Department Annual Report 2002-3; Governance Framework for Public Entities

Meeting report

PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE
26 January 2004
DEPARTMENT ANNUAL REPORT; GOVERNANCE FRAMEWORK FOR PUBLIC ENTITIES

Chairperson: Mr P Gomomo (ANC)

Documents handed out
Presentation on 2002/2003 Annual Report
Presentation on Public Entities
Narrative on Presentation on Public Entities
Department of Public Service and Administration 2002/2003 Annual Report [available on DPSA website shortly]

SUMMARY
During the discussion on the Department's Annual Report the Committee sought clarity on the purpose for which the excess R83m reported by the State Information and Technology Institute would be used, the effect of the sharing of personal information via the Gateway Project on the individual's right to privacy, the mechanism put in place by the Department to monitor the occupancy rate within government departments, the Department's efforts to make the public aware of its successes and its plans to equalise the remuneration received by foreign diplomats across the board.

The presentation on the governance framework for public entities focused on the primary objectives and the outcomes of the framework, the workstream and progress thus far and the strategic impact of the framework. Members requested clarity on the regulatory framework envisaged by the Department in the restructuring process, the R15b allocated to public entities by the Department, the Department's plans to cure the lack of understanding of the legislative framework governing public entities by their controlling boards as well as whether this needs to be remedied via amending legislation.

MINUTES
Department of Public Service and Administration 2002/2003 Annual Report
Mr C Semoadi, the Department's CFO, conducted the presentation (see document) which outlined the Department's aims since 1996, the public entities which report to the Department, a breakdown of the structure of the Department's three programmes and the achievements of those programmes and the costs breakdown of the Department's Human Resource Management (HRM) items.

Discussion
Mr M Sikakane (ANC) sought clarity on the manner in which the R83m excess reported by the State Information and Technology Agency (SITA) would be used.

Mr Semoadi responded that the R83m would be used by SITA to be ploughed back into government activities. The funds were allocated to SITA for specific projects to develop the necessary infrastructure. The Department decided that the 2003/2004 financial year would be the last year in which it transfers funds to SITA, and SITA then yielded the R83m profit in 2003/2004. He stated that because SITA was not a public entity it could not, strictly speaking, distribute those funds as profits. He stated that the R83m would however be used by SITA for the implementation of other projects, and would not be distributed to another party. The Department would instruct SITA on the projects in which it must invest the funds, but it does not prescribe to SITA the specific manner in which it must invest those funds in the projects identified by the Department.

Mr M Steele (DA) expressed concern with the effects of the Gateway Project on the right to privacy. He asked the Department to explain whether the sharing of databases within the public sector via the Gateway Project would have any impact on sensitive or private information regarding the individual.

Secondly, Mr Steele asked whether the access by individuals to the kind of information held by the private sector would be advantaged or retarded by the Gateway Project.

Mr Semoadi replied that the private information regarding the individual, such as certain information held by the South African Police Service (SAPS) for example, would not be included in the portal for public scrutiny. The primary aim of the Gateway was to ensure easy and expeditious access to any information on government activities, and this included the kinds of forms the individual would have to complete. The Gateway thus provided the member of the public with a quicker and easier alternative to physically going to the relevant government department for the information.

He stated that there was sensitive information that would not form part of the portal, and there would still be such information that would have to be sought from the relevant government department directly.

Mr R Schull, Manager: Office of the Director-General of the Department, added that the Gateway involved two distinct phases. The first was to provide a portal on information on government services and there have been 4500 services collected and on each service there was a series of seven questions that were answered. These included questions such as where the service could be obtained, the relevant contact person, the cost of the service and the legislation that would be applicable. This information would all be available on a website that would be accessible to anyone with Internet access as well as to various Multi-purpose Community Centres (MPCC) in due course, and even post offices.

The second phase would enable public service transactions on the Internet portal, which included transactions such as the payment of a fine or the application for an identity document. A system of user authentification would then be needed by the portal as well as a payment engine. These activities were reserved for phase 2 which has not yet commenced, while phase 1 was almost coming to an end.

He stated that part of phase 2 would be the development of the inter-operatability of the portal, which would ensure that government departments' 'back office systems' would enjoy open channels of communication. This would not encroach on secure information.

Mr A Van Jaarsveld (NNP) asked the Department to explain whether it has put any mechanism in place to monitor the occupancy rate of posts the various government departments, and asked the Department to indicate whether it was close to attaining the goal in this regard.

Mr Semoadi responded that one of the slides in the presentation dealt with the Department's Integrated Human Resource (IHR) strategy, as part of the Department's mandate to develop a Human Resource Development (HRD) strategy for the public service. This included the establishment of a recruitment framework, plans to retain skilled civil servants in the public service so that it could compete with the packages offered by the private sector and it also included the implementation of a strategy to ensure and development scarce skills in the public service. He stated that this was an ongoing IHR strategy, and the Department could report back to this Committee on the progress made during the course of 2004.

Mr Schull added that the restructuring process, on which this Committee would receive a full briefing tomorrow, was largely successful in ensuring that the right employees with the necessary skills took up the proper posts. This was a major 15-month undertaking throughout the public service.

Mr Van Jaarsveld asked the Department to indicate its efforts to make the public aware of the Department's successes, as the media only appeared to report on the Department's shortcomings.

Mr Semoadi agreed that the successes of the Department had to be communicated to the public, and the Department's Communication Unit must be sped up to deal with this. He stated that the Department did not have a Communications Unit for the past four months, but this must be addressed and greater effort must be placed on ensuring that the successes are reported as well.

Mr T Abrahams (ANC) sought clarity on the New Foreign Service Dispensation, as the varying exchange rates would make it much more expensive for a South African diplomat to function in countries with a stronger position against the Rand than in those who performed weaker against it.

Mr Semoadi replied that the Department has identified some inequalities in the remuneration packages received by officials in foreign nations and there remained a large disparity in what they should be paid. The inflation rate as well as the CPIX was taken into account in arriving at the remuneration package and, over and above these two factors, there was still a discrepancy in the remuneration packages. The Department did devise a framework on the preferred remuneration packages irrespective of the different exchange rates and the CPIX.

Mr Abrahams sought an update on the public service medical aid restructuring process.

Mr Semoadi responded that the Committee would be received a full and comprehensive briefing tomorrow on the restructuring of medical aid in the public service.

Mr L Modisenyane (ANC) asked the Department to explain the mechanisms by which it communicated the progress made by other government departments in policy development and improved service delivery. This would indicate which departments were really performing.

Mr Semoadi replied that the Department would do as much as it could and would even intervene in some cases, such as the Eastern Cape province. He stated that that where departments failed to adhere to their performance mandates the Department instead development an early warning system which would indicate whether the specific government programme would materialise. This was done even before the Department decided to intervene.

The other indicator would be the Annual Report of the Office of the Auditor-General on the financial statements of each government department, which details the performance of each government department. Even though the Office of the Auditor-General's reports focus primarily on the financials, they are an important tool in checking up on departments. The Public Service Commission (PSC) also monitors government departments. The Department develops policy which government departments have to comply with and the PSC then monitors the Departments to ensure compliance, and also evaluated performance.

Mr Sikakane asked whether the ambassadors were remunerated according to the wealth of the country in which they were posted.

Mr Semoadi responded that South African ambassadors received a basic salary which should be more equal across the board, based on the circumstances. They do receive allowances when they go abroad, and these could vary. This was the case before the Department intervened and the Department has now proposed a framework which aimed to regulate the allowances received by ambassadors, as these should be equal across the board.

The Chair asked Mr Semoadi to explain how exactly the Department would equalise the remuneration packages, as the different exchange rates would surely complicate matters.

Mr Semoadi replied that this did not involve a complicated calculation. He stated that the packages would never be the same for each ambassador, but the principle which the Department aimed to instill was that it should be equal across the board. The Department could even set a maximum limit on the remuneration received.

Mr N Ntsimane, Department's Manager: GICS, added that during the remainder of the current financial year the Department will be involved in an initiative known as Batho Pele Service Excellence Model. The aim of this model is to function similar to a balanced scorecard to be used to check whether government departments were aligned to Batho Pele principles. The long-term vision was to be able to certify or certificate government departments in terms of compliance to service delivery dimensions or Batho Pele principles, in the same manner that there are companies associated with good quality.

Governance Framework for Public Entities
Mr K Bansti, Department's Chief Director, conducted the presentation (see document) which outlined the background to the governance framework for public entities, the primary objectives of the framework and the expected outcomes, the work streams and the progress made to date, the strategic impact of the framework and the way forward.

Discussion
Mr Steele asked the Department to explain the differences inherent in unitary but not unified regulatory framework which allows for a degree of diversity, as referred to in the presentation.

Mr T Sadik, Treasury Advisor, replied that many of the public entities were established through separate enabling Acts and founding legislation that was approved by Parliament, and these included various Schedule 2 and Schedule 3 public entities. The included the constitutional public entities, the major public entities as well as the government business- and non-business type public entities. Many of these public entities were established via founding legislation approved by Parliament or through mandates set up by the governing departments.

Some of these pieces of founding legislation predate or postdate the implementation of the PFMA or the Public Service Act, and the aim of the framework was to give recognition to both the PFMA and the Public Service Act in the founding legislation. Some of these public entities reported directly to Parliament while others reported directly to their governing departments, and some might not report directly to the Department of Public Enterprises. By coherence in legislation the Department was saying that it understood that there were different prescripts in terms of the mandate and accountability of these various public entities, and this must be taken into account.

Mr Sikakane sought clarity on the R15b that was allocated by government for the public entities.

Mr Bansti responded that the R15b was allocated as operation capital. It was not allocated to one single public entity, but rather to various public entities.

Mr Sikakane stated that during 2003 the Minister of Public Enterprises stated that many public entities had been sold overseas, and he was thus alarmed by the same large amount of funds that had been allocated to the public entities. He asked whether this still included public entities that were scattered all over the world.

Mr Ntsimane replied that the Department of Public Enterprises dealt with public enterprises that were separate from those on which the Department's project focused on. Thus the statements made by the Minister of Public Enterprises would not necessarily be related to the R15b referred to here by the Department. The R15b referred to items classified by the Public Finance Management Act (PFMA) as 3a and 3b public entities, which differ from the Department of Public Enterprises public entities.

Mr R Mohlala (ANC) stated that the statement made in the presentation that there appeared to be limited understanding of the legislative framework by some of the controlling bodies of the public entities was very problematic, because it required Parliament to then define who exactly the controlling bodies of these public entities were.

Mr Bansti responded that phase 1 involved much data gathering and this included the conducting of extensive interviews with the CEO's of some of the public entities and their board members. The data compiled from this merely pointed out that this lack of understanding largely resided with the CFO's and some of the board members and less with the government departments that the public entities report to.

Mr Ntsimane added the main focus of the research was on the boards and controlling bodies of the public entities. The discussions with the government departments were centred on gathering information on those public entities that reported directly to the government department in question so that the Department could identify the public entities that existed in the sector.

Mr Bansti added further that phase 1 did highlight the gap in understanding by the controlling bodies, and stated that phase 2 would precisely attempt to address that gap to ensure alignment in terms of the regulatory issues. Alignment in terms of the vision of the public entity and its controlling body would also be ensured, because some of the public entities lacked any contextual understanding of its formation as some of the CEO's were under the impression that they could dictate their own vision without aligning themselves with the broader government vision. This was important because these public entities were, at the end of the day, part of government's machinery and were not independent structures, and had an important role to play in ensuring service delivery.

Mr Mohlala stated that phase 2 must include clear recommendations as to the manner in which this lack of understanding would be resolved because, if this were not done, the strategic objective of this government to provide a better life for all would not be realised. Regulations must be put in place regarding the governing of the public entities, as this would be the only way to ensure their alignment with government objectives.

Mr Bansti replied that one of the workstreams in phase 2 focused precisely on the alignment of the legislative framework governing the public entities.

Mr Steele asked whether the Department envisaged the introduction of one new piece of enabling legislation, or does it anticipate the proposal of a plethora of new amendments.

Mr Sadik responded that the Department would be reviewing the governing legislation of each public entity and, from a governance perspective, amendments would be sought to those pieces of legislation. In addition both the PFMA and the Public Service Act would require amendments, and thus many amendments would be presented to Parliament during 2004.

The meeting was adjourned.