Public Enterprises Budgetary Review and Recommendations report

Meeting report

The Chairperson welcomed all Members present and reminded them that today’s meeting is only to consider the draft of the Public Enterprise Draft Budgetary Review Report and Recommendations (BRRR) and the meeting agenda should be amended as such because it is the first time the Committee is seeing this report.

Members all supported the amendment.

Members were also informed that the Committee Secretary is on leave and a caretaker secretary has been drafted until he returns.

The Committee went through the document page by page which was not numbered to correct minor grammatical and typographical errors.

Recommendations

Mr N Singh (IFP) said that he looked at the recommendations and was not comfortable with the way they are drafted. This is the first time this Committee has drafted a recommendation like this. Recommendations are supposed to give clear directives to the Minister of what is required of them to do because they are expected to report back to the Committee at a certain period of time. Things like: “Ensure and ensure”, is this a typographical error?

Secondly, another paragraph with the following wordings; should link the department’s performance information with SOC performance. What is being said here?

Yet another; announce organizational re-alignment provides an opportunity. This has to be re-looked at.

Also it says; prioritise restructuring poor performing SOCs. What is being said to the Minister here? What is the injunction Parliament is giving to the Minister? Committee needs to be specific on what it wants the minister to do so he can report back to the Committee.

Yet on five; assess risk related SOCs and assess the best mechanism to ensure that buffers are created for a long term economic performance. What does that mean? What is Parliament specifically saying to the Minister here?

Again another says; improve accountability and efficiency in SOCs. How and whose function is that? Introduce governance reform in the area of procurement in SOE. From SOC we are now in SOE.

9.1.9. Introduce private sector participation planning framework. What does that mean?

9.12. Introduce a transparent system on SOC board appointment, board appointment must be competency based and independent ring fenced from undue political interference.

9.1.5. Stabilize operations in the expenditure.

All this should be looked out.

Ms N Mazzone (DA) agreed that the language is atrocious, illegible and embarrassing and secondly, and it is not the Committee’s job to instruct the Minister on how to re-arrange a state owned entity. The suggested recommendations are not part of Parliament's function and the Minister does not have the authority comply with them.

9.1.10. Encourage market discipline to increase market efficiency in the transport programme. How could the Committee encourage market discipline? Is it asking the Committee to go into a free market and encourage discipline? There might be good intensions in the reason behind its drafting but how could the Committee dictate to the market? That is one of the reasons the AG is in existence and this is not Parliament’s functions.

9.1.11. Promote a unified legal framework consistent with a clear mandate to improve oversight and accountability by centralizing them in state owned companies. One of the problems picked up by the AG is that the SOEs are not adhering to the recommendations of their internal audits. How can one centralise oversight for one entity that produces energy, one in charge of coal production and another in charge of transport? The entities are very different in their nature. We all understand that state owned entities are in complete disarray but the answer is not to centralise everything and try to sort them out from a central point.

9.1.3. Re-assess state owned company’s business models. Introduction of new business models in line with international best practice and ensure a long term viability of state owned entities.

This Committee has never seen the full business models of state owned entities. Former ministers have never made these documents available to the Committee even though it is requested every single year. The re-organisation of State owned entities document has disappeared forever, why then did the presidential review happen? This Committee has to step back and look at the previous recommendations. One of things the Committee asked for last year was a list of all recommendations since year one of this 5th Parliament to see if any was implemented.  We still don’t have that document because none of those recommendations were implemented.

9.1.4. Make turn around plans with well specified implementation targets.

This Committee still has no performance targets and does not know what the performance targets are even though it has consistently asked for it. Undertakings from former ministers Gigaba and Brown has never been followed through by them. The AG even said that their KPIs are set too low. Why should we not recommend that the Department of Public Enterprises set their KPIs and make them available to this Committee? That is one idea.

Mr R Tseli (ANC) said in (9.2.2.) he saw no need for compensation for public service obligations through budget transfers.

It is equally important to put through a recommendation that the implementations of the Eskom Inquiry needs to be attended to and the report be brought to the Committee on a quarterly basis. Also, when the Committee received the annual report of the Department, there were issues relating to three entities that were unable to provide the AG with their financial statements. This is an issue that cannot be left as is. A strong recommendation that addresses this issue has to be put forward demanding that it never happens again. All recommendations previously made should be revisited again this year otherwise it would appear the committee was happy about it. Some of the previous recommendations are;

The DPE has to ensure that measures are put in place for underperformance against targets for board members, executives, contractors, SOCs and officials in the Department. That recommendation is needed because of the Committee’s unhappiness with the boards and their entities.

The vacant posts recommendations of last year should be repeated anew this year because it is still relevant. 

Another is in relation to land claims and rural development.

The Shareholder Management Bill needs to be fast tracked this year

The Committee also wants the signed shareholder compact so as to know what the shareholders and entities signed and the nature of the agreements.

The Chairperson said she went through the previous year’s recommendations and found timelines given and the present recommendations should evaluate those timelines, though the Committee is cognisant of the fact that the present Minister is relatively new and has a lot of work to do to clean up the Department.

 The Chairperson also said that more work needed to be done on the report and the suggested comments should be incorporated; the Committee will re-examine the entire document next week.

Ms Mazzone asked the Committee to send a letter of good wishes to their secretary who is getting married.

Minutes of meetings held on 22 August 2018, 28 August 2018, 29 August 2018 and 12 September 2018 were all adopted with amendments.

The meeting was adjourned.