Committee Report on 2017 Appropriation Bill

Meeting report

Committee Report on 2017 Appropriation Bill
 
The Chairperson said that in considering the report, the Committee would go through it page by page.

The Chairperson sought clarity on the stakeholders identified in the report, and asked if the numbers in the main budget of National Treasury on page four had been extracted the way it was, as they wanted to avoid small mistakes that could cause big problems.

The Secretary of the committee, Ms Zandile Hulley, confirmed that the numbers had been verified and extracted as they were.

Mr A McLoughlin (DA) made minor changes to the spelling on pages eight, 12 and 13 of the document.

Mr M Figg (DA) asked for clarity on the statement on page 13: ‘Of concern was the fact that there was no consensus on the number of State Owned Entities (SOEs) in existence, and the lack of a clear legislative framework within which these intuitions operate.’ He asked if this statement was correct, as he thought that the statement was the actual case at present.

The Chairperson said that she had also had a look at that statement, and thought the Human Sciences Research Council (HSRC) was concerned about not being sure about the number of SOEs, and that the Committee might not know how many to monitor, while neglecting others. She requested the Secretary to take note that they should write to the Department of Public Enterprises, which must then provide them with a list of all the SOEs so that the Committee would know which ones to visit, and not leave any out.

Mr N Gcwabaza (ANC) made a minor spelling error change on page 14.  

Mr McLoughlin  made a correction on page 14 regarding the decline in the number of financial misconduct cases finalised, implying that the number had not improved but rather become worse and would get better when more cases were finalised.

Ms D Senokoanyane (ANC) made minor changes to paragraph two on page 15.

The Chairperson also made a minor change.

Mr McLoughlin added a minor change regarding the annual financial statements on page 16.

Ms Senokoanyane said that on page 17, point 3.7, the wording regarding the budget did not sound right, but she was unsure of how to correct it.

Mr McLoughlin then assisted with the wording.  However, when the Chairperson asked if everyone agreed, there was no consensus, and as a result the Chairperson commented that a budget usually had its own terminology and this needed to be taken into consideration

Ms S Shope-Sithole (ANC) said she thought that the wording was fine just as it was. The conclusion was that the Strategic Advisor of Parliament, should make a final correction which with all Members agreed.

Mr McLoughlin added minor changes on page 19, and pointed out a content error on page 20 regarding the Congress of South African Trade Unions’ (COSATU’s) perceived austerity approach of the government, as the sentence initially sounded as if the government had an austerity approach on critical public service vacancies. He felt that it was just a perception, and not what government actually practiced.

The Chairperson asked for a distinction between ‘cost containment’ and ‘austerity measures,’ as she tended to use the two terms interchangeably.

Ms Shope-Sithole clarified for the chairperson that the two were very different -- cost containment referred to the strategic efforts by government to cut unnecessary costs, whereas austerity measures involved a bigger and serious cut of necessary things, like pensions and feeding schemes
 
Dr Figg humorously commented that an example of an austerity measure was the fact that Members of Parliament did not receive increases in their salaries.

Ms M Manana (ANC) went back to the change made by Mr McLoughlin regarding COSATU’s perception regarding the austerity approach, and said she did not understand why the wording had to be changed, considering the fact that COSATU had framed it that specific way themselves.

The Chairperson asked if everyone was in agreement with Ms Manana’s statement. The consensus was that the statement should stay the way in which it had initially been changed.

Ms S Nkomo (IFP) emphasized the point that if the statement was made by COSATU, the sentence needed to clarify that, and she felt that the entire paragraph needed to be changed to show that it came from COSATU.

Ms Hulley proposed an amended phrase in the statement, to which everyone agreed.

Ms Manana wanted inverted commas to be placed around the word “real” on page 21, because the Committee had not understood why the sentence had to include the word “real.” After being informed that the word was being quoted as it was, she proposed the inverted commas.

Mr Figg, however, said that if the Committee inserted inverted commas, they might as well place them on the entire document considering that the Committee was discussing what COSATU had said.

The Chairperson was in agreement, stating that she got the point, as that would imply that inverted commas were not necessary.

Ms Shope-Sithole said that when COSATU or the Committee stated a specific viewpoint, it should be reflected as it was, and the Committee had to ensure that it occurred in that manner.

Mr Gcwabaza sought clarity on the manner in which the statement had initially been phrased, and made a suggestion that it stay the way it originally was.

The Chairperson agreed by referring back to a previously mentioned recommendation regarding not changing stakeholders’ inputs. The Committee concluded it should leave the statement without inverted commas.

While going through the inputs made by COSATU on the different departments of government, the Chairperson commended them for a well-researched and well written report. On page 32, point 5.6, she wanted to add input from the Financial and Fiscal Commission (FFC) regarding disparities between the expenditure and performance of departments, specifically noting that it was some departments and not all of them that had these disparities, as some performed well.

Mr McLoughlin responded that only one department had performed well (at above 90%), according to the input they had received from the FFC, while all the other departments were below 80%. The addition of the word ‘most’ assisted in phrasing the statement, so that it was reflective of the data.

Mr Gcwabaza asked how the regression of departments was recorded, as it lacked consistency.

Ms Shope-Sithole made an addition in order to phrase the statement on page 32, point 5.6, better so as to highlight the departments that had done well in order to encourage their performance.  

Mr McLoughlin replied with a minor proposal on grammar.

The Chairperson asked the Committee where they could fit in ‘investing more in evaluation and monitoring,’ as this should be enforced across all spheres of government.

Mr Tshepo Masoeu, Strategy Advisor of Parliament, replied that it could fit under the theme of ‘effectiveness’ in the report.

Ms Senokoanyane and the Chairperson wanted to make a minor change of removing a word, but Ms Nkomo advised against this, saying that the classification of the word was in accounting terms and was appropriate for the sentence. She further emphasised why the sentence should be left as it was, and there was consensus from Members.

Dr Figg noted an inconsistency in how ‘State Owned Entities (SOEs)’ was written across the document, and recommended that it be changed to be consistent.

The Chairperson made a statement on page 33 regarding educational training colleges, and asked that Members remind her about it when they got to recommendations.

Mr McLoughlin made a minor grammatical change on page 33, point 5.5, and corrected a spelling error on page 35.


Discussion on recommendations

The Chairperson said Members needed to be alert from page 36, where the recommendations started, so that the recommendations were able to be implemented and that in follow up meetings they would be able to account for the key specifics of the recommendations.

Ms Manana referred to the lack of a specific time frame for monitoring.

Ms Shope-Sithole replied that it was quarterly, according to the document.

The Chairperson then said that when the Committee asked departments to come and present, the Members had to have prepared so that they were all able to work in unison.

Ms Manana clarified her point by asking whether the Committee would wait for these reports, or call the departments after a certain period of time.

Ms Shope-Sithole agreed with Ms Manana, and said that she was correct to seek a specific time frame.

Ms Hulley advised that a specific time frame on page 44 was actually provided.

The Chairperson added that the Committee’s role was to monitor the impact and results of the money departments had used, so when the departments came, it would need to fulfil that role and state what recommendations they had made, and ask the departments to account to them

Ms Nkomo said that because the recommendations came from the Committee, the Members had every right to request specific time frames.

The Committee Secretary suggested that Members include that information being sent to Parliament should also be sent to the Committee within the suggested 60 days.

The Chairperson sought clarity on where the 60 days had come from, and was advised that it was a time frame that the Committee had come up with.

The Chairperson asked what informed the list of ministries, and a research team representative referred her to a list of outcomes on page 3 that were in the report.

Mr McLoughlin made minor changes to the grammar, and asked that members specify which ministers should account to them.

Ms Shope-Sithole agreed with Mr McLoughlin, and said that she wanted to see the government taking responsibility for encouraging inclusive discussion and making sure that the private sector and labour worked together and coordinated the budgets with small and medium-sized enterprises (SMEs). She also agreed that the quality of education must be in synchronisation with technology, and the Department of Education (DoE) must work with institutions of higher learning and the private sector for an integrated solution to the challenge facing students trying to find practical jobs. The government needed to solve this issue by having discussions with companies and urge them to take a specific number of students, and ensure that they received practical job training, because the jobs did exist.

The Chairperson added that this implied there would be a key focus on the apprenticeships and learnerships that the government was responsible for.

Mr Gcwabaza said that the emphasis on regulation in transformation patterns was key, as that would be the determining factor in bringing the private and public sector together. The quality of education needed to come from the departments of both basic and higher education, whereby technology would be integrated. Policy and curriculum gaps linked to policy and poor performance and dropouts, existed in both higher and basic education, with the result that in higher education students took a long time to complete their degrees. This was therefore a curriculum policy issue. An improvement in the quality of education therefore required changes in policies, from basic through to higher education.

Ms Shope-Sithole asked the Chairperson to comment on the issue of feeding schemes at the tertiary level.

The Chairperson replied that the Members were aware that there was no policy existing with regard to feeding schemes in higher education.

Mr Gcwabaza said that emphasis must be placed on Technical and Vocational Education and Training (TVET) colleges, because there were a number of problems that existed among the colleges. Therefore, the quality and number of qualified lecturers at these colleges must be improved, as well as the facilitation of learnerships between the colleges and the private sector from the first to the last year. The programme must allow the students to do practical learnerships from the beginning. The government must also provide job training though their own channels

Ms Shope-Sithole added that the Statistician General had elaborated on the specific matter the day before, and had dealt with the need for training in TVET colleges.

The Chairperson stated that in a different committee, they had discussed that TVET colleges also had partnerships with the private sector. However, she was quickly corrected by Ms Shope-Sithole and Mr Gcwabaza, who stated that in practicality that it did not work and the students struggled finding work for their training certificates.

The Chairperson noted the Parliamentary Monitoring Group (PMG) monitor nodding her head, and asked that she be allowed to speak on the matter at hand.

Ms Oyama Botha, PMG monitor, said she agreed with Mr Gcwabaza on the fact that students did struggle to find jobs. Even as a university student herself, it was still difficult, and she could not imagine how terrible it would be for TVET college students, considering the fact that they actually needed the practical training in order to complete their studies and be awarded their qualifications. The other challenges came about when students in colleges took the initiative to go and find jobs in the city’s municipality for their training, and were told that that the number of student intakes for a specific year was full, resulting to them having to extend their studies. For university students, their situation would be that in their final years, instead of focusing on their studies, they would focus their energies on stressing about whether they would finds jobs in the market for the following year, and there would be no assistance in finding these jobs from the government. She also said that this kind of stress could contribute significantly to low performance at school and, in the worst case, lead to students extending their degrees or being excluded due to poor performance.

The Chairperson commented that in this case, she suggested that the recommendation should be that they strengthen and plug into this gap.

On Page 37, point 6.2.1, the Chairperson asked the research team what the Committee would want to achieve regarding the funding of the Passenger Rail Agency of South Africa (PRASA).

Mr Masoeu replied that the FFC had stated that PRASA had informed them that Shosholoza Mayl was an unfunded mandate, which should not continue being so, and this was an important part of the governance objective of turning the transport sector around. If it continued being unfunded, it may not receive the resources it required to operate.

The Chairperson asked for clarity with regard to what other unfunded mandates there were, so that they did not leave any of them out. The research team responded that Shosholoza Mayl was the only official one they knew of, but they always recommended that ‘and others’ be included, so that no other mandate would be left out.

Ms M Manana said that Shosholoza Mayl was not a sustainable mandate, as people were using it to transfer cars and were spending exorbitant amounts for that.

Based on Ms Manana’s observation, there seemed to be some confusion in the room regarding what Shosholoza Mayl does. Clarify was provided by the research team, who said that it was a long distance transport that operated different train routes across South Africa and carried approximately four million passengers.

The Chairperson asked how Shosholoza Mayl had initially been established, because any function must be followed by resources. However, lately the focus had been on politicians taking decisions that had not been followed by resources. This challenge had come up a lot during the Fees Commission, and she made an example of how impractical it would be if all the students sitting at home went to university, because there should be accommodation and classroom capacity ready in order to allow that to happen.

Mr Gcwabaza countered that the point was that the right to free education was in the Freedom Charter, so the structure of universities and their functioning needed to be reviewed. It was not impossible to address the influx of learners in TVET colleges or universities, because if the numbers of learners grew without any structural changes in the institutions, it was inevitable that the structure would not absorb them and this was something that they needed to start talking about.

The Chairperson replied that with regard to structuring these institutions, there had been a decrease in the budget of the infrastructure grant in response to the economic environment, since the country had been declared in a technical recession. Therefore, they could not use money they did not have.

Mr Gcwabaza said the point he was trying to put across was that universities today could not function the same way they had in the past.

He was interrupted by the Chairperson, who said that there was a summit primarily to address the current challenge, and a follow up on the summit’s resolutions should be made whereby the Committee could monitor how far it had gone with resolutions on transforming the education sector in the colleges and universities.

Ms Manana returned to the discussion on Shosholoza Mayl, and said it used to be a primary long distance transport. However, buses and taxis had come into the sector, so the number of trains had decreased because fewer people were using them. This was where the challenge of the unfunded mandate came in, as she thought Shosholoza Mayl could not possibly be making adequate revenue in its functioning. Members needed to engage further on this matter. She was not necessarily putting a recommendation to change the bill, but she questioned if Shosholoza Mayl was worth keeping

Ms Senokoanyane felt that on page 37, point 6.2.4, the current budget gave the impression that there was allowance for government to use it for other projects, and that Treasury had no system in place.

Ms Hulley replied that the recommendation had come about due to questions raised by Members about departments’ administration programmes, and gave the example of how the Department of Rural Development and Land Reform had had an amount allocated to administration of about a R1 billion rand, and it had turned out that some of their programmes were actually for service delivery, and not just support services within the administration budget.

Mr Masoeu said that in light of this, the Parliamentary Budget Office (PBO) had stated that the spending on administration should be half of the budget. The Committee had raised concerns about this, so the proposal was that there should be administration expenses that were only for support services, and not service delivery.

Ms Senokoanyane responded that she did not want to debate the matter, but did want clarity on whether the Members were saying the National Treasury did not have the proper guidelines or programme structures.

The Chairperson said that in 2009, while she was in the Department of Finance, only 6% of the budget was allocated to administration. However, she acknowledged this had been long ago, and asked the research advisors look into the issue of addressing the over-bloated structures and lowering the budget ceiling. To show that there was still a fight to meet this challenge, there had been serious cuts in personnel numbers.

Ms Shope-Sithole felt that it was necessary for the Members look into whether the 6% allocation cut for administration was still in existence, as it might have changed. Every portfolio committee should also check if the employees that were hired were doing what they were supposed to do. Capacity mattered for results, therefore they needed to oversee this.

Mr Masoeu then read out a minor change made in 6.2.4

The Chairperson said that point 6.2.5 would be a repetition of what the FFC had spoken about with regard to the recruitment committee that had been established to ensure that the turnaround time in the employment process was shortened.

Mr Masoeu told the Committee that this was an error, as no separate recruitment committee had been established for the public, only one that had been established within the National Treasury.

The Chairperson said that in terms of the Public Service Act, there was a specified turnaround time for recruitment, but people in the departments tended to behave as if they did not know that the maximum period was three months for human resources management.

Mr Masoeu said that he would take the responsibility for drafting something that spoke to the turnaround time, and would send it to the Department of Public Service and Administration (DPSA).

Referring to point 6.2.5, he said there had been a report from COSATU which stated that there were teachers, municipal workers and nurses who were not paid in Mpumalanga and Limpopo.

Mr Gcwabaza (ANC) asked whether this referred to newly recruited workers.

Mr Masoeu said there was no clarification of this from COSATU.

The Chairperson emphasised the seriousness of the matter. She was aware of the fact that the SAFM radio station had once debated the issue of teachers not being paid, particularly those in Limpopo. She therefore asked for better phrasing of the recommendation so that the implementation made an impact.

She also sought clarity on the allocation of the budgets in National Treasury. She said that National Treasury could not allocate and still implement, in respect of not interfering with the different spheres of government. She suggested that the government’s emphasis had to be on oversight.

The Committee could make a recommendation to the DPSA regarding a follow-up check on the Personnel Administration System (PERSAL) that the National Treasury checked on monthly. In this way, they would be able to monitor the salaries of employees and put systems in place to ensure that the employees were paid, as they were already in the system.

Ms Senokoanyane said she was happy with the principle in point 6.2.6, but there was a very clear regulation with regard to 30-day payment. The main problem was that departments did not comply, despite the regulations.

Ms Shope-Sithole said that National Treasury was responsible for the formulation of the regulations, and Parliament was responsible to oversee and do the follow up.

Ms Senokoanyane felt that the National Treasury was being given too much to do, as there were accounting officers in the departments who should handle the implementation.

The Chairperson said that organograms of the departments should be requested so that they specifically knew and gave informed responsibilities accordingly.  In terms of the Public Finance Management Act (PMFA), accounting officers were responsible for ensuring the monitoring of the budgets.

Mr Gcwabaza suggested a change to a phrase in point 6.2.6.

However, Ms Shope-Sithole said that there was a problem in removing ‘National Treasury’ in the sentence as the responsibility would shift away, whereas there was a PMFA regulation that the Members could hold the accounting officers accountable.

Mr Gcwabaza said that it was up to National Treasury to decide how it would make the Chief Financial Officers, Heads of Departments and accounting officers account for their work.

Mr Masoeu gave an insight with regard to all the Members’ concerns, and suggested that they leave point 6.2.6 as it was, and note other recommendations separately from this one.

The Chairperson stated that in point 6.2.7, the focus should be placed on fighting crime and crime prevention, rather than on women and children in particular.

Ms Manana interrupted, stating that she did not understand the role of National Treasury regarding collaborating with the Department of Police.

Mr Masoeu said this referred to where the National Treasury would help the police in reprioritizing funds.

Mr Gcwabaza took over as Chairperson while Ms Phosa was excused for a short while.

Mr Masoeu said he would make a minor change to the wording on SOEs so that it was consistent in the report. He also agreed to make a minor change to point 6.3.2 for the sake of consistency.

Ms Shope-Sithole felt that the point made in 6.3.2 regarding consulting agencies was an important matter, as consultants did not seem to have the prerequisite skills. She felt that there would not be a problem of chaos in the integrated financial management systems if the consultants were actually skilled. The choice of a consultancy was therefore very important. She added that South Africa did have working relationship options, like India and Germany, which were very advanced, and said they should not do themselves an injustice by selecting a consultancy that would put them in “the deep end.”

Mr Gcwabaza asked that they leave the matter until they dealt with it when it came to reporting from Mr Masoeu.

Mr Gcwabaza clarified that on point 6.4.2, the quarterly reports that needed to be submitted would be submitted to this specific Committee.

Mr McLoughlin asked if the provision of regular reports could be made more specific on page 40. The consensus was that they would say “quarterly,” as they had previously indicated to the oversight structures to be specific.

The Chairperson returned, and said that investing in more evaluation and monitoring capabilities should be added in point 6.5.

Mr Masoeu said he would draft the recommendation and send it to the DPMA.

Mr McLoughlin (DA) asked for clarity about the contracting in and out models in point 6.6.

Mr Masoeu said this referred to when National Health Insurance (NHI) practitioners were contracted in and out.

Mr Gcwabaza said that the problem with the NHI was that it was still in its pilot stage, and the Members should emphasise that it should be implemented.

Ms Manana made a recommendation to rephrase point 6.6 so that it was better understood.
 
The Chairperson said that there had been a meeting with the Department of Health where clarification had been provided that the NHI project was no longer in the pilot phase, as they were now beginning with implementation. She also made a recommendation that powers must be decentralised so that district health centres were given power to make decisions at the level where the NHI operated.

Mr McLoughlin made a change to the manner in which bullet two in point 6.6 was phrased.

In light of the confusion of whether the NHI pilot projects were still in place, Mr Masoeu read out a statement from the Human Sciences Research Council (HRSC), which stated that ten pilot programmes were still in place. He also read out recommendations on rephrasing the bullet points for better understanding, and Members agreed to adopt the changes.

The Chairperson again handed over to Mr Gcwabaza and excused herself, as she had to attend a Parliamentary Budget Office meeting.

Mr McLoughlin (DA) made a change to a minor error in 6.7.2, and with regard to placing the full name of the department in points 6.6.7 and 6.8.

Mr Masoeu referred to the issue of the quality of lecturers that had been raised earlier on, and suggested that they add a third bullet point on page 42 in order to make a recommendation on this issue. There should be an improvement in the capacity of educators within TVET colleges by strengthening the linkages between the public and private sector.

Mr Gcwabaza suggested that they should state that the training and practical work in TVET colleges must be joined in together with the theory, because one of the reasons why the learners were not employed after they finished the theory was because employers knew they did not have the practical skills. This was the weakness of the system, not the private sector’s inability to absorb them.

Mr Masoeu read out the recommendation as: ‘In-service training should take place throughout the duration of the course so as to balance theoretical and practical experience.”

Mr Gcwabaza suggested that they must stipulate somewhere that the output of basic, higher and post education must be strengthened, and indicate where policy and curriculum considerations needed to be made to improve outputs, because some of the challenges in higher education were inherited from the weaknesses in basic education. He added that they should incorporate what the PMG monitor had said regarding the fact that even university students needed the support of practical work experience, and not just those at TVET colleges.

Ms Shope-Sithole replied that what the PMG monitor was actually saying was that university students did need the support, but with TVET colleges it was compulsory, because the students required the practical experience in order to receive their qualifications.

Mr Gcwabaza still insisted that the universities also be incorporated where necessary.

Ms Shope-Sithole said that Members witnessed the experience when they went on an oversight visit to Khayelitsha. She did not dispute that university students needed the support, but there should be an emphasis on TVET college students, because their certificate depended upon the practical experience.

Mr Masoeu read out an edited version of what Mr Gcwabaza was suggesting, based on strengthening basic and higher education, and proposed that the meeting move on to other points. He would come back to them at the end with edited versions of the recommendations.

Ms Senokoanyane sought clarity on point 6.13.1 on page 43.

Mr Gcwabaza said that there should be an addition that referred to people with disabilities in the point made on 6.13.2, page 43, and he felt that the sentence in 6.14.1 needed to emphasise integrated departments.

Mr Masoeu said he would change the wording so that the integration of the departments came across.

Committee Recommendations

Dr Figg felt that the first sentence on page 44, under the recommendation on the Bill, did not reflect the proceedings regarding why the amendments he proposed had been rejected. He asked that they add a few words to give more insight into what had happened. He then proposed a recommendation of how the sentence should be restructured to indicate he had tabled proposed amendments in the amount of R10.8 billion to fund six proposals to fight drug-related crime, support poor students and safeguard the borders, which had been rejected by the Committee.

Arising from this proposal, the Committee was told that before she left the meeting, the Chairperson had made a recommendation in a note that they should add that the Committee had been advised by the Parliamentary Budget Office (PBO) on the matter, and that Members had decided after deliberation to reject the amendment.

Ms Senokoanyane felt that they should include that there had been deliberation, because if they did not explain the rejection point, it would make her uncomfortable. However, in light of the Chairperson’s recommendation, she agreed that her insight should be added

Mr McLoughlin said he needed to mention that there had been a presentation from the PBO on the matter, and perhaps the fact that there was an input from them should be mentioned to enhance the fact that they had made a decision that was well informed.

Mr Gcwabaza agreed that they should specify the number of amendments, but argued against adding every little detail and suggested a more constructive manner in which they could structure the sentence.

Ms Shope-Sithole agreed that it should not come across as if the Committee had negatively rejected the amendments, because the input from the PBO’s legal advisors had not stated that the amendments were bad, but had only alluded to the fact that the amendments would be changing the whole Appropriation Bill.

Mr Masoeu read the amendment related to Dr Figg’s proposal, which added: “after serious deliberations on a submission which comprised of 405 amendments affecting 27 departments and in consultation with the Parliamentary Budget Office and legal services, the Committee did not support the proposal,”

Dr Figg commended the strategy advisor on a quick job with regard to the amendment.

Mr Masoeu read out the final edited drafts from the document, where the Committee had reached consensus to adopt them.

Mr McLoughlin said that the conclusion did not have a number, and asked that they reserve their rights.

Mr Gcwabaza said they would add a number, and that they needed to formally adopt the Bill.

Ms Shope-Sithole proposed adoption.

Ms Manana seconded the adoption.

The draft report was adopted.

Adoption of Minutes

The minutes of the Committee’s meeting on 30 May were proposed for adoption by Dr Figg, and seconded by Ms Shope-Sithole, and adopted with minor corrections.

The minutes of the Committee’s meeting on 31 May were proposed for adoption by Ms Manana, and seconded by Mr McLoughlin, and adopted with minor corrections.

Mr Gcwabaza concluded the meeting by advising Members that Dr Figg was leaving the Committee, and thanked him for his great contribution. Dr Figg also thanked the Committee.

The meeting was adjourned.