ATC210528: Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s performance in Quarter 4 of 2020/21dated28 May 2021.
Joint Standing Committee on Financial Management of Parliament
Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s performance in Quarter 4 of 2020/21dated28 May 2021.
The Joint Standing Committee on the Financial Management of Parliament, having considered the Parliament of the Republic of South Africa’s performance in Quarter 4 of 2020/21, reports as follows:
1. Introduction
1.1 Section 4 of the Financial Management of Parliament and Provincial Legislatures Act, No. 10 of 2009 (the FMPPLA) provides for the establishment of an oversight mechanism to maintain oversight of the financial management of Parliament. The Joint Standing Committee on the Financial Management of Parliament (the Committee) was established in terms of the Joint Rules of Parliament. The Committee has the powers afforded to parliamentary committees under sections 56 and 69 of the Constitution.
1.2 Parliament derives its mandate from:
- Chapter 4 of the Constitution of the Republic of South Africa, 1996, No 108 of 1996, which sets out its composition, powers and functions;
- the FMPPLA which regulates the institution’s financial management;
- the Money Bills Amendment Procedure and Related Matters Act, 2009, No 9 of 2009 (Money Bills Act) which provides procedures to amend money bills; and
- the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act of 2004, No 4 of 2004 which defines and declares the national and provincial legislatures’ powers, privileges and immunities.
1.3 Parliament has as its vision to be an activist and responsive people’s Parliament that improves the quality of life of South Africans and ensures enduring equality in our society. Its mission is to represent the people and to ensure government by the people in fulfilling its constitutional functions of passing laws and overseeing executive action. To this end, the institution conducts its business in line with the following values: openness, responsiveness, accountability, teamwork, professionalism, and integrity.
1.4 Section 52 of the FMPPLA requires that the accounting officer must, within 30 days of the end of each quarter, report to the Executive Authority on Parliament’s quarterly performance in respect of the implementation of the Annual Performance Plan (APP). The Executive Authority in turn, and in terms of section 54 of the FMPPLA, must table each quarterly report five working days of receiving it for the consideration of the oversight mechanism i.e. the JSC Financial Management of Parliament.
1.5 The 2020/21 Quarter 4 report wastabled as required, and on 14 May 2021 the acting Secretary to Parliament—the accounting officer—and her senior management team appeared before the Committee in a meeting at which the institution’s performance and expenditure in the period under review were interrogated.
1.6 This report should be read with the Strategic Plan of the Sixth Parliament and the revised2020/21 Annual Performance Plan and budget.
1.7 The report comprises four parts:
- an overview of the performance in the first quarter of 2020/21 (Part A);
- an overview of the expenditure in the first quarter (Part B)
- observations (Part C); and
- recommendations (Part D).
PART A
2. Overview of 2020/21 Quarter 4 performance
2.1 Background
2.1.1 The Quarter 4 report was drafted in line with the indicators and targets contained in the revised 2020/21 Annual Performance Plan (APP) that was tabled in July 2020. The amended APP accommodated the revised budget that was tabled in Parliament in May 2020. In that budget Parliament’s 2020/21 budget was reducedby R115 million.The APP targets were based on the normal, pre-lockdown, operating environment.
2.1.2 The Quarter 4 report tracked fourteen indicators with 13 targets that were tracked in the period under review. Of the thirteen targets that were tracked, only ten were achieved.
2.1.3 As in the third quarter, the acting Secretary to Parliament emphasised that the institution’s performance in the period under review continued to be impacted by significant budget reductions and the Covid-19 pandemic.
2.2 Programme performance
Programme 1: Strategic Leadership and Governance
2.2.1 Programme 1provides for political and strategic leadership, governance and institutional policy, executive communication and coordination, and to oversee the development and the implementation of Parliament’s strategic plan, APP and Budget. It comprises the following sub-programmes: Office of the Speaker, Office of the Chairperson, and joint services, i.e. Office for Institutions Supporting Democracy (OISD), the Parliamentary Budget Office (PBO) and the Treasury Advice Office (TAO).
2.2.2 Both targets under this programme were achieved; all legal and procedural advice was provided within seven working days, thereby exceeding the 90 per cent target by 10 per cent; and all analyses were provided within the agreed to timeframes.
2.2.3 Although the TAO has not been operational owing to the Treasury Adviser-post still being vacant, the Executive Authority received advice and recommendations from the Accounting Officer and the Chief Financial Officer.
Programme 2: Administration
2.2.4 Programme 2 provides for strategic management, institutional policy and governance, development programmes for parliamentarians, internal audit and financial management, the Registrar of Members’ Interests, and the overall management and administration. The programme comprises the Office of the Secretary to Parliament, Legislative Sector Support, Strategic Management and Governance, the Finance Management Office, Internal Audit, and the Registrar of Members’ Interests.
2.2.5 All targets under this programme were achieved. The members’ capacity building programme-target was met, i.e. the University of Johannesburg Postgraduate Diploma classes took place virtually from 16- 19 March 2021; and one report was prepared in the implementation of the Sector Strategy was delivered as planned.
Programme 3: Core Business
2.2.7 Programme 3 provides for procedural and legal advice, analyses, information and research, content, language, and secretarial and legislative drafting services for meetings of the National Assembly (NA), National Council of Provinces (NCOP) and their committees. It also provides for public education, information and access, and analysis, advice and content support for Parliament’s international engagement. The programme comprises the NA Table, NCOP Table, Core Business Support, Knowledge and Information, and International Relations and Protocol divisions.
2.2.8 Of the six indicators under this programme, five were measured in the fourth quarter. Of these only three were met, i.e. one NA programme was adopted, one NCOP programme was adopted and 99,21 of all advisory, research and information requests were responded to timeously exceeding the targeted 93 per cent.
2.2.9 Targets set in respect of the percentage of the population having access to participate in parliamentary processes, and percentage increase in participation in the activities of Parliament were not met. In terms of access only 13 per cent of the targeted 16 per cent of the population had access, and in terms of participation only 2 per cent of the targeted 10 per cent of the population could participate. Both targets were measured through IPSOS surveys that were conducted in person.
2.2.10 In both cases the under-performance was ascribed to the Covid-19 pandemic and the national lockdown which placed stringent restrictions on movement. Although public hearings and committee meetings could be accessed virtually, very few people had access to virtual platforms. The IPSOS surveys were also impacted by lockdown restrictions.
Programme 4: Support Services
2.2.11 Programme 4 provides facilities and support services including institutional communication services, human resource management, information communication technology, institutional support services, and members’ support services. The programme comprises the Parliamentary Communication Services, Human Resources, Information Communication Technology, Members’ Support Services and Institutional Support Services.
2.2.12 Of the four performance targets measured, three were achieved: as targeted 24 per cent of the population were aware of the business of Parliament, and the highest levels of awareness were reported in the North West, Eastern Cape and Gauteng provinces; universal access was reported at 94,13 per cent, 0.13 per cent higher than planned and; the implementation of the Succession Planning- and Leadership Development programme resulted in a four per cent over-achievement in respect of the talent management index.
2.2.13 The target in respect of Facilities Management Services which measures how services provided by the Institutional Support Services Division met or surpassed customer expectations was not met. Only 48 per cent of the targeted 70 per cent of clients were satisfied with the quality of services. The under-performance was ascribed to the impact of the lockdown restrictions.
Programme 5: Associated Services
2.2.14 This programme provides parliamentarians with travel, communication and other facilities to fulfil their duties as elected public representatives, and financial support to political parties represented in Parliament, their leaders and constituency offices.
2.2.12 In respect of Members Support Services, the institution reported that, services were delivered on a daily basis, and that the average number of working days to reimburse members claims was 2,16 days.
2.2.13 In respect of the transfers to political parties all transfers were processed timeously and in line with the applicable policy.
Part B
3.1 Expenditure Report
Table 1 below, outlines the expenditure across all five programmes.
3.1.1 By the end of the period under review Parliament had spent 67 per cent or R578,524 million of its R864,502 million appropriated budget for the fourth quarter. This means that by the end of 2020/21 the institution had spent R2,304,266 million or 89 percent its annual budget of R2,590,244 million. The R285,978 million that was not spent will be available for allocation in the 2021/22 financial year.
3.1.2 In respect of the direct charges, the institution had spent R121,735 million. This represents a R9,313 million or 8 per cent over-expenditure. The funds that were overspent will be refunded by the National Revenue Fund.
3.2 Spending per economic classification
Table 2 below illustrates the expenditure per economic classification in the period under review, and is clarified in paragraphs 3.2.1 to 3.2.6 below.
|
|
January – March 2021 |
Annual |
||||||
|
Economic classification |
Budget R’000 |
Actuals R’000 |
Variance R’000 |
% |
Annual Budget R’000 |
Actuals R’000 |
Variance R’000 |
% |
|
Compensation of Members |
112,422 |
121,735 |
(9,313) |
(8) |
476,474 |
485,787 |
(9,313) |
(2) |
|
Compensation of Employees |
375,684 |
275,364 |
100,320 |
27 |
1,217,642 |
1,117,322 |
100,320 |
8 |
|
Goods and Services (APP) |
175,111 |
28,085 |
147,026 |
84 |
265,533 |
118,527 |
147,026 |
55 |
|
Goods and Services (Members’ entitlements) |
48,243 |
22,911 |
25,332 |
53 |
99,940 |
74,608 |
25,332 |
25 |
|
Transfers |
131,791 |
125,637 |
6,154 |
5 |
500,302 |
494,148 |
6,154 |
1 |
|
Capital Expenditure |
21,251 |
4,792 |
16,459 |
78 |
30,333 |
13,874 |
16,459 |
54 |
|
TOTALS |
864,502 |
578,524 |
285,978 |
33 |
2,590,244 |
2,304,266 |
285,978 |
11 |
(Source: Parliament of the RSA presentation on 2020/21 Quarter 4 performance)
Compensation of Members
3.2.1 By the end if the period under review, the spending on compensation of members stood at R121,735 million, 8 per cent more than the of the fourth R112,422 million that was budgeted for. The R9,313 million over-expenditure is ascribed to budget reduction that was effected in the adjustment budget, as well as the and payment of loss of office and exit gratuities.
Compensation of employees
3.2.2 By the end of the period under review, the spending on compensation of employees stood at 73 per cent or R275,364 million of the R375,684 million fourth quarter budget. The R100,320 million under-expenditure is ascribed to terminations, and delays in filling critical vacancies that were, in the main, caused by stringent restrictions imposed during levels 4 and 5 of the national lockdown.
Goods and services (APP)
3.2.3 The spending on goods and services relating to the APP amounted to R28,085 million or 16 per cent of the R175,056 million fourth quarter budget. The under-expenditure is ascribed to the impact of lockdown restrictions and precautionary measures. All invoices for services rendered by the 31 March 2021 which have had not yet been paid by the time of reporting would be accrued in terms of the Standards of Generally Recognised Accounting Practice (GRAP) and will increase the expenditure for the year.
Goods and services (Members’ entitlements)
3.2.4 By the end of the period under review, spending on goods and services relating to Members’ entitlements stood at R22,911 million or 47 per cent of the R48,243 million fourth quarter budget. The R25,332 million under-expenditure for the financial year is ascribed to members not having utilised their travel entitlements owing to lockdown restrictions on travel, and the subsequent introduction of virtual meetings.
Transfer payments
3.2.5 By the end of the period under review, spending in respect of transfers to represented political parties stood at R125,637 million or 95 per cent of the R131,791 million fourth quarter budget. The R6,154 million under-expenditure is ascribed to submitted financial statements that have been queried. Payments to the affected political parties were withheld pending the resolution of the queries.
Capital expenditure
3.2.6 By the end of the period under review spending on capital expenditure stood at R4,792 million or 22 per cent of the R21,251 million fourth quarter budget. The R16,459 million under-expenditure by the end of the financial year is ascribed to delays in the payment of invoices that were received close to the end of the financial year and could not be paid.
PART C
4. Observations
4.1 Performance Information
4.1.1 The Committee remains concerned about the key performance areas that are only being tracked annually. That some areas of performance are only assessed on an annual basis is unacceptable, as it leaves no room to address shortcomings that may result in under-performance by the end of the financial year.
- The Committee noted that although the budget was adjusted owing to the Covid-19 pandemic, the performance targets remained the same, hence much of the under-performance reported in the period under review was ascribed to the impact of Covid-19 on the institution’s operations. The under-performance in relation to public awareness of and participation in Parliament’s activities is of particular concern. It is cause for concern that the administration failed to adjust performance targets where necessary or to develop innovative strategies to mitigate the impact of various levels of the lockdown.
4.1.3 Although the institution’s overall performance stood at 77 per cent, one should consider the nature of the targets. In the Committee’s view some targets remained very low and thus achieving them cannot be described as much of an achievement.The institution’s insistence to measure delivery against deadlines instead of against the quality of the services contributed to the perception that performance targets were designed to ensure that they were met, instead of to ensure that the institution improved the quality of its services.
4.1.4 As indicated in previous reports the Committee is extremely concerned about the slow pace in filling posts critical to the leadership and functioning of the institution specifically that of the chief financial officer, treasury adviser, chief audit executive and secretary to parliament. All these posts have been vacant for over 12 months.
Financial performance
4.1.5 The Committee has noted the administration’s continued frustration at the National Treasury-imposed budget cuts. The Committee acknowledges the constrained economic environment and the impact across all spheres of government. While it may not be possible to accede to all budget requests, it has become quite urgent that agreement be reached around how Parliament’s budget should be decided.
PART D
5. Recommendations
The Executive Authority should respond to the following recommendations within 30 days of the tabling of this report.
5.1 Performance Information
5.1.1 The Committee again recommends that all key performance indicators be tracked quarterly, and that detailed update be provided on the progress that has been made.
5.1.2 The Committee recommends that for the remainder of the lockdown the institution should ensure that measures be put in place to mitigate the impact of the national lockdown on performance, particularly in relation to public participation objectives.
5.1.3 The Committee has noted that as of 1 April 2021 (beginning of the 2021/22 financial year), the institution would be measuring the quality of services instead of only whether delivery happened within specific timeframes. The institution should ensure that all recipients of services have sufficient information and training in order to ensure that the move towards assessing the quality of services has the desired impact. The Committee should receive a report on the implementation of the decision to improve performance management in this way, as well as on how employees and the recipients of services have been prepared for this change.
5.1.4 The Committee should be provided with a report on the impact the delay in filling the critical posts in paragraph 4.1.4 has had, as well as monthly written updates on progress made as far as filling critical vacancies, including reasons for any further delays.
5.1.5 The Committee had in the past recommended that the TAO should be fully operational by no later than the end of the 2020/21 financial year, and that the necessary appointments should be made as a matter of urgency. The Committee should be provided with a detailed report on why this has not been possible and how the matter will be addressed.
5.2 Financial performance
5.2.1 The challenges around Parliament’s budget allocation, and concerns around the impact of the Parmed contributions and loss of office gratuity payments preceded the current economic difficulties and must be addressed as a matter of urgency. The Minister of Finance, the Executive Authority of Parliament and the Chairperson of the Parmed Board should brief the Committee on the challenges in resolving the long-standing challenges around Parliament’s budget allocation.
Report to be considered.
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