DSI & DHET Quarter 2 2020/21 performance

Meeting report

DHET on its Q2 performance report

Mr Gwebimkundla Qonde, Director-General, Department of Higher Education and Training (DHET), took Members through the presentation, and said that on 24 June 2020, the Minister of Finance had tabled a Special Adjustment Budget to address the impact of Covid-19 on the economy and continued service delivery. The 2020/21 annual performance plan had had to be amended to ensure alignment with the adjusted budget. Notwithstanding, most targets were either shifted to a later date in the year or to the next financial year. In total, there were 86 targets for the 2020/21 financial year. For the quarter under review, only four of the six programmes had specific targets:

-Programme 1: 1 target (achieved)

-Programme 3: 2 targets (1 achieved and 1 not achieved)

-Programme 5: 2 targets (1 achieved and 1 not achieved)

-Programme 6: 1 target (not achieved)

-Total: 6 targets with 3 (50%) achieved and 3 (50%) not achieved

-Most targets are planned for the fourth quarter of the financial year

Ms Pretty Makukule, Acting Chief Financial Officer (CFO), DHET, presented on the overview of the 2020/21 allocation. The Department’s special adjusted appropriation for the 2020/21 financial year amounted to R107 billion, comprising voted funds of R95.710 billion and a skills levy of R11.291 billion. At the end of the second quarter of the financial year, the Department had total drawings from the Exchequer to the amount of R82.262 billion. Of this available amount, R78.427 billion had been spent, resulting in an under-spending of R3.835 billion on amounts drawn. Under-spending was 4.7%, compared to the Treasury limit of 8%.

Expenditure was influenced by the Treasury instruction to apply Section 29 of the Public Finance Management Act (PFMA). The Department adjusted its drawings from the Exchequer and managed its cash flow and expenditure (including all transfers and subsidies) to be within the limit of 45% of the allocation for 2019/20 until the end of July 2020.

R5 billion was prioritised to fund Covid-19 related activities. R1.5 million was spent in the Department to protect employees from Covid-19 and to purchase protective equipment. Of that R5 billion, R2.5 billion was allocated to the National Student Financial Aid Scheme (NSFAS) for the purchase of laptops for students, as they were studying remotely. The remaining R2.3 billion was allocated to universities, and R172 million to Technical and Vocational Education and Training (TVET) colleges, for all Covid-19 related programmes.

DSI on its Q2 performance

Dr Phil Mjwara, Director-General, Department of Science and Innovation (DSI), took Members through the presentation and touched on the highlights for the quarter relate to the signing of the National Research Foundation Amendment Bill, bursaries awarded and interns supported, increased knowledge generation and innovation outputs related to COVID19 and local manufacturing programmes. The presentation also addressed international cooperation relations during the quarter.

In terms of performance, for quarter 2, DSI achieved 20 of 33 planned output targets (61%).

-Programme 1 achieved 50% of its targets and 50% of the planned targets were not achieved.

-Programme 2 achieved 67% of its targets and 33% of the planned targets were not achieved.

-Programme 3 achieved 50% of its targets and 50% of the planned targets were not achieved.

-Programme 4 achieved 73% of its targets and 27% of the planned targets were not achieved.

- Programme 5 achieved 57% of its targets and 43% of the planned targets were not achieved.

Targets were not achieved due to:

-Process delays – refers to factors which are outside the control of the DSI and therefore achievement of such targets is mainly dependent on outside circumstances.

-Ineffectiveness of implementers – refers to non-achievement due to deficiencies during the implementation phase

-Target formulation deficiencies – refers to targets which were not achieved because of variables which were not foreseen during the target formulation phase

Regarding financial performance, the Department planned to spend R4,928 billion by the end of quarter 2. The actual spending for the period amounted to R3,712 billion (50,4%) of the total adjusted budget of R7,362 billion). This translates to a material variance of R1,216 billion or 24,7% of planned expenditure. Various measures are being put in place to address the material variance; these include:

-Revision of projections during the Adjusted Estimates of National Expenditure period (AENE); and

-Fast track administrative processes.

[See document for details]

Discussion

The Chairperson congratulated Dr Mjwara, who was identified as the best Director-General and received the award. It was well deserved, and the Committee had also witnessed this. He thanked Dr Mjwara for his work in the Department.

He had felt uncertain when the DHET presented the Q2 report, and thought that it had been summarised and began to doubt whether the Committee was receiving a second quarter report or not. For example, there were only three targets for the university programme. There were only two targets that had been reported on, where one was achieved and the other was not. As he was going through the presentation, he began to question whether the branch really had only three programmes. Performance should be reported in the fashion of planned targets and the performance of those targets.

This branch had been allocated R79 billion, but the Department reported on only three targets, where only two were actually reported. Surely this R79 billion did not represent the three targets. This was very shady and very poor. It should have indicated what the planned targets were and what had been achieved, not the planned summary that Members were presented with.

Last week, when the Committee engaged with the South African Qualifications Authority (SAQA) and the Quality Council for Trades and Occupations (QCTO), it had directed that the Department should engage with SAQA to assist in the halting of the retrenchments. How far was the Department in assisting SAQA with that?

Mr T Letsie (ANC) also congratulated Dr Mjwara on his award.

He asked the DHET about the trade tests that were not conducted in the first and second quarter. What was the impact on the employability of those who would have ordinarily done the trade tests and those who required the trade tests to get employment? What was the trade testing backlog, and for which trades? What mechanisms were in place to ensure that the trade test backlog would be addressed? Was the Department confident that those who applied would be tested, and by when? What was the waiting period for those who applied for the trade test, given the backlog?

The DHET in August had advertised a number of key vacancies. The advert stated that those who possessed qualifications must ensure that those qualifications were vetted by the SAQA. A strong message must be sent out to all departments that when they advertise, everyone must be vetted through the SAQA for their qualifications.

The CFO had indicated that some posts would be frozen during the presentation. Which posts would be frozen exactly? Did this include the most recent advertised posts? If so, which of those posts would be frozen?

He asked the DSI about its finances, particularly on the less than 1% spent on businesses owned by women. If the government was not spending enough on these businesses, the private sector could not be expected to do so by the government if it was not setting a good example on the matter.

Over R79 billion of the DHET’s money had been spent between NSFAS and the university branch. When universities were instructed to come and account to Parliament, Members were often told about institutional autonomy. The Committee had not even received the NSFAS audit outcomes. This was extremely concerning, because about 75% of the DHET’s budget was spent on those two programmes. He proposed that the Committee should host a dialogue or conversation around the issue of institutional autonomy and accountability, particularly with the universities and NSFAS.

Ms D Sibiya (ANC) asked the DHET about the status of the review of the TVET curriculum in collaboration with universities. Secondly, she sought confirmation on whether the recommendations in the report by SAQA had been implemented.

Regarding the DSI, she was not clear on the matter regarding funding people living with disabilities, and sought clarity. On slide 15, she asked for clarity on the district model, and which provinces had advanced. Lastly, what were the reasons for the under-spending in the Office of the Deputy Minister?

Ms J Mananiso (ANC) wanted to ascertain whether there were any programmes planned by the DSI to assist people living with disabilities, particularly the blind. She asked whether the DSI had any relationship with Blind South Africa. It should be the last time that the DSI spoke very little regarding providing assistance for people living with disabilities. This sector was struggling financially, so she appealed to the Department to prioritise people living with disabilities.

On women’s empowerment regarding procurement, it looked like the DSI was doing well but one would hope that the quota would be ramped up to 40%.

What was the DHET’s plan to mitigate the possible retrenchments at SAQA?

Lastly, how would it ensure that its targets would be achieved as planned? How far was the Department in ensuring that everything was in place for the implementation of policies?

Mr B Nodada (DA) congratulated the Director-General of the DSI on the good work that was done in the Department.

He asked the DHET about not achieving 100% for six out of 10 of its targets in programmes three and five. What were the reasons for that? What interventions have been put in place to ensure that those targets are achieved, and how would they be monitored to ensure that they were reached?

Secondly, what were the reasons for the shift in the Department’s focus, and how this impacted the APP in programmes three, five and six?

Many of the variances in performance were recurring – they were not new issues that Members had not seen. This implied a lack of effective consequence management. Had any consequence management been implemented in underperforming areas of the Department?

The Chairperson said that the Committee had not received any apology from the Minister regarding his absence from this meeting. The Committee had sent a letter to the office of the Minister regarding the NSFAS. The Committee had not received a response to this letter, and a reminder had subsequently been sent on 3 November, requesting that a response be furnished to the Committee by 5 November. The Chief of Staff in the Office of the Minister, when the Members enquired, had indicated that the Office of the Minister was preparing a response. It was almost a month later, and that information had not been provided. The Committee had not received any indication about the status of providing that information. One could safely assume that his Office perhaps did not want to provide this information, or the Minister’s Office was simply refusing to account to Parliament.

This was not acceptable. That information had been requested, with time lines, and the Committee had been ignored by an Executive that accounted to Parliament. He stated emphatically that he was not pleased with this, and hoped that the Department would respond.

The benefit approved by the Minister for the advisors of NSFAS was not something that should have been done as a ‘by the way’ -- there were legislative processes that had to be followed.

The Committee had requested the DSI to respond to a number of issues, which included the Decadal Plan, with information regarding what was identified by the AG as irregular expenditure. The Committee needed this information in order to finalise its reports for Budgetary Review and Recommendations Report (BRRR) process.

DHET’s responses

Ms Makukule said that a meeting with SAQA was scheduled to take place tomorrow. The Department had had an internal meeting with Finance to attempt to reconcile all the financial information regarding SAQA.

She apologised for the misunderstanding over the advertised posts, because she was trying to indicate that the Department would have some savings in the compensation of employees’ budget due to the posts that were frozen and the halting of the recruitment process due to the national lockdown.

Mr Zukile Mvalo, Deputy Director-General: Skills Development, DHET, said that they had been subdued in terms of the work due to Covid-19, and were unable to start with trade testing in July. After opening, they had to close on two occasions due to some instances that had been identified. Before lockdown, they had 386 applications for trade testing, and those applications had been processed. Since the reopening, they had received 126 applications which were currently being processed. The applications were mostly on the trades that were in demand, such as engineering, etc. This information would be provided to the Committee.

On the lead time, when someone submitted an application, they had allowed 169 days for the processing and finalising of the trade testing. This had been reduced to 37 days by improving efficiencies in the system.

He comforted the Members that in the previous financial year they had managed to achieve their target of about 24 000. They hoped to meet the 2030 target, but had to revise down the targets for this financial year. The artisan targets were also affected as a result. However, they had not revised down from the next financial year until 2025.

Dr Diane Parker, Deputy Director-General: Universities, DHET, said that the universities’ budget was indeed about R79 billion, and there was one branch in the Department that managed all the work around that R79 billion. The branch had approximately 120 staff members and a number of vacancies at the moment. The Chief Director and Director posts had been advertised; and hopefully other vacancies would be advertised soon.

The majority of the funding went in transfers to universities on a monthly basis. This was not set as a target, because it was an operational matter. These transfers were monitored regularly to ensure that universities could operate effectively. There was also NSFAS that receives a large amount of funding. Of the total funding, just over R8 billion was an earmarked grant that was allocated for the branch to do direct monitoring and evaluation to hold universities to account for the funding. There was an enormous amount of work that went into that to ensure that policies were implemented. There was a monitoring and support programme that worked directly with the institutions.

They had 33 targets for the year but in the second quarter they had two targets because of the Covid-19 issues and the process of APP changes. Due to the changes, the APP had had to be revised. Some targets were too late to be changed and were kept, but could not be met due to Covid-19.

The Department would provide an in-depth report on the progress of all other annual targets.

The report that was presented was not detailed enough on the work that was done on a daily basis, but since the pandemic, the branch had been very busy on teaching and learning measures that had been impacted by Covid-19.

Dr Bheki Mahlobo, Acting Deputy Director-General: Planning Branch, Community Education and Training (CET), DHET, responded to the targets that were not achieved. On the APP, the programme had 15 targets including the un-achieved ones. The monitoring of curriculum implementation was a real-time event, so it could not be done retrospectively. The report that would be submitted at the end of March would clearly specify these issues.

The CET directors placed in each region would be able to monitor the curriculum changes and implementation, and would then come back and report to the Department. Many of the targets had been moved towards the end of the year due to the compression of time. At the moment, the branch was focused on monitoring the exams through regional functions.

Mr Reineth Mgiba, Director: Strategic Planning, DHET, responded on the structure of the report, and confirmed that the Chairperson’s concern was taken seriously, particularly that the report was not comprehensive enough. It was structured according to the targets outlined in the APP. When the DHET tabled the APP, it indicated that most of the targets were being shifted to a later date or the next financial year, so for this quarter there were six targets. In the next quarter, the Committee would see that the bulk of the targets would be covered in quarters three and four.

Ms Lulama Mbobo, DDG: Corporate Services, DHET said that there was no intention to freeze any posts in the Department. It had advertised 160 vacancies, and this week the Minister would be hosting a short-listing meeting for the three DDG positions, and the CFO position. The date for interviews for the DDG positions was planned for next month. The Department would be advertising the rest of the vacancies in January next year. There were a total of 299 positions vacant, but only 160 had been advertised. Towards the end of January next year, the second phase would be advertised.

DSI’s response

A Department official responded at the beginning of the pandemic, the Department was unable to procure certain services from service providers, and that had affected the procurement from women and people with disabilities. However, it hoped that in the next quarter this would change, as things have eased up on the lockdown restrictions.

The Deputy Minister’s office was meant to have been transferred from the DHET to the DSI, but as a result of the lockdown, that transfer did not happen. The spending on the compensation from 1 April was carried by the DHET, which then sent over the vouchers for that spending to the DSI. Now the spending would be carried by the DSI, which meant it would increase. This was why the spending by the DSI for the DM’s office had been low -- it was still being borne by the DHET.

The Chairperson sought clarity on this, and asked whether it was a mere internal arrangement between the two Departments. The Committee was informed beginning of Parliament that both the Minister and the Deputy Minister would be housed at the DSI, and their remuneration would be carried by the DSI.

A Department official said that Treasury advised that the DM’s spending had not been moved during that period because it was in the middle of the financial year. The Minister’s Office, or function, had moved immediately after the administration. The DM’s office had not moved, and the arrangement was that it would move in 1 April. Unfortunately, by 1 April the national lockdown had commenced, so it had not moved.

The Chairperson said that the budget for DSI was about R8 billion, and it had been adjusted down to R7.3 billion, yet the DHET’s budget was over R100 billion and the adjusted budget was still in the region of R100 billion. The DSI was an important Department, and the logical thing to do would have been for the DHET to cover the costs of the Executive Authority as opposed to the DSI, whose resources were significantly lower.

A Department official said that the money for the Deputy Minister was going to be transferred to the National Treasury in any case, because it would not have been spent. Therefore, it was not going to affect the DSI’s budget.

A Department official said there was a Ministerial guideline that made provision for different categories for empowerment. For people with disabilities, the allocation must be 4%, for women it was 55%, and for blacks it was 80%. These guidelines were managed by the NSI, but when it came to bursaries and scholarships, this was managed by the NRF. Recently, the DSI had developed an indicator that it would soon implement with regard to its stakeholders, to ensure that the ministerial guideline was implemented. In the coming year, the DSI would push hard to get the figures met.

Mr Imraan Patel, Deputy Director-General: Socio-Economic Innovation Partnerships, DSI, referred to the work done for the blind, and said he did not have current information on the technology that was developed by the CSIR for the blind. He was uncertain about the status of the project, but it had been taken to the market. This information could be provided to the Committee in a detailed fashion at a later date.

Dr Mjwara acknowledged the congratulations from the Members, and also welcomed the proposal of an increased budget to be allocated to the DSI. He would take the lead from the Committee on how best that would happen.

The Chairperson said that in the Committee’s reports to Parliament, it always argued for more allocation to the DSI because of its important work. The cuts in the funding would ultimately impact on the funding for NRF graduates. The funding for research was going to decline ultimately. The Committee remained determined that there must be a better allocation to the DSI.

The clarification on targets by the DHET had helped, but it should have presented the first and second quarter reports in order for Members to understand the context.

The meeting was adjourned.