ATC121120: Report of the Select Committee on Finance on the Follow-Up visit to Limpopo in terms of Section 100 (2) (C) of the Constitution of the Republic of South Africa, 1996, 16 November 2012

NCOP Finance



1. Background

On 5 December 2011, the South African Cabinet announced its intervention i n the Limpopo Provincial Government according to section 100 (1) (b) of the Constitution of the Republic of South Africa , 1996. This intervention effectively placed five Limpopo provincial departments, namely the Provincial Treasury, Education, Transport and Roads, Health and Public Works under national executive administration.

The intervention required that the Heads of Department (HODs) surrender their Accounting Officer (AO) functions in terms of section 36 of the Public Finance Management Act ( PFMA) regarding the operational affairs of the relevant departments.

Section 100 (2) (c) of the Constitution provides for the National Council of Provinces (NCOP) to, whilst an intervention continues, review the intervention regularly and make recommendations to the National Executive.

1.1 Reasons for the intervention

The main reason for this intervention was the Province’s poor budget management and challenges with the Supply Chain Management (SCM) processes. The Province was also not able to provide basic management services such as infrastructure and property management services.

Furthermore, the Provincial Treasury (PT) was found to be dysfunctional due to poor cash management; a dysfunctional public finance unit; poor infrastructure monitoring; inappropriate SCM processes; a lack of risk management function and vacant critical Senior Management Staff (SMS) positions in the areas of budget planning, performance and infrastructure monitoring.

The main objectives of the follow-up oversight visit to the Province included:

· Review and measure progress made between 27 March 2012 and September 2012 (6 month period after the Committee’s previous oversight visit);

· Enforcement and implementation of the PFMA, sections 38 (e) and (h) and sections 39, 40 and 81-86. These sections deal with unauthorised expenditure, contravention of the Act, budget control, responsibilities of HODs and Members of Executive Council (MECs) and financial misconduct, respectively amongst others;

· Progress made regarding the development and implementation of the action plans;

· Determine whether section 100 intervention is effective, should be extended or discontinued; and

· Determine whether the Administrators are transferring skills to avoid regression in terms of spending and performance.

1.2 The NCOP approach

A delegation consisting of Members of the NCOP that serve on the Select Committees on Finance, Appropriations, Social Services, Education and Public Services undertook a follow-up visit to the Limpopo Province from the 01 st to the 05 th of October 2012.

To further enhance its assessment of the provincial situation, the NCOP delegation divided itself into teams that conducted site visits related to Health, Education, Roads and Transport and Public Works. The delegation further held engagements with relevant stakeholders of the departments mentioned above.

1.3 Introduction

This Report captures information on the follow-up oversight visit to the Limpopo Province following the National Executive invoking of section 100 (1) (b) of the Constitution.

The Report discusses the presentations made by the National Treasury (NT), the Office of the Premier, the departments of Health, Education and Roads and Transport. These presentations largely address progress made in the Province in terms of service delivery; the approaches followed, challenges encountered and the way forward. The Committee found the presentation made by the Department of Public Works to be unsatisfactory. For the purpose of this report, the Department of Public Works has been excluded. The report finally makes recommendations based on the observations and findings of the Committee.

2. National Treasury feedback on progress made since the intervention

The National Treasury reported that although the Limpopo Province had been technically bankrupt before the intervention, the Province was technically solvent at the time of reporting, with a positive cash position of R2.4 billion as at September 2012 as compared to an overdraft of just under R800 million at the same time in the previous year. The National Treasury had implemented a sound cash management system.

The Province had accumulated unauthorised expenditure of R2.7 billion at the end of 2010/11 financial year and had an outstanding R1.6 billion to address. The R162 million in the Department of Education that had been addressed in 2010 was now funded in its budget.

Some of the challenges still faced by the Province in general were highlighted as follows:

· Managing the current cash crises in the Province required robust management of cash flow;

· The Provincial Treasury still needed to be strengthened to become functional;

· The provincial departments used inappropriate organograms that were not aligned to their service delivery;

· The Province needed financial restructuring that would create sustainable and credible budgeting in the long term;

· There was still a serious lack of capacity in infrastructure management within the provincial departments.

National Treasury reported that the Province was lagging behind slightly in their spending at 39.7 per cent. This was not necessarily a bad thing if service delivery was not adversely affected. It was further reported that an over-expenditure of R427.6 million on personnel was projected in the Province; with the Department of Health being the main contributor to this. National Treasury also indicated that there was an amount of R1.5 billion in unspent conditional grant funds in the Province’s bank account. This would be monitored closely and the money would be returned to the National Revenue Fund if there was not significant spending by December 2012.

National Treasury indicated that the t urnaround of finances should not be used as the only yardstick on whether the intervention was successful or not. There would also be a need to ascertain whether the underlying systemic problems were being addressed; whether the correct procurement systems were being embedded; and whether the Provincial Treasury was functioning as it should be. In this regard, the National Treasury indicated that the Premier was assisting with the filling of the vacant Head of the Department position within the Provincial Treasury. In addition, the Provincial Treasury was finalising the appointment of service providers to address the financial management gaps in departments. Appointments were expected to take place towards the latter part of October 2012. This was in line with the Treasury’s mandate in terms of section 18 of the PFMA. A concerted collaboration between the Administrators would be required to implement good practices in the provincial administration .

The Provincial Treasury Administrator reported that the diagnosis by the intervention team had revealed weaknesses in the administrative system. The approach to recovery contained the following components:

· Stabilisation of the financial crisis;

· Strategically refocusing the Provincial Treasury to its core business and prioritising aspects of service delivery in departments such as Health and Education that are key for service delivery;

· Aligning and integrating the recovery strategy with effective administrative processes, including enforced accountability;

· Organisational change in aligning and integrating the strategy with an appropriate organisational structure and to build capacity for optimum performance;

· Strict and credible leadership was required;

· Stakeholder support in terms of managing expectations, conflicting needs and building confidence.

The Administrator further reported that the following ten projects were being implemented to address the gaps identified during the diagnostic phase:

2.1 Cash Management

A schedule of payment s for the year 2012/13 had been issued and these had been reduced from eight to two. Cash allocation letters had also been issued, indicating the available cash per payment, in line with the schedule . The challenge was that the Provincial Revenue Fund (PRF) had not been reconciled and that the process of reconstructing the balances of the PRF since Annual Financial Statements were introduced in 2003/04 was ongoing.

2.2 Replacement of FINEST system

The Provincial and National Treasury were working on the replacement of the FINEST system. Either Integrated Financial Management System (IFMS) roll out would be expedited or Logistical Information System (LOGIS) would be rolled out. The final decision and the project plan would be sent by National Treasury.

2.3 Thirty Days Payment Compliance

As a result of the Provincial Treasury placing adverts inviting suppliers who had not been paid to submit their claims, 243 cases had emerged and were being analysed. The fact that the FINEST and Basic Accounting System (BAS) systems did not interface, posed challenges.

2.4 Procurement Management

Despite challenges, the general trend with respect to procurement was positive. The Province was working on the restoration of sound and legal procurement practices and establishing a strong centre to manage transversal contracts in order to leverage economies of scale and provide improved contract management.

2.5 Cost containment

A Provincial Instruction Note had been issued, restricting access to the BAS budget functionality to limit the shifting of funds. Departments had been requested to identify specific budget items where savings could be realised.

2.6 Revenue enhancement

The Departments were being monitored through the normal In-Year Monitoring (IYM) reports and other mechanisms of accountability. Bilateral meetings had been held with the departments of Health, Roads and Transport, Economic Development and Public Works. Changes on revenue targets would be effected during the budget adjustment process.

2.7 Reduction of Compensation of Employees

The requirements of Instruction Note 1 of 2012 with regards to the compensation of employees’ reduction plans were being implemented and provision was only made for filling critical positions. The Province was in the process of finalising terms of reference on financial management, oversight capacity, audit outcomes and lease and/or contract management review.

2.8 Infrastructure

Organisational realignment was taking place for the departments of Education, Health, Public Works and Roads and Transport. An induction programme for newly appointed officials in the Provincial Treasury was underway. National Treasury provided added infrastructure related capacity to the Provincial Treasury.

2.9 Organisational realignment and project-based learning

The Department of Public Service and Administration (DPSA) was assisting with an Organisational Functionality Assessment. A request had been issued for proposals for service providers to provide project-based learning and work-based training for officials in all five departments placed under Administration.

2.10 Financial Accountability

With regard to conflict of interest, 21 disciplinary cases were being investigated as well as 14 cases related to fraud and corruption. Twelve officials were charged and were due to be suspended. A total of 38 criminal cases were opened with the law enforcement agencies and in some cases the suspects were charged.

3. Office of Premier feedback on impact of the intervention

The Office of the Premier referred to decisions taken and directives given during specific meetings held between the provincial and national government stakeholders. These decisions and directives had been aimed at guiding and facilitating a smooth process during the implementation of Section 100 (1) (b) of the Constitution in the Province.

3.1 Outcome of the meeting held between the Ministers and the Executive Council Members

On 8 December 2011 a meeting was held between the Ministers, MECs and HODs. During this meeting, the following resolutions were made:

· A Memorandum of Understanding (MOU) would be developed to clarify and define roles, duties and obligations of the various stakeholders; and

· A diagnostic report would be finalised within six weeks of the meeting.

With regard to the above resolutions, the Office of the Premier reported the following:

· The MOU to clarify and define roles, duties and obligations of the various stakeholders had not been developed to date; and

· No diagnostic report had been developed to date and if it had been developed, it had not been shared with the Provincial Administration.

The effect of the non-implementation of the above decisions was reported as follows:

· There was confusion around the roles and responsibilities of the Administrators and the provincial HODs. In some departments, the Administrators took total control of the operations and in other departments the Administrators were not fully in control.

· There was also confusion as to who the actual Accounting Officer (AO ) in the five affected departments is, between the national Director-General (DG), the Administrator and the provincial HOD;

· There were inconsistencies in relation to the implementation of Section 100 (1) (b) of the Constitution in the five departments. In one department the Minister signed off the Annual Performance Plan (APP) and in other departments the MECs signed off the APPs;

· The absence of a diagnostic report might have contributed to the non-development of an implementation plan which could be used by all oversight committees to monitor progress made with the implementation of the intervention on a quarterly basis.

According to the Office of the Premier, from the time of the 8 December 2011 meeting until 10 January 2012, the Province had waited for Administrators to be deployed.

3.2 Outcome of the meeting held between the Minister of Finance and the Premier

On 10 January 2012 a meeting was held between the Minister of Finance and the Premier of Limpopo. Also present at this meeting were the Director Generals of the National Treasury and the Province of Limpopo , the Deputy Director General of the National Treasury and the Coordinator of the Administration team. During this meeting decisions were taken on 14 points, which served as an agreement for the implementation of the intervention. This agreement was signed by both the Minister of Finance and the Premier of Limpopo. The implementation of these 14 points and its impact follows:

· Decision 1: The spirit of cooperation in implementing the Cabinet decision must be reinforced and there should be recommitment to this by all concerned. Consequently, t he Premier convened a meeting of all Senior Management Staff members in the Province and emphasised the need for everyone to fully co-operate with the Administration team and ensure that they continue to perform their duties professionally and with dedication.

The Director General of the Province had two bilateral meetings with the Chief Administrator during January and February 2012, where both parties agreed on the need for structured meetings to assess progress and address challenges. However, all subsequent attempts by the Director General to meet with the Administrators had failed. While some Administrators did not have a problem with attending meetings called by the Executive Council (EXCO), the Chief Administrator had indicated in writing that the Administrators would not attend meetings called by the EXCO. Thus no report on the implementation of the intervention had been presented to the EXCO at the time of the meeting.

The Office of the Premier indicated that the absence of an agreement clarifying roles and responsibilities has had a negative impact. It was believed that the intervention was supposed to assist the Province in dealing with the challenges identified. However, in the absence of meetings it might be difficult to implement this decision.

· Decision 2: The purpose of the intervention is to enhance the quality of service delivery and to assist the Province in upgrading its systems and capabilities to a “new normal”, which will also ensure full compliance with all legislation including the PFMA .

A plan to enhance the quality of service delivery had not been developed, and if it had been developed it had not been shared with the Provincial Administration. Such a plan could have assisted all the oversight committees to assess the impact made by the intervention in enhancing the quality of service delivery in the Province. In the absence of a diagnostic report and an implementation plan it was difficult to assess whether the intervention has upgraded the provincial systems and capabilities. Compliance with the payment of invoices within 30 days was not being realised as there were invoices that had not been paid for more than 90 days.

The absence of an agreement clarifying roles and responsibilities had created confusion. This has had a negative impact on service delivery and on the integrity of Government. There were media spats between the previous Administrator of Education and the line management within the Department of Basic Education, for example. Non-compliance with payment of invoices within 30 days negatively affected service delivery.

· Decision 3 : The Office of the Premier will create conducive environment to ensure smooth implementation of the intervention.

The Office of the Premier reported that it did its best create a conducive environment, including inviting Administrators to provincial governance meetings, but in vain. The meetings of the EXCO and of the HODs were attended by representatives from Provincial Treasury. These representatives assisted in providing progress reports on provincial financial performance but were unable to provide any progress report on the intervention itself. A progress report on the intervention had not been presented to the EXCO as the Chief Administrator did not attend the EXCO meetings.

· Decision 4: The Province and National Treasury should ensure alignment of communication; speak with one voice and avoid a “them and us” situation.

Communication was mainly done by the National Treasury and the Chief Administrator, and in all cases, the Province was not involved. The report of the Chief Administrator was communicated through the media; including the pronouncement that the Administration might take three years. The EXCO did not receive reports on the progress made and on the challenges that might have contributed to the comment by the Coordinator that the Administration might take three years.

The EXCO had not been invited to the media briefing of the Inter-Ministerial Task Team and the Province had difficulties in dealing with the negative media coverage thereafter. The negative media coverage on the distribution of textbooks had created an impression of “us and them” which could have been avoided.

· Decision 5: The Directors-General of National Treasury and the Province should develop guidelines to clarify roles urgently to avoid administrative uncertainty in the Province and to ensure that proper accountability arrangements are in place. The terms of reference must :

o Clarify the roles and responsibilities and reporting lines of MECs and HODs and of the national Ministers and their deployees;

o Provide the details of the intervention team;

o Ensure that proper accountability mechanisms are in place; and

o Put a monitoring and reporting system in place that must indicate how monitoring and reporting would interface with the Premier, EXCO, the Legislature, national Ministers and the NCOP.

The Provincial Director General had developed guidelines to address the challenges as an input by the Province in order to comply with the above decision. These guidelines had been submitted to the DG of the National Treasury in January 2012. No acknowledgement had been made and no feedback was received. The guidelines from the National Treasury, if any, had never been shared with the Province. Details of the intervention team had not been provided as per the decision and the Province often heard through the media that a certain Administrator had been replaced. Proper accountability mechanisms for monitoring and reporting were not in place.

During the ten months of the Intervention no guidelines had been developed. This created daily challenges in operations as tasks were not clearly defined and there were inconsistencies in implementation. Similarly, no accountability mechanisms had been put in place, creating challenges like the situation of the delivery of textbooks. The Office of the Premier was of the view that, had monitoring and reporting systems been put in place, these issues could have been addressed.

· Decision 6: An intervention plan or Terms of Reference, indicating the scope of the intervention, time frames and deliverables must be put in place. The document must be flexible and allow for incorporation of additional matters should they arise.

There was no intervention plan or terms of reference in place. If there was, it had not been shared with the Province. The Office of the Premier was of the view that if such a plan had been available, it would have assisted all the oversight committees to monitor progress with the implementation. It would also have assisted in aligning progress reports of the Administration team, the HOD and the DG of the Province.

· Decision 7: The intervention plan should ensure that departments that are not under administration are not adversely affected.

The intervention plan affected some of the Departments that were placed under administration and those that were not. The following challenges experienced by departments and the impact on service delivery stated is evidence of the extent to which departments are affected:

o Department of Agriculture

The Department of Agriculture is not under administration but had been impacted by changes both in the Provincial Treasury and in the provincial Department of Public Works. All the projects implemented by Public Works experienced delays due to the time it took for the Public Works Administrator to sign off the projects for implementation. Payments to service providers had been delayed from November 2011, a critical time for the planning and design engineers to finalise and submit plans, designs and bid documents for the capital projects for 2012/13. More contractors on projects had to request for an extension into 2012/13, reducing the current budget. On the capital projects, end dates and total costs had to be extended due to slow payments.

o Department of Cooperative Governance, Human Settlements and Traditional Affairs

Some contractors and professionals had not been paid since December 2011, and there was no production on-site. Some small businesses were severely compromised to the point of collapse. The contractual relationship with service providers was negatively affected and this also affected forward planning for 2013/14.

o Department of Roads and Transport

There was confusion around SCM processes for the appointment of Professional Service Providers. Non-approval of exemption in procuring skills development programmes had resulted in a lack of response. Auditing and verification of processes took longer than two months in certain instances. As at 31 August 2012, the Department had 25 unpaid invoices older than 30 days to the value of R5.8 million.

o Department of Education

The termination of the Project Management Unit Contract and the intervention team’s failure to develop alternative mechanisms, resulted in the Department spending only R190.4 million against a budget of R942 million for conditional grants as at the end of August 2012. The Administrator had disapproved the procurement of items and activities for the Technical Secondary Schools Recapitalisation Programme, which had been in the business plan. The budget for the grant was R26.7 million and the actual expenditure to date was R5.87 million .

The budget for the Extended Public Works Programme (EPWP) Social Grant was R18.5 million, of which nothing was spent at the time of the meeting. The previous Administrator disapproved the business plan, which was approved by the current Administrator in July 2012. The budget for the Dinaledi Schools Grant was R10.16 million and the actual expenditure to date was at R240 000 (2.36 per cent). The Administrator disapproved the procurement of items and activities which had been approved in the business plan.

o Department of Social Development

The payment turnaround time had a major impact on the payment of service providers, which in turn affected the provision of services at the service delivery points. The services affected thus far include social relief of distress to families ; g roceries for children’s homes, old age homes and places of safety ; S ocial Worker services in communities; finalisation of foster care backlogs and t ransfer of funds to non-profit organisations .

o Department of Public Works

The Intervention delayed 40 projects including libraries, hospitals and primary health care centres. No transfer of properties from the provincial government to municipalities took place . The Intervention also resulted in the following issues of non-compliance with the PFMA, invoices were paid after 30 days; security contracts continued to be extended after the cancellation of three adverts; all leases were extended on a month-to-month basis, leaving some user departments occupying buildings without legitimate lease agreements and standard reports, such as In Year Monitoring reports, were not being submitted.

The Intervention further led to non-compliance with respect to the submission of Asset Management Plans and the lack of signed performance agreements for 2012/13 with the 23 SMS members of the Department.

o Department of Sport, Arts and Culture

The Department submitted a request for the maintenance of 11 libraries to the provincial Department of Public Works as the implementing agent in December 2011. At the time of the meeting, no approval or feedback had been obtained from the Administrator of Public Works. Consequently some of the libraries were not fully functional. A budget of R 17.4 million was allocated for 2012/13 for additional scope of work on 10 libraries. To date no approval or feedback had been obtained from the Administrator. The completed libraries could not be utilised as they did not have some of the basic services. This not only affected service delivery, the empty buildings were likely to be vandalised, which might result in the Department having to allocate more resources.

· Decision 8: That, under the leadership of the Minister of Finance, the DGs of the National Departments should coordinate the intervention and the DG of the Province will work with the team.

Same progress experienced as captured under Decision 5, with a similar impact.

· Decision 9: The payment of service providers should continue where appropriate backup documents are available. Verified and urgent steps must be taken to speed up the process of paying service providers with legitimate claims.

Some service providers had been paid at the time of the meeting. The NT BAS report on the payment of invoices for the period ending 31 August 2012 showed that the value of unpaid invoices older than 30 days in the Limpopo Province was R 140.37 million. Education had 1 231 unpaid invoices to the value of R 49.5 million and Health had 859 unpaid invoices to the value of R 81 million.

· Decision 10: The Minister and the Premier agreed to keep in regular contact and inform each other of important developments, likewise the DGs of NT and the Province.

The DG of Limpopo wrote to the DG of the NT in January 2012 outlining the proposed roles and responsibilities to be played by national departments and the corresponding provincial departments under administration. Also, proposals were made for the ideal working relations of the two spheres of government in the application of the Section 100 (1) (b) of the Constitution intervention.

No response to this correspondence was received from the DG of National Treasury’s office. In addition, the DG of Limpopo wrote to the DG of NT on 18 January 2012 making an input into the Communication Plan for the implementation of the intervention. Again, no response was received from the DG of National Treasury’s office.

· Decision 11: The Chief Administrator is appointed as the Accounting Officer of the Provincial Treasury and the Minister of Finance assumes the responsibility of MEC for Finance. The status of certain provincial HODs remains under discussion and will be clarified shortly.

The Accounting Officer of the Provincial Treasury is expected to present the provincial expenditure and compliance report to the provincial HODs Forum and to EXCO on a monthly basis. While the Chief Administrator has been appointed the Accounting Officer of the Limpopo Provincial Treasury, the Chief Administrator had not attended these meetings. Instead, delegated officials attended these meetings and presented Provincial Treasury reports. The EXCO never received a report on the progress made. The EXCO heard about all the reports presented to the Portfolio Committee on Public Service and Administration during its oversight visit for the first time in the meeting.

· Decision 12: The Province should be brought to normality as soon as possible and every effort must be made to ensure that sustainable capacity is built in the Province. In this regard arrangements for staffing skills and capacity building must be put in place.

Ten months into the Administration intervention, there was no diagnostic report, implementation plan and legislation or policy in place to guide the administration process. This could indicate a lack of skills and capacity with the Administrators themselves. The Administrators should have high capacity levels with intensive knowledge on governance, service delivery, leadership and management since they had been given the responsibility to manage departments.

If an Administrator was starting to learn the work of an Accounting Officer during this Administration process, this could have negative consequences for governance and service delivery. If the Administrators had been Accounting Officers with a history of poor performance, it could be difficult to achieve good performance during this process.

The Office of the Premier stated that, in light of the challenges experienced by various departments and the fact that fundamental documents to guide the process were not developed; a serious review of the intervention was required. The Office of the Premier is of the opinion that the capacity and skills of the Administrators should be assessed in relation to the tasks they had been given.

Of specific concern was the fact that three different Administrators had been appointed for the Department of Education within an eight month period; none of whom had had a meaningful impact, in the opinion of the Province. Another example cited was the Department of Public Works, where the first team of officials from the national Department of Public Works had left without producing the plans they had promised and a new Administrator had been deployed. The provincial Department, having previously received a qualified audit opinion, had now received a disclaimer of audit opinion just like the national Department of Public Works.

· Decision 13: There is a need for a technical assistance programme that must continue beyond the intervention. The administrative capacity of the PT must be addressed urgently and, in addition, new systems and processes might need to be introduced to enhance the administration.

In the absence of the diagnostic report on the challenges within departments under Administration, the technical assistance programme was still to be realised.

· Decision 14: The national Ministers should meet shortly and finalise their respective intervention teams. These teams will be formally communicated to the Premier immediately thereafter.

The Province did not have a record of any communication in relation to the decision mentioned above. The departments under Administration had experienced regular changes of Administration Teams without any formal communication.

4. Department of Health feedback on impact of the intervention

According to the Provincial Department of Health Administrator, the mandate received from the MEC was to focus on areas such as Human Resource (HR), Information and Communication Technology (ICT), Finance, infrastructure and pharmaceutical arrangements. The key issue for this Department was Finance, particularly with regards to over expenditure and not necessarily the state of health in the Province.

The Health Administrator reported that the following measures were being implemented under the guidance of the National Executive Intervention task team. These measures discussed below, had implemented over a six month period from March 2012 to September 2012:

4.1 Organisational realignment

Progress made over a six month period included:

· Abolished 26 000 unfunded posts. Conducted a head count (PERSAL clean-up) project in collaboration with StatsSA and NT, with the target date of March 2013;

· Development of staffing ratios and norms and standards were also expected to be completed by March 2013;

· Approved new generic structure to align with the Negotiated Service Delivery Agreement (NSDA), expected to be completed in December 2012;

· Advertised the Chief Executive Officer (CEO) post, started the interview process in June 2012 and the appointment of Hospital CEO’s was underway and targeted for completion by the end of October 2012;

· Deployed 57 unemployed graduate interns by the National Department of Health in finance and revenue, SCM, Asset Management, HR and ICT Management.

According to feedback provided by the management of the Lebowakgomo District Hospital , the staff complement stood at 870 and the vacancy rate was very high. There were insufficient nurses, doctors and support staff such as cleaners. It was also reported that of the total of 40 health institutions in the district, 29 had no permanent CEOs. However, posts were being advertised, short listing was being done, seven institutions had interviewed candidates and more interviews were scheduled for the following week.

The Thabamoopo Psychiatric Hospital had 30 approved posts, of which 26 were filled, which was not enough as they had to deal with 360 patients with mental disabilities. It was further indicated that there were no resident specialists, only three from Polokwane. The hospital management, together with the Office of the Premier and the Legislature worked on the matter of patients whose identities were not known in trying to identify their families. A task team has been established by the HOD of the department to assist. About six social workers were being seconded from the Department of Social Development.

The Health and Other Services Personnel Trade Union of South Africa (HOSPERSA) expressed its disappointment with the moratorium on the filling of vacant posts of support staff in the Department. This moratorium put more pressure on the current staff considering the high influx of patients to these health facilities and negatively affected healthcare services in the Province. Furthermore, HORSPESA raised concerns around over spending, acting CEOs at hospitals and shortage of staff including cleaners across health institutions in the Province.

The Health Professions Council of South Africa ( HPCSA) indicated that interns were being trained by Registrars, who were in turn trained by Specialists. These interns worked long hours increasing the chances of medical negligence, which would in turn compromise the health professional conduct.

4.2 Supply Chain Management

The Department indicated that prior to the intervention, the following challenges had been experienced, absence of an SCM policy; reliance on the PFMA and the National Treasury Regulations (NTRs); contracts were fragmented across districts and needed consolidation and some procurement processes were centralised.

Since March 2012:

· The Department reviewed its SCM policy, developed a Health System Policy, which was consequently approved for implementation. The Policy helped avoid irregular expenditure;

· Major contracts were reviewed, including security services; maintenance and repairs of boilers; maintenance of equipment; helicopter Emergency Medical Services;

· The contract database project, with an early warning or monitoring system, was underway and expected to be completed by the end of December 2012;

· It could be determined that of 43 hospitals in the Province, 38 needed major repairs amounting to R88 million;

· Currently, the SCM regulations were delegated in cases where services and goods were supplied by sole providers and those on valid contracts;

· A continuous challenge still persisted regarding quotations which were not market related, and transversal [1] contracts had been put in place to minimise the risk.

The management of Lebowakgomo Hospitals reported the following challenges, shortage of cleaning materials; centralized procurement of goods and services delayed approval of processes; lack of leadership or in-house SCM office and some Black Economic Empowerment (BEE) service providers not meeting expectations.

The SCM challenges experienced by the Thabamoopo Mental Hospital included the fact that the procurement process took longer due to points of verification and management expressed a need to increase ward attendants and cleaners.

HOSPERSA reported that, the supply of food in some of the hospitals were not consistent, the aggravating circumstances were that the suppliers were not paid in due course because the processes of approving payments were taking a long time.

4.3 Pharmaceutical Depot management turnaround strategy

A key challenge that contributed to the Department of Health being placed under administration had been the lack of adequate medicine at the Depot and large stocks of expired medicine.

The implementation of section 100 had led to the following achievements, amongst others:

· Development of a turnaround strategy which was being discussed with the relevant stakeholders;

· A project driven by the National Department of Health was being implemented to set up a new structure and processes for efficient management of the Pharmaceutical depot, including a review of the pharmaceutical medical supply ordering system and to develop capacity on drugs SCM;

· Reduction of the high risk of hoarding medicine at the Depot and improvement of availability of medicine at 68-78 per cent at clinics and hospitals;

· The challenge of data integrity was being addressed through the clean-up of the pharmaceutical information management system.

The management of Lebowakgomo Hospitals mentioned that they had been affected by the intervention more especially when it came to the pharmaceutical section.

4.4 Infrastructure management

The Administrator reported progress in the following areas:

· Improved capacity for monitoring of projects and construction work;

· Improved payments based on verified progress of work done, by the national engineer and the team;

· Establishment of a new Infrastructure Unit; and

· Some contracts had been reviewed and some renegotiated for cost effectiveness such as the construction of doctor’s accommodation.

The infrastructure related challenges experienced by the Lebowakgomo Hospital, were lack of mental health care and TB ward; X-ray machines had not been operational for the entire 2011/12 financial year, and only expected to be fixed by the end of October 2012 (patients were being transferred to Zebediela in the meantime) and the inadequate number of hospital beds (currently 220 active beds, needed to be upgraded to 400 beds). The Department promised the hospital management that a building for staff accommodation would be erected but to date nothing had been done.

The Thabamoopo Psychiatric Hospital mental health patient numbers were congested and this compromised infection control and was in contravention of the law. It was expected that the process of revitalisation would address the lack of space. Progress had been made on the issue of the building structures although some of them had not been occupied.

HOSPERSA cautioned the delegation that, the well established eye unit which served the entire Province had been functioning without laser machines which are used to treat sugar diabetes and high blood pressure patients to prevent blindness. In addition, the suctions theatre machine in Mankweng Hospital had been out of order for eight month and it was hindering the competency of the doctors to perform operations.

4.5 Financial management

Financial management with respect to over-expenditure, particularly on Compensation of Employees (CoE) was arguably the main reason that led to the implementation of the Section 100 intervention. Other key challenges that impeded effective delivery of health service included the high shortage of doctors, nurses and specialists. The Department therefore was required by the EXCO to realise a 2 per cent saving on CoE to stabilise its finances.

Achievements since March 2012 included the following:

· Stabilised the financial situation and cash flow management;

· Achieved about 80 per cent of the 30 day payment requirement. Payments were made twice per month within the available cash; accruals had been cleared excluding the ones with possible disputes;

· The EXCO resolution for a 4 per cent reduction (2 per cent per year) of the CoE was not realistic and would negatively affect the Department and the provision of health services;

· The 2012/13 first quarter expenditure pattern for CoE reflected a possible over expenditure estimated at R136 million due to accruals of R140 million from the 2011/12 financial year;

· Processes were underway to interrogate the expenditure to ensure accurate projections and remedial action included the implementation of austerity measures to realise savings and the shift of funds to CoE.

The Lebowakgomo Hospital management indicated that Programme 8 responsible for the servicing and maintenance of medical equipment had budget constraints and the Hospital was waiting for financial assistance from the Provincial Treasury and other Departments. These budget constraints were due to the baseline of the Department being reduced. It affected retention of staff, including support staff.

At the Thabamoopo Hospital , mental patients from across the country were being dumped there without proper consultation with their relatives. As a result, some patients could not be identified and some came from different provinces making them more difficult to trace. The challenge was that these patients had to be transported and the hospital incurred the cost.

The HPCSA commented that, the World Health Organization had recommended one doctor to a maximum of 1 500 patients. However, in South Africa , it was one doctor to 4000 patients. HPCSA further reported that, as the Department of Health stated, due to its financial constraints, it had halted employment of doctors, invariably that would lead to a shortage of doctors and would affect healthcare service delivery.

4.6 Service Delivery monitoring

The Health Administrator reported progress made as follows:

· Deployed additional capacity from the National Department of Health including the Chief Operations Officer;

· Visited 18 hospitals. Findings indicated lack of proper infrastructure and functional medical equipment; insufficient budget and delays in procurement practices, which resulted in low staff morale.

· Historic poor contract management related to repair, maintenance and procurement of life saving and diagnostic medical equipment, that was being addressed;

· I ntervention plans were underway to assist the Department with the procurement of autoclaves for all the hospitals identified (estimated at R50 million), as part of quality assurance;

· An audit of all medical equipment was currently underway to determine functionality; maintenance status and/or the need for replacement, with the relevant cost implications.

It was indicated that the food shortage at the Province’s hospitals had been resolved. Due to problems with the contracts, service providers had not been paid on time. That problem had since been addressed and all accounts were now paid within a reasonable time.

The Department expected that service delivery would be improved to a large extent with the appointment of the hospital CEO and appropriate delegations of authority. This was one of the steps towards the building blocks for the implementation of the National Health Insurance. A detailed Recovery Plan was also available in a template format which reflected completion dates and responsibilities per project.

HOSPERSA reported that the staff morale was too low because of them not being paid their Performance Management and Development System (PMDS) bonuses for the period 2010/11 and 2011/12 despite the promise to pay them in the month of September 2012, and the non-payment of pay progression to the Primary Health Care nurses in the Capricorn District municipality for the years mentioned.

5. Department of Education feedback on impact of the intervention

The Administrator for the Department of Education indicated that a recovery plan was developed, submitted and in the process of being implemented. Having noted the challenges existing within the Department, the following measures were being implemented under the guidance of the National Executive Intervention task team.

5.1 Provisioning and delivery of quality basic education

According to the Administrator, datasets posed challenges as procurement of textbooks depended largely on the learner numbers. The Learner Record and Information System ( LURIS) system facilitated tracking of learners and NT assisted with the headcount project. The Administrator reported that they had prioritised the customisation and alignment of the South African Schools Administration Management Systems (SA-SAMS)/LURIS or Business Intelligence (BI) at all schools, circuits, districts and Head Office in order to ensure that learner data was credible and reliable.

Procurement of books was prioritised using the 2012/13 Learner Teacher Support Material (LTSM) budget that focused on Teacher, Textbook and Time principles. On the 3 rd and 4 th of June 2012, the first orders had been placed with the book publishers. The Education officials had met with the publishers to negotiate price reductions and about R249 million was secured.

Teachers resorted to using other means available such as using learner numbers from the HOD to procure textbooks. It was also indicated that the transfer of money to schools is based on two factors, namely, LTSM portion and per capita expenditure.

The Province planned to ensure that the right books were delivered to the right schools and learners including at farm level. Section 20 affected most schools whereas section 21 schools got better opportunities.

Progress reported since March 2012 with respect to Section 100 is summarised below:

· Training for and the phased-in implementation of the Curriculum and Assessment Policy Statements (CAPS);

· The procurement and delivery of learning support materials (LTSMs – CAPS-aligned and top-up textbooks, workbooks and stationery);

· The roll-out of an efficient learner transport programme;

· The implementation of the education infrastructure development programme;

· The transfer of funds to schools in terms of the norms and standards;

· Implementation of focused remedial and enrichment programs for Grades 10-12.

  • The coordination of the Annual National Assessments (ANA) for Grades 1-6 and 9 and the National Senior Certificate examinations; and
  • The implementation of the Grade 10 Catch-up programme (an order of the North Gauteng High Court).

The leadership of Bokamoso Secondary School reported on issues that were previously raised:

· Delivery of textbooks: In June 2012, textbooks and workbooks were delivered with some shortages. Top-up textbooks were not yet received;

· Finance, norms and standards: Apart from R331.25 on 30 March 2012 and R108.025 in May 2012, no money had been received from the Department in respect of norms and standards. The school needed to know their budget in advance for improved planning;

· Schools nutrition programme : This was not a problem anymore, the school just needed a new kitchen to prepare meals as the current one was unhygienic;

· Learner transport : Learners were still without transport; contracts had been terminated and the issue was still pending;

· Infrastructure: The school needed renovations; security; staff room; storage space for food and textbooks and an extra building. Security required fencing worth R1.2 million and manpower.

· Staff shortages: An Administrative Clerk was needed to manage the CAPS programme;

· Catch up plan: Materials had not been given on time and the schools were not trained on how to run CAPS.

The Reverend Malatjie School reported progress based on issues previously raised as follows:

· Delivery of textbooks : Readers or workbooks expected in January were only received in September 2012; Grades 4, 5 and 6 learners got books used to improve reading and writing. Grades 1-6 learners using workbooks, which are enough on their own and were delivered;

· Norms and standards: The school did not receive the second tranche of the money; the challenge was that the grant allocated was not adequate.

· Schools nutrition programme : This was going well, the problem had been with the previous service provider;

· Learner transport: There were no issues to report, problems had been resolved;

· Annual National Assessment: Results showed a slight improvement as at September 2012, ANA was challenging but it was work in progress and the school expected to improve over a two year period.

The South African Democratic Teachers Union (SADTU), National professional Teachers Organisation of South Africa (NAPTOSA), and Professional Educator’s Union (PEU) raised issues around the frequent change of Administrators; the moratorium placed on appointments creating many problems; fear of further cuts with regards to norms and standards budget; this money not being paid on time; rural school infrastructure dilapidated; delivery of textbooks still an issue; Administrators perpetuating the education problems; catch up programme a smokescreen; no proper management of educators with regards to educator provisioning; Early Childhood Development (ECD) spending are different in provinces and less in Limpopo; administrative staff and general workers needed and lack of resources and staff at circuit offices.

These unions further cautioned that there was a need for the Administrator to carefully look at the manner in which the infrastructure budget for the schools was being cut as some schools did not even have ablution facilities. PEU also raised its concern over the use of temporary classrooms which were now becoming permanent in schools.

Furthermore, SADTU and NAPTOSA expressed their disappointment with the manner in which the Department was handling the transfer of funds according to the norms and standards. In some cases, the Department failed to provide some schools with their first 25 per cent transfer of funds.

5.2 Financial Management

The Department indicated that the 30 day payment requirement was still not being met. However, a cost containment strategy had been devised. Some of the challenges identified were that the telephone or Vodacom and fuel bills were too high, pointing to abuse, and that software was not effective. Time frames for submission of statutory reports were not adhered to and delegations with regard to timelines had to be addressed.

Some progress made regarding financial management included:

· Strategically addressing the 2011/12 and 2012/13 adverse Auditor-General’s audit opinions;

· Credible budgets were developed, approved, managed and controlled;

· High levels of unauthorised expenditure and accruals were effectively managed;

· Prescripts of the NT Instruction Note No. 01 of 2012 were actualised;

· Authentic invoices were verified and paid within the prescribed 30 day period, and a cost containment strategy had been effected across the system;

· Stabilised cash flow management and receivables and debt were managed and controlled;

· Developed and managed a credible and sustainable asset register;

· Reviewed the Strategic and Annual Performance Plans and aligned the documents with the budget and organisational structure;

· Developed a credible statutory financial report, on time with financial delegations reviewed and reassigned accordingly.

The management of Reverend MP Malatjie Primary School and Bokamoso Secondary School reported that there had been a delay in the transfer of funds according to the norms and standards and that created challenges. In addition, the funds were not enough.

5.3 Supply Chain Management

The challenges with respect to SCM included slow verification of invoices, which were sometimes inflated.

Progress made since the intervention with regards to SCM follows:

· SCM policy was reviewed, implemented and being monitored;

· High-cost contracts (security, learner transport, LTSM, photocopying and printing, etc.) were reviewed and closely monitored for compliance;

· The vetting of SCM staff also commenced, a credible database of contracts was maintained and the declaration of financial and business interests was made a norm in the SCM unit;

· Transversal contracts were managed and executed, and impact monitored in cooperation with the PT, and identified discrepancies and irregularities were acted upon decisively and within the prescripts of the law.

5.4 Human Resource Planning and Management

With regards to educators in the Province, 1 800 of the total of 4 300 temporary educators had been absorbed in the system and a saving of R440 million had been realised. There was a need to profile, match and appoint these educators permanently.

It was indicated that about 1 551 promotional posts were vacant, 336 posts had been advertised but the attrition rate was also high with regards to principals and HODs. The other challenge was the Personnel Salary System (PERSAL) cleanup. The Development Bank of Southern Africa (DBSA) assisted the Department with the organisational structure.

The Administrator indicated that the SMS members were involved in the intervention process. There was no need to transfer skills because everybody worked together. With regards to the catch-up plan, Grade 10 was the main focus, curriculum scan was done, gaps were identified, schoolshave also indicated gaps and a strategy had been devised to address those. A task team was formed with five unions and Provincial Treasury provided R75 million for the catch-up plan.

Out of 134 circuit offices, 24 offices were vacant. Ten months later no advertising had been done and the Department was waiting for the Provincial Treasury to assist with funding. The long term strategy of the Department was to address the foundation phase. The headcount of learners and educators still needed to be done.

The Administrator indicated that it was crucial to deal with the bloated CoE budget as the Department was spending more than R18 billion out of a budget of R22 billion on CoE and that was not sustainable.

The Department was busy with the following processes:

· Reduction and control of the CoE budget;

· Clean-up of the PERSAL transversal system;

· Roll-out of the headcount project in collaboration with NT, Stats SA and the Department of Basic Education (a project funded by NT);

· Review and realignment of the PERSAL delegations with the HR delegations;

· Review and realignment of the organisational structure;

· Addressing the high vacancy rates of promotional posts and support staff at schools, districts and Head Office;

· Implementation of determined post provisioning norms for schools;

· Match temporary educators with profiled vacant substantive educator posts as per Public Service Coordinating Bargaining Council (PSCBC) Resolution 01 of 2012;

· Addressing the problem of ad hoc educators in the system;

· Creating and maintaining labour peace in the system; and

· PMDS and declaration of interests to be made a norm at all levels.

SADTU, NAPTOSA and PEU emphasised a need to address the issue of the funded posts which were not filled by the Department, which was now putting more pressure on their members to perform the impossible. The South African Principals Association (SAPA) also indicated a need for the full staff establishment to be fully implemented by the Department. Suid-Afrikaanse Onderwysersunie (SAOU) raised the issue of transparency of the budget as they had been told by the Department of it being depleted during the course of the financial year.

The management of Reverend M.P. Malatjie Primary School

reported progress with respect to scholar transport and the school nutrition programme. On the other hand, Bokamoso Secondary School reported that the issue of the scholar transport had not been addressed, but they were satisfied with the school nutrition programme.

6. Department of Roads and Tra n sport feedback on impact of intervention

The Administrator and the HOD for the Department of Roads and Transport ( DoRT ) reported that good and commendable progress had been achieved. It was further acknowledged that more work still needed to take place at the Roads Agency of Limpopo (RAL) and the Gateway Airports Authority Limited (GAAL). The challenges at the two agencies related to legislative, governance and HR matters. Service delivery through these agencies needed to be discussed and proper benchmarking with best models had to be developed as a matter of urgency.

6.1 Turnaround implementation plan

The Department's organogram had been reviewed with the support obtained from the National Department of Transport pending input from the Department of Public Service and Administration (DPSA). Similar exercises at RAL and GAAL were 40 per cent completed although the filling of key positions remained a challenge.

The Task Team had identified internal control weaknesses regarding financial management, and those weaknesses were currently being addressed. The Task Team had also developed new delegations of authority; appointed new procurement committees to bring back legitimacy and reliance; introduced an invoice verification system and re-allocated the budget for projects in terms of the APP. The Province had also completed a manual checklist of all infrastructure contracts and started with the collection of critical information that was missing in the contract files.

T he Department had resolved the threat of over spending. However, proper planning to roll out infrastructure for the following year needed to start immediately. Furthermore there was a need to raise awareness to close the capacity gaps of professionals and technicians in the infrastructure unit.

Further progress made was reported as follows:

· Completed a thorough diagnosis of the financial situation and stabilised the cash;

· The Department was spending according to cash flow and paid all outstanding invoices within the required 30 days;

· Reduced expenditure on goods and services by a monthly average of R20 million. Cash available as a result of instituted austerity measures was R82.6 million as at September 2012;

· Introduced new internal controls related to budgeting, procurement and payments;

· Properly aligned the 2012/13 budget to the Strategic Plan and the Department’s Annual Performance Plan;

· Unpacked the budget right down to project level so that all relevant information can be transparently understood;

· Brought in additional capacity from the National Department of Transport to do quality checks and invoice verification focusing on the two main cost drivers, namely, the roads infrastructure and bus contracts;

· Additional capacity further improved financial management and SCM at both RAL and GAAL, resulting in the clearing of the payments backlog at RAL;

· Extensive support was provided to RAL in its legal proceedings.

6.2 Roads Agency Limpopo

The entity focused primarily on its operations, beginning with the legal framework that established the entity and its mandate of being responsible for the strategic planning of the provincial road system and the rehabilitation of the Limpopo provincial roads network. The governing structure consists of the MEC for Roads and Transport as the government’s sole shareholder, the board of directors and management.

Some of the challenges raised that led to the intervention included the over-commitment of the entity’s budget; the late approval of the APP, cash flow shortages, long outstanding invoices, and the contravention of SCM processes. Pending matters included a review of the organogram in order to fast track the filling of critical vacant posts such as the CEO, CFO and the internal legal unit.

6.3 Gateway Airports Authority Limited

According to the presentation made by the management, GAAL is an entity that is entirely owned by the Limpopo Provincial Government through the national Department of Roads and Transport. The airport is operating under a category 9 international operating license. This meant that while the airport was currently not fully operational as an international airport, it had the licence to operate as the gateway to Africa in future.

In terms of the operations and staff component, GAAL had a total of 67 employees, with vacancies existing in certain units such as fire and rescue officer (three), a tractor driver, and an Information Technology practitioner. Processes were at an advanced stage to fill most of the vacancies. The critical posts of the Chief Financial Officer and Risk Manager remained vacant despite interviews having been completed. The Board of GAAL had been dissolved by the former MEC in 2008.

In line with keeping compliance with the principles of good financial management and accounting and good governance within the institution, GAAL had appointed Ernst & Young to conduct a forensic investigation and audit in 2011. The Board of GAAL was dissolved before the forensic report could be presented, leading to the provincial Fraud and Corruption Task Team to investigate possible fraud as highlighted in the forensic report.

The challenges highlighted included insufficient capacity and competencies in the finance division. The continued absence of the Board had far reaching implications in terms of decisions taken by management. Over the last four years, five people had vacated the position of CEO. This caused instability in financial management and operational control.

The management of GAAL acknowledged it suffered due to insufficient capacity and competencies. However, that did not amount to a total lack of capacity and competencies as alleged. Furthermore, the finance management unit was not dysfunctional but there were gaps which were being addressed in conjunction with the Department and the intervention team.

7. Committee Observations

The Committees had engagements with the five Departments placed under administration; the Premier of Limpopo Government; the National Treasury representatives; the Administration team and various stakeholders invited during a follow-up visit to the Limpopo Province . Oversight visits were also conducted and the NCOP observed the following:

7.1 The absence of guidelines on the intervention has created tension between the Executive Council and the Inter-Ministerial Task Team. This led to inconsistent application of the intervention by different Administrators in the Province;

7.2 It appeared that the Task Team does not have sufficient capacity to implement the action plan for the intervention. Hence, the team was still promising to provide technical support after ten months of the intervention;

7.3 The intervention costs approximately R17 million, funded by the National Treasury;

7.4 The Task Team neither had clear plans with specified time frames, terms of reference with indication of scope of the intervention, time frames and deliverables nor an exit strategy for the intervention ;

7.5 There was no communication between the Office of the Premier and the Administration team. That negatively affected the implementation of section 100 (1) (b) and consequently, service delivery;

7.6 There are no Memorandums of Understanding between the administrators, Heads of Departments, MECs and the Ministers;

7.7 The absence of a diagnostic report might have contributed to the non-development of implementation plans that could have been useful to Oversight Committees;

7.8 There is stability in terms of finances of the Province;

7.9 The Province does not fully comply with payments of invoices within 30 days, which contravenes the National Treasury Regulations and the PFMA, No. 1 of 1999;

7.10 There was significant improvement in the Departments of Health, Education and Roads and Transport compared to the time of the Committee visit in March 2012;

7.11 The intervention in its current form might not lead to any skills transfer and might make the systems put in place unsustainable beyond the intervention;

7.12 The organisational structure and staffing within the Provincial Treasury, a key Department in the Province, remained a challenge. The Provincial Treasury is still experiencing challenges with public finance; and poor infrastructure monitoring;

7.13 The roles of oversight structures are critical in this process of intervention as a result collaborative effort from all structures is important to realise improvement in this intervention;

7.14 The Province is lagging behind in its spending, with 39.7 per cent at the time of reporting as compared to the expected 50 per cent. This slow spending has the potential to compromise service delivery and also either under spending or fiscal dumping towards the end of the financial year. National Treasury has already indicated that R1.5 billion is likely to be returned by the Province as unspent conditional grants;

7.15 According to the Office of the Premier, some departments that were not under section 100 (1) (b) of the Constitution of the Republic of South Africa were now being negatively affected by the intervention;

7.16 Based on the signed memorandum between the Minister of Finance and the Premier, the Directors General of National Treasury and the Premier’s Office had to meet to discuss and clarify roles and responsibilities of respective role players but that meeting has not materialised;

7.17 Key issues in the Department of Health were finance and over-expenditure and not necessarily the state of healthcare in the Province. The Department of Health managed to stabilise the financial situation but could not realise a savings of 2 per cent and instead owed 4 per cent. An SCM policy developed by the Department of Health assisted in avoiding irregular expenditure. Health need more money and not budget cuts;

7.18 The Department of Health conducted a headcount project with Stats SA and National Treasury to get a better understanding of the Health personnel numbers in the Province;

7.19 The Province need about 100 ambulances in the next two years, likely to cost R2 million;

7.20 The shortage of medical professionals such as doctors, nurses and administrative in staff the Province remain challenging;

7.21 The Health Administrator works with the HOD on a regular basis and there is no communication problem with the MEC;

7.22 The CFO of the Department of Health was suspended with charges related to financial management areas, disclaimed audit, regression from the previous year, failure to report to the Provincial Treasury and the Auditor General on time. The CFO was charged on 18 September 2012;

7.23 The problem of over-stocking of medicine at the Depot has been resolved. The Department of Health conducted a medicine stock take at all clinics during September 2012 and a reallocation of medicine was done;

7.24 A moratorium placed on the filling of posts led to the following: several hospitals in the Province having acting CEOs; shortage and migration of doctors nationally and internationally; negative impact on healthcare services and increased doctor patient ratios;

7.25 The HPCSA and HOSPERSA concerns are largely related to staff shortages, over spending, acting CEOs and lack of communication between the Administration team, MEC and HODs and the unions;

7.26 The Lebowakgomo Hospital issues are mainly the shortage of staff (including cleaners), insufficient space or accommodation, delayed maintenance of medical equipment (e.g. X-ray machines), acting CEOs in 29 of 40 health institutions and centralisation of procurement services delaying service delivery;

7.27 The issues raised in March 2012 with the Thabamoopo Mental Hospital have been largely resolved, including food supplies. An infrastructure report was available that outlines the challenges. However, procurement issues and challenges of staff shortages remain;

7.28 The Limpopo Department of Education is projecting an overspending of R172 million over the Medium Term Expenditure Framework;

7.29 The textbook delivery problem is still not fully resolved. An analysis of the impact of textbook shortages on schools was done and details are compiled in a report;

7.30 School nutrition issues raised previously seems to have been resolved;

7.31 There are no adequate measures and forums in place to inspect and monitor schools in the Province and 24 out of 134 circuit managers posts were vacant;

7.32 The Committee noted that the presentation made by the HOD of Education made reporting difficult as it was more verbal than written;

7.33 Many schools in the Province still need assistance with respect to; infrastructure; school buildings; textbooks; refurbishment and has budget constraints;

7.34 Since the Province was put under administration, the norms and standards money has not been transferred on time each quarter, and the allocation amount has been reduced making planning and budgeting difficult in schools;

7.35 The moratorium placed on filling of posts (deputy principals, circuit offices without managers, administrative staff and general workers etc.) created service delivery problems;

7.36 The catch up programme for Grade 10 learners was not effective as materials were not delivered on time and learners in some schools did not receive study guides;

7.37 The lack of security at schools in terms of fencing and manpower, compromises safety of teachers and learners;

7.38 There is a lack of communication between the Education Administrator, the MEC, the unions, the provincial legislature and the HOD;

7.39 Compensation of employees was too high versus the high vacancy rate within the Departments of Health and Education;

7.40 The presentation made by the management of Roads Agency Limpopo (RAL) did not provide sufficient information on the affairs of this entity. There also seems to be an ambiguity on the Department’s oversight role over the entity;

7.41 Several strategic positions within RAL remained vacant and the Chief Executive Officer was still in an acting capacity;

7.42 RAL contracted out its responsibilities to service providers despite the fact that there were an internal division of engineers within the agency. There were challenges with contractors not meeting delivery deadlines and targets and no punitive measures were taken against contractors that failed to deliver on time;

7.43 There was a general lack of satisfaction over the existence of a CEO who seemingly did not have any powers at RAL;

7.44 The management of RAL has a tendency to over-commit despite knowing that there were insufficient funds;

7.45 A total of R267 million worth of projects were awarded by RAL without following proper procedures;

7.46 The management at RAL downplayed the role played by the community in influencing the projects, the management did not consult appropriately;

7.47 The sustainability of Gateway Airports Authority Limited (GAAL) and its continued existence remains questionable;

7.48 The Limpopo Department of Roads and Transport’s oversight role over GAAL seems to be non-existent;

7.49 GAAL’s presentation was not clear about annual financial statements for the period 2007/08 to 2011/12 and employment and vacancies information. There was also a lack of capacity and challenges in financial control and management; and

7.50 The presentation made by the Administrator of the Department of Public Works did not meet the Committees’ expectations and was instructed to compile a report with more content.

8. Recommendations

T he Select Committee on Finance was guided by section 100 (1) (b) of the Constitution, 1996, that at its core protects the interests of the people and further states the assumption of responsibility for the relevant obligation in that Province to the extent necessary to; maintain essential national standards or meet established minimum standards for the rendering of a service; maintain economic unity; maintain national security; or prevent that Province from taking unreasonable action that is prejudicial to the interests of another Province or to the country as a whole.

The Select Committee on Finance therefore recommends that:

8.1 The Inter-Ministerial Task Team should as a matter of urgency hold a meeting with the Executive Council to clarify the guidelines, roles and functions of functionaries during the intervention to ensure that proper accountability mechanisms are in place ;

8.2 The Inter-Ministerial Task Team should ensure that there are regular meetings between the Administrators, HOD’s and MEC’s of the departments concerned;

8.3 The Inter-Ministerial Task Team and Executive Council should provide space for effective oversight by relevant oversight bodies and also clarify the roles of Administrators and MEC’s when departments that are under administration are called by the Oversight Committees in the Legislature;

8.4 The Inter-ministerial Task team should clarify the implications of the intervention on the role of the MEC for Roads and Transport as the sole shareholder of RAL;

8.5 The administrators should speed up the verification of the outstanding invoices and related Supply Chain Management policy issues to avoid any further delays in spending, that could compromise service delivery;

8.6 The administrators should also be working on the specified time frames and the exit strategies that would sustain the departments after the intervention;

8.7 The administrators should ensure the sustainability of the remarkable progress made by the departments of Education, Health and Roads and Transport. Such progress should also translate into improved service delivery;

8.8 The administrators should assist the Province to review an organisational structure for the Provincial Treasury, that provides for appointments of the positions of senior managers in budgeting, performance monitoring, and infrastructure monitoring and risk management;

8.9 Both National Treasury and the Department of Public Service Administration should jointly develop long term capacity building strategies for the Province;

8.10 The National Treasury should urgently initiate legislation that would provide regulations on interventions in terms of section 100 (3) of the Constitution;

8.11 Though there is stability in terms of finances in the Province; the Province should still sustain austerity measures in order to deal with the accumulated deficit over the past years;

8.12 The Administrators and the HOD’s for the departments of Health and the Department of basic Education should develop plans to address the issue of “bloated” compensation of employees versus the high vacancy rates;

8.13 The Administrator and the Department of Health should develop and cost a plan to secure ambulances over the medium term; refer to the Northern Cape Province’s model of procuring ambulances through Public Private Partnerships and create partnerships within the Limpopo Province ;

8.14 The Limpopo Provincial Legislature should ensure effective oversight over the finances of the Province by empowering its oversight Committees;

8.15 The Inter-Ministerial Task Team should fast-track measures to address staff shortages within the Provincial Departments of Health and Education, and ensure alignment of personnel and the allocated budget;

8.16 The Department of Education should report timeously on the delivery of textbooks, workbooks and study guides on time at schools across the Province, including rural areas before the schools open in 2013;

8.17 The Administrator of basic Education should assist the Province to develop a long term strategy for the Province to address the foundation phase, temporary teachers and headcount of learners and educators. A headcount model developed by the Department of Health should be used as a benchmark for Education in the Province;

8.18 The Inter-Ministerial Task Team should review at the delivery model by RAL and ensure that there is capacity to implement infrastructure in the Province;

8.19 The Inter-Ministerial Task Team should work with the Ministers of Health and basic Education to address infrastructure and security issues at schools and hospitals across the Province;

8.20 The Inter-Ministerial Task Team should intervene to improve working relations between the Public Works Administrator, the HOD and the MEC in the Province;

8.21 The Department of Roads and Transport should review the legislation that established RAL to avoid any ambiguity on the Department’s oversight role over the entity;

8.22 The Inter-Ministerial Task Team should ensure that the Board of RAL plays a more effective oversight role over management’s control over the entity’s compliance with financial regulations in order to avoid unnecessary pressure on its budgetary allocation;

8.23 That a new board be appointed to run GAAL and the Board members should have appropriate experience in the management of the sector;

8.24 That a competent qualified CEO of GAAL be appointed by the Provincial Department of Roads and Transport within 90 days after the adoption of this report by the House;

8.25 That the finance unit for GAAL should be capacitated with qualified and competent personnel;

8.26 That the Development Bank of Southern Africa should assist GAAL to draw-up a turnaround strategy and manage the implementation of that turnaround plan;

8.27 That the investigation by the Provincial Fraud and Corruption task team should be concluded in terms of the recommendations of the forensic investigation conducted by Ernst and Young; and

8.28 The Committee is satisfied with progress achieved in turning around the financial status of the Province by the task team. In light of the outstanding matters, the Committee recommends that the Cabinet consider putting some time lines that would enable a speedy execution of the recovery plan so that the departments concerned can be handed over to the province.

Report to be considered.

[1] Transversal contract means general period contracts that are arranged by national or provincial Treasury for more than one department. National Treasury Framework policy on Supply Chain Management as published in Gazette no. 25767 dated 5December 2003 in terms of Section 76(4)(c) of PFMA


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