ATC210205: Budgetary Review and Recommendation Report of the Portfolio Committee on Sports, Arts and Culture on the Performance of the Department of Arts and Culture for the 2019/20 Financial Year, Dated 2 February2021

Sport, Arts and Culture

THE BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON SPORTS, ARTS AND CULTURE ON THE PERFORMANCE OF THE DEPARTMENT OF ARTS AND CULTURE FOR THE 2019/20 FINANCIAL YEAR, DATED 2 FEBRUARY2021
 

The Portfolio Committee on Sports, Arts and Culture (hereinafter referred to as “the Committee”), having considered the 2019/20 financial and non-financial performance of the Department of Arts and Culture (hereinafter referred to as “the Department”), reports as follows:

1.INTRODUCTION

1.1.Mandate of the Committee

 

The Constitution of the Republic of South Africa, 1996, empowers the National Assembly (NA), through its committees, to ensure that executive organs of the state in the national sphere of government are accountable to it. It further empowers the NA to maintain oversight of the exercise of the national executive. In order for the Committee to provide oversight, the Budget Review and Recommendation Report (BRRR) is an essential tool to assess the Department’s performance and strategic direction. The BRRR also acts as a mechanism to measure service delivery and identify areas that require urgent interventions. This process enables the Committee to understand how the Department has expended its appropriated budget.

 

1.2.Description of Core Functions of the Department of Arts and Culture

The Department derives its mandate from the Constitution with specific focus on language and culture, access to information and, to some extent, education. The Department further seeks to unleash the potential of the Arts, Culture and Heritage (ACH) sector to contribute to job creation and economic growth and development through the Mzansi Golden Economy (MGE) strategy. The Department focus is to promote and preserve infrastructure, provide community library services, position cultural and creative industries to contribute to economic growth, and facilitate social cohesion and nation building. In addition, the Department is also responsible for the promotion of the performing arts in South Africa; provision and promotion of official languages and enhancement of linguistic diversity in South Africa; and provision and maintenance of the declared cultural institutions, National Archives and National Library of South Africa. The Department is responsible for 26 entities established to enable the Department to deliver on its mandate. These entities are categorised into Development Agencies, Performing Arts Institutions, Libraries, Heritage Institutions (Robben Island Museum, which is a World Heritage Site) and Constitutional Institution, i.e. the Pan South African Language Board (PanSALB).

The Medium Term Strategic Framework (MTSF) identifies key priorities, which are delineated into fourteen outcomes and associated activities and targets. Outcome 14, ‘a diverse, socially cohesive society with a common national identity’ that responds to chapter 15 of The National Development Plan: Vision for 2030 (NDP) is assigned to the Department. In response, the Department has developed the following strategic outcomes-oriented goals:

 

• A transformed and productive ACH sector, aiming to:
  • Develop, protect and promote the cultural and creative sector;
  • Develop, preserve, protect and promote heritage;
  • Develop and promote the official languages;
  • Build relationships and partnerships locally and internationally; and
  • Provide access to information.

 

• An integrated and inclusive society, aiming to:
  • Lead, coordinate and implement social cohesion programmes.

 

• An efficient and effective ACH sector, aiming to:
  • Create a coherent policy and legislative environment for the ACH sector;
  • Drive integrated outcomes-based research, planning, monitoring and evaluation across the sector;
  • Implement sound financial management and control systems; and
  • Strengthen and modernise archives and records management systems.

 

• A professional and capacitated ACH sector, aiming to:
  • Build human resource capacity and promote excellence.

 

During the reporting period, it was announced that the Department will merge with the Department of Sport and Recreation South Africa (SRSA) by 1 April 2020. The two departments worked together to implement action plans for different workstreams to develop organisational and programme structures for the new Department of Sports, Arts and Culture (DSAC).

1.3.Purpose of the Budgetary Review and Recommendation Report

Section 5 of the Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009) requires the National Assembly, through its Committees, to produce a BRRR which assesses the performance of each national department with reference to the following:

• The Medium Term Estimates of Expenditure, Strategic Priorities and Measurable Objectives, as tabled in the NA;
• Prevailing Strategic Plans;
• The Expenditure Report as published by the National Treasury in terms of section 32 of the Public Finance Management Act (No. 1 of 1999);
• The Financial Statements and Annual Reports;
• The Reports of the Committee of Public Accounts; and
• Any other information requested by or presented to a House of Parliament.

 

The purpose of this report is to account in accordance with Rule 339 of the Rules of the National Assembly for the work done by the Committee in considering the 2019/20 Annual Reports of the Department and entities which were tabled in accordance with Section 40 (1) of the Public Financial Management Act (PFMA); and as referred in terms of the National Assembly Rule 338 by the Speaker to the Committee for consideration and reporting in terms of Rules 339 and 340, respectively.

 

As such, the BRRR must provide an assessment of the Department’s service delivery performance given available resources. It must also provide an assessment of the effectiveness and efficiency of the department’s use of available resources and may include recommendations on the future use of resources.

 

1.4.Method

In compiling the 2020 BRRR the Committee utilised the following documents:

• 2019 President’s State of the Nation Address (SONA);
• 2014 – 2019 MTSF;
• 2015/16 – 2019/20 Strategic Plan of the Department of Art and Culture;
• 2020/21 Annual Performance Plan of the Department of Sport, Arts and Culture;

• 2020/21 First quarterly report of the Department of Sport, Arts and Culture and entities;
• 2019/20 Annual Report of the Department of Arts and Culture and entities;
• 2019/20 Budget Review and Recommendation Report of the Portfolio Committee on Arts and Culture; and
• The NDP.

 

The Committee invited the Auditor-General of South Africa (AGSA) to explain the 2019/20 audit outcomes of the Department and the entities, and considered the Department’s2019/20 Annual Report on 26 January 2021.

1.5.Portfolio Committee’s Oversight Environment

After the general and provincial elections in 2014, the establishment of the fifth Parliament and the fifth administration, Government published the 2014 – 2019 MTSF. This strategic roadmap identified the following priorities:

• Radical economic transformation, rapid economic growth and job creation
• Rural development, land and agrarian reform and food security;
• Ensuring access to adequate human settlements and quality basic services;
• Improving the quality of and expanding access to education and training;
• Ensuring quality health care and social security for all citizens;
• Fighting corruption and crime;
• Contributing to a better Africa and a better world; and

• Social cohesion and nation building.

These priorities were then expanded into fourteen outcomes and their associated activities and targets. The outcome that is allocated to the Department is Outcome 14, ‘a diverse, socially cohesive society with a common national identity’.

The call for the shared responsibility of building a better South Africa is a recurring appeal common to all SONAs post the publication of the NDP. While SONA 2020 SONA 2020 did not make any specific mention of the sector, the following possibly have some bearing on the sector:

• The President opened his address with remarks about the 30th anniversary of the release of Nelson Mandela and mentioned the fact that after 50 years, the location of the burial of freedom fighter, Basil February remains unknown. Both events in history are linked to the Resistance and Liberation Heritage Route. This project located within the National Heritage Council (NHC), is a national memory project aimed at commemorating, celebrating, educating, promoting, preserving, conserving and providing a durable testament of South African’s road to independence.
• A new University of Science and Technology will be established in Ekurhuleni and will feed into the national agenda to enhance the country’s 4th Industrial Revolution (4IR) efforts. The World Economic Forum claims that in 2020 creative thinking will be third on the list of the most important skills needed to survive and thrive during the 4IR. Creativity and innovation should not be regarded as separate skills as the former has the ability to drive the later. This link between the ACH sector and higher education and training, specifically science and innovation, should be at the forefront of planning and perhaps needs be coordinated.
• Concerning youth unemployment, the ACH sector through the MGE strategy should continue to prioritise reducing youth unemployment. The development of “new and innovative ways to support youth entrepreneurship and self-employment” should not be to the exclusion of the ACH sector.
• Lastly, the President ended his address with an extract from the song, “World in Union” used as the theme song for the International Rugby Board (IRB) 1995 Rugby World Cup which speaks to power of the sector to contribute to national building and social cohesion.

According to its 2019/2020 Annual Performance Plan (APP), the Department’s programme of action was guided by the following priorities:

• Accelerating and amplifying nation building and social cohesion and dealing with, inter alia, the challenges of racism;
• Focusing on Africa and the global space;
• The infrastructure programme, including the National Heroes’ Acre Project and the Liberation Heritage (RLH) Route;
• Promotion of all official languages;
• Ensuring that Mzansi Golden Economy (MGE) benefits previously disadvantaged arts practitioners;
• The library and archives programme;
• The Community Arts Programme; and
• Ensuring that the school curriculum teaches correct South African heritage and history through the Arts Education Programme and DAC Schools Programme.

 

1.5.1The Portfolio Committee oversight approach

The Committee acknowledges that the Department has a pivotal role to play in realising the vision of the NDP, in particular Outcome 14.The oversight activities of the Committee aim at accelerating the delivery of arts, culture and heritage services and infrastructure. As such, the Committee engaged the Department and its entities to ensure their strategic priorities are aligned to those of Government and the NDP.

1. Oversight role of the Committee

As mandated by section 55 of the Constitution of the Republic of South Africa, 1996, the Committee exercised it oversight function through robust portfolio committee meetings where the executive accounts on a regular basis. The Committee ensured that the Department accounts to it on its Annual Performance Plans, Quarterly Reports, Annual Reports and other activities that the Department is engaged in. On Quarterly Reports and Annual Report, the Committee ensured that the Department accounts for its performance and other pertinent matters.

2.OVERVIEW OF THE KEY RELEVANT POLICY FOCUS AREAS

The following events and achievements characterised the sector during the 2019/20 financial year:

2.1.Revised White Paper

During the reporting period, the Department submitted the Revised White Paper to Cabinet for consideration and approval.Therationale for the revision was to consolidate the democratic dispensation established for the sector in 1996 and to reposition it to effectively accelerate transformation by addressing shortcomings and integrating it into national and international policies with a direct bearing on the sector. These include the NDP; National Strategy for Social Cohesion and Nation Building (2011); UNESCO Declaration of Cultural Diversity (2001); Convention for the Safeguarding of the Intangible Cultural Heritage (2003); Charter for African Cultural Renaissance (2006), Convention on the Protection and Promotion of the Diversity of Cultural Expression (2005) and the African Union’s Agenda 2063 (2014).The revised White Paper revokes elements of the 1996 White Paper on Arts, Culture andHeritage that is outdated and disharmonious with the present political and sector approach todeveloping the cultural and creative industries and increasing its contribution to addressingthe country’s triple challenges of unemployment, poverty and inequality.

 

2.2.South African Public Library and Information Services (SAPLIS) Bill

Cabinet approved this Bill in February 2019 for public comment. The Bill seeks to address the transformational issues in providing public libraries with the communities particularly those previously disadvantaged communities and provides the norms and standards of the ideal public library. The implementation of the norms and standards will have serious financial implications for all spheres of Government that are involved in managing, funding and delivering library and information services (LIS). Based on the financial implications, and after consulting with the National Treasury, the Department deemed it not practical in the short to medium term to implement the Bill. Consequently, the Department informed Cabinet about the proposal to delay the implementation of the Bill by at least three years based on the current financial status of Government. Notwithstanding, the implementation of this critical Bill will, above addressing the inequality in the provision of LIS, requires the expansion of library infrastructure and personnel thus contributing to job creation. The Committee has noted the financial implications for the implementation of this Bill. The Bill will be reconsidered once National Treasury permits the implementation thereof to proceed.

3.SUMMARY OF THE PREVIOUS KEY FINANCIAL AND NON-FINANCIAL PERFORMANCE RECOMMENDATIONS OF THE PORTFOLIO COMMITTEE

3.1.Overview of the 2019 BRRR Recommendations

• Mzansi Golden Economy: The Department should find ways of utilising these funds effectively so that the anticipated jobs could be created. 
• Consequence Management: Leadership should ensure that all those who are found to have contravened legislation, policies and regulations are reprimanded accordingly.
• Succession Planning: The Department should develop a succession policy and ensure that all employees are part of its development as well as its implementation.
• Recruitment and selection: When the Department uses agencies, the prospective employee should be in the employment of the Department not that of the agency. This is in line with the recent amendment of the Labour Relations Act (LRA), which dictates that clients of labour brokers have to hire contractors after three months who earn less than R205 433 annually.
• Proper Planning: The Department should ensure that it applies the SMART principles in their planning.
• Leadership: The Department should strengthen its monitoring on all of its entities, and all the personnel in the monitoring and evaluation unit should be held accountable for underperformance on entities.
• Irregular, fruitless and wasteful expenditure: Internal control mechanisms should be strengthened to curb the recurrence of irregular, fruitless and wasteful expenditure. The PFMA section 81(1)(b) states that an accounting officer of an institution commits an act of financial misconduct if that accounting officer wilfully or negligently permits an unauthorised expenditure, an irregular expenditure or wasteful expenditure. All senior managers, if found to have been negligent on irregular, fruitless and wasteful expenditure, should be held accountable.
• The Department to look at a feasibility study for the amalgamation of the entities reporting to the Department as twenty-five was deemed too many to manage.
• Members believed that consequence management should be initiated against the affected officials regarding the R17 million that the Department had to pay for the court cases.
• Members indicated that the Committee should devise mechanisms that will ensure that the Department and its entities were held accountable.
• Members also recommended that the entities that received a poor audit outcome during this financial year under review must work towards an improved audit outcome in the next financial year. 
• Some Members of the Committee raised a concern that they were expected to support a report where certain public holidays were said to have been celebrated successfully whereas in reality it was not the case. For an example, some people in the society do not celebrate Heritage Day but celebrated the National Braai Day and this does not promote social cohesion.

The Committee made no recommendations relating directly to the National Treasury and thus the 2020 Budget Review does not contain any responses to the Committee.

3.2.2020/21 Committee Budget Vote 37 Report

Summary of selected 2020/21 Committee Budget Vote 37 report recommendations

The Committee, having considered the Budget Vote 37: Sport, Arts and Culture and the 2020/2021 Annual Performance Plan (APP), made the following recommendations:

1. The Committee should consider whether the budget allocation increase of R4.7 million for PanSALB is sufficient given the National Lexicography Units and the National Language Bodies has placed financial strain on the institution in the past.
2. No significant additional financial support is provided to the performing arts institutions. The Department should elaborate on other means of support provided to ensure that these institutions operate effectively and are able to fulfil their mandate. The Department should also detail strategies in place to ensure that these theatres are working towards being sustainable.
3. Public entities, particularly those with an art, culture and heritage focus, already spend a major share of their budget allocations on compensation of employees. The Department should report on how it is assisting cultural entities with devising plans and strategies to ensure that museums and performing arts institutions manage to create premium exhibitions and shows to attract new and diverse audiences, with the ultimate goal of being self-sustainable.
4. The Department needs to provide the Committee with a detailed long-term plan for the ongoing support for practitioners in light of the impact of COVID-19 with respect to job and income losses.

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

The Committee supported the 2019/20 budget of the Department and its Annual Performance Plan (APP). It also supported the strategic alignment of the Department’s programmes with the NDP.

 

4.1.Overview and assessment of the overall budget and expenditure

The Department’s budget funds four programmes; namely, Programme 1: Administration, Programme 2: Institutional Governance, Programme 3: Arts and Culture Promotion and Development, and Programme 4: Heritage Promotion and Preservation. Programmes 3 and 4 received 90,1% of the Department’s total budget allocation.

 

For the 2019/20 financial year, the Department’s total original budget allocation was R4,617 billion. This was adjusted downwards by 1%, or R45.4 million which was declared unspent funds across two budget programmes, namely Programme 1 and 4.

• Programme 1: R5.4 million in unspent funds was declared on compensation of employees as the Department did not have to carry the costs of the office of the deputy minister, which were carried by the SRSA.
• Programme 4: R40 million in unspent funds was declared on capital works due to various challenges in implementing heritage and infrastructure projects. Of this, R5 million has been declared on the Sarah Baartman Centre; R5 million on the Isibhubhu Cultural Arena; R20 million on the National Archives; R5 million on the Performing Arts Centre of the Free State; and R5 million on the KwaZulu-Natal Museum.

The Department’s final appropriation for the 2019/20 financial year was thus R4,572 billion. Actual expenditure for the period under review was R4,335 billion. Expenditure thus represents 95.0% of the final appropriation and is a regression on the 97.7% expenditure for the 2018/19 financial year.

Table 1: 2019/20 budget allocation and expenditure

APPROPRIATION PER PROGRAMME	FINAL APPROPRIATION	ACTUAL EXPENDITURE	VARIANCE	% SPENT
	R’000	R’000	R’000	%
Administration	328 599	304 250	24 349	92.6%
Institutional Governance	148 866	141 107	7 759	94.8%
Arts and Culture Promotion and Development	1 131 870	1 068 750	63 120	94.4%
Heritage Promotion and Preservation	2 962 750	2 830 460	132 290	95.5%
TOTAL	4 572 085	4 344 567	227 518	95.0%

Source: DAC 2019/20 Annual Report

Table 1 above reflects that overall under-expenditure amounts to R227.5 million or 5.0% of the final appropriation. Under-expenditure in 2018/19 amounted to R100.8 million or 2.3% of the final appropriation. Therefore, this indicates a year-on-year regression in unspent funds.

 

1. Expenditure estimates per economic classification

 

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

APPROPRIATION PER ECONOMIC CLASSIFICATION	FINAL APPROPRIATION	ACTUAL EXPENDITURE	VARIANCE	% SPENT
	R’000	R’000	R’000	%
Current payments	747 652	673 522	74 130	90.1%
Compensation of employees	267 458	248 828	18 630	93.0%
Goods and services	480 193	424 693	55 500	88.4%
Transfers and subsidies	3 697 868	3 624 490	73 378	98.0%
Payments for capital assets	125 816	45 806	80 010	36.4%
Payments for financial assets	749	749		100.0%
TOTAL	4 572 085	4 344 567	227 518	95.0%

Source: DAC 2019/20 Annual Report

 

The Department had spent R248,8million on compensation of employees against the available budget of R267,5million, representing 93.0% of the budget spent. Underspending on compensation of employees amounted to R18,6 million, or 7% of the available budget. The Department could not conduct recruitment after the announcement of the merger and had to first conclude the process of national macro-organisation of the state. Filling of the posts needed to be put on hold while placing staff into the new start-up structure. Underspending on compensation of employees wasattributed to vacant posts that were in the process of being filled.

 

Expenditure on goods and services amounted to R424,7 million against the available budget of R480,2 million, translating into an underspending of R55,0 million. The underspending was due to challenges experienced in the procurement of the appointment of transaction advisers to conduct a feasibility study for the National Archives new purpose building. Due to the COVID-19 pandemic, flagship events were cancelled/postponed and provinces could therefore not submit claims.

 

Regarding transfers and subsidies, the Department had spent R3,62 billion against the available budget of R3.70 billion, translating into 98,0% of the budget spent. Expenditure on paymentsfor capital assets amounted to R45,8 million against the budget of R125,8 million. This represents 36,4% of the available budget spent. Underspending on payments for capital assets at the end of the financial year amounted to R80,0 million.

 

All virements were approved during and post the Adjusted Estimates of National Expenditure (AENE). Approval for all virements above the 8% threshold was granted by Parliament. The approved virements emanate from legacy projects reprioritisation, MGE work streams and reclassification of items. Approvals were granted prior to incurring the expenditure.

 

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

The Public Finance Management Act, 1999 (Act No. 1 of 1999) section 38(1)(c) (ii) states that the accounting officer of a department, trading entity or constitutional institution must take effective and appropriate steps to prevent unauthorised as well as irregular, fruitless and wasteful expenditure resulting from criminal conduct.

 

In the 2019/20 financial year, the irregular expenditure opening balance was R437 million and irregular expenditure relating to 2019/20 amounted to R2 million. As the end of the reporting period, no amount was condoned as the Department was still waiting for an investigation report.

 

Irregular expenditure across the entire portfolio, including the Department, decreased from R98,5 million in 2018/19 to R59,6 million in 2019/20. For the reporting period, the majority of irregular expenditure R30,0 million, or 51%, was incurred by National Arts Council (NAC)and it relates to transfer payments made irregularly. Generally, for the portfolio, the nature of the irregular expenditure includes:

• Awarding of contracts without following tender process;
• Procuring goods without inviting at least the minimum prescribed number of written price quotations from prospective suppliers, and the deviations were approved even though it was possible to obtain the quotations;
• Payments exceeding the approved budget; and
• Undisclosed subcontracting by supplier.

 

The Department incurred fruitless and wasteful expenditure amounting to R36.1 million substandard work identified on the legacy projects and interest paid on overdue accounts. The legacy projects affected by substandard work include:

• eNyokeni Cultural Precinct;
• Winnie Madikizela-Mandela House Museum;
• Dr John Langalibalele (JL) Dube House;
• Oliver Reginald (OR) Tambo Memorial Centre; and
• Khananda Hill Massacre Museum.

 

Across the portfolio, fruitless and wasteful expenditure increased from R35,0 million in 2018/19 to R67,9 million in 2019/20. After the Department, the South African State Theatre was the highest contributor to fruitless and wasteful expenditure incurred, i.e. R26,0 million or 38% due to fraud and loss.

 

The Department incurred no unauthorised expenditure during 2019/20.

 

1. Contextualising the report of the Auditor-General of South Africa

The Department has achieved a financially unqualified audit opinion with findings. The audit opinion thus remains unchanged from those achieved for the last six financial years, with the Department receiving a qualified audit opinion in 2013/14.

 

Emphasis of matter:

Fruitless and wasteful expenditure of R36 million that was incurred in the previous years is still under determination as quantification process is still in progress.

Related party transactions which reflected underspending on the project. Cumulative amount of R75 million to the venture capital fund over the past three years and only R11 million have been disbursed.

 

Report on the audit of the annual performance report:

No material findings on the usefulness and reliability of the reported performance information was identified for the audited programme, namely Programme 3.

Financial statements, performance reports and annual reports:

The financial statements submitted for auditing were not prepared in accordance with the Modified Cash Standard (MCS) and were not supported by full and proper records as required by section 40(1) (a) and 40(1)(b) of the PFMA. The Department corrected material misstatements of disclosure items and lease payments identified by the auditors in the submitted financial statements and the supporting records were provided subsequently, resulting in the financial statements receiving an unqualified opinion.

 

Expenditure management:

The Department failed to take effective steps to prevent fruitless and wasteful expenditure and irregular expenditure. Fruitless and wasteful expenditure amounting to R36,0 million was incurred with the overwhelming majority of this stemming from work performed on the legacy infrastructure projects and overpricing on those projects in prior years. The majority of the irregular expenditure amounting to R1.9 million was incurred by deviating from the normal procurement processes where the reasons for such deviations were not justifiable. Further, payments were not made within 30 days or an agreed period after receipt of an invoice. The AG has flagged expenditure management for at least five successive financial years.

 

Procurement and contract management:

There was no adequate monitoring on the contract entered into by the Department on Government-owned properties leased on behalf of its entities, management could not identify amounts to be paid by the Department that arise from this arrangement.

 

Consequence management:

The AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred fruitless and wasteful expenditure and irregular expenditure as required by section 38(1)(h)(iii) of the PFMA. This was due to an investigation which was not initiated within 30 days after determination test, consequently at year end the investigation had not been concluded by the Department. Information regarding the disciplinary hearing was recently submitted

 

A snapshot of the audit across the portfolio shows the following:

Movement in audit opinion

• Seven auditees retained its clean audit and two audits improved from unqualified with findings in the prior year to a clean audit in the current year. The NAC, South African Heritage Resources Agency (SAHRA), War Museum of the Boer Republics, Playhouse Company and Kwa-Zulu Natal museum for achieving a clean audit for three or more years in a row.
• It is concerning thattwo auditees regressed from unqualified audit opinion with findings in the prior year to a qualified opinion in the current year and NHC regressed from unqualified without findings to qualified opinion in the current year.
• The Performing Arts Centre of the Free State (PACOFS) has slightly improved from disclaimer to qualified audit opinion; however, concerns remain as the entity has not improved their audit outcomes for the past five years.

 

Financial statements

The percentage of unqualified financial statements presented to the AGSA decreased from 80% in 2018/19 to 73% in 2019/20. This is a regression that needs to be addressed.

 

Performance reports

There has been an improvement of the percentage of findings on performance reports. This figure moved from 77% in 2018/19 to 85% in 2019/20.

 

Compliance with legislation

The percentage of no findings on compliance with legislation has increased from 35% in 2018/19 to 50% in 2019/20. This signifies a positive improvement in this regard for the portfolio.

 

4.2.Overview and assessment of the programme budget and expenditure for 2019/20 financial year

 

1. Overview of overall programme performance

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

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

	Programme 1 Administration	Programme 2 Institutional Governance	Programme 3 Arts and Culture Promotion and Development	Programme 4 Heritage Promotion and Preservation	Total
Financial performance
Final appropriation (R’000)	328 599	148 866	1 131 870	2 962 750	4 572 085
Actual expenditure (R’000)	304 250	141 107	1 068 750	2 830 460	4 344 567
Expenditure as % of final appropriation	92,6%	94,8%	94,4%	95,5%	95.0%
Non-financial performance
Targets achieved	5	8	8	9	30
Targets not achieved	-	4	3	1	8
Total targets	5	12	11	10	38
Success rate	100%	67%	73%	90%	79,0%

Source: Department of Arts and Culture, 2019/20 Annual Report

A total of eight targets (21%) were not fully achieved out of 38 planned targets for the year under review. Half of the total targets that were not achieved were located in Programme 2. Programme 1, which is responsible for the provision of leadership, management and support functions to the Minister, Deputy Minister, Director-General (DG) and the Department, has achieved all five planned targets.

The performance targets that were not achieved as planned included:

Programme 2: Institutional Governance

The purpose of this programme is to coordinate and manage all crosscutting functions of the Department and its public entities, and to provide support and oversight to these public entities.

 

• Number of CEOs forum held.

The Department attributed the deviation to competing priorities in the Chairperson's diary; the meeting scheduled for February was postponed to 27 March 2020. However, as a result of the national lockdown, the scheduled meeting could not take place and was instead convened on 23 April 2020.

• Number of reports on the implementation of the social cohesion compact.

The target was recorded as not achieved due to inadequate corroborating evidence. The social cohesion compact could not be finalised during the year under review.

• Number of arts and youth development programmes supported.

One of the programmes was only partially supported. As such, the programme did not have adequate corroborating evidence to substantiate full achievement.

• Number of arts and social development programmes supported.

None of the programmes had adequate corroborating evidence to substantiate full achievement.

 

Programme 3: Arts and Culture Promotion and Development

• Number of sector organisations supported.

While four sector organisations were supported, seven reported as fully achieved were partially supported and thus have inadequate corroborating evidence to substantiate full performance. Contributing factors include instances of organisations that could not conclude their programmes due to the limitation of social gatherings due to COVID-19 lockdown and restrictions, including delays in the submission of compliance documents to conclude the programmes. Further, one of the envisaged twelve sector organisations was not supported at all due to budget constraints.

• Number of provincial community arts programmes supported.

None of the planned provincial community arts programmes were fully supported or concluded in the year under review. Seven provincial community arts programmes received partial financial support, and these include programmes based in Free State, North-West, Northern Cape, KwaZulu-Natal, Limpopo, Eastern Cape and Gauteng. The Western Cape and Mpumalanga based programmes did not receive financial support at all. Contributing factors include delays in finalising business plans which led to delays in starting and finalising the projects, including the payments thereof.

• Number of capacity building programmes supported.

Out of the 23 planned programmes supported, only 12 were fully supported. An additional 14 capacity building programmes to the 12 reported as achieved were only partially supported and thus could not be completed. Contributing factors include instances of programmes that could not be concluded due to the limitation of social gatherings due to COVID-19 lockdown and restrictions, including delays in the submission of compliance documents to either start the programmes or conclude the programmes.

 

Programme 3: Heritage Promotion and Perservation

• Number of multi–year heritage infrastructure projects completed.

One of the two planned projects was completed as planned. The OR Tambo Garden of Remembrance Construction was not completed and the Department noted according to the report from the implementing agent, the progress on the construction was heavily affected by the weather. As a result, a number of construction days were lost.

 

1. Entities of the Department of Arts and Culture

For the current reporting period, the Committee has not considered the 2019/20 annual reports for any of the entities reporting to the Department.

5.COMMITTEE OBSERVATIONS

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

Strategic planning

5.1. The Committee is greatly concerned about the drastic impact the global COVID-19 pandemic has on the lives and livelihoods of practitioners in the creative industry.

5.2.The Committee noted with concern that public entities spend a major share of their budget allocations on compensation of employees.

 

Strengthening internal controls and financial management

5.3.The increase in fruitless and wasteful expenditure and the continued incurrence of irregular expenditure is of concern, especially given the current economic climate.

5.4.The Committee has observed the downward movement in the quality of initial submission of performance reports. This impacts negatively on the time taken for the AGSA to finalise the auditing process.

5.5. Based on the assessment of eight auditees not classified as small auditees, the AGSA has indicated that intervention is required relating certain areas of internal control. These include effective leadership (PanSALB), daily and monthly controls (the Department), the review and monitoring of compliance (the Department and PanSALB), and risk management (PanSALB).

5.6. The Committee has noted with appreciation that the Department has introduced phases of the COVID-19 Sector Relief Fund to assist artists and technical personnel to soften the economic impact of the COVID-19 pandemic.

Governance

5.7.In spite of the NAC having attained a clean audit opinion for the reporting period, the Committee expressed concern that majority of the irregular expenditure across the portfolio was incurred by National Arts Council relating to transfer payments made irregularly to orchestras on behalf of the Department.

5.8. The Committee notes that PanSALB has been flagged by the AGSA as an institution requiring intervention relating to governance.

 

Investigations and consequence management

5.9.While there has been a general improvement on findings relating to compliance with key legislation, the Committee notes with concern that one of the top four non-compliance areas for the portfolio is consequence management.

 

Improving the implementation of infrastructure projects

5.10. The Department has reported significant underspending on infrastructure projects over the past three financial years due to an inadequate capital projects approach which does not appraise capital projects before budget allocation. Infrastructure has considerable potential for job creation when implemented correctly. Further, the Committee expressed concern about the fruitless and wasteful expenditure incurred because of substandard work on key legacy projects.

 

Effectiveness of the Pan South African Language Board

5.11. The Committee commends the Department for intensifying its oversight responsibility over PanSALB. However, the Committee is concerned about the regression in audit opinion from unqualified with findings in 2018/19 to qualified with findings in 2019/20.

 

6.RECOMMENDATIONS

The Portfolio Committee on Sports, Arts and Culture recommends the following:

 

Strategic planning

1.  The Department needs to provide the Committee with a detailed long-term plan for the ongoing support for practitioners in light of the impact of COVID-19 with respect to job and income losses.
2. The Department should assist public entities, particularly museums and performing arts institutions, with devising plans and strategies to ensure that they become less reliant on Government subsidies.

Strengthening internal controls and financial management

1. The Department should account on its efforts to reduce irregular and wasteful expenditure, especially when it comes to hiring of contractors for building of infrastructure, as well as organising of events and campaigns where exorbitant amounts are being paid to suppliers.
2. The Department and its entities should ensure that it improves on the quality of performance reports submitted for auditing purposes.
3. The Department and its entities should develop adequate action plans to address key deficiencies that need to be shared with the Committee in order to ensure effective oversight on the implementation of the AGSA’s recommendations.
4.  The Department should fast track the audit of the various phases of the COVID-19 Relief Fund as a matter of urgency.

 

 

 

Governance

1.  The Department should ensure that the board of the NAC is effective in performing its mandate.
2. The Department ought to improve its oversight and monitoring functions over the work of the public entities and ensure that all newly boards/councils are held to account for the governance and performance of their respective entities.

 

Investigations and consequence management

6.9. The Department should furnish the Committee with a comprehensive progress report on disciplinary processes brought against officials who have failed to comply with legislation.

 

Improving the implementation of legacy infrastructure projects

6.10. The Department should, in a detailed report to the Committee, outline the successes and challenges Infrastructure Management Officeand furnish the Committee with an overview of the number of jobs and/or job opportunities created through the implementation of infrastructure projects.

Effectiveness of the Pan South African Language Board

6.11. The Department should ensure that it continues with its efforts to increase oversight on PanSALB. PanSALB should intensity its engagements with the AGSA to find ways of dealing with the qualified audit findings to prevent recurrence and/or regression.

Report to be considered.