National Skills Fund and National Skills Authority: briefing on budget and strategic plans 2010/11

Higher Education, Science and Innovation

20 April 2010
Chairperson: Mr M Fransman (ANC)
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Meeting Summary

The underspending and poor performance of the National Skills Fund (NSF) was the main concern that members had. The Department of Higher Education and Training (DHET) explained that since the two institutions – the National Skills Authority (NSA) and the National Skills Fund were now part of the new DHET, they would function differently.

Members felt that in a country that had a shortage of skills, it was unacceptable that the NSF was not spending the funds it had. They felt there had been no alignment between national, provincial and local strategies on skills development. The use of rollover funds was criticised in that it encouraged poor performance. Targets needed to be set to promote skills in South Africa.



Meeting report

 

The Chair reminded members of the oversight visit the previous week in which they had observed the issues facing the skills sector in South Africa. They had also visited the DHET at their head office. They had received a briefing by the NSF while on the visit. Certain strategic issues would be dealt with in the current meeting. He reminded members that they all knew that the NSF had a problem of underspending. They would have to see that the fund delivered on its mandate in the future.

Prof Mary Metcalfe, Director General in the DHET addressed the Committee on the NSF. She said that they would be addressing the Committee on its budget and the strategic plan. The NSF had a history of underspending. The Minister had therefore appointed an Acting Executive Officer, together with a team to ensure that the NSF carried out its mandate. The NSF would also be made a public entity but would still be part of the DHET.

Mr Eubert Mashabane, Acting Chief Director, NSF, stated that his aim was to change the organisation into a grant-making body. This would show the levels of spending and the impact which the fund made. The main source of revenue for the NSF was from the skills development levies which companies paid. They also received some funds from Treasury. The reason that there was a decline in expenditure for the next three years was because they were trying to work off the surpluses in the fund. He admitted that they were underperforming but stated that they wanted to improve. For further details please refer to attached document “NSF powerpoint presentation”.

Ms Metcalfe addressed the Committee on the National Skills Authority (NSA). She pointed out that the links between the DHET and the NSA were being strengthened. She would be the Chairperson of the NSA in this preliminary phase since the DHET was a new department. She stressed that the role of the NSA had been clarified. It was there to consult and advise the Minister.

Mr Edward Majadibodu, Chairperson of the NSA pointed out that he had only been appointed in February by the Minister. He was very happy that the NSA was now placed in the DHET. This was a very strategic position for it to be in. The NSA had a very strong research capacity and he was happy about this as it was an important part of the NSA’s work. In the past, the different systems were not talking to each other. He stressed that all the systems were present but that the linkages just needed to be made.

Mr Firoz Patel, Acting Executive Officer of the NSA and DDG in the DHET, addressed the Committee as in the NSA Budget and Strategic Plan 2010/11 of the NSA powerpoint presentation attached. He stated that the main function of the NSA was to advise the Minister. It also had to give feedback to the SETAs. The NSA had to ensure that all role players gave input into the sector skills plans. Skills development and training had to be meaningful, accredited and had to improve the skills level in South Africa. The Working Plan which had been given to the Committee still had to be approved by the NSA.

Discussion

The Chair said that he did not want the Committee to go into the history of the NSF and NSA. He pointed out that the NSF and NSA had been reactive in the past and not pro-active. He also stressed that there was no alignment between national, provincial and local strategies where skills development was concerned. There was serious underspending in the NSA and there needed to be a realignment agenda so that issues could be corrected.

Mr G Boinamo (DA) commented that the NSA’s function was to give the Minister advice. He felt that the NSA needed advice itself. The municipalities were not delivering because their workers were not skilled, yet the funds were available. He wanted to know why the NSF only seemed to be spending in the Eastern Cape and KwaZulu-Natal. It seemed like the other provinces were being neglected. He suggested that the underspending was perhaps due to the fact that the board was not directing the money to the provinces.

Dr W James (DA) pointed out that Mr Boinamo’s comments about the provinces were inaccurate and that the report did not indicate what he had said. He added that the test for the NSF was the number of learners in South Africa that were getting qualifications. It was unacceptable that money was not being spent. The NSF had said that it would be operating differently now, but he was not convinced that there was any difference in the way things would be done. How much money was actually not spent? How different would things be in the future?

Ms N Vukuza (COPE) said on the oversight visit the previous week, they had seen the situation in the skills sector. She had been moved from despair to compassion. For her, the situation had not changed. She felt that the fact that the NSF could rollover funds was an incentive for poor performance. There was a need for internal controls in the fund. Money could not be rolled over each time. The performance of the two organisations had to improve. Targets had to be set for performance. She felt that the strategic plan of the NSA was more about the structure of the organisation than about strategy. There was an urgent need to re-image and rebrand the skills landscape in South Africa.

Ms F Mushwana (ANC) referred to the strategic plan and asked how the NSF could find projects when the systems were not in place. This was the impression she got as the projects were listed as objectives before the systems.

Mr M Kubayi (ANC) said that he felt that in certain areas, the legislation was the problem. he urged the Committee to give its attention to this and rectify it. He added that the report that had been handed to the Committee by the NSF raised lots of questions. One of the concerns was that there were no targets mentioned in the report. He asked what mandate the Director General of Labour had over the fund. There seemed to be inconsistent reporting on figures in the different documents that had been given to the Committee. There was an urgent need for a monitoring system to be implemented. He was concerned that students were being de-registered by universities because they could not pay the fees, yet the NSF had money.

Ms S Makhubele (ANC) referred to retrenchments that had taken place during the recession and asked what kind of support was given to these people. She was concerned about projects that had not been approved, but yet the report shows funds being allocated. What was happening about the Recognition of Prior Learning (RPL) as it was not mentioned in the report? She requested clarity about the discretionary projects which the DG could sanction. How were these initiated?

Ms Metcalfe said that the rebranding of the skills sector was underway. The fact that the Skills Development Act was now a DHET competence was a good move and the rebranding could be done. Part of the problem was that skills development had been in different departments in the past. The NSA was a group of stakeholders who represented different constituencies who then advised the Minister as they saw what the Department was doing. There had previously been a process which had slowed things down. The Minister, of this new Department, was appointed in May 2009, but had only received legislative power in November. The DG of the Labour Department had been taking all decisions up until March. The legislative clean-up was therefore now underway which would help the situation. Information was constantly changing and therefore some figures were different in the various documents. The Committee had to decide whether it wanted quarterly or annual figures.

Mr Kubayi (ANC) disagreed with Ms Metcalfe and pointed out that when the Committee had been in KwaZulu-Natal the previous week, they had been given certain information. Two days later they were in Pretoria and were given different figures.

Mr Mashabane addressed the issue on the provinces and explained that the NSF makes funding available to the provinces but that they were not spending it. There was not much that the NSF could do about this. He explained this by mentioning that Mpumalanga had been given R99 million but had taken 18 months to spend it. There was a problem with capacity to spend the funds. The National Student Financial Aid Scheme (NSFAS) had been given R51 million but had only spent R37 million of it. Addressing the issue of retrenchments, he said that the Department of Labour had made payments to 700 000 people. Referring to the disapproved projects, he said that the reporting structures worked in such a way that it had to mention the ones that were not approved. He also reminded members that the report they had was not an audited one. He explained to members that the objectives in the strategic plan were not in order of priority. All of them had to be achieved. He said the issue of rollovers had been explained and that he would give the figures.

Ms Metcalfe pointed out that there an annual figure as well as a cumulative balance which one had to be aware of when looking at the rollover.

Mr Mashabane explained that at the beginning of the 2009/10 financial year the NSF had a balance of R4,1 billion. By the end of April 2009 it had received an income of R1,9 billion which brought its total to R6,1 billion. If one subtracted the expenses of R844 million, it would show that the fund had a surplus of R5, 2 billion. R2,5 billion was being used in projects being carried over. This meant that there was R2,7 million which was uncommitted.

Mr Majadibodu said the function of the NSA needed to be unpacked further so that they knew what was expected from them. The marketing of the NSA was important.

Ms Metcalfe stated the discretionary projects that the DG would decide on did not mean that she had a blank cheque. These projects were governed by the Skills Development Act. It was also important to note that the DG was accountable to the NSA for the way these funds were spent.

Mr Mashabane said some of the discretionary projects arose from constituency visits. He also added that RPL was not stressed in the National Skills Development Strategy (NSDS). Some RPL, however, happens on a daily basis in some projects.

Ms N Magazi (ANC) asked what parts of the legislation limited the provinces in their performance. She added however that legislation was there to give guidance and that it was the individual’s responsibility to translate it into a programme.

Ms Mushwana (ANC) asked why there were no companies, from Limpopo province, mentioned in the report.

Ms Metcalfe said that as part of the Skills Development Act, provincial skills development forums were supposed to be established. This had to be given more attention. She suggested that that the National Council of Provinces (NCOP) be engaged as well to address this issue.

Mr Mashabane said legislation did not limit expectations since the Public Finance Management Act (PFMA) governed spending. It was co-ordination that was needed. The NSF did not choose the companies it funded. Those mentioned in the report were chosen by the Department of Trade and Industry (DTI). Incentives were then given by the DTI for training to be done and the NSF had just provided the funds.

The Chair said that the DHET and NSA needed to work out some benchmarks for the NSF, which the Committee could then use to assess the work of the NSF in six months time. A clear audit does not always mean that the targets are being achieved or that impact is being made. It was important to monitor the way that service providers behaved and whether they are implementing the skills strategy properly. He agreed that they should meet with the NCOP to address the under expenditure in provinces. If there was legislation that needed to be changed, it needed to be investigated. It was also important that the issue of RPL be looked at again as it was not in the strategy. There was a lack of coherence in this area.

Ms Metcalfe reminded the Committee about the Higher Education Summit that would be taking place the next two days at the Cape Peninsula University of Technology (Bellville Campus). On the 25 April there would also be the Association of Commonwealth Universities conference at UCT.

Ms Makhubele (ANC) said the NSF did not seem to have any projects in the rural areas. She felt that this was something which needed to be explored at another occasion.

The Chair then referred to the draft report on their visit to the Cape Peninsula University of Technology (CPUT) and asked members if they were happy with it.

Mr Kubayi (ANC) pointed out that there seemed to be an error in the report regarding the 240 students who were not accepted.

Ms Vukuza (COPE) said that the issue of qualified academics was not mentioned. It had emerged at the visit that because CPUT had arose as a result of a merger, there was an imbalance in the qualifications of academics.

The Chair said that the case of 240 learners who were not accepted from the FET college because they did not have physics, needed to be followed up. He suggested that the report be accepted with corrections.

Transport arrangements were then discussed regarding the Higher Education Summit which would take place the next two days. It was suggested that members make their own arrangements and then contact the Committee secretary if they had no transport.

The Committee secretary informed members that the study tour to the Netherlands and the UK, at the end of May 2010, was not yet confirmed. The Chair of committees had received the application but had requested a meeting with the Committee chair to discuss a possible change of the date.

The meeting was adjourned.

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