Department of Communications on its 2014 Strategic Plan; Legacy Report; Budget Analysis; Audit Outcomes by Auditor-General

Meeting report

The Chairperson opened the meeting requesting the members from both committees to introduce themselves. The session was to be run as a joint committee meeting.

Ms M Shinn (DA) noted that there were two departments with three programmes each at the joint meetings, and enquired as to whom would be presenting what and when. Clarity as to the programmes for the joint meetings was requested and it would be useful for the Communications entities to be separate from the Telecommunications entities so as not to waste time.

The Chairperson replied by taking the members through the programme explaining that the proclamation splitting the DoC and allowing the DoTPS to have separate legal standing was yet to be signed. The committees would sit together because there would be one budget for both as the budget would be allocated to the DoC under which the DoTPS still falls. Reading through the programme for 1 to 11 July, would allow members to plan for the upcoming presentations on the various strategic plans and annual performance plans. The budget was the reason the committees were sitting together, and once passed the two would go their separate ways, focusing on their own programmes. The presentations would assist each committee in drawing up and submitting a budget process report. The DoC debate was taking place on 15 July 2014 and the DoTPS debate on 16 July 2014.

Ms Shinn asked how there could be two debates when the DoTPS was not yet a legal entity separate from the DoC, and enquired what exactly it was that would be debated.

The Chairperson said that the debates would be policy-oriented to determine the plans for each department as the DoTPS was yet to be signed into existence as a legal entity by way of proclamation.

Ms Moloi-Moropa pointed out that the processes would be clarified along the way as this was a new arrangement - the DoTPS being separated from the DoC as a new department.

Ms Shinn stated that budget approval was a legal process, with the money being divided legally between the two debates. However, it was unknown what would be discussed exactly at each debate as the members do not know which entities belong to each department.

The Chairperson ruled that the matter be closed.

Ms L Maseko (ANC) acknowledged that the establishment of a new department and the splitting of the budget was not a new thing. By the time of the debates, the confusion would be resolved. In terms of the new department being established, it was necessary for that Minister to present his views about the direction he wished the department to go in.

Mr M Ndlozi (EFF) said that the matter of the DoTPS not yet being a legal entity should be flagged. The DoC exists until the proclamation has been signed and the work of the Committee was oversight.

The Chairperson closed the matter.

Committee Programme
The Joint First Term Committee Programme was adopted.

Fourth Parliament Legacy Report presentation
Mr Mbombo Maleka, the Content Advisor to the Committee, indicated the six key areas the Portfolio Committee dealt with from 2009 to 2013. These were its High Cost to Communicate programme; Digital Migration programme; Transformation of the print media programme; Transformation of the advertising industry; passing the amendments to four Acts (ICASA Amendment Act, Post Bank Act, South African Post Office Act, and Electronic Communications Act); and improving local content development.

The Chairperson's foreword evaluated the various programmes, focusing on the inequalities of communities such as the Northern Cape not having access to broadcasting services or signal. There was also efforts by the committee to align policy with changes in the technological and global environments. There was a large focus on universal access.

The recommendations by the Fourth Parliament committee on the following matters were outlined in detail in the Legacy Report:
Committee Administration Issues
Outstanding reports and issues from Department of Communications (DoC) including Budgetary Review and Recommendations Reports (BRRR)
Outstanding issues for DoC and ICASA
Other DoC issues for consideration by the 5^th Parliament
GCIS
Brand South Africa
Follow-up issues: Study tours
Communications Legislation Monitoring
Strategic Planning hosted during 4^th Parliament
Committee Budget over-spend.
(See presentation document and Legacy Report)

Discussion
The Chairperson commented that the Legacy Report's concerns about administration and committee finance would have to be assessed by the chairpersons.

Mr C Mackenzie (DA) commented that it would be more useful for the committees if the report’s findings were split between the departments to focus attention on the legacy issues for each department.

Ms Maseko responded that a split would not be feasible as the report was not done on two departments, but on the DoC before it was decided that DoTPS would split away from it. The one-size-fits-all budget for all portfolio committees is an issue because each portfolio has different needs and so overspending is an issue. To discuss each committee’s needs with committee chairs would ensure overspending or under-spending does not occur. The provinces have undergone a workshop dealing with oversight, and it was proposed that parliamentary committees should do the same training. The five key priority areas on the strategic plan should be driven by the priorities of government and the committee should ensure this. The committee would need a copy of the committee report of its study tour to Brazil. It is important to consider what international entities are doing in comparison to South Africa and to reflect on whether the committee is on the right track with regard to its strategic plan.

Mr Maleka said that in terms of the five key strategic areas, most of the priority focus areas covered were based on government programmes which were not set in stone. There was a hope that those entities would take into account the strategic plan of Fourth Parliament and ensure that there was a follow-through to Fifth Parliament in that regard.

Mr Ndlozi asked for the development of local content to be elaborated upon and how the improvement of local content had been perceived by the committee. There was uncertainty as to what it was in relation to. Following that, what did the committee say about oversight of the SABC and what work was done regarding it as there were problems and controversies with the SABC raised in the Public Protector’s report.

The Chairperson commented that the last committee gave more than enough time to the issue of the SABC. There would be assistance for members to obtain the various reports that they required.

Mr Sandile Nene, Committee Researcher, said that policy had been developed on local content and digital migration, but the department was in the best position to discuss this.

Mr Maleka added that the department had formed a working group consisting of the top 30 companies in the country. This group would be better equipped to address the issue of local content development. Regarding the SABC, there was a board in place to hold them accountable and ensure that it is functioning properly.

Ms Shinn said that the Public Protector’s report on the SABC was not the property of the committee because it was not put before the committee legally, but was instigated in response to a request by a former employee of the SABC. The Public Protector recommended it to the Parliament Ethics Committee and Department to deal with it. The problems with the SABC were ongoing and would continue to take up time, especially removals from posts, and problems with senior management lacking appropriate skills. In addition, the SABC lacked credibility with its viewers, especially in relation to its news.

Mr R Tseli (ANC) asked if there was an executive summary of the issues raised during the Cost to Communicate public hearings as there were 80 submissions from those hearings.

Mr Maleka said that the detailed Legacy Report was a summary of all the recommendations from the public hearings, as well as recommendations from other activities conducted during the Fourth Parliament.

Mr H Nkoana (ANC) said that there were a number of abbreviations referred to during the presentation. There was a need for a systematic way of tracking the issues that were raised in the report for consideration by the committee in going forward.

Mr W Madisha (COPE) said that the Chairperson stated the reports given could not be changed. Everything held in the report could not be fleshed out because it was in relation to the past committee and so the present committee could not get into the report. Therefore how was the present committee to deal with the report? Given that the previous committee dealt with the report, it seems the committee would be wasting its time going into the report.

The Chairperson responded that the report could not be amended by the present committee because it was the property of the Fourth Parliament, but it provided assistance for isolating and dealing with issues that were still relevant to the budget review process or to the various DoC entities. The report was a narration of the previous committee’s story as to what they had done.

Mr Maleka said that these were outstanding issues outlined in the Report that were still relevant for the Fifth Parliament to deal with.

Ms D Tsotetsi (ANC) reiterated that the Legacy Report identified issues that are still relevant.

The Chairperson said that all committee reports are found in the Announcements, Tablings and Committee Reports (ATC) database for the members to consider in preparation for when an entity comes before the committee to give a presentation. The Legacy Report was foundational in order to assist the committee in moving forward, while recognising the challenges present.

Budget Vote Analysis presentation
Mr Sandile Nene, Committee Researcher, said that the budget was a tool for transformation by ensuring service delivery to those who needed it. The analysis was conducted to hold the executive accountable, to assess spending so as to determine the upcoming budgetary allocation, and to isolate the issues stemming from previous allocations.

Government Communication and Information System (GCIS)
The GCIS was there to drive communications and access to information by citizens. Democratic participation in decision making does not exist without information, and GCIS existed to drive the national policy framework of government and communicate it to its citizens. Without this entity, a culture of suspicion is fostered and it disrupts the discourse with its citizens.

The Media Development and Diversity Agency (MDDA) drives and promotes community media at a local level. It ensures that there are community print media, radio stations and television stations throughout the provinces.

The Department of Communications now includes the SABC, GCIS, ICASA and Brand South Africa.

On the matter of the budget, most government departments will have to re-prioritise the importance and necessity of the programmes they wish to implement, and how they should go about implementing these. Difficult decisions about the budget will have to be made. The benchmark was that departments should spend 25% of the budget per quarter. The DoC spent only 74% of its budget in 2013/14 financial year. No reasons were provided as to the under-spending, therefore the current committee would have to motivate hard to National Treasury for an increase in funding. It is for the committee to ensure that the increase would be over and above inflation.

The DoC must address the continuing transformation of the advertising industry and the print media industry. South Africa does not have the necessary tools to deal with media diversity which would allow people to access media in the different languages.

Discussion
The Chairperson reiterated that these presentations were done to flag the relevant issues in the Department's Strategic Plan and Annual Performance Plan and to assist the Committee in engaging with the department.

Mr Tseli pointed out that the position of the GCIS Chief Executive Officer had been vacant for two years.

The Chairperson said that this question should be reserved for the Minister to address later in the day.

Mr Tseli commented that the last quarter expenditure was an improvement in comparison to the other quarters in the way the department spent its budget.

The Chairperson said that this comment should be made later as it should be heard by the Ministers and departments who would be present here this afternoon.

Mr Mackenzie asked what benchmarks were used to gauge and measure the effectiveness of expenditure in terms of the strategic plan and meeting targets.

Mr Maleka said that Treasury should be invited to provide details behind the rationale involved the allocation of funds.

The Chairperson said that the Treasury would allocate a certain amount and will look at trends in expenditure over time. The committees, along with the Standing Committee on Appropriations would monitor expenditure, and whether the department is spending in accordance with its planned expenditure. The monitoring happens on a quarterly basis, with the department providing reports. These reports allow for the tracking of expenditure patterns. This is done in terms of the Public Finance Management Act to analyse appropriate expenditure.

Mr Mackenzie followed up by clarifying his question, enquiring as to the benchmarks used by the committee to gauge if the performance is effective. On budget increases, if the performance benchmarks remain the same, and the increase is less than the inflation rate, performance is not increased but remains the same.

The Chairperson responded that the Strategic Plan would be considered. It should be gleaned what the department is planning to do, what it is looking to achieve, whether its goals are reasonable with realistic and measurable targets and objectives. Based on this analysis, Treasury would allocate funds after the defence and justification of the budget by the department. The committee reflects its opinion on the measurability of the Strategic Plan.

Mr G Davis (DA) asked for ‘transformation in print media’ to be defined as ‘transformation’ is a broad concept.

Mr Nene said that transformation was covered in the Legacy Report. It was being considered throughout the sector and its conglomerates, relating to everything. Print media was not meeting its BEE codes, it was lacking in assisting its communities and should contribute more to print and distribution of publications.

Ms Maseko said that in order to deal with the budget allocation the committees should have the programme allocation from 2012/13. It was necessary to track the spending of the committees to ensure the 25% benchmark is brought to the attention of the department.

Mr Nene responded that the treasury would publish expenditure reports on a quarterly basis. It would publish what the department planned to spend, what it actually spent, and whether it over- or under-spent.

Department of Communications
Mr Nene began by requesting that the members overlook the fact that the document referred to the DoTPS. The statistics in the presentation were from the census conducted in 2011, as well as its accompanying assessment. 89% of people have mobile phones, but this does not necessarily mean that they have sim cards. South Africa’s telecommunications sector’s employment figures are contested, and the postal service is worth R10 billion. ICT increased productivity.

The analysis of the budget is focused on the policy directive of transparency. The sector wanted the Minister to establish an industry forum. The department must provide a plan for addressing the findings by the Auditor-General when it comes before the committee. There was no allocation of a subsidy to build post offices in rural and under-served areas in the budget. It needed to provide a structured plan for raising awareness about the department’s policies, and the lack of implementation of the 112 Emergency Call Centre needs to be explained.

The Administration part of the budget had increased in the budget allocation.

The department needed to analyse the market to inform policy, but there are only two employees in the Research Economic and Market Analysis entity who have to analyse various broad sectors such as telecommunications or the internet economy. This is problematic and needs to be investigated.

It is important to refer to and analyse the budget especially if there is uncertainty as to where a certain entity is headed. (See Budget Analysis of Department of Telecommunications and Postal Sector: 2014/15 Presentation)

Discussion
Mr Ndlozi said that the committee needed information as to the size of the industry with respect to employment at present, and information was needed on the figures for mobile phone usage and internet access. The presentations need to be thorough.

The Chairperson said that the percentages provided were according to the 2011 census. When going into the Strategic Plan, a detailed analysis of the sectors would take place, plus deliver viewpoints as to what the sectors have done to move forward.

Ms Moloi-Moropa said that the current focus was the budget and there would be opportunities at a later stage to focus on the various issues in depth.

Auditor-General South Africa presentation
Ms Corne Myburgh, Business Executive, Office of the Auditor-General, said that the AGSA mandate is purely to audit, but it does so for the parliamentary committees to improve their oversight function. The information presented was on the previous audit outcomes because the current audit was still in progress. The main focus of the presentation was to offer recommendations for improving the entities financial statements, compliance and performance information between the 2011/12 and 2012/13 years.

The presentation was colour-coded. Where it was yellow, this meant “financially unqualified with other matters”, red was “qualified”, purple was “disclaimer”, and green meant “clean”. Disclaimer means the auditors did not have the information necessary to conclude on the reliability of the presented information. Qualified is when assurance can be provided on the majority of the set of financial statements, while highlighting those components where adequate information was not received. Financially unqualified with other matters refers to adequate information about the financial statements, but problems of non-compliance or performance information. Clean refers to financially unqualified, no problems with compliance or performance information. The MDDA was the only clean entity in the DoC group in 2012/13. The majority of auditees have non-compliance findings. In considering performance information, the criteria includes presentation (information and explanation for variances), usefulness of information (SMART / measurable), and reliability of reported information.

Within the Communication Portfolio, ICASA improved while Brand SA and MDDA remained the same in that they had no findings in relation to performance information.

Generally, the three root causes for prevention of improved outcomes in the departments were: lack of consequences for continual non-compliance, slow response in implementing corrective action, and vacancies in the departments. These problems were applicable to all the entities within the portfolio of communications.

The auditing of the entities in the DoC showed that the information provided was reliable, but not without issue. The department had not achieved all its targets, yet the budget was fully spent. There was the expectation of an improvement for the department with respect to performance information as from 2013. It was recommended that the position of the CFO be filled, and the senior managers should sign performance agreements so that they are aware of what they need to do and this serves to hold them accountable.

ICASA moved from qualified in 2012 to unqualified to 2013. Roles and responsibilities should be clear to avoid confusion, for example, e

mployees did not sign job descriptions and performance agreements. It needed to implement a proper document management system for filing evidence. Its indicators should be well-defined and its targets should be specific and measurable. The Council and CEO roles should be clearly defined, and performance management should be enhanced. The Complaints and Compliance Committee process should be improved to ensure compliance.

The SABC did not do very well in the last audit, regressing to disclaimer. There are critical vacancies within its structure, especially at leadership level. Performance management is inadequate, leading to lack of consequences for non-compliance. AGSA does not think it will move to unqualified this year. There was a gap between IT and business which did not ensure that IT worked effectively. There are policies that are either outdated or not in place, and there should be a policy register to allow the board to review and assess potential policies to be implemented.

GCIS should prioritise filling the CEO position that has been vacant for some time. There should be a process for the collection and verification of actual performance throughout the year.

Brand SA had issues with financial statements and its supply chain.

The outcomes for the Telecommunications and Postal Services portfolio found that NEMISA required a CEO and there were inadequate controls to identify irregular expenditure. USAASA had leadership instabilities with outstanding vacancies, and requires a document management system to maintain the information supported in the financial statements. SAPO needed to prioritise filling some important vacancies such as the Chief Information Officer. In addition, there was no disaster recovery plan in place in IT and there was a shortage in IT skills. (See the AGSA presentation).

Discussion
Mr M