Services SETA audit action plan and measures to improve performance; Public Service SETA overview of the skills development programmes in the public service

Meeting report

Mr Anele Kabingesi, Committee Secretary, welcomed the Members and announced that the Chairperson had submitted an apology for her absence. Members were asked to nominate an Acting Chairperson per the National Assembly Rules.

Ms J Mananiso (ANC) was nominated and elected as the Acting Chairperson.

The Acting Chairperson greeted Committee Members and noted apologies, including the Minister and Deputy Minister. At the previous meeting with the Sector Education and Training Authorities (SETAs), issues were raised by the Committee about the action plan and the Auditor-General’s (AGSA) findings. The Committee convened the current meeting to receive updates on whether the SETAs had implemented the recommendations made by Members. Every time the Committee met with SETAs, important issues were raised, especially around poor governance and lack of implementation of consequence management.

Dr Nkosinathi Sishi, Director-General, Dept of Higher Education and Training (DHET), addressed the meeting and said that skills development was one of the critical areas that still needed a great deal of work. The Department had identified critical skills and skills in high demand and the DHET produced an annual report on these issues. The skills strategy has been finalised to support the ELRP by Nedlac and the institutions’ enrolment plans reflect the ELRP skills and occupations in high demand.

The Department was in the process of developing the Master Skills Plan in conjunction with the SETAs. The DG was pleased that they would be reporting on issues around the audit report today. Government had initiated the process of implementing the hydrogen knowledge eco-system programme and critical in the Just Energy Transition. SETAs are at the forefront of implementing this programme.

Briefing by the Services SETA

The briefing was introduced by a person who was not identified. He provided a high-level summary of the presentation and the context for some issues that would be raised. The issues that would be addressed: a recap of the previous meeting; an audit update; a performance update, other matters, and a conclusion.

Mr Andile Sipengane, Acting Chief Executive Officer, Services SETA, then took Members through the presentation. The SETA reported on organisational performance with improved audit outcomes. It had a total of 35 audit findings, 24 of which have been resolved (13 resolved by internal audit and 11 still to be confirmed by internal audit.)

[See the presentation for more details]

Briefing by the Public Services SETA

Mr Thulani Tshefuta, Chairperson of the Accounting Authority, Public Services SETA, introduced the presentation which included an overview of skills development programmes in the public service. The presentation dealt with the SETA’s scope of coverage; strategic outcomes; priority areas; scarce and critical skills; geographical spread of public service employees; skills development interventions; flagship projects; internship and leadership programmes; audit report; and key challenges.

He was followed by Ms Bontle Lerumo, Chief Executive Officer, PSETA, and then by the Acting CFO.

The key challenges were identified as follows:

• Budgetary constraints which impact on the PSETA’s ability to meet the demands of the sector.
• The financial resources available for training and development remain with the sector. To address this, PSETA is in the process of exploring proposals for a sustainable funding model.
• The sector’s training priorities are not centralised and streamlined due to various skills development role players. This resulted in a lack of coherence in skills development and HR development efforts.
• Insufficient workplaces within the sector to host artisan development learners.
• Internship and Work-integrated Learning (WIL) learners are not absorbed into employment after completion of programme.

[See the presentation for more details]

Discussion

The Acting Chairperson said that the Committee was consistent regarding its agenda on transformation. Some of the slides presented were not specific about the demographics of the beneficiaries of the various programmes and it was emphasised by Members that this information needed to be compiled and presented accordingly. Members needed more information about the beneficiaries participating in these offered programmes.

Regarding the PSETA, she was pleased with its representation of the delegation. She was pleased to hear about the RPL learner landscape, external analysis of programmes, research and approach to skills learning in the PSETA presentation.

Mr T Letsie (ANC) said that when the acting CEO of the Services SETA was presenting, his camera was off and he could not be seen. He hoped that during responses, he would become visible. This also applied to the CFO and COO, who presented from a device that was named after the CEO, and who were thus not introduced by name to the Committee.

Generally, SETAs are extremely important in this country as they seek to address the skills shortages of the country, so their existence is not a ‘by the way’ matter. It is legislated and if one analyses how/when they were established, and where we are now, there would seem to be little progress made in terms of the skills profile, especially of young people of the country. Regarding the money spent on the SETAs, it might be considered politically expedient for some people to say it was time to reconsider the SETAs. However, if one looks at what the SETAs seek to do, there is a solid argument for the need for them even though they have not lived up to expectations.

The reason why the Services SETA is present is because, on 2 November 2022, we had a meeting with the SETA to deliberate on its audit outcome which Members were not happy about. It was resolved that the Committee would meet with the SETA quarterly to measure progress on implementing its audit action plan. A slide in its presentation today by the Services SETA made him uncomfortable – Point 7, update on consequence management – irregular expenditure.

He asked if the officials responsible for irregular, fruitless and wasteful expenditures were taken through proper disciplinary hearings. He asked about the discretionary grant support threshold of 7.5% and requested that the Services SETA provide more details about this and how it dealt with each case. Issuing a warning letter to the officials was inadequate, and he wanted to know the Rand value of the " lost " amounts.

Officials responsible for Supply Chain Management (SCM) in these institutions tend to think they are invincible. When they transgress, they are issued with a warning letter. What is the SETA’s policy on disciplinary hearings for employees who do such things and how much, in Rand value, was involved in this reported SCM non-compliance issue? 

He also asked the Services SETA about the legal fees paid on disputes between itself and a service provider. There was also mention of security threats to employees of the SETA and that the board had put together a mechanism to deal with this issue. He was against officials having bodyguards in the sector and there were now VCs that were guarded and had bodyguards. Several CEOs in SETAs had security detail or bodyguards. It seems there is a criminal network that is hijacking the sector. TVET colleges and universities were unable to finish their infrastructure projects because they were being hijacked. He requested the Director General to engage with the security cluster on this issue.

The chairperson of the Services SETA had indicated that some attempts had been made on members of his executive. The issue with not having security mechanisms in place timeously is that by the time they are in place, people would already have been victimised. There must be an urgent intervention meeting on this matter and the Department must lead a process to deal with situations where lives are at risk. Members would not want the CEOs of SETAs to resign or leave the government when they report matters of corruption. How far is the Services SETA on securing its officials from criminals?

In the last meeting with the Services SETA, Members raised the issue of employing a CFO who SAQA confirmed did not meet the minimum requirements for the job. In that meeting, Members indicated that they were not surprised by the AGSA’s audit report.

Regarding the PSETA, he welcomed the interventions put in place to ensure that the SETA did not train for the sake of training but that it trained in response to the economic needs of the country. On slide 9, there is a point about work-integrated learning in uMgungundlovu, Pietermaritzburg, that cost R1.7 billion (R1.7 million may be more accurate) for 60 learners. However, in Mopaka, the same programme had 18 students enrolled, but R1.5 million was spent. He asked for clarity on these two programmes that commenced at almost the same time, over the same period. He welcomed a written response on this, but it must be accompanied by a breakdown of all programmes on a spreadsheet.

Ms D Sibiya (ANC) asked for more details on the issues around consequence management, and fruitless, and wasteful expenditure at the Services SETA. The expenditure could not be written off because no official was responsible for it. What does it mean to say that there was no official responsible?

Ms K Khakhau (DA) said she was largely covered by Mr Letsie’s remarks. She requested the PSETA’s breakdown of critical skills and details of the Departments and institutions that are addressing these skill needs. The list should also include the number of beneficiaries and their demographics. Is the PSETA considering extending the list or doing any work on expanding it? Lastly, the employment service seems poor in rural provinces. Is it looking to expand the employment base and if so, are there any other constraints besides financial constraints?

The Acting Chairperson was concerned that in the presentations, there was budget spend regression and this should be condemned because of the Department’s role in responding to poverty, unemployment and inequality. On the lack of proper records, Members have expressed their view that stakeholders must adopt a culture of zero backlogs. People must know that they are expected to execute the mandate and task at hand.

She acknowledged the programme of action in terms of solutions to be implemented but have those solutions been implemented and planned per timeframes? How often does management meet with the audit team at the Services SETA? If there is a proper internal audit team, it is easier to resolve issues raised in the audit findings. Are there any backlogs regarding the 30-day payment period on invoices? Are the timeframes for audit action plans realistic?

She also asked about the OUTA report and the main allegations, point by point, in terms of what is being done. This can be submitted in writing to the Committee. She noted that Services SETA was having a challenge with appointments of people with disability for internships, bursaries, and work-integrated learning and skills programs. Is there a plan to mainstream those that are left out?

On sector employment transition, does the entity ensure trained persons are integrated into sustainable work opportunities? What is the cost of insufficient workplaces within the sector for both artisan and development learners? What measures can be introduced to increase the sector training opportunities and what funding models were being considered for more revenue streams? Has the entity concluded the skills audit methodology framework and tools? Is the tool applied in the public service? What is the level of alignment of skills programs supported within the key development sectors such as the Just Transition and industrialisation?

Responses

Services SETA

Mr Stephen De Vries said that the Services SETA had noted the comments and questions of the Members and that responses must be submitted in writing. Regarding the timeframes of the action plans, the Services SETA is within its timeframes and does conduct regular engagements with the chairperson of the audit committee.

As for the budget, there was a decrease from 2020 to 2021 due to the skills levy holiday during Covid-19. However, the budget was increased from the previous financial year from R770 million to R932 million. He believed this would increase in this financial year.

The CFO was not among those that did not have the required minimum qualifications and experience for the post. The CFO was not part of this issue and the report from SAQA did not include the CFO. He does have the requisite experience and qualifications for the job.

He has engaged with the CEO on the issue of security threats to officials and the measures that could have been taken. The view from the board was to consider security in terms of where the threat came from and when security was provided, it needed to be constantly assessed to ascertain whether it would still be necessary and appropriate.

Services SETA has internal controls in place for each case reported as irregular. Once a case is assessed, it is referred to a disciplinary hearing.

The Acting CEO commenced with audit issues and said engagements with AGSA started in December 2022. There were now weekly engagements with the AGSA to address issues raised. The turnaround time for responses has been reduced significantly in order to adhere to established deadlines. Three meetings have already been held with the executive team and business unit head of the AGSA to ensure some alignment in terms of preparedness and addressing the gaps that are identified.

On the DG support area above 7.5%, he hoped that the OD process would assist with this. The rand value implicated was around R93 million. The same person was not responsible across all these areas. There is a discretionary grant policy with discretionary grant regulations guiding the utilising and allocation of funding. It appeared that as the HR capacity of the entity ballooned, they looked into the project delivery of discretionary grants and this led to the push of 7.5% to 10.5%. However, the SETA was applying a measure to correct this for the future.

On the DG expenditure on expired contracts, the monetary value is R42 million. What contributed to this area was that during the Covid-19 period, there were active contracts that could not be closed. They were allowed to conclude and to get the appropriate payments. Cutting them off would have had a huge negative impact on the learners associated with these contracts. The person who was associated with this was the CFO.

On the supply chain management non-compliance – the rand value implicated was R906 000, and it involved four human resources persons. This related to the training that continued without deviation approval and the expenditure being above the threshold. There were two consequence management approaches in responding to transgression: disciplinary action and capacity building in the form of a training intervention for an HR officer.

The fruitless expenditure was related to the rural allowance not approved by the accounting authority and the company demanded through litigation that it was paid. There appeared to be a gap in implementing the internal processes and procedures in terms of obtaining approval by the Accounting Officer. We also realised that there were outstanding banking details that that company did not provide on time.

A further issue was the settlement of a dispute between the Services SETA and an ICT service provider. When this dispute came for resolution, it was found that there was insufficient evidence, which resulted in the Services SETA losing this case.

The legal fees between the Service SETA and a service provider related to a cancelled project. The Services SETA had been under administration for a period and some projects were impacted by the transition out of the administration period. Some of the projects had to be cancelled for various reasons but because some employees had left the SETA, there was insufficient evidence for the SETA to make its case, which resulted in the SETA losing the case and incurring costs.

On the settlement dispute between the Service SETA and security service provider (Mode Security), the amount was based on the negotiation that was still ongoing and the Committee would be appraised with the costs and status update.

Public Service SETA

Mr Tshefuta said the skills interventions of the SETA are above those basically required in public administration and management. There is a dedicated focus on ensuring that in the era of digitisation, these skills are offered not only to unemployed youth but the public servants that were currently employed. The SETA prides itself on trying to scale up and integrate training on ethics as a cross-cutting offering.

The problem with learner absorption is that the SETA does not have adequate funding to place interns in the departments, agencies, and institutions within the SETA’s fold. Money for these interns and learnerships is also sitting with different government departments. There is no central point for defining the skills needed in the public service arena. If these resources could be coordinated under the PSETA like other SETAs, it would be able to define the demand and provide the necessary skills to match that. Where budgets are cut for departments, the skills development opportunities become the first victim of budget cutting. Thus, a sustainable funding model and central coordination by the PSETA may result in the desired outcome. The Committee may have a role to play in this regard.

Ms Lerumo said the stipend paid for TVET learners is higher than the university of technology learners. For TVET learners the duration is 18 months while for universities of technology it varies between three to six months. A detailed breakdown will be provided.

The critical skills list is informed by a sector skills plan, which is produced annually. It also informs the skills gap, supply, and demand. The report should be ready by June/July, and it will be provided to the Committee.

In terms of reaching out to PWDs in terms of bursaries and internships, PSETA would give a bursary to an institution and the institution would recruit the learners. Going forward, the PSETA will be clear that about 30% to 40% of the learners recruited must be learners living with disabilities. The PSETA started offering new qualifications like the New Venture Programme, which teaches learners entrepreneurial skills and how to start a new business.

On the funding model, there are a few options on the table but one of the immediate ones is approaching the National Skills Fund (NSF) to assist with funding. PSETA is receiving requests from departments for interns but with the budget limitations, PSETA was not able to meet the need. Either the Treasury increases the budget or the PSETA approaches the departments to contribute.

Regarding the audit methodology: the methodology has been approved by the Cabinet, and PSETA is in the process of implementing it. Government should move away from utilising consultants when it comes to skills audits. PSETA wants to capacitate departments with HR practitioners who can conduct skills audits. It has been engaging with the National School of Government and DPSA in this regard. The former will develop a capacity-building programme and the target is about 600 HR practitioners who will be capacitated to roll out the programme.

Mr Letsie raised the issue around the qualifications of the executives of the Services SETA that did not possess the requisite qualifications for their positions. SAQA was part of the new board's first meeting in May 2020. SAQA confirmed that there were executives that did not meet job requirements. Last year, this matter resurfaced and the only executive that did not meet the requirements who was still employed in the Services SETA was the CFO, Mr T Matseba. The chairperson of the board was referring to a different report and a different person.

The Acting Chairperson asked that this information be submitted within seven days. She also asked that the demographics of the beneficiaries should be presented as clearly as possible. She noted the response regarding the inclusion of people with disabilities and said that the 30% to 40% was very high and the PSETA should be realistic because the current percentage was 7%.

She also asked the SETAs to write to the Committee on plans regarding the key challenges in the presentations. She also asked for a written submission on programmes on rural development and how they linked to the National Rural Youth Corps Service Programme.

DHET

Dr Sishi thanked the Committee for its contributions. He pointed to the militarisation of the sector and the need for security. He said that the Minister had appointed one of the universities to investigate options available to the Department in assisting institutions with the matter of safety and security. The report has been finalised and there is a very clear indication of where the challenges emerged from. The Department will engage with the institutions on this and ensure that the DHET response is aligned with matters identified in the report. There was also another report sanctioned by the National Police Commissioner on the TVET sector but it is also relevant to other institutions and SETAs. These reports will be shared with entities. DHET is targeted in its approach and will avoid over-expenditure on one security item and ignore others. The issue of safety affects everyone in the sector, not just high-profile officials. There must be urgent intervention in areas where anyone is possibly targeted, especially those that are vulnerable.

Ms Pretty Makukule, Chief Financial Officer, DHET, said that the Department monitors the spending of entities periodically. Reports are submitted quarterly but the Department does not always wait for the report. It engages with entities when challenges arise and there are formal structures for the CFOs to discuss issues of common interest and benchmark the best practices.

The Acting Chairperson thanked the officials and stressed the issue of consequence management. People were not being imprisoned for wrongdoing. It is important that, as public servants, Members follow the money and that the money is used for what it is intended for.

Committee business

Members considered and adopted a number of sets of Committee minutes from November 2022 to March 2023.

Members also considered and adopted its report on the Global Convention on the Recognition of Qualification concerning Higher Education and the Second and Third Quarter Expenditure and non-financial performance report.

The meeting was adjourned.