Parliament 2020/21 Quarter 3 performance: Acting Secretary to Parliament briefing

Joint Standing Committee on Financial Management of Parliament

12 March 2021
Chairperson: Ms B Mabe (ANC) and Ms D Mahlangu (ANC, Mpumalanga)
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Meeting Summary

Video: Joint Standing Committee on the Financial Management of Parliament, 12 March 2021

The purpose of the virtual meeting was for the Committee to be briefed by the Acting Secretary to Parliament on the institution’s performance in the third quarter of the 2020/21 financial year.  

The third quarter report for Parliament was drafted as per the indicators and targets of the Revised Annual Performance Plan (the APP) for the 2020/21 financial year as was tabled in mid-July 2020, after the Minister of Finance tabled a new budget in Parliament. Parliament’s budget was adjusted downwards by R115 million for the financial year. Parliament’s performance for the third quarter of the 2020/21 financial year was measured by 14 indicators. Out of these 14 indicators, only eight had quarterly targets meaning that six indicators were measured annually and were not tracked for the period under review. Seven of the eight indicators have met the targets set, translating to an institutional performance of 87.5%. Parliament’s operating environment continues to be impacted by significant budget cuts and the COVID-19 pandemic, while the targets of the APP were based on a normal operating environment.

Parliament has spent 87% (amounting to R510.34 million) of its appropriated budget of R583.71 million for the third quarter, and indications are that there will be an underspending of R120.48 million amounting to 6% of Parliament’s annual budget of R 2.11bn at the end of the financial year. The institution’s performance remained at a high level despite significant budget cuts and a new operating model in light of the COVID-19 pandemic. Further budget reductions remain a significant risk, but the reported indicators show significant progress and Parliament is on track to meet its set targets, as outlined in the APP.

Presenting on the spending matters of December 2018 against December 2020, in the 2020/21 financial year, the institution spent R141.32 million compared to the expenditure of R348.22 million during the 2018/19 financial year for the same period. This is attributable to travel restrictions and other precautionary measures that have been put in place by the National Government as a response to the COVID-19 pandemic. The reported underspending did not impact negatively on the fulfilment of Parliament’s mandate.

Members said the comparison of Parliament’s spending patterns with the 2018/19 financial year has shown the difficult situation that the COVID-19 pandemic has brought about but questioned how the under-expenditure of Parliament affect the institution’s performance moving forward. They questioned what the underspending would be like in the coming quarters and how the savings would be managed.

Members noted the massive underspending related to travel and the huge saving this presented. They said it brought into light the need for Parliament to move to Gauteng for there to be a return on investment. The Executive Authority was called on to update the Committee on this matter

Meeting report

Chairperson Mabe convened the virtual meeting and welcomed Members to the virtual meeting. Ms Penelope Tyawa, the Acting Secretary to Parliament, was in attendance as well.

The purpose of the virtual meeting was for the Committee to be briefed by the Acting Secretary to Parliament on the institution’s performance in the third quarter of the 2020/21 financial year. Another item on the agenda was for the Committee to consider and adopt its outstanding minutes of its previous meetings, particularly that of 5 March 2021.

Parliament’s performance in the third quarter

Ms Tyawa presented the briefing to Members.

Introduction and the overall performance of Parliament:

The third quarter report for Parliament was drafted as per the indicators and targets of the revised Annual Performance Plan (the APP) for the 2020/21 financial year as was tabled in mid-July 2020, after the Minister of Finance tabled a new budget in Parliament. Parliament’s budget was adjusted downwards by R115 million for the financial year. Parliament’s performance for the third quarter of the 2020/21 financial year was measured by 14 indicators. Out of these 14 indicators, only eight had quarterly targets meaning that six indicators were measured annually and were not tracked for the period under review. Seven of the eight indicators have met the targets set, translating to an institutional performance of 87.5%.

Parliament’s operating environment continues to be impacted by significant budget cuts and the COVID-19 pandemic, while the targets of the APP were based on a normal operating environment. The only target that was not met pertained to legal and procedural advice provided within seven days.

Financial performance of Parliament:

Parliament has spent 87% (amounting to R510.34 million) of its appropriated budget of R583.71 million for the third quarter, and indications are that there will be an underspending of R120.48 million amounting to 6% of Parliament’s annual budget of R2.11bn at the end of the financial year.

The financial performance of Parliament included the following:

  • The expenditure relating to direct charges amounted to R121.95 million (amounting to 96% for the third quarter budget of R126.92 million), and indications are that there will be a projected overspending of R16.17 million. This is as a result of a budget reduction by National Treasury during October 2020. This overspending will be a direct charge against the National Revenue Fund in line with section 23(4) of the Financial Management of Parliament Act 10 of 2009.
  • The expenditure relating to the compensation of Members amounted to R121.95 million (amounting to 96% of the third quarter budget of R26.92 million). There are indications that there will be a projected overspending of R16.17 million at the end of the financial year under review. This is due to a budget reduction of R30.6 million during the period.
  • The expenditure relating to the compensation of employees amounted to R312.68 million (amounting to 98% of the third quarter budget of R319.17 million). Indications are that there is a projected underspending of R43.26 million at the end of the financial year. This is due to terminations during the year and delays in filing of critical vacant positions as recruitment processes were slow during the lockdown period.
  • The expenditure relating to goods and services, relating to the APP, amounted to R41.16 million (amounting to 44% of the third quarter budget of R99.67 million). Indications are that there is a projected underspending of R66.52 million at the end of the financial year. The underspending on goods and services is a direct result of the impact of the national lockdown with travel restrictions and precautionary measures introduced.
  • The expenditure relating to goods and services (related to Members’ entitlements) amounted to approximately R27.27 million (amounting to 71% of the third quarter budget of R38.48 million). Indications are that there is a projected underspending of R3.98 million at the end of the financial year. This is due to the fact that Members were not utilising their entitlements due to travel that has been suspended during the lockdown period.
  • The expenditure relating to transfer payments, relating to transfers to political parties represented in Parliament, amounted to approximately R123.47 million (amounting to 98% of the third quarter budget of R125.97 million). Indications are that there is a projected underspending of R6.72 million at the end of the financial year.
  • The capital expenditure amounted to R5.77 million (amounting to 90% of the third quarter budget of R6.41 million). Indications are that the full annual budget of R40.83 million will be spent by the end of the 2020/21 financial year, which is under review.

Performance of Parliament per programme:

For Programme no. 1 (Strategic Leadership and Governance), one out of two targets were achieved, resulting in 50% achievement of the set targets. For this programme, Parliament has spent R25.68 million (amounting to 79% of its third quarter budget of R32.78 million). This resulted in a variance of R6.9 million due to the national lockdown which resulted in minimal traveling allowed. Indications are that R103.66 million will be spent of the annual budget of R109.58 by the end of the financial year. This will result in a variance of R5.92 million, which will be available for reallocation to Parliament’s budget for the next financial year.

For Programme no. 2 (Administration), all targets were achieved, resulting in 100% achievement of the set targets. For this programme, Parliament has spent R37.46 million (amounting to 93% of its third quarter budget of R40.28 million). This resulted in a variance of R2.83 million, due to delays caused by the national lockdown which resulted in minimal local and no international travelling. Indications are that R155.41 million will be spent of the annual budget of R174.64 million by the end of the financial year. This will result in a variance of R19.22 million, which will be available for reallocation to Parliament’s budget for the next financial year. The expenditure for the third quarter involved R1.89 million on procurement of goods and services relating to the COVID-19 pandemic.

For Programme no. 3 (Core Business), all targets were achieved, resulting in 100% achievement of the set targets. For this programme, Parliament has spent R163.84 million (amounting to 87% of its third quarter budget of R189.22 million). This resulted in a variance of R25.37 million due to delays caused by the national lockdown which resulted in minimal local and no international travelling. Indications are that R626.67 million will be spent by the end of the financial year. This will result in a variance of R44.83 million, which will be available for reallocation to Parliament’s budget for the next financial year.

For Programme no. 4 (Support Services), all targets involved were annual targets that were not tracked for the third quarter. For this programme, Parliament has spent R112.02 million (amounting to 92% of its third quarter budget of R135.21 million). This resulted in a variance of R23.19 million due to delays caused by the national lockdown which resulted in minimal local and no international travelling. Indications are that R429.96 million will be spent by the end of the financial year. This will result in a variance of R27.79 million, which will be available for reallocation to Parliament’s budget for the next financial year.

For Programme no. 5 (Associated Services), Parliament has spent R171.35 million (amounting to 92% of its third quarter budget of R186.42 million). This resulted in a variance of R15.1 million due to delays caused by the national lockdown which resulted in minimal local and no international travelling. Indications are that an amount of R 677.59 million will be spent by the end of the financial year. This will result in a variance amounting to R22 million, which will be available for reallocation to Parliament’s budget for the next year.

Parliament’s spending patterns:

Ms Tyawa presented the Committee with Parliament’s spending patterns for the 2020/21 financial year as compared to the 2018/19 financial year. Over the two comparative years, Parliament has had an underspending of R206.91 million (amounting to 59% of its operational budget). In the 2020/21 financial year, the institution spent R141.32 million compared to the expenditure of R348.22 million during the 2018/19 financial year for the same period. This is attributable to travel restrictions and other precautionary measures that have been put in place by the national government as a response to the COVID-19 pandemic. The reported underspending did not impact negatively on the fulfilment of Parliament’s mandate.

Parliament’s overall institutional performance for the third quarter of the 2020/21 financial year amounted to 87.5%, which shows an increase from the second quarter’s performance of 71.4%. The institution’s performance remained at a high level despite significant budget cuts and a new operating model in light of the COVID-19 pandemic. Further budget reductions remain a significant risk, but the reported indicators show significant progress and Parliament is on track to meet its set targets, as outlined in the APP.

Discussion:

Mr B Radebe (ANC) welcomed the fairness of the report by the Acting Secretary to Parliament. The comparison of Parliament’s spending patterns with the 2018/19 financial year has shown the difficult situation that the COVID-19 pandemic has brought about. How will the under-expenditure of Parliament affect the institution’s performance moving forward? He raised a concern regarding feasibility of the unmet target of procuring legal and procedural advice within seven days. Meeting this target will be exceptionally difficult.

Mr M Moletsane (EFF, Free State) asked why there are no security officers escorting Members in the transport shuttles since the COVID-19 pandemic and enquired whether this was a result of budget cuts.

Ms O Maotwe (EFF) stated that there was a massive underspending related to travel, both domestic and international but more so domestic. This is a huge saving. She asked for clarity on the amount that was actually budgeted for the 2020/21 financial year for the travelling of Members. It is a true reflection of the spending patterns of Parliament and the expensive nature of travelling. The amount that Parliament has saved because of the restrictions on travelling has had a positive impact, and the funds can be redirected in the 2021/22 financial year to ensure that Parliament utilises all of its resources. This speaks to the point that travelling to Cape Town was expensive and there was not return on investment as all the ministries were in Gauteng – this needs attention. The call of the EFF was to have Parliament in Gauteng. One needed to at least look at the cost and return on investment. The quarterly expenditure currently presented is an indication of what to expect in the coming quarters as COVID will still be with us for some time. It is important not to sit with such huge savings when the money could be used for other things.

Chairperson Mahlangu also asked about the spending on the shuttles. She agreed with the points raised by Maotwe – progress updates on the matter is required.

Responses

Ms Tyawa responded that on the matter of the move, the assessment and socioeconomic impact study was submitted to the Executive Authority. It has much to do with timing and the primary injection of money into such a massive move. She would communicate to the Executive Authority that the Joint Standing Committee raised the matter once more. The administration has done its part.

Ms Ressida Begg, Division Manager: Core Business Support for Parliament, responded to Mr Radebe’s concern regarding feasibility of the unmet target of procuring legal and procedural advice within seven days. She stated that the target related to legal services providing advice within seven days from the date that the advice has been requested. There is often a negotiation of the timeline for advice when it involves more complex legal matters to ensure that the advice given is sound. It predominantly relates to legal advice required on the rulings made within Parliament, and particularly the National Assembly.

Ms Tyawa responded that the procedural officers must make rulings consistently regardless of the complexity of the matters involved.

Ms M Zungu, Division Manager: Institutional Support Services, said security services are only provided to the transport shuttles on special occasions when it is required, such as during public hearings and oversight visits.

Ms Tyawa said when quarter four was presented, Members would be provided with the original budget was allocated per division and the expenditure thereof by 31 March 2021 and the unspent funds. The R104m that was unspent is anticipated to be increase. Parliament would look at what was allocated per division, classify it according to the line items and then work on expenditure to-date. This is exactly what is sent to the Auditor-General – it is the same information presented to the Committee. The Executive will have to reprioritise and the Committee will have to look at the strategy of the sixth Parliament and reprioritise and provide guidance. Budget reduction is a reality. The administration will present what is needed to operate and what was spent to date. This means that in the meeting, there should be only one item dealing with the budget and strategy review and expenditure. The Committee when then be able to look at the core functions of oversight, public participation etc, whether this was being impeded by the budget and then what could be done to assist. Looking at Vote 2 and the mandate of Parliament, the Committee really needs to engage on the reduced budget.

The Committee did not adopt the minutes of its previous meeting, dated 5 March 2021, as the requisite quorum of Members necessary for adoption was not present.

The meeting was adjourned. 

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