Parliament 2018/19 draft budget and plans

Meeting report

2018/19 APP and Budget Presentation
Ms Penelope Tyawa, Acting Secretary to Parliament, spoke on the process followed in drawing up the APP and budget; change of focus; key areas in the 2018/19 APP; long term outcome milestones; and additional requests for the Fifth Parliament.

A strategic review and planning session was held from 10 to 12 April 2017 with these purposes:
• review long-term implementation outcome milestones and indicators aligned to the policy priorities
• review programme indicators and targets for 2017/18 to 2019/20
• develop operational plans for 2017/18 to 2019/20, to implement the annual performance plan
• develop resource and budget requirements for 2017/18 to 2019/20 for implementation of plans.

The planning review process was specifically aimed to achieve the following:
- change the operational focus of the existing objectives and indicators to reflect institutional results
- reduce the amount of objectives and indicators to a manageable level
- integrate objectives and indicators which share common outcome results
- comply to guidelines whereby objectives and indicators should focus on final outputs and outcomes.

The draft APP and budget for was prepared using the results-based approach to planning and zero-based budgeting. There has been a move from measuring inputs and activities to measuring results such as institutional outcomes and impact. The 2018/19 APP is now results oriented to ensure NDP targets and goals are met, ensure a responsive and accountable governance is realised, ensure effective laws are passed and oversight is exercised, and to ensure constitutional democracy is exercised.

She stated that key areas in the 2018/19 APP include:
- Updated situational analysis
- Reorganisation of the organisational situation, aligned to mandate and business of Parliament
- New section on the business of Parliament included
- Outcome tables updated from information provided at the 2016 Mid-year review session (Nov 2016)
- Section on the transitioning of strategic objectives has been updated.
- Organogram updated.
- Programme objectives and indicators adjusted to reflect results
- Combined models into Oversight and Accountability programme.

For long-term outcome milestones, the indicators include the following:
- Strengthening oversight and accountability
- Enhancing public involvement
- Strengthening co-operative government and inter-governmental relations
- Deepening engagement in international participation
- Improved quality and impact of legislation.

It was reported that for 2016/17, 2017/18 and 2018/19 financial years there are shortfalls of R956.406m, R1 064.980m, and R470.367m, respectively. An additional amount of R54.582m is required for compensation of employees for the Parliamentary Budget Office and the Office on Institutions Supporting Democracy (OISD) which has always been funded from Parliament’s unspent funds as well as the Legislative Sector Support (LSS) which was funded from donor funds. The budget for transfer to political parties has always been less than the allocated amount and the variance was funded by moving funds from Goods and Services. Additional funds are needed for replacing computer equipment and purchasing of furniture and equipment.

(Tables and graphs were shown to illustrate the 2018/19 MTEF budget requests)

Discussion
Fourth Quarter Report
Ms C September (ANC) asked if the Committee has received notification in writing from the Office of the Secretary to Parliament about the special leave “granted” to the Secretary to Parliament.

The Chairperson replied the Committee has not received anything from the Office of the Secretary.

Mr M Waters (DA) wanted to know if the Co-Chairpersons of the 12 May meeting signed the media release which is full of inaccuracies about the DA walk-out.

The Chairperson replied it is Parliament that has to answer for the media release, not the Co-Chairs.

Mr N Singh (IFP) asked if communication regarding the media releases is the responsibility of the administration or committees because the Co-Chairs did not sign the media release.

Ms Tyawa stated that communication that is sent out has to be signed by the committee chairperson. She said she does not know who signed the media release.

Mr Waters pointed out the tone of the media release is very political. It is clear it comes from a person who has got a political background but never had a chance to cool-off. A media release has to carry the signature of the chairperson.

Ms E Coleman (ANC) asked the Chairperson to seek clarity from the Speaker about the media release. Every committee has a communicator responsible for media matters and those media statements are signed by the chairperson of the committee concerned.

The Chairperson raised concerns about the Fourth Quarter performance. He reminded the administration that as Members of Parliament they do not call meetings for mere malicious compliance. Their duty is to ensure good oversight. He pointed out the performance indicators are not SMART (specific, measurable, realistic and time-bound). He said the Committee does not understand what 100% target on translations mean and they could not do oversight over this. What the administration is doing is not what it is giving to the Committee. The Committee wants to know the performance for the quarter under review, and the administration should tell the Committee what it has done and amounts of money spent on the work. The Committee does not deal with cumulative figures. He reminded the administration that the Committee does not need to meet with them monthly for financial reports; but the Committee has asked its researchers to provide it with monthly reports for the quarter. The Committee had received a note from Treasury which indicate the administration has not submitted reports to Treasury, especially for the Fourth Quarter. The Committee has been shocked by under-spending by Parliament. When the Committee looked at the budget for core business, the bottom line budget remains the same. He asked if there were virements or money moved from one programme to another. These things need to be improved urgently to ensure the Committee does what it is supposed to do: oversight.

Ms N Mente (EFF) agreed with the Chairperson and pointed out there are defects in the reports, especially when you look at the economic classification. Figures presented in the quarterly report are not the same in the annual report. Money spent quarterly does not match the money spent annually. The administration needs to do its work thoroughly.

Mr Singh added that the annexure that Ms Mente is referring to is not even labeled to show if it is March 2016 to February 2017.

Ms September asked if the format Parliament uses for financial reporting is from Treasury. She asked if there is an internal audit committee in the administration, and if the administration is in the process of adjusting the budget.

Ms Tyawa explained that for reporting they use the prescripts of Treasury for the baseline. Their reporting template caters for things achieved and not achieved, and budget spent. She noted they would have to reconsider their format of reporting. There is an independent audit committee but it has not received an invitation to attend the Committee meeting. The administration reports to the audit committee and the executive authority. The audit committee is the one exercising oversight over the administration. On budget adjustments, they have started the process with Treasury. The administration would need additional funds to address the shortfalls.

Mr A Shaik-Emam (NFP) asked the administration if it can present to the Committee the quarterly expenditure report rather than the annual expenditure report.

Mr Manenzhe Manenzhe, Chief Financial Officer: Parliament, reported that the R875m is the actual spend on salaries and the R902m is the actual spend plus accruals in the form of leave and pensions. The R93m is the direct charge that is to be returned to Treasury and it is growing every year, then the unspent R73m is a committed fund for projects committed in the previous year.

Ms Mente asked for clarity on the estimated actual spend because salaries are budgeted for and there is no 13th cheque in Parliament. Leave is not part and parcel of the actual amount for salaries. She queried why Parliament reflected R902m for staff compensation while salaries amounted to R875m, and disputed the explanation that the higher amount included leave and pensions.

Mr Singh remarked that the compensation of employees seems to be ring-fenced. He asked why the administration budgets for R500m, but spends only R400m. He asked that the Committee be given a breakdown on Goods and Services and roll-overs.

Ms September remarked the administration should state if it is following partially or in full the way Treasury defines compensation of employees because if it is partial, it would show.

Ms Coleman indicated she has a feeling the managers were not ready for the meeting because they could not respond to some questions and the Committee was not satisfied with their answers. The managers did not pre-empt and they could not provide answers on accruals and expenditure, especially the CFO because that information is supposed to be at his finger tips. The Committee is dealing with the previous financial year, but it does not look as if they have the information the Committee needs.

The Chairperson asked why they asked for R530m for Goods and Services from Treasury but used only R400m. What does it mean that the unused or under-spent amount is a committed fund? The administration has the space to explain over-spending and under-spending. The Committee has come to the conclusion that it is not useful to interact with them from an oversight point of view. The report from the administration did not provide the breakdown for the five year period, but only provided one line and a figure. The administration needs to meet the requirements of the Financial Management of Parliament and Provincial Legislatures Act. They should go back and re-do the Fourth Quarter report and beyond thoroughly because it is important their documents are clearly and accurate as the information would go to the public. Members of Parliament need to be able to explain to ordinary people and the media.

Ms Tyawa replied the managers did prepare for the meeting, however, they accept guidance from the Committee. They would re-do the work, provide details and footnotes, and report in a format that would be easy for Members to understand.

2018/19 APP and budget
The Chairperson pointed out that the administration asked for R2.8b and indications are that it is going to get R2.4b. He asked if the funding for the “engine of Parliament” would be located under Goods and Services. The administration must provide details on the allocations for the committees, research, and oversight for the current financial year.

Mr Manenzhe replied that a breakdown of the budget would be sent to the Committee. It would cater for Compensation of Employees and Goods and Services which include advertising, printing and travelling.

Ms September asked if the bulk of the money is going to go to administration or constitutional obligations. Is the budget going to address the core business of Parliament to ensure ordinary people are able to come to Parliament to voice their concerns? Would the proposed budget improve the way Parliament works, and would it cater for ad hoc committees?

Ms Tyawa replied the bulk of the budget would go to administration and core business. Ad hoc committees and emerging projects are uneven and the budget does not have space for such line items and miscellaneous items. The administration is going to look at the trends and make projections and see how these are going to be factored into the budget. A certain percentage of the budget would be set aside to deal with issues that would arise.

Mr L Gaehler (UDM) asked if the increases for Compensation of Employees are included in the request for R2.8b. Which areas are going to be affected or down-sized due to budget shortfalls?

Ms Tyawa explained that because Parliament is a knowledge institution, their salary bill is going to be slightly higher because they make use of professional people for it to function properly. She said the proposed R2.8b budget does include increases for Compensation of Employees.

Mr Singh remarked the Committee should prepare itself for the adjustment budget because there would be things they would have to compromise on. The budget is a wish-list, but Members need to know what it means to address critical areas. He asked for clarity on the 69 critical posts.

Ms Tyawa replied the information on the critical posts would be sent to the Committee in writing. Previously, Parliament was bloated and they had to work on a re-alignment.

Mr A Masondo (ANC) commented that as Members they are not told how the Parliament budget works. When they have to visit far flung areas, they are told there is no money.

Ms Coleman remarked if the budget is not clear, Members would continue to ask questions. She stated it appears as if the administration does not communicate with Treasury because the Compensation of Employees money for return to Treasury could have been communicated in advance as an accrual, and then Treasury might have allowed the administration to use that money. She asked what Parliament does with “own revenue”.

Mr Manenzhe replied the own revenue and donor funds are ring-fenced, but have to be appropriated.

Mr Shaik-Emam wondered how Parliament is achieving what it is supposed to achieve because for the 2017/18 budget there is a shortfall of R1 billion. It is becoming clear Parliament always gets less than whatever it has been asking for from Treasury. The request is guided by needs yet there is a pattern of it getting less and still it is able to carry on with its work.

Mr Waters commented committees are complaining about the lack of resources. After 2014 the Cabinet ballooned and this caused the increase in portfolio committees. He wondered if the administration had communicated this to Treasury.

Ms Mente asked why R34 million was given to the Communication Services Unit as that is too much, seeing that there are shortfalls,

Ms Tyawa explained the R34 million was secured for buying airtime for advertising public engagements on public service and community radio stations. The messages were in all African languages. Now the strategy has been changed and they work with content producers of the radio programmes.

Mr Gaehler remarked that every year budgets go up; they do not decrease. He asked the administration to come back to the Committee and address this yearly budget decrease.

Ms Tyawa explained the yearly decreases in budget requests are a result of the fact that the Fifth Parliament took over some of the broadcasts and high capital projects. It would continue to decrease. The executive authority of Parliament has been engaging with the Minister of Finance about the revision of the baseline because Parliament would collapse if it is not revised.

The Chairperson asked the administration to give the Committee comfort that the constitutional requirements of Parliament would be adequately funded, and the Committee should be provided with risks associated with budget cuts. In future, the administration is not going to come to the Committee to merely pass the APP and Strategic Plan, but it has to bid for it. The Committee needs to know what Goods and Services entail. He asked the administration to re-work the 2018/19 and 2019/20 budget. They must prepare for engaging with the Committee on HR matters, policy documents, financials per quarter, and annual report. He noted the Committee would not accept information documents only on the day of the meeting. The Committee needs information in time so that it could prepare. Requested information received after seven days would not be accepted. Information needs to be given to the Committee within seven working days after it has been requested.

The meeting was adjourned.