ATC201126: Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Transport, Dated 25 November 2020

Transport

BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON TRANSPORT, DATED 25NOVEMBER 2020

 

The Portfolio Committee on Transport (“the Committee”), having considered the performance and submission to National Treasury (NT) for the medium-term period of the Department of Transport (“the Department”) and its entities, reports as follows:

 

  1. INTRODUCTION

The period under review took place against the backdrop of the second phase of the implementation of the National Development Plan (NDP) (2019-2024). As part of its contribution to the NDP, the transport sector had to identify interventions aimed at accelerating service delivery, increasing sector job opportunities, rural development and skills development. Key priorities in this regard included investments in public transport, maintenance of roads and rail investments. These had a direct bearing on the Government’s drive to respond to the challenges of poverty, unemployment and inequality.

Due to the impact of Covid-19 lockdown measures on the performance of the in the last month of the year under review, as well as its impact on the reporting and audit finalisation timeframes for the year under review, this report will be based on those annual reports that were tabled by 20 November 2020. The Road Traffic Infringement Agency (RTIA)and South African Maritime Safety Authority (SAMSA) had not submitted their annual reports in time for consideration by the Committee. With regard to the RTIA, the Minister indicated that it was estimated to only table its report by 15 December 2020. No reason for the late tabling of the SAMSA report was provided at the time of considering this report.

 

1.1        Mandate of the Committee

The prime mandate of the Committee is governed by the Constitution of the Republic of South Africa, 1996 (“the Constitution”), in respect of its legislative and oversight responsibilities as public representatives. It is required to consider legislation referred to it and consider all matters referred to it in terms of the Constitution, the Rules of the National Assembly (NA) or resolutions of the House. It is also required to respond to matters referred to it by Government within its mandate. In addition, the Committee is entrusted with considering the budgets, Strategic Plans,Annual Performance Plans (APPs) and the annual reportsof the Department and entities that fall within the transport portfolio.

 

1.2        Purpose of the Budgetary Review and Recommendation Report

Section 77(3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend money bills before Parliament. This constitutional provision gave effect to the Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009). The Act gives Parliament powers to amend money Bills and other legislative proposals submitted by the Executive whenever the Executive deems it necessary to do so. The Act therefore makes it obligatory for Parliament to assess the Department’s budgetary needs and shortfalls against the Department’s operational efficiency and performance.

 

This review seeks to establish whether the Department and its entities have achieved their aims and objectives, as set out in their Strategic Plans, as well as whether they continue to fulfil their constitutional mandates within the year under review. As this is the second BRRR done by the 6th Parliament Committee, reference will be made to the key achievements made, as well as challenges encountered during the 2018/19 and 2019/20 financial years, as reported in the Department’s and entities’ 2018/19 and 2019/20annual reports and APPs. 

 

1.3        Methodology

 

The Committee engaged with the Auditor-General of South Africa (AGSA) on its audit findings of the Department and its entities, as well as engaged with the Department (on its interim Audit Findings prior to tabling of their report) and, due to time constraints,oneselected entity on 6 October, 10 and 17 November 2020 on their performance and audit outcomes for the period under review.

 

The Committee selected to meetwith only the Passenger Rail Agency of South Africa (PRASA) due to reporting time constraints. Unfortunately, at the time of meeting PRASA, the annual reports of its subsidiaries were not tabled yet, however, these reports were tabled by the 20 November 2020 deadline.

 

At the time of considering this report, the RTIA and SAMSA had not tabled their annual reports yet, despite indications by the AGSA that the SAMSA audit had been finalised and that there were technical issues to be resolved with the RTIA audit prior to finalisation thereof. The Committee voiced its dissatisfaction with the reasons provided for the failure to table the RTIA annual report and found it unacceptable that no reasons had been provided for the failure to table the SAMSA report.

 

The following entities were not programmed or called to meet with the Committee, however, their annual reports and/or financial statements were tabled on time and were taken into account for purposes of the report:

 

  1. Railway Safety Regulator (RSR);
  2. South African National Roads Agency Limited (SANRAL);
  3. Road Accident Fund (RAF);
  4. Cross-Border Road Transport Agency (C-BRTA);
  5. PRASA subsidiaries:

6.1 Intersite; and

6.2 Autopax;

  1. Ports Regulator of South Africa (PRSA);
  2. South African Civil Aviation Authority (SACAA);
  3. Airports Company South Africa (ACSA);
  4. Road Traffic Management Corporation (RTMC);
  5. Air Traffic and Navigation Services (ATNS);
  6. Driving Licence Card Account (DLCA);
  7. South African Search and Rescue Organisation (SASAR) including the National Sea Rescue Institute (NSRI).

 

The BRRR details the analysis of the 2018/19 and 2019/20annual reports and financial statements, strategic objectives, budget allocation and financial performance and the recommendations made by the Committee.

 

The BRRR is based on information accessed through:

  • The 2019 StateoftheNation Address (SONA);
  • The Department’s Strategic Plan and APPs for 2019/20;
  • The Department’s Annual Report and Financial Statement for 2018/19 and 2019/20;
  • The Strategic Plans and the APPs/Corporate Plans of the entities that fall under the Department, as well as their annual reports and financial statements for 2018/19 and 2019/20;
  • Quarterly reports of the Department;
  • The report of the AGSA on the audit outcomes of the Department and its entities;
  • NT Section 32 Reports;
  • The NDP; and
  • Oversight visits by the Committee during the period under review.

 

 

  1. MANDATE OF THE DEPARTMENT OF TRANSPORT

 

The Department is mandated with maximising the contribution of transport to the economic and social development goals of society providing safe, reliable, effective and efficient fully integrated transport systems that best meet the needs of passenger and freight users. To attain this objective, the Department is entrusted with the provision of transport infrastructure and services in a manner that is efficient and affordable to consumers and the economy, while ensuring safety and security in all transport modes. The Department depicts itself as “the heartbeat of South Africa’s economic growth and social development”.  Its core values are:[1]

 

•           Maintaining fairness and equity in all our operations;

•           Striving for quality and affordable transport for all;

•           Stimulating innovation in the transport sector;

•           Ensuring transparency, accountability and monitoring of all operations; and

•           Ensuring sustainability, financial affordability, accessibility, as well as the upholding of the Batho Pele principles.

 

The Department is mandated through various Acts of Parliament to render specific services to the public that relate to the provision of passenger transport, as well as goods. In an endeavour to discharge its mandate effectively and efficiently, the Department has organised itself into the following programmes:

•           Programme 1: Administration;

•           Programme 2: Integrated Transport Planning;

•           Programme 3: Rail Transport;

•           Programme 4: Road Transport;

•           Programme 5: Civil Aviation;

•           Programme 6: Maritime Transport; and

•           Programme 7: Public Transport.

 

The simplified structure of the Department puts extensive emphasis on modes of transport. Complementing this modal emphasis are two programmes that seek to provide strategic support to key programmes of the Department, namely Administration, as well as Integrated Transport Planning. It is the belief of the Department that these internal programmes not only set the agenda for the Department, but are equally a sine qua non of “a collective, integrated and harmonised approach to addressing sector challenges”.  Key players in this collective comprise the Department, transport entities, provincial departments, municipalities and key private sector stakeholders. A convergence of all these stakeholders will assist in fast-tracking the responsiveness of the sector to the realities on the ground.

 

2.1        Strategic overview 2019/20

 

2.1.1     Strategic priorities of government

 

To execute its mandate, the Department is guided by Government’s commitments as set out in, inter alia, the NDP 2030, the New Growth Path (NGP) Framework, the Presidential Infrastructure Coordinating Commission (PICC), the Medium-Term Strategic Framework (MTSF) 2014-2019, as well as the SONA policy directives. The Department has focused on improving mobility and access to social and economic activities, maintaining the national and provincial road networks with a view to responding to Government’s strategic objectives. In addition, emphasis has been on improving public transport for rail and road commuters. These activities contribute to the realisation of Outcome 6 (An efficient, competitive, and responsive economic infrastructure network) of Government’s 2014-19 MTSF.[2]

 

The NDP has identified economic transformation as a catalyst for accelerated economic growth and job creation. In response to the NDP, the Department has committed itself to:[3]

 

•           Demonstrating accelerated speed in delivery of services and operations;

•           Putting together reflection on stakeholder engagement and buy-in;

•           Laying more emphasis on shared growth initiatives;

•           Reprioritising optimum resource allocation, distribution and usage;

•           Supporting diversification of trade patterns;

•           Supporting industrialisation beneficiation; and

•           Prioritising capacitating of designated groups with socio-economic skills.

 

As part of the 2014-19 MTSF and in aligning its programmes to the NDP, the Department oversees the manufacturing of a rolling stock factory by PRASA in Ekurhuleni that will ensure that over 65% of trains used in the country are built locally.[4]  In addition, the Department has undertaken to upgrade the R573 Moloto Road in order to improve access to economic opportunities and social space, and address the road safety challenges.[5]  It is anticipated that the upgrade of the Moloto Road will create approximately 10 000 job opportunities, while the rolling stock jobs are estimated at 65 000.[6]

 

For its part, the 2019 SONA accentuated the following strategic objectives that had a bearing on the transport sector:[7]

•           Creating jobs for the unemployed.

•           Focussing attention on policies and programmes on the key parts of the economy that are labour intensive, including the oceans economy.

•           Committing Government to contribute R100 billion into the Infrastructure Fund over a 10-year period and use this to leverage financing from the private sector and development finance institutions.

•           Restoring proper corporate governance through the appointment of new boards with credible, appropriately experienced and ethical directors at PRASA.

 

Of significance to the Minister and the Department are the following key outcomes:

Outcome

Sub-Outcome

Outcome 4: Decent employment through inclusive economic growth

Sub-Outcome 1: Productive investment is effectively crowded in through the infrastructure build programme

  • Ensure monitoring of off-takes by end users on the infrastructure programme

Outcome 6 – An efficient, competitive and responsive economic infrastructure

Sub-Outcome 1: Regulation, funding and investment improved

  • Establish a Single Transport Economic Regulator (STER)
  • Develop a Private Sector Participation (PSP) Framework for ports and freight rail, removing barriers to entry for private investment and operations within the context of Cabinet-approved policy and with an analysis of the implication of tariffs

Sub-Outcome 3: Maintenance, strategic expansion, operational efficiency, capacity and competitiveness of our logistics and transport infrastructure ensured.

  • Improve national transport planning to develop long-term plans for transport that synchronise with spatial planning and align infrastructure investment activities of provincial and local government and clearly communicate the State’s transport vision to the private sector
  • Ensure development and approval of the Integrated Transport Plan
  • Develop and implement approved plan and improve market share of containers on rail vs road, to ensure that we move road freight to rail
  • Improve and preserve national, provincial and local road infrastructure
  • Strengthen road traffic management
  • Improve public transport
  • Strengthen institutional arrangements for public transport

Sub-Outcome 6: Coordination, planning, integration and monitoring implementation of strategic integrated projects (SIPs) in the National Infrastructure Plan.

  • SIP 1: Unlocking the Northern Mineral Belt
  • SIP 3: South Eastern Node and Corridor Development
  • SIP 4: Unlocking economic opportunities in the North West Province
  • SIP 7: Integrated Urban Space and Public Transport Programme

Outcome 7 – Comprehensive Rural Development and Land Reform

Sub-Outcome 5: Increased access to quality infrastructure and functional services, particularly in education, healthcare and public transport in rural areas

  • Improve transport infrastructure and public transport in rural areas
  • Access Road Development Plan for improving rural road infrastructure implemented
  • District municipalities implementing the Integrated Public Transport Network Strategy

Outcome 10 – Protect and enhance our environmental assets and natural resources

Sub-Outcome 2: An effective climate change mitigation and adaptation response

  • Develop strategic policy and regulatory frameworks and programmes to promote a low carbon economy
  • Green Transport Strategy and Implementation Plan formulated and completed

(Table 1: Ministers’ Delivery Agreement with the President of the Republic of South Africa – information obtained from the Annual Performance Plan 2019/20 p. 2 – 3. The Annual Report of the Departmentfor 2019/20did not contain this agreement as was done in the past)

 

2.1.2     Strategic Priorities of the Department

 

During the period under review, the Department discharged its responsibilities with a view to attaining the following strategic objectives:[8]

 

•           Safety as an enabler of service delivery;

•           Public transport that enables social emancipation and an economy that works;

•           Infrastructure build that stimulates economic growth and job creation;

•           Building a maritime nation, elevating the oceans economy;

•           Accelerating transformation towards greater economic participation;

•           Innovation that advances efficiencies and supports a continuous improvement model; 

•           Environmental Protection – Recovering and maintaining a healthy natural environment; and

•           Improved efficiency and effectiveness of support services.

 

In the 2019/20 financial year, the Department performed its work in line with the following strategic outcome-oriented goals:

2.1.2.1 Strategic Outcome-oriented Goal 1: Efficient and integrated infrastructure network and operations that serve as a catalyst for social and economic development

 

Develop and implement policies and promulgate Acts that are set to drive investments for the maintenance and strategic expansion of the transport infrastructure network, and support the development of transport asset management systems in rural and provincial authorities. The definitive drive of these interventions is to improve the efficiency, capacity and competitiveness of transport operations in all modes.

 

The following Strategic Objectives (SOs) as pre-determined by the Department will be geared towards achievement of the Strategic Outcome-oriented Goal as stated above:

 

SO 1.1 Develop and monitor implementation of legislations, policies, strategies and planning tools to enhance facilitation of integrated macro-transport systems planning to guide investments in the sector

SO 1.2 Develop and monitor implementation of legislations, policies, strategies and planning tools to promote national, regional and continental integration of transport infrastructure and operations

SO 1.3 Develop and monitor implementation of legislations, policies, strategies and planning tools to enhance socio-economic transformation of the transport sector

SO 1.4 Develop and monitor implementation of legislations, policies, strategies and planning tools to ensure a sustainable transport infrastructure network

SO 1.5 Develop and monitor implementation of legislations, policies, strategies and planning tools to enhance performance, efficiency and reliability of the transport sector

 

2.1.2.2 Strategic Outcome-oriented Goal 2: A transport sector that is safe and secure

 

Develop and implement policies and strategies that seek to reduce accidents and incidents in the road, rail, aviation and maritime environment.

 

The following SOs as pre-determined by the Department will be geared towards achievement of the Strategic Outcome-oriented Goal as stated above:

 

SO 2.1 Develop and monitor implementation of legislations, policies, strategies and planning tools to enhance regulate and transport safety and security.

 

2.1.2.3 Strategic Outcome-oriented Goal 3: Improved rural access, infrastructure and mobility

 

Increase mobility and access in rural space by improving transport infrastructure and implementing integrated transport services.

 

The following SOs as pre-determined by the Department will be geared towards achievement of the Strategic Outcome-oriented Goal as stated above:

 

SO 3.1 Develop and monitor implementation of legislations, policies, strategies and planning tools to enhance provision integrated rural transport infrastructure and services

 

2.1.2.4 Strategic Outcome-oriented Goal 4: Improved public transport services

 

Provide integrated public transport solutions through development and implementation of legislation, policies, strategies and regulations. The definitive drive of these solutions is to ensure safe, secure, reliable, cost-effective and sustainable public transport services.

 

The following SOs as pre-determined by the Department will be geared towards achievement of the Strategic Outcome-oriented Goal as stated above:

 

SO 4.1 Develop and monitor implementation of legislations, policies, strategies and planning tools to enhance promotion of sustainable public transport

SO 4.2 Develop and monitor implementation of legislations, policies, strategies and planning tools to Improve public transport access and reliability

SO 4.3 Develop and monitor implementation of legislations, policies, strategies and planning tools to enhance regulation of public transport

 

2.1.2.5 Strategic Outcome-oriented Goal 5: Increased contribution to job creation

 

Create an enabling environment for employment opportunities in the transport sector through the implementation of labour-intensive interventions and off-takes of ancillary support programmes.

 

The following SOs as pre-determined by the Department will be geared towards achievement of the Strategic Outcome-oriented Goal as stated above:

 

SO 5.1 Monitor off-takes of the implementation of the provincial road maintenance programme

SO 5.2 Develop and implement relevant charters and legislation

 

 

2.1.2.6 Strategic Outcome-oriented Goal 6: Increase contribution of transport to environmental protection

 

Develop and implement policies that aim to mitigate climate change and adaptation responses through reduction of greenhouse gas (GHG) emission, aviation noise and pollution at sea.

 

The following SOs as pre-determined by the Department will be geared towards achievement of the Strategic Outcome-oriented Goal as stated above:

 

SO 6.1 Reduce GHG emissions

SO 6.2 Minimise aviation noise

SO 6.3 Reduce level of pollution at sea

 

2.1.2.7 Strategic Outcome-oriented Goal 7: Effective and efficient management and support

 

Improve departmental performance by strengthening internal support functions and ensuring good governance controls.

 

The following SOs as pre-determined by the Department will be geared towards achievement of the Strategic Outcome-oriented Goal as stated above:

 

SO 7.1 Provide strategic support and corporate services

SO 7.2 Ensure good governance and a sound control environment

 

2.1.3     Challenges experienced in 2019/20

 

The following were reported in the annual report as challengesexperienced by the Department during the year under review, per the Report of the Accounting Officer:[9]

 

2.1.3.1 Programme 1: Administration

 

The internal challenge of alignment and optimal use of resources (human, financial, facilities and equipment) remains a prickly issue that the Department continues to deal with. The main intervention of modifying and purifying the organisational structure is on course and will be prioritised to ensure efficient and effective performance of the Department and improve service delivery. The Department remains focused on addressing the vacancy rate through the filling of critical positions; and also ensuring that its oversight role over sector public entities is strengthened and stabilised.

 

2.1.3.2 Programme 2: Integrated Transport Planning

 

Main challenges have been the filling of vacant posts in the branch over the 2019/20 financial year. The delays in bid processes further delayed execution of critical projects for the current year.

 

Bid adjudication process implementation impacted adversely on the implementation of the Freight Logistics project implementation.[10]

 

2.1.3.3 Programme 3: Rail Transport

 

The Draft White Paper on National Rail policy is reported by the Department as having been widely consulted with all stakeholders and is supported by critical stakeholders (despite issues of contention indicated below). The Draft White Paper will proceed to Cabinet once fully endorsed by the Director-General and the Minister of Transport. The National Rail Bill was not submitted to Parliament for approval for public consultations due to the fact that the Draft White Paper on National Rail Policy has not been approved by Cabinet. The Rail Policy is the basis on which the National Rail Bill is drafted with the intention of facilitating and enforcing implementation of the approved Rail Policy. Issues of contention with critical stakeholders needed to be resolved prior to submission of the Draft White Paper to Cabinet for approval, as they will be the implementers of the rail policy. Change in political leadership also led to a delay as the new leadership of the Department needed to be consulted and be in support of the Draft White Paper before it is submitted to Cabinet for approval.

 

2.1.3.4 Programme 4: Road Transport

 

The programme challenges were due to the financial challenges faced by SANRAL as a result of the continued uncertainty over the funding of the Gauteng Freeway Improvement Project (GFIP) and the obligations on SANRAL linked thereto.

 

2.1.3.5 Programme 5: Civil Aviation

 

None indicated.

 

2.1.3.6 Programme 6: Maritime Transport

 

None indicated.

 

2.1.3.7 Programme 7: Public Transport

 

Low expenditure trends in municipalities due to supply chain and procurement weaknesses, unstable and poorly capacitated and performing municipalities.

 

2.1.3.8 Key policy developments and legislative changes

 

The Department has 7 Bills that are being processed through Parliament and they are hereby listed as follows:[11]

1) Road Accident Benefit Scheme Bill, 2017 [B17B-2017]

2) Airports Company Amendment Bill, 2018 [B5B-2018]

3) Air Traffic Navigation Services Company Amendment Bill, 2018 [B6B-2018]

4) Civil Aviation Bill, 2018 [B44-2018]

5) Economic Regulation of Transport Bill, 2020 [B1-2020]

6) Transport Appeal Tribunal Amendment Bill, 2020 [B8-2020]

7) National Road Traffic Amendment Bill, 2020 [B7-2020]

 

  • Administrative Adjudication of Road Traffic Offences (AARTO) Amendment Bill

President Cyril Ramaphosa has signed the AARTO Bill into law. It is now called the AARTO Amendment Act, 2019 (Act No. 4 of 2019) and will come into operation on a date that will be confirmed by announcement in the Government Gazette.

 

  • National Land Transport (NLT) Amendment Bill, 2016 [B7D-2016]

The NLT Amendment Bill was approved byParliament and was sent to the President on 10 March 2020 for assent.

 

The objects of the Bill are to amend the National Land Transport Act, 2009, to insert certain definitions and amend others; to provide for non-motorised and accessible transport; to bring the Act up to date with developments since the implementation of the Act; to provide for certain powers of provinces to conclude contracts for public transport services; to expand the powers of the Minister to make regulations and introduce safety measures; to prescribe criteria and requirements for municipalities to enter into contracts for public transport services; to amend other transport-related legislation to bring it into line with the Act; and to clarify or simplify various provisions or solve problems that have arisen since the implementation of the Act; and to provide for matters connected therewith.

 

The National Land Transport Amendment Bill (NLT Amendment Bill) was introduced in Parliament during 2016. Deliberations by the Committee were finalized, and the NLT Amendment Bill was adopted by the NA. The NLT Amendment Bill also served before the Select Committee and the deliberations were finalized. The Select Committee made further amendments and sent it back to the Committee for concurrence. However, on 7 May 2019 during the 5th Parliament, the Bill lapsed. The Bill was revived by the 6th Parliament on 29 October 2019, and the Department was expected to brief the Committee on on the Bill on 11 February 2020.

 

The Bill is waiting to be signed into law.

 

  • Road Accident Benefit Scheme (RABS) Bill, 2017 [B17B-2017]

The objects of the Bill are to Provide for a social security scheme for the victims of road accidents; Establish the Road Accident Benefit Scheme Administration to administer and implement the scheme; to provide a set of defined benefits on a no-fault basis to persons for bodily injury or death cause by or arising from road accidents; to exclude liability of certain persons otherwise liable for damages in terms of the common law; and to provide for matters connected therewith.

 

The Road Accident Benefit Scheme Bill (RABS Bill) was approved by Cabinet and introduced in Parliament. Deliberations by the Portfolio Committee was finalized and the RABS Bill was sent to the NA for debate and adopted. During the 5th Parliament, the Bill lapsed. The Bill was revived by the 6th Parliament on 29 October 2019. On 18 February 2020, the Department was expected to brief the  Committee  on the Bill.On 21 August 2020, the Committee adopted its Report on the RABS Bill in which the Committee indicated its decision of 19 August 2020 that it does not agree to the Bill.

 

  • Airports Company Amendment Bill, 2018 [B5B-2018]

The objects of the Bill are to amend the Airports Company Act, 1993 so as to insert new definitions; to substitute certain expression ; to provide for appointment and disqualification for membership of the Regulating Committee; to provide for vacation of members of Regulating Committee; to provide for the meetings of the Regulating Committee; to amend the period for issuing of permission; to provide for decision of the Regulating Committee; to provide for the establishment of Appeal Committee; to provide for appointment and disqualification for membership of the Appeal Committee; to provide for vacation of members of Appeal Committee and to provide for matters connected herewith.

 

The Airports Company Amendment Bill was approved by Cabinet and introduced in Parliament. Deliberations by theCommittee was finalized. TheCommittee approved the Airports Company Amendment Bill to be sent to the NA for debate and adoption. On 7 May 2019 during the 5th Parliament, the Bill lapsed. However, the Bill was revived by the 6th Parliament on 29 October 2019. On11 February 2020, the Department briefed theCommitteeon the Bill. TheB-Bill was agreed to by the Committee and has since been referred to the NCOP.

 

  • Air Traffic Navigation Services Company Amendment Bill, 2017 [B6B-2017]

The objects of the Bill are to amend the Air Traffic and Navigation Services Company Act, 1993 so as to insert new definitions; to substitute certain expression; to provide for appointment and disqualification for membership of the Regulating Committee; to provide for vacation of members of Regulating Committee; to provide for the meetings of the Regulating Committee; to amend the period for issuing of permission; to provide for decision of the Regulating Committee; to provide for the establishment of Appeal Committee; to provide for appointment and disqualification for membership of the Appeal Committee; to provide for vacation of members of Appeal Committee and to provide for matters connected herewith.

 

The Air Traffic Navigation Services Company Amendment Bill was approved by Cabinet and introduced in Parliament. Deliberations by the Portfolio Committee were finalized. TheCommittee approved the Air Traffic Navigation Services Company Amendment Bill to be sent to the NA for debate and adoption. On 7 May 2019 during the 5th Parliament, the Bill lapsed. The Bill was revived by the 6th Parliament on 29 October 2019. On11 February 2020, the Department briefed theCommitteeon the Bill.The B-Bill was agreed to by the Committee and has since been referred to the NCOP.

 

  • Civil Aviation Amendment Bill, 2018 [B44-2018]

The objects of the Bill are to amend the Civil Aviation Act, 2009, so as to amend existing, and insert new, definitions; to rectify references to certain Ministries and Government Departments; to amend Chapter 4 of the Act so as to make provision for the operational independence of aircraft accident and incident investigation; to rectify the provision regarding the establishment of the South African Civil Aviation Authority; to give the South African Civil Aviation Authority environmental protection oversight function; to do away with the requirement for the development of a corporate governance plan; to make provision for an employee of the Department to be a member of the Civil Aviation Authority Board; to amend the provisions relating to the appointment and removal of the Commissioner for Civil Aviation and matters related to his or her functions and responsibilities; to amend the provisions relating to the performance agreement between the Minister and the Aviation Safety Investigation Board; to clarify the provisions dealing with conflict of interest; to provide for the designation of the Chairperson of the National Aviation Security Committee and matters connected with the operations of the Committee; to delete the provisions dealing with compliance notices; to amend the provisions dealing with appeals; to authorise the Minister to issue exemptions and to prescribe additional offences and additional enforcement mechanisms; to extend the powers of the Minister to make regulations; to move the procedures for the establishment of consultative structures to the regulations; and to provide for matters connected therewith.

 

The Civil Aviation Amendment Bill was approved by Cabinet and introduced in Parliament. The Civil Aviation Amendment Bill is before theCommitteeand during November 2019, the Bill was presented by the Department. Public hearings on the Bill were held on 3 and-4 March 2020, and the Department responded by 10 March 2020. The Bill required a second round of publication for purposes of consideration of proposed amendments that were not in the original Bill and is with the Committee for further processing.

 

 

2.1.4     Achievementsidentified and significant events and projects for the year 2019/20

 

The following were reported in the annual report asachievements by the Department during the year under review:[12]

 

2.1.4.1 Programme 1: Administration

 

  • Human Resources Development and Performance Management and Development System (PMDS)
    • Skills Programmes: A headcount of 413/648 (63%) of employees had been trained in line with the 2019/20 Workplace Skills Plan (WSP). This exceeded the 50% target for the financial year. At least three (3) female senior managers graduated in absentia on Post Graduate Certificate in Business and Strategic Leadership in Cranfield University, London on  28 June 2019 sponsored by Transport Education and Training Authority (TETA);
    • Bursaries: 168 bursaries were managed of which 73 new bursaries were awarded during the financial year exceeding the set target of 50. These included 29 Masters and 3 Doctoral degree programmes. 24 bursars completed their qualifications in various fields;
    • Internship Programme: Out of the 52 interns appointed on a 24 months contract (2018/2020), 29 interns secured permanent (21) and contract (8) jobs (i.e. 56%) before the expiry of their internship contracts. Recruitment and selection process for the filling 50 internship posts for the period 2020/22 was finalized and placement scheduled for 1 April 2020 was interrupted by the Covid-19 National Disaster lockdown;
    • Scholarship Programme: Two employees participated in the international scholarships during the financial year. The first employee completed his Master’s Degree in International Development and Internship Programme at the International Management Graduate School in Japan, through the Japan International Co-operation Agency (JICA) Initiative whereas the second employee is currently pursuing his studies in Master’s Degree in Information and Communication Engineering at the Dalian Maritime University (Information Science and Technology College), through the China Ministry of Transport’s Scholarship Council Initiative;
    • University Programme: 13 Memorandum of Agreements entered with various Universities were managed in which 302 students were enrolled and 189 students graduated during 2019 academic year. Budget spent on this programme amounted to R12,236,240. Three (3) mobile laboratories were funded through the University of Stellenbosch, servicing schools in KwaDukuza, in KwaZulu-Natal, Eerste Rivier in Western Cape and Hellen Franz School of the disabled in Limpopo. The programme aimed to improve Maths and Science to the previously disadvantaged youths that would serve as a feeder to universities that the Department has partnered with. 1143 learners participated during the financial year;
    • Career Outreach Programme:  Ten (10) targeted Career outreach sessions were conducted during the reporting period, and  6476 school learners were reached across various provinces.

 

  • Performance Management and Development System(PMDS)
    • Compliance in the submission of Performance Agreements:

- Employees at salary level 12 and below: 586 of 586 submitted = 100%;

- Senior Management Service (SMS) members: 94 of 94 submitted = 100%.

 

  • Submission of Half-Yearly Performance Reviews:

- Employees at salary level 12 and below: 589 of 591 submitted = 99%;

- SMS members: 94 of 94 submitted = 100%.

 

  • Payment of performance incentives for 2018/19:

- Performance incentives for all the qualifying employees at salary level 1 to 14 were successfully paid before the Department of Public Service and Administration (DPSA) timeline of 31 December 2019;

- The 2018/19 moderation process for senior managers at Deputy Directors-General level scheduled for the fourth quarter was interrupted by the pronouncement of the Covid-19 National Disaster and the subsequent lockdown.

 

2.1.4.2 Programme 2: Integrated Transport Planning

 

  • Regional Integration: Submitted Framework for the Development of the Regional Transport Integration Strategy to stakeholders for consultation;
  • Modelling and Economics Analysis: Cabinet approved the Economic Regulation of Transport Bill (Commonly referred to as the Single Transport Economic Regulation Bill). The aim of the Bill (when it becomes Law) is to ensure competition and access in the transport sector through regulation of monopolies. The National Household Travel Survey (NHTS) has been completed and will be launched during the October transport month. The survey was done through Statistics South Africa;
  • Freight Logistics: Finalised the Road Freight Strategy Implementation Plan. Started the process of developing the National Freight Databank Update.

 

2.1.4.3 Programme 3: Rail Transport

 

  • National Rail Bill

The Draft White Paper on National Rail policy has been reported by the Department as having been widely consulted with all stakeholders and is supported by critical stakeholders. The Draft White Paper will proceed to Cabinet once fully endorsed by the Director-General and the Minister of Transport.The National Rail Bill was not submitted to Parliament for approval for public consultations due to the fact that the Draft White Paper on National Rail Policy has not been approved by Cabinet. The Rail Policy is the basis on which the National Rail Bill is drafted with the intention of facilitating and enforcing implementation of the approved Rail Policy.Change in political leadership also led to a delay as the new leadership of the Department needed to be consulted and be in support of the Draft White Paper before it is submitted to Cabinet for approval.

 

  • Railway Safety Bill

The Railway Safety Bill was presented to the National Economic & Labour Council (NEDLAC) in order to source inputs from labour and business constituencies. NEDLAC recommended the submission of the Bill to Cabinet for further processing.

Cabinet approved the submission of the Bill for submission to Parliament towards the end of the 2019/2020 financial year. A Notice of Intention to introduce the Bill to Parliament was also published in the Government Gazette.

 

  • Rail Economic Regulation

Currently, the bulk of the freight rail network is owned by Transnet Freight Rail (TFR), which has an effective monopoly on freight rail movements on the network. PRASA owns a smaller network which interconnects with TFR’s network, and runs passenger trains on part of the TFR network. The access arrangements between the major operators are problematic and have given rise to disputes over accessing the network, service levels and payment arrangements. The current environment is also not conducive to private sector participation and does not provide regulatory certainty.

 

To address these challenges, the Draft White Paper on National Rail Policy envisages providing a conducive environment for private sector participation in rail operations and the Economic Regulation of Transport Bill will introduce a legal framework which promotes competition on the rail network. Both these initiatives have a potential to substantially improve the efficiency and output of the sector. The manner in which rail access guidelines are structured should thus also take into account the need to begin migrating the rail governance system towards one in which dependent regulation plays a primary role, and competition is enabled.

 

The international rail environment was reviewed in terms of benchmarking appropriate rail access arrangement and a report entitled “Rail Access and Pricing Regime Approach for South Africa” was developed in collaboration with the Department of Public Enterprises and National Treasury in May 2019. A further report was developed in March 2020 dealing with Rail Access Guidelines for South Africa to provide guidance on the issues that need to be covered when rail access arrangements are crafted. It should be noted that any access regime guidelines proposed do not envisage a one-off intervention to address the network access problems in the sector, but sets out the first steps towards the introduction of a rail access regime.

 

  • The New Rolling Stock Renewal Programme

The Rolling Stock Fleet Renewal Programme is the catalyst for the transformation of Metrorail services and public transport as a whole. It has been designed to achieve a number of key Government objectives, including the delivery of quality services to citizens, revitalisation of South Africa’s rail engineering industry through local manufacturing and ensuring local content (65% minimum local content is set) as part of the Government’s Industrial Policy Action Plan (IPAP2), employment creation and skills development, as well as Broad-Based Black Economic Empowerment (B-BBEE).

 

The programme includes three main deliverables namely; Arrival of two test train sets and eighteen completed train sets from Brazil for deployment on the PRASA network, construction of a local factory in Dunnottar Park, Ekurhuleni, and manufacturing of 580 train-sets in the local factory. PRASA entered into two contracts with Gibela Rail Transport Consortium (Gibela) in April 2014, a Manufacture and Supply Agreement (MSA) for the acquisition of 600 train-sets, duration - 10 years and a Technical Support and Spares Supply Agreement (TSSSA), duration - 18 years. The two test trains and eighteen train-sets were delivered to PRASA prior to the 2019/20 financial year , and are already operational on the PRASA network.

 

The train-sets manufactured in Brazil were delivered to PRASA prior to the 2019/20 financial year , as well as the completion of the construction of the local factory which signified the ramp up for local manufacturing of trains. By the end of March 2020, PRASA had received a total of 31 of the 580 new trains to be manufactured at the local factory. During the 2019/20 financial year , a delay in the delivery programme by ten trains, was experienced and Gibela is working on building mitigation measures to prevent any further re-occurrence. Plans to finance and develop a Supplier Park within the factor site are on-going, in parallel to the finalisation of the sublease agreement. By the end of the 2019/20 financial year,  a total of 1 177 jobs were created across various categories, for both manufacture and maintenance activities. The skills development component of the programme has benefitted 1 822 individuals through bursaries, internships and artisanal training and learnerships, partnerships with universities and TVET colleges, work-based training focusing on employees. A Community development and skills programme which focuses on addressing the scarce skills gaps, has resulted in a total of 1 676 beneficiaries.

 

2.1.4.4 Programme 4: Road Transport

Implementation of the S’hamba Sonke Provincial Road Maintenance Programme was monitored through site inspections, bilateral consultations and progress reports.

 

The final draft of the Due Diligence Report on the Review of Founding Legislations of Road Entities was developed.

As part of implementation of the National Road Safety Strategy, the following were done:

  • Easter Road Safety Campaign launched and conducted
  • Education and Awareness Campaign programmes
  • Interfaith programmes and taxi rank activations
  • Passenger and driver education awareness, youth programmes, cyclist education and alcohol awareness campaigns
  • Road Safety Education and awareness campaigns
  • Road Safety cycling education and awareness campaign
  • Women in Traffic Law-Enforcement Road Safety Dialogue
  • Festive season Arrive Alive 24/7 road safety campaign launched and conducted
  • Festive season road safety education and awareness campaigns (Passenger and driver safety, Alcohol and fatigue awareness, seatbelt & child restraint awareness, pedestrian safety campaigns)
  • Overload road safety operations conducted on major and busy national routes

 

The final draft of the National Anti-Fraud and Corruption Strategy was developed.

The Draft National Road Traffic Amendment Bill was approved by Cabinet.

 

2.1.4.5 Programme 5: Civil Aviation

 

  • Aviation Economic Analysis and Industry Development

• A Business Case for a Government-owned Aviation Academy was developed.

• Aviation Economics and Regulation: The Airports Company Amendment Bill and Air Traffic and Navigation Services Company Amendment Bill were re-introduced in Parliament under the Sixth Administration. Subsequently, these Bills were passed by the NA and transmitted to the National Council of Provinces (NCOP) for concurrence. The afore-mentioned Amendment Bills are section 75 Bills, which means that they do not necessarily affect the Provinces.

• During the 2019/20 financial year, the Department successfully solicited the interest of Limpopo Provincial Government in hosting the annual commemoration of International Civil Aviation Day (ICAD). Through this gesture, the Limpopo Province took the baton of hosting ICAD from Mpumalanga Province that was the previous year’s host. “75 Years of Connecting the World” was the approved theme that guided the worldwide commemoration of ICAD. In ensuring that ICAD 2019 translated into meaningful auctioning, the values espoused in the said theme, festivities were spread over two days: 06 - 07 December 2019. The host venue was Polokwane International Airport and is also the administrative seat of Gateway Airports Authority Limited (GAAL) responsible for managing all airports in the Limpopo Province.

The highlights of the first day was the career expo supported by over a dozen organisations and it reached 1 481 leaners invited from high schools predominately located in historically disadvantaged communities of the host province. Ninety-seven (97) educators who accompanied these learners benefited from the TETA sponsored educator’s workshop. Its outcome was empowerment of educators to assist the learners in making informed decisions when choosing relevant subjects to enhance their career pathways into aviation.

 

The highlights of the second day included observing ICAD through a formal programme. This activity was graced by political principals from local, district, provincial and national spheres of Government. Whilst selected dignitaries offered messages of support, the Minister delivered a keynote address. In addition, theDdepartment established rapport with a young female student pilot born and bred in Limpopo Province, but has a shortfall in completing her training towards Commercial Pilot Licence. Efforts are underway to assist her to secure a sponsorship. Due to inclement weather conditions, an air show open to the public at no cost was cancelled.

 

  • 40th International Civil Aviation Organization (ICAO) Assembly

• During the 2019/2020 financial year, the Minister successfully led the South African delegation comprised of officials from the Department; Department of Tourism (Tourism); Department of Environmental Affairs (DEA); Department of Home Affairs (DOHA); Department of International Relations and Cooperation (DIRCO), State Security Agency (SSA); South African Police Service (SAPS); ATNS; ACSA; SACAA, Airlines Association of Southern Africa (AASA), South African Airways (SAA); South African Revenue Service (SARS) and the South African Weather Service (SAWS) during the 40th Triennial Assembly of the International Civil Aviation Organization (ICAO), held during the period 24 September to 4 October 2019, in Montreal, Canada.

 

At the Assembly, Ms Poppy Khoza, the Director of Civil Aviation Authority was elected as the second Vice-President of the ICAO Assembly.

The Minister signed the Protocol to Amend the Convention on Offences and Certain Other Acts Committed on Board Aircraft on behalf of the Government of South Africa. By signing the Montreal Protocol, the Minister was merely officially acknowledging the act of signature, which is the first step of a two-tier process.

 

South Africa will be expected to proceed with the second step and ratify the Protocol.

The Minister, amongst others, signed Bilateral Agreements with Jamaica and Malaysia.

South Africa was re-elected to the Council of ICAO as one of the 36 Member States that constitute the Council, under Part II. These are States that make the largest contribution to the provision of facilities for international civil air navigation.

 

  • Aviation Policy and Regulations

• A socio-economic impact assessment certificate was obtained for the Air Services Bill.

• The Draft South African Maritime and Aeronautical Search and Rescue Amendment Bill was submitted to the South African Search and Rescue Executive Committee for approval.

 

2.1.4.6 Programme 6: Maritime Transport

 

• The Marine Energy Efficiency Programme was finalised.

• A request for qualification proposal / submission for the Salvage Tug building project was analysed.

• South Africa's readiness for International Maritime Organisation mandatory audits was successfully ensured.

• The assessment of the state of public Maritime Education and Training facilities was completed.

• Stakeholder engagement  on the development of SADC Coastal Shipping Agreement was completed.

• Merchant Shipping Bill was approved by Cabinet for public consultation.

• FOSAD Clusters approved Amendment of the Marine Pollution Prevention Bill (Annex IV and VI) - for tabling at Cabinet and further processing to Parliament.

• The World Maritime Day 2019 under the theme - 'Empowering Women in the Maritime Community' was commemorated, and , at the time of reporting, plans were underway for the 2020 World Maritime Day Parallel Event.

•  Maritime Security Audits (audits done every 5th year) were successfully completed, and  new Security Plans for the next cycle were assessed. The Director-General had approved new Security Plans as revised, and issued ISPS compliance certificates to all eight commercial ports.

 

2.1.4.7 Programme 7: Public Transport

 

• Integrated Public Transport Networks (IPTNs) were funded and monitored in 13 cities (Ekurhuleni, Mbombela, Nelson Mandela Bay, Johannesburg, Cape Town, George, Durban, Polokwane, Msunduzi, Mangaung, Rustenburg, Buffalo City and Tshwane) by end March 2020. Six (6) cities are operational, namely Ekurhuleni, Tshwane, Johannesburg, Cape Town, George and Nelson Mandela Bay.

• The draft Operational Licence Strategies were developed as a critical part of the development of detailed network plans in two (2) district municipalities (Vhembe and Nkangala District Municipalities). The detailed plans could not be completed during the year.

• With regard to the Shova Kalula bicycle project, 2,252 bicycles had- been distributed in eight provinces.

• A survey was conducted on the extent of illegal taxi operations in South Africa.

• The Transport Appeal Tribunal Amendment Bill was approved by Cabinet and the Bill was gazetted for introduction to Parliament.

 

  1. OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE

3.1        2018/19

Table 2: Appropriation Statement for 2018/19

Programme

R’000

2018/19

2017/18

Final Approp.

R’000

Actual Expenditure

R’000

Over/Under Expenditure

R’000

Final Approp.

R’000

Actual Expenditure

R’000

Over/Under Expenditure

R’000

 

Programme 1: Administration

434 094

379 809

54 285

415 254

407 466

7 788

 

Programme 2: Integrated Transport Planning

89 982

71 375

18 607

83 075

76 360

6 715

 

Programme 3: Rail Transport

15 887 279

15 873 693

13 586

19 333 199

14 515 158

4 818 041

 

Programme 4: Road Transport

30 098 760

30 067 108

31 652

27 138 175

27 118 369

19 806

 

Programme 5: Civil Aviation Transport

182 253

167 718

14 535

171 165

166 149

5 016

 

Programme 6: Maritime Transport

129 126

123 993

5 133

128 417

109 327

19 090

 

Programme 7: Public Transport

13 009 800

12 509 758

500 042

12 525 895

12 277 572

248 823

 

Direct charge against Revenue Fund

10 200

2 976

7 224

10 000

5 559

4 441

 

Total

59 841 494

59 196 430

645 064

59 805 180

54 675 960

5 129 220

 

(Source: Department of Transport Annual Report for 2018/19 (2019b).

 

For the 2018/19 financial year, the Department had received a budget of R59.8 billion and of this amount, it spent R59.2 billion by the end of the financial year, that is 98.9% of the available budget, up from R54.7 billion (or 91.4%) of the R59.8 billion it had spent by the same time in 2017/18. The Department underspent a total amount of R645.1 million, translating into an under-expenditure of 1.1%. The biggest under-expenditure was in the Public Transport programme. Of the R13billion that had been allocated to this programme, the Department had spent R12.5 billion (or 96.2%) by the end of the reporting period, indicating an under-expenditure of R500 million (or 3.8%). The Compensation of Employees was underspent in all programmes due to posts that could not be filled.[13]

 

3.2        2019/20

Table 3: Appropriation Statement for 2019/20

Programme

 

2019/20

2018/19

Final Appropriation

Actual Expenditure

Over/Under Expenditure

Final Appropriation

Actual Expenditure

Over/Under Expenditure

R’000

R’000

R’000

R’000

R’000

R’000

Programme 1: Administration

419 337

412 741

6 596

434 094

379 809

54 285

Programme 2: Integrated Transport Planning

152 936

139 950

12 986

89 982

71 375

18 607

Programme 3: Rail Transport

16 560 839

16 560 238

601

15 887 279

15 873 693

13 586

Programme 4: Road Transport

33 295 501

33 285 865

9 636

30 098 760

30 067 108

31 652

Programme 5: Civil Aviation Transport

224 345

178 820

45 525

182 253

167 718

14 535

Programme 6: Maritime Transport

135 250

132 879

2 371

129 126

123 993

5 133

Programme 7: Public Transport

13 416 923

13 178 118

238 805

13 009 800

12 509 758

500 042

Direct charge against Revenue Fund

10 424

2 614

7 810

10 200

2 976

7 224

Total

64 215 555

63 891 225

324 330

59 841 494

59 196 430

645 064

   (Source: Department of Transport, (2020).

 

For 2019/20, the Department had received a budget of R64.2 billion and of this amount, it spent R63.9 billion by the end of the financial year, that is 99.5% of the available budget, up from R59.2 billion (or 98.9%) of the R59.8 billion it had spent by the same time in 2018/19.

 

The Department underspent a total amount of R324.3 million, translating into an under-expenditure of 0.5%. The biggest under-expenditure was in the Public Transport programme. Of the R13.4 billion that had been allocated to this programme, the Department had spent R13.2 billion (or 98.2%) by the end of the reporting period, indicating an under-expenditure of R238.8 million (or 1.8%). The Compensation of Employees was underspent in all programmes due to posts that could not be filled.[14]

 

3.2.1     Programme 1: Administration

 

By the end of 2019/20, the Administration programme had spent R412.8 million (or 98.4%) of the R419.3 million that had been allocated to it, translating into an under-expenditure of R6.6 million (or 1.6%). This under-expenditure was on Compensation of Employees owing to posts that could not be filled.[15]

 

The net under-expenditure in the programme of R23.7 million, excluding the under-expenditure on Compensation of Employees, was shifted across programmes to cover over- expenditure in the Road Transport programme.[16]

 

Before the virement to the Road Transport programme, savings, under- and over-expenditure on Goods and Services amounted to a net amount of R25.1 million. Communications was overspent due to expenditure on October Transport Month and Road Safety Campaigns.[17] Office Accommodation was overspent owing to invoices that had been received late for the previous financial year, and the Ministry was also overspent. Corporate Services “saved” funds and underspent on a number of projects.[18] Management “saved” funds and underspent on forensic and internal audit services.[19] The savings were mainly due to cost saving measures. 

 

3.2.2     Programme 2: Integrated transport planning

 

The budget allocation for the Integrated Transport Planning programme stood at R152.9 million and of this amount, the programme had spent R139 950 million (or 91.5%) by the end of the reporting period, translating into an under-expenditure of R12 986 million (or 8.5%). The programme underspent R2.9 million on the Compensation of Employees owing to the posts that could not be filled.[20]

 

Before a virement to the Road Transport programme, Goods and Services was underspent by R23.7 million due to non- or slow spending on the following projects:[21]

 

  • Corridor Freight Development;
  • National Transport Planning Databank;
  • Multi-Modal Transport Planning and Coordination Act;
  • Freight Transport Model;
  • Single Transport Economic Regulator;
  • Regional Corridor Strategy; and
  • Procedures, Computations and Recovery of Overloading Costs.

 

3.2.3     Programme 3: Rail transport

 

For 2019/20, the budget for the Rail Transport programme stood at R16 560 839 billion and of this amount, the programme had spent R16 560 238 billion (or approximately 100%) by the end of the period under review. The programme underspent R601.00. It also underspent R0.6 million (0.003%) on the Compensation of Employees due to the posts that could not be filled.[22]

 

Pertaining to Goods and Services, the programme “saved” funds because work on the White Paper for Rail Transport had been “done in-house”.[23] The programme underspent on the following projects due to non- or slow spending:[24]

 

  • Review of the Branch Line Strategy;
  • PRASA Intervention Strategy;
  • Establish Rail Economic Regulator; and
  • National Rail Safety Amendment Bill.

 

3.2.4     Programme 4: Road transport

 

Of the R33 295 501 billion that had been allocated to the Road Transport programme for 2019/20, the Department spent R33 285 865 billion (or approximately 100%). The Department underspent R9.6 million (or 0.02%). This under-expenditure was on the Compensation of Employees due to posts that could not be filled.[25]

 

Goods and Services were overspent by R214.7 million, mainly owing to expenditure related to the maintenance of the electronic National Traffic Information System (eNaTIS) in previous financial years, and an investigation regarding the eNaTIS. A number of projects were underspent, including the following:[26]

 

  • Programme Development for S’hamba Sonke; and
  • Decade of Action for Road Safety.

 

The programme “saved” on operational expenditure. An amount of R0.8 million was shifted within the programme from Goods and Services to cover over-expenditure on Transfers to Households and Payments for Capital Assets. A total of R221.6 million was shifted across programmes to the Road Transport programme to cover the over-expenditure on Goods and Services, and Payments for Financial Assets of R6.1 million, which was related to the eNaTIS.[27]

 

3.2.5     Programme 5: Civil aviation transport

 

By the end of 2019/20, the Department had spent R178.8 million (or 79.7%) against R224.3 million that had been allocated to it during the reporting period, indicating an under-expenditure of R45.5 million (or 20.3%). The Civil Aviation Transport programme underspent R4.8 million on the Compensation of Employees due to posts that could not be filled.[28]

 

Savings on Goods and Services amounted to R57.6 million, mainly due to savings on Watch Keeping Services, which had been over budgeted for owing to the indicative contract amount at the time of budgeting before negotiations reduced the contract price.[29] The programme also saved funds on operational expenditure. 

 

Moreover, Goods and Services were underspent by R4.5 million, mainly due to non-expenditure on the following projects:[30]

 

  • Establishment of an Appeals Committee;
  • Regional Search and Rescue Conference;
  • Business Case for the Development of an Aviation Academy;
  • Correction Factors for Aviation Regulation;
  • International Air Services Licensing Council; and
  • Implementation of the Airlift Strategy.

 

An amount of R2.5 million was shifted within the programme from Goods and Services to cover over-expenditure on international memberships and leave gratuities. Funds amounting to R19 million were shifted across programmes to cover over-expenditure in the Road Transport programme, leaving net savings of R40.6 million on Goods and Services.[31]

 

3.2.6     Programme 6: Maritime transport

 

For the 2019/20 financial year, the Maritime Transport programme had received R135.3 million and of this amount, it spent R132.9 million (or 98.2%), indicating an under-expenditure of R2.4 million (or 1.8%). It is worth noting that there is slight improvement in the under-expenditure in this programme compared to 2018/19, when of the R129.1 million that had been allocated to it, it had spent R123 993 million (or 96%), translating into an under-expenditure of R5.1 million (or 4%). The programme underspent R1.3 million on Compensation of Employees thanks to the posts that could not be filled.[32]

 

Goods and Services were underspent by a net amount of R2 million.[33] Oil Pollution Prevention Services was overspent, while little or no expenditure was incurred on a Feasibility Study on Tug Boat Services. The same held true for Policy related projects, as well as events that had been planned, such as the International Maritime Organisation (IMO) World Maritime Day Parallel event, World Maritime Day and other projects.[34]

 

To cover over-expenditure on Payments for Capital Assets, an amount of R0.4 million was shifted from Goods and Services and another R1.5 million was shifted across programmes to cover over-expenditure in the Road Transport programme. This left only R0.1 million unutilised under Goods and Services.[35] Savings were realised on Transfers to Foreign Governments and International Organisations, mainly because less membership fees were paid to the IMO than had been budgeted for.

 

3.2.7     Programme 7: Public transport

 

By the end of the reporting period, the programme had spent R13.2 billion (or 98.2%) of the R13.4 billion that had been allocated to it, translating into an under-expenditure of R238.8 million (or 1.8%). However, the Public Transport programme recorded some progress from  the previous financial year (2018/19), because by the end of that reporting period, it had spent R12.5 billion (or 96.2%) of the R13 billion that had been allocated to it, indicating an under-expenditure R500 million (or 3.8%).[36] The programme underspent R1.5 million on Compensation of Employees due to posts that could not be filled.[37]

 

Transfer Payments were underspent by R196.7 million due to the “withholding of a Public Transport Network Grant (PTNG) of R98.2 million from a Municipality” and slow spending on the Taxi Recapitalisation Programme that is demand-driven (R98.5 million).[38] This was after R78.6 million had been shifted from Transfer Payments to Households across programmes to cover over-expenditure in the Road Transport programme. 

 

Savings on Goods and Services amounted to R4.5 million on operational expenditure, while “under-expenditure on a range of projects” amounted to R122.8 million before R72.6 million was shifted across programmes to cover over-expenditure in the Road Transport programme.[39] An amount of R3.5 million was shifted within the programme to Transfers to Households. The remaining under-expenditure on Goods and Services amounted to R51.2 million, being earmarked funds of R40 million for Grant Monitoring that had not been spent, and R11.2 million for expenditure that was reclassified as capital expenditure.

 

Other projects that were underspent under Goods and Services included the following:[40]

 

  • Empowerment of Small Bus Operators;
  • Moloto Bus Contract Design;
  • Public Transport Safety Plan;
  • Taxi Scrapping Administration (due to late invoices);
  • Technical Oversight and Support for Public Transport;
  • National Land Transport Information System Upgrade;
  • National Public Transport Regulator;
  • North West Intervention;
  • Shova Kalula Bicycle Programme; and
  • Implementation of Integrated Public Transport Networks (IPTNs) and other smaller projects.  

 

 

3.3        Virements 2019/20

 

Table 4: Virements[41]

Programme

Goods and Services

 

Households

 

Payments for Financial Assets

Foreign Governments

 

R’000

R’000

R’000

R’000

Programme 1: Administration

(23 296)

 

(405)

(23 701)

Programme 2: Integrated Transport Planning

(13 290)

 

 

(13 290)

Programme 3: Rail Transport

(12 943)

 

 

(12 943)

Programme 4: Road Transport

215 543

 

6 077

221 620

Programme 5: Civil Aviation Transport

(19 000)

 

 

(19 000)

Programme 6: Maritime Transport

(1 521)

 

 

(1 521)

Programme 7: Public Transport

(72 591)

(78 574)

 

(151 165)

Total

72 902

(78 574)

5 672

-

 (Source: Department of Transport, (2020).

 

Savings and under-expenditure were shifted across programmes to cover over-expenditure in Programme 4: Road Transport, thanks to expenditure emanating from previous financial years pertaining to the maintenance of eNaTIS and a related investigation.

 

3.4        Rollovers requested 2019/20

 

Rollovers were requested as detailed in the table below:[42]

 

Table 5: Rollovers

Programme

R ‘000

Programme 5: Civil Aviation Transport

 

From: Programme 5 Civil Aviation Goods and Services: Reduced contract amount which resulted in a saving in Watch Keeping Services

 

 

 

 

To: Programme 6 Maritime Transport Goods and Services: Acquisition of the (International Maritime Satellite (INMARSAT) Fleet broadband Satellite communication system for the South African Maritime Safety Authority (SAMSA)

537

To: Programme 7 Public Transport Goods and Services: Covid-19 disaster response for transport

40 000

Programme 7: Public Transport

 

From: Programme 7: Public Transport Transfers and Subsidies:  Public Transport Network Grant withheld from Nelson Mandela Bay

98 163

To: Programme 7; Public Transport Transfers and Subsidies: Public Transport Network Grant to Nelson Mandela Bay

 

From: Programme 7; Public Transport Transfers and Subsidies: Taxi Scrapping which is demand driven, hence fewer taxis were scrapped than anticipated

 

To: Programme 6: Maritime Transport Goods and Services: IMO World Maritime Parallel Event

13 000

To: Programme 4: Road Transport Goods and Services: Arrive Alive campaigns

 

Total

335 965

(Source: Department of Transport, (2020).

 

 

3.5        Unauthorised, fruitless and wasteful and irregular expenditure 2019/20

 

3.5.1     Unauthorised expenditure

 

The cost of the eNaTIS maintenance and operations resulted in unauthorised expenditure of R1.3 billion that had been incurred in 2013/14, 2014/15 and 2016/17. Unauthorised expenditure of R980 375 was incurred 2018/19 as expenditure that had been incurred, but not in accordance with the vote of the programme: Road Transport.[43]

 

The Road Traffic Management Corporation (RTMC) took over the eNaTIS with effect from 5 April 2017. Disciplinary processes commenced related to the unauthorised expenditure that was not in accordance with the vote of the programme: Road Transport.

 

3.5.2     Fruitless and wasteful expenditure

 

30 new cases of fruitless and wasteful expenditure pertaining to “no shows” were declared in the financial year amounting to R53 000, of which three (3) cases amounting to R4 000 were transferred to debt and 27 cases amounting to R49 000 were to be transferred to debt at the time of reporting. 26 cases amounting to R77 000 from previous financial years were transferred to debt and seven (7) cases amounting to R8 000 were written off.[44]

 

48 cases of fruitless and wasteful expenditure remained at the end of the financial year amounting to R115 000. Of these cases, 45 amounting to R64 000 had to be transferred to debt at the time of the reporting. Two (2) cases totalling R1 000 were expected to be resolved and a legal opinion was outstanding for one (1) case amounting to R50 000.[45]Two cases amounting to R482 000 of alleged over payments were to be investigated to confirm fruitless and wasteful expenditure.[46]

 

3.5.3     Irregular expenditure

 

During the period under review, irregular expenditure amounting to R5.2 million was declared for:[47]

 

  • Officials who had over claimed sessional allowances (R299 000) of which R122 000 was transferred to debt;
  • Accommodation and transport booked without approved travel authorisation forms (R900 000), which had been handed over to Labour Relations to arrange for disciplinary steps to be taken;
  • R2.9 million from investigations that had been concluded; and
  •  R1.1 million for non-compliance with local content regulations.

 

The National Treasury had condoned one case of irregular expenditure that amounted to R637.5 million.[48]

 

Irregular expenditure for 22 cases amounting to R113.7 million remained at the end of the financial year. Of these cases, the Bid Adjudication Committee (BAC) recommended to approach the National Treasury to condone one (1) case amounting to R0.5 million. Disciplinary processes were ongoing in four (4) cases amounting to R46.9 million. Recommendations of investigation reports had to be implemented in seven (7) cases amounting to R6.6 million. The National Treasury had not condoned four (4) cases amounting to R57 million. Two (2) cases amounting to R0.6 million were to be considered at the BAC. A forensic report was being reviewed in one (1) case of R0.5 million. The National Treasury had requested that one (1) case of R0.3 million be further investigated to decide whether the case could be condoned. One (1) case of R0.2 million had to be transferred to debt and another one amounting to R1.1 million had been declared as a result of the audit which had to be considered for investigation. 

 

3.5.4     Measures put in place

 

Thetable below indicates the measures that were indicated in the annual report as having been put in place to prevent and/or detect irregular expenditure.[49]

 

Despite the measures indicated as having put in place, the year under review saw R2.4 million in irregular expenditure incurred for the Transport portfolio (a decrease when compared to the irregular expenditure of the 2018/19 financial year of R4.1 million); R2.3 million of which represents non-compliance in the 2019/20 financial year, and R36.2 million is expenditure relating to prior year non-compliance identified in the 2019/20 financial year under review.

 

The Committee remains concerned that the measures listed below for the current year under review only differ by one measure from those which were taken from the previous annual reports of the Department that wereidentical to the measures put in place in the annual reports for 2014/15, 2016/17, 2017/18 and 2018/19. The concern is valid given that the Transport portfolio still incurred irregular expenditure in the current period under review, which would indicate that the measures were either insufficient or ineffective or that the Department had not implemented these measures appropriately.

 

The Committee also noted with dismay that the previous measure that sought to ensure training was provided to staff involved in the procurement process had been removed from the measures in place during the current year under review. This is especially concerning as the Committee extended recommendations to the Minister, as well as the Minister of Finance to assist with ensuring that officials in SCM were sufficiently trained to ensure that irregular expenditure is prevented. The Department has therefore not improved or reviewed these measures, as requested by the Committee specificallyduring the 2018 and 2019 BRRR.

 

Table 6: Measures put in place to prevent and/or detect irregular expenditure 2016/17, 2017/18, 2018/19 and 2019/20

2016/17 Annual Report

2017/18 Annual Report

2018/19 Annual Report

2019/20 Annual Report

Measures reported in the 2016/17 report to have been put in place by the Department to prevent and/or detect irregular expenditure are as follows: 

•Where appropriate, cases of irregular expenditure are referred to the Department’s legal services to determine whether any official can be held liable for the irregular expenditure;

•Cases of irregular expenditure are referred to the Department’s Directorate: Investigations and Forensics for investigation when an investigation is required;

•Relevant managers are requested to take disciplinary steps against officials who make or permit irregular expenditure;

 

•The Bid Adjudication Committee (BAC) will not consider condoning irregular expenditure until a legal opinion has been obtained where applicable and disciplinary steps were considered;

•The contract management system monitors all payments against orders that are placed, and will detect payments that exceed the contract value;

•The contract management system will detect any payments that are approved for processing for which no order was placed;

•Payments for all procurements must be processed via Supply Chain Management (SCM) so that any irregular procurement can be detected before payment;

•To prevent the occurrence of not completing the internal order and requisition forms, the SCM component does not make any approval documents or letters of acceptance available until the internal order and requisition forms are completed; and

•Initiatives to train all officials who are involved in the approval of procurement matters will continue.

Measures listed in the 2017/18 report that were put in place to prevent and/or detect irregular expenditure are as follows:

 

•Where appropriate, cases of irregular expenditure are referred to the Department’s legal services to determine whether any official can be held liable for the irregular expenditure;

•Cases of irregular expenditure are referred to the Department’s Directorate: Investigations and Forensics for investigation when an investigation is required;

•Relevant managers are requested to take disciplinary steps against officials who make or permits irregular expenditure;

•The BAC will not consider condoning irregular expenditure until a legal opinion has been obtained where applicable and disciplinary steps were considered;

 

•The contract management system monitors all payments against orders that are placed, and will detect payments that exceed the contract value;

•The contract management system will detect any payments that are approved for processing for which no order was placed;

•Payments for all procurements must be processed via SCM so that any irregular procurement can be detected before payment;

•To prevent the occurrence of not completing the internal order and requisition forms, the SCM component does not make any approval documents or letters of acceptance available until the internal order and requisition forms are completed; and

•Initiatives to train all officials who are involved in the approval of procurement matters will continue.

Measures listed in the 2018/19 report that were put in place to prevent and/or detect irregular expenditure are as follows:

 

•Where appropriate, cases of irregular expenditure are referred to the Department’s legal services to determine whether any official can be held liable for the irregular expenditure;

•Cases of irregular expenditure are referred to the Department’s Directorate: Investigations and Forensics for investigation when an investigation is required;

•Relevant managers are requested to take disciplinary steps against officials who make or permits irregular expenditure;

 

•The BAC will not consider condoning irregular expenditure until a legal opinion has been obtained where applicable and disciplinary steps were considered;

 

•The contract management system monitors all payments against orders that are placed, and will detect payments that exceed the contract value;

•The contract management system will detect any payments that are approved for processing for which no order was placed;

•Payments for all procurements must be processed via SCM so that any irregular procurement can be detected before payment;

•To prevent the occurrence of not completing the internal order and requisition forms, the SCM component does not make any approval documents or letters of acceptance available until the internal order and requisition forms are completed; and

•Initiatives to train all officials who are involved in the approval of procurement matters will continue.

Measures listed in the 2019/20 report that were put in place to prevent and/or detect irregular expenditure are as follows:

 

o Where appropriate, cases of irregular expenditure are referred to the Department’s legal services to determine whether any official can be held liable for the irregular expenditure;

o Cases of irregular expenditure are referred to the Department’s Directorate: Investigations and Forensics for investigation when an investigation is required;

  • Relevant managers are requested to take disciplinary steps against officials who make or permits irregular expenditure;

 

  • The BAC will not consider condoning irregular expenditure until a legal opinion has been obtained where applicable and disciplinary steps were considered;

 

  • The Logis system monitors all payments against orders that are placed, and will detect payments that exceed the contract value;

 

  • The Logis system will detect any payments that are approved for processing for which no order was placed;

 

  • Payments for all procurements must be processed via SCM so that any irregular procurement can be detected before payment;
  • To prevent the occurrence of not completing the internal order and requisition forms, the SCM component does not make any approval documents or letters of acceptance available until the internal order and requisition forms are completed; and

 

  •  Sundry payments that could have originated via SCM are checked to confirm the procurement process that was followed.

 

 

3.6        Findings of the AGSA for the 2019/20 Financial Year

 

During the period under review, the Department received an unqualified audit opinion with findings. The AGSA made the following findings:[50]

 

3.6.1     Restatement of corresponding figures

 

As disclosed in notes 36 and 37 to the financial statements, the corresponding figures for 31 March 2019 were restated as a result of an error in the financial statements of the Department at 31 March 2020, and for the year ended, 31 March 2020.

 

3.6.2 Irregular expenditure

 

The Department incurred irregular expenditure as a result of officials not always following the prescribed procurement processes.

 

The AGSA found that the Department had not taken effective and appropriate steps to prevent irregular expenditure of R5 164 000, as disclosed in note 26 to the annual financial statements, as required by section 38(1)(c)(ii) of the Public Finance Management Act 1 of 1999 (PFMA) and treasury regulation 9.1.1.

 

With regard to the failure to take effective steps to prevent this irregular expenditure, this is a repeat finding.

 

3.6.3 Annual Financial Statements and Annual Performance Report

 

The AGSA found that the financial statements submitted for auditing had not been prepared in accordance with the prescribed financial reporting framework, as required by section 40(1)(a) of the PFMA.[51]

 

Material misstatement in the comparative figures for the principal-agent arrangements disclosure note, identified by the auditors in the submitted financial statements, was corrected through a prior period error adjustment, resulting in the financial statements receiving an unqualified opinion.

 

3.6.4 Procurement and Contract Management

 

Bid documentation for the procurement of commodities designated for local content and production did not stipulate the minimum threshold for local production and content, as required by the 2017 Preferential Procurement Regulation 8(2).[52]

 

 

3.6.5Financial and Performance Management

 

The AGSA found that management had not performed adequate reviews to ensure that the submitted financial statements were accurate and adhere to the applicable financial reporting framework, resulting in a material amendment to the annual financial statements relating to principal-agent arrangements disclosure.[53]

 

Management did not adequately review and monitor compliance with the PFMA and Treasury Regulations to ensure compliance with procurement processes and to prevent incurring irregular expenditure.

 

 

3.6.6     Expenditure Management

 

The AGSA found that the Department had not taken effective and appropriate steps to prevent irregular expenditure amounting to R5.2 million, as required by section 38(1)(c)(ii) of the PFMA and Treasury Regulation 9.1.1.[54] The Department regressed in this area because in 2018/19, the AGSA found that it had not taken effective and appropriate steps to prevent irregular expenditure to the tune of R1.2 million.[55]

 

3.6.7Investigations

 

The AGSA found that three internal investigations into allegations concerning supply chain management matters were still underway at the time of auditing. The outcomes are expected in the financial year ending 31 March 2021.[56]

 

   

  1. OVERVIEW AND ASSESSMENT OF PROGRAMME PERFORMANCE

4.1        Summary of performance

 

Table 7: Overall Annual Performance Targets

Total targets set

29

Targets achieved

26/29

Targets not achieved

3/29

Success rate

89.7%

Total budget spent

R63.9 billion (or 99.5%)

(Source: Department of Transport (2020).

 

The Committee is not satisfied with the performance of the Department as the achievement of these targets did not translate into improved service delivery nor was the Department able to meet 100% of the performance targets which it set itself for the year under review.

 

During the period under review, the Department had set itself 29 annual performance targets and of these, it achieved 26, translating into an achievement rate of 89.7%.[57] It spent R63.9 billion (or 99.5%) of the R64.2 billion that had been allocated to it in 2019/20. The Department did not achieve three (3) annual performance targets, indicating an under-achievement rate of 10.3%. In contrast to 2018/19, the success rate for the Department improved in 2019/20. In that financial year (2018/19), the Department had set itself 31 annual performance targets and of these, it achieved 26 by the end of the reporting period, translating into an achievement rate of 83.9%.[58]

 

Some of the achievements by the Department during the period under review were the following:[59]

 

  • In March 2020, the Department complied and submitted a Human Resource Development (HRD) Monitoring Report for 2019/20 to the Department of Public Service and Administration (DPSA);
  • During the period under review, a total of 413 (63%) employees were trained in line with the Workplace Skills Programme (WSP) of the Department. This exceeded the set target of 50% of staff establishment;
  • The interviewing and selection of 50 interns was successfully coordinated. This exceeded the target of 5% of the establishment, as set out by the DPSA; 
  • The Annual Monitoring Report on the implementation of action plans was developed;
  • The Annual Monitoring Report on the implementation of the Risk Management Strategy was developed as targeted;
  • In November 2019, Cabinet approved the updated Economic Regulation of Transport (ERT) Bill. A Gazetted Notice of Intention (Notice No. 1575) to introduce the ERT Bill to Parliament in terms of Rule 241(1) (b) of the National Assembly was issued on 6 December 2019;
  • The International benchmarking on Rail Access Regime Guidelines was conducted;
  • The Railway Safety Bill approved by Cabinet for submission to Parliament; 
  • The implementation of the S’hamba Sonke Provincial Road Maintenance Programme (PRMG) was monitored through site inspections, bilateral consultations and progress reports compiled as targeted;
  • The final draft of the National Anti-Fraud and Corruption Strategy was developed as targeted;
  • The Cabinet approved the Draft National Road Traffic Amendment Bill;
  • A concept paper on the aviation training landscape in South Africa and a draft Business Case for a Government-owned Aviation Academy were developed;
  • The Maritime Energy Efficiency Programme was developed as targeted; and
  • The survey on the extent of illegal taxi operations was conducted on the eNaTIS and data was analysed and findings were consolidated. The preliminary findings provided that 47% of old taxi vehicles were in the Gauteng province, and 24% were in KwaZulu-Natal.

 

However, the Department encountered certain challenges:

  • During the period under review, the Department had set itself a target of conducting ten (10) Community Outreach Campaigns. However, by the end of the reporting period, it had managed to conduct nine (9) Community Outreach Campaigns. The Department’s inability to conduct the tenth Community Outreach Campaign was attributed to the outbreak of the Covid-19 pandemic. The Department has undertaken to conduct the remaining Community Outreach Campaign in the 2020/21 financial year;[60]
  • The Department could not secure the ministerial approval to submit the Draft Marine Pollution Amendment Bill to Cabinet;[61] and
  • The detailed ITPNs could not be developed in Amathole and Capricorn District Municipalities as targeted during the period under review.[62]

 

4.2        Programme performance

 

4.2.1     Programme 1: Administration

 

Table 8: Programme 1: Administration: Annual Performance Targets

Total targets set

4

Targets achieved

3/4

Success rate

75%

Total budget spent

R412.8 million (or 98.4%)

(Source: Department of Transport (2020).

 

The Department had set itself four (4) annual performance targets under the Administration programme, and it achieved 3 (or 75%). The target that the programme could not achieve pertained to conducting ten (10) Community Outreach Campaigns, previously referred to. The Administration programme regressed from the previous financial year (2018/19) when it had set itself five (5) annual performance targets, and all of them were achieved. For the 2019/20 financial year, the Department spent R412 million (or 98.4%) of the R419.3 million that had been allocated to this programme.

 

4.2.2     Programme 2: Integrated transport planning

 

Table 9: Programme 2: Integrated Transport Planning: Annual Performance Targets

Total targets set

4

Targets achieved

4/4

Targets Not Achieved

0/4

Success rate

100%

Total budget spent

R139.950 million (or 91.5%)

(Source: Department of Transport (2020).

 

During the period under review, the Department had four (4) annual performance targets under the Integrated Transport programme, and it achieved all of them. The Department spent R139 950 million (or 91.5%) of the R152.9 million budget allocation for the programme in 2019/20.

 

4.2.3     Programme 3: Rail transport

 

Table 10: Programme 3: Rail Transport: Annual Performance Targets

Total targets set

3

Targets achieved

3/3

Target not achieved

0/4

Success rate

100%

Total budget spent

R16 560 238 billion (approximately 100%)

(Source: Department of Transport (2020).

 

Of the three (3) annual performance targets that the Department had set itself under the Rail Transport programme, it achieved all of them. The Department spent R16 560 238 billion (or approximately 100%) of the R16 560 839 billion in the Rail Transport programme. The performance of the programme improved from 2018/19, when the Department had itself four (4) annual performance targets, and it achieved three (3) (or 75%) by the end of financial year.[63]

 

4.2.4     Programme 4: Road transport

 

Table 11: Programme 4: Road Transport: Annual Performance Targets

Total targets set

5

Targets achieved

5/5

Target not achieved

0/5

Success rate

100%

Total budget spent

R33 285 865 billion (approximately 100%)

(Source: Department of Transport (2020).

 

During the reporting period, the Department had set itself five (5) annual performance targets under the Road Transport programme, and all of which (100%) were achieved. The Department spent R33 285 865 billion (or approximately 100%) of the R33 295 501 billion that had been allocated to the Road Transport programme. The programme has been consistent in achieving 100% of its annual performance targets. In 2018/19, it had set itself six (6) annual performance targets, and it attained all of them by the end of the reporting period.

 

4.2.5     Programme 5: Civil aviation transport

 

Table 12: Programme 5: Civil Aviation Transport: Annual Performance Targets

Total targets set

3

Targets achieved

3/3

Target not achieved

0/3

Success rate

100%

Total budget spent

R178.8 million (or 79.7%)

(Source: Department of Transport (2020).

 

Under the Civil Aviation Transport programme, the Department had set itself three (3) annual performance targets, and it achieved all of them.  The Department spent R178.8 million (or 79.7%) of the R182.3 million that had been allocated to this programme. There was improvement on the performance of the programme from 2018/19, because in that financial year, the programme had set itself five (5) annual performance targets, and it achieved only two (2) by the end of the reporting period. [64]

 

4.2.6     Programme 6: Maritime transport

 

Table 13: Programme 6: Maritime Transport: Annual Performance Targets

Total targets set

6

Targets achieved

5/6

Target not achieved

1/6

Success rate

83.3%

Total budget spent

R132.9 million (or 98.2%)

(Source: Department of Transport (2020).

 

During the period under review, the Department had set itself six (6) annual performance targets under the Maritime Transport programme, and it achieved five (5). This translated into a success rate of 98.2%. The annual performance target that the programme could not achieve was to have the Marine Pollution Prevention Amendment Bill approved for submission to Cabinet.  The reason provided by the Department for its inability to meet this target was that the meeting for the “[Government Communication Advisory Committee] (GCAC) for the sub-committee of the [International Cooperation, Trade and Security] (ICTS) cluster had been postponed due to Covid-19 Disaster Declaration”.[65] The Department reported that the matter had been prioritised for the first sitting of the GCAC sub-committee.

 

By the end of the financial year, the Department had spent R132.9 million (or 98.2%) of the R135.3 million that had been allocated to it in the Public Transport programme.

 

While the programme regressed during the period under review, it is worth noting that it had increased its annual performance targets by 100%. In 2018/19, the programme had set itself three (3) annual performance targets, and by the end of that reporting period, it had achieved all of them.

 

4.2.7     Programme 7: Public transport

 

Table 14: Programme 7: Public Transport: Annual Performance Targets

Total targets set

4

Targets achieved

3/4

Target not achieved

1/4

Success rate

75%

Total budget spent

R13.2 billion (or 98.2%)

(Source: Department of Transport (2020).

 

The Department had set itself four (4) annual performance targets under the Public Transport programme, and it achieved three (3) by the end of the financial year under review, indicating a success rate of 75%. The Department had spent R13.2 billion (or 98.2%) of the R13.4 billion that had been allocated to the Public Transport programme. The annual performance target that the programme could not achieve was the development of the detailed ITPNs plans in Amathole and Capricorn District Municipalities. The reasons provided by the Department for its inability to achieve this target were:[66]

 

  • Amathole IPTN Plan process was delayed due to internal approval processes; and
  • The contract for Capricorn District Municipality was awaiting final signatures. 

 

As a corrective measure, the Department has undertaken to prioritise the development of IPTNs plans for the two district municipalities in the 2020/21 financial year.[67]

 

 

5.         HUMAN RESOURCE MANAGEMENT

 

During the year under review, the Department had 883 posts on the approved establishment and of these, 679 had been filled. The vacancy rate stood at 23.1%.[68] The highest vacancy rate was in the Road Transport programme that stood at 29.1%. The Maritime Transport programme came second, with the vacancy rate of 28.9%. In the third place, was the Civil Aviation Transport whose vacancy rate stood at 27.5%.

 

 

6.         SUMMARY OF 2019REPORTING REQUESTS

 

During the 2019 BRRR, the Committee requested additional matters for the Department to report on. Although the Department lists these in itsannual report on page 208, it  does not indicate how it responded to these requests.The Committee noted that in the course of engagements throughout the year, the Department did address some of these issues.

 

The Committee is of the view that the Department and its entities must comply with the additional reporting requests contained in its BRRR, and that the failure to do so will not be accepted. A number of these requests are repeated in this year’s additional reporting requests (table 21 below), which could have been prevented had the Department and its entities ensured that these were reported on and resolved within the set timeframes.

 

Table 15: Additional Reporting Requests from the 2019 BRRR by the Committee

Reporting matter

Action required

Timeframe

Progress

The Department should submit an improved Action Plan to address the findings of the AGSA, as well as the implementation of the recommendations made by the Committee in this report.

Written plan from the Department.

15January 2020.

Not reported on in the Annual Report.

 

The Department submitted a first report on the action plan to address the 2019 BRRR findings, but has not submitted a comprehensive written action plan.

 

The Department did indicate the measures put in place to address irregular expenditure, however, as indicated above, these measures were repeats of the same measures from the previous year.

 

In its presentation to the Committee during this BRRR engagement, the Department did present on the Actions Taken and Actions to be taken to address the AGSA findings for the 2019/20 audit.

The Department should submit a comprehensive briefing on steps it will be taking to assist in stabilising its entities (including filling of vacancies, conclusion and evaluation of shareholder agreements, improving the efficiency of the shareholder representatives on the boards, closely monitoring the implementation of projects and budget expenditure, etc.).

Monthly progress written briefings from the Department.

Monthly starting with first report due on 15 January 2020.

Not reported on in the Annual Report.

 

The written briefing was not submitted to the Committee within the deadline as requested in the 2019 BRRR.

 

During the previous year, the Department indicated its establishment of the Public Entity Oversight Sub-Directorate.

 

The Department, also briefed the Committee during the year on the steps taken by the Ministry to fill the vacancies in the Department as well as in the entities.

The Department should submit a comprehensive briefing on progress made on the filling of Board vacancies in entities as well as the filling of all critical posts within the Department and its entities.

Monthly progress written briefings from the Department.

Monthly starting with first report due on 15 January 2020.

Not reported on in the Annual Report.

 

The written briefing was not submitted to the Committee within the deadline as requested in the 2019 BRRR.

 

The Department, however, did brief the Committee during the year on the steps taken by the Ministry to fill the vacancies in the Department as well as in the entities.

The Department should submit a comprehensive briefing on implementation of the RTRP.

Written briefing from the Department.

15 January 2020.

Not reported on in the Annual Report.

 

The written briefing was not submitted to the Committee within the deadline as requested in the 2019 BRRR.

 

The Committee has, however, received a briefing on the implementation of the Reviewed TRP by the Department as well as how it seeks to make use of this programme to address the recommendations from the Public Protector Report on illegally converted Quantum Panel Vans.

The Department should submit quarterly reports on investigations underway in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

The written plan was not submitted to the Committee within the deadline as requested in the 2019 BRRR.

 

The report on outstanding matters, that includes investigations and litigation matters from entities, has not been submitted and many investigations remain outstanding.

 

There have not been quarterly reports on this matter to the Committee as requested.

The Department should submit quarterly reports on pending litigation, as well as settlements reached and judgments for and against the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

The written plan was not submitted to the Committee within the deadline as requested in the 2019 BRRR.

 

Periodic reports on litigation matters are received as and when members put these questions to the Department or the entities before them.

 

There have not been quarterly reports on this matter to the Committee as requested.

The Department should submit quarterly reports on human resource management (retentions, secondments, transfers, retirements, training and skills transfers, resignations and dismissals), as well as report on progress in disciplinary matters (including suspensions) in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

A written plan was not received from the Department.

 

As far as reporting of progress on the HRD targets within Programme 1 is concerned, the Department does include a summarised overview of its performance (no report on the performance for this item by entities) in their Quarterly Report Presentations to the Committee, which does not contain details regarding retentions, secondments, etc. or the progress in disciplinary matters for the Department or its entities.

The Department should submit quarterly reports on the achievement of job creation targets in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

No written plan was received from the Department.

 

The Quarterly Reports did not contain figures on job creation.

The Department should submit quarterly reports on the achievement of transformation targets in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

The Quarterly Reports did not contain figures on transformation targets.

 

The Department should submit quarterly reports on the progress towards prevention of irregular expenditure for the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

The Quarterly Reports did not contain progress reports on prevention of irregular expenditure.

The Department should submit quarterly reports on the Shova Kalula project.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

Other than how the project affected the spending or target achievement statistics for the relevant programme per quarter, the Department has not submitted a written plan on the project implementation, nor has it presented Quarterly Reports on this project.

The Department should submit quarterly reports on the progress of projects linked with the following grants:

  • -PTOG
  • -PRMG
  • -PTNG
  • -Rural Road Asset Management Systems Grant (RRAMS)
  • -Coal Haulage Grant
  • -Disaster Management Grant

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

The Department has not done quarterly reports on progress of projects linked to the grants.

The Department should submit quarterly reports on progress regarding the Moloto Corridor Project and how this affects both the Road and Rail Programmes.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.
 

The Department has not done quarterly reports on the Moloto Corridor Project.

 

The Department indicated, in the Committee meeting of 3 July 2019 that, at the convenience of the Committee, a briefing can be arranged for a full discussion on all rail related matters, including the Moloto Corridor, however, this has not occurred.

The Department should submit a comprehensive briefing on the progress made to address and/or implement recommendations emanating from Committee Oversight Reports during the year.

Written briefing from the Department.

15 January 2020.

Not reported on in the Annual Report.

 

The Department has not submitted comprehensive briefings on progress made to address Committee Oversight Report recommendations.

The Department should submit quarterly reports on strategies to address the financial health status of:

  • -C-BRTA
  • -RAF
  • -PRSA
  • -SANRAL
  • -PRASA

Written plans from the Department of Transport and:

 

  • -C-BRTA
  • -RAF
  • -PRSA
  • -SANRAL
  • -PRASA

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

The Department has not done quarterly briefings on the financial health status of its entities.

 

 

The Department with the C-BRTA should submit quarterly progress reports on progress regarding:

  • The implementation of the 1996 Southern African Development Community (SADC) Protocol on Transport, Communications and Meteorology;
  • The resolution of the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA.

Not reported on in the Annual Report.

 

Quarterly reports on these C-BRTA matters have not been submitted or made to the Committee.

 

 

The Department with PRASA should submit a comprehensive briefing on the Werksmans contract from conclusion of the contract in 2015 to the current status of work performed by the firm and include the total expenditure to date relating to the contract in question as well as the progress on resolving the matters raised in the report.

Written briefing from the Department.

15 January 2020.

Not reported on in the Annual Report.

 

No recent briefing on the Werksmans contract was received nor was the written briefing received per the requested BRRR deadline.

The Department, together with PRASA should submit a comprehensive briefing on:

- the Progress made due to interventions from the operations of the PRASA War Room;

- the Get on Track Rescue Plan it intends to implement, as well as how this will address the shortages of train sets currently online and how they intend to increase ridership;

- The plan in place to ensure that PRASA complies with the RSR directives and the Court Order regarding these;

- The plan in place to phase out manual authorisation or how they will ensure that the use of manual authorisation will not lead to another train collision or derailment;

- The plan to address the concerns raised regarding Autopax.

Written briefing from the Department.

15 January 2020.

Not reported on in the Annual Report.

 

Although PRASA does report in reply to Committee questions during engagements where the rescue plan issue is raised, the comprehensive written report as requested from the Department has not been submitted by the reporting date.

 

During the year under review, following the appointment of the Administrator at the entity, the War Room was discontinued and the Administrator’s 12-month plan was implemented. A briefing on this was received by the Committee.

The Department, together with the DLCA must submit a comprehensive plan on how the concerns regarding the card production machine is being addressed.

Written plan from the Department.

15 January 2020.

Not reported on in the Annual Report.

 

No written report was received by the deadline.

The Department, together with SANRAL must submit a comprehensive plan on managing the fiscal constraints placed on the entity due to the e-tolling GFIP concerns raised.

Written plan from the Department.

15 January 2020.

Not reported on in the Annual Report.

 

No written report was received by the deadline.

 

The GFIP project and its funding remains a concern for the Committee as well as the AGSA as it directly affects the entity’s financial status.

 

No Cabinet decision on this issue has been reached or reported on by the Department.

 

 

7.         OBSERVATIONS

 

7.1 Tabling and Reasons for delays or non-tabling of Annual Reports

 

Due to the impact of Covid-19 lockdown restrictions on the finalisation of the audit of the Department and its entities, there was an extension granted for the late tabling of annual reports until 16 November 2020. By 16 November 2020, the annual reports of the Department, as well as five (5) of the entities and the SASAR/NSRI reporthad been tabled in Parliament.

By 20 November 2020, the remainder of the entities and subsidiaries, except RTIA and SAMSA, had tabled their reports. At the time of compiling the report, the Minister had not submitted a letter to explain the delay in tabling the SAMSA Annual Report, despite the indication from the AGSA that the audit had been finalised. The Minister did table the following reasons for the delay in tabling the RTIA Annual Report:

I acknowledge my responsibility for tabling of the Annual Report of RTIA for the financial year ended 31 March 2020 in line with section 65(1)(a) of the Public Finance Management Act of 1 of 1999. However, RTIA has submitted that it facing challenges in so far as the finalization of the Audited Financial Statement and Annual reports by the deadline 16 November 2020.

The main reasons that impacted on the finalization of the Audited Annual Financial Statements and Annual Reports are the following with the Auditor General (AGSA):

  • The disclosure of a suspense account under payable in the annual financial statements submitted on 31 July that needed to be corrected. There were a number of engagements and follow-ups on this item.
  • Supporting documents in respect payments made iro a contact having to be sourced from the service provider.
  • Numerous engagements were held to obtain the National Treasury letters of approval for the Extension of four contracts. When these were submitted, we were unable to trace these to the Register kept by National Treasury. This has resulted in follow-ups being done with National Treasury to determine if these are valid approvals or not.
  • The AGSA needs to ensure that all our processes are concluded on and that we have addressed all the risks in line with the auditing standards before we issue the Audit Report.

Based on the above, I humbly request for an extension to table the Audited Annual Financial Statements for the financial year ended 31 March 2020 by no later than 15 December 2020. I trust that you will the above to be in good order.”

 

The Committee does not accept the reasons provided for the late tabling of the RTIA Annual Report, and is disappointed at the failure of the Minister to indicate why the SAMSA Annual Report was not tabled by the extended due date despite the indication from the AGSA that the audit of the annual financial statements of SAMSA was finalised.The RTIA and SAMSA 2019/20annual reports remained outstanding at the time of the adoption of this report by the Committee.

 

7.2 Opinions expressed by the AGSA: Audit Outcomes for the Transport Portfolio

 

7.2.1 Summary of AGSA findings for the Department specifically

 

During the period under review, the Department received an unqualified audit opinion with findings. However, with regard to only the Department, the Committee noted that the AGSA made findings on the following:[69]

 

7.2.1.1 Restatement of corresponding figures

 

As disclosed in notes 36 and 37 to the financial statements, the corresponding figures for 31 March 2019 were restated as a result of an error in the financial statements of the Department at 31 March 2020, and for the year ended, 31 March 2020.

 

7.2.1.2 Irregular expenditure

 

The Department incurred irregular expenditure as a result of officials not always following the prescribed procurement processes.

 

The AGSA found that the Department had not taken effective and appropriate steps to prevent irregular expenditure of R5 164 000, as disclosed in note 26 to the annual financial statements, as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1.

 

With regard to the failure to take effective steps to prevent this irregular expenditure, this is a repeat finding.

 

7.2.1.3 Annual Financial Statements and Annual Performance Report

 

The AGSA found that the financial statements submitted for auditing had not been prepared in accordance with the prescribed financial reporting framework, as required by section 40(1)(a) of the PFMA.[70]

 

Material misstatement in the comparative figures for the principal-agent arrangements disclosure note, identified by the auditors in the submitted financial statements, was corrected through a prior period error adjustment, resulting in the financial statements receiving an unqualified opinion.

 

7.2.1.4 Procurement and Contract Management

 

Bid documentation for the procurement of commodities designated for local content and production did not stipulate the minimum threshold for local production and content, as required by the 2017 Preferential Procurement Regulation 8(2).[71]

 

 

7.2.1.5 Financial and Performance Management

 

The AGSA found that management had not performed adequate reviews to ensure that the submitted financial statements were accurate and adhere to the applicable financial reporting framework, resulting in a material amendment to the annual financial statements relating to principal-agent arrangements disclosure.[72]

 

Management did not adequately review and monitor compliance with the PFMA and Treasury Regulations to ensure compliance with procurement processes and to prevent incurring irregular expenditure.

 

 

7.2.1.6 Expenditure Management

 

The AGSA found that the Department had not taken effective and appropriate steps to prevent irregular expenditure amounting to R5.2 million, as required by section 38(1)(c)(ii) of the PFMA and Treasury Regulation 9.1.1.[73] The Department regressed in this area because in 2018/19, the AGSA found that it had not taken effective and appropriate steps to prevent irregular expenditure to the tune of R1.2 million.[74]

 

7.2.1.7 Investigations

 

The AGSA found that three internal investigations into allegations concerning supply chain management matters were still underway at the time of auditing. The outcomes are expected in the financial year ending 31 March 2021.[75]

 

 

7.2.2 AGSA findings for the entire Transport portfolio

 

TheCommittee noted thefollowing views expressed by the AGSA regarding the audit outcomes of the Transport portfolio:

 

  • Overview:
    • The audit outcomes of the portfolio improved slightly compared to the prior year;
    • PRASA remained the same with a disclaimer due to significant material misstatements in the financial statements and limitation of scope imposed;
    • SAMSA remained the same with a qualified audit opinion as ithad addressed some prior year qualification paragraphs, but did not address all to avoid a qualification;
    • SACAA, RAF and DLCA  improved from the prior year by implementing action plans to address the internal control weaknesses reported in the previous year, resulting in these entities receiving an unqualified audit opinion with no findings;
    • C-BRTA sustained its unqualified audit opinion with no findings;
    • RTMC regressed from unqualified audit opinion with no findings to unqualified with findings due to material misstatements in AFS;
    • RTIA was/is outstanding due to some critical technical issues that were/are still being engaged on with management.

 

  • Concerns:
    • The overall Transport portfolio continues to have challenges with effective implementation of controls in the majority of auditees. This is an indication of a lack of financial discipline, the deliberate lack of compliance with legislation and lack of consequence management. Management needs to address internal controls and significant audit risks to improve and sustain audit outcomes.
    • The audit outcomes for the Department have remained unchanged for the past three years as unqualified audit opinion with findings. The Department should monitor the audit action plan to ensure that it achieves an unqualified opinion without significant findings.
    • SANRAL – The decision on future funding model for GFIP is still not yet finalised. The delays in the finalisation of the GFIP matter has negatively affected the financial sustainability of SANRAL.
    • SAMSA - The overall control environment at the entity requires intervention to improve audit outcomes. There was no adequate consequence management and action plans to address non-compliance and financial statements related findings. We have noted some improvement in commitments and irregular expenditure that had been qualified in the previous year. It is critical that the appointment of the Chief Executive Officer (CEO) is fast tracked to ensure that there is accountability.
    • PRASA has once again received a disclaimer of opinion for the second year in a row due to material misstatements in the financial statements and limitation of scope. Governance challenges have continued in the 2019/20 financial year, with the removal of the Board and the appointment of the administrator which was set aside by the High Court after year end. PRASA’s failing infrastructure, together with the repeated incidents of accidents, theft, vandalism, delays and security issues continued to impact on both rail commuters and the ability of the Agency to effectively discharge its mandate. The entity’s service offering to rail commuters is diminishing at alarming levels which is evident by the passenger numbers being at its lowest level since 2012/13 financial year.
    • PRASA received 10 new trains during 2019/20 financial year, while the cumulative number of trains received is still behind schedule. The new trains are still only permitted to run on the Pretoria-Pienaarspoort Corridor. The lack of infrastructure development in respect of the modernisation of depots and stations negatively impacts on the deployment of new trains across the country wide rail network. The delays are caused by a number of SCM deficiencies and since the roll out of the new train-sets is dependent on these upgrades, it is important that these are attended to as a matter of urgency. Capital spend in relation to the capital subsidies received remains significantly low.
    • Financial viability and sustainability of the subsidiaries of PRASA remains a concern. The financial position of both subsidiaries has regressed further. Both subsidiaries are unable to sustain their operations and require ongoing financial assistance from PRASA.
    • At PRASA, material non-compliance findings were raised on a number of subject matters, i.e. annual financial statements, expenditure management, procurement and contract management as well as consequence management. Compliance monitoring deficiencies previously reported remained unaddressed. The entity has multiple significant issues, including ineffective internal controls. These deficiencies require urgent attention in order to improve the stagnant audit outcome. The Board must focus its attention on bringing stability to the entity by ensuring that key positions are filled.
    • PRASA is constantly under threat from a security perspective with the pillaging and destruction of the rail infrastructure that is continuing unabated. Not only are the trains continuously being vandalised and burnt, rail network infrastructure has also been under consistent attack, stripped of copper cables, railway tracks, signalling equipment and overhead electricity cables and its facilities are being vandalised. This pillaging escalated during the lockdown period with a number of facilities and rail network assets being completely damaged or pilfered rendering some parts of the network unusable until alternate arrangements are made. Despite a number of security related targets being included as part of the APR including the development and commencement of a plan for creating internal security capability, the implementation of armoured vehicles for critical security hotspots, implement the national security drones’ operation tender and commence implementation of the integrated control rooms in line with the C14STAR model none of these security related targets were achieved. The reasons cited by management were that these were due to SCM deficiencies.
    • At PRASA, record-keeping issues previously reported remained unaddressed, with an incomplete submission of annual financial statements on 31 July 2020, and a number of limitations of scope findings across a number of audit areas. Inadequate governance records have again been highlighted as having a significant impact on the audit, as certain procurement approvals could not be confirmed in line with the delegations and key decisions taken could not be confirmed. This included resolutions taken relating to the subsidiaries.
    • Repeat areas of concern at PRASA in the annual financial statements include property, plant and equipment, capital grants, irregular, fruitless and wasteful expenditure and other disclosure items. These are all repeat findings where deficiencies have not been addressed. Deficiencies previously noted over asset management have remained unaddressed in respect of the lack of a credible asset register, inadequate records to support disclosed (WIP) projects and inadequate records relating to network assets. The quality of the useful lives and impairment assessment of the assets is a significant concern. While there are significant indications of assets across all classes being significantly impaired, no impairment losses have been recognised, while the state of disrepair of the assets is evident in terms of the number of operational corridors, as well as the reasons for the train delays and cancellations.

 

- Disregard for compliance with legislation: Top five non-compliance areas:

  • Quality of financial statements (the Department, RTMC, SAMSA and PRASA)
  • Management of procurement and contracts – local content (the Department, PRSA and PRASA)
  • Management of procurement and contracts - Declarations of interest not submitted by providers (PRSA, PRASA and SAMSA)
  • Prevention of irregular, fruitless and wasteful expenditure (the Department, SAMSA, ACSA, PRASA, RSR, PRSA and ATNS)
  • Consequence Management (SAMSA, SANRAL, PRASA and PRSA).

 

- Financial Health Concerns:

  • Material uncertainty exists whether three of the auditees can continue to operate in future (SANRAL, RAF and PRASA subsidiary Autopax)
  • Revenue Management (Of concern): Collection of debt - inability to collect monies owed and the resultant high impairment of receivables (i.e. E-toll fees) for SANRAL This is an indication of challenges in the collection of outstanding debt as they become due, which exposes the entity to liquidity risk The entity should therefore continue to hold engagements with relevant stakeholders to find a permanent solution. SANRAL’s debtor’s impairment provision as a percentage of accounts receivable is still very high and increased from 90.6% to 94.8% which indicates that the recoverability of a significant portion of trade and other receivables is in doubt.
  • Assets and liability management (Intervention required): The financial performance of PRASA and Group has slightly improved in the current financial year compared to prior years’ restated figures that show a profit (material misstatement noted). This is evidenced by an increase in profitability from a loss of R 1.9 billion and R 2.1 billion for the entity and Group respectively, in the previous financial period to a profit of R 2.2 billion and R 2.1 billion for the entity and group respectively. This was as a result of the additional grant subsidy they received. It should be noted that PRASA is disclaimed and therefore the numbers may not be reliable. Loans to Autopax for the year were in excess of R 236 million. Autopax is insolvent and the auditee is unable to prove its going concern status. At RAF, the deficit of R 59.6 billion and increase in accumulated deficit of R 322 billion as at 31 March 2020 is due to the continued efforts of the RAF to complete and settle more claims.
  • Cash management (Intervention required): Negative cash balance - possible cash flow constraints resulting in a higher risk in the event of financial set-backs and the ability of the auditee to meet its obligations to provide basic services and its financial commitments will be compromised (the Department). This is owing to historic unauthorised expenditure.

 

- Unauthorised expenditure decrease over 2 years:

  • No unauthorised expenditure was incurred in 2019/20.
  • The Department incurred unauthorised expenditure of R980.4 million  in the previous financial year as expenditure that was incurred but not in accordance with the vote of the programme (Road Transport). The matter is still being investigated.

 

- Fruitless and wasteful expenditure decrease over 2 years:

  • R81.1 million fruitless and wasteful expenditure was incurred in the 2019/20 financial year, only R4 000 is expenditure relating to prior years.
  • PRASA was the largest contributor, with fruitless and wasteful expenditure amounting to R48.3 million identified in the current year related to interest and penalties (R34.4 million) and incorrect rate used for overtime (R12.4 million).
  • RAF (R15.3 million) linked to claims related expenditure.
  • ACSA (R16 million) linked to penalties on revised tax liability resulting from SARS audits.

 

- Irregular expenditure decrease over 2 years:

  • R2 376 million irregular expenditure was incurred in the 2019/20 financial year. R2 340 million represents non-compliance in 2019/20. R36.2 million is expenditure relating to prior year non-compliance identified in the current year.
  • PRASA, SANRAL and ACSA were the main contributors to irregular expenditure.
  • PRASA (R1 325 million) - Competitive bidding not followed (R625 million), procurement not in accordance with Preferential Procurement Policy Framework Act (PPPFA) and SCM policy (R401 million), contract price exceeded (R195 million), payment without contract (R40 million) and purchase of goods and services through splitting of quotes instead of a tendering process (R65 million).
  • SANRAL (R342 million) - Contract price exceeded (R173.7 million), expenditure not approved by duly delegated authority (R81 million), Contracts not advertised for at least five working days on CIDB website (R40.8 million) and non-compliance with other procurement process requirements (R46.5 million).
  • ACSA (R560 million) - The largest portion of this relates to non-compliance with PPPFA (R536.7 million).

 

- Most common findings on supply chain management:

  • Not able to audit procurement of R122.3 million due to missing or incomplete information.
  • Payments made in excess of contract price to the amount of R368.7 million.
  • Uncompetitive and unfair procurement processes at 57% of auditees.
  • Local content minimum threshold for local production not adhered to by three auditees.

 

- The AGSA expanded mandate:

  • AGSA indicated the following regarding the implementation of its expanded mandate (Public Audit Act amendments):
    • Commencement date of the amendments was proclaimed by the President as 1 April 2019.
    • 2018/19: For the Audits of 2018/19,it was implemented as follows based on the audit outcomes of PRASA:
      • Typeof material irregularity is a material non-compliance (which would be reported in the audit report) that resulted in (or is likely to result in) a material financial loss.
      • PRASA was selected for the phased-in implementation based on the following selection criteria:
        • Latest audit outcome not clean or unqualified with findings –except if there was a material finding on prevention or follow-up of irregular expenditure.
        • High irregular expenditure over the last three years.
        • Sufficient coverage across spheres of Government and provinces.
        • Material irregularities identified (PRASA):
          • Unfair procurement process for the purchase of locomotives.
          • Competitive bidding process not followed in the award relating to:

•Provision of bus services in the Western Cape.

•Provision of surveillance services (drones).

•Provision of security services:

  • Investigation to be initiated –To be followed up in 2019-20 audit.
  • Unfair procurement process followed in the appointment of signalling contractors and unfair award for the control of vegetation:
    • Investigation to be initiated –To be followed up in 2019-20 audit.
    • Competitive bidding process not followed in the appointment of general overhaul and upgrade contractors:
    • Investigation by the Special Investigations Unit(SIU) –To be followed up in 2019-20 audit.
  • Uncompetitive process followed in the award relating to:

•Supply and delivery of signalling equipment.

•Repair and replacement of signalling equipment:

  • Investigation to be initiated –See Status report below.
  • Recommendations:
    • Appropriate action should be taken to ensure the second phase of the investigation is concluded.
    • Effective and appropriate disciplinary steps should be taken against employees found to be responsible.
    • Status - With regard to these prior year material irregularities, at PRASA nine (9) material irregularities were reported of which follow-up on the matters in the current year revealed that the SIU has been commissioned to investigate these matters as of the 1stt of July 2020, except for the Swifambo matter which was commissioned as of the 1st of August 2020. The investigation is expected to run for a duration of 6 months.
    • 2019/20: To allow for establishing capacity and processes, a phased-in approach for identifying material irregularities was followed in 2019/20
    • PRASA was selected for implementation in the prior year and nine (9) material irregularities were raised and reported on. In the current year, three (3) entities in the Transport portfolio have been identified for the implementation of phase two (2), namely PRASA, SANRAL and ACSA. The audit teams are still busy assessing if there are any potential material irregularities for the current year.

 

 

7.3 Committee Observations following the engagement with the AGSA

 

The AGSA indicated that the Transport portfolio had shown a slight improvement in performance and this was evident in the improved audit outcomes of the DLCA, SACAA and RAF to unqualified opinion with no findings along with the C-BRTA receiving its fifth unqualified opinion with no findings. The Department,for the fourth year,received an unqualified opinion with findings, which also contained a number of repeat findings; the regression in audit opinion from unqualified with no material findings to an opinion of unqualified with findings of the entitiesRTMC and the non-tabling of RTIA showed a regression in performance.

 

The Department and its entities received the following findings:

  • Unqualified Audit with no material findings (also referred to as a Clean Audit) – C-BRTA, DLCA, SACAA, RAF and Intersite;
  • Unqualified with findings–the Department, RTMC, ACSA, SANRAL, RSR, PRSA and ATNS;
  • Qualified with findings – SAMSA (did not table in time despite audit findings having been presented by the AGSA);
  • Disclaimer – PRASA and Autopax;
  • Failure to submit and findings still outstanding – RTIA.

 

The Committee was pleased to note that the C-BRTA had continued to retain its unqualified audits with no material findings (clean audit), despite the challenges it they faces.The mostsignificant of the challenges that remain is the one around theunsustainable funding regime of the entity, and that the impasse on the issuance of passenger permitsfor the RSA/Lesotho route remains unresolved.

 

The Committee welcomed the improved audit findings from unqualified with material findings, to unqualified with no material findings (clean audit) from SACAA, RAF and Intersite.

 

The Committee expressed concern over the audit outcome of SAMSA as being a qualified audit for the fourth year in a row, as well as the fact that the entity failed to table its annual report to Parliament for consideration within the extended deadline.

 

Of utmost concern to the Committee, was the regression of PRASA for a second year in a row as it received yet another disclaimer, as well as the poor performance of its subsidiary Autopax of a disclaimer opinion.The Committee welcomed the improvement in the audit outcome of Intersite from a qualified audit opinion to that of unqualified without findings, however, uncertainty remains regarding when the property and investment function which is underway at PRASA as part of a restructuring process at group level will be finalised and this impacts on the subsidiary. This, along with another matter raised by the AGSA, indicate that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern.

 

Although the achievement of prerequisite performance targets is to be applauded, the Committee was of the view that there remained insufficient linkages between the meeting of targets and an actual or tangible improvement in service delivery standards to all transport stakeholders. It was also important to note that due to the limitations on the audit process imposed due to Covid-19 lockdown restrictions, the AGSA did not audit the same number of outcomes per auditee, as in previous years. For this reason, the Committee continues to urge that the Department and its entities move towards the development of key performance targets that would have tangible and measurable results that show actual and/or improved service delivery to all transport stakeholders.

 

SACAA is commended for once again being an entity of the Department that managed to achieve all of its performance targets for the financial year under review.PRSA is the only other entity that managed to achieve all its planned targets for the year under review.

 

The Committee expressed concern that the RTIA did not submit its financial statements for audit within the required extended timeframe, and that despite having completed its audit, that the Department failed to table the SAMSA Annual Report within the extended timeframeto Parliament for consideration during the BRRR process.

 

For the fourthconsecutive year, the Committee notes a failure by the Department to ensure that all of its entities table their annual reports on time and that the Committee was once more unable to engage and perform its oversight function fully over two entities that failed to table within the BRRR process. Although the annual reports of these entities could not be engaged on, the Committee notedthe comments by the AGSA on the audit outcomes of SAMSA as noted, but did not accept the reasons provided by the AGSA and the Minister on the delays in the finalisation and tabling of the RTIA Annual Report.

 

Although the Committee received the SASAR/NSRI Annual Report, these are not generally audited as separate entities or regarded as entities of the Department as their expenditure and funding is regarded as a line item under the Department’s budget that is audited as part of the Department’s Annual Financial Statements.

 

The top five areas of material non-compliance remain the failure to prevent unauthorised, irregular and fruitless and wasteful expenditure, lack of consequence management, non-compliance with legislation and regulations when it comes to procurement and contract management related to local content and declarations of interest not submitted by providers, as well as material misstatements to financial statements submitted for audit.

 

From the presentations and engagements, the Committee noted those areas where improvements were evident, however, concluded that the Department and its entities had not been able to clear repeat findings through implementing all recommendations and corrective measures proposed by the AGSA and those that the Committee has made since the start of the current term.

 

The Department must focus more attention on ensuring that action plans are implemented to address prior year audit findings and that sustainable solutions are implemented to prevent a recurrence of findings in the area of compliance with key applicable legislation and financial reporting. Vacancies and instability of management at the Department,as well as its entities persist and continue to pose significant challenges regarding operations and the creation of a control environment to ensure that basic financial, performance reporting and compliance with laws and regulations are enforced.

 

The Committee noted that during the year under review the Department reported[76] that it made use of 30 individual consultants over 22 projects, for a total of 6820 working days at a total cost of R66 143 867.86. The Department lists the various projects in which these consultants were used, as well as the contract cost of these. It further indicates how many of these consultants come from Historically Disadvantaged Individuals. What the Department failed to report on was whether these agreements included the requirement to ensure that skills transfer to Department or entity staff were delivered during the contracts with the consultants.

 

The accountability for Government spending at State-Owned Entities (SOEs)continues to be an area receiving attention in the public, as Government funds and guarantees are being used to sustain some of the SOEs.The audit outcomes of SOEs continued to regress – most often as a result of inadequate controls, monitoring and oversight. Instability at Board and executive level played a role in the outcomes of SOEs, and the Department and its entities were not spared this. Entities like ACSA and SANRAL have the added pressure of financial ratings agencies downgrading the country and the specific entities investment ratings, as was done in March 2020 with a further downgrade in November 2020 prior to finalisation of this report. The level of oversight by the Departmentover the entities reporting to it remained a concern for the Committee throughout all budget reviews over the past six years and the Committee cannot stress this enough -the oversightbranch within the Department must improve its work towardsachieving a greater level of oversight over its entities.

 

The Committee noted during the 2019 BRRR that the AGSA was making use of its extended mandate to seek to address the issues raised for PRASA during the 2018/19 financial year u. PRASA was selected for implementation in the prior year and nine (9)material irregularities were raised. During its presentation to the Committee in this year’s BRRR engagements, the AGSA reported the following progress:

“With regards to these prior year material irregularities, at PRASA nine (9) material irregularities were reported of which follow up on the matters in the current year revealed that the SIU has been commissioned to investigate these matters as of 1st of July 2020 except for the Swifambo matter which was commissioned as of 1st of August 2020. The investigation is expected to run for a duration of 6 months.”

 

The Committee further noted that the AGSA will be implementing a phased-in approach of its extended mandate as it indicated that, during the current year under review, three (3) entities in the Transport portfolio have beenidentified for the implementation of phase 2, namely PRASA, SANRAL and ACSA. The audit teams were still busy assessing if there were any potential material irregularities for the currentyear. Although the Committee welcomes the efforts by the AGSA to seek to resolve these material irregularities within the entities’ reported annual financial statements, it has not seen expression of the efforts from last year’s intervention.

 

It cannot be stressed enough that the strategic targets and key performance areas set by the Department, its entities and implementors or recipients of all grants allocated under the Transport Vote must be linked to actual tangible service delivery to the citizens of the country. The Committee, in its oversight over the Department, has continued to request the Minister to ensure that proper monitoring and oversight is performed over all grant allocation projects in order to see to it that the actual performance targets achieved through transfers translate into actual service delivery on the ground and value for money.

 

The irregular expenditure does not necessarily represent wastage or means that fraud was committed – this needs to be confirmed through investigations to be conducted by the accounting officer (also referred to as the CEO) or accounting authority (Board) – but losses could already have arisen or may still arise if follow-up investigations are not concluded timeously or initiated. It is difficult to remedy SCM inefficiencies when a thorough investigation has not been completed to assist in identifying the weaknesses and inefficiencies in the system. The track record of auditees in dealing with irregular expenditure and ensuring that there is accountabilityor that investigations are finalised timeously remains poor. The decrease in irregular expenditure for the portfolio is noted, however, irregular expenditure still occurs and it can be attributed overall to continued weaknesses in the SCM directorates in the application of SCM policy and National Treasury Regulations in this regard. The most common findings for the past sixyears related to deviations from the prescribed procurement processes.

 

More frustrating is that the Committee and its predecessors recommended the need for the Department and its entities to ensure further and continued training of SCM staff – the Department has listed the exact same interventions to remedy SCM inefficiencies and prevent irregular expenditure as it has for the past 4 years and this is clearly insufficient as there was once more findings of irregular expenditure per the audit outcome. Some credit must be given to PRASA as the only entity thus far admitting to a lack of skills and experience of their staff in SCM and for having presented a plan to deal with this. The Committee remains resolute that there is a need for the entire Transport portfolio to strengthen its SCM staff through training and equipping them sufficiently, as well as implementing SCM Policy reviews to strengthen the internal SCM compliance further.

 

The Committee continues to impress upon the Department and its entities that all investigations must be finalised within a reasonable timeframe, and that all contraventions of legislation and regulations must be acted upon through disciplinary action. In instances where employees may have resigned, the Committee persists in its view that the Department and its entities must not stop there, but should continue with steps to retrieve losses from those employees and, where appropriate, follow the procedures laid out in the PFMA for possible criminal prosecution.

 

The Preferential Procurement Regulations make provision for the promotion of local production and content. These regulations are aimed at supporting socio-economic transformation. The Committee continues to highlight the need for the Department, as well as its entities to adhere to the Preferential Procurement Regulations throughout their engagements, as well as working towards the achievement of increased local content and radical economic transformation in their respective fields of operation.

 

 

7.4 Committee Observations with specific reference to entities

 

The followingextracts show concerns noted from the annual reports and observations that were made:

 

7.4.1 ACSA

 

The overall audit outcome of ACSA has remained stagnant compared to the prior years. The entity received a financially unqualified audit opinion with material findings in compliance with legislation,as well as concerns regarding material impairments with reference to investment in associates and the ongoing legal matter regarding the buy-back of the Company’s shares. The entity once more failed to take appropriate steps to prevent irregular expenditure amounting to R559 064 000 as disclosed in note G.13 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA. The majority of the irregular expenditure disclosed in the financial statements was caused by non-compliance with SCM prescripts/legislation that led to irregular expenditure. Further hereto, effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R16 011 000, as disclosed in note G.14 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA. The majority of the fruitless and wastefulexpenditure was caused by penalties on revised tax liability resulting from SARS audits.

 

The entity met six (6) out of the nine (9) Key Performance Indicator (KPI) targets set for the year under review.

 

The Group’s performance in the first three quarters reflectsthe difficult macroeconomic environment, with a drop inearnings before interest, tax, depreciation and amortisation(EBITDA) as a result of increased costs emanating fromregulatory amendments, personnel costs and heightenedsecurity measures implemented during the year. A vitalachievement during this period was the R210 millionreduction in debt, which enhanced the Group’s resilience.On 27 March 2020, Moody’s Investors Service (Moody’s)downgraded South Africa from an investment-graderating to Ba1, maintaining a negative outlook, spurred bythe country’s weak economy and unreliable power sector.Fitch Ratings Inc. later followed suit, retaining a negativeoutlook given the ongoing risks, particularly in the lightof the Covid-19 pandemic. Moody’s downgrade of thesovereign rating led to a consequential downgrade of theGroup’s global scale rating to sub-investment grade of Ba1from Baa3, while the national scale rating was downgradedto Aa2.za from Aa1.za. Moody’s has further placed theGroup under review for an additional downgrade based onthe global economic outlook and the anticipated drasticdecline of passenger traffic in the current year with anensuing drop in earnings that will impact liquidity positionand financial covenants negatively. Management is focusedon strengthening the Group’s liquidity and restoring itsfinancial profile in order to avoid a downgrade.

 

During the year under review, its governance structureswere strengthened and management stability restored withthe appointment of new Board members and a permanentCEO and Chief Financial Officer (CFO).

 

Revenue for the year was down 0.03% to R7.12 billion,reflecting the impact of a tough operating environment,resulting in a 1.7% drop aeronautical revenue. A 1.9%increase in non-aeronautical revenue offset the mutedaeronautical income. However, the overall decrease in

revenue combined with increased operating costs andconsiderably higher employee expenses, eroded earnings. The entity’s  KPI’s of ROE and ROCE are dependenton factors such as traffic volumes, commercial activity fornon-aeronautical revenue and cost management and wastherefore subdued.ACSA achieved aprofit for the year of R1.2 billion, which is asignificant improvement on its R0.2 billionprofit in the previous financial year. This is,to a large extent, at odds with the underlyingoperational performance of the Company.Revenue of R7.12 billion was down comparedto R7.13 billion in the previous year, resultingin a drop in Earnings Before Interest TaxDepreciation and Amortisation to R2.6 billioncompared to R2.9 billion in 2018/19.Revenue decreased by 0.03% to R7.12 billion (2019: R7.13billion) for the year ending 31 March 2020.Employee costs increased 11% to R1.8 billion (2019: R1.6billion) in the current year, driven by a basic cost increase of20.0% due to annual salary escalation, headcount growthand the staff transport cost, which increased by 946%to R117 million (2019: R11 million). Operating costs increased by 2% to R2.64 billion (2019:R2.58 million). The expenditure for the year decreased by 18.6%to R273 million (2019: R336 million) due to successful ratesappeals for the Cape Town International Airport, King ShakaInternational Airport and O.R Tambo International Airport. ACSA capital projects reflected a R1.3 billion(2019: R1.0 billion) spent during the year.The impairment expense on trade and other receivablesincreased by 398.1% to R270 million (2019: R54 million).The investment property portfolio increased by 10.3%to R7.7 billion (2019: R7.0 billion), mainly as a result offair value gains of R721 million (2019: R134 million loss)reflecting the strength of property portfolio rental income,which has remained largely stable. ACSA made no further equity injections into its concessionsduring the year under review. A cautionary was issued inFebruary 2019 following an offer for the 10% equity stakein MIAL, stating that the Company is still pursuing theopportunity to sell its stake.The GRU concession has not been profitable since itssecond year of business, the 2014 financial year. Thecumulative losses have led to a total reduction of the valuerecognised by ACSA at yearend to nil (2019: R0, restated from R848 million).

 

Despite the challenging environment, ACSA recorded a 3.3% total passengergrowth, as at year-to-date February 2020, comprising ofmuted growth of 0.3% for cross border traffic and 4.7% fordomestic travel. However, the positive growth trajectoryrecorded in the 11 months of the financial year came to anabrupt halt as the Covid-19 pandemic sent shock wavesthrough the global aviation industry. The remaining monthwas marred by panic relating to travel and almost a weekof a hard lockdown in the country. This decimated thepassenger growth for the financial year, to a total passengerthroughput contraction of 0.9%. The contractionswere mainly observed on the international and regionaltraffic sides, which recorded decreases of 3.5% and 5.7%respectively, with the domestic passenger traffic remainingin positive territory with a 0.4% growth.

 

In previous years, its non-aeronautical revenueperformance did not reach its full potential. In response, the entity shifted its operating model towards a greater inclusionof non-aeronautical revenue. Leading up to the lastquarter, its plans to grow this revenue were yielding goodresults. Compared to the previous year, commercial andretail revenues were up 4% and 1% respectively. Annualescalations pushed car rental and property revenues up4% and 9% respectively. Advertising recorded a 10%increase, although this still fell short of targets due to adelay in awarding tenders, which resulted in cancellationsand reduced rates. Despite the increases, retail and parkingperformance were below expectations. The onset of theCovid-19 pandemic caused its earnings to take a dramaticdownturn and this trend is set to continue in the current 2020/21 financial year.

 

ACSA’s non-aeronautical operations, including commercialactivities and cargo handling, performed well despite thechallenges posed by Covid-19 in the fourth quarter. While it was pleased with the 1.9% growth in non-aeronautical revenuetotalling R3.4 billion – which is above its target of R3.3 billion– ACSA remains mindful that this positive momentum will be severelyhampered by the impacts of Covid-19 in the current 2020/21 financial year.

 

ACSA’s equity investment in Guarulhos International Airporthas not returned to profitability. In the year ahead, ACSA intends to support this equity investments’ return tostability. The sale of Mumbai International Airport Limited(MIAL) is still underway and ACSA is hoping to finalise this inthe year ahead.

 

In transforming its supplier base, ACSA has developed andadopted an economic transformation strategy, which highlightskey initiatives relating to its seven sector strategies.

Accordingly, within advertising, car rental, retail, construction,information communication and technology, propertyand ground handling, ACSA support enterprise developmentand preferential procurement. In the year under review, it increased black business share of commercial revenuegenerated to 55.4% (FY2018/19: 54%).

 

The Committee welcomed the indication by ACSA that intensive training for employees adjudicating tenders had been provided and the SCM process had been digitised in an effort to improve document management for key SCM documents. It was also welcomed that, for the 2020/21 financial year, audit findings will be linked to performance management of all senior employees.The Committee also welcomed the appointment of a permanent CEO and CFO who commenced their duties on 1 February 2020 and 1 May 2020 respectively.

 

The Committee voiced its concern over the overall reduction in revenue collected by the entity during the year under review, especially since the impact of Covid-19 travel restrictions during the current 2020/21 financial year is predicted to see a further loss in revenue generation for the entity going forward.

 

The Committee voiced concerns regarding the progress of investments in concessions by ACSA. The Group made no further equity injections into its concessions. The entity should provide a full report to the Committee, by the end of January 2021, on the progress regarding the sale of its MIAL concession, as well as the way forward to deal with the continued loss in the Guarulhos International Airport concession.

 

 

7.4.2 SACAA

 

The entity achieved a 100% of its targets and the Committee welcomed the improved audit outcome of the entity back to an unqualified audit with no findings,from the unqualified audit with findings achieved last year.

 

Following the Covid-19 lockdown restrictions and travel bans from March 2020, it is important to note that the closing of borders,which extended beyond this reporting period, meant a halt ofaviation activities as SACAA was accustomed to, and this manifestedinto a negative impact on the SACAA’s financial well-being.Keeping in mind the subsequent post-financial-year developmentsaround Covid-19 in the country and across the globe, it becameapparent that the SACAA’s main revenue sources would be undertremendous pressure and that it had to rely on its financial reserves.A report released by the Airports Council International (ACI)stated that the reduction in global passenger traffic volumes asa result of the Covid-19 pandemic had accelerated from -6.9%in January 2020, with an average decline of 28.3% for the firstquarter of 2020, which is equivalent to a reduction of 620 millionpassengers.

 

For more than 30 years, South Africa has not recorded a fatalaccident involving a commercial scheduled flight, a record that SACAA strives to uphold for years to come. This record is due to the robustoversight initiatives and cooperation with the industry over theyears. However, in the General Aviation sector, despite the manyinitiatives implemented in the last six (6) years, such as the Cross-Functional Accident Reduction Plan (C-FARP) and annual safetyand security promotion campaigns, there were some incidentsrecorded. It is even more tragic that one such accident involvedthe SACAA aircraft that, unfortunately, claimed the lives of three (3) employees from the Flight Inspection Unit in January 2020.A closer look at the accidents indicates that fatal accidentsdecreased by 13% and fatalities by 5%. However, the overallnumber of accidents increased by 14%. A reduction in the numberof serious incidents by 1.8% is also reported in the detailed statisticsin the report.

 

SACAAclosed the fiscal year witha net operating surplus of R93 million, compared to a budgeteddeficit of R19.1 million. This resulted in a positive variance ofR112.1 million. The positive results are the net impact of a surplusof R93 million, arising mainly from the insurance proceeds of R43.9million less the scrapping of the Flight Inspection Unit aircraft andrelated calibration equipment worth R18.7 million.

 

Despite the Committee questioning whether the entity still required the grant from the Department in the 2019 BRRR, the Committee does note the drastic impact that Covid-19 travel bans have had and continue to have on the aviation industry and that this grant from the Department may still be needed in the wake of the pandemic impact on the industry.

 

The Committee remains of the view that SACAA should ensure that it obtains a new or lease a calibration aircraft urgently to ensure the continued operations at airports across the country.

 

 

7.4.3PRSA

 

For the second year in a row, the entity achieved 100% of its performance targets, however, it sustained an unqualified audit with findings.

 

The Ports Regulator approved a below inflation average increase on Port Authority tariffs of 0% for 2020/21. The Record of Decision was published on 29 November 2019.Significantly, cargo dues on export containers were reduced by -20% and many break bulk cargo dues were capped in support of the President’s economic stimulus imperatives.In addition, in support of economic development, the Regulator introduced an incentive for the registration of cargo carrying commercial vessels on the South African  flag. The growing number of ships taking up this opportunity will improve South Africa’s involvement in the maritime sector, increasing jobs, skills and supply chain opportunities for South Africans beyond our boundaries. The Regulator has also in the past ensured that all automotive industry cargo dues were equalised at the full 60% discounted level, enjoyed by only the largest automotive manufacturers. This reduced the cost of doing business for smaller South African auto manufacturers.

It has been six (6) years since the Ports Regulator published its first tariff methodology for 2015/16 to 2017/18, and in March, 2020 it published the third revised multi-year tariff methodology for the years 2021/22 to 2023/24. The entity has continued its open and public approach to its work, conducting a written public consultation process, and concluding with the hearing of presentations from interested parties in Durban on 5 February 2020, as the culmination of a Tariff Methodology consultation process that started in early September 2019.Another significant achievement was the development and publishing of South Africa’s first formal Methodology for the Valuation of the Regulatory Asset Base (RAB) of the National Ports Authority. The Regulator concluded that the Trended Original Cost (TOC) approach that ensures Financial Capital Maintenance will be the preferred valuationmethodology.

It must, however, be noted that whilst the full impact of the implementation of the Value of Assets combined with the uncertainty of the corporate structure of the National Port Authority (NPA) is still to be determined, the Regulator has opted to apply a partial implementation of the methodology for the 2020/21 tariff year.

The performance incentive system, WEGO, continues to be based on five key indicators that were consulted with the NPA and Port Consultative Committees in the major commercial ports.However, the 2020 ROD commences the measurement of land-side measures with the inclusion of baseline measurement of Truck Turnaround Time as a future KPI. The new WEGO system, which forms part of the new Tariff Methodology rewards year-on-year improvements in performance and penalisesdeteriorating performance, allows the Ports Authority to gain or lose up to 7,5% profit for up to 15% increase or decline on a proportional basis, with the Regulator annually revising the weightings of lower performing KPI’s upwards.

It is anticipated that the Ports Regulator will form the nucleus of a Single Transport Economic Regulator (“STER”). This requires the Regulator to better capacitate itself as it prepares for STER, which includes increasing staff in order to enhance the services rendered to the sector in areas of compliance and monitoring as well as greater scrutiny of the accounts of the regulated entity.The revised organogram when approved will require increase on the baseline funding. In response to this, the Regulator has requested the Department of Transport to fast track the parliamentary processes to approve the funding model proposals in the National Ports Amendment Bill.Necessary legislative gaps were identified regarding the funding model,enforcement powers and ancillary matters of the Ports Regulator. This resulted in the proposed amendments of the National Ports Act by the Regulator.The Secretariat engaged extensively with the Department, which is charged with the function of policy development.The Department, as the custodian of the National Ports Act, incorporated the agreed comments and proposed amendments into a Draft Amendment Bill(s) (Funding Model and Enforcement Powers) pursuant to the conducted consultation process.Significant progress was registered on the Draft Amendment Bills, but they have been put in abeyance to go through the necessary Cabinet and Parliamentary processes as a result of the anticipated and impending STER.During the year under review, the Department further published the Economic Regulation of Transport Bill (“ERT Bill”) which was eventually approved by Cabinet in November 2019 and introduced to Parliament to undergo the parliamentary legislative processes.Therefore, a need has been identified for the Ports Regulator to be capacitated urgently, as it is anticipated to form the core of the proposed Transport Economic Regulator, as envisaged in the ERT Bill.

The Committee remains of the view that there is a need for the country to have tariff pricing that would put the country on a more equal competitive footing with worldwide port tariffs.

The Committee also noted the continued dependence of the Regulator on the finalisation by the Department of the ERT Bill which has been delayed for a number of years, but which is currently before the Committee.

 

 

7.4.4C-BRTA

 

The C-BRTA continues with its exemplar audit outcome of an unqualified audit with no findings. However, the mostsignificant of the challenges that remain is one around theunsustainable funding regime, given that permit revenueis the single source of income for the Agency. To thisend, the Agency is in discussions with the Department on a permit fee determination model, whichwill form the basis for permit fee increases going forward,with baseline review performed every five (5) years in linewith the planning cycle or earlier when necessary.

 

The Agency increased permit tariffs by 4.7% for theyear under review. The total permit revenue for the yearwas more than the budget due to a slight increase inthe number of permits. In real terms, R204.352 millionin permit revenue was recorded for the Financial YearEnding March 2020. Penalty income recorded for thefinancial year is R48.414 million, bringing total revenueto R252.766 million, including interest and otherincome. The penalty revenue is used to fund the lawenforcement function being performed by the RTMC under aprincipal/agency relationship.

 

The Agency’s total expenditure for the Financial YearEnded March 2020 amounted to R231 519 million,consisting mainly of employee costs of R131.926 millionand general expenditure of R78 177 million. Employeecosts were R12.775 million below budget resulting fromthe implementation of cost-containment measures. Thesurplus of R27.711 million for the financial year will beretained to serve as a buffer for the Agency consideringthe impact of the Covid-19 pandemic.

 

During the reporting period, the Agency achieved 85.71%on pre-determined objectives, which is a regression when compared to the 2018/19 financial yearperformance level of 92.31%.

 

The Committee remains concerned that as at the end of March 2020, the Board had four (4) vacancies and was as such not constituted in line withthe provisions of the Cross-Border Road Transport Act(No. 4 of 1998). It must be pointed that the vacancieson the Board negatively affect the composition of theRegulatory Committee, which is a quasi-judicial structureestablished in terms of the Cross-Border Road TransportAct to adjudicate on permit applications. The fillingof the Board vacancies is a matter for the Minister and must be resolved urgently. It was also noted that theterm of the current Board ended at the end of April 2019and has been extended until further notice.

 

The Committee noted that the Agency continues to seek a lasting solution to the RSA/Lesotho impasse. In the year under review, the Agency participated in the National Ministerial Task Team (NMTT) which consists of representatives from the Department; theFree State Department of Police, Roads and Transport and the Lesotho Ministryof Public Works and Transport. The Provinces of KwaZulu-Natal and the EasternCape are also represented in the team. A draft bilateral agreement between theRepublic of South Africa and the Kingdom of Lesotho has been drafted and isunder consideration.The Committee welcomes the report by the entity that a Memorandum of Understanding (MoU) was enteredby the Free State South African National Taxi Council(SANTACO), Madiboho Taxi Forum (RSA/Lesothoborder-town operators), International Cross BorderTransport Organisation (ICBTO) and RSA/LesothoRoute Committee to regulate cross-border operationsbetween all inland towns of South Africa going to theKingdom of Lesotho. The implementation of the MoUanticipates a solution to the cross-border operationspassenger impasse.

 

The Committee noted that the Agency’s financial sustainability remains a keychallenge, as the Agency funds its operations through oneprimary stream being revenue generated from issuance ofpermits to South African operators.

 

The Committee once more stressed its concern regarding the failure by the Southern African Development Community (SADC) countries to fully implement the 1996 SADC Protocol on Transport, Communications and Meteorology (the Protocol) and bilateral agreements in regard to road transport.This negatively impacts the seamless movement of cross-border road transport and significantly contributes to the challenges faced by the cross-border industry as a whole. The full implementation of the Protocol peraining to road transport, and bilateral agreements would lead to efficient cross-border transport regulation and transportation and, in turn, culminate in reduction in challenges facing the sector. The Committee proposed that the issue be raised at the next meeting of the Committee of Ministers.

 

 

7.4.5RAF

 

It was noted that RAF improved its audit outcome to an unqualified audit outcome with no findings.

 

Despite an increase of 5c/l in fuel levy, total revenue during the 2019/20 financial year decreased to R41.42 billion from R43.24 billion in the previous financial year, mainly due to increase in Diesel refund from R3.48 billion to R4.82 billion.

 

The entity registered 303 695 claims and finalised 258 382 claims in 2019/20. The total amount of claims paid increased by 4.7% to R44.6 billion from R42.6 billion the previous financial year. Claims liabilities increased by 21.7% to R331 billion from R272 billion in the previous financial year.

 

While the financial assistance provided for in the Budget is welcomed and appreciated, given the tough economic climate and the competing priorities for Government’s resources,the Committee noted that this increase remains insufficient to match the RAF’s R331 billion actuarial claims liability. The Committee noted that the 2020/21 Budget Speech in February 2020 announced an additional 9 c/l for the RAF Fuel Levy effective from 1 April 2020, as this increase was estimated to add an additional R2 billion to the Fund’s income in the 2020/21 financial year, had it not been for the advent of Covid-19.

 

The Committee welcomes the appointment of a CEO with effect from 6 August 2020, as well as the appointment of the Board that assumed office on 4 December 2019.

 

During the year under review, the Committee noted that the RAF achieved 57.14% of the targets contained in the APP, compared to the 77% achievement in the previous year. This was still lower than the 91% achieved in 2017/18. It was concerning that despite an audit outcome improvement, the entity continued to regress in performance. In response to this concern, the RAF still persisted with the view that the performance should be viewed against the Fund’s determination to set stretched targets in terms of its 2015-2020 Strategic Plan, limited funding to fund claims liability and the ineffective RAF business model that has not improved outstanding personal claims average age of 5 years.

 

The Committee is still concerned regarding the high amount of budget spent on legal and other cost payments, as these continue to increase. The Committee indicated that there is still a need to consider the possibility of capping the amounts that can be charged as legal fees in these cases or improving the ability of victims/claimants to access the direct claims process. The entity spent R13.4 billion on legal and other administrative costs. Outstanding claims increased by 16% to 359 190 at the close of the financial year. This is due to financial constraints that has led to an increase in Requested but Not Yet Paid (RNYP).

 

The Committee observed that RAF continues to experience financial challenge, which, in turn, increases the backlog in finalising claims received. The financial health status of the entity remains a risk to the fiscus and intervention is required. The claims process continues to be regarded as cumbersome and that it still takes far too long to finalise claims and pay awards out to victims or claimants. The RAF and the Department must consider alternative funding models and consider all options that could assist the Fund to decrease its claims liability.

 

 

7.4.6RSR

 

The Committee noted that during the reporting period, the RSR had maintained its unqualified audit outcome with findings, as well as achieved 94% of its annual performance targets, which is a regression when compared to the 100% achievement from last year.

 

Some of the highlights of the year under review included the conclusion of the restructuringprocess, including the filling of crucial vacancies; the development of a Safety RiskModel (SRM) scope; occurrence reporting categories were published, and the CommonSafety Method for Risk Assessment (CSM-RA) was tested with three Class A operators.Competency guidelines and agreed workload planning are still in progress and will beincluded in the operational plan of the relevant department for the 2020/21 financial year to ensurethat RSR does not lose sight of the set targets.

 

The RSR awarded a total value of R2 762 474 forexternal bursaries to 29 students to assist with the completion of theirstudies in the 2020 academic year. The organisation also awarded

internal bursaries to nine staff members totalling R282 485.

The RSR established solid relations with the South African Local Government Association (SALGA)in the Gauteng and North-West provinces respectively. To thisend, municipal stakeholders attended a workshop for rail activemunicipalities in the North West province where the RSR socialisedthe stakeholders on the Regulator’s mandate. The municipalities werealso educated on their responsibilities relating to compliance, as wellas spatial planning, especially where the municipal developments areadjacent to the rail reserve and may have an impact on their safetypermit. Emphasis was placed on the importance of consulting theRSR prior to undertaking any railway developments. Similar effortswere made to engage the Tshwane Oversight Committee on Roadsand Transport. Furthermore, the RSR is engaging SALGA to plan anational conference with municipalities across the country. The RSRwill have an opportunity to address mayors and municipalmanagers on the challenges experienced in their respectivemunicipalities. The conference is scheduled to take place in thenew financial year.

 

An assessment was conducted on TransnetFreight Rail (TFR), a division of Transnet SOC Ltd, andit was recommended that TFR review its approach to theimplementation of the Safety Management System (SMS) withfocus on execution, motoring and review.

 

Although the RSR was unable to developthe HFM Capacity Building Framework, the organisationconducted a study to determine the current population ofemployees who occupy safety-critical grade positions in trainoperations for effective oversight on vacancies. Although onlya few railway operators participated in the study, the RSRmanaged to collect data from a sample of approximately 17053 individuals performing safety-critical grades functions,nationally from Class A operators. More data is required toensure a representative sample population which will allow theRSR to effectively monitor the status of safety-critical grades

for the railway industry. Therefore, future data will be collectedfrom all railway operators including the remaining class A, Band C operators.

 

An analysis of the sample of the current interfaceagreement signed between Transnet and its counterpartswere conducted. The analysis provided an understanding ofthe level of compliance with interface agreement regulatoryrequirements outlined by Transnet SOC Ltd. This is done toenhance the safety performance of operators through theprovision of a framework which will assist the industry in concluding appropriate interface agreements.

 

The Committee noted that the entity failed to prevent irregular, fruitless and wasteful expenditure during the year under review, and that there was a need to improve the internal control related to the review and monitoring of compliance.

 

7.4.7 SANRAL

 

The entity maintained its unqualified audit outcome with findings.

 

During the financial year, the total capital expenditureon 47 construction projects on non-toll roads amountedto R2.8 billion and operational expenditure to maintainthese roads amounted to R2.273 billion across 273 projects. SANRAL’s four regional offices entered into Routine RoadMaintenance (RRM) contracts to the value ofR2.6 billion. These contracts covered both non-toll andtoll roads, excluding those under concession. Theinternational benchmarks emphasise that poor to verypoor roads must be below 10%; in SANRAL’s case,

thanks to RRM contracts being one of the activitiesimplemented, this category constitutes only 6.4%of the network.

 

During the year under review , the total capital expenditure on sevenconstruction projects on SANRAL toll roads amountedto R412 million and operational expenditure on 60 projectsto maintain these roads amounted to R2.2billion. Thenet profit for the year was R1.1 billion. Notwithstandingthe improved revenue flow for toll roads and the overallreduction in the cost of operating these roads, this was58% lower than operating profit earned in 2018/19(R2.6 billion).

 

The Committee remains concerned that the issue which continues to place financial pressure on SANRAL is the continued difficulty to collect fees from road users who choose not topay the GFIPe-toll fees. The matter is still before Cabinet and SANRAL still awaits direction in this regard.The Agency continues to experience financial pressure on the toll portfolio in its entirety due to the sustained under-collection of the GFIP e-toll fees. The Committee noted in its engagements with the Department that the undertaken GFIP/e-toll discussions were still not finalised despite past indications that a pronouncement on proposals were due by the end of October 2019.

 

 

The Committee noted that the AGSA was still concerned regarding the financial health of the entity, citing the collection of debt and the inability to collect monies owed resulted in a high impairment of receivables (i.e. E-toll fees) for SANRAL. This is an indication of challenges in the collection of outstanding debt as theybecome due, which exposes the entity to liquidity risk.In the absence of the finalisation on the GFIP/e-toll matter from the Ministry and Cabinet, the entity should continue to holdengagements with relevant stakeholders to find either interim or permanent solutions.

 

The Committee also noted with concern that SANRAL also contributed to the irregular expenditure captured for the portfolio. SANRAL’s contribution towards the irregular expenditure of the portfolio amounted to R342 million, which were forinstances where the contract price was exceeded (R173.7 million), expenditurenot approved by duly delegated authority (R81 million), contracts not advertisedfor at least five working days on Construction Industry Development Board (CIDB) website (R40.8 million) and non-compliance with other procurement process requirements (R46.5 million).

 

 

7.4.8 PRASA

The entity received a Disclaimer opinion for the second financial year in a row.

 

Publicperception of PRASA continues tobe poor for a number of reasonsincluding:

• Disclaimer audit outcome by the AGSA;

• High turnover at senior managerlevel since 2015;

• Imprudent business decisionsby senior leadership leading todisastrous consequences;

•Little or no consequence formanagement and compliancefailures throughout theorganisation;

• Inadequate record keeping and, insome instances, no records at all;

• Operating systems not fullydeployed and, in some cases, non-existent;

• Outdated, and in certain instancesnon-existent, policies andoperating procedures;

• Inadequate SCM processeshampering procurement ofnecessary goods and services;

• Poor implementation of projectsand programmes including thecritical Capital Programme;

• Numerous instances of irregularexpenditure and an increase inrepeat findings which are not

addressed; and

• Burdening of the organisation byexorbitant and long-outstandingliabilities.

 

The Committee remains concerned that the entity has not been able to improve on ensuring the safety and security of the company assets, infrastructure and passengers. This is evident in the poor performance by the entity with specific concerns regarding passenger safety and the reliability of the services provided by PRASA. It noted that this poor performanceis also reflected in the continued drop in fare revenue collected for year ending 31 March 2020.

 

The Committee is dismayed that PRASA again received an audit outcome of a disclaimer for the reporting year, with its subsidiary Autopax also receiving a disclaimer. The Committee welcomed the fact that Intersite received an improved unqualified opinion without findings.

 

Noting the instabilities in the filling of vacancies in the entity, as well as the continued need to extend the interim Board appointment periods for the year under review, one could not have had expected much improvement in target achievement or audit findings for the past three consecutive years. The achievement in the reporting year in question of merely 17.5% of the pre-determined objectives for the PRASA Group is unacceptable and the entity should work towards ensuring that it achieves all its set targets. It was noted that the Minister finally appointed a Board to PRASA in October 2020.

 

The Committee noted the following key impediments to performance for Intersite since its inception to date:

  • Intersite has an unfunded mandate and this has been the case since its inception;
  • Intersite doesnot get capital budget allocation from PRASA and this has been the case since its inception;
  • Intersite is unable to borrow funds from financial iInstitutions due to restrictions placed on PRASA and the fact that PRASA is a schedule 3B entity in terms of the PFMA;
  • Assets that were supposed to have been transferred from PRASA to Intersite for commercialization purposes have not been transferred from inception to date. These include, amongst others, the select PRASA stations and landholdings; the managed property portfolio; the renewable energy programme, and the advertising portfolio;
  • Convoluted roles between the mandate of Intersite and the mandate of other PRASA divisions which over the years have resulted in inward focus and unhealthy internal competition; and
  • The approved property strategy has not been implemented insofar as the mandate of Intersite is concerned.

 

As part of the PRASA Turnaround Strategy, the PRASA Group Governance Committee, at its February 2019 seating, recommended that PRASA Corporate Real Estate Solutions (“PRASA CRES”) a division of PRASA and Intersite, a PRASA subsidiary, be consolidated into a single entity. Amongst some of the issues that the consolidation would help address are the following:

 

  • The strategic re-alignment and positioning of the secondary mandate;
  • Strategic repositioning of the PRASA property portfolio;
  • Rationalization of similar functions; and
  • Addressing overlapping mandates and roles.

 

In this regard, a Steering Committee comprising Intersite and PRASA CRES Executive Management has been set up and has already produced a preliminary consolidation report for consideration by the PRASA Group Exco, the Group Board Governance Committee and the Group Board itself. The consolidation report has put three options on the table as to how the consolidation of these two entities can be undertaken, namely:

 

  • Consolidate into a division: Consolidate the two entities into a division and close the subsidiary;
  • Consolidate into a subsidiary: Consolidate the two entities into a subsidiary and do away with the division; and
  • Consolidate into a division but retain an investment vehicle: A hybrid model that entails the consolidation of the relevant functions into a division but with a wholly owned investment vehicle (Intersite) being retained for specific investments transactions and structuring purposes.

 

The Board of Intersite supports the option to retain Intersite as a separate legal entity for investment purposeswithin the PRASA Group. The PRASA Administrator had made a submission to the Minister of Transport toobtain approval to implement the approved consolidation. Such approval remains pending at the reportingdate. Once or if approval is received, a process will be defined to affect the consolidation, however, noneexists as yet. In the interim, the two entities continue to operate as business as usual and with each entityimplementing its approved Strategic Objectives, Business Plan, Annual Performance Plan and Budgets. The Committee was of the view that this process had to be finalised urgently in order to provide stability in these two subsidiaries.

 

 

With regard to Autopax, the Committee once again noted with concern that the subsidiary remains in dire financial straits. The Committee noted that Autopax not only has an ageing fleet of buses andpending reports on ongoing investigations, but it also was found to have a lack of corporate governance and fraught with financial mismanagement. With no viable plan to turn performance around for the subsidiary, the Committee continues to be concerned regarding the viability to continue its operations.

 

 

7.4.9 ATNS

 

In the period under review, the entity achieved an unqualified audit opinion with findings.

 

Despite the tough macroeconomics and negativeglobal growth, for the financial year under review, ATNS recorded an increase of total revenue by 0.36%to R1 673 million (2019: R1 668 million). Thisnotwithstanding the following uncontrollablefactors:

  • its core revenue arising from aerodrome, enroute and approach fees decreasing by 1% to R1 463 million (2019: R1 479 million);
  • revenue-generating air traffic movements decreasing by 4.4% to 306 000 (2019: 320 000); adversely impacting our regulated revenue streams;
  • a limited tariff increase of just 0.5% compared to 7.5% in 2018/19; and
  • travel restrictions, as a result of the Covid-19 pandemic, toward the end of the financial year.

 

ATNS’s balance sheet maintained its strength witha liquidity ratio of 5.6:1 (2019: 4.6:1) and gearingat 3.4% (2019: 0.3%). This puts ATNS in a betterposition to raise funding for both imminent capitalexpenditure and to continue to buffer the financialhardship our sector is experiencing in the wakeof the global pandemic.

 

The Committee noted that the entity was not able to ensure that effective and appropriate steps were taken to prevent irregular expenditure amounting to R22.9million, as disclosed in note 35 to the annual financial statements, as required by section 51(1) (b) (ii) of the PFMA. The majority of the irregular expenditure incurred was caused by non-compliance with laws and regulations governing procurement and contract management. The AGSA found that the internal controls had been inadequate.

 

 

7.4.10 RTIA

 

The entity did not submit its annual report in time and the AGSA also did not present any audit outcomes for the entity to include in this report.

 

The Committee did not accept the reasons provided by the Minister for the delay in tabling of the Annual Report.

 

 

7.4.11 RTMC

 

The Committee noted that the entity regressed in its audit finding and received an unqualified audit opinion with findings due to material misstatements in the annual financial statements.

 

The Committee also noted that there was an indication by the AGSA regarding the entity that there were issues regarding key officials lacking appropriatecompetencies.

 

As the entity concludes the five-year implementation cycle, it highlighted the following key achievements:

• Road traffic fatalities in the country have stabilised and are beginning to show a steady decline. In 2015there were 12 944 fatalities recorded on the roads. This has come down to 12 503 in 2020 which is a 3.4percent decline;

• RTMC has worked with strategic stakeholders encompassing all sectors of society to develop a NationalRoad Safety Strategy 2016 to 2030 as a blue print to guide road safety interventions.Cabinet approvedthe strategy in March 2017, allowing us to move from an era of disintegrated approaches to enhancedcoordination on road safety matters;

• To bring about uniformity and cohesion within traffic law enforcement, it has developed the NationalTraffic Law Enforcement Code and its implementation plan;

• To revolutionise the training of traffic officers, it has introduced a new NQF level six traffic officertrainingcourse. The first cohort of the 21-Century cadre of traffic officers began training on this modulein January 2019;

• It also acquired the Boekenhoutkloof traffic training college and integrated the Road Traffic Inspectoratewithin the National Traffic Police to enable us to implement the Cross-Border Transport Act;

• After a lengthy legal battle, it succeeded in getting the National Traffic Information System (eNaTIS) tothe state;

• It introduced new technological innovations to improve the ease of doing business between

members of the public and the state. The online booking system and online crash reporting wereintroduced in the period under review;

• Its unrelenting attention on fraud and corruption has ensured that officer corruption in vehicle testingstations and driving licence testing Centres is placed firmly on the national agenda. A total of 129 arrestswere made in the year under review;

• It has managed to stabilise its finances. RTMC revenue base has grown by 16% in the year underreview and the AGSA has identified no irregular expenditure in the currentfinancial year;

• The restructuring of the Corporation was successfully implemented in the year under review.

 

 

7.4.12DLCA

 

The DLCA improved its audit outcome to an unqualified audit opinion with no findings by implementing action plans to address their internal control weaknesses.

 

The entity managed to achieve 73% of its planned targets despite the challenges it faced. However, revenue decreased by 5% compared to the previous year.

 

The Committee remains concerned regarding the age of the current card production machine and the need to request exemptions or deviations from National Treasury related to obtaining the raw material used in the card production process and maintenance of the production machine. The Committee was further concerned about how slow progress has been in finalising the new driving licence card design planned for introduction in 2021/22.

 

 

7.4.13SAMSA

 

For the second year, the entity did not table its report in time for consideration as part of the BRRR. The notes hereunder are taken from the AGSA general presentation to the Committee.

 

SAMSA’s audit outcome remained the same with a qualified audit opinion as they addressed some prior year qualification paragraphs, but did not address all to avoid a qualification.

 

Under listed concerns, the AGSA indicated that at SAMSA, the overall control environment requires intervention to improve audit outcomes. There were no adequate consequence management and action plans to address non-compliance and financial statements related findings. The AGSA noted some improvement in commitments and irregular expenditure that had been qualified in the previous year. It is critical that the appointment of the CEO is fast tracked to ensure that there is accountability.

 

Under the AGSA’s discussion regarding entity areas of disregard for compliance with legislation, the following top four of the five non-compliance areas were linked to SAMSA:

  • Quality of financial statements ;
  • Management of procurement and contracts - Declarations of interest not submitted by providers;
  • Prevention of irregular, fruitless and wasteful expenditure; and
  • Consequence Management.

 

8.         RECOMMENDATIONS

 

8.1        Recommendations from the Budget Vote Report 2020 (both the initial Budget Vote Report as well as the Adjustments Budget Report)

8.1.1     The Committee recommended that the Minister ensure (for the first 2020 Budget Vote):

 

8.1.1.1  Impact of the Covid-19 pandemic, as well as ratings agencies’ downgrade on the Department as well as its entities

The Department should provide details on how it envisions the impact of the Covid-19 regulations, as well as the ratings agencies’ downgrade on budget re-prioritisation for the Department and its entities in terms of the estimations and programme allocation.

 

8.1.1.2  Increase in use of consultants in the Public Transport programme

The Department must brief the Committee on all consultants used and the expenditure linked to these appointments. The Department should indicate whether the consultants transferred relevant skills to the employees of the Department.

 

8.1.1.3  Infrastructure development     

More information was requested on the budget allocation for infrastructure development, as this matter was not presented on in detail by the Department.

 

8.1.1.4  Universal accessibility

The Department and its entities should increase the implementation of programmes aimed at increasing Universal Access to all modes of public transport, and for all transport and road infrastructure.

 

8.1.1.5  Operational risks on Western Cape Railway Lines

The Department and PRASA should provide the Committee with detailed plans to reduce operational risks on the Western Cape railway lines.

 

8.1.1.6  Provincial Road Maintenance Grant (PRMG)

The Department should provide the Committee with quarterly monitoring reports on the implementation of the PRMG.

 

8.1.1.7  Moloto Road Upgrade

The Department should provide the Committee with an updated presentation on the project, as well as the maintenance plan for the Moloto Road.

 

8.1.1.8  Shova Kalula

The Department deliver quarterly updates to the Committee on the progress made regarding the programme. The report should include information on where the bicycles have been distributed, the number of bicycles distributed and plans for future distribution.

 

8.1.1.9  Implementation of the IPTNs

The Department deliver an updated report to the Committee on the rollout, expenditure and reasons for delays in active operations of the IPTN programmes in the 13 original cities ,as well as the way forward with the remaining 10 cities. The Department should also give reasons for the under-expenditure in the spend on this line item.

 

8.1.1.10            Taxi Recapitalisation programme

The Department deliver an updated report on the rollout of the revised taxi recapitalisation programme,as well as how it aims to work towards formalisation and corporatisation of the taxi industry.

 

8.1.1.11            Vacancies

The Department deliver an updated report on the status of vacancies in the Department and its entities. This report should also indicate whether there was still a need to fill these vacancies.

 

8.1.1.12            Transformation

The Department deliver an updated report on the transformation policy for the Department, as well as each of its entities and indicate concrete and clear steps on how it and the entities’ management seek to address the lack in transformation progress in the industry.

 

 

8.1.2     The Committee recommended that the Minister ensure (for the 2020 Adjustment Budget Vote):

8.1.2.1        That the Department provide the Committee with a report, within 60 days of the adoption of this report by the House, to indicate how PRASA would, with its adjusted budget and Covid-19 restrictions, be able to prioritise the entity targets as presented by the Administrator to the Committee.

8.1.2.2  That the Department ensure careful consideration for budget planning to prevent future under-expenditure.

8.1.2.3              That the Department present a plan to the Committee to mitigate job losses in the entities as a result of Covid-19 and provide the Committee with a report on this, within 60 days of the adoption of this report by the House.

8.1.2.4              That the Department ensure that the Revised Taxi Recapitalisation Project is fast tracked in order to remove as many un-roadworthy vehicles from the industry as possible and prevent future continued roll-overs or virements from this project.

8.1.2.5              That the Department, along with ACSA and SACAA, provide a clear report on the projects that would require additional funding in the adjustments budget and provide the Committee with a report on this, within 60 days of the adoption of this report by the House.

8.1.2.6              That the Department report on the expenditure of the reallocated funds.

8.1.2.7              That the Department reports on the planned security measures for PRASA infrastructure and assets, as well as start a discussion with the relevant Departments responsible for the declaration of National Key Points to have PRASA infrastructure and entities be declared as National Key Points.

8.1.2.8              That the Department undertake a revision and consolidation process of its entities.

8.1.2.9              That the Department improve its oversight over the implementation of IPTNs in the 13 cities (reduced to 10) receiving PTNG funding. That the Department provide the Committee with a report, within 60 days of the adoption of this report by the House, on the progress in the cities on these projects.

8.1.2.10            That the Department ensure that, for purposes of allocations under the PRMG, proper scrutiny of plans is done and that approved planning is in place prior to allocation of funding. The Department must further improve its oversight over PRMG projects in all provinces.

8.1.2.11            That the Department ensure that the e-toll funding policy matter is finalised urgently and report back to the committee immediately upon finalisation of the matter in Cabinet.

8.1.2.12            That the Department report to the Committee on its planned and actual expenditure and assistance provided for the supply of Personal Protective Equipment (PPE) and sanitizer to the public transport industry, and provide the Committee with a report on this, within 60 days of the adoption of this report by the House.

 

8.2        Observations and recommendations from the Strategic Plan and APP Report 2019

 

The Budget Vote debate of the Department took place on 9 July 2019. Due to the fact that the Department and entities tabled their APPs on 2 July 2019 and the limited timeframe within which to engage on these between tabling and the Vote, the Committee, therefore, was not able to receive briefings on the APPs of the Department’s entities prior to the Budget Vote Debate. Accordingly, the Committee engaged on the APP and Budget Allocations for 2019/20 with the Department on 3 July 2019 and undertook to schedule presentations by the Department’s entities on a later date in order to receive briefings on their amended and/or new Strategic Plans, and (specifically for the entities) 2019/20 Corporate Plans or APPs.

 

The Committee subsequently met with the entities of the Department, including the NSRI, from 27 August 2019 to 10 September 2019 on their 2019/20 Budgets, APPs and Corporate Plans.

 

The Committee has, during November 2019, finalised its 2019 Report on these matters.

 

As general observations, the Committee was of the view that there needs to be greater alignment in all the entities between their Key Performance Indicators and the outcome of actual service delivery or improvements to service delivery to the people. It will no longer accept that an entity might meet 100% of its set targets, while actual service delivery felt on the ground does not equate to the set targets or the expenditure on set targets or that those targets are not truly measurable when linked to service delivery outcomes. At the time of engagements with the entities, the Committee was still of the view that vacancies in the Boards and Management of the entities must be dealt with as a matter of urgency, as was stated in the 2019 Budget Vote Report by the Committee. There was also a concern expressed that some entities still fail to submit APPs or Corporate Plans by the legislated timeframes and that for some this also leads to late submissions and tabling of annual reports.

 

8.2.1 The Committee made the following observations:

 

8.2.1.1 RSR

The entity was spending too much of its budget on operational expenditure.

The Committee was of the view that the number of injuries and fatalities on the railways and in the rail industry as regulated by the entity is still too high and that the entity should consider amending its targets in a manner that will assist with an improved reduction (working towards elimination) of incidents on the country’s railways.

There was a concern that the Regulator would be regarded as “helpless” and ineffective if it fails to withdraw operator permits in instances where non-compliance occurs. A view was expressed that the Regulator should implement a similar harsh approach to grounding operators when their actions or inactions would lead to a safety concern on the railways, comparative to how the aviation regulators enforce their standards.

Notwithstanding the fiduciary duties of RSR which pertain to providing and developing regulatory framework for railway safety. There are about 240 operators with permits issued by RSR, the main being PRASA and Transnet the Committee observed that there are no strict punitive measures on the operators to ensure that they compel all operators to comply with the conditions of their permits to prevent the most common occurrences such as train surfing, level crossing including overloading.

The Committee has observed that there are many abandoned railway tracks in the townships that have been decommissioned many years ago, however, they remain in the townships and have not been disposed. RSR should develop and impose stricter fines.

The Committee noted the unsustainable funding model of RSR.

 

8.2.1.2 PRASA

The Committee noted with concern that, in the view of the Board Chairperson, the entity was a broken entity with internal instability and demotivated staff who were fighting change. This, however, was clear from the number of rail safety incidents experienced during the entity’s operations, as well as the unacceptable customer satisfaction survey level of 60%.

There was a concern that the presentation by the entity did not also speak to the plans for its subsidiaries and that no presentations were made for these subsidiaries.

PRASA did not sufficiently indicate what it was doing to address and curb fatalities at train stations. The Committee was of the view that the entity must further improve its work with the RSR, SAPS and other law enforcement bodies in order to eliminate rail safety concerns and reduce incidents on the railways under control or within the PRASA operations.

There was a view that the targets regarding the general overhaul of the entity remained a moving target and that no finality will be achieved unless clear deadlines are set and met.

Members were concerned about PRASA not adhering to its own deadlines for projects and that the entity appeared to have the tendency to wait until the last minute to submit required documentation on deadline days instead of ensuring that they comply well before deadline dates.

The entity was urged to address the issues raised by the reinstated workers as well as resolve outstanding employee disputes and grievances.

There was a need to perform or obtain the statistics of a conditional assessment per corridor.

The Committee observed that many senior management and executive positions are filled by acting personnel.

The Minister’s war room was an initiative of the shareholder and not a management initiative, as such the good intention of the initiative opens a door for interference by the shareholder.

The Committee observed that there is a systematic collapse of corporate governance principles and non-adherence to legislation, such as the PFMA. The Committee noted the revision of the SCM policy at PRASA and the gross violation of the said policy.

The Committee also noted the fierce lobbying of PRASA to have the entire 23 000km of rail track to be transferred to PRASA from Transnet.

 

8.2.1.3 ATNS

The Committee observed that 62% of revenue goes to salaries.

There was a view that the gender equity in the ATNS Board was skewed.

In order to retain skills and receive a return on “investment”, there was a view that the ATNS bursary should have contractual obligations attached for Air Traffic Controller trainees.

The Committee noted that there is legislation outstanding that would assist the entity and once revived in Parliament this will be dealt with by the Committee.

The Committee noted the advance stage of the recruitment of the CEO.

The Committee observed that the contract to provide ATNS with new and updated modern billing system was not finalized.

 

8.2.1.4 ACSA

A breakdown was needed of the Capex programme to indicate how people with disabilities, women and the previously disadvantaged were benefitting from the projects.

It was noted that the presentation did not include financial information, and that the entity did not highlight the decline in revenue (profit) in its presentation.

There was a view that various airports require a change of name, and that this process must be finalised soon.

The work done by the entity should not be a barrier to greater economic transformation, but should allow the empowerment of previously disadvantaged business owners to break into the aviation industry as well.

 

8.2.1.5 DLCA

The current organisational structure of the Trading Account did not correspond with the mandate of the entity.

The Committee was concerned following the indication by the Acting Head of the Entity that there was a material risk related to the card production machine which will no longer be able to be serviced.  The service provider for the production machine will stop maintaining it due to the machine having aged. Bearing in mind the machine has been in use since 1998. The decision is based on newer technology and unavailability of spare parts. This was the only machine of its kind in the country and a new card format is being considered which will require a new type of production machine as well.

The Committee observed that there was a need for mobile trucks within DLCA to target remote and rural areas which ordinarily find it difficult to access the DLCA services.

The Committee also observed that DLCA is not in control of eye testing facilities at municipalities, which at times impacts negatively on services in the event that a person is referred to an optometrist which visit carries a serious financial burden on the person referred.

The Committee observed the excessive use of consultants within the DLCA despite a Treasury directive to minimise the use of consultants.

 

8.2.1.6 RTMC

 

The enrolling of Traffic Officer and the upskilling of Facilitators on the NQF 6 qualification was regarded as a positive development. However, the numerous different types of traffic officers (uniforms) seen must be unified and there needs to be an improvement in the overall quality of traffic law enforcement.

The entity’s intergovernmental relations can be improved on.

There was a view that the intelligence collected from the road safety reports should feed into the entity through improving its Strategic Plan in a manner that will make a noticeable impact to the safety on the roads.

RTIA and RTMC provided contradictory figures with regard to the cost to the economy as a result of road accidents.

There was a need to review the K53 programme and implement regulation of Driving School Practitioners in a manner that will result in road behaviour changes for safer roads.

The Committee observed that sight must not be lost of the concerns raised regarding the need to ensure compliance to MOUs and ensure an improved working relationship between the C-BRTA and RTMC law enforcement units, as well as the correlation between the RTMC and the RTIA in the achievement of their targets towards reducing road fatalities.

The Committee made an observation that there are over 100 cases of fraud and corruption that are yet to finalize.

The Committee was also informed of the R109 million budget that is in the office of the CEO, and recommended that part of that allocation should be ring fenced for research to improve and curb road fatalities on our roads.

The Committee was also informed that the Department owes RTMC about R176 million in grant funding. This is a concern.

The Committee observed that there was a duplication of functions e.g. law enforcement as this function is executed by Provinces and municipalities as well.

 

The Committee observed that the RTMC’s substantive role is that of cooperating and not agency and is concerned at this competition.

 

8.2.1.7 RTIA

Members noted that the entity was operating on a tight budget and had a deficit for the past two years.

There was a need to raise Committee concerns that the indication of a 100% achievement of KPIs was not a true reflection of the impact felt on the lives of road users by the work performed by the Agency when one considers the numbers of fatalities still experienced on our roads. There was also a concern regarding the measurable outcomes of the prayer day events hosted and paid for by the Agency.

There was a view that RTMC and RTIA must combine their awareness programmes in order to have greater impact on road safety.

The Committee observed that the entity listed the AARTO bill now law as a high risk under their risk index.

The Committee also made an observation that under the Public Awareness Campaigns Initiatives, the entity invested quite heavily on the National Prayer Day for road safety. The Committee was, however, concerned with regard to the measurability and the impact of this investment. If there is no mechanism to measure any spending on any allocation, we can conclude it is rather a futile way to spend taxpayers’ money.

 

8.2.1.8 SANRAL

There was a need for the entity to improve on its intergovernmental relations and to liaise with communities to ensure buy-in for road construction projects, as in most instances there were resistance from communities to the implementation of the projects.

The introduction of weighbridge technology that will allow for the weight of trucks to be determined as they move on the roads was welcomed, especially when the costs are compared between a stationary/fixed weighbridge versus the moving measurement weighbridge.

The entity was requested to bear in mind in their road designs that some towns and communities are largely dependent on the accessibility to and from those roads.

The Committee noted the submission of the entity on the investment of R5.8 billion on the R573 Moloto Road project, however the road stretch continues claim lives of citizens.

The Committee was also informed that that Moloto Road project was taking way too long and this was apparently due to the encroachment of the road reserve. This is a concern and needs to be resolved.

The Committee observed that SANRAL continues to foot the bill for the ill-advised GFIP and this poses a fiscal risk to the entity and the nation. A concern was that SANRAL shifted funds which could’ve been used to maintain the non-toll road network.

 

8.2.1.9 RAF

There is a need for the entity to improve fraud detection before payments were made to claimants.

The Committee indicated a concern regarding the high amount of budget spent on legal and other cost payments. The Committee indicated that there is a need to consider the possibility of capping the amounts that can be charged as legal fees in these cases or improving the ability of victims/claimants to access the direct claims process.

The entity continues to be a fiscal risk to the nation.

 

8.2.1.10            C-BRTA

Members noted the inefficiency experienced at the border posts.

The presentation did not reflect the gender breakdown in the entity’s organisational structure.

The Committee observed that sight must not be lost of the concerns raised above under the RTMC discussion and how C-BRTA was affected by monies due to the RTMC.

There was a view that the entity should play a greater role towards ensuring truck safety for all freight operators.

The Committee observed with concern the lack of resolution of the Lesotho / RSA Free State taxi impasse.

 

The Committee observed that the MOU between C-BRTA and RTMC on cross border transport law enforcement is not producing the desired outcomes.

 

8.2.1.11            SAMSA

Concern was expresses about the vacancy in the CEO position since July 2016.

Members observed the entity’s R216 million in irregular expenditure in the previous financial year, and the findings of the Auditor General of South Africa and that the entity was not adhering to the procurement framework.

Consequence management needed to be improved and reported on.

 

8.2.1.12            SACAA

The Committee was of the view that the entity was an example of how regulators and operators can work together. It further noted that the grounding of some operators for outstanding debt as well as safety concerns were being implemented.

 

8.2.2. The Committee recommends that the Minister of Transport ensures:

8.2.2.1  Setting of KPIs

That there is greater alignment in all the entities between their Key Performance Indicators and the outcome of actual service delivery or improvements to service delivery to the people.

That the Department ensure that there is synergy pertaining to the implementation of the road safety programmes by the various entities so that the programmes can complement each other in achieving a reduction in the carnage on the roads. Key Performance Indicators in the various entities that speak to road safety must be aligned with each other in order to ensure that there is limited duplication of targets and to ensure that the funds spent towards these programmes are allocated to the most suited entity and programme. This will ensure that these programmes deliver measurable results.

That Key Performance Indicators in RSR and PRASA that address rail safety must be aligned in order to deliver a greater reduction of incidents on the country’s railways.

That the invaluable data collected in the rail and road safety reports by the RSR, as well as the RTMC in their respective fields must be applied to the targets set in their respective Strategic Plans and APPs going forward in order to make noticeable impact on improving the safety on our railways and roads.

 

8.2.2.2  Vacancies and Acting Positions

That the appointments are made with due consideration of gender parity principles for all critical vacancies that need to be filled in Senior Management, as well as throughout all levels of the Department, executive of the entities, and board vacancies.

That Board members of entities are appointed without delay so that the entities are able to discharge their legislative mandates optimally. The Minister is also requested to report to the Committee on this matter, as well as the Department’s plan for ensuring future Board member vacancies are filled timeously within 30 days of the adoption of this report by the House. Furthermore, that the Minister ensure that all other vacancies in senior management in the Department and the executive in the entities are filled and reported on to the Committee within 60 days of the adoption of this report by the House.

 

8.2.2.3  Effective Regulation of Industries

That there must be support to all regulating entities in the transport portfolio in order to ensure that the actions they take to compel operators to comply are effective. The Department must also ensure that all pieces of legislation that may affect the operations of these regulators are up to date and where amendments or additional regulations are required, that these amendments and regulations are processed as speedily as possible.

 

8.2.2.4  Legislative Programme impact on Entities

That the Department and its entities ensure that their planning for legislation to be submitted to Parliament for processing is done in such a manner that would allow for the thorough processing thereof during the Parliament Cycle and not to rush submissions in the outer years of the MTSF.

That the Department is requested to submit a full and comprehensive list of legislation that is proposed which would include the current status of progress on these matters within 60 days from the adoption of the report by the House.

 

8.2.2.5  Funding Models

That all entities with turn-around strategies and new funding models are given the required assistance, guidance and oversight required in order to implement these strategies and models that would allow them to be self-funding and reduce the increasing reliance on the national fiscus in the pursuit of service delivery. The Minister also needs to address the continued going concern issues raised for entities by arranging meetings between the entities, the Department, as well as the National Treasury.

That the Department reports to the Committee on a quarterly basis regarding the above recommendations.

 

8.2.2.6              Finalisation of Investigations and Resolution of Grievances

That the Department should submit quarterly reports on investigations underway in the Department and all the entities. All investigations, processing and finalisation of grievances and disputes following HR processes, as well as court order implementation must be resolved and/or implemented as speedily as possible.

 

8.2.2.7  Skills retention

That there should be amendments to the bursary conditions offered by the various entities that would allow for the recipients to be bound to apply their newly acquired skills to the issuing entities’ field of operations for a predetermined timeframe. This would allow for a greater return on “investment”.

 

8.2.2.8  Use of consultants

That the use of consultants is monitored by the Department, and that the Department ascertains whether the services rendered provided good value for money. In addition, the Department should indicate whether the consultants transfer relevant skills to the employees of the Department. The Department must furthermore brief the Committee on all consultants used with reference to their scope of work and the expenditure linked to these appointments within 30 days of the adoption of this report by the House.

 

8.2.2.9              Intergovernmental Relations Improvements and MOU Compliance Required

That the intergovernmental relations of the entities must be improved in order to ensure greater service delivery in all spheres of government and eliminate duplicate spending of the budget on projects with the same outcomes.

That the Department must assist the entities and monitor compliance to currently held MOUs between entities to ensure compliance and improved working relationships between the contracting parties.

 

8.2.2.10            Moloto Road upgrade and Development Corridor

That the Department delivers quarterly updates to the Committee on the progress made regarding the Moloto Development Corridor programme, including both the Moloto Road upgrade and Moloto Rail programmes.

 

8.2.2.11            SANRAL funding concerns, as well as impact of GFIP thereon

That the Department ensures that the budget allocation for the SANRAL road maintenance programme responds to the challenges of unemployment, poverty alleviation and inequality.

That SANRAL is assisted with developing a suitable funding model that could aid in resolving the impact on its finances from the rollout of the GFIP project, as well as manage current project stoppages related to the general objections on all toll projects by finalising the development of a fresh Toll Roads Policy. The Minister also needs to address the going concern issues raised for SANRAL by arranging meetings between the entity, the Department, as well as the National Treasury.

That SANRAL should also be assisted with support towards the achievement of its Strategic Objective to foster cooperative working relationships with all spheres of Government and the Southern African Development Community (SADC) member countries through the possible expanding of its scope towards becoming a road agency for the SADC as this could help support the development of infrastructure in the region, as well as economic integration.

That the Department reports to the Committee on a quarterly basis regarding the above recommendations.

 

8.2.2.12            PRASA Modernisation project

That the Department assist PRASA in improving their current services and safety through the rollout of the turnaround strategy in a manner that would allow for the entity to focus further on the modernisation project. The entity should also indicate progress towards the devolution of authority to regions for effective management and rail operations through quarterly reports on the above to the Committee. PRASA should ensure that quarterly briefings are presented to the Committee regarding updates and progress on its rolling stock fleet renewal programme, the refurbishment of coaches, as well as the upgrading of signalling systems.

 

8.2.2.13            SADC Protocol and RSA/Kingdom of Lesotho Impasse

That the Department, together with the C-BRTA, should submit quarterly progress reports regarding:

  • The implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology;
  • The resolution of the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route.

 

8.2.2.14            Increased Promotion Required of Universal Access

That the Department and its entities increase the implementation of projects and/or programmes aimed at increasing Universal Access to all modes of public transport and for all transport and road infrastructure.

 

 

8.3 Recommendations made by the AGSA for the Budgetary Review and Recommendation Report for the 2019/20financial year

 

The role of the AGSA is to reflect on the audit work performed to assist the Committee in its oversight role of assessing the performance of the entities taking into consideration the objective of the Committee to produce a BRRR.

 

The AGSA recommends the following to the Department and its entities:

  • Executive management positions should be filled with appropriately skilled and experienced personnel;
  • Develop and implement action plans to address audit findings;
  • Monitor performance and consequence management especially around supply chain management; and
  • Implement disciplined financial reporting structures based on solid accounting knowledge.

 

The AGSA recommends the following toCommittee:

  • The Committee should request accounting officer/authorities and the Minister to provide feedback on the implementation and progress of action plans to ensure improvement in the audit outcomes of the portfolio; and
  • Enhance oversight on PRASA to ensure that governance challenges, poor performance and poor audit outcomes are addressed.

 

8.4        The Committee recommendations for the 2019/20 financial year Budgetary Review and Recommendation Report

 

The Committee recommends that the Minister, through the Department, should ensure the following:

 

8.4.1 Recommendations specific to the Department and of General Application to entities

8.4.1.1Due to the observation that the Department indicated the same measures to address AGSA findings as it had in previous year, the Committee implores the Minister to ensure that stronger measures are put in place to address the audit findings effectively and that they are implemented in a manner that will ensure that the Department improves its audit outcome for the 2020/21 financial year. In relation to this recommendation, it is imperative that the Department strengthen its oversight over the entities and report to the Committee, on a quarterly basis, on progress made to remedy all matters raised by the AGSA;

8.4.1.2The advertising and filling of Board, CEO, as well as senior management vacancies, as indicated in the paragraphs above, should be prioritised in the Department and the affected entities. In order to achieve theSONA 2018 commitment made by Government to changing the way boards of SOEs are appointed, the positions filled should be with people who have the relevant expertise, experience and integrity to serve in these vital positions.This will allow the Department, as well as the entities to operate and report effectively, and do so within the parameters of applicable legislation. The Department, with its entities, must report to the Committee, by the end of January 2021, and thereafter on a quarterly basis, on current efforts underway to finalise the filling of posts and ensure that it presents an implementable strategy to address future vacancies. The Department should also provide the Committee with an updated report, by the end of January 2021, on the status of current Board vacancies;

8.4.1.3The Department must implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself. The Department should ensure that the targets set in their Strategic Plans and APPs going forward adhere to SMART principles and ensure that sufficient records are available to prove that those targets have been met. Management in the Department should ensure that it is possible to validate the processes and systems that produce the indicator to enable them to produce the required evidence (through improved record- keeping) supporting their reported performance. Conversely, ity should adhere to the requirements of the Framework for Managing Programme Performance Information (FMPPI) to ensure that all indicators are well defined and verifiable, and that all targets are specific and measurable i.e. the nature and required level of performance is clearly specified and measurable. The Committee also requested that the Department and its entities move towards the development of key performance targets that would have tangible and measurable results that show actual and/or improved service delivery to all transport stakeholders;

8.4.1.4Effective steps should be implemented to prevent irregular expenditure. Some of these highlighted by the Committee are:

8.4.1.4.1 Officials who caused the Department or its entities to incur irregular, fruitless and wasteful expenditure should be subjected to disciplinary procedures and, where applicable, implement the appropriate measures provided for in terms of sections 81 to 86 of the PFMA.

Section 81(1) stipulates that:“an accounting officer for a department or a constitution institution commits an act of financial misconduct if that accounting officer wilfully or negligently-

(a) fails to comply with a requirement of section 38, 39, 40, 41 or 42 or

(b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful expenditure”.

In addition, section 81(2) states that:“an official of a department, a trading entity or a constitutional institution to whom a power or duty is assigned in terms of section 44 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty”.

For its part, section 86(1) of the PFMA states that:“an accounting officer is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting officer wilfully or in a grossly negligent way fails to comply with a provision of section 38, 39 or 40”.

In addition, section 86(2) of the PFMA maintains that:“an accounting authority is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting authority wilfully or in a grossly negligent way fails to comply with a provision of section 50, 51 or 55”.

Finally, section 86(3) of the PFMA stipulates that:“any person, other than a person mentioned in section 66(2) or (3), who purports to borrow money or to issue a guarantee, indemnity or security for or on behalf of a department, public entity or constitutional institution, or who enters into any other contract which purports to bind a department, public entity or constitutional institution to any future financial commitment, is guilty of an offence and liable on conviction to a fine or imprisonment for a period not exceeding five years”.

TheAct also includes provisions for criminal prosecution in cases of gross financial misconduct;

8.4.1.4.2 The Department and its entities must at all times ensure that proper record-keeping is implemented for information supporting compliance and procurement processes and implement consequence management for staff members who fail to comply with applicable legislation in this regard;

8.4.1.4.3 Having noted that the Department had a Loss Control Committee/Division to deal with and ensure the rooting out of irregular expenditure, the Department must present quarterly reports on the progress made by this Committee/Division to ensure that the Department does not incur irregular expenditure going forward;

8.4.1.5The Committee requests the following with regard to compliance with the provisions of the PFMA:

8.4.1.5.1 The Department should capacitate its Finance and SCM directorates/departments/branches with appropriately skilled and competent personnel to prepare credible financial statements;

8.4.1.5.2 The executive authorities, accounting authorities, accounting officers and senior management should ensure that information used to prepare financial statements is accurate and reliable; and

8.4.1.5.3 The Department must ensure that all officials responsible for reporting in terms of the PFMA are reskilled by ensuring they receive training on compliance with the PFMA, ensure that these staff members undergo refresher courses on the applicable NT Regulations that are implemented from time to time, and receive training on compliance with the King Report on Corporate Governance IV;

8.4.1.6Control processes should be adhered to in the SCM processes. Some of these highlighted by the Committee are:

8.4.1.6.1 The Department should identify and address the inefficiencies in the SCM process in the Department, and assist its entities to do the same where needed. There should be a review of SCM policies and the implementation of consequences for poor performance and failure to comply with applicable legislation;

8.4.1.6.2 Members of the relevant bid evaluation committee and the CFO should satisfy themselves that all service providers that are recommended for award have all the required documentation in terms of legislation. The list of recommended bidders should be accompanied by a signed checklist confirming the completeness of required documents;

8.4.1.6.3 Management should properly plan the acquisition of goods and services and exercise sufficient oversight and monitoring of controls to ensure that compliance with SCM policy is achieved;

8.4.1.6.4 Recurring non-compliance should be investigated and appropriate action taken against transgressors;

8.4.1.6.5 Furthermore, management should ensure that their own policies and procedures arereviewed and aligned to the Framework for Managing Performance Information and the PFMA, to ensure that performance reporting requirements are properly processed by the Department;

8.4.1.7The Department should report back to the Committee on a quarterly basis regarding the projects to which grant funds are allocated and transferred to. This report must cover its monitoring, tracking and engagement with its provincial and municipal counterparts on the implementation of the PRMG and other applicable grants to ensure that money is used for its intended purpose, to ensure that there is value for money spent and to prevent a future need for roll-overs;

8.4.1.8 The Department should ensure that the budget allocation for projects is strengthened and realistic in order to reduce the high amounts of funds being transferred under Virements;

8.4.1.9 The Department should develop an alternative investment attraction plan in order to make better use of Public-Private Partnerships and the promotion of Private Sector Participation in the funding options for various infrastructure projects, such as the Moloto Corridor Project and other major infrastructure projects planned by the Department;

8.4.1.10The Committee takes a dim view of the non-compliance and the lack of tabling of annual reports in terms of the sections 8 and 65 of the PFMA. The outstanding annual reports that are yet to be tabled before this Committee are of a serious concern. The Committee did not accept the reasons provided during the presentation by the AGSA, as well as in the letter from the Minister regarding the failure to table the RTIA Annual Report in time. Despite the indication by the AGSA that the SAMSA annual financial statements had been audited prior to the tabling due date, the Committee was not provided with reasons from the Minister on why the annual report of the entity was not tabled within the extended deadline. This was found to be unacceptable. The Department must ensure, and assist well in time where it is able to, that all annual reports are submitted within the legislated timeframes for the audit by the AGSA, as well as tabling in time before Parliament. The outstanding reports should be presented to the Committee as soon as they are tabled and referred to the Committee. The Committee would work towards submitting a supplementary report on the late received annual reports, should they be tabled in time to do so;

8.4.1.11 The Department must ensure that the newly appointed PRASA Board is given the required assistance to ensure that the entity performance is drastically improved and that initiatives are implemented towards improving rail operations and deliver quarterly reports on the above to the Committee;

8.4.1.12 The Department must address the issuesonce again raised regarding the financial health forACSA, ATNS, DLCA, RTMC, SAMSA and RTIA in as far as their finances may be additionally affected by the impacts of Covid-19 lockdown restrictions on operations going forward, as well as the continued concerns regarding the finances of RAF, SANRAL,PRASA and its subsidiariesand ensure that a comprehensive plan is submitted to the Committee by the end of January 2021. This must be followed up by quarterly reports on the financial health of all of its entities;

8.4.1.13 In light of the cost containment instructions by National Treasury to Departments and entities to limit the use of consultants, the Department should indicate to the Committee what measures it has put in place to ensure compliance to this instruction and provide the Committee with a detailed report, by the end of January 2021, on all projects in which consultants were used (Departmental projects, projects linked to Grants such as the IPTN projects), as well as whether there were skills transfers that accompanied the use of consultants as is required by the National Treasury instructions. The Department must also provide a report, by the end of January 2021, on any consequence management that has been or is planned to be implemented against officials that may have approved the use of consultants without compliance to the National Treasury instructions;

 

8.4.2 Entity Specific Recommendations

 

The Committee recommends that the Minister, through the Department, should ensure the following is done with specific reference to the following entities:

 

8.4.2.1 ACSA

 

8.4.2.1.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.1.2 The entity must ensure that it improves on its Financial Statements preparation;

8.4.2.1.3 Given the impact that has been felt on the entities’ international investment projects due to airline failures, as well as the Covid-19 travel restrictions, the entity must present plans to the Committee on how it will off-set these investment losses;

8.4.2.1.4 The entity should provide quarterly updates to the Committee on its plans going forward to limit the loss of revenue.

 

8.4.2.2 ATNS

 

8.4.2.2.1The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.2.2 The entity must ensure that it improves its Financial Statements preparation, as well as putting sufficient measures in place to plan for revenue losses due to Covid-19 travel restrictions;

 

8.4.2.3 C-BRTA

 

8.4.2.3.1 The C-BRTA must, on a quarterly basis, report to the Committee regarding the steps taken in resolving the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route;

8.4.2.3.2 The C-BRTA should report to the Committee, by the end of January 2021 and on a quarterly basis thereafter, regarding the continued engagements on the implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology;

8.4.2.3.3 The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity. Should the funding model and legislative impediments regarding regulation by the C-BRTA not be corrected, the entity will also face liquidity concerns;

8.4.2.3.4 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets havebeen met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

 

8.4.2.4 DLCA

 

8.4.2.4.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.4.2The entity must submit quarterly reports to the Committee on progress made regarding the application for approval to move to a new card format and the acquisition/procurement of a new card manufacturing machine. Should there be a failure to obtain these approvals, the entity must immediately inform the Committee of steps taken to limit service disruptions to card applicants in the event that the current machine is no longer serviced and if it becomes inoperable;

 

8.4.2.5 PRASA

 

8.4.2.5.1 General

8.4.2.5.1.1The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity and its subsidiaries (especially Autopax given its dire financial position). Should the funding model and legislative impediments regarding regulation by the PRASA not be corrected, the entity will also face liquidity concerns;

8.4.2.5.1.2 The below-than-acceptable performance requires special interventions and a rescue plan that will ensure that, in the next financial year, PRASA, focuses on the following:

8.4.2.5.1.2.1 Arresting the current decline in business performance;

8.4.2.5.1.2.2 Focusing on reliability, availability, predictability of the service that is safe and secure and improves customer service satisfaction;

8.4.2.5.1.2.3 Fixing a misaligned and fragmented organisational structure and drive efficiencies and effectiveness in the deployment of resources;

8.4.2.5.1.2.4 Bringing organisational stability and strict governance; and

8.4.2.5.1.2.5 Fast tracking the modernisation programme to improve passenger rail travel experience and ensuring that the infrastructure is suitable and depots are available to receive the new trains from Gibela;

8.4.2.5.1.3 That PRASA improves their current services and safety through the rollout of the current turnaround strategy and the entity should co-operate with the Department to ensure progress from the previous year’s War Room initiative is made on improving rail operations. The Department must deliver quarterly reports on the above to the Committee;

8.4.2.5.1.4The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.5.1.5 The entity must ensure that it improves its Financial Statement preparation;

 

8.4.2.5.2 Intersite

8.4.2.5.2.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.5.2.2The entity must work with the Department to finalise its consolidation with PRASA Cres;

 

8.4.2.5.3 Autopax

8.4.2.5.3.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.5.3.2The entity must provide the Committee with quarterly progress reports on the investigations ongoing as reported by the AGSA;

8.4.2.5.3.3 The entity must ensure that it improves its Financial Statement preparation and that it works with PRASA and the Department to find a viable solution to improve its finances;

 

8.4.2.6 PRSA

 

8.4.2.6.1The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity. Should the funding model and legislative impediments regarding regulation by the PRSA not be corrected, the entity will also face liquidity concerns;

 

8.4.2.7 RAF

 

8.4.2.7.1 The entity should cooperate with the Department to develop funding plans to ensure the financial sustainability of the entity and should provide the Committee with quarterly updates on strategies to improve the financial health status and reduction of instances where the liabilities exceed total assets of the RAF, as there was uncertainty as to whether the entity would be able to fund their future obligations. Updates should also be provided on the notable concerns regarding liquidity remaining for RAF;

8.4.2.7.2 The RAF should be supported by the Department and stakeholders in discharging its mandate of efficiently and effectively providing compulsory social insurance cover for to all users of South African roads; rehabilitate and compensate people injured owing to the negligent driving of motor vehicles;

8.4.2.7.3 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

 

8.4.2.8 RSR

 

8.4.2.8.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity. Should the funding model and legislative impediments regarding regulation by the RSR not be corrected, the entity will also face liquidity concerns;

8.4.2.8.2 The entity must ensure that it improves on its Financial Statements preparation;

 

8.4.2.9 RTIA

 

8.4.2.9.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity. Should the funding model and legislative impediments regarding regulation by RTIA not be corrected, the entity will also face liquidity concerns;

8.4.2.9.2 The entity should ensure that the required measures are in place to ensure its record keeping is improved sufficiently to prevent a future tabling delay as was experienced during this audit process;

 

8.4.2.10 RTMC

 

8.4.2.10.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.10.2The entity must remedy its inability to collect monies owed and resolve the resultant impairment of receivables due to amount owed being irrecoverable;

 

8.4.2.11 SACAA

 

8.4.2.11.1 The entity must ensure that its internal audit and senior management assurance are improved;

 

8.4.2.12 SAMSA

 

8.4.2.12.1 The entity, through the Minister, must provide adequate reasons to the Committee, by 15 December 2020, as to why the annual report of the entity was not tabled within the extended deadline. In the next reporting period, the entity must ensure that it adopts its annual report in order for the Minister to table it timeously. The entity, through the Minister, must ensure that the annual report for 2019/20 is tabled urgently;

8.4.2.12.2 The entity must urgently address the findings that led to its qualified audit as identified by the AGSA;

 

8.4.2.13 SANRAL

 

8.4.2.13.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity and should provide the Committee with quarterly updates on strategies to improve the financial health status and reduction of instances where the liabilities exceed total assets of SANRAL as there was uncertainty as to whether the entity would be able to fund their future obligations. Updates should also be provided on the notable concerns regarding liquidity remaining for SANRAL;

8.4.2.13.2 With regard to SANRAL, the Ministry must urgently seek to achieve finality regarding the GFIP funding model;

8.4.2.13.3 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets have been met. The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA;

8.4.2.13.4 The entity must ensure that it improves on its Financial Statements preparation;

 

8.4.3 Committee recommendations applicable to all entities

 

As the following recommendations have general application to all entities of the Department and for the sake of limiting repetition, the Committee recommends that the Minister, through the Department, should ensure the following:

 

8.4.3.1 When vacancies in entities arise in critical posts (CEO, CFO, COO, CPO), those appointments should be expedited so that consequence management can be implemented against officials who incur or permit irregular expenditure, as well as fruitless and wasteful expenditure;

8.4.3.2 The Committee requests the following with regard to compliance with the provisions of the PFMA:

8.4.3.2.1 The entities should capacitate their Finance and SCM directorates/departments/branches with appropriately skilled and competent personnel to prepare credible financial statements;

8.4.3.2.2 The executive authorities, accounting authorities, accounting officers and senior management should ensure that information used to prepare financial statements are accurate and reliable; and

8.4.3.2.3 The entities must ensure that all officials responsible for reporting in terms of the PFMA are reskilled by ensuring they receive training on compliance with the PFMA, ensure that these staff members undergo refresher courses on the applicable NT Regulations that are implemented from time to time, and receive training on compliance with the King Report on Corporate Governance IV;

8.4.3.3 Control processes should be adhered to in the SCM processes. Some of these highlighted by the Committee are:

8.4.3.3.1 The entities should identify and address the inefficiencies in the SCM process in the entity. There should be consequences for poor performance and failure to comply with applicable legislation;

8.4.3.3.2 Members of the relevant Board/bid evaluation committee and the chairperson should satisfy themselves that all service providers that are recommended for award have all the required documentation in terms of legislation. The list of recommended bidders should be accompanied by a signed checklist confirming the completeness of required documents;

8.4.3.3.3 Management should properly plan the acquisition of goods and services and exercise sufficient oversight and monitoring of controls to ensure that compliance with SCM policy is achieved;

8.4.3.3.4 Recurring non-compliance should be investigated and appropriate action taken against transgressors;

8.4.3.3.5 Furthermore, management should ensure its own policies and procedures are reviewed and aligned to the Framework for Managing Performance Information and the PFMA, to ensure that performance reporting requirements are properly processed by the entity;

8.4.3.4 The entities must each submit a comprehensive action plan to address any and all of the AGSA’s findings and recommendations to the Committee, followed by quarterly progress reports;

 

8.4.4 Committee recommendations to the Minister of Finance

 

The Committee regrets to report that the Minister failed to respond to these recommendations during the 2020 Budget Report, as the Minister did for recommendations made by other Committees.

It is for this failure of response from the Minister of Finance that the Committee once more recommends that the Minister of Finance, through NT, should ensure the following:

8.4.4.1 Assist the Department and its entities in strengthening their SCM policies and compliance thereto,as well as providing training to staff on compliance to PFMA provisions and Treasury Regulations and report to the Committee on this assistance by the end of January 2021;

8.4.4.2 Assist the Department with providing clarity regarding the way forward with the Moloto Rail Corridorand report to the Committee on this matter by the end of January 2021 (following the statement by the Minister in his July 2019 Budget Speech that the finalisation of the feasibility study would be prioritised compared to the 2020 responses by the Minister to other committee recommendations that the Rail Corridor is not feasible and that the funding would be directed towards the Moloto Road Programme);

8.4.4.3 Assist the Department to address the liquidity and funding concerns raised by the AGSA specifically for RAF, SANRAL, PRASA and its subsidiaries and report on this assistance by the end of January 2021;

 

8.4.5 Committee recommendations to the Minister in the Presidency

The Committee recommends that the Minister in the Presidency, should ensure the following:

8.4.5.1 Assist the Department and SANRAL in urgently processing the decision on the future funding model for the GFIP as this is still not yet finalised and the continued delays in the finalisation of the GFIP matter has continuedand continues to negatively affected the financial sustainability of SANRAL;

 

9.        SUMMARY OF REPORTING REQUESTS

 

The Committee requested additional matters for the Department to report on:

 

Table 21: 2020 Summary of Reporting Requests

Reporting matter

Action required

Timeframe

The Department should submit an improved Action Plan to address the findings of the AGSA for it and its entities, as well as the implementation of the recommendations made by the Committee in this report.

Written plan from the Department.

15 January 2021

The Department should submit a comprehensive briefing on steps it will be taking to assist in stabilising its entities (including filling of vacancies, conclusion and evaluation of shareholder agreements, improving the efficiency of the shareholder representatives on the boards, closely monitoring the implementation of projects and budget expenditure, etc.).

Monthly progress written briefings from the Department.

Monthly starting with first report due on 15 January 2021

The Department should submit a comprehensive briefing on progress made on the filling of Board vacancies in entities, as well as the filling of all critical posts within the Department and its entities.

Monthly progress written briefings from the Department.

Monthly starting with first report due on 15 January 2021

The Department should submit a comprehensive briefing on implementation of the RTRP with specific reference as well to the progress under the programme for purposes of implementation of the recommendations from the Public Protector’s Report on illegal Quantum Van conversions.

Written briefing from the Department.

15January 2021

The Department should submit quarterly reports on investigations underway in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on pending litigation, as well as settlements reached and judgments for and against the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on human resource management (retentions, secondments, transfers, retirements, training and skills transfers, resignations and dismissals), as well as report on progress in disciplinary matters (including suspensions) in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on the achievement of job creation targets in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on the achievement of transformation targets in the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on the progress towards prevention of irregular expenditure for the Department and all the entities.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on the ShovaKalulaproject.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on the progress of projects linked with the following grants:

  • PTOG
  • PRMG
  • PTNG
  • RRAMS
  • Coal Haulage Grant
  • Disaster Management Grant

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit quarterly reports on progress regarding the Moloto Corridor Project and how this affects both the Road and Rail Programmes.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department should submit a comprehensive briefing on the progress made to address and/or implement recommendations emanating from Committee Oversight Reports during the year.

Written briefing from the Department.

15January 2021

The Department should submit a progress report on the finalisation of the Public Transport Safety Plan.

Written report from the Department.

15 January 2021

The Department should submit quarterly reports on strategies to address the financial health status of:

  • C-BRTA
  • RAF
  • PRSA
  • SANRAL
  • PRASA
  • SACAA
  • ACSA
  • ATNS

Written plans from the Department of Transport and:

 

  • C-BRTA
  • RAF
  • PRSA
  • SANRAL
  • PRASA
  • SACAA
  • ACSA
  • ATNS

Quarterly reports within 30 days of the adoption of this report by the NA.

The Department, together with the C-BRTA should submit quarterly progress reports on progress regarding:

  • The implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology;
  • The resolution of the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route.

Written plan from the Department.

Quarterly reports within 30 days of the adoption of this report by the NA

The Department, in conjunction with PRASA should submit a comprehensive briefing on the Werksmans contract from conclusion of the contract in 2015 to the current status of work performed by the firm and include the total expenditure to date relating to the contract in question, as well as the progress on resolving the matters raised in the report.

Written briefing from the Department.

15January 2021

The Department, together with PRASA should submit a comprehensive briefing on:

- the Progress made due to interventions from the operations of the Administrator’s Plan during his tenure;

- the new Board interventions plan it intends to implement, as well as how this will address the shortages of trainsets currently online and how they intend to increase ridership;

- The plan in place to ensure that PRASA complies with the RSR directives and the Court Order regarding these;

- The plan in place to phase out manual authorisation or how they will ensure that the use of manual authorisation will not lead to another train collision or derailment;

- The plan to address the concerns raised regarding Autopax;

Written briefing from the Department.

15January 2021

The Department, together with the DLCA must submit a comprehensive plan on how the concerns regarding the card production machine is being addressed as well as a report on the progress made to finalise the proposed new card standards.

Written plan from the Department.

15 January 2021

The Department, together with SANRAL must submit a report on the agreements entered into and deliverables in relation to the transfer of road maintenance and further planned construction in relation to the Moloto Road Corridor with each of the relevant affected provinces and SANRAL.

Written report from the Department.

15 January 2021

The Department, together with SANRAL must submit a comprehensive plan on managing the fiscal constraints placed on the entity due to the e-tolling GFIP concerns raised.

Written plan from the Department.

15 January 2021

The Department, together with SACAA must submit a report on the progress into the investigation of the aircraft crash involving the Calibration Aircraft of the entity as well as submit the final report on this crash investigation once it is finalised.

Written progress report from the Department.

15 January 2021

 

 

10.        CONCLUSION

 

The Committee would, through its oversight and engagements with the Department and its entities, ensure that the AGSA’s recommendations are implemented by the Department and its entities. The Committee would further insist on receiving regular feedback from the Department on key issues impacting entities as identified through the oversight process performed by the Committee, as well as the Department’s own internal oversight directorate over the entities.

 

11.        APPRECIATION

 

The Committee would like to acknowledge the Minister, the Deputy Minister, the Department officials, as well asBoard Members and officials of the entities for presentations made and engagements on their annual reports and annual financial statements. 

 

The Committee applauds the achievements by the C-BRTA, DLCA, SACAA, RAF and Intersitein receiving Unqualified Audit opinions with no material findings.

 

The Committee would also like to extend a note of appreciation to its support staff during the year under review and in the compilation and capturing of the Committee reports.

 

The Democratic Alliance (DA), Economic Freedom Fighters (EFF) and Freedom Front Plus (FF Plus) parties indicated that they reject to the adoption of the report.

 

Report to be considered.

 

Attached – Annexure A: List of abbreviations/acronyms

 

 

ANNEXURE A: LIST OF ABBREVIATIONS/ACRONYMS

Abbreviation/Acronym

Meaning

AARTO

Administrative Adjudication of Road Traffic Offences

ACSA

Airports Company South Africa

AFCAC

African Civil Aviation Commission

AGM

Annual General Meeting

AGSA

Auditor-General of South Africa

APP

Annual Performance Plan

ARDP

(Draft) Access Road Development Plan

ATNS

Air Traffic Navigation Services

AU

African Union

BAC

Bid Adjudication Committee

BARSA

Board of Airlines Representatives of South Africa

B-BBEE

Broad-Based Black Economic Empowerment

BRRR

Budget Review and Recommendations Report

BRT

Bus Rapid Transport

C-BRTA

Cross-Border Road Transport Agency

C-BRTRF

Cross-Border Road Transport Regulators Forum

CEO

Chief Executive Officer

CFO

Chief Financial Officer

CNG

Compressed Natural Gas

COTO

Committee of Transport Officials

CPO

Chief Procurement Office

DG

Director-General

DGEC

Directors-General of the Economic Cluster

DDG

Deputy-Director General

DGOs

Dangerous Goods Operators

DLCA

Driving Licence Card Account

DLTC

Driving Licence Testing Centres

DPE

Department of Public Enterprises

DPME

Department of Planning, Monitoring and Evaluation

DPSA

Department of Public Service and Administration

eNaTIS

Electronic National Traffic Information System

ESEID

Economic Sectors, Employment and Infrastructure Development

EXCO

Executive Committee

FMPPI

Framework for Managing Programme Performance Information

FOSAD

Forum of South African Directors-General

GFIP

Gauteng Freeway Improvement Project

GHG

Greenhouse Gas

GDP

Gross Domestic Product

GDYC

Gender, Disability, Youth and Children

GTS

Green Transport Strategy

HRD

Human-Resource Development

IA

Issuing Authority

ICAD

International Civil Aviation Day

ICAO

International Civil Aviation Organisation

ICT

Information and Communications Technology

IMO

International Maritime Organisation

IPAP

Industrial Policy Action Plan

IPTNs

Integrated Public Transport Networks

IPTTP

Integrated Public Transport Turnaround Plan

IRERC

Interim Rail Economic Regulatory Capacity

IT

Information Technology

KPI

Key Performance Indicator

LDV

Light Delivery Vehicle

LPG

Liquefied Petroleum Gas

MECs

Members of the Executive Council

MEOSAR

Medium Earth Orbit Search and Rescue 

MLPS

Long Distance (Main Line) Passenger Service

MOU

Memorandum of Understanding

MTEF

Medium-Term Expenditure Framework

MTP

Comprehensive Maritime Transport Policy

MTSF

Medium-Term Strategic Framework (2014-19)

MTT

Ministerial Task Team

M&E

Monitoring and Evaluation

NA

National Assembly

NADP

National Airports Development Plan

NATMAP 2050

National Transport Master Plan 2050

NCAP

National Civil Aviation Policy

NCCRS

National Climate Change Response Strategy

NCOP

National Council of Provinces

NDP

National Development Plan

NEDLAC

National Economic Development and Labour Council

NICRO

South African National Institute for Crime Prevention and the Reintegration of Offenders

NIP

National Infrastructure Plan

NQF

National Qualifications Framework

NRSS

National Road Safety Strategy

NRTA

National Road Traffic Act

NSRI

National Sea Rescue Institute

NT

National Treasury

PEPFRA

Ports Economic Participation Framework

PFMA

Public Finance Management Act

PICC

Presidential Infrastructure Coordinating Commission

PMDS

Performance Management and Development System

PPP

Public-Private Partnership

PRASA

Passenger Rail Agency of South Africa

PRSA

Ports Regulator of South Africa

PRMG

Provincial Roads Maintenance Grant

PSC

Passenger Safety Charge

PSP

Private Sector Participation

PTNG

Public Transport Network Grant

PTOG

Public Transport Operations Grant

RABS

Road Accident Benefit Scheme

RAF

Road Accident Fund

RFS

Road Freight Strategy

RSA

Republic of South Africa

RSR

Railway Safety Regulator

RTIA

Road Traffic Infringements Agency

RTMC

Road Traffic Management Corporation

RTRP

Revised Taxi Recapitalisation Programme

SAAF

South African Air Force

SAATM

Single African Air Transport Market

SABC

South African Broadcasting Corporation

SABOA

Southern African Bus Operations Association

SACAA

South Africa Civil Aviation Authority

SADC

Southern African Development Community

SAMSA

South African Maritime Safety Authority

SANRAL

South African National Roads Agency Limited

SAPS

South African Police Services

SARS

South African Revenue Service

SASAR

South African Search and Rescue Organisation

SCM

Supply Chain Management

SEIAs

Socio Economic Impact Assessment System

SIP

Strategic Infrastructure Programme

SMART

Specific, Measurable, Achievable, Realistic and Timely

SMME

Small, medium and micro enterprises

SMS

Senior Management Service

SmS

Safety Management System

SMSR

Safety Management System Report

SOEs

State-owned Enterprises

SONA

State of the Nation Address

SSP

S’hamba Sonke Programme

STER

Single Transport Economic Regulator

TAT

Transport Appeals Tribunal

TETA

Transport Education and Training Authority

TFR

Transnet Freight Rail

TNPA

Transnet National Ports Authority

ToR

Terms of Reference

TRP

Taxi Recapitalisation Programme

TVET

Technical Vocational Educational and Training

UN

United Nations

VTC

Vehicle Testing Centres

WHO

World Health Organisation

WITS

University of Witwatersrand

YD

Yamoussoukro Decision

 

 


[1] Department of Transport (2020), p. 51.

[2]Department of Transport (2017), p. 15.

[3]Ibid.

[4]Ibid.

[5]Department of Transport (2017), p. 7.

[6]Ibid.

[7] Ramaphosa (2019).

[8] Department of Transport (2020), pp. 73-74.

[9] Annual Report for 2019/20 Financial Year Vote 35: Department of Transport p20.

[10] Under the Freight Logistics projects, the Department indicates in its annual report that these projects going forward may be delayed due to the impact thereon by the Covid-19 restrictions that came into place at the end of the year under review.

[11] Annual Report for 2019/20 Financial Year Vote 35: Department of Transport, p.69.

[12] Annual Report for 2019/20 Financial Year Vote 35: Department of Transport, p. 20.

[13] Department of Transport (2019b), p. 35.

[14] Department of Transport (2020), p. 31.

[15] Department of Transport (2020), p. 32.

[16] Department of Transport (2020), p. 336.

[17]Ibid.

[18]Ibid.

[19]Ibid.

[20] Department of Transport (2020), p. 32.

[21] Department of Transport (2020), p. 337.

[22] Department of Transport (2020), p. 33.

[23] Department of Transport (2020), p. 337.

[24]Ibid.

[25] Department of Transport (2020), p. 33.

[26] Department of Transport (2020), p. 338.

[27]Ibid.

[28] Department of Transport (2020), p. 34.

[29] Department of Transport (2020), p. 338.

[30]Ibid.

[31]Ibid.

[32] Department of Transport (2020), p. 34.

[33] Department of Transport (2020), p. 339.

[34]Ibid.

[35]Ibid.

[36] Department of Transport (2019b).

[37] Department of Transport (2020), p. 35.

[38] Department of Transport (2020), p. 339.

[39]Ibid.

[40]Ibid.

[41] Department of Transport (2019), p. 38.

[42]Department of Transport (2020), p. 36.

[43] Department of Transport (2020), p. 37.

[44] Ibid.

[45]Ibid.

[46]Ibid.

[47] Department of Transport (2020), pp. 37-38.

[48] Department of Transport (2020), p. 38.

[49] Annual Report for 2019/20 Financial Year Vote 35: Department of Transport, p. 44.

[50] Department of Transport (2020), pp 269-274.

[51] Department of Transport (2020), p. 272.

[52] Department of Transport (2020), p. 272.

[53] Department of Transport (2020), p. 273.

[54] Department of Transport (2020), p. 273.

[55] Department of Transport (2019b), 241.

[56] Department of Transport (2020), p. 274.

[57] Department of Transport (2020), pp. 76-166.

[58] Department of Transport (2019b).

[59] Department of Transport (2020), pp. 75-118.

[60] Department of Transport [2020), p. 78.

[61] Department of Transport (2020), p. 114.

[62] Department of Transport (2020), p. 119.

[63] Department of Transport (2019b). p. 87.

[64] Department of Transport (2019b), p. 98.

[65] Department of Transport (2020), p. 114.

[66] Department of Transport (2020), p. 119.

[67]Ibid.

[68] Department of Transport (2020), p. 232.

[69] Department of Transport (2020), pp 269-274.

[70] Department of Transport (2020), p. 272.

[71] Department of Transport (2020), p. 272.

[72] Department of Transport (2020), p. 273.

[73] Department of Transport (2020), p. 273.

[74] Department of Transport (2019b), 241.

[75] Department of Transport (2020), p. 274.

[76]Department Annual Report 2019/20 p 263.

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