Home Affairs responses on its Strategic Plan; Government Printing Works: Strategic Plan 2008-11

Meeting report

The first part of the meeting was closed to the public.

Government Printing Works (GPW): Strategic Plan 2008-11
The Chairperson noted that the late arrival of the Annual Report had again put this Committee under pressure.

Mr Tom Moyane, Chief Executive Officer, Government Printing Works, welcomed the opportunity to detail the issues affecting GPW. The Strategic Plan acknowledged inputs from the Auditor General (AG), the Portfolio Committee and Standing Committee on Public Accounts. For a number of years, GPW tried to give high performance in return for the money it had been given. However, this strategic plan must be considered as an interim plan. The Corporatisation process, reported on previously, had taken a new direction and GPW had taken a Government Component Model approved in April by Department of Home Affairs (DHA) Steering Committee. This recognised the corporatisation as strategic to the DHA service delivery model.

Mr Moyane noted that GPW played a pivotal role in the DHA as GPW was the State's mandated security printer. The mission was to become a reliable and cost effective deliverer, through technology and service excellence. The core values included honesty, reliability, trustworthiness and client satisfaction. The GPW provided printing, stationery and publishing. The operating principles would be to provide and supply security printing service to all levels of Government. Core services included all face value documents that conferred citizenship, official forms, and general printing.

For 2008/9, Mr Moyane said that the key drivers were based on four elements. The first was conversion to the new business model, which would enhance the pace of transformation of GPW. There was now a watertight business case, which had been approved by National Treasury (NT) and Department of Public Service and Administration (DPSA) as well as DHA. The establishment notices to transform to a government component had been prepared. The component came into being on 1 April 2008, through Cabinet approval.
Secondly, he pointed out that for a number of years there had been no investment, but now that the model was approved, there was investment in new modern printing technology, with integrated ICT propositions. The third driver was the production process optimisation. GPW would be relocating to better production facilities in Pretoria, and it was a fully supported site. It would house the first state-of-the-art passport manufacturing equipment. This was a milestone for which GPW had been fighting for many years. This would improve competitiveness. The final driver was the market strategy, which would put service level agreements in place, and would develop new markets, both local and regional. The GPW was currently participating in a tender for printing of national examinations for Malawi government, and was printing AU passports. GPW believed it was putting the DHA and government on the map.

Successful transformation was dependent on high performing standards. GPW was now looking to putting in place standards for printing, finances, performance, service, internal controls, human capital and operational standards. Security was key to all activities.

The organisational structure was presently an interim one, to enable short term implementation. Once all the approvals by stakeholders were done, this structure would be modified to meet the needs of the new corporatised organisation. There would be a lean and solid structure. There was not yet a full component of senior management, nor a marketing officer, nor a permanent Chief Financial Officer. The question might be asked as to why to corporatise an organisation that was "hollow". He stressed that GPW was needing to fill those positions, but was unable to do so because it was not operating in synergy with the private sector. The new structure would ensure that security printing became a reality, and the business case was viable. A number of high level meetings had been held with National Intelligence and other key stakeholders.

Mr Moyane said that the strategic priorities must be implemented in all areas. It was important to consolidate the finance section with the requisite skills. Cost management was key to pricing GPW in the market. Operations and Technology must be sufficient to ensure high quality and on-time delivery. ICT management was vital. There must be strong supply chain management, supported by a strong financial officer. There must also be a strong and forward-looking human resource team, to source the people to run the technology. There was now a business case that showed the fast-tracking of processes. There had been heavy losses, particularly of artisans, because of lower remuneration. Security was vital, since face-value documents were produced and there must be zero-tolerance approaches to disappearance of documents. Internal audit would ensure compliance and this must also be strengthened. A Director-level position was now approved for GPW’s internal audit. Marketing was also important. Everything that the GPW did impacted upon the DHA turnaround strategy.

Mr Moyane went on to present the budget. The R130 million shown for passport systems had not been transferred, but would be transferred to allow the purchase of new equipment to strengthen the position as a mandated security printer. There was also the need for training and talent-management, and R5 million had been allocated for this. The GPW new building had no allocation this year, but R56.8 million was budgeted for the following year. There was a request to bring this amount forward to relocate GPW in the new facility.

The projected expenditure would be R561.9 million for 2008/9, rising to R759 million in 2010/11. However, he noted that these figures would change because of recruitment, and improved salaries, as well as increased expenditure on equipment and technology. He noted that the rising petrol prices tended to increase the paper prices. Mr Moyane projected revenue of R606 million, which anticipated a profit of R45 million. He noted that the organisation was viable. However, the subtotal for printing showed revenues of R165 million, one-sixth of the total revenue, which seemed to indicate that GPW was not primarily being a security printer. Warehousing services currently accounted for 50% of the revenue. There had been a focus on incorrect aspects over the years. It was hoped to turn this around in the next year. Security printing should be the cash cow. Because of years of neglect, poor technology and the lack of management, it had not been so. It believed that there would be substantial turnaround by 2010, when it was hoped that GPW would have show a turnover of R1 billion. The profit margin should be about 30%, yet was currently 7.4%, because GPW had not been in charge of the pricing strategy. IDs were free, yet there were costs attached. GPW should not have to seek funding from the State.

Discussion
The Chairperson noted that there was no legislation allowing GPW to corporatise, and he asked for further explanation of the temporary strategic plan.

Mr Moyane explained that this plan was interim in the sense that it was agreed that by 30 April, the DPSA, NT and GPW would have presented the business case and set in place the processes to corporatise. Had this happened, there would have been a different strategic plan presented. The meeting would now take place this month, and whatever was decided would have an impact on the strategic plan, because of the implications of the new business model. GPW wanted a strategic plan that would allow it to be functional - that it now had - and this would be implemented. However it was described as temporary because once the blueprint was accepted, the strategic plan would have to be modified to fall in line with the vision espoused in the business case.

The Chairperson said that nothing had been said about the issues raised by the Auditor General. He would have expected this to be raised in the strategic plan.

Mr Moyane said that the criticisms and points raised had been taken into account in respect of the strategic plan and the measures put in place were outlined in the glossy document, pages 10 and 11. The debtors had been a sore point for many years. GPW had been delighted that SCOPA had written to government departments requesting them to pay their outstanding debts, and that had had an effect. GPW was putting in place a variance report on a monthly basis, which had not been done in the past. By June, there would be a report on the successes obtained.

Ms Amanda Pretorius, Acting CFO, GPW, added her thanks to SCOPA and this Committee for their intervention. Six departments had now paid. It was intended to put the time of collection to 45 days, and to use 45 days also for creditors. Attempts were being made to fill vacant posts. Previously, the expenditure and budget were not properly controlled, but measures had now been put in place to deal with this on a monthly basis. There was also now timeous reporting to National Treasury. Management of financial risk was being improved by better procedures and processes and training of the staff.

Kgoshi K Morwamoche (ANC) noted that in terms of the National Treasury regulations, the strategic plans should have been tabled at least seven days prior to discussion of the budget vote. He said that it would be impossible to deal with the strategic plans in piecemeal fashion.

Kgoshi Morwamoche noted that there was printing in other countries. He asked why it was not able to print the South African ballot papers.

Ms Maunye noted that the question of internal controls had not been addressed. The AG said that that an approved and documented IT policy was not in place. Much emphasis had been placed on security, but she asked how this would work without a security policy being in place.

Ms Maunye pointed out that the relocation process had been raised year after year. She hoped to hear progress in this year.

Mr Moyane said that GPW had done all that it could, from 2005 to date, from identification of the ideal sites, to needs analysis, to try to get a building in place. The Department of Public Works (DPW)  had given no response. Finally there was proactive management in place, and when GPW saw things grinding to a halt, the management itself went to look for a facility that could host the equipment. A meeting had been arranged with DPW, who finally approved that the building currently being adapted would be the final home of GPW. The building would be ready for the equipment in August.

Ms Maunye said that last year the Minister of Finance had said, in the budget speech, that R900 million was to be allocated to DHA, and part of that was supposed to purchase printers for GPW. She asked for progress on that.

Mr Moyane said that GPW had not received any money in the past from the State, as it was self-funding. He clarified that the figure of R900 million was being bandied about, but only R110 had been received. This was used for the procurement of the passport manufacturing equipment. Six staff were undergoing training in Japan and the equipment would land at the end of August. GPW had accounted in full for that money.

Mr M Louw (DA) said that he appreciated the intention to turn things around. However, this organisation had not been able to retain staff, and he wanted more details on the asset stripping, and he would like to hear more details of whether assets had been deliberately run down.

Mr Moyane noted that for more than 20 years GPW had bought a few small items, but certainly nothing that was strategic to print passports and other documents. The equipment on the floor was in a skeleton form; there was no request that the State should fund it, but the State should have looked at the goodwill of the GPW.

Mr Louw asked how the good intentions would be translated into positive finding of staff, assets, security of documents, and correction of errors.

Mr Moyane said, in relation to security of documents, that this was a problem, but pointed out that although GPW printed to booklet the final details – and therefore the security – were the responsibility of DHA, so if there were questions how a Caucasian female ID book bore the photograph of a black male, then that must be directed to DHA.

Mr Louw also raised questions on this issue. There was a risk of spending far more, but that the same levels of service might still be provided. He wondered if creating the printing through  into a private sector company might not be a better option as the market seemed to be more efficient.
 
Mr Louw said, if the service was retained in house, how the changes would really be effected. For many years GPW had been in trouble, and he did not see that it had really changed yet. He was particularly worried that until SCOPA had stepped in, the debts were not being paid.

Mr Louw asked about the possibility of providing printing to the private sector. There were huge opportunities. The taxpayers were picking up the overheads, and the economy of scale could be used to its advantage.

The Chairperson wondered why the meeting in April had not taken place, and he agreed that how the Committee could decide whether the strategic plan would respond to the current issues. Corporatisation was a process to be guided by the law. The strategic plan should have responded to the issues that the AG had raised.
Kgoshi Morwamoche questioned the corporatisation, saying that he was surprised it was being implemented before discussed with the Portfolio Committee.

Ms M Maunye (ANC) asked the CEO to give his opinion on SCOPA's view that corporatising the entity would not be the only way to solve the problems.

Mr W Skhosana (ANC) also raised questions on corporatisation. He asked whether the public/private partnership (PPP) route had been considered. He was not sure that the route of corporatisation would address the problems of human resources. He thought also that the main intention should not be the profit, but rather proper achievement of the goals.

Mr Moyane said that corporatisation was not seen as the panacea for everything. However, it could mean different things to different people.

Mr Aneel Radhakrishna, Turnaround Team member assigned to GPW, answered the questions around the corporatisation and the strategic plan. He said that the issues of lack of equipment, asset stripping and staffing had been addressed during he turnaround. GPW was currently at a crossroad. The question was whether GPW should close, and start again. Privatisation, outsourcing and closure would all affect the State's well-being, integrity and security, so this was not an option. The Corporatisation process would give a new form from a legal perspective. GPW would be a government component. All GPW was at the moment was a service-delivery agent within government. The frustrations expressed by the Committee were shared by GPW. There was a sound business case and GPW knew where it needed to go. There were different pieces of legislation that did not talk to each other, and this had resulted in the stalling of the process. If all had gone well, there would have been legislation to make GPW a government component by the end of last month.

Whilst the legal form may be in place, and GPW would be a State entity, from the operational perspective many of the issues would continue for the next eighteen months. The strategic plan, however, would address these issues. The key issues had been identified - such as the facility that was not conducive to manufacturing. That was being addressed. There had been agreement on the top structure, and the CEO's grading had been done, with a decent benchmark for executives. GPW would then have to drive the change management processes. On the financial side, there had been approval for support to clean up the audit issues. NT had agreed that the financial arrangements would continue until the end of March. The assets and liabilities would be sorted out, and it would then proceed to the transformation. Service Level Agreements were in place. The CEO would get daily reports on what was happening. There had been, over the last couple of weeks, securing of the new premises. A difficulty in the turnaround had been the lack of action. There was now a facility. The turnaround had resulted in GPW, for the first time, getting the proper attention. Pressure was on management to get the processes running. He said that operationally, many of those matters set out in the strategic plan would continue, but there would be additions. Therefore, the financial side may be amended to take new processes into account, assuming that the business case could be adopted.

The Chairperson said that these issues were not in the plan. Page 143 of the Annual Report contained some of the issues. This should be balanced with the Strategic Plan, which should contain the responses. He said that the corporatisation would be engaged upon in greater detail. There could still be application to National Treasury for certain waivers. It should not be assumed that the corporatisation would be "an easy ride". The Bill was supposed to have been prepared by June. He asked how, then, the aim was to move to that. He agreed that the groundwork should be done, but it should be linked to actual happenings. He appreciated the work that had been done. However, the interim plans should address what the AG had raised, including the questions of policy in respect of the payment of debts. Corporatisation would not help that. The Committee did not believe that GPW could operate with an interim plan. He noted that some transfers were also given to GPW from DHA, and that must be accounted for.

The Chairperson pointed out that, in respect of debt collection, R110 million was still sitting with government departments who were not paying this over to GPW. Some of the departments had responded, but GPW must have plans and policies for the outstanding collections. That was not clearly stated in the Strategic Plan.

The Chairperson said he appreciated the efforts in respect of the machines. The DG of DHA had spoken in detail of the time frames. He noted that it was not a healthy situation that State Information Technology Agency (SITA) and GPW both would deal with one document, and pass it from one institution to another. Part of the plan would be how to create a one-stop shop. Capacity issues were not very clear.

The Chairperson asked Members to consider how to deal with the interim Strategic Plan.

Kgoshi Morwamoche felt that the rules did not allow this Committee to approve an interim Strategic Plan, unless there was time to bring outstanding issues back to the Committee.

Mr Louw asked what the implications would be if the plan was not approved. The Committee would like to support GPW and he would not like this plan to be rejected. He asked for guidance whether it would still be possible to have the budget debate the following week.

Mr Moyane stated that the comments had been noted. He said that this had been a frank and open meeting. GPW would continue to operate. The plans, based on the arguments placed, were not the final plans because of the planned transformation. He said that GPW and DHA would interact with the Committee when the changes took place. He requested that the Committee accept this document as the strategic plan, on the understanding that modified plans would be presented when there were changes. Some of the issues could not be addressed immediately. There were pertinent issues that had been taken into account.

The Chairperson asked what the time frame was. Corporatisation was a process, that must start with legislation, and that was not even in place.

The Chairperson then said that the Committee could note the strategic plan as presented today. It would call the GPW in after about two weeks to clarify the issues. SCOPA was also working on the corporatisation issues. He asked GPW in the meantime to resolve the outstanding issues from the AG and incorporate those into the strategy. The document could be re-drawn to reflect the options and retain the flexibility.

Department of Home Affairs (DHA) responses to questions on the Strategic Plan presented on 3 June
The Chairperson noted that the errata in the Annual Report had been corrected.

Kgoshi Morwamoche raised an issue around the ports of entry manned by South African Police Services (SAPS). The Committee, during the oversight visits, had found police present, but no DHA officials. He asked for clarification.

Mr Mavuso Msimang, Director General, DHA, noted that this would need to be investigated. He said that some of the smaller ports of entry were perhaps still being manned by South African Police Services (SAPS) in the remoter areas. He would look into this and report to the Committee. He pointed out that there were difficulties in accommodation and transport at the borders and this matter was being discussed with other stakeholders.

Kgoshi Morwamoche noted that the mobile offices were a good idea, but the DHA had apparently not budgeted properly for staff to man them. The result was that staff were being taken from existing offices, which were already short staffed.

Mr Msimang said that he would provide a further report. There were shortcomings, and he had already indicated that people with the expertise in running trucks, training of drivers and so forth should perhaps be sought so that they could commit to availability. That was a matter still being discussed with NT.

Kgoshi Morwamoche said that the online registration projects, without sufficient staff, were also depleting already short-staffed offices.

Mr Msimang said that about 60% of births were being registered in no more than four or five major hospitals. Perhaps online registration should not be in each and every hospital. However, it had been found to be positive to put staff in places where the majority of children were being born. There were agreements being made with the Department of Health so that they could assist with the roll out. The intention was to ensure that all children were registered in their first year of life.

Kgoshi Morwamoche was concerned about the recurring matters of emphasis raised by the AG, and he did not think that the Strategic Plan was clearly addressing those issues.

Mr Sagaren Naidoo, Acting Chief Financial Officer, DHA said that there was not a link into the strategic plan. This was because of the focus of the AG’s report. However, the separate report on service delivery would be tabled separately. The financial audit report interfaced with the strategic plan in so far as the activities of finance and the revenue collection were concerned. These were fundamental areas on which DHA would concentrate. Other issues related to the performance audit.

The Chairperson noted that internal controls were lacking. The correction of this should have been included in the Strategic Plan, with time frames noted. He was not sure how the DHA would achieve a clean report without addressing these issues.

Mr Naidoo said that the Strategic Plan had set out the six strategic imperatives, preordained in Government for the DHA. These  areas of financial controls were part of the operational plans within the Department.

Mr Msimang said that the audit report on the 2007/08 financial year would already reflect that action had been taken Therefore they would have been dealt with.

The Chairperson then asked the DHA to say how it had responded to all the issues and where the responses could be found.

Mr Naidoo said that this was contained in the report to the Minister and the Office of Accountant General, and was dealt with in February.

The Chairperson said that this Committee had not seen that report. It had no knowledge of how these issues had been resolved. He asked that this report be furnished to the Committee before the following Tuesday, as the budget vote would be informed by what had been achieved. This would also assist members in doing oversight.

Mr Msimang said that the Annual Report would not be available. He understood that an unaudited report could be given, and the issues that the AG had reported on would form the subject of the report.

Kgoshi Morwamoche noted that this Committee had raised concerns in the past, but now those very concerns were forming part of a Court ruling. He felt that the DHA should have dealt with the issues, rather than making itself the subject of a Court order.

The point was noted. 
 
Kgoshi Morwamoche asked about devolution of power. The provincial managers were given powers, but they did not have the power to write letters of appointment, and it could take more than one year for HR management in Pretoria to confirm the appointments.

The Chairperson said that at some stage there would be a need to give a presentation on human resources. 700 people should be employed in the current year. He wondered if there was capacity within human resources to deal with the administration and the identification. In order for the plans to succeed, strong management must be in place. Policies should also be drawn up in regard to overtime, especially at airports.

Kgoshi Morwamoche asked about generally regulating the amounts to be paid for applications for various documents. There seemed to be differing amounts claimed at different offices. Immigration was another issue. This would need a meeting on its own. If one of the departments involved in border control was not doing its job properly, then that would impact heavily on DHA.

The Chairperson said that the influx was seen as a problem; if the border lines were being manned properly, then people would be forced to go through the proper border posts. Eventually everyone in the country would end up at DHA.

Mr Msimang said that responsibility for illegal immigrants was always being cast at the door of DHA, although it was not responsible for them. The Cluster meetings of Border Control Operational Coordinating Committee (BCOCC) consisted of DHA, the Departments of Justice, Correctional Services, Defence and the SA Police Service. There was a real issue around securing the border. The transfer from the Defence Force to the Police Service of border control had happened three years ago but the latter had not yet come to grips with all the issues. BCOCC could only really discuss operational matters. The Cluster had made recommendations to the Committee on issues of policy and legislation. He did not have any more information on these facts at the Security Cluster. The porousness of the borders was a problem.

Kgoshi Morwamoche asked about the zoning of the Department. He did not believe this was the correct route to take. Zoning seemed to be contrary to the new demarcations and he wondered how this would fit in with the role of the Demarcation Board.

Mr P Mathebe (ANC) also did not believe that zonal structures would be positive. He asked whether people who were failing to perform well in provinces would manage well across more than one province.

Mr Louw asked if the ideas of zones and provinces could perhaps be discussed on Tuesday. He was not sure whether the zones would work, but he welcomed anything that went outside the standard thinking. He felt that it was certainly worth a try, and he pointed out that this was the point of turnaround strategies; to try to address something that was not working.

The Chairperson noted that there were allocations to provinces in the budget. He proposed that before moving to the budget debate at 10h00, the Committee should meet and spend two hours on these issues. He pointed out that there would be longer-term engagement with the Department. If the model was not adopted, the plan would not succeed.

Mr Msimang stated that provinces were not being done away with. However, for administrative purpose, the job description of the current provincial managers had not been concentrated into the zone managers. Currently the provincial manager was responsible for everything in the province, whether HR procurement, immigration or any other issues. The idea was to create zonal managers with a specific focus on immigration and establish direct lines of reporting, to shorten the communication cycles, into a capacity being created at Head Office. An immigration issue at the airport in Cape Town should not be taken to the regional person, then the area person, but should rather be taken directly to the person managing immigration at the Head Office. Most of the zoning would affect civic services. Budgets would be allocated to the provinces, and the accounting for the work in the province would continue to reflect service activities within the province. There was no intention to collapse all nine provinces into four. The nine managers would do fewer things, because of the direct reporting lines being set up. He could show more functionalities in a diagram.

The Chairperson asked that an organogram be provided of how the reporting system would work.

The meeting was adjourned, and the Committee would hear further from the Department at 08h00 on Tuesday 10 June.