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
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
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
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 Provinces 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 Committees
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
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
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 Provinces 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 Treasurys 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
·
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 teams
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 childrens 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
·
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
No response to this correspondence was received from
the DG of National Treasurys office. In addition, the DG of
·
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
CEOs 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
The
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
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 doctors 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
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
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
At the
The HPCSA commented that, the World Health Organization had
recommended one doctor to a maximum of 1 500 patients. However, in
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 Provinces 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
·
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
·
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 Educators 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-Generals 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
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
reported progress with
respect to scholar transport and the school nutrition programme. On the other
hand,
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 (
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 Departments 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
Some
of the challenges raised that led to the intervention included the over-commitment
of the entitys 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
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
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
7.16
Based on the signed
memorandum between the Minister of Finance and the Premier, the Directors General
of National Treasury and the Premiers 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
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 Departments 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 Transports oversight role over GAAL seems to
be non-existent;
7.49
GAALs
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, HODs and MECs 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 MECs 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 HODs 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 Provinces
model of procuring ambulances through Public Private Partnerships
and create partnerships within the
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 Departments 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 managements control over the entitys 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
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
Documents
No related documents