statistics system and to enhancing corporate governance and administration.

Out of a budget of R682.1 million, this programme reported an expenditure of R2. 294 billion (Over-expenditure of R50,9 million for 2019/20 after applying final virements) or 105.0 per cent of the programme’s 2019/20 budget.

Stats SA conducted client satisfaction survey and an intervention strategy will be developed based on the outcome of the survey. Succession planning was not institutionalised as planned due to a proposed restructuring of the organisation and the implementation of Computer-Assisted Personal Interview (CAPI). The redeployment of staff affected by CAPI has been postponed to 2019/20 and will be undertaken with the full implementation of CAPI. The appointment of interns is under review due to budget constraints in the organisation. Stats SA has achieved 100% of financial disclosure for Senior Management Service (SMS), Middle Management Service (MMS) and other designated employees, which were submitted to the Department of Public Service and Administration (DPSA). 

  1. Programme 2: Economic Statistics

The Economic Statistics programme produces economic statistics to inform evidence-based economic development and transformation in line with internationally recognised practices. Its main objectives are to expand the economic statistics information base by increasing the depth, breadth and geographic spread for evidence based planning. Programme Management for Economic Statistics provides strategic direction and leadership. 

The programme has achieved 99% of its annual targets, as scheduled in the Annual Performance Plan. This programme reported an actual expenditure of R277.8 million or 100.0 per cent of its 2019/20 budget allocation as at the end of March 2020. The bulk of the budget was spent on compensation of employees whilst other amount was spent on goods and services items such as consultants, travel and subsistence and operating payments. The programme’s actual expenditure when compared against the benchmark was 100% when applying straight-line analysis.

Key achievements included monthly, quarterly and annual releases in line with the international Special Data Dissemination Standards. The programme informed economic planning, monitoring and decision-making by providing accurate, relevant and timely statistical information on the level of economic activity in relation to the primary, secondary and tertiary sectors of the economy, financial information on private sector businesses and government and information on sustainable resource use and management.

 

  1. Programme 3: Population and Social Statistics

The purpose of the programme is to produce population, demographic, labour market and social statistics to meet user requirements in line with internationally recognised practices. Population and social statistics inform evidence based socio-economic development and transformation in line with internationally recognised practices. Programme 3 contributes to strategic objective in an effort to expand the statistical information base by increasing its depth, breadth and geographic spread.

Stats SA achieved 96% of its targets as scheduled in the Annual Performance Plan, of which 4% were not achieved. The programme was initially allocated R176.8 million. This programme spent R189.2 million or 107.0 per cent of its 2019/20 budget allocation as at the end of March 2019. The bulk of the amount was spent on compensation of employees, whilst remaining amount was spent on goods and services such as travel and subsistence and operating payments. Actual expenditure compared against the benchmark spending was 107.0%.

The programme contributed to informing social and economic development planning, monitoring and decision-making by providing relevant, timely and accurate statistical information on living conditions, population dynamics, vital events, employment, crime and poverty levels. Stats SA has encountered late publications in relation to the quality of administrative data received from Home Affairs. Stats SA continues to collaborate and support the Department of Home Affairs to improve the quality of administrative records.  During the year under review, Stats SA key outputs include mid-year population estimates at national, provincial, district council and metro levels, thematic demographic reports on cohort fertility and labour market outcomes of migrant communities.

  1. Programme 4: Methodology, Standards and Research

The purpose of the programme is to provide expertise on quality and methodology for official statistics, standards for conducting surveys, and business sampling frames. This will be done by improving the comparability and accuracy of statistical information and by ensuring accurate and reliable statistical information for users. Additionally, this programme conducts policy research and analysis on emerging policy matters. Therefore, this programme provides statistical support and advice to policy makers by annually conducting policy research and analysis.

Stats SA achieved 96% of its targets as scheduled. The programme contributed to improving the credibility, comparability and accuracy of statistical information by applying appropriate quality criteria, standards, classifications and procedures, providing methodological and system support services, developing standards, researching current and international best practice and ensuring an updated sample frame for the collection of economic statistics.

The programme was allocated R83.5 million. This programme spent R83.2 million or 99.7 per cent of its total available budget as at the end of March 2020.The bulk of the amount was spent on compensation of employees, whilst other amount was spent on goods and services. The main cost drivers are travel and subsistence, operating and machinery and equipment. Actual expenditure as compared against the benchmark spending was 99.7%.

Key achievements, in the year under review, include the developments of standards on determining the need for information, data linking, tabulation plan, the provision of preliminary and final sampling frames and a report on further implementation of the unit’s model. Stats SA produced three research reports on government’s socioeconomic planning, two research reports on spatial analysis and a research report on demographic dividend analysis.

  1. Programme 5: Statistical Support and Informatics

This programme aims to enable service delivery programmes by using technology in the production and use of official statistics. This includes promoting collaboration with potential stakeholders in building and maintaining reliable household surveys. This programme further assists in modernising business processes and supporting the department’s production of official statistics.  

The Stats SA has achieved 83% of its annual targets and 16.7% were not achieved. The programme contributed to improving the measurement of the economy and society by providing and maintaining a frame for accurate sampling of household surveys and a complete and up-to-date database of dwellings for planning and conducting of surveys and censuses.  The programme provided editing, publishing and distribution services.

The programme has spent R279.3 million (98.4 per cent)) against an available budget of R283.9 million as at the end of March 2020. The bulk of the amount was spent on compensation of employees, whilst other amount was spent on goods and services. The main cost drivers on the programme include publication services such as the payment of computers and contractors.

  1. Programme 6: Statistical Collection and Outreach

The purpose of the programme is to provide statistical information to support policymakers. It manages stakeholders to provide effective communication services. It also promotes statistical development and cooperation in South Africa, Africa and the World. The programme contributes in enhancing public confidence and trust in statistics; improving productivity and service delivery; leading the development and coordination of statistical production within theSouth African National Statistical System(SANSS); investing in the learning and growth of the organisation; and promoting international cooperation and participants in statistics.

Programme 6 has achieved 83,9% of its annual targets of which 71,0% were achieved as scheduled; 11,6% were achieved earlier than scheduled and 1,3% were achieved later than scheduled. 16,1% of targets were not achieved.The programme spent R700.2 million or 100 per cent of its available budget as at the end of March 2020.The bulk of the amount was spent on compensation of employees, whilst other amount was spent on goods and services.

 

The programme contributed to increasing awareness and marketing, and communicating and disseminating official statistics to relevant stakeholders through effective stakeholder management, internal communication and public and media relations. Furthermore, the programme contributed towards expanding the statistical information database through integrated fieldwork, continuous data collection, stakeholder management, increased collaboration and strengthening partnership within SANSS, promoting the harmonisation of statistics in Africa, strengthening statistical capacity on the continent, promoting international statistical best practice and building international partnerships. 

  1. Programme 7: Survey Operations

The purpose of the programme is to provide collection and processing support to produce official statistics. The programme also conducts independent household survey monitoring and evaluation activities. The programme contributes in improving productivity and service delivery.

Programme 7, has achieved 81,0% of its annual targets of which 76,2% were achieved earlier than scheduled and 4,8% were achieved later than scheduled. 19,0% of targets were not achieved.The programme contributed to informing social and economic development, planning, monitoring and decision-making and to increase the efficiency and effectiveness of survey operations. The programme was allocated R310.0 million and it spent 98.8 per cent of its budget to the value of R306.3 million as at the end of March 2020.

 

The bulk of the budget was spent on compensation of employees, whilst other amount was spent on goods and services items such as communication, operating payments and travel and subsistence. The programme spent 100% of its allocated budget.  

Stats SA conducts periodic population censuses and large-scale population surveys. During the year under review, Stats SA reports on processing and editing of questionnaires and implementation of phase 2 of digital data collection. The Department received death notification forms for the Mortality and Causes of Death Survey later than scheduled from the Department of Home Affairs.   

  1. AUDITOR-GENERAL OUTCOMES

The Auditor-General has audited the financial statements of the Statistics South Africa, set out Annual Report 2019/20, which comprise appropriation statement, the statement of financial position as at 31 March 2020. The statement of financial performance, statement of changes in net assets and cash flow for the year ended as well as the notes to the financial statements including a summary of significant accounting policies. The Auditor General opinion indicates financial statements are present fairly, in all material respects, the financial position of Statistics South Africa and its financial performance and cash flows for the year are in accordance with the Modified Cash Standard and the requirement of the PFMA.

  • Compliance with legislation - Compliance monitoring was not effective due to misinterpretation of the 2017 procurement regulation on local production and content resulting in non-compliance identified.

 

Statistics South Africa received an unqualified audit in consecutive years.

8.1 Predetermined objectives

The Auditor-General performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents. The AG did not identify any material findings on the usefulness and reliability of the reported performance information on programme 3:Population and Social Statistics and Programme 7: Survey Operation.

 

8.2 Adjustment of material misstatements

The AG identified material misstatements in the annual performance report submitted for auditing on the reported information for Programme 5: Statistical Support and Informatics and programme 6: Statistical Collection and Outreach. Management subsequently corrected the misstatements. The AG did not identify any material findings on the usefulness and reliability of the reported performance information.

 

 

 

8.3 Internal Control

The AGconsidered internal control relevant to my audit of the financial statements, reported performance information and compliance with applicable legislation; however’ my objective was not to express any form of assurance on it. The matter reported below is limited to the significant internal control deficiencies that resulted in the finding on compliance with legilstaion included in this report.  In some instances, compliance monitoring was not effective due to misinterpretation of the 2017 procurement regulation on local production and content resulting in non-compliance identified.

 

  1. OBSERVATIONS AND KEY FINDINGS

The Portfolio Committee made the following observations:

  1. The Portfolio Committee commended Statistics South Africa for receivingunqualified audit in consecutive years, includingthe 2019/20 financial year.The Committee commended Stats SA for good performance, although operating under tough financial and human resource constraints. 

 

  1. The Committee took note of the historical budget shortfalls for compensation of employees,which was significantly reduced in the previous financial years. This has resulted in the department overspending budget on compensation of employees at the end of the 2019/20 financial year.

 

  1. The Committee continued to raise concerns on the high vacancy rate at Stats SA as a result of budget cuts experienced in Compensation of Employees and high turnover due to the inability to retain staff, as well as lack of prospects for promotion in the department. This situation has resulted in Stats SA employees, particularly in middle and senior management, being overstretched with additional workload. The situation poses a high risk that might hamper data collection and analysis impacting on the reliability and quality of statistics. The Committee remains optimistic that additional budget allocated for 2020/21 financial year will assist Stats SA in filling critical positions.

 

  1. The Committee urged Stats SA to consider diversification of South African languages when recruiting enumerators (fieldworkers) for a myriad of surveys. Household members feel comfortable with enumerators who speak fluently their home language, unlike interviews conducted only in English. Stats SA was required to ensure diversity and balance of languages when recruiting enumerators for Census 2021.

 

  1. The Committee commended Stats SA for paying invoices to service providers within 30-days.  

 

  1. Stats SA raised concerns with regard to the major events happening concurrently with Census 2021, such as Local Government Elections 2021. Stats SA informed the Committee of a risk of some enumerators being viewed to be campaigning for political parties. However, the Committee encouraged Stats SA to ensure its enumerators operate within a professional code of conduct with the aim of maintaining and protecting its independence. The Committee further highlighted that the amendments to Statistics Act of 1999, particularly with regard to Census shifting to being conducted every 10 years to avoid coincidence with the five-year cycle of elections.  

 

  1. The Committee encouraged Stats SA to improve its equity targets and empower women as Stats SA so that it was able to meet the set target of 50% of women in senior management positions and 2% of people with disabilities.

 

 

 

 

 

 

 

 

 

 

  1. RECOMMENDATIONS

The Portfolio Committee recommends that:

  1. The Minister in the Presidency for Planning, Monitoring and Evaluation and the Minister of Finance should urgently resolve the budget shortfall on compensation of employees and critical surveysat Stats SA, so that crucial and quality statistics get generated to the country’s and Government’s benefit, if an ideal resolution cannot be found, the Minister is requested to escalate the matter to the Presidency.

 

  1. Statistics South Africa should urgently devise a strategy on its vacancy rate, as this affects service delivery.

 

  1. Statistics South Africa should improve on women representivity at Senior Management Service by ensuring that it filled vacancies with women as soon as conditions allowed it to employ personnel.

 

  1. Statistics South Africa should develop systems to access deep rural communities so as to provide credible statistics during Census 2021.

 

  1. Statistics South Africa should have proper mechanisms in place to protect field workers and communities from the COVID-19 pandemic, especially when it conducts its operations in super spreader areas.

 

The Portfolio Committee

 

  1. The Portfolio Committee took a decision to invite the National Treasury and the Minister of Finance together with the Minister of the DPME as well as Statistics South Africa in order to address the budget challenges at the Department.

 

  1. CONCLUSION

The Department was able to spend the entire allocated budgets, and even went beyond the allocation, due to budget cuts by the National Treasury. The Department’s funding must be given urgent attention to prevent the shortfall that occurred during the financial year. Statistics South Africa continues to play a critical role in South Africa and internationally. Statistical releases give meaning to the evidence-basedpolicy making, decision making, planning and allocation of the budget in the country. Currently, the institution experiences funding challenges,which hamper its effectiveness in the production of the quality, reliable and timelystatistics.

 

The institution continues to exercise its mandate of producing basic statistics under inadequate human resource and financial constraints. WithoutStats SAbeing adequately funded, government will not be able to plan and realise the main objectives of the National Development Plan, which is to build a capable and developmental state. Funding challenges might erode the independence of the institution. The Committee appeals to the Ministerial Committee on Budget (MINCOMBUD) to urgently attend to budget shortfalls before the Department loseseven more competent and capable statisticians.

Report to be considered

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