Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698928773467.pdf (South Africa)
1 Friday, 25 October 2019] No 88 – 2019] FIRST SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA ____ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS ____ FRIDAY, 25 OCTOBER 2019 TABLE OF CONTENTS ANNOUNCEMENTS National Assembly 1.

Referral to Committees of papers tabled .......................................................................... 1 COMMITTEE REPORTS National Assembly 1.
Employment and Labour .................................................................................................. 3 2.

Home Affairs ................................................................................................................. 51 3.

Communications ........................................................................................................... 106 4.
Transport ...................................................................................................................... 162 ANNOUNCEMENTS National Assembly 1.
Referral to Committees of papers tabled (1) The following paper is referred to the Portfolio Committee on Justice and Correctional Services: (a) Proclamation No R. 54, published in Government Gazette No 42773: Referral of matters to the existing Special Investigating Unit and Special Tribunal: South African Health Products Regulatory Authority, in terms of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).

2 National Assembly COMMITTEE REPORTS 1.


Budgetary Review and Recommendation Report of the Portfolio Committee on Employment and Labour, dated 23 October 2019 The Portfolio Committee on Employment and Labour, having considered the performance of the Department of Employment and Labour and its entities on 18 September 2019 and 9 October 2019, reports as follows: 1.
INTRODUCTION The Budgetary Review and Recommendation Report of the Portfolio Committee on Employment and Labour has been compiled in compliance with the Money Bills Amendment Procedure and Related Matters Act, No.

9 of 2009.
9 of 2009.

This report provides an assessment of the Department of Employment and Labour (DEL) and its entities’ service delivery performance given available resources; effectiveness and efficiency of the use and forward allocation of available resources; and recommendations on the forward use of resources.

1.1.

The mandate of the Committee All parliamentary committees have a mandate to legislate, conduct oversight over the executive and facilitate public participation.
As such, the mandate of the Portfolio Committee on Employment and Labour (the Committee) is governed by the strategy of Parliament and the Constitution.

The Committee is charged with the responsibility of holding the executive and related entities accountable through oversight of objectives of its programmes; scrutinising its budget and expenditure; and recommending through Parliament, what actions the Department should take in order to attain its strategic goals and contribute to service delivery.
The National Assembly, through its committees, is required by section 5 of the Money Bills Amendment Procedure and Related Matters Act, No.

9 of 2009, to annually assess the performance of each national Department and submit Budgetary Review and Recommendation Reports (BRRR) for tabling in the National Assembly.

These reports should be submitted to the Minister of Finance and the relevant Ministers.

1.2.
1.2.

The mandate of the Department of Employment and Labour The Department derives its mandate from the Constitution and gives effect thereto through a number of Acts which regulate employment and labour matters in South Africa.

Such legislation includes the following: 3 • Basic Conditions of Employment Act (1997); • Employment Equity Act (1998); • Employment Services Act (2014); • Labour Relations Act (1995); • Occupational Health and Safety Act (1993); • National Minimum Wage Act (2018).
The mandate of the Department is to regulate the labour market through policies and programmes developed in consultation with social partners, which are aimed at: • Improving economic efficiency and productivity; • Creation of decent employment; • Promoting labour standards and fundamental rights at work; • Providing adequate social security nets to protect vulnerable workers; • Promoting sound labour relations; • Eliminating inequality and discrimination in the workplace; • Enhancing occupational health and safety awareness and compliance in the workplace; • Giving value to social dialogue in the formulation of sound and responsive legislation and policies to attain labour market growth.
The Department of Labour’s legislative framework is informed by the South African Constitution, Chapter 2: Bill of Rights: • Section 9, to ensure equal access to opportunities; • Section 10, promotion of labour standards and fundamental rights at work; • Section 18, freedom of association; • Section 23, to ensure sound labour relations; • Section 24, to ensure an environment that is not harmful to the health and wellbeing of those in the workplace; • Section 27, to provide adequate social security nets to protect vulnerable workers; • Section 28, to ensure that children are protected from exploitative labour practices and not required or permitted to perform work or services that are inappropriate for a person of that child’s age or their wellbeing, education, physical or mental health or spiritual, moral or social development is placed at risk; • Section 34, access to courts and access to fair and speedy labour justice.
4 1.3.

Purpose of the BRRR The Money Bills Amendment Procedure and Related Matters Act sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department.

In October of each year, portfolio committees must compile BRR Reports that assess service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations of forward use of resources.
The reports are also source documents for Standing/ Select Committees on Appropriations/ Finance when they make recommendations to the House of Parliament on the Medium Term Budget Policy Statements (MTBPS).

The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.

1.4.
Method In reviewing the work of the labour portfolio (Department and its entities) for the 2018/19 financial year, the Committee placed emphasis on the following: • Overall performance in lieu of allocated budget as reflected in the annual reports of the portfolio; • Presentations by the labour portfolio to the Committee on their annual reports; • Report of the Auditor-General on the labour portfolio; • Report of the Financial and Fiscal Commission on labour portfolio; • Report of Statistics South Africa on employment statistics; and • Responses of the Department to the BRR report of 2018.
The source documents used by the Committee are: 2019 Estimates of National Expenditure; presentations by the labour portfolio during the course of the year; annual reports of the Department and entities; and the State of the Nation Address.

The Committee invited the Auditor-General to brief it on its assessment of performance of the labour portfolio.

The Committee also invited the Financial and Fiscal Commission as well as the Statistics South Africa to brief it on relevant matters.
This was followed by meetings with the Department and entities comprising the portfolio to receive presentations on their performance against their annual performance plans.

5 1.5.
Outline of the contents of the Report The content of the Report is as follows: • Overview of the key relevant policy focus areas; • Summary of previous key financial and performance recommendations of the Committee; • Overview and assessment of financial performance of the Department of Labour; • Report of the Auditor-General; • Financial Performance for the first quarter of the 2019/20 financial year; • Overview and assessment of service delivery performance for 2018/19 financial year; • Overview of Performance of Entities of the Department of Labour; • Committee Observations; • Committee Recommendations; and • Appreciation.
The sections below expatiate on the content outlined above.

2.

OVERVIEW OF THE KEY RELEVANT POLICY FOCUS AREAS Poverty, unemployment and inequality are three major challenges facing the country.

The National Planning Commission, which was appointed by the former President J Zuma in May 2010 developed the National Development Plan whose aim is to eliminate poverty and reduce inequality by 2030.
In its diagnostic report of June 2011, the Commission identified unemployment as one of the nine primary challenges confronting the country.

Therefore, raising employment through faster economic growth became one of the three priorities to remedy the situation the country finds itself in.
One of the key points raised in the National Development Plan was, “To eliminate poverty and reduce inequality, South Africa has to raise levels of employment and, through productivity growth, the earnings of working people.” The key measures of economic success were identified as achieving an average growth of over 5% of Gross Domestic Product (GDP) and the reduction in unemployment rate to 6% by 2030.
The Quarterly Labour Force Survey (QLFS), which is a household-based sample survey conducted by Statistics South Africa, reported the unemployment rate to be 29% at the end of June 2019 (Quarter 2 of 2019 calendar year).

This reflects a quarter-to-quarter increase of 1.4% from the 27.6% reported in the previous quarter.

Compared to the second quarter of 2018, unemployment rate increased by 1.8% from 27.2% reported.
6 The labour force increased by 476 000 from 22 492 000 in the first quarter to 22 968 000 in the second quarter of 2019.

Compared to the second quarter of 2018, the labour force increased by 598 000 from 22 370 000 to 22 968 000 reported in the second quarter of 2019.

The number of people who are employed increased by 21 000 from 16 291 000 in the first quarter of 2019 to 16 313 000 in second quarter of 2019.
Compared to the second quarter of 2018, the number of employed people increased by 25 000 from 16 288 000 to 16 313 000 in the second quarter.

The formal non-agricultural sector lost 49 000 jobs in the second quarter when compared to the first quarter of 2019.

Compared to the second quarter of 2018, the sector lost 148 000 jobs.

The private households sector also lost 49 000 jobs when compared to the first quarter of 2019 and 45 000 jobs when compared to the second quarter of 2018.
The informal non-agricultural sector gained 114 000 jobs compared to the first quarter of 2019 and gained 219 000 jobs when compared to the second quarter of 2018.

The agricultural sector gained 5000 jobs compared to the first quarter of 2019 and lost 1000 compared to the second quarter of 2018.

The number of unemployed people increased by 455 000 from 6.2 million in the first quarter to 6.7 million in the second quarter of 2019.
Compared to the second quarter of 2018, the number of unemployed people increased by 573 000 from 6.1 million to 6.7 million in the second quarter of 2019.

Since more jobs were created than lost, the explanation for an increase in unemployment rate can be attributed to the increase in the number of people entering the job market as reflected by the reduction in the “not economically active” population, which decreased by 326 000 quarter-to-quarter.
In response to the unemployment challenge, President Ramaphosa convened the Presidential Job Summit, which developed the Framework Agreement in October 2018.

Social partners who were part of the summit agreed that the unemployment crisis necessitated the Jobs Summit to focus not only on job creation but also address the crisis of job losses and retrenchments.
Government dismissed the rumour that it was going to embark on retrenchments in the Public Service and committed to filling all critical vacancies in the Public Sector.

Business agreed that everything possible had to be done to avoid retrenchments in the Private Sector.
The Jobs Summit identified five areas of interventions to realise intended outcomes, which are: Economic sector specific Interventions; SMME interventions; Education and Skills interventions; Inclusive growth interventions; and Public and Social interventions.

Furthermore, the social partners agreed on continuous monitoring of implementation of commitments.

7 In 2018 Parliament processed and passed the National Minimum Wage Act whose purpose is, inter alia, to improve the wages of lowest paid workers.
This will contribute in narrowing the income inequality gap and improve lives of those who were earning less than the prescribed national minimum wage.

While the introduction of the national minimum wage was met with some criticism regarding the level at which it was introduced, it was estimated that about six million workers stood to benefit from its introduction.

The triple challenges of poverty, unemployment and inequality have persisted despite legislative interventions that started in 1994.
This, amongst others, prompted the fourth democratic parliament to identify assessment of the impact of legislation passed since 1994 as key priority to be undertaken by the fifth democratic parliament.

The High Level Panel that was headed by former President K Motlanthe was appointed by the fifth Parliament to conduct the impact assessment of the legislation and make recommendations.
The panel produced a report titled: “Report of the High Level Panel on the Assessment of Key Legislation and the Acceleration of Fundamental Change”.

The panel recommended, amongst others, that people below a certain age, those that have been unemployed for a long time, people in rural areas and the disabled be employed without the firm being required to pay the minimum wage on the same terms.
Furthermore, the panel recommended that Parliament amend the Labour Relations Act to remove the extension to non-parties’ clause or to prescribe that the extension to non- parties will not be applicable to small and medium enterprises.

3.

SUMMARY OF PREVIOUS KEY FINANCIAL AND PERFORMANCE RECOMMENDATIONS OF THE COMMITTEE 3.1.
2018/19 BRRR recommendations and responses of the Department In the BRRR of the previous financial year, after considering the presentation of the labour portfolio on their annual reports and inputs from the Auditor-General, the Committee made recommendations to the Minister of Labour.

Below are recommendations made by the Committee and the responses of the Department of Labour are captured in italics.
The Committee recommended that the Minister of Labour take steps to ensure that: 3.1.1 The vacant funded posts within the Labour portfolio are filled with suitably qualified persons without delay, priority be given to critical posts.

8 Response: The vacancy rate in IES has now gone down to 6%, at end of September 2019.

This is the lowest vacancy rate in a long time.

The Branch prioritised and speeded up the filling of vacancies.

3.1.2.
3.1.2.

The services of the Internal Audit and the Audit Committee of the Department are fully utilised and their reports implemented to avoid negative findings by the Auditor- General.

Response: The IES has a consolidated action plan that ensures that audit findings are dealt with effectively.

The action plan is monitored on a monthly basis.


Corporate Services has developed a management action plan that is consolidated into one departmental plan that addresses the root causes of the audit findings and this is updated and reported to EXCO on a monthly basis.

Internal Audit provides an assurance on the effectiveness of the management action plans.

3.1.3.
3.1.3.

Incidents of Irregular Expenditure and Fruitless and Wasteful Expenditure are investigated and officials who are found to have flouted regulations are timeously subjected to remedial action.

Response: The Employee Relations process deals with all the officials who are found to be liable through the recovery process or other forms of disciplinary process.
3.1.4 The Inspection and Enforcement Services programme is adequately resourced so that suitably qualified inspectors can be appointed; provided with relevant tools of trade to monitor implementation of labour laws and that the retainment strategy is developed.

Response: The Branch is going to add 500 more OHS inspectors by the end of the financial year.

The Branch has put in place various strategies to ensure retention of staff.

The Departmental policy on retention is also utilised to assist with this.
3.1.5.

The funding of Productivity SA is timeously addressed in line with the proposed single funder mechanism to enable the entity to fulfil its mandate.

Response: Productivity SA continue to receive its Annual Treasury allocation from the Department in line with their legal mandate and the transfer agreement concluded with the Director-General.
Challenges continue to exist in the following areas that the entity has taken additional work that is not part of the Treasury allocation but remain crucial 9 for companies to attain Turn Around Solutions and improve their productivity and competitiveness levels and thereby saving jobs: (a) Inability of the entity to generate additional revenue through services that they provide to various entities to assist them in improving their productivity initiatives.
(b) The Workplace Challenge programme under the DTI that is costing the entity about R23 million to implement when the allocation from the DTI is around R10 million.

(c) Turn Around Solutions project that is funded by UIF and the unresolved disputes with regard to Project Management, Accountability and Governance.
The Director-General has established a Committee that has developed a number of proposals to resolve challenges in all these areas: (a) The entity was assisted with a bail out after securing Treasury approval from DEL savings during the last consecutive 3 years with amounts ranging from R5 million to R23 million during the 2018/19 financial year.

(b) Discussions were also held with Treasury to increase the entity’s allocations from the fiscus and to do away with other sources of funding.
However, this could not be realised given the current economic situation.

3.1.6 Additional funding is made available to the CCMA to enable it to fully implement its statutory obligations in terms of the National Minimum Wage, Basic Conditions of Employment Act and Labour Relations Act.

Response: The Secretariat for the NMW Commission has as yet not been fully implemented and therefore there will still be savings realised.
The Branch is dependent on the HR section in the DEL to finalise all necessary processes in order for it to move forward.

3.1.7.

The current approved structure of the Supported Employment Enterprises is reviewed in order to capacitate the entity and government departments are encouraged to procure goods from the entity.

10 Response: The SEE structure was reviewed and the following adjustments were recommended: (a) Profile of CEO was reviewed and submitted for advertisement and recruitment.
(b) Creation of new Director HRM position at SEE HQ (c) Creation of new Director Risk, Security and OHS at SEE HQ (d) Creation of new Deputy Director Risk (e) Creation of new Deputy Director Security and OHS (f) Creation of new 13 nursing positions for each factory at SR 9 (g) Creation of new organizational structure for the Limpopo factory comprising of: (i) Factory manager SR 10 (ii) 3 instructors (Wood, Steel and Textile) at SR 8 (iii) HR senior admin officer at SR 9 (iv) Store person admin officer at SR 7 (v) 2 admin clerks at SR 5 (h) The SEE did not have a budget for the new positions and did the following in order to secure funding for the structure.
(i) Adjusted budget through virement (ii) Abolished funded vacancies and recreated new positions (iii) Reallocated medical health budget towards first aid centres and employment of nurses.

Government Department procurement from SEE has not been fully realized however the following initiatives were undertaken: 1.

SEE was awarded a contract for Hospital Linen as part of government stimulus packages by the DHA 2.
Contracts were concluded with the National Department of Basic Education for new school’s furniture and the Eastern Cape Provincial Education Department 3.

A contract for supply of Hospital Linen was also concluded with the Department of Health Western Cape 4.
SEE held exhibitions in the DEL Service Delivery initiatives, Ministerial Imbizo’s Presidential events and also opened showrooms in most 11 factories and specific sites wherein government department procurement officers are invited from time to time.

5.

The SEE also submit Tender applications wherever opportunities arise in various Departments.

6.

The SEE price listing is reviewed annually and submitted to Treasury for approval.

7.
7.

The National Treasury is developing a special procurement dispensation for entities similar to SEE and will release those details when the applicable approval has been granted.

3.2.

Committee Report on Budget Vote 28: Labour 2018 The Committee was generally satisfied with the budget plans of the labour portfolio.

However, the Committee made the following recommendations: 3.2.1.
Putting measures in place to ensure that irregular, and fruitless and wasteful expenditure are not incurred, and ensuring that the recommendations of the Auditor- General are taken into consideration.

3.2.2.

Establishing partnerships between the Department of Employment and Labour and the Department of Higher Education, Science and Technology, as well as other government Departments to ensure that relevant skills are provided.

3.2.3.
3.2.3.

Ensuring that all the Department’s Centres are accessible to the majority of the communities.

3.2.4.

Increasing the budget of the Department to accommodate the possible expansion of its mandate.

3.2.5.

Ensuring that the Department work with the Department of Justice and Correctional Services to address delays in Occupational Health and Safety cases.

3.2.6.

Strengthening the office of the Registrar of Labour Relations to ensure that it discharges its mandate effectively.

3.2.7.
3.2.7.

Funding Productivity SA appropriately so that it can perform its duties.

4.

OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE OF THE DEPARTMENT OF LABOUR 4.1.

Overview of Vote allocation and spending (2017/18 to 2018/19) 12 The activities of the Department of Employment and Labour are structured into four programmes, namely Administration, Inspection and Enforcement Services, Public Employment Services and Labour Policy and Industrial Relations.
Table 1 below reflects the allocation and expenditure per programme in 2017/18 and 2018/19 financial year.
Table 1: Comparative Revenue and Expenditure for 2018/19 and 2017/18 Programmes 2018/19 / r e v O e r u t i d n e p x E R’000 R’000 R’000 e r u t i d n e p x E % 2017/18 n o i t a i r p o r p p A l a n F i r e d n U / R’000 R’000 R’000 1.Administration 881 531 804 917 2.Inspection and 592 223 549 211 76 614 43 012 91.3 92.7 860 734 768 677 92 057 545 115 520 165 24 950 Enforcement Services 3.Public Employment Services 605 674 542 817 62 857 89.6 562 574 485 543 77 031 4.Labour Policy 1 203 442 1 189 746 13 696 98.9 1 087 398 1 069 634 17 764 and Industrial Relations Total 3 282 870 3 086 691 196 179 94.0 3 055 821 2 844 019 211 802 Source: Annual Report 2018/19 (Department of Labour) Table 1, reflects that the final appropriation for the Department of Labour amounted to R3.2 billion in 2018/19 financial year, which is an increase of R227.0 million from the R3.0 billion allocated in 2017/18.
The Department spent R3.0 billion or 94% of the final appropriation, resulting in under-expenditure of R196.2 million or 6% of the final appropriation.

The larger portion of the final appropriation was allocated to the Labour Policy and Industrial Relations programme at R1.2 billion, followed by the Administration programme at R881.5 million.

The Inspection and Enforcement Services programme received the least allocation at R592.2 million.

13 4.2.

Expenditure per programme of DoL 2018/19 4.2.1.


Administration The purpose of the Administration programme is to provide management, strategic and administrative support services to the Ministry and the Department, with a goal of building institutional capacity.

To carry out this objective the activities of the programme are structured into five sub-programmes, namely: Ministry, Management, Corporate Services, Office of the Chief Financial Officer and Office Administration.
The total allocation for the programme amounted to R881.5 million, which is approximately 27% of the final appropriation to the Department.

This allocation is an increase of R20.8 million from the R860.7 million allocated in 2017/18 financial year.

The programme spent R804.9 million or 91.3% of the allocation resulting to under-expenditure of R76.6 million or 8.7% of its budget and achieved 75% of the predetermined objectives.
The reason for underspending was attributed to internal promotions and vacant posts that were not filled during the financial year, which resulted in less spending on Compensation of Employees.

The Management sub-programme received the largest allocation of R272.6 million or 30.9% of the programme allocation.

This sub-programme spent 100% of its budget by the end of the financial year.

It was followed by Corporate Services sub-programme which received R262.6 million of 29.8% of the programme allocation.
This sub-programme spent R225.2 million or 85.8% of its budget by the end of the financial year resulting to a variance of R37.4 million.

4.2.2 Inspection and Enforcement Services (IES) The purpose of this programme is to realise decent work by regulating non-employment and employment conditions through inspection and enforcement, to achieve compliance with all labour market policies.
IES programme comprise the following sub-programmes: Management and Support Services; Occupational Health and Safety; Registration; Compliance, Monitoring and Enforcement; Training of Staff; and Statutory and Advocacy Services.

The final appropriation for the programme amounted to R592.2 million, which is an increase of R47.1 million from the R545 1 million allocated in the previous financial year.
The programme spent R549.2 million or 92.7% of the programme allocation and achieved 50% of the predetermined targets, resulting in under-expenditure of R43.0 million.

Internal promotions 14 and vacant posts that were not filled during the financial year resulted to under-expenditure on Compensation of Employees.

Delay in the delivery of ICT equipment for inspectors resulted in under-expenditure on Payment of Capital Assets.
Compliance, Monitoring and Enforcement sub-programme received R472.5 million, which is the largest portion of the programme budget.

It spent R438.9 million or 92.9% resulting to a variance of R33.6 million by the end of the financial year.

4.2.3.

Public Employment Services (PES) The purpose of the PES programme is to provide assistance to companies and workers to adjust to changing labour market conditions, and to regulate private employment agencies.
This programme comprise the following sub-programmes: Management and Support Services: PES; Employer Services; Work-Seeker Services; Designated Groups Special Services; Supported Employment Enterprises; Productivity South Africa; Unemployment Insurance Fund; Compensation Fund; and Training of Staff: PES.

The final appropriation for this programme was R605.7 million and it spent R542.8 million or 89.6% of its allocation and achieved 75% of its predetermined targets, resulting to a variance of R62.9 million.
Internal promotions and vacant posts that were not filled during the financial year resulted to under-expenditure on Compensation of Employees.

Delay in the procurement of ICT equipment for the provincial offices resulted to under-expenditure on Payment for Capital Assets.

Work-Seeker Services sub-programme received R179.5 million or 29.6% of the programme allocation, which was the largest share of the programme budget.
It spent R156.6 million or 87.3% of its allocation resulting to a variance of R22.9 million.

Supported Employment Factories and Subsidies to Designated Workshops sub-programme received R153.2 million or 25.3% of the programme allocation, which is the second largest allocation.

It spent R142.2 million or 92.8% of its allocation resulting to a variance of R11.1 million.

4.2.4.
4.2.4.

Labour Policy and Industrial Relations (LP&IR) The purpose of the LP&IR programme is to facilitate the establishment of an equitable and sound labour relations environment; support institutions of social dialogue and promote South Africa’s interests in international labour matters; conduct research, analysis and evaluate labour policy; and provide statistical data on the labour market.
15 The LP&IR programme comprise the following sub-programmes: Management and Support Services: LP&IR; Strengthen Civil Society; Collective Bargaining; Employment Equity; Employment Standards; Commission for Conciliation, Mediation and Arbitration (CCMA); Research Policy and Planning; Labour Market Information and Statistics; International Labour Matters; and National Economic Development and Labour Council (NEDLAC).
The LP&IR programme was allocated R1.203 billion or 36.7% of the entire budget of the Department, which is the largest programme allocation.

It spent R1.189 billion or 98.9% and achieved 57% of its predetermined targets, resulting in under-expenditure of R13.7 million.

The delay in promulgating the National Minimum Wage Act resulted in under-expenditure on Compensation of Employees.

Fluctuating exchange rates resulted in under-expenditure on Transfers and Subsidies.
The CCMA sub-programme received R963.1 million or 80% of the programme budget.

The CCMA spent 100% of its budget allocation by the end of the financial year.

4.3.
Expenditure by Economic Classification The Department reported its expenditure by Economic Classification as follows: Table 2: Expenditure of the Department by Economic Classification Economic Classification Final Actual Variance Expenditure Appropriation Expenditure (Over)/ Under as % 0f Final 2018/19 R’000 2018/19 R’000 2018/19 R’000 Appropriation % Current payments 1 856 686 1 700 607 Compensation of employees 1 271 652 1 149 681 Good and services 585 034 550 926 Transfers and subsidies 1 315 142 1 296 766 Payments for capital assets 109 633 Payments for financial 1 409 87 909 1 409 156 079 121 971 34 108 18 376 21 724 91.6 90.4 94.2 98.6 80.2 - 100.0 assets TOTAL 3 282 870 3 086 691 196 179 94.0 Source: Annual Report 2018/19 (Department of Labour) Table 2 reflects expenditure of the Department by Economic Classification.
Current Payments received R1.856 billion or 56.6% of the total budget of the Department, which is the largest share.

A total of R1.700 billion or 91.6% of the Current payments budget was spent by the end of the financial year resulting to a variance of R156 million.

Compensation of Employees 16 received R1.271 billion or 68.5% of the Current Payments budget.

Of that amount R1.149 billion or 90.4% was spent by the end of the financial year, resulting to a variance of R122 million.
Goods and Services was appropriated R585.0 million or 31.5% of the Current Payments budget.

Of that amount R550.9 or 94.2% was spent by the end of the financial year resulting in a variance of R34.1 million.

Transfers and Subsidies was allocated R1.315 billion and R1.296 billion or 98.6% was spent by the end of the financial year resulting to a variance of R18.4 million.
Payments for Capital Assets was appropriated R109.6 million and R87.9 million or 80.2% was spent by the end of the financial year resulting to a variance of R21.7 million.

Payments for Financial Assets was appropriated R1.4 million and 100% of the allocated amount was spent by the end of the financial year.

5.

REPORT OF THE AUDITOR-GENERAL The Department of Employment and Labour (DEL), CCMA and Nedlac received unqualified audit opinion with findings in 2018/19 financial year.
DEL and CCMA had been receiving unqualified audit opinion with findings since 2014/15 financial year.

Fifty per cent of employment and labour portfolio received unqualified audit opinion with findings.

DEL materially underspent the budget by R196,2 million primarily on programme 1 and 3, due to vacancies and delays in capital project expenditure.
The Supported Employment Enterprises (SEE) and UIF received qualified audit opinion with findings in 2018/19 financial year, constituting 33% of the employment and labour portfolio.

Both SEE and UIF had received unqualified audit opinion with findings in 2017/18 financial year.

SEE had received a qualified opinion in 2016/17 and the UIF received a disclaimer in the same financial year.

The Compensation Fund (CF) received a disclaimer of opinion in 2018/19 financial year, which is the worst audit opinion.
The CF had received a disclaimer of opinion since 2014/15 financial year.

AGSA reported that DEL achieved unqualified opinions because they corrected all misstatements identified during the audit.

Qualification areas for CF and UIF regarded unlisted investments where credibility of data in respect of valuations performed could not be validated for completeness and accuracy.

AGSA further reported that another qualification area for CF 17 was the limitations on revenue and claims.
Furthermore, it reported that cost of sales were inaccurately recorded and inventories were valued at an incorrect amount at SEE.

With regard to credible performance reporting, Nedlac and UIF submitted performance reports without errors.

This constitute 33% of performance reports submitted without errors, which is an improvement from the 17% of reports without errors in 2017/18.

DEL, CF, CCMA and SEE were reported to have submitted reliable reporting of achievements.
This constitutes 67% of reliable reporting of achievements, which is an improvement from the 50% in the previous financial year.

Performance indicators and targets of the SEE were reported to be useful.

AGSA reported material findings on compliance with key legislation for DEL, CF, Nedlac, SEE and UIF in 2018/19 financial year.

Only the CCMA had no material findings in the year under review.

The whole portfolio had material findings in the previous financial year.
Top five non-compliance areas were: • Quality of financial statements with material misstatements corrected (DEL) and material misstatements not corrected (CF, SEE, UIF); • Prevention of irregular expenditure (DEL, CF, Nedlac); • Prevention of fruitless and wasteful expenditure (DEL, CF); • Revenue management-inability to collect debts (CF-lack of regular follow ups on debtors raised, SEE-clients not paying due to economic conditions); • Consequence Management-Information not provided (CF, Nedlac) or disciplinary steps not taken for irregular/ fruitless and wasteful expenditure (DEL and UIF).
Fruitless and wasteful expenditure decreased from R13.8 million in 2017/18 to R11.4 million in 2018/19 financial year.

The majority of the disclosed fruitless and wasteful expenditure for the current year was caused by litigation and claims of R6.7 million at CF, damages to vehicles of R4.1 million at DEL and R0.2 million on lease payments for parking at UIF.

Irregular expenditure decreased from R111.3 million in 2017/18 to R49.3 million in 2018/19 financial year.
The majority was caused by the non-adherence to procurement and contract management processes of R43 million at the Department and all entities.

Of the R43 million, R10.7 million is expenditure on ongoing multi-year contracts at CCMA.

Overspending on the approved budget of R6.2 million at Nedlac without the Minister’s approval contributed to irregular expenditure.

18 5.1.
18 5.1.

Statement of Financial Performance for the year ended 31 March 2019 The final appropriation of the Department for 2018/19 financial year amounted to R3.282 billion and the departmental revenue amounted to R10.781 million.

The total revenue amounted R3 293 billion.

This is an increase of R221 million from the total revenue of R3 072 billion in 2017/18.
The source of departmental revenue was: • Sales of goods and services other than capital assets (R4 665 million); • Fines, penalties and forfeits (R1 988 million); • Interest, dividends and rent on land (R1 233 million); • Sales of capital assets (R76 000); • Transaction in capital assets (R2 819 million).
The total expenditure amounted to R3 086 billion, which was broken down as follows: • Total current expenditure (R1 700 billion); • Total transfers and subsidies (R1 296 billion); • Total expenditure for capital assets (R87.909 million); • Total expenditure for financial assets (R1 409 million).

This resulted in underspending of about R207 million.

5.2.
5.2.

Statement of Financial Position for the year ended 31 March 2019 The total assets of the Department for the year ended 31 March 2019 amounted to R209 1 million (R209 103 000) comprising R188.8 million (R188 799 000) current assets and R20.3 million (R20 304 000) non-current assets.

This is a decrease of R15.6 million from the 2017/18 total assets that were valued at R224.7 million (R224 745 000).

Total liabilities amounted to R199.8 million (R199 816 000) comprising only current liabilities.
These included: • Voted funds to be surrendered to the Revenue Fund (R196 179 000); • Departmental revenue and NRF receipts to be surrendered to the Revenue Fund (R718 000); • Payables (R2 919 000).

Total liabilities decreased by R16.9 million from R216 805 000 in 2017/18 to R199 816 000 in 2018/19.

19 The net assets amounted to R9 287 000, which was an increase of R1 347 000 from the net assets that were valued at R7 940 000 in 2017/18.

6.
6.

FINANCIAL PERFORMANCE FOR Q1 OF 2019/20 FINANCIAL YEAR 6.1 Expenditure analysis The main appropriation of the DEL for 2019/20 financial year amounted to R3.4 billion.

By the end of June, the Department had spent R758.

6 million or 22.1% of the total budget.

This is lower than the projected amount of R830.7 million by R72.1 million or 8.7%.

The slow spending is mainly under compensation of employees, goods and services and payments for capital assets.

6.2.

Expenditure per programme 6.2.1.


Administration The Administration programme was appropriated R962.0 million and had spent R182.5 million or 19.0% of the allocation by the end of the first quarter.

This is R49.0 million or 21.2% less than the projected expenditure of R231.5 million.

The slow spending is mainly under compensation of employees due to vacant finance, supply chain, security and management posts at provincial offices and labour centres and IT posts at head office.
The slow spending on goods and services is due to delays in invoicing by service providers for the procurement of cars for the departmental fleet in the provinces as well as delays in the issuing of invoices for office accommodation leases and municipal service charge by the Department of Public Works.

6.2.2.
6.2.2.

Inspection and Enforcement Services (IES) The main appropriation for Inspection and Enforcement Services programme was R631.1 million and the programme had spent R126.2 million or 20.0% by the end of the first quarter.

This is R200 000 or 0.1% higher than the projected R126.0 million.

Goods and Services was the main contributor to higher spending.

This is due to new security services tender that came into effect in April that resulted in an increase in the amount spent.

6.2.3.
6.2.3.

Public Employment Services (PES) The main appropriation for Public Employment Services programme was R611.2 million and R145.6 million or 23.8% was spent by the end of the first quarter.

This is R10.0 million or 6.4% less than the projected expenditure of R155.6 million.
The slow spending was mainly under transfers and subsidies because of delays in the payment of transfers to Designated 20 Groups Special Services due to the adjudication committee approving the awarding of funding, which was completed on 23 July 2019.

6.2.4.

Labour Policy and Industrial Relations (LP&IR) The main appropriation for Labour Policy and Industrial Relations programme was R1.2 billion and the programme had spent R304.3 million or 24.7% of the allocation by the end of the first quarter.
This is R13.2 million or 4.2% less than the projected R317.5 million expenditure.

The slow spending is mainly under compensation of employees due to delays in establishing and appointing the National Minimum Wage Commission.

Slow spending under goods and services is due to delayed invoicing for property payments as well as delayed invoicing by service providers for the procurement of cars for the regional offices.
The slow spending under transfers and subsidies is due to delays in transferring funds to Strengthen Civil Society because of late submission of signed original memoranda of agreements.

Most of these memorandums of agreements were only received in June.

6.3.

Personnel Expenditure on compensation of employees during the first quarter was R300.8 million or 21.5% of the available budget of R1.4 billion, against the projected spend of R319.6 million as at the end of June 2019.
The headcount target for 2019/20 as per the Estimates of National Expenditure is 3 341 with only 2 690 posts filled by the end of the first quarter.

The slow spending and lower headcount is due to delays in the filling of vacant posts.

6.4.

Issues for the Committee to note The Department is struggling to retain labour inspectors.

Many labour inspectors leave the Department for higher salaries in the private sector and departments such as Mineral Resources.
The Department needs to develop a strategy to retain inspectors within the IES in consultation with the Department of Public Service and Administration (DPSA).

7.

OVERVIEW AND ASSESSMENT OF SERVICE DELIVERY PERFORMANCE FOR 2018/19 FINANCIAL YEAR The overview and assessment of service delivery performance is classified into three categories, namely: Performance per Strategic Objectives, Performance per Programme and Performance per ENE Objectives.

7.1.
7.1.

Performance of the Department per Strategic Objective 21 The Department reported its performance per strategic goals as follows: Table 3: Performance of the Department per Strategic Objective Strategic Goals Annual Planned Indicators Achieved Overall Achievement % 1.

Strengthen occupational safety This strategic objective is covered in terms of protection indicators that are applicable in protecting vulnerable workers.

2.

Promote equity in the labour market 3.

Protecting vulnerable workers 4.


Strengthen multilateral and bilateral relations 5.

Contribute to employment creation 6.

Promote sound labour relations 7.

Monitor the impact of legislation 8.


Strengthen the institutional capacity of the Department Overall Performance 1 5 1 4 3 2 4 1 4 1 4 1 2 3 20 16 100 80 100 100 33 100 75 80 Source: Presentation by the Department to the PC on Employment and Labour on 18 September2019 The Department achieved its targets except for promoting sound labour relations strategic objective.

It achieved 33% of performance on this strategic objective.
It achieved 16 of the 20 annual planned indicators, translating to an overall achievement of 80%.

7.2.

Performance of the Department per programme The Department reported its performance per programme as follows: Table 4: Performance of the Department per programme Programme Annual Planned Indicator Achieved Overall Achievement % 1.

Administration 2.

Inspections and Enforcement Services 3.

Public Employment Services 4 4 4 3 4 4 75 100 100 22 4.
Labour Policy and industrial Relations Overall Performance 8 20 5 16 63 80% Source: Presentation by the Department to the PC on Employment Labour on 18 September 2019 The Department achieved 16 of its 20 annual planned indicators, translating to an overall achievement of 80%.

The Administration programme achieved three of the four annual planned indicators, translating to an overall achievement of 75%.
It did not achieve the target of having 45% of total Department’s M-Pat standards at level 3 and 4 by 31 March 2019.

Instead, it had 20% of total Department’s M-Pat standards at level 3 and 4.

The Labour Relations and Industrial Relations programme achieved 5 of the 8 annual planned indicators translating to 63% overall achievement.

The programme did not achieve the target of implementing the National Minimum Wage by 1 May 2018.
The programme extended 80% (16 out of 20) of collective agreements within 90 days against a target of extending 100% by end of March 2019.

The programme did not achieve the target of reporting on impact of amendments to LRA on workplace conflict by 31 March 2019 because the amendments were promulgated in January 2019.

7.3.
7.3.

Performance of the Department on Estimates of National Expenditure (ENE) indicators The Department reported performance on ENE as follows: Table 5: Performance of the Department on ENE indicators ENE Performance Indicators Related Outcome to Target Overall Programme which it Achievement contributed 1.

Number of employers inspected IES Outcome 4: 218 732 218 919 per year to determine compliance with employment law Decent employment through 2.
Percentage of reported IES inclusive 65% 76% incidents investigated and/ or growth 23 finalised within prescribed time frames 3.

Number of work-seekers PES 650 000 888 553 registered on ESSA per year 4.

Number of work and learning PES 200 000 2405 opportunities registered on ESSA per year 5.

Work-seekers provided with PES 42 500 49 968 employment counselling 6.

Number of registered work and PES 85 000 142 804 learning opportunities filled by registered work-seekers per year 7.
Number of pay scales assessed LP & IR 3 3 per year to reduce gaps in minimum wage determination Source: Department of Labour Annual Report 2018/19 Table 5 above indicates that the Department exceeded the majority of its ENE performance targets.

It inspected 218 919 employers to determine compliance with employment law against a target of 218 732.

The Department investigated 76% of reported incidents and/ or finalised within prescribed time frames against a target of 65%.
It registered 888 553 work-seekers on ESSA against a target of 650 000.

It registered 240 695 learning opportunities on ESSA against a target of 200 000.

The Department had planned to provide 42 500 work-seekers with employment counselling.

It provided 49 968 work-seekers with counselling.

The Department planned to fill 85 000 work and learning opportunities with registered work-seekers.

It managed to fill 142 804 work and learning opportunities with registered work-seekers.
The Department met the target of assessing three pay scales to reduce gaps in minimum wage determination.

8.

OVERVIEW OF PERFORMANCE OF ENTITIES OF THE DEL: 2018/19 8.1.

Supported Employment Enterprises (SEE) SEE is a business entity of the Department of Employment and Labour and it resides under the Public Employment Services programme.
24 The SEEs were established in 1943 to provide employment for people with mental and physical disabilities that prevented them from entering the open labour market, due to their afflictions.

The factories provide employment to all races and currently employs 972 people with disabilities.

The factories have operated without an enabling legislation since inception, except for a Cabinet Memorandum, first compiled in 1943.
The Employment Services Act 4 of 2014 formally established the Supported Employment Enterprises.

There are currently 12 factories across the country in seven of the nine provinces.

Income from the factories is generated from the sales of manufactured goods that include furniture, hospital linen, protective clothing, garments, upholstery and screen printing.

SEE reported a need to review the current structure in order to capacitate it and ensure the smooth running of the organisation.
The DEL provides the following services to SEE: • Internal Audit • Audit and Risk committee • Legal services.

SEE financial health has deteriorated due to the revocation of the preferential supplier status and the production processes which are not cost effective.
In response, SEE has launched a Sustainability Plan aimed at: • Driving Business Productivity and Cost Containment Programmes to restore financial sustainability; • Re-engineering the production processes; • Investment on machinery and equipment as part of capital maintenance; • Developing selling price lists that are cost reflective, which was approved for the financial year 2018/19.

8.1.1.
SEE Performance per Strategic Objective SEE reported its performance per Strategic Objective as follows: Table 6: SEE Performance per Strategic Objective 25 Achieved Overall Strategic Objectives Annual Planned Indicators 1.Provide work opportunities for persons with disabilities Overall Performance 2 2 2 2 Achievement % 100 100 Source: Presentation to the PC on Employment and Labour dated 18 September 2019 Table 6 above reflects that SEE had two planned indicators and achieved both of them translating to 100% overall achievement.
It provided 100 additional People with Disabilities with work opportunities by end of March 2019 as planned.

It increased sales revenue from Goods and Services by 16.59% against a target of 10% by end of March 2019.

In monetary terms it increased sales revenue to R72.0 million against a target of R61.8 million by end of March 2019.

8.1.2.
8.1.2.

Statement of Financial Position as at 31 March 2019 SEE had total assets amounting to R228.2 million by end of March 2019, which is a decrease of R23.5 million from the R251.8 million value of assets recorded at the end of March 2018.

Total assets comprise R199.8 million current assets and R28.4 million non-current assets.

The Current Assets decreased by R27.0 million from R226.8 million recorded in 2018 and the Non- Current Assets increased by R3.5 million.
Total Liabilities of the SEE amounted to R106.7 million, which is a decrease of R5.1 million from R111.9 million worth of assets recorded in 2018.

The larger share of liabilities are current liabilities amounting to R106 6 million.

The Net Assets amounted to R121.5 million, which is a decrease of R184 million from R139.9 worth of net assets recorded at the end of March 2018.

8.2.
8.2.

Commission for Conciliation, Mediation and Arbitration (CCMA) The CCMA’s constitutional mandate is drawn directly from section 23 of the Constitution that deals with labour relations.

The CCMA is a national public entity in terms of schedule 3A of the PFMA.

The CCMA’s statutory functions are set out in section 115 of the LRA, and are divided into those that are mandatory and those that are discretionary.

26 8.2.1.
26 8.2.1.

Annual performance of the CCMA by Strategic Objectives by 31 March 2019 The CCMA reported its annual performance per strategic objective as follows: Table 7: CCMA annual performance per strategic objective Strategic Objective Planned indicators Actual annual Overall achievement % achievement 1.

Enhancing the labour market to advance stability and growth 2.

Advancing good practices at work and transforming workplace relations 3.

Building knowledge and skills 4.


Optimising the organisation 5 5 1 8 5 5 1 7 Overall performance 19 18 100% 100% 100% 88% 95% Source: Presentation to the PC on Employment and Labour dated 18 September 2019 Table 7 reflects that CCMA had 19 planned targets for 2018/19 financial year and it achieved 18 targets, translating to an overall achievement of 95%.
The actual target for Strategic Objective 4, which is optimising the organisation was to have 98% of all registered cases’ first event heard within 30 days (excluding agreed extensions).

The actual achievement was 88% (136 857/155 351) of all registered cases’ first event heard within 30 days.

The reason provided for non-achievement was that the Case Management System has limited capacity to extract and populate the number of conciliations sat down to be heard at first event within 30 days.
As a corrective measure, the technical indicator has been amended to reflect ‘all’ cases activated for conciliation at first event within 30 days of the date of receipt of referral.

The CCMA received 193 732 referrals during the 2018/19 financial year and heard 136 857 conciliations within 30 days.

A total of 16 669 arbitration awards were sent to parties by the fourteenth day after completion of the arbitration process.

The CCMA conciliated cases within 24 days and arbitrated cases within 68 days.
Through partnership with the Sheriff’s Board, the CCMA assisted 3 721 vulnerable workers to enforce and execute CCMA awards.

Approximately 71% of all case referrals related to unfair dismissals and 11% related to unfair labour practice disputes.

27 The Business Professional Services sector remained the highest referring sector at 27% of total referrals and the Retail sector accounted for 11% of total referrals at the end of 2018/19.

Safety and Private Security Sector accounted for 12% of total referrals.
The table below reflects referrals by Act as at 31 March 2019.
Table 8: Number of referrals by legislation ACT REFERRALS % Labour Relations Act 176 144 Basic Conditions of Employment Act 10 525 Employment Equity Act National Minimum Wage Act Skills Development Act Unemployment Insurance Act 3 765 619 72 4 92.2% 5.5% 2.0% 0.3% 0.0% 0.0% Source: Presentation to the PC on Employment and Labour od 18 September 2019 Table 8 above reflects that the bulk of referrals, which is 92% were related to the Labour Relations Act.

8.2.2.
8.2.2.

Annual Financial Performance results for the period ended March 2019 The table below reflects annual financial performance of the CCMA per programme.

Table 9: CCMA Revenue and Expenditure per programme in 2018/19 BUDGET ACTUAL VARIANCE EXPENDITURE PROGRAMME SPENDING R’000 R’000 R’000 % 1.

Administration 557 063 522 019 29 733 29 108 46 367 625 2.Institution Development 3.Corporate Governance 7 300 5 320 1 980 4.
Social Services 451 464 Total 1 045 560 431 201 987 649 20 445 57 911 Source: Presentation to the PC on Employment and Labour dated 18 September 2019 92 98 73 95 94 28 Table 9 above reflects that the CCMA had a total budget allocation of R1.0 billion and spent R987.6 million or 94% of the total allocation, resulting to a variance of R57.9 million.

The Administration programme received highest allocation of R557 million and spent R552 million or 92% of the allocation, resulting to a variance of R46 million.
The Social Services programme received the second highest allocation of R451 million and spent R431 million or 95% of the allocation, resulting to a variance of R20 million.

The table below reflects annual financial performance of the CCMA by Economic Classification.
Table 10: CCMA Annual financial performance by Economic Classification in 2018/19 BUDGET ACTUALS VARIANCE EXPENDITURE ITEM R’000 R’000 R’000 % Current 1 008 471 970 797 37 674 Payments Compensation 538 678 521 987 16 691 of Employees Goods and 469 793 448 810 20 983 Services Transfer Payments 6 178 5 610 568 Total OPEX 1 014 649 976 407 CAPEX Total Expenditure 30 911 11 242 1 045 560 987 649 38 242 19 669 57 911 96 97 96 91 96 36 94 Source: Presentation to the PC on Employment and Labour dated 18 September 2019 Table 10 above reflects that Current Payments received an allocation of R1.0 billion and spent R970 million or 96%, resulting to a variance of R37.6 million.
Of that allocation, R538.6 or 53% went to Compensation of Employees and R521.9 or 97% was spent resulting to a variance of R16.6 million.

Of the Current of Payments budget, R469.7 or 47% went to Goods and Services and R448.8 or 96% was spent, resulting to a variance of R20.9 million.

Transfer Payments was allocated R6.2 million and spent R5.6 million or 91%, resulting to a variance of R568 000.
29 Therefore, total operational budget amounted to R1.0 billion and R976.4 or 96% was spent resulting to a variance of R38.2 million.

The budget for capital expenditure amounted to R30.9 million and R11.2 or 36% was spent resulting to a variance of R19.7 million.

The table below reflects annual financial performance of the CCMA per Strategic Objective in the year ended 31 March 2019.
Table 11: CCMA Revenue and Expenditure by Strategic Objective STRATEGIC OBJECTIVE BUDGET ACTUALS VARIANCE EXPENDIT R’000 R’000 R’000 URE % 1.

Enhancing the Labour 12 451 11 274 1 177 91 market to advance stability and growth 2.

Advancing good 15 448 8 232 7 216 53 practices at work and transforming workplace relations 3.

Building knowledge and 22 631 24 008 (1 377) 106 skills 4.
Optimising the 995 030 944 135 50 895 95 organisation TOTAL 1 045 560 987 649 57 911 94 Source: Presentation to the PC on Employment and Labour on 18 September 2019 The CCMA spent R11.2 million or 91% of the budget allocated for Strategic Objective one, resulting to a variance of R1.2 million.

The variance was reported to be as a result of implementation of cost containment measures on travel and subsistence.
It spent R8.2 million or 53% of the R15.4 million budget allocation for Strategic Objective two, resulting to a variance of R7.2 million.

The variance was attributed to unfilled posts and timing difference in implementation of dispute management activities.

30 The entity overspent by 6% on Strategic Objective three and the over-expenditure was attributed to high demand for training interventions in the labour market.
The CCMA spent R944.1 million or 95% of the R995.0 budget allocated for Strategic Objective four, resulting to a variance of R50.9 million.

The spending on this strategic objective is in line with the National Treasury guidelines.

8.3.

National Economic Development and Labour Council (Nedlac) Nedlac was established through the Nedlac Act, No.

35 of 1994.

It operates in terms of the Nedlac constitution.


Nedlac’s mandate is derived from the Nedlac Act, Labour Relations Act, Nedlac constitution and Nedlac protocols.

Nedlac’s objectives in terms of the Nedlac Act are to: • Strive to promote the goals of economic growth, participation in economic decision- making and social equity.

• Seek to reach consensus and conclude agreements on matters pertaining to social and economic policy.
• Consider all proposed labour legislation relating to labour market policy before it is introduced in Parliament.

• Consider all significant changes to social and economic policy before it is implemented or introduced in Parliament.

• Encourage and promote the formulation of coordinated policy on social and economic matters.

8.3.1.
8.3.1.

Nedlac’s overall annual performance per programme in 2018/19 Nedlac reported its performance per programme as follows: Table 12: Nedlac annual performance per programme in 2018/19 Programme Annual Targets Overall Planned Achieved Achievement Indicators (%) 1.

Administration 2.

Core Operations 10 28 8 27 80 96 31 3.


Constituency Capacity 6 Building Funds Summary of Performance 44 6 41 100 93 Source: Presentation to the PC on Labour dated 18 September 2019 Table12 above reflects that Nedlac had 44 annual planned indicators and achieved 41, translating to an overall performance of 93%.

The Constituency and Capacity Building programme had 6 annual planned indicators and achieved all of them translating to an overall achievement of 100%.
The Administration programme had 10 annual planned targets and achieved 8 of them, translating to an overall achievement of 80%.

The Core-Operations programme had 28 annual planned indicators and achieved 27, translating to an overall achievement of 96%.

8.3.2.
8.3.2.

Nedlac’s overall annual performance per strategic objectives in 2018/19 Nedlac reported its performance per strategic objective as follows: Table 13: Nedlac annual performance per Strategic Objective Strategic Objective Annual Targets Overall Planned Achieved Achievement Indicators (%) 1.

Effective governance and strategic leadership 2.

Provision of efficient and reliable back office support services 3.

Improved risk management and financial oversight 4.

Improved facilities management 5.


Office administration systems enhanced and monitored 6.

Strengthen organisational culture and performance 2 1 3 1 1 2 2 1 2 1 1 1 7.

Effective engagement on draft policy and 23 22 legislation within the framework of the Nedlac Act, Constitution and Protocols 100 100 67 100 100 50 96 32 8.

Conclude matters under consideration within the framework of the Nedlac Protocols 9.

Conclude matters under consideration within the framework of the Section 77 Protocol 10.
Promote social dialogue through communication, information and capacity 1 1 4 building 11.Compliance with Nedlac policy on 5 Constituency Capacity Building, Budgeting and Expenditure 1 1 4 5 100 100 100 100 Summary of Performance 44 41 93 Source: Nedlac Annual Report 2018/19 Table 13 above reflects that Nedlac had a total of 44 annual planned indicators.
Of these 23 fall under strategic objective 7, which is effective engagement on draft policy and legislation within the framework of the Nedlac Act, Constitution and Protocols.

This strategic objective reflects the core mandate of Nedlac, hence more than 50% of annual indicators fall under this strategic objective.

Nedlac achieved 22 of the 23 planned indicators under this strategic objective, translating to an overall achievement of 96%.
The above table also reflects that Nedlac achieved 100% overall performance in the majority of other strategic objectives.

8.3.3.
Annual financial performance results for period ended 31 March 2019 Nedlac reported its financial performance as follows: Table 14: Nedlac financial performance in 2018/19 Economic Classification Audited Actual R’000 Total Revenue Compensation of employees Goods and Services Total Expenditure Surplus/ (Deficit) 41 456 21 235 25 655 46 890 (5 434) Source: Presentation to PC on Employment and Labour dated 18 September 2019 33 The total revenue of Nedlac amounted to R41.5 million and the total expenditure amounted to R46.9 million.
Of this amount, R21.2 million or 45% was spent of Compensation of Employees and R25.7 million 55% was spent of Good and Services.

The over-expenditure of the entity amounted to R5.4 million.

8.4.

Productivity SA 8.4.1.

Legislative mandate of the Productivity SA Productivity SA is established in terms of section 31 of the Employment Services Act, No.
4 of 2014, as a juristic person, with the mandate to promote employment growth and productivity, thereby contributing to South Africa’s socio-economic development and competitiveness.
The Act enjoins Productivity SA to develop relevant productivity competencies and competitiveness in workplaces, with a focus on the following core functions: • To promote employment and income growth, and workplace productivity; • To improve the employment and reemployment prospects of employees facing retrenchments and those retrenched, which include schemes to provide for turnaround strategies, layoffs, retraining or alternative employment opportunities; • To conduct research on productivity and competitiveness related matters, provide productivity improvement and competitiveness measures; and • To promote social dialogue and a culture of productivity and competitiveness in the workplace and all spheres of the nation’s economic and community life.
The value proposition of Productivity SA is that it offers productivity and competitiveness improvement solutions to accelerate wealth and decent employment creation, by enhancing the productive capacity and operational efficiency of enterprises throughout the business lifecycle.

8.4.2.

Annual performance per Strategic Objective of the Productivity SA in 2018/19 Productivity SA Performance per Strategic Objective is reflected in the following table.
Table 15 Productivity SA performance per Strategic Objective Strategic objective Annual planned indicators Achieved Overall achievement % 34 1.

Strengthen the institutional capacity of PSA to deliver on its mandate and be financially sustainable 2.

Provide support to programmes aimed at sustainable employment and income growth 3.

Provide support to companies facing economic distress to retain jobs 4.

Contribute to employment and income growth through research, information generation and dissemination 5.
Promote social dialogue and a culture of productivity and competitiveness in the workplace and community life 4 2 3 2 2 Overall Performance 13 3 2 0 0 2 7 75% 100% 0% 0% 100% 54% Source: Presentation to the PC on Employment and Labour dated 18 September 2019 Table 15 above reflects that Productivity SA had a total of 13 annual planned indicators and achieved 7, translation to an achievement of 54% by the end of March 2019.
The entity had an overall achievement of 0% on strategic objective 3, which is to provide support to companies facing economic distress to retain jobs.

This is one of the core-functions of Productivity SA.

Another core-function where the entity scored 0% is strategic objective 4, which is to contribute to employment and income growth through research, information generation and dissemination.

8.4.3.
8.4.3.

Annual performance per programme of the Productivity SA in 2018/19 Productivity SA reported performance per programme as follows: Table 16 Productivity SA performance per programme Programme Annual planned indicators Achieved Overall achievement % 1.

Corporate Services 2.

Human Resource Management 3.

Marketing and Communication 4.

Productivity Organisational Solutions 5.

Value Chain Competitiveness 6.


Turnaround Solutions 2 1 1 2 4 3 2 0 1 2 2 0 100% 0% 100% 100% 50% 0% 35 Overall Performance 13 7 54% Source: Presentation to the PC on Employment and Labour dated 18 September 2019 Table 16 above reflects that the Productivity SA achieved 100% overall performance in the majority of the programmes.

However, it scored zero in programme 2, which is Human Resource Management and programme 6, which is Turnaround Solutions.
The entity had four annual planned indicators for programme 5, which is value chain competitiveness.

It achieved two of those indicators translating to an overall achievement of 50%.

It is concerning that the entity scored a zero on turnaround solutions programme, which is its core function.
This may be attributed to the fact that the grants from UIF towards this programme are not guaranteed and the transfers are always not in full or on time, which resulted in the programme being suspended during the 2018/19 financial year.

The reason for poor performance of the entity on core functions is elaborated upon below.

8.4.4.
8.4.4.

Productivity SA Challenges Productivity SA current funding model does not allow the organisation to adequately achieve its national mandate of leading and inspiring a competitive and productive South Africa.

The organisation is also under-resourced in terms of human capacity and the lack of required resources hinders its ability to make a meaningful and desirable impact nationwide.
The current challenges emanate from the change in business environment with the promulgation of the Employment Services Act in 2015, which expanded the mandate of Productivity SA to include promoting employment growth and supporting initiatives aimed at preventing job losses.

However, there was no additional funding appropriated by Parliament for this expanded mandate.
Productivity SA is a national public entity, but its footprint is limited to three provinces resulting in inadequate national coverage and equitable servicing of all the nine provinces.

The footprint is reorganised into regional offices (Johannesburg/ Midrand servicing Gauteng, North West and Limpopo; eThekwini/ Durban servicing KwaZulu-Natal, Eastern Cape and Mpumalanga; and Cape Town servicing the Western Cape, Free State and the Northern Cape).

The Funds received from the three sources of funding i.e.
DEL, DTI and the UIF are not sufficient for the entity to deliver on its mandate and provide services to the entire country.

The persistent applications for additional funds are evidence of the funding problem.

8.4.5.

Annual financial performance of Productivity SA as at 31 March 2019 36 Productivity SA reported its financial performance as follows: Table 17 Productivity SA Financial Performance Programme Actual APP Targets achieved Expenditure 2018/19 R’000 1.

Administration 2.
Administration 2.

Productivity Solutions 3.

Value Chain Competitiveness (Research) 4.

Turnaround Solutions 5.

Workplace challenges Total 53 912 11 193 8 683 1 099 12 879 87 766 3 2 0 0 2 7 80% 100% 0% 0% 100% 54% Source: Presentation to the PC on Employment and Labour dated 18 September 2019 Table 17 above reflects that Productivity SA spent R87.8 million and achieved 54% of its annual planned indicators.
The largest share of expenditure was on Administration programme, which spent R53.9 million and achieved 80% of its annual planned indicators.

Workplace challenges programme spent R12.9 million and achieved all its annual planned indicators.

Productivity solutions programme also spent R11.2 million and achieved all its targets.

8.5.

Compensation Fund (CF) 8.5.1.

Constitutional Mandate The mandate of the CF is derived from section 27(1)(c) of the Constitution.
In terms of this section, everyone has the right to have access to social security, including, if they are unable to support themselves and their dependants.

The CF is mandated to provide social security to all injured employees and those who have contracted diseases as a result of their workplace and diseased employees and their dependants.

8.5.2.

Legislative Mandate The CF is a Schedule 3A (National Public Entities) entity of the Department of Employment and Labour.
The Fund administers the Compensation for Occupational Injuries and Diseases 37 Act, No.

130 of 1993, as amended by the Compensation for Occupational Injuries and Diseases Act, No.

61 of 1997.

The main objective of the Act is to provide compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees, or for death resulting from injuries or diseases.

8.5.3.
8.5.3.

CF performance per Programme in 2018/19 The CF reported its performance per programme as follows: Table 18: CF Performance per Programme Programme Planned Achieved Overall Indicators Achievement 1.

Administration 2.

COID Services 3.

Medical Benefits 4.


Orthotic and Rehabilitation Services Overall Performance 3 3 2 1 9 Source: Compensation Fund Annual Report 2018/19 % 33 67 100 100 67 1 2 2 1 6 Table 18 above indicates that CF achieved six of its nine planned indicators, translating to an overall achievement of 67%.

Administration programme had three planned indicators and achieved only one translating to an overall performance of 33%.
COID Services programme achieved two of its three planned indicators, translating to an overall achievement of 67%.

Programme 3 and Programme 4 achieved all of their planned indicators.

8.5.4.

CF Performance per Strategic Objective in 2018/19 CF reported performance per strategic objective as follows: Table 19: CF Performance per Strategic Objectives Strategic Objective Planned Achieved Overall Indicators Achievement % 38 1.

Provide effective and 3 efficient client-oriented support services 2.
Provide faster, reliable 6 and accessible COID Services by 2020 Overall Performance 9 1 5 6 Source: Compensation Fund Annual Report 2018/19 33 83 67 Table 19 indicates that strategic objective 2, which is to provide faster, reliable and accessible COID services by 2020 achieved five of the six planned indicators, translating to an overall achievement of 83%.

8.5.5.
CF High level organisational performance CF reported on high level organisational performance as follows: • 85% projects on risk-based audit plan were implemented by 31 March 2019 • 98% of approved benefits paid within 5 working days of receipt • 146 664 claims were adjudicated within 40 days of receipt (out of 156 223 claims registered) – 94% • 867 381 medical invoices finalised within 60 working days of receipt (out of 934 742 invoices received) – 93% • 1 539 of pre-authorisations responded to within 10 working days on previously finalised cases (out of 1 657 requests) – 93% • 1 050 requests for assistive devices responded to within 15 working days of receipt (out of 1 159) – 91% • 219 050 employers were assessed, which if 55% of active registered employers • Investment return of 1.6% on funds invested over a 12 months’ performance period • The Funds Risk Management maturity increased to 3.5.by March 2019.
8.5.6.

CF Financial Performance in 2018/19 CF reported on financial performance per programme as follows: Table 20: CF Financial Performance 39 Programme Budget Actual (Over)/ Expenditure Adjustments Expenditure Under Expenditure R’000 R’000 R’000 % 1.

Administration 2 357 627 3 869 336 (1 511 709) 164 2.

COID Services 1 364 860 2 271 573 (906 714) 166 3.

Medical Benefits 2 772 988 4 856 527 (2 083 539) 175 4.
Orthotic and 42 450 26 653 15 797 63 Rehabilitation Services Total Expenditure 6 537 925 11 024 089 (4 486 165) 169 Source: Compensation Fund Annual Report 2018/19 Table 20 above indicates that The CF had a budget of R6.5 billion and spent R11.0 billion or 169% of the budget resulting to an over-expenditure of R4.5 billion.

Programme 3 received the highest budget of R2.8 billion and it exceeded that budget by R2.0 billion or 75% of that budget.
The Administration programme spent R3.9 billion against a budget of R2.4 billion, resulting to an over-expenditure of R1.5 billion.

Programme spent R2.3 billion against a budget of R1.4 billion, resulting to an over-expenditure of R906 million.

Programme 4 is the only programme that did not over-spent.

This programme spent R26.7 million or 63% of the allocated R42.5 million, resulting to a positive variance of R15.8 million.

8.5.7.
8.5.7.

CF Challenges CF identified the following challenges: • Weak internal control environment due to ICT system inefficiencies and skills levels; • Poor compliance levels by employers affecting collection levels and claims processing; • Inefficient business processes and operating model; • Fraud syndicates who prey on the inefficiencies of the Fund; • Inability to attract the required skills and expertise.

8.6.

Unemployment Insurance Fund (UIF) 8.6.1.


Constitutional Mandate 40 The mandate of the UIF is derived from section 27 (1) (c) of the Constitution.

The UIF provides social security to its contributors in line with the afore-mentioned section of the Constitution, which states that “everyone has the right to social security”.

8.6.2.

Legislative Mandate The mandate of the UIF is stated in the Unemployment Insurance Act, No.

63 of 2001, as amended.


The UIF was established in terms of section 4(1) of the UIA.

The Act empowers the UIF to register all employers and employees in South Africa and pay those who qualify for unemployment insurance benefits.

The Unemployment Contributions Act (UCA), No.

4 of 2002, empowers the SARS Commissioner and the UI Commissioner to collect monthly contributions from both employers and employees.
Section 9 of the UCA empowers the UI Commissioner to collect contributions from all those employers who are not required to register as employers in terms of the fourth schedule of the Income Tax Act, No.

58 of 1962, and who are not liable for the payment of the skills development levy in terms of the Skills Development Act, No.

9 of 1999.

These contributions are used to pay benefits and other expenditure reasonably incurred relating to the application of the Act.

8.6.3.
8.6.3.

Performance of the UIF per Strategic Objective UIF reported performance per Strategic Objective as follows: Table 21: UIF Performance per Strategic Objective Strategic Objective Planned Achieved Overall Indicators Achievement % 1.

Ensure financial sustainability 2.

Strengthen institutional capacity of the Fund 3.

Provide easy to use services through multiple access points 4.

Improve service delivery 5.


Collaborate with stakeholders to improve compliance with UIF Act 3 1 2 6 2 3 0 0 5 1 100 0 0 83 50 41 6.

Enhance employability of UIF 2 1 50 beneficiaries, enable entrepreneurship and preserve jobs Overall Performance 16 10 63 Source: Presentation to the PC on Employment and labour dated 9 October 2019 The UIF achieved 10 of the 16 planned indicators, translating to an overall achievement of 63%.
The entity scored 0 on strategic objectives 2 and 3, which is to Strengthen institutional capacity of the Fund and Provide easy to use services through multiple access points respectively.

The Fund planned to reduce the vacancy rate to 10% or less but it was at 13.3% (80 vacancies/602 establishment) by 31 March 2019.

Failure to meet the target was attributed to high volumes of applications received and the recruitment and selection of 68 internship posts additional to the establishment.
The entity upgraded 33 provincial sites with free Wi-Fi against a target of 126.

Failure to meet the target was attributed to delays in the appointment of service provider.

The UIF planned to develop a test towards the implementation of the integrated claims management system (ICMS).

The annual target was not achieved due to delay with the appointment of a service provider and approval for Accenture to conduct handover to the new service provider.
The entity achieved 50% on strategic objective 5, which is to collaborate with stakeholders to improve compliance with UIF Acts.

It registered 64 577 new employers against a target of 65 000.

The performance was reported to have been impacted by the systems downtime owing to data centre movement.

The UIF achieved 50% on strategic objective 6, which is to enhance employability of UIF beneficiaries, enable entrepreneurship and preserve jobs.
It provided 3 823 UIF beneficiaries with learning and/or workplace experience opportunities against a target of 450 000.

Failure to meet the target was attributed to delays due to internal and external probity.

The Fund achieved five of the six planned indicators on strategic objective 4, which is to improve service delivery.

It issued 79% of applications with complete information with compliance certificates or tender letter within 10 working days against a target of issuing 90% within 10 working days.
8.6.4.

Performance of the UIF per Programme UIF reported performance per programme as follows: 42 Table 22: UIF Performance per Programme Programme Planned Achieved Overall Indicators Achievement 1.

Administration 2. Business Operations 3.

Labour Activation Programme 6 8 2 3 6 1 Overall Performance 16 10 Source: Adapted from the Annual Report of the UIF % 50 75 50 63 The Administration programme achieved three of the six planned indicators translating to 50% achievement.
Business operations programme achieved six of the eight planned indicators translating to an achievement of 75%.

Programme 3 achieved one of the two planned indicators translating to an overall achievement of 50%.

8.6.5.

UIF Financial Performance UIF reported its financial performance as follows: Table 23:UIF Financial Performance Programme Budget Actual (Over)/ Expenditure R’000 R’000 Under R’000 % 1.

Administration 1 658 712 1 512 413 146 299 2. Business Operations 1 697 831 1 417 655 280 176 3.
Fund Poverty 5 028 1 434 3 594 91 84 29 Alleviation Schemes Total Expenditure 3 361 571 2 477 552 884 019 74 Source: Unemployment Insurance Fund Annual Report 2018/19 The UIF spent R2.5 billion or 74% of the allocated R3.4 billion, resulting to an under- expenditure of R884 million.

Business Operations programme was allocated R1.69 billion, which is more than half the budget of the entity.

It spent R1.4 billion or 84% by the end of March 2019 resulting to a variance of R280 million.
The Administration programme spent R1.5 billion or 91% of the allocated R1.66 billion resulting to a variance of R146 million.

43 Programme 3 spent R1.4 million or 29% of the allocated R5.0 million resulting to under- expenditure of R3.6 million.
8.7 CF and UIF Boards of Directors The adverse performance by the two entities above, over a long period, with the CF continuously receiving disclaimers from the audit outcomes of the Auditor-General, for 9 years, compelled this Committee for the first time to call in the CF and UIF Advisory Boards to appear before it.
The engagements were held on Wednesday, 16 October 2019 and the following transpired: 8.7.1 CF Board The CF Board identified the main reasons for disclaimers and the slow pace of performance at the CF, as caused by the Information, Communication and Technology (ICT) environment, among others, as follows: • Poorly configured systems and lack of control over management of ICT within the Fund; • Skills gaps in financial management identified in the past took time to be addressed by management resulting in no clear turnaround strategy and audit action plans; • Inability of the board to intervene at an executive level as they are advisory result in the inability to act on poor performance or misconducts; and • Weak controls as a result of poor ICT Infrastructure/systems resulting in fraud and opportunism by third parties.
The Board acknowledged the challenges and confirmed that it was in the process of putting together various intervention strategies to try and improve the performance of the entity.

8.7.2 UIF Board The UIF Board acknowledged that the entity achieved 63% of its targets in the 2018/19 financial year and received a qualified audit outcome by the AGSA, with eight recurring findings.
As part of its intervention strategy, the UIF Board mentioned that it had instituted a Clean Audit Committee to drive the main pillars of the UIF, as follows: § The Clean Audit Committee will be chaired by the Chief Operation Officer (COO).

44 § It will meet on a monthly basis and report to EXCO.

§ The consolidated report will also be served at the Board and Departmental EXCO.
§ The Clean Audit Committee will report to: • The Director-General on a monthly basis; and • Risk and Audit Committee on progress.

§ The Clean Audit Committee will also perform thorough reviews of the annual financial statement and recommend them to other structures.

§ The Clean Audit Committee will oversee the implementation of the control self- assessment for each Directorate.

9.
9.

COMMITTEE OBSERVATIONS After considering the presentations made by the Department and its entities on their annual reports and the input from the Auditor-General and Advisory Boards, the Committee made the following observations: 9.1.

Department of Employment and Labour (DEL) 9.1.1 South Africa's official unemployment rate soared to 29 percent in the second quarter of the year, the highest jobless rate since the start of 2008.
9.1.2 The Department materially underspent the allocated budget by R196.2 million.

Effective and appropriate steps were not taken to prevent wasteful, irregular and fruitless expenditure.

9.1.3 Most challenges identified by AGSA in the department had already been identified by internal auditors.

However, the department was slow to implement recommendations from internal audit.
9.1.4 The main reason for variance between appropriated funds and expenditure was reported to be the vacancies in the Department that resulted in underspending on Compensation of Employees.

9.1.5 Inspection and Enforcement Services programme has been struggling to attract and retain labour inspectors for the past few years.

Many labour inspectors leave the 45 Department for higher salaries in the private sector and to departments such as the Department of Mineral Resources.
9.1.6 With the expanded mandate on Employment, the DEL will require budget allocation increase to create an enabling environment for job creation.

9.1.7 The National Treasury reported that the headcount target for the Department was 3 341 personnel but only 2 690 posts were filled by the end of the first quarter.

This translates to 651 vacant posts by the end of the first quarter.

9.2.
9.2.

Supported Employment Enterprises (SEE) 9.2.1 SEE generates its income from the sales of manufactured goods that include furniture, hospital linen, protective clothing, garments, upholstery and screen printing, therefore, requires more government departments to procure from their products in order to be sustainable as an entity.

9.3.
9.3.

Commission for Conciliation, Mediation and Arbitration (CCMA) 9.3.1 CCMA has additional statutory obligations in terms of the National Minimum Wage, Basic Conditions of Employment Act and Labour Relations Act, which will require additional funding to enable it to fully implement legislation.

9.4.

Productivity South Africa (PSA) 9.4.1 PSA continues to experience funding challenges, which led to the suspension of the Turnaround Solutions programme.
9.5 Unemployment Insurance Fund (UIF) 9.5.1 The UIF did not implement adequate controls relating to daily and monthly processing and reconciliation of transactions.

9.5.2 The plan developed to address internal controls was inadequately monitored and management did not ensure that financial statements are reviewed adequately and have supporting documents.

9.5.3 The UIF Board is male dominated which is not reflective of gender parity in accordance with the department’s gender equity plan.
46 9.5.4 The UIF Board has never appeared before the Committee responsible for the labour portfolio in the current and previous Parliaments, as a result, its functionality and ability to make firm advisory decisions has yet to be tested.

9.5.5 A skills audit with regards to members of the Board of Directors is crucial to make a meaningful contribution to the work of the Board.

9.7 Compensation Fund (CF) 9.7.1 The Compensation Fund has received a disclaimer of opinion for the past nine years.
The CF has commissioned a number of investigations to try and establish the origins of some of the financial challenges plaguing the entity.

There were forensic investigations done by Sizwe Ntsaluba and Gobodo; and by SIU and the Public Protector.

All these investigations made recommendations that are in line with those of the Auditor- General.

9.7.2 The Compensation Fund reported that it had been struggling to find suitably qualified personnel.
However, it reported that the current management personnel were appointed based on the conducted skills audit.

9.7.3 A skills audit with regards to members of the Board of Directors is crucial to make a meaningful contribution to the work of the Board.

9.7.4 The CF has a challenge of weak internal control environment due to ICT system inefficiencies and skills levels.

9.7.5 The CF Board is also male dominated which is not reflective of gender parity in accordance with the department’s gender equity plan.
9.7.6 The CF Boards has never appeared before the Committee responsible for the labour portfolio in the current and previous Parliaments, as a result, its functionality and ability to make firm advisory decisions has yet to be tested.

10.
10.

COMMITTEE RECOMMENDATIONS 10.1 After considering the presentation of the Department and its entities on their annual reports and input from the Auditor-General and Advisory Boards, the Committee recommends that the Minister of Employment and Labour takes steps to ensure that: Department of Employment and Labour (DEL) 47 10.1.1 The DEL must step up its initiatives and programmes that support an enabling environment for job creation.
10.1.2 The implementation of consequence management in the Department and entities must be prioritised and enforced.

10.1.3 Recommendations of Internal Audit Committee are implemented.

10.1.4 The Department, in consultation with the Department of Public Service and Administration (DPSA), develop a strategy to retain labour inspectors within the Department.
Supported Employment Enterprises (SEE) 10.1.5 The DEL engages with National Treasury regarding preferential procurement by government departments and State-owned Enterprises (SOEs) from SEE.

Commission for Conciliation, Mediation and Arbitration (CCMA) 10.1.6 Additional funding is made available to the CCMA to enable it to fully implement its statutory obligations in terms of the National Minimum Wage, Basic Conditions of Employment Act and Labour Relations Act.
Productivity South Africa (PSA) 10.1.7 The mandate of the Productivity SA is fully funded.

Unemployment Insurance Fund (UIF) 10.1.8 The UIF develops a plan to address internal controls deficiencies and a mechanism to monitor the implementation of the plan.

10.1.9 Through the Nedlac selection processes, gender equity is promoted at the UIF Advisory Board.

10.1.10The UIF Board reports to the Ministry on a regular basis and to the Portfolio Committee on a quarterly basis.
10.1.11The DEL, through the Minister of Employment and Labour, conduct skills audit on the members of the Board of Directors and present the skills audit report to the Portfolio Committee.

Compensation Fund (CF) 48 10.1.12The CF develops an action plan that responds to the recommendations of the Auditor- General.

The action plan has to clearly indicate the short, medium and long-term milestones.
Depending on the implementation of the action plan or the lack thereof, the Committee may commission an investigation around weaknesses in the running of the entity.

10.1.13The appointment of personnel based on a conducted skills audit in the CF is cascaded down to the operational staff level.

10.1.14The CF Board reports to the Ministry on a regular basis and to the Portfolio Committee on a quarterly basis.
10.1.15The DEL, through the Minister of Employment and Labour, conduct a skills audit on the members of the Board of Directors and present the skills audit report to the Portfolio Committee.

10.1.16The ICT system inefficiencies at the CF are addressed to strengthen the internal control environment.

10.1.17Through the Nedlac selection processes, gender equity is promoted at the CF Advisory Board.
10.1.18The Compensation Fund and other entities with adverse audit opinions put in place Audit Action Plans to address issues raised by the Auditor-General.

Such plans have to be submitted to the Committee and entities have to report quarterly to the Committee on progress with implementation.
10.2 Further recommendation to the Minister of Finance 10.2.1 The Committee further recommends that the Minister of Finance takes steps to ensure that the budget allocation of the Department of Employment and Labour is adjusted to accommodate the expanded mandate of the department, thus enabling for the capacitation of its inspectorate.

11.

APPRECIATION The Committee appreciates the cooperation it received from the Department and its entities.
Furthermore, for the first time, the Committee had the opportunity to engage with the UIF and the CF Boards of Directors, in a bid to unfold the challenges that led to poor performance of these entities in the past few years.

The Committee also acknowledges the assistance of the 49 Auditor-General, Financial and Fiscal Commission and Statistics South Africa in providing information necessary for compiling this report.

Report to be considered.

50 2.


PORTFOLIO COMMITTEE ON HOME AFFAIRS BUDGETARY REVIEW AND RECOMMENDATION REPORT- 2019/20 FINANCIAL YEAR, DATED 15 OCTOBER 2019 1.

INTRODUCTION As specified by section 5 of the Money Bills Amendment Procedures and Related Matters Act (MBAP) of 2009, the National Assembly, through its Committees, must annually assess the performance of each national department.
A Committee must submit the Budgetary Review and Recommendation Report (BRRR) annually to the National Assembly which assesses the effectiveness and efficiency of the department’s use and forward allocation of available resources and may include the recommendations on the use of resources in the medium term.
The Committee must submit the BRRR after the adoption of the budget and before the adoption of the reports on the Medium Term Budget Policy Statement (MTBPS) by the respective Houses in November of each year.

The Committee were briefed by the Auditor General (AG) and Department of Home Affairs on the 2018/19 Annual Report on 8 October 2019.

This was followed by the Electoral Commission (IEC) 2018/19 Annual Report in the afternoon.
The Government Printing Works (GPW) requested a postponed 2018/19 Annual Report tabling in order to finalise the audit process.
The Portfolio Committee on Home Affairs (the Committee), considered and adopted its draft BRRR on 15 October 2019 1.1 The Portfolio Committee on Home Affairs In line with the core objectives of Parliament, the mandate of the Committee is to consider and pass legislation; oversee and scrutinise executive action; facilitate international participation; and facilitate co- operative government and facilitate public participation and involvement.
On the basis of the oversight and legislative encounters of the Committee from the end of 2018, the two 2019 State of the Nation Addresses and within the broader National Development Plan 2030; key issues in the DHA, IEC and GPW are put forward by the Committee: The Report of the Committee is based primarily on the following activities: • 22 Committee Meetings and deliberations since the last BRRR which includes briefings by the national and provincial DHA, the IEC and GPW.
In addition, the committee met with the Department of Public Works, the Auditor General and informants in a State Capture Inquiry and Fireblade Aviation.

• Drafting, public submissions by several public and private stakeholders, consideration and voting on three pieces of legislation and internal Committee reports.
51 • Scrutinising Strategic and Annual Performance Plans, the State of the Nation Addresses, policy documents, Estimates of National Expenditure, Medium Term Expenditure and budget allocations, as well as other external briefings and reports.

• Conducting an oversight visit to Gauteng and public engagement during constituency periods.
1.2 The Department of Home Affairs The mission of the DHA is to ensure the efficient determination and safeguarding of the identity and status of citizens and regulation of migration to ensure security as well as to promote and fulfil South Africa’s international obligations.

This mandate is administered through the following three overarching budget programmes: Programme 1 - Administration: The programme provides leadership, management and support services to the Department of Home Affairs.
Programme 2 – Citizen Affairs: The programme provides secure, efficient and accessible services and documents for citizens and lawful residents.

This programme also includes the transfers to the IEC and GPW.

Programme 3 - Immigration Affairs: The programme facilitates and regulates the secure movement of people into and out of the Republic of South Africa through ports of entry; determines the status of asylum seekers and regulates refugee affairs.
It also confirms and provides enabling documents to foreign visitors legally residing within the Republic of South Africa and enforces immigration legislation and effects deportations.

2.

THE DEPARTMENT’S STRATEGIC PRIORITIES AND MEASURABLE OBJECTIVES National government has fourteen outcomes and the DHA contributes to four of these outcomes, which comprise three Strategic Outcome Orientated goals for the 2015-2020 period.
These in turn translate into 9 Strategic Objectives as follows: 1.2 An integrated and digitised National Identity System (NIS) that is secure and contains biometric details of every person recorded on the system.

1.1 All eligible citizens are issued with enabling documents relating to identity and status.

Strategic Outcome Oriented (SOO) Goal 1: Secure South African citizenship & identity.

S E V I T C E J B O C I G E T A R T S 2.2 Refugees and asylum seekers are managed and documented efficiently.
2.3 Enabling documents issued to foreigners efficiently and securely.

SOO Goal 2: Secured & responsive immigration system.

2.1 Movement of persons in and out of the country managed according to a risk-based approach.

SOO Goal 3: Services to citizens & other clients that are accessible & Efficient.

3.1 Secure, effective, efficient and accessible service delivery to citizens and immigrants.

3.2 Good governance and administration.


3.3 Ethical conduct and a zero tolerance approach to crime, fraud and corruption.

52 3.4 Collaboration with relevant stakeholders in support of enhanced service delivery and core business objectives.

2.1 The Department’s Contribution to the National Development Plan (NDP) The major focus of the NDP is to confront the triple challenge of poverty, inequality and unemployment by achieving higher growth rates.
The DHA contributes the following to the NDP: • Facilitating the acquisition of the critical skills so as to facilitate the building of a capable state.

• Playing a role in enabling regional development by working with SADC countries to improve the efficient, secure and managed movements of people.

• Providing citizens with identity documents that give them access to rights and services.

• Through the modernization programme, seeking to reduce fraud and the cost of doing business.
2.2 Medium Term Strategic Framework 2014 to 2019 Commitments In support of achieving the strategic objectives of the DHA, government priorities and the NDP, the DHA identified the following MTSF commitments for delivery by the end of 2019: 3.
2019/20 ANNUAL PERFORMANCE PLAN (APP) AND BUDGET OF THE DHA The DHA, IEC and GPW presented on their strategic priorities for the 2015-2020 MTSF, an overview of proposed targets for the next MTSF, planned objectives and targets for the 2019/20 APP as well as the related budget on 2 July 2019.

The 2019/20 financial year is the last year of the 2014 to 2019 Medium Term Strategic Framework cycle – it is therefore imperative for the DHA to meet its MTSF commitments.
Specific focus and attention is to be placed on the identified strategic challenges and implementation of 53 strategic responses to mitigate challenges as well as improvement in organisational and financial performance.

The mandate of the DHA is derived from the Constitution and various acts of Parliament and policy documents.
The Acting Director General (DG) went through the vision, mission, mandate and values of the DHA, which remain consistent with previous years as well as proposed targets for the next 2020 to 2025 MTSF.

3.1 Budget Vote 2019/20 3.1.1 Department of Home Affairs The DHA programme structure is along the following three main programmes: Administration, Citizen Affairs, and Immigration Affairs.
The Citizen Affairs programme is the biggest of the three main programmes, constituting 57 percent of the overall departmental expenditure.

The DHA’s 2019/20 budget increase, especially the allocation to the Electoral Commission, can be attributed to preparations towards the general elections held in June 2019.
Over the medium term, the DHA will focus on repositioning itself as a modern and secure organisation; improving and expanding client interfaces and service delivery imperatives; establishing and operationalising a border management agency; streamlining and securing international migration; and establishing public private partnership (PPP) in support of key infrastructure projects.

The 2019/20 budget supports the long-standing policy priorities of the DHA.
Some of the key highlights of Vote 5 include: • The modernisation programme of DHA is allocated an estimated amount of R1.8 billion over the medium term.

• Improving and expanding client interface is allocated an amount of R2.2 billion over the medium term for issuing of an estimated 11.9 smart Identity (ID) cards.

• To improve and expand client interface, the DHA requires adequate and skilled personnel.
Therefore, R7.1 billion is set aside over the medium term for expenditure on compensation of employees.

• The DHA is still planning to establish the Border Management Agency (BMA).

The BMA Bill was set to be finalised by 2019/20.

However, the BMA Bill lapsed before the Select Committee on Social Services due to contention with National Treasury on the BMA taking over customs payments at border posts.
To establish the Agency, amounts of R16 million in 2019/20, R28 million in 2020/21 and R40 million in 2021/22 have been earmarked.

These allocations are earmarked for compensation of employees, system development, and various goods and services items.

• The DHA aims to streamline and secure international migration.

In this regard, the DHA is introducing an advanced passenger processing system, which would enable passenger screening at the point of 54 departure, instead of arrival.
Over the medium term, an estimated R498 million will be spent mainly on service fees for the DHA ‘s use of the system.

• Over the medium term, DHA will continue its infrastructure projects of the redevelopment and modernisation of 6 ports of entry, as well as moving the refugee reception centres closer to the country’s borders.
Amounts of R72.1 million in 2019/20, R76.6 million in 2020/21, and R80.4 million in 2021/22 have been allocated for the improvement of residential and office accommodation at ports of entry and refugee reception offices.

Overall budget of DHA 2019 to 2022 Programme Budget Nominal Real Nominal Real % Rand Rand % Change Change Change Change R Million 2018/19 2019/20 2020/21 2021/22 2018/19 -2019/20 2018/19-2019/20 1.

Administration 2525..1 2340..2 2490.5 2694.5 -184.9 -300.6 -7.32 -11.9 2.
Citizen Affairs 5448..7 4736..7 4922.4 5535.1 -712 -946.1 -13.07 -17.36 3.

Immigration 1073..6 1262.8 1330.6 1383.1 189.2 126.8 17.62 11.81 Affairs Total 9047..4 8339.7 8743.5 9612.7 -707.7 -1119.9 -7.82 -12.38 The DHA plays a crucial role in safeguarding the identity and status of citizens and regulating immigration to ensure security, promote development and fulfil South Africa’s international obligations.
However, its budget is relatively small taking into account the growing demand from citizens for DHA services.

The voted budget allocation for the 2019/20 financial year is R8.339 billion.

In comparison with the 2018/19 adjusted allocation of R9.047 billion, in Rand value, it shows a nominal decrease of R707.7 million (but when the cost of inflation is taken into consideration, the budget shows a real decrease of R1.119 billion).
It should be noted, however, that over the past five years (2014/15 – 2018/19), there has been a trend for the DHA voted allocation to invariably be adjusted upward in the adjusted allocation during October.

With inflation, the DHA 2019/20 voted budget declines with 12.38 per cent from the adjusted budget the previous year.

Of its three main programmes, only the Immigration Affairs programme increases in both nominal and in real terms.
In nominal terms (before inflation is taken into account), Immigration Affairs increases by R189.2 million (17.62 per cent).

However, with the inflationary effect (real terms), this increase translates into R126.8 million (11.81 per cent).

The Administration and Citizen Affairs programmes experience decreases in their respective allocations in both nominal and real terms.
55 In terms of Economic classification about 26.1 per cent of the DHA budget is in the form of transfers and subsidies, totalling R2.176 billion.

This is primarily transfers to the Independent Electoral Commission (IEC) (R2.012 billion) and to the Represented Political Parties’ Fund (R157.7 million).

Capital assets (machinery and equipment) constitutes 0.15 per cent of the DHA budget, and totals R12.6 million in 2019/20.

The DHA budget is dominated by current payments, which totals R6.15 billion.
This represents 73.75 per cent of the Department’s voted budget, which caters for compensation of employees, as well as goods and services.

Compensation increases from R3.3 billion previously, to R3.55 billion in 2019/20.

This represents an above inflation increase (real terms) of 2.27 per cent.

On the other hand, the DHA’s budget for goods and services declines with 31.1 per cent in real terms.

Goods and services decreases to R2.59 billion, from R3.6 billion in 2018/19.
The significant decline in goods and services are directed by amongst others: • Stationary, printing and office supplies: from R902 million previously to R73.75 million in 2019/20.

• Travel and subsistence: from R499.98 million previously to R83.16 million in 2019/20.

• Property payments: from R397.32 million previously to R181.25 million in 2019/20.

• Operating payments: from R65.96 million previously to R22 million in 2019/20.
• Computer services: from R848 million previously to R696.14 million in 2019/20.

In contrast, the following items increases significantly in 2019/20: • Minor assets: from R32.7 million previously to R152.48 million in 2019/20.

• Contractors: from R96.4 million previously to R341.87 million in 2019/20.

• Agency and support/ outsourced services: from R40.37 million previously to R120.77 million in 2019/20.

• Fleet services: from R14.48 million previously to R46.77 million in 2019/20.
• Operating leases: from R333.74 million previously to R464.67 million in 2019/20.

Proportional comparison of three main programmes, 2018/19 and 2019/20 in Rand (Millions) The above tables allow comparison of the proportional allocations per main programme between 2018/19 adjusted and 2019/20 voted funds.

While Administration retains 28 per cent of the DHA allocation in both years, there is a 3 per cent shift between the Immigration and Citizen functions.
In 2019/20, the Immigration programme proportionally increases with 3 per cent, while the Citizen function declines with 3 per cent.

56 Programme 1 Administration Administration sub-programme expenditure Taking into account the costs of inflation, the Administration programme decreases by R300.6 million (11.9 per cent).

While its adjusted budget was R2.525 billion in 2018/19, it is reduced to R2.34 billion currently.
Of its five sub-programmes, Transversal Information continues to dominate the expenditure, but shows strong decline in expenditure from the previous year.

Since 2017/18 financial year, this sub-programme’s budget has been in decline.

The Corporate Services sub-programmes shows strong decline, from R845.9 million in 2018/19, to R670.7 million at present.

Office Accommodation continues to grow in both nominal and in real terms.

Since 2018/19, it nominally increases with 5.6 per cent.
After inflation, the following real increases/ decreases are recorded per sub-programme: • Ministry: 12.36 per cent decrease.

• Management Support Services: 11.91 per cent decrease.

• Corporate Services: 24.63 per cent decrease.

• Transversal Information: 7.13 per cent decrease.

• Office Accommodation: 0.38 per cent increase.

57 Programme 2: Citizen Affairs Citizen Affairs provides secure, efficient and accessible services and documents to citizens and lawful residents.
The budget of this programme is allocated to 6 sub-programmes, namely: Citizen Affairs Management, Status Services, Identification Services, and Service Delivery to Provinces, Electoral Commission, and Represented Political Parties’ Fund.

Citizen Affairs sub-programme expenditure Source: Calculated by Research Unit from National Treasury (2019b) The Citizen Affairs programme remains the biggest of the three main programmes in the DHA, constituting 57 per cent of the overall departmental expenditure.
This programme receives an allocation of R4.736 billion for 2019/20, compared to the allocation of R5.448 billion in 2018/19.

This represent a nominal decrease of R711.9 million or 13.1 per cent (before cost of inflation).

After cost of inflation, it represents a real decrease of R946.1 million or 17.36 per cent.

The Identification Services sub-programme receives a solid budget increase in both nominal and real terms.
The budget share of this sub-programme shows a nominal increase of R72.2 million (or 29.58 per cent).

Calculating for inflation, it shows a real increase of R56.5 million (or 23.18 per cent).

As in the previous financial year, the Electoral Commission allocation shows a marginal real increase – for 2019/20, it increases with 0.38 per cent.

The increase can be attributed to preparations towards the general elections held in May 2019.
After inflation (calculated at 5.2 percent), the following real increases/ decreases are recorded per sub- programme: • Citizen Affairs Management: 36.22 per cent decrease 58 • Status Services: 88.38 per cent decrease • Identification Services: 23.18 per cent increase • Service Delivery to Provinces: 0.64 per cent decrease • Electoral Commission: 2.63 per cent decrease • Represented Political Parties’ Fund: 0.38 per cent increase The real decrease recorded for the Service Delivery to Provinces sub-programme may pose a challenge with respect to the DHA priority of maintaining its footprint, which requires adequate and skilled personnel.
In addition, functions such as client interface are funded under this sub-programme.

The Status Services sub-programme continues to experiences major decline in its funding – as was the case the previous year.

For 2019/20, it declines with 88.38 per cent (real terms), while 2018/19 financial year recorded 88.92 per cent real decline.

This sub-programme is tasked with one of the main mandates of the DHA.
This include maintaining an accurate register of all citizens and immigrants who have acquired the right to permanent residence; registering births, deaths and marriages; providing travel and citizenship documents; providing financial assistance to citizens abroad who wish to return to South Africa, but have no means of doing so; and determining and granting citizenship.
Programme 3: Immigration Affairs This programme is responsible for facilitating and regulating the secure movement of people through the ports of entry into and out of South Africa.

It is also responsible for determining the status of asylum seekers and regulate refugee affairs.

Spending on compensation of employees is the main cost driver in the programme, accounting for an estimated 63.5 percent (R2.5 billion) of its total budget over the medium term.
The Immigration Affairs programme is the smallest of the three main programmes in terms of budgetary size.

Unlike in the previous financial year when it experienced a real decrease of 16.62 per cent, the programme grows with 11.8 per cent.

In monetary terms, Immigration Affairs increases in real terms with R126.7 million.

Its budget allocation grows from R1.073 billion in 2018/19 to R1.262 billion in the current year.
The budget under the programme is shared amongst the 4 sub-programme as outlined in the pie chart below.

59 Immigration affairs sub-programmes The Admission Services sub-programme continues to dominate the budget share of this programme; i.e.

61 per cent.

Its allocation in 2019/20 is R768.7 million, up from R609.2 million previously.

The sub- programme’s allocation should be viewed in the context of past concerns about the turnaround times for processing of permits and visas.
After inflation, the following real increases/ decreases are recorded per sub- programme for 2019/20 financial year: • Immigration Affairs: 14.65 per cent decline (compared to 4.04 per cent decline in 2018/19).

• Admission Services: 19.95 per cent increase (compared to 25.85 per cent decline in 2018/19).

• Immigration Services: 0.78 per cent increase (compared to 2.23 per cent decline in 2018/19.

• Asylum Seekers: 14.06 percent increase (compared to 3.49 percent increase in 2018/19).
The increases in Asylum seekers, Admission Services, and Immigration Services sub-programmes is commendable given the current challenges with regard to asylum seekers and refugee management in the Department.

3.1.2 Electoral Commission Budget 2019/20 The IEC received an allocation of R2,052 billion for 2019/20 compared to R1,963 billion in 2018/19.

The IEC allocation shows a marginal real increase – for 2019/20, it increases with 0.38 per cent.
The increase can be attributed to preparations towards the general elections held in May 2019.

In 2019/20 IEC expenditure focused on its preparations for the 2019 national and provincial elections, and in the medium term it prepares for the 2021 local government elections.
Over the MTEF period, as part of the commission’s Electoral operations programme, the IEC indicated that it will be involved in updating of addresses on the voters roll in line with court judgments, the registration of new voters, and the procurement of ballot papers, ballot boxes and stationery.

This is expected to result in 60 spending of R541 million.
An additional R126 million has been allocated in the Administration programme to update databases in line with electoral requirements, update and roll out the commission’s IT infrastructure, and erect 15 prefabricated offices for commission staff, increasing the number of these offices from 28 in 2018/19 to 43 in 2021/22.
The has enter into a finance lease agreement to the value of R510 million to replace its zip-zip machines (voting registration devices) as they have exceeded their lifespan and are not compatible with smart ID cards.

In preparation for the August 2021 local government elections, the IEC will conduct two registration weekends aimed at increasing the number of voters, particularly young people between the ages of 18 and 25.

R295 million additional funding has been allocated in 2020/21 for this purpose.
This includes compensation of about 488 000 permanent, fixed-term and temporary electoral employees to work on election days at an estimated 23 000 voting stations during the main electoral events.

About 68 000 of these employees are to be compensated for registration activities as well.

This allocation is expected to enable commission to improve the quality of training it provides through its Electoral operations programme by increasing the number of training days for electoral staff from 2 to 3.
Spending on the compensation of employees is expected to increase at an average annual rate of 5.4 per cent, from R780.4 million in 2018/19 to R913.5 million in 2021/22.

The commission undertakes extensive civic and democracy education and communication campaigns to protect the credibility and integrity of electoral processes.

Through these campaigns, the commission keeps the electorate informed and aims to attain higher voter turnouts on election days.
For these campaigns, R655.7 million over the MTEF period has been allocated in the Outreach programme.

Transfers to the IEC include an additional R72.1 million allocated over the MTEF period to fund a new unit to administer the Political Party Funding Bill to regulate private funding to political parties, which is expected to be finalised in 2019/20.

The commission expects to generate R15 million per year over the MTEF period though the sale of goods and services, and interest on investments.
IEC Budget Allocation Overview Sub-programmes Audited Outcome 2019 MTEF (R'000) 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Programme 1: administration 496,057 597,820 537,463 618,832 714,136 698,206 795,910 61 Programme 2: electoral operations Programme 3: outreach TOTAL 664,188 1,205,108 649,697 1,099,951 1,154,647 1,042,041 1,432,979 255,029 214,931 108,644 244,301 183,402 271,581 200,704 1,415,274 2,017,859 1,295,804 1,963,084 2,052,185 2,011,828 2,429,593 3.1.3 GPW Budget for 2019/20 Financial Year The GPW indicated that it generates its own revenue, which is expected to increase at an average annual rate of 9.4 per cent, from R1.5 billion in 2018/19 to R2 billion in 2021/22.
It expects to improve its ability to generate revenue by increasing the production of passports and identity documents with the new equipment it is set to acquire.

In the short term its overall average profit however is set to decline from above R500 million in the last three years to under R200 million as it plans to focus on replacing old equipment and machinery, refurbishing its production facility, and developing and attracting specialised skills.
Purchased machinery will also attract depreciation costs once installed in new facilities.

By upgrading its equipment, the entity will be able to do printing that used to be outsourced to private companies.

This includes 2 machines to print smart identity cards, 1 machine to personalise special documents, 1 machine to print secure examination materials, and 1 offline serialisation system machine to enable document numbering.
R972 million over the MTEF period has been allocated in the Production and operations programme for the purchase of this specialised equipment and machinery.

A further R400 million has been set aside for the construction of a polycarbonate plant to enable the production of smart ID cards.

GPW is currently importing the plastic required to produce these cards from overseas companies.
This will be insourced as part of the construction of a new security printing division in Pretoria that is expected to be completed by 2023/24 at an estimated cost of R542 million over the MTEF period as part of the organisation’s Production and operations programme.

The project is managed by the Department of Public Works.
GPW Budget Overview 2019 to 2022 R'000 2019/20 2020/21 2021/22 Income Revenue 1.532.442 1.749.280 1.960.157 62 Other operating income 104.954 110.726 121.799 Interest received 3.814 4.092 4.501 Total income 1.641.210 1.864.098 2.086.457 Expenditure Compensation of employees 366.667 395.293 423.235 Goods and Services 1.038.003 1.166.811 1.290.836 Depreciation 83.295 127.067 176.369 Total expenditure 1.487.965 1.689.171 1.890.440 Profit 153.245 174.927 196.017 As a significant portion of the entity’s personnel are nearing retirement, it will aim to institute a comprehensive strategy to develop and attract the specialised skills required for its work through an internship programme and recruitment.
As a result, the number of personnel is set to increase from 760 in 2018/19 to 899 in 2021/22, driving an increase in spending on compensation of employees at an average annual rate of 8.5 per cent, from R331 million in 2018/19 to R423.2 million in 2021/22.
3.2 2019/20 Annual Performance Plans 3.2.1 Department of Home Affairs A delegation from the DHA was led and introduced by the newly appointed Minister of Home Affairs and the presentation was made by the Acting Director-General (DG) (Deputy Director General for Immigration) on 2 July 2019.
The Minister made an introduction indicating that the several acting positons in the DHA were outstanding including the DG since August 2018; the Deputy Director General Civic Services since August 2017 and DDG’s of Information Systems and Counter Corruption since late 2014.

The appointment of DG and DDG’s was in part due to a moratorium on appointment till after the 2019 elections and the latter two were due to not being able to find suitable candidates and will now be head hunted.
The DG reported that the following are the priorities of the DHA for 2014 – 2019 MTSF: • Establishment of the Border Management Authority (BMA).

• Complete the Modernisation Programme.

63 • Upgrade key ports of entry (6).

• Comprehensive review of Immigration Policy; and • Improved client experience through leadership (Moetapele).

The DG reported that the BMA Bill was still with Parliament at the National Council of Provinces (NCOP).

The BMA was supposed to be operational by 2017/18.


This commitment has not been met.

The DHA encouraged Parliament to revive the BMA bill in the 6th Parliament.

The total number of targets for 2019/20 compared to 2018/19 have decreased from 31 to 26.
Programme Number of targets 2016/17 2017/18 2018/19 2019/20 1.Administration 2.Civic Affairs 19 5 3.Immingration Affairs (including BMA) 8 Total 32 Programmes and number of targets of the DHA 2016-20 13 5 10 28 17 3 11 31 15 3 8 26 The DHA indicated that the overall targets in the APP for 2019/20 had been reduced from 31 to 26 for the following reasons: • The Request for Proposal submitted to National Treasury for approval for Refugee Reception Centres) was removed from the APP due to funding constraints.
One selected refugee reception centre with improved infrastructure was shifted to Property Management and placed in DHA Ops Plan and thus not allocated as earmarked funding in 2019/20.

• Three selected ports of entry with improved infrastructure were also shifted to Property Management and placed in DHA Operations Plan and thus not allocated as earmarked funding in 19/20.
• Integrated Border Management Strategy (IBMS) was placed in DHA Operations Plan and implementation is underway but with numerous dependencies.

• The Passport indicator experienced a changed formulation due to insertion of parent’s details in child passports and the focus now is on adult passports in the APP.
• New target added of Official Identity Management Policy to be submitted to Cabinet for approval for public consultation • Target on networks Architecture Design and Investment Plan was placed in DHA Operations Plan.
Overview of APP Targets 2018 vs 2019 Area 2018/19 2019/20 Targets Removed / Added / Amended 64 Immigration 9 8 Request for Proposal submitted to National Treasury for Affairs approval (Public Private Partnership for Refugee Reception Centres) – Target removed from APP due to funding constraints; included in errata for 2018/19.
3 selected ports of entry with improved infrastructure as per approved implementation plan – Ownership shifted to Property Management and placed in DHA Ops Plan; not allocated as earmarked funding in 19/20.

1 selected refugee reception centre with improved infrastructure as per implementation plan - Ownership shifted to Property Management and placed in DHA Ops Plan; not allocated as earmarked funding in 19/20.
Integrated Border Management Strategy (IBMS) placed in DHA Operational Plan – implementation underway, numerous dependencies.

Citizen Affairs 3 3 Passport indicator – change to formulation due to insertion of parent’s details in child passports and focus now on adult passports in APP; included in errata for 2018/19.
Administration 18 15 Official Identity Management Policy submitted to Cabinet for approval for public consultation – new target added Target on networks (Reference Architecture Design and Investment Plan implemented (phased approach) – placed in DHA Ops Plan.

Total 30 26 A summary of the targets per branch/ budget programme is as follows: Administration i. NIS developed in respect of: Request for Proposal published.

ii.

Biometric MCS (full biometric solution) piloted at additional 2 ports of entry.

iii.
iii.

iv.

v. E-gate piloted at 1 port of entry.

E-permit system (phase 1) rolled out to 6 missions.

500 managers trained in leadership and management development programs.

vi.

Vacancy rate maintained at 10% or below.

vii.

70% of reported misconduct cases submitted to a presiding officer for consideration.

65 viii.

Official Identity Management Policy submitted to Cabinet for approval for public consultation.

ix.

Final draft of the DHA Bill submitted to Cabinet for approval for public consultation.
x.

Revised DHA Access Model approved by Minister’s Management Meeting.

xi.

20 awareness initiatives on ethics, fraud prevention & counter corruption conducted.

xii.

166% of reported cases on fraud & corruption finalised within 90 working days.

xiii.

60 Threat & Risk Assessments conducted.

xiv.

416 vetting files referred to SSA.

xv.

Communication strategy & action plan implemented – 28 media engagements, 3 campaigns and 6 izimbizo.

Citizen Services i. ii.


Early Birth Registration: 810 000 births registered within 30 calendar days.

Smart ID Cards: 3 million smart ID cards issued to citizens 16 years of age and above.

iii.

Adult Passports: 90% of machine readable passports (new live capture system) for adults issued within 13 working days for applications completed and processed within the RSA (from branch process complete date until passport is scanned at office of application).

Immigration i.
Immigration i.

Draft Immigration Bill (including amendments to the Refugees Act) submitted to Minister for approval.

ii.

160 Law enforcement operations/ inspections conducted to ensure compliance with immigration and departmental legislation.

iii.

85% of permanent residence applications adjudicated within 8 months (selected categories for applications collected within the RSA).

iv.

90% of business and general work visas adjudicated within 8 weeks (applications processed within the RSA).

v. vi.

vii.
v. vi.

vii.

viii.

85% of critical skills visas adjudicated within 4 weeks (applications processed within the RSA).

National Targeting Centre business case submitted to Minister for approval (BMA).

Draft Request for Proposal (RfP) submitted to National Treasury (BMA).

BMA operational as per BMA Road Map (Phased Approach).
The newly appointed Minister made an introduction indicating that the several acting positons in the DHA were outstanding including the DG since August 2018; the Deputy Director General Civic Services since August 2017 and DDG’s of Information Systems and Counter Corruption since late 2014.

The appointment of DG and DDG’s was in part due to a moratorium on appointment till after the 2019 elections and the latter two were due to not being able to find suitable candidates and will now be head hunted.
The DG then reported on other vacancies in the DHA as follows: 66 The DG then gave an overview of the service delivery footprint as follows: Channel Number of DHA offices (Small, Medium and Large Offices) Quantity 412 • Urban (164) • Rural (248) Number of modernised offices (live capture offices) 193 • Rural (81) • Urban (112) Banks hosting DHA service points using an online “e-Home Affairs” 14 • Gauteng (13) • Western Cape (1) Health facilities equipped for birth and death registration 391 • Urban (203) • Rural (188) Designated ports of entry (PoEs) DHA represented abroad at South African missions Refugee Reception Centres Repatriation Centre Premium visa and permit centres 3.2.2 IEC Annual Performance Plan for 2019/20 72 30 5 1 4 The Acting Chief Electoral Officer (CEO) made the presentation indicating that the Political Party Funding Bill was approved by Parliament in July 2018.
The President assented to the Act on 23 January 2019.

67 • The Act provides for the regulation of the funding of political parties including requiring the disclosure of sources of party funding.

The Electoral Commission will have to table a report on party funding annually to Parliament.

• The Act mandates the Electoral Commission to implement this legislation and regulations.
• Public hearings on the draft regulations are scheduled for early August 2019 on conclusion of the regulations the Electoral Commission will publish the commencement date of the new party funding regime.
The CEO added that the following are some of the key challenges facing the Electoral Commission in the medium term: Voters’ roll clean up: Since March 2016, the Electoral Commission has made significant headway in updating the voters’ roll to include the addresses of all voters and has continued to work to narrow this gap by the November 2019 deadline.
Funding shortages: The current fiscal challenges and austerity measures come at a very difficult time for the Electoral Commission which is facing its most significant budget demands since inception.

Among the funding requirements facing the Electoral Commission in the medium term are: a) the replacement of the outdated zip-zip machines with new online voter registration technology; b) deployment of technology to facilitate real time live voters’ roll c) intensified social media response mechanism.
Additional resources to rebut false information on social media; d) improved results and recon processes to minimize mistakes as a result of staff fatigue; e) enhanced training requirements for election staff and party agents – introduce e-learning, videos, etc; f) new strategies for outreach and democracy development and g) implementation of party funding legislation and regulations.
The Following are the summarised strategic goals and related objectives of the IEC for the 2019/20 financial year: Strategic Goal 1: Strengthening governance, institutional excellence, professionalism and enabling business processes, at all levels of the organisation.
Strategic objectives 1.1 Exercising oversight (monitoring, evaluation and leadership) to ensure the effective implementation of the Electoral Commission’s core mandate, strategic goals and objectives, aligned with the corresponding budget allocation.

1.2 Exercise efficient oversight (monitoring, evaluation and support) by the provisioning of assurance and risk management services.

1.3 Build institutional capacity to enable the Electoral Commission to deliver on its constitutional mandate.
68 1.4 Manage financial resources efficiently to protect the public image of the Electoral Commission as an accountable institution.

1.5 Provide and maintain a stable, secure and scalable ICT environment that meets the functional needs of the Electoral Commission to ensure the credibility of electronic electoral processes.
Strategic Goal 2: Achieving pre-eminence in the area of managing elections and referenda, including the strengthening of a cooperative relationship with political parties Strategic objectives 2.1 Manage free and fair elections in accordance with the applicable electoral timetables to ensure the efficient and credible execution of the mandate of the Electoral Commission; 2.2 Maintain an accurate national common voters roll to ensure the credibility of elections; 2.3 Ensure efficient election delivery by the timely establishment of accessible and suitable voting facilities and processes and by applying infrastructure and logistical resources to meet operational demands for main electoral events; Strategic Goal 3: Strengthening electoral democracy Strategic objectives 3.1 Encourage the electorate’s engagement with, and participation in, electoral processes in order to facilitate the right to vote as enshrined in the Constitution; 3.2 Achieve a low rate of spoilt ballots as a measure of the effectiveness of balloting education; 3.3 Enhance the Electoral Commission’s reputation as a credible and trustworthy Electoral Management Body; 3.4 Provide thought leadership in the field of electoral management and related fields as per Vision 2018 in order to strengthen electoral democracy.
4.2.3 The Government Printing Works (GPW) Annual Performance Plan for 2019/20 The Acting CEO made the presentation indicating the mission and vision of the GPW was still the same and that ICT is a critical element of GPW.

GPW will procure eight new high tech pieces of equipment in the current and next financial year.

The GPW was also producing the Smart ID Cards in relation to client (DHA) specifications.

Government Gazettes, both digital and electronic, are also still issued timeously.
It is the mandate of the GPW to deliver security printing and related services to the Government of South Africa.

On 9 October 2009, GPW became a Government Component reporting to the Minister of Home Affairs with oversight by the Parliamentary Portfolio Committee.

The Core Services of the GPW include: 1.


Security Printing: Conceptualisation, design and production of face-value documents (Passport, Identification Documents, Examination papers, Vehicle licensing/registration forms & distribution to local authorities; Road Traffic Infringement blank documents; Firearm licenses; etc.

69 2.
69 2.

Non-Security Printing: Layout, design and production of government official stationery and related documents (police case dockets, hospital registers, Annual Reports, Brochures, Posters, Information Pamphlets, etc.

3.
Gazette Publication Services: The administration and publishing of official government notices in the Government Gazette GPW retains the three overall strategic outcome oriented goals as follows: Strategic outcome oriented goal 1 Goal statement Strategic outcome oriented goal 2 Goal statement Reposition the GPW business processes Reposition the GPW business processes to ensure stability, sustainability and viability of the organization as a critical national security facility Optimise processes and facilities Optimize processes and facilities to increase operational effectiveness and improved customer service Strategic outcome oriented goal 3 People management and development Goal statement Recruit, develop and retain effective and efficient human capital GPW commits to deliver on outcomes for 2019/20 as follows: 1.
Reposition the GPW business processes to ensure stability, sustainability and viability of the 2.

3.

4. organization as a critical national security facility.

Continue to implement the MTEF Strategic Plan and APP commitments.

Ensure return on investment, sound financial management and sustainability.
Long term vision – State security printer of choice (Vision 2030) that will allow GPW to pursue SADC and African Union member states to utilize GPW as a service provider for State and non-state printing services.

5.

Capacitate and train the workforce to meet market and client demands.

GPW was also reported to be marketing itself to most African countries, however, many countries still have contracts with their former European colonial countries.
There are promising discussions with Swaziland and Namibia to produce documents.

3.3 Committee Observations After the presentation by the DHA, GPW and IEC; the Committee raised matters including the following 70 3.3.1.

Department of Home Affairs i.

There continue to be network challenges at the DHA offices and long queues in some offices and offices were no longer opening on weekends.

ii.
ii.

Although the issue of vacancies was explained by the DG as due to lack of funds, the Committee felt that vacant funded posts should nonetheless be filled urgently.

iii.

The Committee enquired on the status of the amendment relating to Section 34 of the Immigration Act called for by the Constitutional Court Ruling (CCT 38/16) by July 2019 and the lapsed Civil Union Amendment Bill.

iv.
iv.

The Committee noted the planned introduction of an e-visa regime but enquired as to why so many counters for immigration officials were vacant at airports even during peak season.

v. The Committee enquired as to whether the mentioned 160 immigration inspections were sufficient given the amount of businesses not paying taxes and underpaying staff in various sectors.

vi.
vi.

The committee was curious about the capacity in Refugee Reception Offices especially in Musina, given the long delays adjudicating applications.

vii.

There was an enquiry on the non-recognition of Muslim, Jewish and Hindu religious marriages in terms of why they can’t use dowry certificates for proof like African traditional religious lobola.

viii.

The e-Gates system where trusted travellers will be allowed to pass through immigration at the ix.

x.
x.

Airports was raised as a potential security risk.

The issue of fraudulent marriages was raised as a major concern.

The mobile trucks were noted to not have been modernized to issue Smart ID Cards and passports, especially to rural areas.

xi.

There was a concern with respect to the children born from undocumented migrants because there were unable to go to school since they did not have birth certificates.

xii.
xii.

There are South African children who do not have birth certificates because their births were not registered.

xiii.

The DHA services offered in 14 was encouraged but a concern from the Committee was the issue of security of information.

xiv.

If was noted by the committee that the delegation of senior officials of the DHA are mostly males.

3.3.2 The Electoral Commission of South Africa i.


The Committee was concerned about the low young voter turnout during election days for National and Provincial Elections despite significant expenditure on outreach and communication.

ii.

The Committee was concerned with the use of private property as venues for election registration and voting given that campaigning by political parties had been blocked.

iii.
iii.

The IEC was asked if they foresee setting a “clean audit” rather than the current “unqualified audit” target as a realistic target in the forthcoming strategic plan.

71 iv.

It was enquired what additional capacity and funding will be needed for the administration of the Political Party Funding Act.

v. vi.

There was concern that the filling of vacancies target was set at 90% rather than 100%.
The Committee was concerned about the alleged double voting in the 2019 National and Provincial Elections, the removal of indelible ink by voters and the number of spoilt ballot papers.

vii.

The IEC was reported in the 2019 elections to not have Section 24A forms to complete in some voting stations for voters who needed to vote in different voting stations.

The Zip-zip machines were not able to assist in real time to warn of potential double voting.

viii.
viii.

There was a gap in communication between the IEC and the political parties and the media at the Results Operations Centre.

3.3.3 The Government Printing Works i.

The Committee commended the efficiency and profitability of the GPW despite the difficulties in the economy.

It was asked how the amount of profit submitted to National Treasury was determined.

ii.

The Committee was concerned about the vetting of staff in and around the production of secure enabling documents.

iii.
iii.

The Committee was encouraged in discussions with the Minister on the provision of printing solutions for SADC countries including Swaziland.

iv.

The committee enquired why GPW does not print all planning and report documents for Government Departments.

v. The committee asked what had led to the long term vacancy of the positon of Chief Executive Officer of Government Printing Works.

vi.
vi.

There was concern that client specifications for security documents did not seem to include expected delivery times.

4.

SECTION 32 EXPENDITURE REPORTS 4.1 First Quarter Performance and Expenditure Report of 2019/2020 The Portfolio Committee on Home Affairs (the Committee), met with the Department of Home Affairs on 20 August 2019 on the First Quarter Performance and Expenditure Report of 2019/2020.
The Minister of Home Affairs, Dr PA Motsoaledi, together with the Deputy Minister of Home Affairs, Mr. N Nzuza, led the delegation from DHA and the Acting Director General (DG) briefed the Committee on the First Quarterly Report of 2019/2020.
The report covers the period from 1 April 2020 – 30 June 2020 showing the following progress: • The DG reported that the Work Order for the piloting of the Biometric Movement Control System (BMCS) was approved by the CFO on 30 April 2019 for OR Tambo International Airport and King Shaka International Airport.

The BMCS pilot was reported to be underway at Lanseria Airport.

72 • The e-Permit to be rolled out at 6 missions.

The plan was to assess the network infrastructure which was completed.
The networks of the foreign missions needed to be upgraded to at least 2 MB.

The DHA engaged with the Department of International and Cooperation to upgrade the networks in New Zealand, China, India, United Kingdom and Nigeria.

• Of the 100 managers to be trained in leadership and management development programme, it was reported that there 128 managers trained.
• The DHA draft bill to repositioned the DHA in line with the Home Affairs White Paper was revised and approved by the Chief Director: Policy and Strategic Management.

• The vacancy rate has always been below one percent.

There were no vacancies that had been filled.

• Of the 42 cases of misconduct, 35 of the cases were presented to the Presiding Officer, which represent 90 percent achievement.
• In terms of the awareness programmes fraud prevention and counter corruption, the DHA conducted seven as against five planed.

The initiatives were conducted in the Northern Cape.

• The DHA achieved 81 percent of the cases that were investigated and finalized within 90 days.

• There were 124 cases that were referred to State Security Agency (SSA) and the SSA in the Free State helped with the fieldwork instigations on 16 files.
• With regards to communication, the DHA had 14 media engagement, two campaigns and four Imbizo.

The Imbizo were conducted in Sterkspruit and Swartruggens, Postmansburg.

This engagement assists with the collection of Smart ID Cards because there were about 3000 uncollected Smart ID Cards.

• The DHA registered 2019 196 births within 30 days.

The Minister of Home Affairs indicated that all births should be registered within 30 days after births.
• There were 61 operations conducted with the Department of Tourism in Mpumalanga and in Gauteng, Beitbridge and Kwazulu-Natal.

• With regards to Permanent Residency, there were 1903 out of 1961 that were adjudicated within 8 months, which represented about 97 percent.

The business and general work visas, there 441 adjudicated out of 442 which represented 99.8 percent.
The critical skills visas, there 1652 out of 1671 which were adjudicated within 4 weeks There were targets that were not achieved, however, the DG indicated that there was some work which had been done and these are some of the targets that were not achieved: • Request for accreditation for possible bidders published.

The Acting Director-General reported that the development of the National Identification System (NIS) was not completed, however, the draft specifications were done.
• Ensure that integration between the Biometric Movement Control System (BMCS) and Automated Biometric Information Systems (ABIS).

The BMCS and ABIS are not yet operational because of the dependency on the finalization of the delayed e-Gate automated visa system at airports.

73 • Access norms and standards approved by the Minister’s Management Meeting.

The Acting DG reported that there was a delay in the development to measure the population threshold.
This will ensure that those DHA offices are opened where there is demand.

• The DHA was supposed to conduct 10 Threat and Risk Assessments (TRAs) according to the Minimum Information Security Standards.

The DHA only conducted 8 because of the shortage of personnel including three Heads of Security at Western Cape, Limpopo and North West Provinces remained unfilled.

• The issuance of 780 000 Smart ID Cards to replace the Green ID Books.
The DHA only managed to issue 717 729 due to system instability which was experienced during April and May 2019.

The Acting Director-General reported that production of approximately 172 000 IDs was lost during this time.

Also, only 193 of 412 DHA offices can issue Smart ID Cards with the required Live Capture system.

• 90 percent of the readable passports are issued within 13 working days.
The DHA only manage to achieve 86.2 percent because of the system instability, downtime and error messages on the passport dispatching system and the increasing numbers of passport applications requiring image enhancement.

• Service provider appointed to develop a business case for the National Targeting Centre (NTC).

The Acting DG reported that the DHA had approached the Government Technical Advisory Centre (GTAC) to assist with the development of the NTC.
GTAC was not appointed because the proposal was over the budget and their envisaged scope of proposed work differed to that proposed of the BMA: Project Management Office.

The CFO made the presentation on the budget and he indicated that the DHA received R8, 339 704 billion and during the first term the DHA had spent R2,583 801 billion which represented an expenditure of 31 percent.
The transfer to the Electoral Commission and the Represented Political Parties Fund contributed to the expenditure of 31 percent.

The DHA budget vote only is R5, 589, 438 billion excluding the transfers to IEC and Represented Political Parties Fund and the WHO AM I ONLINE.
Programmes Budget R’000 Expenditure % Budget Spent R’000 Programme 1: Administration R2, 381, 394 R 438,787 Programme 2: Citizen Affairs R4, 706, 597 R1, 839, 051 Programme 3: Immigration Affairs R1, 251, 713 R 305, 963 18.4% 51.2% 31% In terms of the linear projections, the DHA should have spent 25 percent as at end of June 2019 and the variance of 6 percent is due to payments to Self-Financing expenditure.
The spending on programme 1: Administration was at 18.4 percent and the underspending was due to the Counter Corruption budget is R190 million and the expenditure as at 30 June 2019 was R40.9 million.

The lower expenditure on the item was due to a delay in awarding bids for guarding security services.
74 The Border Management Agency (BMA) was R42.3 million and the expenditure was R1.1 million and it was due to the delay in the finalizing of the BMA Bill by Parliament and the postponement of the BMA pilot launches.

The budget for State-owned leases was R516.1 and the expenditure was R55.4 and the underspending was due to the Department of Public Works invoices which get invoiced on a quarterly basis.
The spending on Programme 2: Citizen Affairs was 39.1 percent which was higher than the linear projection of 25 percent.

It has been reported that the DHA will request an amount of R1.188 million for self-financing expenditure during the 2019 Adjusted Estimates of National Expenditure.

The self-financing is for the printing of passports and Identity Books.

The DHA also transferred funds to the Electoral Commission and Represented Political Parties Fund.
Programme 3: Immigration Affairs had spent 24.4 percent which is closer to the linear projection.

The provinces had been allocated R2,115,919,000 and so far, has spent 24 percent of the budget, which is below the linear projection of 25 percent.

The DHA has collected R42, 692 000 at the end of June 2019 which excludes eHomeAffairs and revenue from foreign missions.
4.2 First Quarter 2019/20 Observations The Portfolio Committee on Home Affairs observed the following in relations to the presentation by the DHA: • The function of the DHA in relation to the undocumented immigrants: The DHA indicated that the function of the Department in the operations that took place in Johannesburg is to verify the documentation of apprehended persons and conduct deportation if the person is found to be undocumented.
The Acting Director-General reported that there was one deportation facility, which is Lindela Repatriation facility in Gauteng.

In provinces closer to the borders, the DHA conducts direct deportation and some police stations have been designated as the holding facilities.

• The matter of fraud and corruption and the recoup the funds and the cleaning of the National Population Register (NPR): The DHA indicated that the matter of fraud and corruption is big a challenge within the DHA.
The DHA ensures that persons involved in corruption activities are arrested and lifestyle audits are conducted for officials of the DHA.

The cleaning of the NPR is also conducted.

The matter is that children still apply for the IDs at the age of 16, and sometimes corrupt officials allocate their ID numbers to foreign nationals because the ID number is not linked to the biometrics of the child.

When the owner of the ID number applies, they can find that the ID number has already been allocated.
The 75 biometrics are only taken at the age of 16.

That is the reason that the first time applicant must come with their mother.

• • The kind of training for frontline staff: The Acting Director-General indicated that the training to frontline staff is on the understanding of the legislation.
The issuance of an emergency passport or to expedite the issuance of the passport in case of an emergency: The DG indicated that the DHA does issue emergency travel documents in exceptional circumstances but it encourages South Africans to always have a passport.

He also said that most countries do not accept these travel documents but only machine-readable passports.

The emergency travel certificates are issued to South Africans who have travelled outside the country and lost their passports.
• Network instability: there should be a penalty to the service provider.

• With regards to the 61 operations that were conducted during the quarter: the DHA to indicate how many took place in the Metro areas.

• • • There was an issue of the status of the birth of the child born of the undocumented migrants: The DHA does not issue births certificates to children born from foreign nationals.
The DHA issues notice of births which should be presented to the embassies of the country of origin to issue out birth certificates.

Child of asylum seekers takes the status of their parents.

The Immigration Colloquium: the DHA to furnish the Committee with the documentation regarding the colloquium.
The visit by the Minister of Home Affairs to the Desmond Tutu Reception Office: The Deputy Director-General: Immigration Services, indicated that the challenges at the Desmond Tutu Reception Office are the applicants who apply for refugee status meanwhile they are economic migrants.

5.

DHA AND IEC 2018/19 ANNUAL REPORTS The PCHA met with the Auditor-General of South Africa (AG) to receive training and an overview of the audit outcome for the DHA, GPW and IEC and on 8 October 2019.
The DHA then briefed the Committee on their Annual Report for the 2018/19 followed by the IEC.

The GPW had requested the Speaker of Parliament for a postponed tabling due to the delays in its audit.

5.1 The Department of Home Affairs (DHA): In total, the DHA has ten (10) strategic objectives to report on.
In terms of the performance of the DHA from 2014-15 to 2017-18, the performance increased each year until 2018/19, where the performance has regressed to 73 percent or 22 out of 30 Targets compared to 86% in 2017-18.
The DG reported that the poor performance was as a result of the dependencies on third parties such as the Department of Public Works for office accommodation and the State Information Technology Agency (SITA) on ICT and network connectivity and the delay in enactment of the enabling legislation, the lack of 76 resources, the non-availability of datacentres and the complexities in relation to the conducting of a Socio- Economic Impact Assessment (SEIA) which affect the target regarding the Immigration and Refugees Bills.
In terms of performance highlights, the DG indicated that of the 412 front offices, 193 were converted to issue Smart ID Cards and passports.

The Live Capture system was rolled out to nine more offices and one bank.

The target to issue Smart ID Cards for 2018/19 was to issue 3 million Smart ID Cards and the DHA exceeded this by 127 217.

The target for the registration of birth within 30 days was 810 000 and the DHA exceeded the target by 6 698.
The DG reported that the turnaround for key enabling documents in the immigration also improved.

The on time adjudication of permanent residence applications, business and general work visas and critical skill visas varied between 89 percent and 97 percent in 2018/19.

The DHA recorded over 42.1 million movements through the 72 ports of entry and daily processed about 100 000 people.
There are visa exemption agreements for diplomatic and official passports with Liberia, Uganda, Niger, Mali and China with the agreement for the relaxation of the requirements for tourists however it was indicated that China has only four officials for the processing of the visas which exceeds demand.

Cabinet approved the DHA White Paper in 2018 and the DHA began the process of developing a Home Affairs Bill.

The Bill provides for the repositioning of the DHA within the security system.
The Bill was submitted to the Minister for approval.

The DG indicated the following as challenges in 2018/19: • • • • • Network connectivity.

The dependency on SITA is problematic.

This reliance on SITA is a mandatory service as prescribed by the SITA Act.

Long queues.

The long queues emanate from high client volumes which the DHA attributed to a decision to close offices on Saturdays.

The then Minister of Home Affairs, Mr Malusi Gigaba launched a “War on Queues”.

Provision of Office Accommodation.


The DHA is also dependent on the Department of Public Works for office accommodation.

This creates problems for the DHA to modernize some of the offices.

The DHA reported it spends about R300 million per year on leases.

Human Resources capacity constraints.

The DHA is unable to fill posts when officials exist the services due to the Compensation of Employees (COE) ceiling.

It was reported that the DHA was operating at 44 percent of its ideal establishment.
Records Management.

The IT system at DHA is not fully integrated and digitized.

The old records have to be retrieved manually.

77 • The African Global Operations (AGO) voluntary liquidation.

The relation with AGO formerly known as Bosasa commenced in 2002 for the provision of detention of illegal immigrants at Lindela Repatriation Centre, pending their removal from the Republic.
If the liquidation is successful, it means that the DHA would not have an alternative facility in the immediate to short term.

For 2018/19, DHA had 30 planned performance targets and achieved 22 (73%).

This simply means that DHA could not achieve eight planned targets for the year under review.

Over the past five years, DHA has been gradually improving its target performance.

However, the target performance declined for the year under review as the chart below indicates.
As can be seen from the below figure, the only financial year, which significantly declined in target performance over the 2014 – 2019 MTSF period, is the 2018/19 financial year whereby the DHA only achieved 73% of its planned targets.

The decline is concerning considering the fact that the DHA spent 100% of its allocated budget for 2018/19.

There should be a correlation between the budget spent and the targets achieved.

2018/19 Performance Programme No.


targets Achieved Not achieved Administration Citizen Affairs Immigration Affairs Total 18 3 9 30 12 (67%) 3 (100%) 7 (78%) 22 (73%) 6 0 2 8 The Table above, indicates that the DHA overall target performance for 2018/19 financial year is 73%, a decline compared to the 86% achieved in 2017/18 financial year.

78 The programme that underperformed of the three programmes of DHA is the Administration programme.

This programme achieved 12 targets of the planned 18 targets.
This is concerning for a programme that consumes the second largest portion of the departmental budget.

5.1.1 Performance per programme This section focuses on the performance of the three programmes of the DHA for 2018/19.
Programme 1: Administration The administration programme is responsible for strategic leadership, management and support to the department and consists of five (5) sub-programmes, namely: Ministry; Management Support Services; Corporate Services; Transversal Information Technology Management; and Office Accommodation.
Performance of programme 1: Administration Performance targets 2017/18 2018/19 Number of targets as per annual performance plan Number of targets achieved or overachieved Number of targets not achieved 13 11 2 18 12 6 Percentage level of 85% 67% achievement The programme achieved 12 (67%) of the planned 18 targets for 2018/19.

This indicates a regression of 18 percent compared to the 85 percent achieved in 2017/18 financial year.
Out of the overall eight targets that were not achieved across the three (3) DHA programmes, the Administration programme contributed by six targets.

Parliament should note that the DHA increased the targets under the programme from thirteen in 2017/18 to eighteen in 2018/19 financial year.
The notable targets that were not achieved under the programme during the period under review include the following: • Automation of Asylum Seeker Management process as per specifications – this target was not achieved due to uncertainty on the agreement between DHA and the South African Revenue Services (SARS).

• The DHA planned the migration of the Automated Finger Identification System (AFIS) data into Automated Biometric Identification System (ABIS).
The DHA states that it could not achieve this target due to unavailability of data centres and delays due to copying of HANIS data.

• The DHA planned to pilot the Biometric Movement Control System (full biometric solution) at one port of entry – this target was not achieved and the Department states that the piloting of the BMCS will be rolled over to 2019/20.
79 • The DHA planned to equip 62 ports of entry with interim biometric functionality – the interim biometric functionality was installed in only 10 ports of entry in 2017/18 and there was no further roll out.

• Approval of DHA Access Model by the Executive Committee (EXCO) – the Access model was not approved as planned by the DHA.

If approved, the DHA Access Model would improve the footprint of the DHA and access to DHA services.
• A preferred bidder or private party for the development of six (6) ports of entry was not appointed.

Had the DHA achieved this target, it would have complied with the Treasury Regulations in respect to a Public-Private Partnership (PPP) for the development of ports of entry.

The final appropriation for the programme was R2.326 billion and DHA spent R2.325 billion (100%) for 2018/19 financial year.

However, there is an under-expenditure of R100 000.
The under-expenditure was under the Corporate Services Sub-programme (R99 000) and Transversal Information Technology Management sub-programme (R1000).

Programme 2: Citizen Affairs The Citizen Affairs programme provides secure, efficient and accessible services and documents to citizens and lawful residents.
The budget of this programme is shared amongst six (6) sub-programmes, namely: Citizen Affairs Management, Status Services, Identification Services, and Service Delivery to Provinces, Electoral Commission, and the Represented Political Parties’ Fund.

This programme achieved 100% of the planned targets for 2018/19.

There is a reduction of two (2) targets compared to the five (5) targets set for 2017/18 under this programme.

This programme consumes 60.2% of the total budget of DHA.
For 2018/19 financial year, this programme had a share of R5.447 billion and spent R5.447 billion (100%).

There is an under-expenditure of R100 000, particularly within the Status Services sub-programme.
Performance of programme 2: Citizen Affairs Performance targets 2017/18 2018/19 Number of targets as per annual performance plan Number of targets achieved or overachieved Number of targets not achieved 5 4 1 3 3 0 Percentage level of 80% 100% achievement The notable achievements under the programme include: 80 • Number of births registered within 30 calendar days – the DHA planned to register 810 000 within 30 days and exceeded this target by 6000 births registered within 30 calendar days.
This is one of the targets that DHA has had a challenge with over the MTSF 2014 – 2019.

• The DHA planned to increase the number of smart ID cards issued to citizens 16 years of age and above from 2 864 111 million in 2017/18 to 3 000 000 million (target) in 2018/19.

The DHA exceeded the target by 127 000 smart ID cards issued.

This brings the number to 3 127 217 smart ID cards issued between 2014/15 and 2018/19.
Programme 3: Immigration Affairs This programme is responsible for facilitating and regulating the secure movement of people through the ports of entry into and out of South Africa.

It is also responsible for determining the status of asylum seekers and regulate refugee affairs.
Performance of programme 3: Immigration Affairs Performance targets Number of targets as per annual performance plan Number of targets achieved or overachieved Number of targets not achieved 2017/18 10 9 1 2018/19 9 7 2 Percentage level of 90% 78% achievement The Immigration Affairs programme is the smallest of the three main programmes in terms of budgetary size.

For the year under review, the programme received a total budget of R1.273 billion and spent R1.273 billion (100%).
This programme had nine (9) planned performance targets and achieved seven (7) indicating 78% achievement rate.

The two (2) targets that were not achieved under this programme include the submission of the Immigration and Refugees Bills to Parliament for approval and the establishment of the Border Management Authority (BMA) as per project plan.

5.1.2 DHA Financial Report As can be seen from the graph below, DHA’s adjusted allocation increased from R6.6 billion in 2014/15, to R9 billion by 2018/19.
Over the past five years, the strongest growth was experienced in the 2018/19 financial year when voted funds increased 6.3% above inflation.

On expenditure, the Department has been doing well, for four years; it spent almost 100% of its allocated budget except for 2014/15 financial year wherein it spent 98.9%.
The table below provides DHA’s expenditure for the year under review: 81 DHA historical overview of allocations and expenditure form 2014 - 2019 2018/19 Financial year Final Actual Expenditure as a % of Final Programme Appropriation Expenditure Variance in R Appropriation R’000 R’000 R’000 Administration Citizen Affairs Immigration Affairs Total 2 326 056 5 447 520 2 325 956 5 447 420 1 273 863 9 047 439 1 273 863 9 047 239 % 100% 100% 100% 100% 100 100 - 200 The DHA’s allocation is adjusted significantly higher from its voted allocation.
This is due to the self- financing mechanism created by National Treasury wherein the DHA is allocated part of the revenue it collects during the financial year - allocated after the adjusted appropriation.

For example, during the 2017/18 and 2018/19 financial years, its budget was adjusted upwards with R1.3 billion and R1.1 billion respectively from the allocation it received at the start of the financial year.
However, actual expenditure by end of the financial year usually remains within its adjusted budget; hence, it is close to 100% expenditure rate.

The Table above indicates that the DHA spent R9.047 billion (100%) of the final appropriated budget for 2018/19 financial year, indicating an under expenditure of just R200 000.

Compared to the previous financial 82 years, DHA has reduced its under expenditure from R660 000 and R12.281 million in 2017/18 and 2016/17 respectively.
The DHA received an initial budget allocation of R7.915 billion as voted funds.

However, during the Adjustment Estimates of National Expenditure (AENE), additional funding of R1.132 billion (self-financing) was allocated to the DHA.

Additional funding is mainly used to pay for items expenditure such as: • Smart ID cards for first time applicants and elderly citizens older than 60 years.

• Infrastructure to implement the Who Am I online (WAIO) project.

• Fees for cash in transit.


• Printing costs for enabling documents.

During the year under review, the Department approved Treasury Regulation 16A6.4 deviations (sole supplier contracts) to the value of R602 million.
The deviations are as follows: • Department requested National Treasury for approval to deviate and appoint NEC Africa (Pty) Ltd and Bytes as substitutes for Marpless for the maintenance and support of the Home Affairs National Identification System (HANIS) system for a 24-month period, while the new Automated Biometric Identification System (ABIS) system is being developed and implemented.

The deviation is for a 24- month period and the contract value is R298 million.
• Linked to this deviation above was the substitution of Marpless with Dimension Data for maintenance and support of the National Identity System (NIS) for a period of twenty-four months for the amount of R51 million per annum.

• The third major deviation that was approved is for the renewal of the Microsoft Enterprise licensing Agreement to the value of R219 million.

Irregular, Fruitless and Wasteful Expenditure DHA has an opening irregular expenditure balance of R552.96 million.
There is an amount of R1.58 million relating to the prior year and for the current year (2018/19), the incurred total amount was R28.622 million.

The rest of the amount related to un-condoned amounts from previous years.

There were funds that were condoned (R328.27 prior years) and (R21 000 current year) and this brings the closing balance of DHA’s irregular expenditure to R253.29 million for 2018/19.
The contributing factors to the current irregular expenditure include: • Services rendered without valid contract to the value of R 20 000 • Cleaning services (split orders) to the value of R2.59 million • Exceeded 15% threshold of current extension without National Treasury (NT) approval to the value of R21.77 million • Exceeded compensation of employees (COE) ceiling to the value of R2.671 million 83 • Deviation not supported by NT (deportation services) to the value of R1.577 million.
The current irregular expenditure (R28.622 million) does not include the potential irregular expenditure of R278 million that is under investigation.

The split of the irregular expenditure under investigation is as follows: • Security services on quotation is R550 000.

• Supply Chain Management processes not followed is R2 487 000.

• Furniture procured not compliant with local content is R1 071 000.

• Exceeded petty cash threshold without National Treasury approval is R 8 000.
• State Information Technology Agency (SITA) ABIS procurement is R274 579 000.

The Auditor General of South Africa reported that effective and appropriate steps were not taken by DHA to prevent the irregular expenditure amounting to R28 622 000 for the current year.

Also, the Internal Audit Committee of DHA is not satisfied with the state of the internal control environment and recommended that more effort needs to be put in place to ensure internal control environment is effective.
In terms of fruitless and wasteful expenditure, the DHA had an opening balance of R184 000.

For the current year (2018/19), DHA incurred fruitless and wasteful expenditure to the value of R73 000 (against R46 000 incurred in 2017/18).

The closing balance of fruitless and wasteful expenditure by DHA is R249 000 which is higher than the closing balance of R184 000 incurred in 2017/18.
The contributing factors to fruitless and wasteful expenditure are due to staff no shows and interest paid on late payments and on arbitration awards.

The no shows occur when officials fail to make use of bookings without a valid reason or, at times, where circumstances are beyond their control.

It should be noted that the department did not incur any unauthorised expenditure during the year under review.
5.1.3 Findings of the Auditor General (AG) The AG compared the outcomes of the portfolio over the last five (5) year period, starting from 2014-15 to 2018/19.

It was reported that the audit outcomes of the IEC have remained stagnant with unqualified with findings for the past five (5) year period.

GPW received a clean audit in 2014-15 and regressed in 2015-16 to unqualified with findings until the 2017-18 financial year.
The DHA was at qualification from 2014-15 to 2015-16 and improved to unqualification from 2017-18 until the year under review, 2018/19.

The DHA only received unqualification only because they corrected all misstatements.

84 It was reported that the DHA needed intervention on IT governance and review and the monitoring of compliance.

Of concern to the AG was the oversight responsibility by the leadership, and action plans were not implemented.
It was reported that there was no improvement in the IT environment and the position of the Chief Information Officer had not been filled.

In terms of assurance, it was reported that the senior management, the accounting officer and the executive authority provided some level of assurance meanwhile the Internal audit unit and the Audit Committee provided assurance.

The AG further reported that all auditees in the portfolio were a going concern.

The issue raised was the revenue management.


The DHA was not able to collect all monies owed timeously.

With regards to fruitless and wasteful expenditure, it has increased from R108 000 in 2017-18 to R151 000 in 2018/19 which was attributed to late payments of invoices, which resulted in the interest charged.

Both the DHA and IEC are investigating the matters.

The Irregular Expenditure increased from R122 million to 2017-19 to R161 million in 2018/19.
It was reported that the IEC irregular expenditure was due to a contract that was awarded to a bidder who did not comply with the evaluation.

On Supply Chain Management (SCM), it was reported that all findings should be investigated.

The most common findings on SCM were uncompetitive and unfair procurement by the DHA and the IEC.
The IEC awarded a contract to the amount of R164 million to a bidder that did not comply with the evaluation criteria that were not stipulated in the original invitation for bidding.

The DHA made considerable progress with its audit findings from qualified opinions granted by the Auditor- General of South Africa (AGSA) in 2014/15 and 2015/16, to unqualified opinion with findings in 2016/17, 2017/18 and 2018/19.

It should be noted that in 2013/14, DHA received a disclaimer.
Whilst it is commendable that the DHA received unqualified audit opinions for the past three years, of concern is the recurrence of matters of emphasis such as uncertainty relating to the future outcome of litigation, impairment of accrued departmental revenue, and irregular expenditure.

For 2018/19, the DHA received an unqualified audit opinion.
However, the Auditor General (AG) of South Africa made the following findings: • Uncertainty relating to the future outcome of litigation – the department is the defendant in various claims.

The department is opposing the claims.

The ultimate outcome of the matters cannot currently be determined.

• • Impairment of accrued departmental revenue – an amount of R156 544 000 was impaired as a result of the department not taking effective and appropriate steps to collect the penalties due.
Irregular expenditure – there were cases that were not yet confirmed as irregular by the Loss Control Committee amounting to R278 million.
This amount consists of R4 million Supply Chain Management 85 transgressions and R274 million for ABIS project which the DHA has disclosed as irregular expenditure (under investigation/determination) DHA history of audit opinions from 2014 - 2018 Year Opinion Description 2013/14 Disclaimer • Inability to obtain sufficient appropriate audit evidence (foreign revenue) • Capital assets • • Intangible assets Immovable assets • Commitments 2014/15 Qualified • Departmental revenue • Accruals and payables not recognized • Intangible capital assets 2015/16 Qualified • Departmental revenue and NRF receipts to be surrendered to the Revenue Fund • Accruals and payables not recognized Year Opinion Description 2016/17 Unqualified EMPHASIS OF MATTERS • Restatement of corresponding figures • Uncertainty relating to the future outcome of litigation • Irregular expenditure 2017/18 Unqualified EMPHASIS OF MATTERS • Restatement of corresponding figures • Uncertainty relating to the future outcome of litigation • Irregular expenditure 2018/19 Unqualified EMPHASIS OF MATTERS • Uncertainty relating to the future outcome of litigation • • Impairment of accrued departmental revenue Irregular expenditure Compliance with specific matters in key legislations Procurement and contract management 86 • Some of the goods and services of a transaction value above R500 000 were procured without inviting competitive bids and deviations were approved by the accounting officer.
This means that the accounting officer did not follow the requirements of treasury regulation 16A6.1 and 16A6.4.

This issue was also raised in the previous financial year.

• Some contracts were extended or modified without the approval of a properly delegated official as required by section 44 of the Public Finance Management Act and treasury regulation 8.1 and 8.2.
• Some of the bid documentation for procurement of commodities designated for local content and production did not stipulate the minimum threshold for local production and content as required by the 2017 preferential procurement regulation 8(2).

Expenditure management • Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R27 045 000, as required by section 38(1)(c)(ii) of the Public Finance Management Act and treasury regulation 9.1.1.
The AG states that the majority of the irregular expenditure was caused by non- compliance with Supply Chain Management (SCM)-related legislation.

Revenue management • Effective and appropriate steps were not taken to collect all penalties and other long outstanding receivables due, as required by section 38(1)(c)(i) of the PFMA.

This resulted in the significant portion of the debtors being provided for impairment.
5.2 The Electoral Commission of South Africa (IEC) Ms J Love, the Vice-Chairperson of the IEC led the delegation.

She indicated that the CEO and CFO would make the presentation on the performance and expenditure of the Commission.

The CEO reported that the IEC has received an unqualified material adjustment from the AG.

The IEC has three programmes; namely programme 1: Administration; programme 2: Electoral Operations and programme 3: Outreach.
There were 25 targets for all the programmes, 18 of the 25 targets were achieved and seven (7) of the targets were not achieved.

The overall achievement of the targets was 72 percent.

In programme 1: Administration, there were ten (10) targets and seven (7) were achieved.

The targets that were not achieved under programme 1 were: the 100 percent performance agreements of qualifying staff members and it was reported that 85 percent of the staff completed the agreements by 1 April 2018.
The non- achievement was due to the activity leading to the National and Provincial Elections 2019.

The other target which was not met was the IT upgrade and was not met due to the delay in the procurement process and the last target not achieved is the filing of all 930 posts.

The actual achievement was 922 and was due to delays in the organizational review processes.

87 In programme 2: Electoral Operations, there were ten (10) targets and six (6) were achieved.
Those that were not achieved were: The target did not have the number of elections set aside by the Electoral Court and it was reported that two (2) elections were set aside.

These were the results of the by-election in Dr JS Moroka and Mtubatuba on 4 December 2018.

The second target of 27 653 820 of registered voters reflected on the voters was not achieved.

The IEC only had 26 749 557 (903 763 short).


The third target not met was 1 600 000 registered voters whose addresses did not appear on the voters roll and the actual achievement is 3 882 773 so there were 1 411 487 more voters than planned.

The last unachieved target is only 22924 of the 23 000 voting stations for the purpose of the weekend registration and general election days, however this was due to a more efficient and convenient structure for voters was devised.
The IEC budget was about R2 billion and R1.5 billion was spent on goods and services, lease rentals and employee costs.

This resulted in a surplus of R455 million.

The amount was a result of the delayed IT refreshment of voter registration devices.
5.3 Committee Observations on 2018/19 Annual Reports The Committee observed the following during its oversight over the Department of Home Affairs, the Government Printing Works and the Electoral Commission of South Africa: 5.3.1 Department of Home Affairs • It appears that the DHA and IEC lack general accountability because the AG raises the same issues in each and every financial year.
• The issue of repeat offenders and the amount that the DHA and IEC were able to recover as a result of irregular expenditure.

• The matter raised by the AG on the filing of positions was a concern because government departments do not have funds to fill the posts.

• The DHA to provide the Committee with the list of repeat offenders and officials who are doing business with other government departments.
• The matter of consequence management for those responsible for irregular wasteful and fraudulent expenditure is not being implemented.

The AG has reported that there were repeat offenders that were identified during the audit outcomes and it appears that there was no consequence management from the DHA.

• The issue of filling of vacant funded posts such as the Chief Information Officer was a concern as the AG raised the matter of IT governance in the audit outcomes.
Although the DHA reported that the post was advertised four times and could not get suitable candidates.

• The long queues at high volume offices such as the Soweto, Alexander, Umgeni, Pietermaritzburg.

The school children have to queue during school times to apply for enabling documents.

88 • The list of those DHA officials doing business with another government department has not been provided to the Committee.
• The dependency on the DPW for office accommodation and on SITA on the network connectivity was a major concern.

Although the Minister of Home Affairs indicated that there were no law forcing government departments to use accommodation sourced by DPW.

The Committee should meet with DPW and SITA.

The DHA have started investigations into getting their own buildings.

• The amount of approximately R2 billion on contingency liabilities was a very serious concern.
• The audit action plans are not being implemented fully by DHA.

5.3.2 Electoral Commission • • • • The delayed IEC IT refresh for procuring new registration machines resulted in an under- expenditure/surplus.

The matter of alleged double voting which happened in the National and Provincial Elections 2019 was reported as under investigation The IEC expenditure on leases each year is too high.

The audit action plans are not being implemented fully by the IEC 5.3.3.
Government Printing Works • The GPW should table its annual report as soon as possible before the 2019/20 Medium Term Budget Policy Statement (MTBPS) 6.
CONSIDERATION OF OTHER SOURCES OF INFORMATION 6.1 Two State of the Nation Addresses 2019 Key Remarks by the President: February 2019 • “We are pleased to report that significant progress has been made in restoring policy certainty on mining regulation and the visa regime, crafting the path towards mobile spectrum allocation, and reviewing port, rail and electricity prices.

• “Our highest priority this year will be on the introduction of a world class eVisa regime”.
• “… we will focus on further strengthening the capacity of the state”.

• “I have engaged with the Independent Electoral Commission and also with the Premiers of all provinces, and intend to proclaim the 8th of May 2019 as the date of the election”.

Key Remarks by the President: June 2019 • “We will make good on our ambition to more than double international tourist arrivals to 21 million by 2030.
This will be achieved through the renewal of the country’s brand, introducing a world-class visa regime and a significant focus on Chinese and Indian markets and air arrivals from the rest of our continent.

We are determined to ensure that tourists who come to our country are safe”.
89 The Priorities emanating out of the state of the nation address include: Economic transformation and job creation: • • • • • Continue with the simplification of visa application procedures for selected investment and low risk countries to benefit from visa waivers and / or relaxation of conditions.

The White Paper on International Migration and subsequent legislation will facilitate investment and ease of entry for bona fide visitors, business persons and investors.
DHA is investing into enabling infrastructure and the development of IT systems that will enhance efficiency at the point of application, processing of traveller movements and providing for the verification of identity.

The development of the new biometric movement control system (BMCS) and e-Permitting system are key enablers to achieving such efficiencies.

The latter part of 2018/19 and the 2019/20 FY will see the prioritisation of a progressive rollout of these new technologies.
This will also give way to the implementation of a pilot programme on e-gates at our international airports recognising trusted travellers and creating a seamless facilitation of migratory movement whilst still maintaining a risk managed approach.

A capable, ethical and developmental state • • The repositioning programme of the DHA is a critical component of strengthening the capacity of the state.

The DHA is central to e-Government and realising the benefits of the fourth industrial revolution.
The DHA could play a central role in improving efficiencies in general and lower the cost of doing business.

The DHA will develop a “corps of skilled and professional public servants of the highest moral standards – and dedicated to the public good” through its re-skilling programme and recruitment practices as part of repositioning.
6.2 Sustainable Development Goals The outcome of the 2030 Sustainable Development Agenda outlining the 17 Sustainable Development Goals pays particular attention to the people, planet and prosperity.
The SDGs recognises the positive contribution migration makes to inclusive growth and development and therefore call on United Nations (UN) member states to strengthen their international support and cooperation to ensure safe, orderly and regular migration with full respect for human rights and fundamental freedoms.
In this regard, the South African government has embarked on a comprehensive process of re-examining the role that migration plays in its society and economy through an extensive review of the international migration policy outlook currently underway.

The objective of this policy framework is to better equip South Africa to manage the challenges presented by migration and harness its opportunities for both the local communities as well as immigrants.
90 6.3 African Union Agenda 2063 At the African Union Assembly in June 2015, Members adopted Agenda 2063 as both vision and action plan for the integration of Africa.
The White Paper on International Immigration Policy acknowledges at least two resolutions adopted by the Assembly, which set clear parameters for South Africa’s immigration policy, namely, the establishment of a Continental Free Trade Area (CFTA) and a continent-wide visa-free regime, including the issuing of visas on arrival at ports of entry for African citizens.

As a result, visa-free entry should be the norm provided that bilateral return agreements are concluded.
In fact, DHA has been issuing 10-year multiple entry visas to frequent travellers from other African countries.

Where visas are still required, entry is easy as possible for bona fide travellers.
In addition, South Africa’s White Paper on International Migration Policy acknowledges at least two resolutions adopted by the Assembly, which set clear parameters for South Africa’s immigration policy, namely, the establishment of a Continental Free Trade Area (CFTA) and a continent-wide visa-free regime, including the issuing of visas on arrival at ports of entry for African citizens.
6.4 Oversight Visit to DHA, IEC and GPW headquarters and facilities The Committee conducted an oversight visit to the DHA, the IEC and the GPW on 27 – 29 August 2019 including the Desmond Tutu Refugee Reception Office.

The purpose of the oversight visit was to familiarise the Committee on the work of the DHA, the IEC and the GPW because all members of the Committee were new to the Committee in the 6th Parliament.
6.4.1 DHA Head Office and Population Register The DHA indicated in its overview of the Department Head Office in Pretoria, that it had 9163 positions that were filled in 2019/2020 and four were vacant.

Some positions the DHA would not able to fill because of the national ceiling on the Compensation of Employees.

The DG indicated that the DHA was in discussion with National Treasury to provide the DHA with additional capacity.

In 2018, the DHA lost 500 positions which it cannot fill.
He gave an example that foreign missions such as in China had four officials to process documentation and these officials are not able to adjudicate on time.

Nigeria had three officials and these officials had to process between 300 – 400 applications per day.

He reported that it costs about R1 million per year to deploy one official in a mission.

He reported that DHA needed funding to fill critical positions.
In addition to information present elsewhere in this report, the DHA indicated that South Africa has 72 ports of entry and is represented in 30 missions abroad.

There are 114 old mobile units which can process and print birth, marriage, death certificates, however, there no Smart Card system capabilities.

Out of the 114 mobile units, 59 will be refurbished.

There were 41 new mobile units of which 9 are installed with the Live Capture System.
There are 391 connected health facilities to register births within 30 days.

In terms of the law, birth registration should be done within 30 days after birth.

The DHA is working with the Department of Health to ensure that all children born at hospitals are registered.

91 The DHA has a partnership with the banks for their clients to apply for Smart ID Cards and passports.

The partnership is with 13 banks in Gauteng and one in the Western Cape.

The banks have processed over a million documents.


He further reported that the DHA was in discussion with the National Treasury to review tariffs of the services that the DHA was charging.

An example was that it costs the DHA R545 to produce passports and the Department charges the citizens R400.
South Africa has five Refugee Reception Offices, namely, Musina Refugee Reception office in Limpopo, Desmond Tutu Refugee Reception in Gauteng, Durban Refugee Reception in Kwazulu-Natal, Port Elizabeth Refugee Reception in the Eastern Cape and the Cape Town Refugee Reception Centre.

The DHA was in the process of reopening the Cape Town office but intends relocating the Refugee Offices to the Northern part of the country.

This will ensure that asylum seekers are processed closer to the borders.
The DHA has now been located in the security cluster and the Border Management Authority (BMA) Bill was finalized in the National Assembly in 2017 and now it needed to be completed by the National Council of Provinces (NCOP).

The IEC accounts directly to Parliament as a Chapter 9 Institution.

The DHA transfers funds to the IEC and the Represented Political Parties Fund (RPPF).
The GPW is currently self-funding, although it has strong links with the DHA and the Minister of Home Affairs exercises oversight over it.

The DG reported that the following challenges not mentioned elsewhere: • • • • • Need for the effective and efficient management of migration and the asylum seeker/refugee environment to embrace global opportunities while safeguarding the sovereignty and ensuring public safety and national security.
Lack of an integrated approach to border management and inadequate provision of acceptable port infrastructure.

Footprint and infrastructure (DHA uses physical office infrastructure as the main delivery channel for its services.

There is a dependency on the Department of Public Works (DPW) for the acquisition and maintenance of its offices.
Currently, the department is accommodated in 412 Civic Services front offices across the country, which is inadequate considering that the DHA provides civic services to all SA citizens, permanent residence holders and refugees.

The footprint of the DHA does not meet the minimum accessibility norms (distance to be travelled by clients to access services) of 50 km in the Northern Cape and 25 km in other provinces, as set by the Department of Public Service and Administration (DPSA).
There is a lack of DHA purpose-build infrastructure.

Non-integration of IT systems across the DHA and running of dual systems (digital and manual) in the same environment.

Lack of efficient records management in support of key services to clients.

92 • • • • Lack of capacity in critical support areas such as Legal Services, Risk Management, Information Services, Counter Corruption and Security Services and Inspectorate.
Need to professionalize the DHA cadre (ensuring staff are appropriately trained, professional and caring with the required leadership and management capabilities).

Challenges with increasing working hours for services due to labour protests.

Long queues in offices.

The delegation was taken on tour to the PR Section and it was reported that the DHA was managing migration by risk.
The high risks include acquiring of PR through marriage, accompanying spouse permits, relatives permit and retirement permits and low risk is the issuing of visas.

Some of the high risks countries for PR are Nigeria, Pakistani and Bangladesh.

Nationals of these countries tend to have a marriage of convenience.

In the high-risk category, it tends to take long to finalize the processing of the PR.
Applicants tend to submit fraudulent documents and when rejected, they appeal to the higher authority with the same fraudulent documentation.

The delegation was shown the Advanced Passenger System (APP).

The APP is a system where the DHA extends its borders to foreign country.

The Airline traveling to South Africa sends passengers information to the DHA to check if there is an undesirable person at the point of embarkation.

The DHA would notify the airline if there is an undesirable person on the list.
The airline is not allowed to board that person and if it does, the DHA would ensure that airline takes the person back and a fine imposed.

Once the Operation Centre receives the list from an airline, it can respond in three ways; namely it is fine to board, do not board and the check against records if a ban has been removed.

It was reported that there about 120 000 ‘do not board’ cases per year.

The system deals with 49 airlines and 25 maritime partners.
There are always people per shift to advise airlines.

The delegation was taken to the New Corporation Population Register Building.

The first part was to visit the postal receipt section.

It was reported that all manual applications from provinces and missions are received here.

This includes the application of Green Barcoded IDs.

The applications are recorded and sorted out in terms of business units and use track and trace system.
It was reported that the timeframe for the issuance of Green Barcoded ID Books is 54 working days and 47 workings for the re-issue.

The applications of the Green Barcoded ID Books have gone done due to the Smart ID Cards.

The delegation was also shown the Document Management archive and it was indicated that documents that have not been digitized are kept.

It was further reported that the DHA use to have Namibian documents, which had been sent to Namibia.
The delegation was taken to amendments section as well.

93 The DHA is able now to resolve the issue of duplicate cases.

Duplicates cases is a situation when an individual has two ID numbers or two individuals share one ID number.

It was further reported that with the Smart ID Cards, there are two challenges that it is not able to accommodate long names and special characters.
The timeframe for the applications of the Unabridged Birth Certificates is between 3 – 4 weeks and the DHA was also doing pre-modification for children below the age of 18 years.

The Unabridged Birth Certificates was introduced in 2013.

All children born after 2013 are always issued with Unabridged Birth Certificates.

Unabridged Birth Certificates are certificates with particulars of both or one parent.
6.4.2 Tour of the Desmond Tutu Refugee Reception Office On 29 August 2019, the delegation went to Desmond Tutu Refugee Reception Office (formerly the Marabastad Refugee Reception Office).

The Chief Director for the Asylum Seeker Management took the delegation through the tour.

The delegation started at the self-service (ABT) machines where extensions and new appointments are made.

On Thursdays, it was reported that the Office deals with nationals from Somalia, Cameron, Senegal, Eritrea and Ethiopia.
The office opens at 7:30 until 16:00 every day, however, there are officials at 6:00 to start assisting with extensions and renewals at the ABTs.

Mondays and Wednesdays are their busiest days and the office assists an average of 1000 people daily.

The people who were assisted at the ABT machines are supposed to have the transit visa issued at the port of entry and a passport, however, it was reported that 99.9 percent of them do not have the transit visa.

They only have a passport.


It was mentioned that the transit visa is issued at the port of entry.

With regards to the camera at the entrance of the complex, the Chief Director, it had not been installed as advised in the last visit by the Committee in 2018.

He reported that there are 24-hour security personnel for the premises.

The DHA discourages clients to come at night for security reasons.
He also indicated that South Africa had 88 000 recognized refugees and the rest are asylum seekers who are awaiting decisions by the Standing Committee on Refugees (SCRA) and the Refugee Appeals Board (RAB).

The United Nations High Commission on Refugees (UNHCR) was assisting the DHA on backlogs of approximately 150 000 at the RAB.

The Director of the Asylum Seekers Management reported that the challenge was with the capacity at the SCRA and RAB.
The delegation was taken inside the building and it was reported that there were off-site interpreters based at the Head Office of the DHA.

The rationale of off-site interpreters was to curb the issue of corruption.

On the question of the First Safe Country principle, the DHA reported that South Africa needed to have formal agreements with neighbouring countries.

South Africa only has an agreement with Tanzania.


94 The delegation was shown the control room which monitors the interviews by the 41 adjudicators and the challenge is that it can only record video but there is no audio.

While in the control room, the delegation noted that there was an official who was busy on his phone in front of the client.

The delegation requested that a report is required on this by 30 August 2019.

6.4.3 The Electoral Commission (IEC).


The delegation met with the IEC on 28 August 2019 at its Head Office in Centurion.

The leader of the delegation made the opening remarks and indicated that the Committee was conducting oversight in order to enhance operations of the IEC.

The IEC and the delegation made an introduction.

After the introduction, the IEC Chairperson made introductory remarks and he indicated the IEC has just concluded an internal review of the 2019 National and Provincial Elections.
According to the review, the IEC was ahead of most of its peers and South African democracy was maturing because there was less of intra-political conflict.

South Africa should embrace digitization of processes that would eliminate a number of challenges.

There was an improvement in the training of party agents and improved communication but the downside of the social media was the disinformation.

The Chief Electoral Officer (CEO) made the briefing on the overview of the Electoral.
The CEO indicated that the IEC was established as an independent institution which was mandated to: • • • Manage elections of national, provincial and municipal bodies.

Ensure that those elections are free and fairs; and Declare the results of those elections within a period prescribed by a national election which is within 7 days.

The CEO further indicated that the vision of the IEC is to be a pre-eminent leader in electoral democracy with Mission and Values.
The Commission has five Commissioners appointed for seven years with a maximum of two terms.

The prospective Commissioners are interviewed by a panel headed by the Chief Justice and heads of other Chapter 9 Institutions.

The shortlisted candidates are sent to Parliament and the National Assembly recommends to the President the preferred candidates.

The President designates the Chairperson and Vice-Chairperson.
He reported that there was 1020 permanent staff based at the National Office, nine provincial offices and local offices in the municipality (eight metropolitans and 226 local municipalities).

The current vacancies are about 120.

Of the 1020 staff, 534 were females which represented about 58 percent and 411 were males.

Africans, Indians and Coloureds together represented 867 staff/ 94 percent and Whites were 55, which represented about 6 percent.
95 The IEC has already conducted six National and Provincial elections and four Municipal elections with an average of 100 by-elections per year.

The next elections would be Municipal Elections between August and November 2021.

The IEC has already met with the Local Government to commence on the preparations for the general elections of municipal councils.

Cabinet has appointed an Inter-Ministerial Committee on local government elections in order to support the IEC in the conduct of those elections.
It was reported that the Minister determined and published the formulae on 5 July 2019 for the determination of the number of councillors per municipal council.

The MEC will now apply the formulae based on the number of registered voters and the MEC has until September 2019 to perform this function.

Once this is done, the Municipal Demarcation Board (MDB) will start with the delimitation process and hand-over of the final wards by August 2020.
The current five-year term of municipal council expires on 3 August 2021.

The elections should take place between 4 August – 1 November 2021.

The Deputy Chief Electoral Officer responsible for Electoral Operations made the presentation.

He indicated that the electoral operations are the core business of the IEC and interfaces with the public, including voters and political parties.
He indicated that the election value chain is as follows: Voting district delimitation, voter registration, register political parties, administer contesting candidates and parties, voting and special voting, counting of ballots and lastly announcing elections results.

He reported that there were 22 924 Voting Districts (VDs) which are servicing about 26,7 million registered voters.
Each VD in urban areas has 3000 registered voters and no more than 7,5 kilometres walking to the station and rural VDs which has about 1200 registered voters and 12,5 kilometres walk to the voting station.

He further indicated that a person is eligible to register to vote if he or she is a South African citizen and must be 16 years and above.

The citizen should be in possession of an ID document and must be ordinarily resident in a ward with an address.
It was reported that voter details are verified against the National Population Register (NPR).

The IEC continuously verifies voter’s details against the NPR to determine any change changes such as Non-South African Citizen, those underage and deceased.
The Deputy Chief Electoral Officer responsible for Outreach Programme made the presentation and he indicated the programme is divided into two broad programs: • Communication including media liaison; • Civic, voter and democracy education including research on democracy and electoral processes.
In terms of the Communications, the Deputy Chief Electoral Officer outlined the following: • Internal Communications: To promote knowledge and understanding of internal stakeholders through monthly awareness publications and email communications.

96 • External Communications: To promote knowledge and awareness of electoral processes through the mix of the following platforms: Outdoor Media.

Digital media.

Print.

Television; and Radio.


The communication campaign was based on a theme and focus on the sector of RSA citizens while reaching everyone.

For Elections 2019 the campaign was focused on young voters with the campaign slogan “XSE” Feedback on the campaign is very good and a number of young voters were able to relate to the campaign.

XSE campaign featured in all our communication platforms in print, digital productions and voice radio.
There is also an ongoing engagement with the following stakeholders: • Stakeholder engagements and interactions with various community structure.

• Community education programs focusing on civic responsibility and civic participation including balloting.

• Sector focused on civic education and continuous liaison and interaction.

• Disability.

• Commercial Farmers.


Civic Education Research is conducted in areas of Electoral Democracy, documentation, areas of management, elections, democracy and politics.

The voter turnout in the NPE was 66.05 percent and the target was 70 percent.

Spoilt ballot paper was 1.25 percent against the target of 1.85 percent.

It was reported that there was declining voter turnout for the general elections and it worsens with by-elections.
The voter registration figures for youth was still below the desirable level.
The Deputy Chief Electoral Officer for Corporate Services made the presentation and indicated that the Corporate Services’ functions are the following: • Human Resources and Development • Legal services • Support services • Information Technology Human Resources and Development is responsible for maintaining the organogram, recruitment and selection of staff, recruitment and payment of electoral staff, employee assistance programs, performance management, labour relations, training of permanent staff, development of election training materials and training of electoral staff.
It was reported that only 91 percent of the posts on the organogram were funded.

There are currently 917 permanent staff and 59 fixed-term staff.

During the electoral period, there were 198 721 staff appointed including 4 908 area managers.
Legal Services is responsible to: • Institute and defend legal proceedings 97 • Draft and vet contracts and other legal documents • Provide legal advice and draft opinions as required • Draft legal notices and amendments to legislation and manage the process of publication thereof • Investigate section 65 objections in respect of by-elections and make recommendations to the Commission South Africa had no regulatory framework for the private funding of political parties before the Political Party Funding Act (PPFA) was approved by the President on 21 January 2019.
Amongst other things, the PPFA was to: • Prohibit certain donations made directly to political parties.

• To regulate disclosure of donations.

• To provide for administrative fines and criminal sanction.

• Establish a Multi-Party Democracy Fund (MPDF).

Regulations on PPFA were published in March 2019 for public comments and received 4 300 responses from the public, some substantive and some merely acknowledging the initiative.
The Party Funding Committee sat on 26 August 2019 to look at all the recommendations made by the legal unit and once the regulations are finalized, they will be presented at the Political Liaison Committee (PLC).

The Commission anticipates implementing the Act on the date to be agreed with the Presidency.

The position of the Head of the unit has already been filled and the recruitment process of the next level of positions is currently underway.
The delegation was shown the servers and it was reported that there were 92 servers.

During the National and Provincial Elections 2019, it was reported that there were several attacks, which were reported to be around 3000 from the United State of America, Canada and South America.

All of them were unsuccessful.

The building also has also two Uninterrupted Power Supply units (UPS) and a generator.

The generator kicks in within 3 seconds after the UPS when the power goes off.
6.4.4 The Government Printing Works (GPW) The delegation met with the GPW on 29 August 2019 at its head office.

The leader of the delegation made an introductory remark, then introductions were made which was followed by the briefing by the GPW management.

The GPW indicated it is a Government Component reporting to the Minister of Home Affairs.

It was established in 1888 and it has 130 years’ experience in government security printing.
The mandated of GPW is to provide printing services to all Organs-of-State in South Africa and it receives no funding from 98 Government.

Its vision is to be the State’s mandated security printing.
The core business of GPW is security printing, non-security printing and gazette publications services • Security Printing: Conceptualisation, design and production of face-value documents (Passport, Identification Documents, Examination papers, Vehicle licensing/registration forms & distribution to local authorities; Road Traffic Infringement blank documents; Firearm licenses; etc.
• Non-Security Printing: Layout, design and production of government official stationery and related documents (police case dockets, hospital registers, Annual Reports, Brochures, posters, information Pamphlets.

• Gazette Publication Services: The administration and publishing of official government notices in the Government Gazette.
It was reported that in 2013/14 and 2014/15, GPW received clean audits and from 2015/16 to 2017/18 it received unqualified audit opinions, however, it should be noted that in 2016/17 and 2017/18, the GPW paid a total amount of R400 million back to National Treasury.

The top 10 customer of GPW as of 31 March 2019 are: • • • • • • • • • • Department of Home Affairs.

South African Police Service (SAPS) Logistics Pretoria.

Department of Education Limpopo.

Department of Roads and Transport.


Department of Basic Education National Head Office.

Department of Higher Education & Training.

Department of Education Kwa-Zulu Natal.

eGazette Cash Sales Account.

SAPS Division Visible Policing.

State Information Technology Agency SOC Ltd (SITA SOC Ltd).

The main client for GPW is the DHA for which it prints the Identity documents and Smart ID Cards.
It has the capacity to print 3 million Smart ID Cards annually on day shift and can also print 9 million Smart ID Cards per annum with more shifts.

It can also print 1.2 million booklets per annum on day shift and 3 million booklets per annum on the day and night shifts.

GPW can also print 276 000 examination scripts per day and package 840 000 scripts per day.

GPW also published automated digital eGazette and converted manual processing to eGazette in 2015.
It was reported that GPW has begun to expand their footprint to SADC countries, however most countries have contracts with their former colonial occupiers.

GPW partner with DHA and attend engagements from 99 international visitors that would expose GPW to more business.

GPW also conducts international visits to gain exposure and market GPW to targeted customers in order to increase their revenue base.

GPW is working with the DHA to finalize and tabling of the Security Printing Bill to Parliament.
This will ensure that all security printing was ring-fenced.

GPW is encouraging government departments to procure printing services from it so that it could increase its revenue base.

The delegation was taken on a tour of the Printing Factory, starting with the section of the DHA sections where: passport photos are enhanced, quality assurance of the passports is done, and documents are dispatched.

This was followed by the tour of the passports printing and the Smart ID Cards printing section.
The delegation was also taken to the high quantity printing section and examination sections.

In all the sections, the security is very tight with cameras, security personnel and only staff that have been vetted.

The delegation was further taken to Bosman Street Printing Factory, where the non-security printing is done.

In this factory, GPW prints and designs the eGazatte and stationary.
It was further reported that both the buildings at Visagie and Bosman Streets like all state buildings are owned by the DPW.

6.4.5 Committee Observations.

The Portfolio Committee on Home Affairs observed the following: The Department of Home Affairs.

• • • • • • The DHA was dependent on the DPW for office accommodation The DHA was dependent on SITA for ICT services and far too often the system was down at the frontline offices which impacts on service delivery.
The DHA was underfunded by National Treasury, which also has an impact on service delivery.

Some foreign nationals submit fraudulent documentation in the application for Permanent Residency and kept the same documents on appeals to high authority.
The committee noted the 5th Parliament recommendation to proactively monitor the procurement and renewal process of contracts under the DHA and investigate related irregularities particularly in relation to Visa Facilitation Service (VFS), EOH and Fireblade Aviation.

The Committee noted the need for an update on the Bosasa liquidation and appointment of new service providers as it relates to the operation of Lindela repatriation centre.

The Electoral Commission.


• The Committee was concerned about the municipal demarcation into wards every municipal election.

Although an explanation was provided by the IEC.

The Committee felt that some communities might not want to vote because of the demarcation.

100 • • • • It appears that the IEC was not countering the fake news on social media.

The zip zip machines are obsolete and needed to be replaced.
The Committee was concerned about reports of double voting during the National and Provincial Elections 2019.

The printing of ballot papers is subject to the PFMA.

The Government Printing Works.

• • The Security Printers Bill was being prepared by the GPW and DHA to ensure that security printing for the state is ring-fenced and done by GPW.

The GPW was marketing itself into the African continent to print its security documents.

7.
7.

COMMITTEE’S RECOMMENDATIONS Based on findings mentioned in this report during the oversight and engagement with the Department of Home Affairs (DHA), the Electoral Commission (IEC) and the Government Printing Works (GPW); the Portfolio Committee on Home Affairs recommends that the Minister of Home Affairs should: 7.1 Issues outstanding from the 2018 Budget Review and Recommendation Report The Department of Home Affairs 7.1.1.
Submit budget and planning proposals to National Treasury to address the continued inability of the State Information Technology Agency to improve Information Technology challenges at the DHA, in particular the network downtimes and reliable power supply, for consideration in the Medium Term Budget Policy in 2019.

In the interim, SITA is to report to the Committee on its interventions.

7.1.2.
7.1.2.

Report on the consequence management, as per the Public Finance Management Act, in relation to staff not complying with Supply Chain Management regulations; involved in corruption; irregular and fruitless expenditure, before the tabling of the 2018/19 Annual Report.

7.1.3.

Report back on its investigations in relation to the AG provided list of persons with involvement in companies whilst in the employ of the DHA within seven days after the adopting of this report.

7.1.4.
7.1.4.

With regards to operations at Desmond Tutu Refugee Reception Office, report back on Counter Corruption Directorate investigations as well as engaging the Hawks to investigate and address syndicates that operate outside and within the office by June 2019.

7.1.5.

Install a camera and microphone focusing outside the entrance of the Desmond Tutu Refugee Reception Office to address corrupt activities along with the relevant monitoring and counter corruption capacity by June 2019.

7.1.6.
7.1.6.

Report on the full reopening of refugee offices in Port Elizabeth and Cape Town as per court orders as a matter of urgency.

7.1.7.

Prioritise the roll out of fully functioning mobile offices to improve service delivery.

101 The Government Printing Works 7.1.8.

The GPW should make a submission to Parliament to introduce a legislative provision for a governance structure before the end of 2019 given the organisation is remaining a Government component.

7.1.9.
7.1.9.

The DHA should be approached to sponsor the legislation needed by the GPW to formalise its status as a government component before the end of 2018/19 financial year.

7.1.10.

The GPW should report on the implications of introducing legislative provisions for ring-fencing of certain government printing work prior to the tabling of such legislation at Parliament.

7.1.11.
7.1.11.

Continued failure to support the completion of GPW facilities beyond 2018/19 will result in the City of Tshwane and DPW being called to account to Parliament for their delays.

7.1.12.

The appointment of the CEO of the GPW should be prioritised and reported to the Committee by the end of 2018.
7.2 Recommendations 2019/20 Based on the continuous engagement with the Department of Home Affairs, the Government Printing Works and the Electoral Commission for the 2019/20 financial year, the Committee recommends the following to the Minister of Home Affairs: Department of Home Affairs 7.2.1 Resolve the matter of the system downtime by SITA with the Minister of Communications to address front office service delivery by the DHA and provide alternative solutions and related budget implications if not resolved by the end of the 2019/20 financial year.
7.2.2 Initiate the process to be exempted from the requirement to use the Department of Public Works and Infrastructure with regards to the procurement of DHA offices that are suitable for the Live Capture System prior to the 2019/20 Budget Allocation.
7.2.3 Engage more urgently with the Ministers of Finance regarding the cutting of funding to the already constrained DHA which is operating at less than half its ideal capacity, since it is significantly effecting service delivery, the correct statement of audit figures, as well as national security.

7.2.4 Outcomes of these deliberations to be reported to the Committee within one month of the tabling of this report.
7.2.5 Effect administrative and legislative changes to facilitate laying criminal charges against foreign nationals who submit fraudulent documentation in the application for Permanent Residence and report back in this regard by the end of the 2019/20 financial year.

7.2.6 Ensure that all undocumented migrants should be registered with the DHA and those who do not want to register are deported to their country of origin.
Increased budget allocations for recruitment of Inspectorate Officials in the adjusted 2019/20 budget is critical in this regard.

102 7.2.7 Further motivate for funding over the Medium Term Expenditure period for completing the digitizing of paper based population records and cleaning of the National Population Register of duplicate, fraudulent and other irregular records.
7.2.8 Provide for funding for training of front office staff on the legislation governing the DHA, including for Department of International Relations and Cooperation staff at foreign missions handling visa and other DHA applications.

7.2.9 Provide the Committee with a written response, within 30 days of tabling this report, on the matter of the repeat offenders amongst staff and the related consequences as raised by the AG.
7.2.10 Ensure that the progress report on the litigation against the DHA should be forwarded to the Committee within 30 days, including categorization of cases which could be settled rather than going to court; in order to mitigate the trend of wasteful legal expenses and address large contingent liabilities.

7.2.11 Strive towards a clean audit opinion and better adhere to in-year audit plans.
In particular, the impairment of departmental revenue in collecting of penalties and the reduction of irregular expenditure.

Progress on audit plans and the Auditor General Management Letter must form part of all future quarterly performance reporting to the Committee.

7.2.12 Revive the need for working and providing services to clients on Saturdays in negotiation with National Treasury for funding and trade unions for staff interests prior to the end of the 2019/20 financial year.
Consideration, in this regard should be given to the lost productive time for learners, businesses and employees as well as the essential nature of the services.

7.2.13 Address the issue of late payments to cut the cost of interest on late payments and report on this during the quarterly performance reports to the Committee.

7.2.14 IT governance issues should be addressed including, but not limited to, the urgent appointment of a Chief Information Officer before the end of the 2019/20 financial year.
7.2.15 Ensure as much increase in provision of services through banks as possible to ease congestion for the applications and collections of ID Cards and passports in the medium term expenditure period.

7.2.16 Rather than the proposed increase in funding to outsourced contractors from around R40 million to R120 million, consider employing more permanent staff in 2020/21.
7.2.17 Ensure that all trusted travellers are registered and all international airports are equipped with the e- Gate system by 2021 to improve efficiency without compromising on security.

7.2.18 Ensure funding in the medium term expenditure period for all mobile trucks to be modernised to issue Smart ID Cards and passports in the rural areas.
7.2.19 More health facilities should be equipped in the medium term expenditure allocations to register births within the required 30 days, ideally prior to the child leaving the hospital.

Arrangements should also be made for the documentation provided to children of foreign migrants to be acceptable by schools.
103 The Electoral Commission 7.2.20 Conduct more effective and extensive outreach programmes to youth in communities regarding the importance of voting in elections before the Municipal Elections in 2021.

7.2.21 Continue to engage with National Treasury for allocating sufficient funding for completing the harvesting of voter addresses before the Municipal Elections in 2021.
7.2.22 Increase efforts towards achieving a clean audit rather than continued unqualified audits in the plans of the IEC for 2021/22 onwards.

7.2.23 Move towards the roll out of live results and ensure constant communications with political parties and the media at the results operations centre by the end of the 2020/21 financial year.
7.2.24 Engage with the Municipal Demarcation Board (MDB) on the matter of minimizing the negative impact on voters during wards demarcation well before the Municipal Elections in 2021.

7.2.25 Improve on countering the proliferation of fake news during upcoming elections by 2021.

7.2.26 Engage with the Minister of Finance on the issue of the PFMA requirement for three quotations in relation to the printing of ballot papers considering the security concerns.
The GPW should rather be considered for the 2021 Municipal Elections, in this regard, given its security printing credentials.

7.2.27 Ensure the IT refresh and purchase of new registration machines are procured and ready for use prior to the first registration weekends ahead of the 2021 Elections.
7.2.28 Provide detailed motivation and budgets for the procurement of permanent headquarters rather than continued payment of considerable rent prior to the end of the current lease agreement and in view of medium to long term financing.

The Government Printing Works.

7.2.29 Ensure that the State Security Printers Bill is submitted to Parliament by the end of the 2019/20 financial year.
7.2.30 Engage with the Leader of the Government Business to ensure that all national government departments and state organs are encouraged to print their documents with the GPW prior to the passing of the State Security Printers Bill.

Consideration should however be given to not negatively impact on small and medium size businesses in this regard.
7.2.31 Engage with counterparts in the Trade and Industry and International Cooperation departments to market the security printing capacity of the GPW on the African continent.

7.2.32 Ensure the GPW table their 2018/19 annual report in Parliament as a matter of urgency, if possible prior to the 23rd of October 2019 and also ensure timeous submission of future audits to not again miss the annual report deadline.
7.2.33 Consider the ring-fencing of GPW profit within the Home Affairs budget vote along the lines of the self-financing model introduced in the DHA.

7.2.34 Fund and fill the positions of CEO and CFO as soon as possible and no later than the end of the of the 2019/20 financial year.

104 Report to be considered.

105 3.
THE BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON COMMUNICATIONS, DATED 22 OCTOBER 2019 The Portfolio Committee on Communications (PCC), having considered the financial and non- financial performance for the year 2018/19 of the Department of Telecommunications and Postal Services (the Department), Sentech, State Information Technology Agency (SITA), Broadband Infraco, the Universal Service and Access Agency of South Africa (USAASA), the Universal Service Access Fund (USAF), the South African Post Office (SAPO); .ZADNA, and NEMISA, reports as follows: 1.
Introduction In terms of Chapter 4 of the Constitution of the Republic of South Africa, Act 108 of 1996 (the Constitution) gives a mandate to Portfolio Committees to legislate, conduct oversight over the Executive Authority and also facilitate public participation.

1.1.
1.1.

Purpose of the report The Money Bills Amendment Procedure and Related Matters Act 9 of 2009 sets out the process that allows Parliament to make recommendations to the Minister of Finance as well as the cabinet Minister responsible for the vote to ensure the effectiveness and efficiency of the use of resources to ensure optimal service delivery.
According to Section 5 of the Money Bills Amendment Procedure and Related Matters Act, the National Assembly, through its Committees, must annually assess the performance of each national Department.

The Committee must submit an annual Budgetary Review and Recommendation Report (BRRR) for the Department as it falls under its oversight responsibilities, for tabling in the National Assembly.
This process happens every October of each year where the Committee assesses service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on the forward use of resources.

106 The BRRR also sources documents from the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS).
The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.

The Standing Committee on Appropriations (SCOA) should consider these when it is considering and reporting on the MTBPS to the National Assembly.
Lastly, this performance report is also in line with Section 195 of the Constitution and other legislative prescripts that guide performance management in the public sector to display and promote transparency and accountability to stakeholders and the general public concerning matters under their control.

2.
2.

Role and mandate of the Committee As part of fiscal accountability, government departments have to table their annual reports before Parliament to account for fiscal expenditure and service delivery performance.

The accountability of public officials, the transparency of public decision-making, access to information, and the implementation of enforceable ethical standards and codes all have significant impacts on democratic institutions and poverty reduction strategies.
Accountability is the pillar of democracy and good governance that compels the state, the private sector, and civil society to focus on results, seek clear objectives, develop effective strategies, and monitor and report on performance.

It implies that Parliament must hold individuals and organisations responsible for performance, measured as objectively as possible.
Therefore the general role of the Committee is to: (i) Consider legislation referred to it; (ii) Exercise oversight over the Department and its entities; (iii) Consider International Agreements referred to it; (iv) Consider Budget Votes of the two Departments; (v) Facilitate public participation process; and (vi) Consider all matters referred to it in terms of legislation, the Rules of Parliament and resolutions of the House.

3.
3.

Organisational environment Following President Cyril Ramaphosa’s announcement of a new cabinet in November 2018, the Department of Communications was merged with the Department of Telecommunications and 107 Postal Services, and a new Minister Stella Ndabeni-Abrahams and Deputy Minister Pinky Kekana were appointed.

“This move is going to ensure that we have better alignment and coordination on matters that are critical to the future of our economy in the context of the 4IR,” President Ramaphosa.
The decision to merge the two Ministries is in line with the realignment of Government as pronounced by the President during the State-of-the-Nation Address.

The President further confirmed that the two Departments would remain as separate Departments until the end of March 2020.

Upon assuming office, the Department commenced with the preparations on the Organisational Reconfiguration Project, which deals with the development of a strategy on the role of the Government in leveraging the 4IR.
The strategy on the role of the Government in leveraging the 4IR will inform the development of the Departmental strategy in line with its revised mandate as well as a new organisational structure.

The reconfiguration process will gain momentum in the 2019/20 financial year.
The Minister also sought to continue on the legacy of former Minister Siyabonga Cwele who had committed to finding solutions to key programmes of the Department, including but not limited to: (i) implementation of the National Integrated ICT White Paper; (ii) fast-tracking policy development on high-demand frequency spectrum; (iii) rationalisation of State-Owned Enterprises (SOEs); (iv) implementation of the e-Government Strategy; (v) establishment of the Presidential 4IR Commission; (vi) implementation of the SA Connect Policy; and (vii) advancing South Africa’s interests regionally and internationally.
On human resource related matters for the reporting period, the Department had a total head count of 269 staff.

Of these posts 263 were filled, while 6 posts were vacant and funded, which equates to a 2.23 per cent vacancy rate.

The Department was allocated a total adjusted and exclusively earmarked amount of R223,4 million for compensation of employees in the 2018/19 financial year.

At the end of March 2019, the Department had spent R219,3 million.
The main reason for the underspending was the non-filling of vacancies is that a moratorium was placed on the filling of vacant positions.

This was in light of the announcement by the President in November 2018 that the Ministries of Communications and of Telecommunications and Postal Services would be merged into a single ministry.

However, some key appointments were made during the 2018/19 financial year before the moratorium was placed i.e.
Deputy 108 Director: Accounts, Deputy Director: Internal Audit, Assistant Director: Bookkeeping and Assistant Director: Physical Security.

In relation to the digital transformation of the Department’s manual business processes, the Department digitised the process of submitting memorandums through the roll-out of the e- Submission system.

This is part of ensuring that the Department moves towards a paperless environment.

4.
4.

Methodology For the period under review, the Committee, in exercising its oversight role, considered the 2018/19 Annual Reports and Financial Statements of the Department on 8 October 2019, and those of Sentech, SITA, BBI, USAASA, USAF, SAPO; .ZADNA and NEMISA on 15 October 2019.

The Annual Report presentations to the Committee were all preceded by the Auditor-General of South Africa (AGSA) who presented the audit outcomes of the Department and its entities for 2018/19 financial years.
The Committee also considered the 2018 State-of-the-Nation Address (SoNA), the National Development Plan (NDP), committee meetings recommendations, oversight reports and the 2018/19 Estimates of National Expenditure (ENE).

There was no report from the Standing Committee on Appropriations (SCOA) nor was there a report from the Standing Committee on Public Accounts (SCOPA).
4.1 Outcomes of the report This report is aligned to broader government policy framework, New Growth Path (NGP), NDP and the governing party’s priorities (job creation, poverty alleviation, combating crime and corruption, rural development, education and health).

It reviews the initiatives taken by the Department to ensure that the priorities of the plan are realised.
Furthermore, this report will review and seek to address challenges emanating from the 5th Parliament’s Legacy Report and ensure that those recommendations are responded to in a systematic manner.

The report also assesses the financial performance against service delivery performance to ascertain whether the budget allocated to the Department was spent as envisaged and annotated 109 in the APP.
Finally, it summarises the observations made by the Committee after considering quarterly reports, all other necessary documents, as well as presentations generated using oversight instruments, before making service delivery recommendations.

5.

Legislative framework of the Department The legislative mandate of the Department of Telecommunications and Postal Services is embedded in the legislation as reflected below: The Sentech Act No.

63 of 1996, Former States Posts and Telecommunications Act No.
5 of 1996, Former States Broadcasting Reorganisation Act No.

91 of 1996, Postal Service Act No.

124 of 1998, Department of Communications Rationalisation Act No.

10 of 1998, Electronic Communications and Transactions Act No.

25 of 2002, Electronic Communications Act No.

36 of 2005, Independent Communications Authority of South Africa Act No.

13 of 2000, South African Post Bank Limited Act No.

9 of 2010, South African Post Office SOC Ltd Act No.

22 of 2011, State Information Technology Agency Act No.
88 of 1998, Broadband Infraco Act, Act No.

33 of 2007.

In executing its role, the Department is also guided, amongst others, by: • The Constitution of the Republic of South Africa Act 108 of 1996; • The Public Service Act 103 of 1994 as amended; and • The Public Finance Management Act 1 of 1999 as amended.

Chapter 4 of the National Development Plan recognises that ICT is a key enabler of inclusive economic growth that is critical to addressing inequality in South Africa.
In response to this, over the medium term, the Department of Telecommunications and Postal Services continued to focus on: implementing the 2016 White Paper on National Integrated ICT Policy; implementing the South Africa Connect Broadband Policy; implementing the rationalisation of its public entities; improving the performance of the entities under the department’s portfolio; as well as promoting innovation and transformation of the ICT sector as a catalyst for economic growth.
The Department also sets guidelines for the determinations of its regulatory authority, ICASA, and oversees and strengthens the capacity of state-owned companies within its portfolio.
110 5.1 Key policy developments and legislative changes Following the Cabinet approval of the National Integrated ICT Policy White Paper in September 2016, the Department is continuing with the implementation of the White Paper which “outlines the overarching policy framework for the transformation of South Africa into an inclusive and innovative digital and knowledge society.” Over the short to medium term, the Department will continue to prioritise and develop ICT legislation required to give effect to the National Integrated ICT Policy White Paper.
These include, amongst others, the Electronic Communications Amendment Bill, Postal Services Amendment Bill, iKamva National e-Skills Institute Bill (Ikamva Digital Skills Institute Bill) which were introduced to Parliament during the period under review as well as the ICT Sector Commission and Tribunal Bill.

The Digital Development Fund Bill will be developed during the current financial year.

It should be noted that the Ikamva Digital Skills Institute Bill was finalised in the 5th Parliament.
It must be further noted that the name of the Ikamva National E-Skills Institute Bill was changed to Ikamva Digital Skills Institute Bill following its introduction to Parliament.

6.
6.

Strategic outcome-oriented goals The Department is contributing to Outcome 6 (“An efficient, competitive and responsive economic infrastructure network”), Outcome 5 (“A skilled and capable workforce to support an inclusive growth path”), Outcome 11 (“Create a better South Africa and contribute to a better Africa and a better world”), Outcome 12 (“An efficient, effective and development-oriented public service”) and Outcome 3 (“All people in South Africa are and feel safe”).
The general performance of the Department is summarised below in terms of its strategic outcomes goals.

Broadband connectivity that provides secure and affordable access for all citizens to education, health and other government services and stimulates economic development.
In delivering the strategic objective of coordinating broadband connectivity to achieve 100 per cent population coverage, the Department is contributing to Outcome 6 (“An efficient, competitive and responsive economic infrastructure network”).
The Department focused on project managing broadband connectivity to the 570 planned sites, of which 266 sites were 111 connected and services activated while project management of infrastructure roll-out was undertaken for the remaining 304 facilities which await service upgrades and activation.

Furthermore, network and internet service pre-engineering was facilitated for 750 identified sites.
The Department has an interim Rapid Deployment National Coordination Centre in line with the implementation of the Rapid Deployment Policy.

The Department made strides with regards to facilitating and monitoring increased service offerings and operations of the Cybersecurity Hub.

The operations of the Virtual Cybersecurity Hub contribute to Outcome 3 (“All people in South Africa are and feel safe”).
The Department has taken bold and ambitious approaches to tackle many threats our country faces in cyberspace.

Managing and mitigating those threats is a task that the Department recognises its special responsibility to lead the national effort required through the monitoring of the operations of the Virtual Cybersecurity Hub.
South Africa has a modern, sustainable and competitive postal and telecommunications sector In line with its focus area related to developing and implementing the ICT Policy and legislation aimed at improving access and affordability of ICTs, the Department has developed and introduced to Parliament the Electronic Communication Amendment Bill, the Postal Service Amendment Bill and the Ikamva National e-Skill Institute Bill (Ikamva Digital Skills Institute Bill).
The Bills contributed towards the achievement of Outcome 6 (“An efficient, competitive and responsive economic infrastructure network”).

The Department also contributed towards Outcome 5 (“A skilled and capable workforce to support an inclusive growth path”) through facilitating the implementation of the ICT SMME Development Strategy which is aimed at promoting the growth and sustainability of ICT SMMEs.
In its effort to advance South Africa’s National ICT interests in Regional and International Forums towards attaining partnerships for economic growth and development, the Department successfully hosted the BRICS Communication Ministers Meeting 2018 and the ITU Telecom World 2018.

The Department also developed several country positions and participated in various international ICT fora.
Such initiatives contribute towards Outcome 11 (“Create a better South Africa and contribute to a better Africa and a better world”).

An Inclusive Information Society and Knowledge Economy driven through a comprehensive e-Strategy and access to Government service.
112 The Department facilitated the implementation of the National e-Strategy focusing specifically on the development of the National Digital Skills Strategy which directly contributes towards Outcome 5 (“A skilled and capable workforce to support an inclusive growth path”).

The Department also established the Presidential Commission on the Fourth Industrial Revolution and developed the e-Mall Platform for commercialisation by SAPO.
As part of contributing towards Outcome 12 (“An efficient, effective and development-oriented public service”), the Department facilitated the implementation of the e-Government Strategy with specific focus on uploading of the e-Services from selected Government Departments, in consultation with SITA, onto the National e-Services Portal.

Optimally functional Department and SOCs that effectively deliver on their respective mandates.
In order to contribute towards Outcome 12 (“An efficient, effective and development-oriented public service”) the Department focused on improving the performance of SOEs though pro- active and stringent oversight.

The Department undertook monitoring and evaluation of performance and compliance of SOEs against strategic plans and relevant prescripts.

Furthermore, draft legislation for the State IT Company and the State ICT Infrastructure Company was developed.
In order to create a high performing organisation to enable achievement of the Department’s mandate, the Department has furthermore implemented the recommendations stemming from the Climate and Culture Action Plan to improve the current climate and culture within the Department to optimise the delivery of its mandate by implementing and monitoring the Leadership Development Programme for Executive Management (DG and DDGs); and Programme and Project Management for Senior Managers.

7.
7.

Description and Core Functions The mandate of the Department of Telecommunications and Postal Services is to develop ICT policies that will contribute to an inclusive information society.
The Department has a responsibility to modernise the economy and economic infrastructure through: facilitating the rollout of ICT infrastructure, applications and services; enabling the rollout of postal and banking services; developing e-strategies to roll out e-government and e-sectoral services; promoting cybersecurity and the security of networks; and promoting universal service and electronic communications in underserviced areas.
113 The activities of the Department are structured into five programmes, which are: Programme 1: Administration Programme 2: ICT International Affairs and Trade Programme 3: ICT Policy Research and Capacity Development Programme 4: ICT Enterprise Development and Public Entities Oversight Programme 5: ICT Infrastructure Support.
7.1 Performance information As reflected in the graph below, during the 2018/19 financial year, the Department achieved 92 per cent (24 out of 26) of its planned targets as outlined in its 2018/19 Annual Performance Plan.

Budget spending was 99 per cent of its total budget allocation for the year under review.

The graph below is an indication of budget spend against planned targets over three financial years.
As indicated above, the Department did not achieve 2 of its 26 planned 2018/19 annual targets, as reflected below: 114 Implementation of the National e-Strategy The following planned initiatives related to the implementation of the National e-Strategy were not fully implemented as planned: • Approval of the National Digital Skills Strategy • Approval of the Internet for All Framework • Provision of secretarial support to the Presidential Commission on 4IR Broadband connectivity and sustenance of 570 identified sites There was a deviation of 304 identified sites for which upgrades and service activation was incomplete by the end of the reporting period.
7.2 Performance by Programme 7.2.1 Programme 1: Administration The purpose of Programme 1 is to provide strategic leadership, management and support services to the Department.

For the period under review, this programme had one strategic objective which is to create a high performing organisation to enable achievement of the Department’s mandate.
The Department achieved all the planned targets for the reporting period and therefore there are no issues to address with regard to under-performance and no changes to the planned targets during the reporting period.

115 The Department developed a Leadership Development Programme for Executives, as part of implementing the Climate and Culture survey action plan and this was monitored on a quarterly basis.
Programme and Project Management development was fully implemented and 83.3 per cent (50) of identified senior managers were trained during the reporting period and this target was exceeded by 3.3 per cent.

The Department developed the 2018/19 Departmental Budget and Procurement Plan.

The implementation of the 2018/19 Departmental Budget and 2018/19 Procurement Plan was monitored.
The 2019/20 Estimates of National Expenditure (ENE) Chapter and the 2019/20 Procurement Plan was developed and approved in line with APP priorities, and submitted to National Treasury.

The 2019/20 Strategic risk assessment was conducted, and the Risk Register was updated and presented to relevant management structures.

The Department digitised the process of submitting memorandums through the roll-out of the e-Submission system.
Training for users of the system was also conducted and a total of 167 staff were trained during the reporting period.

Following the roll-out of the e-Submission system, 368 submissions were generated for the reporting period.

Spending was R235 million in the 2018/19 financial year and R209,4 million in the 2017/18 financial year.

Spending under goods and services declined from R95,9 million in 2017/18 to R85,8 million in 2018/19 financial year.
The underspending is mainly due to the posts that were not filled during the financial year as the result of the moratorium put in place.

Spending rate under this program is at 98.2 per cent.

7.2.2 Programme 2: ICT International Affairs The purpose of Programme 2 is to ensure alignment between South Africa’s international activities and agreements in the field of ICT and South Africa’s foreign policy.
The strategic objective for the financial year under review was to advance South Africa’s National ICT interest in Regional and International Forums towards attaining partnerships for 116 economic growth and development.

The Department achieved all the planned targets for the reporting period and therefore there are no issues to address with regard to under-performance.

Within this programme, the Department reported the following achievements: RSA Position Paper on SADC roaming was developed.
RSA position on SADC Roaming was advanced at the SADC SCOM in July 2018 and at the SADC Ministerial meeting in September 2018 and the Implementation Plan was developed.

RSA contribution to SADC 4th Industrial Revolution Roadmap was developed and presented at the SADC ICT Ministerial meeting.

The SADC Chairship report was developed and handed over during the SADC ICT Ministerial Meeting held 24-27 September 2018 in Windhoek, Namibia.
The RSA Position Paper for ITU-PP 18 was developed and approved by Cabinet.

RSA Position was advanced at the ITU PP-18 in Quarter 3 of the reporting period.

South Africa was able to advanced 9 proposals which were tabled at the ITU PP-18.

An Implementation Plan, stemming from the outcome of the ITU-PP, was developed.
RSA Position for the reform of UPU was developed and advanced at the UPU Council of Administration (CA) in October and at the African Union Committee on Information and Communication Technologies [AU CICT] in November.

Implementation plan was developed with relevant stakeholder engagement.

The Department hosted the BRICS ICT Ministerial 2018 Meeting in September 2018.

The Outcomes Report of the BRICS ICT Ministerial 2018 Meeting was developed.
The Handover Report was developed and submitted to DIRCO as per the national directive.

The Department successfully hosted the ITU Telecom World 2018 in September 2018 as per Host Country Agreement.

The Outcomes Report of the ITU Telecom World 2018 was developed.

Spending was R85,1 million in the 2018/19 financial year and R50,6 million in the 2017/18 financial year.

There was an underspending of R250 thousand in the 2018/19 financial year.
The underspending is due to ITU sponsorship (in cash) amount of R250 thousand not received from a sponsor after the funds were already allocated to the Department by National Treasury during the adjustment budget.

Spending rate under this program is at 99.7 per cent.
117 7.2.3 Programme 3: ICT Policy Research and Capacity Development The purpose of Programme 3 is to develop ICT policies and legislation that support the development of an ICT sector that creates favorable conditions for the accelerated and shared growth of the economy.

Develop strategies that increase the uptake and usage of ICT by the majority of the South African population, in order to bridge the digital divide.
The Strategic Objectives for the 2018/19 financial year are listed below: (i) Develop and implement ICT policy and legislation aimed at improving access and affordability of ICTs; (ii) Promote growth and sustainability of ICT SMMEs through development and implementation of the ICT SMME strategy; and (iii) Develop and implement a National e-strategy that will give priority to e-government services.
The Department acknowledges its under-performance on the target related to the facilitation of the Implementation of the National e-Strategy focusing on identified areas.

A change in the approach of the Presidential Commission on the Fourth Industrial Revolution delayed the establishment of the Commission.

The Commission will commence operations in the 2019/20 financial year.

Furthermore, the Department will approve the National Digital Skills Strategy in April 2019.
During the reporting period the Department concluded consultations for the Electronic Communication Amendment Bill, Postal Service Amendment Bill and Ikamva National E-Skill Institute Bill (Ikamva Digital Skills Institute Bill).

The 3 Bills were presented to Cluster and Cabinet after which they were introduced to Parliament.

The ECA Amendment Bill was withdrawn following the recommendations by the Committee.
The Department facilitated the incubation of a total of 76 Internet Service Providers (ISPs) / SMMEs which was supported by NEMISA and .ZADNA.

A programme to promote the international competitiveness of ICT SMMEs at the BRICS Ministerial Meeting and ITU Telecom World 2018 was developed and benefited a total of 40 high tech SMEs.

The Integrated Annual Report on ICT SMME Development was also developed.

The Department developed the National Digital Skills Strategy.
However, the Strategy was not approved by close of the reporting period but was instead approved in April 2019.

118 Through consultations with SAPO, the Department developed the e-Mall Platform for commercialisation by SAPO.

Due to a change in approach, an Internet for All Framework was developed as opposed to an Internet for All Work-Programme.

The Department facilitated and monitored the implementation of Internet for All initiatives.
The Presidential Commission on Fourth Industrial Revolution (4IR) was established with the appointment of 30 members.

An Inter-Ministerial Committee on 4IR was also established by Cabinet on 27 March 2019 to support the work of the Presidential Commission.

The Department also developed a report on the Presidential Commission on Fourth Industrial Revolution.

The Department, in consultation with SITA, facilitated the implementation of the National e- Government Strategy and Roadmap.
The National e-Services portal was developed.

e-Services from selected Government Departments were uploaded on the National e-Services Portal, which is live and interactive.

Spending was R85,4 million in the 2018/19 financial year and R78,5 million in the 2017/18 financial year.

There was an underspending of R202 thousand in the 2018/19 financial year.

The underspending is mainly due to less advertising costs incurred.

Spending rate under this program is at 99.8 per cent.
7.2.4 Programme 4: ICT Enterprise Development and Public Entities Oversight The purpose of Programme 4 is to oversee and manage Government’s shareholding interest in ICT public entities and to facilitate the growth and development of Small, Medium and Micro Enterprises (SMMEs) in the ICT sector.

The Strategic Objective for the 2018/19 financial year is to improve performance of SOEs through proactive and stringent oversight and the Department achieved all the planned targets for the reporting period.
Within this programme, the Department reported the following achievements: • The Business Case for the State ICT Infrastructure Company was developed.

Draft Legislation for the State ICT Infrastructure Company was developed.

• The Business Case for the State IT Company was developed.

Draft Legislation for the State IT Company was developed.
119 • The Department monitored and evaluated service delivery performance and compliance of SOEs against strategic plans and relevant prescripts through the development of a consolidated State of SOEs Report for Quarter 4 of the 2017/18 financial year and consolidated reports for State of the SOEs for Quarter 1, 2 and 3 of 2018/19 financial year.

• Spending was R3.2 billion in the 2018/19 financial year and R3.9 billion in the 2017/18 financial year.
The decrease was mainly due to a reduced allocation amount of R2.9 billion in this financial year transferred for the recapitalisation the South African Post Office.

Spending rate under this program is at 100 per cent.

7.2.5 Programme 5: ICT Infrastructure Support The purpose of Programme 5 is to promote investment in robust, reliable, secure and affordable ICT infrastructure that supports the provision of a multiplicity of applications and services.
The Strategic Objective for the 2018/19 Financial Year is listed below: (i) Coordinate the Broadband connectivity to achieve 100 per cent population coverage; and (ii) Develop and implement ICT Policy and legislation aimed at improving access and affordability of ICTs.

The Department acknowledges its under-performance on the target related to the project managing the Broadband connectivity and sustenance of 570 identified sites.
There were challenges experienced largely with regards to the slow rate of service activations which will be prioritised in the 2019/20 financial year through increasing the project management capacity within the Department.

The Department project managed connectivity to 570 identified sites.

However only 266 of these sites were fully connected with both infrastructure installed and services activated.
Project management of infrastructure installation was undertaken for the remaining 304 facilities which still await service upgrades and activation.

However, there was a deviation of 304 identified sites which still awaits service upgrades and activation because approval of the roll-over budget by National Treasury only took place in September 2018, which delayed the activation of services.

Service activations will be prioritised in the 2019/20 financial year.
120 During the reporting period, network and internet service pre-engineering was facilitated for all 750 identified sites, as planned.

The Business Case for funding of Phase 2 Broadband Connectivity was finalised, in line with the BFI funding structuring requirement, and submitted to National Treasury.

The Department facilitated the establishment of the interim Rapid Deployment Coordination Centre (RDCC), in line with the implementation of the Rapid Deployment Policy.
Operations of the Cybersecurity Hub was monitored, and quarterly monitoring reports were developed on increased service offerings and operations of the Cybersecurity Hub.

Increased service offerings included the establishment of Sector-CSIRT and increased collaboration, resolution and responding to threats, information dissemination and incident management, amongst others.

The Department developed the draft SA Preliminary Positions for WRC-19.
The draft report was updated based on the outcomes from Working Parties and submitted as part of multi- contributions to ITU-R TG5/1 and based draft CPM19-2 report.

Spending was R388,4 million in the 2018/19 financial year and R611,9 million in the 2017/18 financial year.

The underspending of R7,8 million in the 2018/19 financial year against the allocation of R396 million was mainly due to delay in the implementation of the DOA project under Payments for Capital Assets.
Included in the expenditure is the R100 million expensed in line with the MCS requirements for the SA Connect Broadband.

Spending rate under this program is at 98 per cent.

8.

Overview and assessment of financial performance of the Department Overall spending at 31 March 2019 was 99,7 per cent of the allocated budget.

A total R2,9 billion transferred to SAPO in January 2019.

Advance payments amounting to R100 million made to BBI (R77 million) and SITA (R23 million) for the SA Connect project.
Reductions to the 2017 MTEF baseline by 46,5 per cent from R1,7 billion to R923 million.

R203,9 million was reallocated from SA Connect (R143,9 million) and Sentech migration of digital signals (R60 million) to Sentech for dual illumination.
The budget allocation per programme was as illustrated in the table below: 121 PROGRAMMES Administration International Affairs and Trade Policy, Research and Capacity Development ICT Enterprise Development and Public Entities Oversight ICT Infrastructure Support TOTAL ALLOCATION R'000 % 2018/19 EXPENDITURE R'000 AVAILABLE R'000 239,157 85,334 6% 2% 235,003 85,084 4,154 250 2017/18 % SPENT 98.3% 99.7% Final Appropriation Actual Expenditure International membership fees amounting to R28 million were paid in full.
Funds not requested is due to ITU sponsorship (in cash) amount of R250 thousand not received from a sponsor after the funds were already allocated to the Department by National Treasury during the adjustment budget.

SAPO issued shares to Government in return for the R2,9 billion.

For ITU sponsorships, the Department received in cash as follows: (i) MTN R25 million (ii) Microsoft R1 million (iii) IDC R250 000.
As mentioned previously, the underspending was mainly due to posts not filled during the financial year.

Furthermore, underspending in infrastructure was mainly due to Digital Object Architecture (DOA) project not implemented during the financial year.

The Cybersecurity awareness was not paid to GCIS because the agreement was not concluded on time.

A R2 million rollover for cybersecurity awareness programme was requested.
On Goods and Services, underspending due to the cybersecurity awareness not paid over to GCIS by end FY was because the agreement was still pending.

A rollover request was made to National Treasury.

Underspending on Capital Assets was due to one car of a former Minister not procured.
8.1 Virements/Rollovers Virements as reflected on the Appropriation Statement were applied in terms of Section 43(1) of the Public Finance Management Act 1 of 1999 which stipulates that virements may not exceed 8 per cent of the amount appropriated under that main division.
Funds amounting to R9,947 million (0,15%) and R5,3 million (1,34%) from programmes 4 and 5 were transferred respectively to programmes 1, 2 and 3 to defray excess expenditure mainly under travel and subsistence, payment for financial assets, compensation of employees, and foreign governments membership fees.

122 An amount of R110,3 million relating to the SA Connect Broadband Project was approved by National Treasury as a roll-over in the year under review.
8.2 AGSA report The Department achieved an unqualified audit opinion for 2018/19 financial year.

The Auditor-General did not raise any material findings on the usefulness and reliability of the reported performance information for these programmes: • Programme 3 – ICT policy, research and capacity development • Programme 4 – ICT enterprise development and SOC oversight • Programme 5 – ICT infrastructure support.
The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 40(1)(a) and (b) of the PFMA.

Material misstatements of investments, commitments, and related parties identified by the auditors in the submitted financial statements were corrected, resulting in the financial statements receiving an unqualified audit opinion.
The Auditor-General was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure as required by section 38(1)(h)(iii) of the PFMA.

This was due to proper and complete records that were not maintained as evidence to support the investigations into irregular expenditure.
The leadership did not exercise oversight responsibility to ensure that consequence management was fully implemented in the Department as some of the irregular expenditure investigations have not been initiated or finalised, this was as a result of a backlog of investigations emanating from 2003 to 2012.
The financial statements contained material misstatements due to incorrect interpretation of accounting standards and lack of proper review of financial statements submitted for audit against the supporting schedules submitted to the finance section for the preparation of the financial statements.

As a result, material adjustments were made to the financial statements submitted for auditing.
Improvements in relation to compliance matters as reflected in AG outcomes: • 3 AG Findings in Audit Report in 2017/18 vs 2 in 2018/19; • 28 AG Findings in Management Letter in 2017/18 vs 25 in 2018/19; • No irregular expenditure incurred during the financial year; 123 • Previous cases of irregular expenditure amounting to R17,8 million were addressed during the financial year.

At the end of the financial year the Department addressed 83 per cent of audit findings raised by the AGSA.
Overall the Department addressed 70 per cent of integrated findings (AGSA and Internal Audit findings).

According to the Auditor-General’s report, there was material misstatement of financial statements in: (i) Impairment of SAPO investment; (ii) Key Management Personnel; (iii) Commitments.

Irregular expenditure wherein investigations not conducted, cases not finalised and the inability to take disciplinary steps.

The Department did not incur any irregular expenditure during the period under review.
The Department has, after detailed investigations were conducted, reduced the irregular expenditure of R226 million by R17,8 million.

R13,9 million was removed from the irregular expenditure register based on the investigations conducted and indicated that the amount was incorrectly classified.

The R3.8 million is condoned after investigations were concluded.
Furthermore, the Department is continuing with the investigations to address the irregular expenditure incurred during the previous financial years.

The amount incurred for fruitless expenditure this year amounts to R13 000, comprising R1 000 for traffic fines and R12 000 for no shows.

Investigation processes are underway to establish the facts before any action can be taken to implement consequence management effectively.
An amount of R2,7 million was written off from expenditure incurred in the previous financial years.

The amount recovered amounted to R4 000.

The Department maintains a register of fruitless and wasteful expenditure and the policies on losses and debt were reviewed in the year under review.

Losses are written off in accordance with the loss and debt policies as well as chapters 9, 11 and 12 of the Treasury Regulations.
There are punitive measures against perpetrators and awareness campaigns are carried out to avoid recurrence of fruitless and wasteful expenditure.

124 At the end of the financial year, the Department had addressed 83 per cent of audit findings raised by the AGSA.

Overall the Department addressed 70 per cent of integrated findings (AGSA and Internal Audit findings).

9.
Entities of the Department The following shows the transfer of funds to entities and agencies reporting to the Department of Telecommunications and Postal Services (excluding international organisations): 9.1 Transfers and payments NAME OF PUBLIC ENTITY SERVICES RENDERED BY THE PUBLIC ENTITY AMOUNT TRANSFERRED TO THE PUBLIC ENTITY AMOUNT SPENT BY THE PUBLIC ENTITY ACHIEVEMENT S OF THE PUBLIC ENTITY R90,8 million R90,8 million NEMISA To provide a national integrated e-skills development management system towards sustainable socio- economic development in South Africa USAASA To promote universal service and access in underserviced areas R80 million R80 million R76,7 million R18,9 million USAF USAF utilised the contributions from licensees exclusively for payment of subsidies to needy persons, undeserved areas and schools.
To provide incentives to • Training was done by the CoLabs and NEMISA’s In- house training division: • 4884 e-literacy; • 4445 sector users; • 812 ICT practitioners; and • 280 e-leaders USAASA achieved 2 of the 4 planned targets.

The achieved targets are: • 100% of risks detailed in the Risk Management Plan mitigated; and • 100% utilisation of the functioning SAP ERP modules The Fund reported achievement of 2 of the 11 planned targets under Rapid Deployment and Connectivity.
The achieved targets are: • 1 public office with 24 months 125 SENTECH network licensees to construct and maintain networks in underserviced areas To provide common carrier broadcasting signal distribution services to licensed broadcasters in South Africa R203,9 million R203,9 million contract maintained • 16 public offices with connectivity maintained SENTECH continued to provide support the dual illumination broadcast phase until the digital migration process is resolved According to the Auditor-General, there is material uncertainty to 25 per cent of the telecommunications portfolio is terms of its continuation to operate.
In particular, SAPO and BBI prepared the financial statements on a going concern basis; however a number of events and conditions have been identified that cast significant doubt on the entities to continue as a going concern.
These are as follows: 9.1.1 SAPO Group Material uncertainty as a going concern has been reported in audit report for the past 5 financial years: • The entity has a high cost base with employee costs accounting for 69 per cent of their revenue which contributes to the constant operating losses.
Despite cost containment initiatives, revenue generation plans have also not yielded the desired outcomes resulting in the entity constantly not being able to generate more revenue than expenses; • The company continues to incur losses with a net loss R1 117 564 000 during the year ended 31 March 2019; • Decline of a major market [Mail revenue]; • Both the debtors and creditors days have increased; and • Increased contingent liabilities.
9.1.2 BBI Material uncertainty on the going concern basis has been reported in audit report for the past financial 4 years: 126 • Recurring operating losses; • Total liabilities exceed total assets by R1 207 730; and • Incurred a net loss of R14 735 million.

9.2 South African Post Office (SAPO) -- R2,947 billion SAPO is a Schedule 2 public entity in terms of the PFMA.
It is a government business enterprise established to provide postal and related services to the public and derives its mandate from the South African Post Office SOC LTD Act No 22 of 2011 and the South African Postbank Limited Act No 9 of 2010.

The Postal Services Act No 124 of 1998 grants SAPO the exclusive mandate to conduct postal services.
This Act further makes provision for the regulation of postal services and the operational functions of the postal company, including SAPO’s universal service obligations and associated financial services.

9.2.1 Operational highlights The Post Office took over social grant payments during the current financial year.

A total of 7.7 million grantees were converted to the new gold SASSA cards.
The SASSA project was a huge success for both Post Office and Government with a smooth transition from the old service provider to on-boarding to Post Office systems.

Post Office has seen revenue growth by 20 per cent year on year.

This was largely contributed by the SASSA social grants payments and the DTT project.

An additional 589,156 street addresses were allocated to citizens against a planned target of 500,000.
The Government project to generate geo-referenced addresses in the rural areas nationally exceeded the target during the year with an achievement of 4.9 million addresses.

The mail service delivery performance at the end of the year was recorded at 76.4 per cent against the ICASA approved target of 92 per cent.

The operational challenges experienced in Quarter 1 and 2 contributed to the decline of 11 per cent from performance in the prior year.
The registration of 1 012 518 qualifying needy households have been registered nationally as at 31 March 2019.

A total of 549 344 Set Top Boxes has been issued up to 31 March2019.
Other highlights include: 127 • The Office of Exchange successfully piloted the customs declaration system (CDS) for countries such as Uganda, Eswatini and Russia; • A total 3 million textbooks delivered to 3 659 schools in Northern Cape and Limpopo; • A total 4,9 million addresses geo-referenced in rural areas enabling them to be FICA compliant and contributed to successful National and Provincial elections; • SASSA grants paid to beneficiaries in the National Payments System from 01 June 2018; • Significant progress made with the corporatisation of Postbank; • The Financial Matters Amendment Bill was approved allowing SOE’s to register a bank; • The transfer of the operations of the Postbank division to the Postbank SOC Ltd was gazetted during March 2019; • Permanent employees headcount reduced by 4 per cent; • Job creation through the recruitment of 3 000 temporary contract workers and 1 000 permanent employees for the SASSA project; • HR Strategic workforce plan finalised to enable staff optimisation process; and • Improvement of governance reporting structures (Rationalisation of Board committees and replicating at EXCO level).
9.2.2 Financial performance The loss for the year increased by R95 million to R1,1 billion: • Revenue increased by 20 per cent to R5,4 billion from R4,5 billion in prior year; • Expenses including finance costs increased by 18 per cent to R7,7 billion from R6,5 billion in prior year: o Expenses excluding SASSA project costs increased by 6 per cent to R6,9 billion; and o SASSA Project expenses of R798 million.
Recapitalisation funds of R2,9 billion received in January 2019 and utilised to settle term loans of R1,035 billion, with balance of R1,2 billion at year end and Postbank depositors funds of R5,2 billion.

SAPO presented the following statement of cash flow for the year ended 31 March 2019.
128 9.2.3 Audit opinion SAPO received a qualified audit opinion due to the following two matters: (i) Other receivables – unable to obtain cash acknowledgement forms (delays in submissions resulted in limitation of scope); and (ii) Other deposits (SASSA liabilities) – Insufficient detail on reconciliations of unclaimed amounts relating to SASSA grants from the Integrated Grant Payment System (IGPS) to SAP.
As at 31 March 2019, the target for Auditor-General SA matters achieved 63.13 per cent, which constitutes 113 issues, resolved from 180 issues reported.

From the 67 issues not resolved, 16 issues failed implementation whereas the remaining 50 issues are still work in progress.

Trade and other receivables The entity did not have adequate systems of internal controls for the recording and reconciliation of these transactions to the financial statements.
Other deposits (grants) The entity did not have adequate systems of internal controls for the recording and reconciliation of these transactions to the financial statements.

Lastly, overall performance of SAPO against targets improved to 58 per cent , up 10 per cent from the prior year (48%).

The final allocated budget was the R2,947 billion transferred for the 129 recapitalisation of SAPO.

Expenditure exceeded the budget by R600 million mainly on card costs and security costs for the SASSA project.
9.3 Sentech -- R203,9 million Sentech’s legislative foundation is the Sentech Act, the PFMA No.

1 of 1999 and National Treasury Regulations published in terms thereof serve as the authority for the organisation’s financial reporting requirements.

Policies have been put in place to ensure that there is compliance with all relevant legislation.
The organisation is further guided by the principles embodied in the King IV Report on Corporate Governance for South Africa and the Protocol on Corporate Governance in the Public Sector 2002.

In 2002, following the deregulation of the telecommunications sector, Sentech was granted two additional licences, allowing the company to provide international voice-based telecommunications and multimedia services.
These licences were subsequently converted into an Individual Electronic Communications Network Service (I-ECNS) and an Individual Electronic Communications Service (I-ECS), licensed in terms of the Electronic Communications Act (ECA).

Sentech derives its mandate from legislation, particularly the Sentech Act and the Electronic Communications’ Act.

Sentech’s licences enables the Company not only broadcasting signal distribution but a range of electronic communications service.
Therefore Sentech's mandate is to provide broadcasting signal distribution for broadcasting licensees, with a particular focus on accelerating the implementation of government ICT interventions within the framework of the NDP and the strategic integrated project for expanding access to communication technology.

Sentech was established as a technical division of the South African Broadcasting Corporation (SABC), responsible for the Corporation’s signal distribution services.
In 1992, the division was corporatised as Sentech, a wholly-owned subsidiary of the corporation.

In 1996, the Sentech Act No 63 of 1996 was amended, converting Sentech into a separate public entity, responsible for providing broadcasting signal distribution services as a ‘common carrier to licensed television and radio broadcasters.
Through the promulgation of the Electronic Communications Act No 35 of 2005, Sentech was then licensed by the Regulator the Independent Communications Authority of South Africa (ICASA) to operate as an Electronic Communications services and Electronic Communications 130 and Network services company.

These licences enabled Sentech to provide all electronic communications services and networks.
As a result, the business model of the Company changed from being a provider of broadcasting signal distribution services only to be a fully- Information and Communications Technology (ICT) services and network provider.
It is wholly owned by the Government of the Republic of South Africa as represented by the Minister of Communications The primary product portfolio consists of Content and Multimedia Services (C&MS), Infrastructure Management Services (IMS) and Connectivity Services (CS) as illustrated below: 9.3.1 Operational highlights During the year under review, Sentech business performance was sub-optimal as a result of the economic challenges that led to churn by customers on some of their services.
Regrettably, the targeted growth of 6,5 per cent was missed and achieved a 4 per cent increase in revenue from R1,349 million to R1,399 million, a reflection of the tough trading conditions.

Earnings Before Tax and Interest (EBIT) declined marginally from R141 million to R140 million.

However, the net income saw better performance from R152 million to R181 million.

This was as a result of improved cost containment.


Sentech has managed a reliable network availability by exceeding the annual target of 99.80 per cent by reaching 99.85 per cent.

This due to a robust infrastructure with a national footprint, operational excellence and investment in proper maintenance of Sentech’s network.
Other highlights include: • Sentech has ensured employee development by exceeding training interventions target of 85 per cent training interventions by implementing 163 per cent of the training plan; • Sentech has connected six broadband sites in remote areas against the set target of four; in support of government’s SA Connect through the delivery of the Internet for All project; • To enhance innovation, Sentech developed two digital products, such as fi xed wireless and OTT platforms in line with the broadband connectivity strategy; and 131 • Sentech exceeded 6.5per cent of actual Net Profit After Tax (NPAT) spend target on Supplier, Enterprise and Socio-Economic development by spending 11.4 per cent as a strategy to contribute to socio-economic transformation and black economic empowerment.
The company achieved 65 per cent as opposed to 80 per cent of the set target in the customer satisfaction survey.

Some of the contributing factors were load shedding that caused severe disruption to the operations and thus negatively impacted on transmission network availability at critical times of the day.

Sentech remains committed to putting customer centricity pillars at the centre stage going forward.
9.3.2 Financial performance EBIT Despite marginal growth in revenue of 4 per cent EBIT for year was almost at the same the previous financial year.

Cost containment measures throughout the organization enabled the company to at least maintain overall cost increase to be in line with revenue growth.

Investment in analogue network whilst DTT network remains on air but generating no revenue until Analogue Switch Off (ASO).

Cash resources preserved for growth increased by 21 per cent.
EBITDA EBITDA was boosted by lower depreciation during the financial year.

NET PROFIT Net profit increased by 19 per cent due higher interest income on overdue accounts and reduction in deferred taxation.

The key highlights on financial performance are set out in table below: 132 As mentioned above, revenue increased to R49,5 million in a challenging economic environment.

The increase was a result of the inflationary increase in the content and multimedia services.
Despite the marginal growth in revenues, Sentech managed to report a net profi after tax of R182 million as a result of cost containment measures, negotiated satellite costs and an increased investment income.

SENTECH managed to improve its cash flow position closing the year at a cash balance of R1,1 billion, an increase of R196,3 million from prior year of 916 million.

This was through rigorous collection measures implemented and grant funding received from the Shareholder.
The overall outcome of these initiatives is the maintenance of a return on equity ratio of 8 per cent when compared to the previous financial year.

Total Liabilities increased mainly due to the deferred taxation on revaluation surplus and differed income relating to government grants which will be utilized in the 2019/20 financial year.

Overall Equity was therefore boosted by the upward valuation of assets and profits made during the year.
Cash flow from operations and overall cash balances improved during the year due to the following: (i) Improvement in cash payments from major customers; and (ii) Cost containment measures and optimization of capital investments.
Conclusion on Financial Performance • Volatile currency and slow economic growth will continue to have an impact on the performance of the company going forward; 133 • Challenges facing community broadcasters and one of the major customers still continue, however management expects resolution of these issues in the 2020 year.
• Revenue outlook has decreased in anticipation of analogue switch off; • The company will continue to streamline processes, strengthen business development, execute capital projects aimed at growing revenue , contain costs and diversify revenue; • In the medium to long term , the company will pursue opportunities in the African continent, identify possible acquisitions and grow the Managed Infrastructure Business; and • Long term funding plan will be reviewed in light of the funding requirements for the growth of the business.
9.3.3 Audit opinion For the 7th consecutive year, Sentech has received a clean audit.
The Auditor-General evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defi ned in the general notice, for Sustainable business growth, Achievement of high-level of customer satisfaction; and Building a high-performance culture strategic goals presented in the annual performance report of the public entity for the year ended 31 March 2019.
No material findings on the usefulness and reliability of the reported performance information for these strategic goals.

The Auditor-General not raise material finding on compliance with the specifi c matter in key legislation set out in the general notice issued in terms of the PAA nor did identify any significant deficiencies in internal control.
9.4 USAASA/USAF – R80 million, USAF R18,9 million The Constitution of South Africa (1996) describes the Bill of Rights as a cornerstone of democracy in South Africa and states that: ‘It enshrines the rights of all people in our country and affirms the democratic values of human dignity, equality and freedom.’ Section 16 of the Bill of Rights underpins the higher guiding principle of USAASA’s mandate to provide access and service that will ensure freedom of expression for the people of South Africa.
The existence, functions, duties and mandate of the Agency are governed by sections 80 to 91 of the Electronic Communications Act 36 of 2005 (ECA), which came into operation on 19 July 134 2006.

The new amendments to the ECA, which have a direct bearing on governance of the Agency, came into operation on 21 May 2014 and is a public body defined by Schedule 3A of the Public Finance Management Act (PFMA) No 1 of 1999.
The National Integrated ICT Policy White Paper approved by Cabinet on 28 September 2016 makes recommendations on new or amended legislation arising from the White Paper.

The most significant proposal with respect to universal access and service is the creation of the Digital Development Fund (DDF), which would replace USAASA and USAF.
It would exclude the policy- and regulation-making functions currently with the Agency, and the Fund would be responsible in the main for identifying, awarding and managing projects.

NDP goals that have an influence on USAASA’s strategy and work include: • Implementation of an integrated e-strategy for the country; • 100 per cent broadband penetration by 2020 (>2mbs); • By 2030, deployment of a full range of government, educational and information services.
USAASA has rationalised its performance objectives from 24 in 2017/18 to just four (4) in the year under review.1 The four strategic objectives include:2 • • • Improved risk management services; Increased utilisation of the information and communications technology (ICT) system; Improved responsiveness by USAASA to the needs of underserviced and unserved communities through research and development; and • A smooth transition from USAASA/USAF to Digital Development Fund (DDF).
9.4.1 Operational highlights USAASA rolled out broadband infrastructure at 62 and 212 broadband sites in the underserviced municipalities of Impendle Local Municipality (KwaZulu-Natal) and Nyandeni Local Municipality (Eastern Cape) in 2017/18.
1 Pg 5 of Usaasa Annual Report 2018/19 2 Ibid 135 In terms of the USAASA strategic goal of ‘An optimally functioning USAASA that effectively delivers against its mandate’, USAASA’s performance worsened from 67 per cent in the 2016/17 financial year to 42 per cent in 2017/18.

For the 2018/19 targets, achieved annual targets against the planned annual targets reveal that there were four planned targets and only were achieved, which is a 50 per cent achievement.
Against these targets, USAASA achieved 50 percent, which is a moderate improvement from 42 percent achieved in 2017/18 financial year.3 It is also important to note that in 2016/17, the performance of USAASA was at 67 per cent at the end of the financial year.

On governance, the entity through its board identified key areas where interventions are necessary for internal controls needed for strengthening systems and procedures to improve audit outcomes.
Risk management committee was reconstituted and mandated to identify root causes of poor performance.

Combined assurance model was strengthened through assistance from Independent Communications Authority of South Africa (ICASA), and the Auditor General of South Africa (AGSA) to further enhance audit reviews on broadband.

The poor project and contract management self-evident in the performance results of the organisation is a clear indication of lack of required skills to deliver results.
On key broadband deliverables for 2018/19 financial year, USAASA had an obligation to deliver on the following: • Construct or upgrade the backhaul infrastructure; • Connect 1 295 sites by year 2020; • Connect government facilities such as local municipal offices; 3 Ibid 136 • Enable and facilitate the adoption of e-health, e-education, e-agriculture and e- government; • Rollout of Wi-Fi hotspots; • Create opportunities for local small, medium and micro enterprises (SMMEs).
9.4.1.1 USAF Worringly, USAF received a qualified audit opinion for two consecutive years.

There was failed processes for BDM inventory management.

The expiry of installers' contract led to stoppage of installations while failed procurement processes for the appointment of a service provider to roll out broadband infrastructure in PSJ and Ingquza Hill local municipalities.

Hence a mere 9 per cent achievement against the planned targets in the 2018/19 APP.
Graph below is a depiction of the non-performance of USAF against its planned targets for the financial year 2018/19.

One of the eleven planned targets was achieved, resulting in ten of the eleven planned targets were not achieved, translating to 91 per cent non-achievement.

9.4.2 Financial performance As illustrated in table below, USAASA had a total revenue of R81 906 million of which R80 million was in the form of government grants and subsidies.
The Agency had a deficit of R23 million by the end of the financial year after a total expenditure of R105 million.

Accumulated surplus as at March 2019 was at an alarming R29 million.

But it must be noted that this is in the backdrop of a 50 per cent achievement of the Agency’s targets for the financial year under review.
137 Recoveries from former employee(s) and interest earned from short-term call account was at R1.8 million while recoveries from former employee(s) and interest earned from short-term call account amounted to R1.8 million by end of financial year under review.

Saving realised due to vacancies during the year amounted to R3.7 million.
As illustrated in table below, USAF had a total revenue of R159 119 million of which R76 million was in the form of government grants and subsidies and R82 million was from finance income.

USAF had an alarming deficit of R199 million by the end of the financial year after a total expenditure of R358 million owing to the Digital Terrestrial Television project and Broadband project which had an expenditure of R320 million.
138 9.4.3 Audit opinion For USAASA, for the first time, no material findings on the Audit of Predetermined Objectives (AOPO).

However the Agency received an unqualified opinion with findings.

Furthermore, USAASA achieved an unqualified audit opinion for the past four years, with emphasis of matters.

There was a reduction in the number of findings raised by the AGSA as compared to the previous financial year.
Qualification on the inventory of set-top boxes due to inadequate internal controls to properly account for and safeguard set-top boxes held by third parties.

Other findings include: • Adoption and embedding of effective governance principles i.e.

meaningful recognition and contribution by assurance providers that led to the commissioning of two forensic audits on Broadband and SAP ERP system; and • Collaboration with ICASA on the audit of Broadband and Connectivity.
For USAF, no material findings on the Audit of Predetermined Objectives (AOPO).

There was a reduction in the number of findings raised by the AGSA as compared to the previous financial year and collaboration with ICASA on the audit of broadband and connectivity was in place.

The majority of the disclosed fruitless and wasteful expenditure for the current year was caused by interest, fines and legal fees due to the non payment of creditors and USAF contributed R4 million.
USAF further received a qualification relating to its inventory.

139 For both USAASA and USAF financial statement preparation remains a concern, as material adjustmentshad to be made to the financial statements submitted for auditing.
Both had material compliance findings, mainly due to non-compliance with procurement and contract management regulations and poor quality of financial statements, more details on nature of findings and in terms of disregard to compliance with legislation, USAASA and USAF were found wanting in terms of prevention of irregular expenditure.

9.5.
9.5.

Broadband Infraco (BBI) -- R410 million Broadband Infraco was established in 2007 in terms of Broadband Infraco Act No 33 of 2007 (the Act) as a State-Owned Entity (SOE).

The Company was registered in 2008 with the Companies and Intellectual Property Commission (CIPC) as an entity owned by the government and the Industrial Development Corporation (IDC).
In October 2009, an Individual Electronic Communications Network Services (I-ECNS) license was issued to the Company by the Independent Communications Authority of South Africa (ICASA).

The Company commercially launched on 18 November 2010.

As per the requirements of the Companies Act No 71 of 2008, Broadband Infraco was registered as a State-Owned Company (SOC) with the CIPC with effect since 2013.

The Company is a Schedule 2 public entity in terms of the PFMA.
Broadband Infraco is a national asset that is leveraged by the Government to drive national growth and industrialisation.

Its extensive fixed national and international infrastructure is open to all competitive and public Information Communication Technology (ICT) operators.

Our legislative mandate is set out in the Broadband Infraco Act No 33 of 2007.
Its objectives are to expand the availability and affordability of access to electronic communications, including, but not limited to, underdeveloped and underserviced areas.

These are aligned with the Electronic Communications Act No.

36 of 2005 and commensurate with international best practice and pricing, through the provision of electronic communications network services and electronic communications services.
Broadband Infraco’s mandate therefore is to expand the availability and affordability of access to electronic communications, including, but not limited to underdeveloped and underserviced areas through the provision of electronic communications network services and electronic communications services.

140 9.5.1 Operational highlights Eighteen (18) of the nineteen (19) targets were met translating to 95 per cent achievement.

Only one target on financial sustainability was not achieved.
Below is an annotated summary of other key highlights for the year under review: • Quarterly performance reports submitted timeously; • Current ratio is achieved at 117 per cent against a target of 55 per cent; • EBITDA is achieved at 36,8 per cent versus a target of 22.9 per cent; • SMME invoices were paid within 15 days versus a target of 30 days; • Debtors were collected within 54 days versus a target of 60 days; • A total number of 313 SA Connect sites were installed and 258 tested end-to-end versus a target of 166; • 0.15 per cent network performance rebates as a percentage of revenue were paid versus the target of 0.3 per cent; • Core network faults were restored within 5.90 hours on average versus a target of 7.5 hours; • 3 SMMEs were allocated OEM installation work versus a target of 3; • The discretionary spend on broad-based black economic empowerment (B-BBEE) totalled 104 per cent versus a target of 70 per cent; • 49 per cent of the total discretionary spend was with Black Owned Entities (BOE) versus a target of 40 per cent; • 44 per cent of the spend on BOEs was with Black Women Owned Entities (BWO), versus a targeted spend of 10 per cent; • 8 per cent of the spend on BOEs was with Youth Owned Entities (YOE) versus a targeted spend of 5 per cent; • 2% of the spend on BOEs was with People with Disabilities Owned Entities (PWD), versus a targeted spend of 1 per cent; • 1 School selected in North West, telematics on distance platform was connected, computers provided and educators trained versus a target of 1 school adopted in underserviced areas; • 1.80 per cent of the total salary bill was spent on training versus target of 1 per cent; • 6 new technical interns were appointed versus a target of 6.
The one technical intern who was still pursuing his P2 has successfully completed his National Diploma; and • Progress on resolving external audit findings was assessed and reports submitted.

141 Lastly, revenue increased by 8.4 per cent year on year versus a target of 40 per cent.

Though this a significant improvement, the non-achievement of the target was mainly due to cancelled links and long sales to billing cycles.
It is expected that revenue will increase in the 2019/20 financial year due to major contracts that are being provisioned.

9.5.2 Financial performance Amidst another tough economic year, BBI was able to improve financial performance, increase cash resources and improve on the overall financial health of the company.
Revenue increased by 8 per cent year on year and Cost of Sales reduced by 3 per cent year on year mainly due to the correction of maintenance costs previously set-off and partly by the increase in costs to provision the services for the sites, connected under SA Connect.
Operational expenses increased by 5 per cent year on year while the operational loss decreased by R99 million to R14 million for the financial year under review (see table next page): The increase of government sites connected under SA Connect and the mitigations that had been put in the place to improve sales enabled the company to increase its revenue by 9 per cent when compared to the 2017/18 financial year.
Furthermore the increase of the customer base from 46 to 57 complemented the increase in revenue.

However, even with these improvements, the Company did not meet the set targets for revenue.

The main contributors to the below target performance are that several budgeted links were 142 terminated during April 2018, the delayed implementation and recognition of revenue on large contracts and the continued economic downturn experienced in the ICT market.
Lastly, the company remained cash positive with a positive Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) of R 154 million and a positive net inflow of cash resources from operations for the second consecutive year.
9.5.3 Audit opinion BBI has remain stagnated in the same finding over a five year period with an unqualified audit with findings; material compliance findings, mainly due to non-compliance with procurement and contract management regulations and poor quality of financial statements.
Inadequate record keeping, insufficient oversight, lack of implementation of standard operating procedures, improper review of Annual Performance Report, insufficiently skilled resources, insufficient understanding of Framework for Managing Programme Performance Information (FMPPI) were the rootcause for the low scoring on usefulness of performance indicators and targets as well as reliable reporting of achievements.
Among other findings, there is a material uncertainty on going concern of the entity, lack of controls around the recording and movement of spare assets.

Creditors were not paid within 30 days and creditor reconciliations were not performed and there was incorrect ageing of creditors.

Predetermined Objectives were incorrectly calculated and the Audit firm’s name was not on the CIPC document.
Management of procurement and contracts, prevention of irregular expenditure as well as prevention of fruitless and wasteful expenditure reflected a disregard of compliance to legislation.

BBI’s R52,5 million in irregular expenditure mean the majority was caused due to unauthorised amendments to tender processes and contract management issues.

Lastly, a number of events and conditions have been identified that cast significant doubt on the entity to continue as a going concern.
BBI demonstrated material uncertainty on going concern which has been reported in audit report for the past financial four years, including (i) recurring operating losses; and (ii) total liabilities exceed total assets by R1 207 730.

BBI incurred a net loss of R14 735 million.


143 9.6 NEMISA -- R90,8 million Legislatively, the National Electronic Media Institute of South Africa (NEMISA) was established as a non-profit institute of education by the Department of Communications in terms of the Companies Act (1973).

It is listed as a schedule 3A public entity in terms of the PFMA.

NEMISA offers national certificates and short courses in the areas of television production, animation and radio production.
The institutes programmes are structured to enhance the market readiness of students in a wide range of broadcasting disciplines.

Among it services is to provide a national integrated e-skills development management system towards sustainablesocio-economic development in South Africa.

NEMISA is in the process of becoming the iKamva Digital Skills Institute.
This is an integration of three entities, NEMISA, the e-Skills Institute (e-SI) and the Institute for Satellite and Software Applications (ISSA): • NEMISA is a non-profit education institution that trains previously-disadvantaged individuals.

Its original focus was developing skills in TV, radio and broadcasting.
With the growth of digital technologies, this focus broadened to include skills that fall within digital content production; • The e-SI is a branch at the Department of Telecommunications and Postal Services.

Its aim is to enable the e-skilling of South Africa – to train digital skills for the world of technology.

It has been building provincial CoLabs and creating training programmes, among other things; and • ISSA is a directorate at the Department of Telecommunications and Postal Services.
It offered postgraduate qualifications in engineering and information and communication technology.

Because the world today is driven by technology, and modern digital technology continues to increase in capacity, mobility, affordability and accessibility; with other significant advances including the convergence of different types of technologies into one device (such as audio, video, calls etc.

in a mobile phone), the need to develop e-skills is recognised in national policies.
And NEMISA is further mandated to develop e-skills capacity in South Africa by creating a partnership framework that guides e-skills initiatives.
144 9.6.1 Operational highlights In the backdrop of budget constraints and the fact that the term of the current Board ends 30 September 2019, the entity had a few highlights as annotated below: • Entity performed very well consistently throughout the year in the quarters (90% Q1, 87% Q2, 100% Q3, 67% Q4); • Achieved unqualified audit outcome; • Resolved the strategic planning finding in the Audit Report; • Strategic and Annual Performance Plans were prepared in line with the envisaged mandate; • Entity was represented at the ITU & BRICS meeting in Durban; • • In-House Training Unit rolled out full SAQA qualifications and skills programmes; In-House Training Unit has full time students on the campus; • Expansion of CoLabs in provinces, i.e.
introduction of UMP; • Entity performed very well consistently throughout the year in the quarters (90% Q1, 87% Q2, 100% Q3, 67% Q4); • Achieved unqualified audit outcome; • Resolved the strategic planning finding in the Audit Report; • Strategic and Annual Performance Plans were prepared in line with the envisaged mandate; • Entity was represented at the ITU & BRICS meeting in Durban; • • In-House Training Unit rolled out full SAQA qualifications and skills programmes; In-House Training Unit has full time students on the campus; and • Expansion of CoLabs in provinces, i.e.
introduction of UMP.

9.6.2 Financial performance Total revenue for the year under review was R97 million to an total expenditure of R97 million.
However, there was an operating deficit of R6 million within the reporting period based on adjustment (see table below): 145 In terms of budget vs actual variance, in the main, it relates to income generated by the sale of motor vehicles and was not included in the Budget: • Interest earned on the rolled-over funds which was not included in the budget; • The difference is due to the e-SI allocation from DTPS that was not received by NEMISA as per the budget; • Underspending due to vacancies that were not filled; and • Overspending/deficit due to prior year commitments realised as expenditure in the current year.
9.6.3 Audit opinion Non-compliance is mainly due to: Irregular expenditure • Previous year identified in current year : R11,2 million (This relates to current rental agreement and insurance contract that was concluded in previous years); • Current year : R14,3 million (mainly relate to the above two contract expenditure incurred in the current year); • Internal Audit is conducting internal investigation on Irregular expenditure; and • Consequence management processes to be initiated upon conclusion of Internal Audit investigation.
146 Difference in Reported Performance This was due to interpretation.

We reported numbers based on learner who completed training, irrespective of whether they signed the attendance registers.

The APP for 2020/21 will indicate completion of training as evidence.

Proper Supply Chain Management This was due to issue of capacity challenges within SCM unit.

The position of SCM manager has been reviewed to ensure that a suitable candidate is appointed at appropriate level (grade).
Financial Statement Adjustments Due to issues of SCM above, disclosure (i.e.

commitments, irregular expenditure) were incomplete.

Appointment of suitable SCM manager and regular reviews of contract register will be done to address this.

9.7 SITA – R5 billion (R23 million for SAConnect) SITA prides itself that on its 20 year anniversary and 25 years into the country’s democracy, it has been the backbone of the SA government and has helped to propel the country into a positive trajectory of development.
SITA is committed to leveraging IT as a strategic resource for government, managing the IT procurement and delivery process to ensure that the government gets value for money and uses IT effectively to support the delivery of eGovernment services to all citizens.
Financial year 2018/19 marked the second year of implementation of its new business model which intended to transform the internal operations to offer value added innovative service offerings to address the long-standing customer service delivery challenges and improve the provision of government services to the citizens.
§ SITA was expected to deliver services within the context of government cost containment initiatives, the impending SOC rationalisation and persistent systemic and institutional challenges.

§ SITA aligned its business operations to government imperatives that enable service delivery to the citizen by focusing on key strategic priorities , namely; Electronic Government, ICT Security , Procurement and Core IT Services.
147 9.7.1 Operational highlights SITA effectively supported the country’s e-Enablement and digital transformation drives aimed at transforming the public service through digital technologies.

SITA deployed 55 eServices to external clients in various provinces and 4 eServices were deployed for SITA internal use, namely; SITA Compliance Website, SITAVarsity, NDP2030 Hackathon Website and SITA Skills Audit.
Overall the benefits of the e-Services deployed have positively impacted the end-users through improved access to services, decreased operational costs, improved efficiencies and accessibility while equally SITA internal business operations have been bolstered.

SITA embarked on an infrastructure modernisation journey to re-engineer the current environment into modern state-of-the-art facilities that includes the introduction of a cloud capability.
SITA launched its new government cloud infrastructure for South Africa which is said to be one of the largest government clouds in the world in conjunction with Gijima, Huawei, and IBM.

The rollout of broadband connectivity, a very capital intensive programme, was flagged as a critical focus area by the Executive Authority, as South Africa is challenged with issues of accessibility, usability, and affordability.
However, the annual performance results point to the achievement of 50 per cent of annual targets.
Challenges leading to the unsatisfactory performance in some indicators: • Delays in the finalisation of the organisational design program leading to lack of capacity and skill to deliver on planned targets; • SLA metrics was not achieved primarily due to the power outage that took place in August 2018 that had a negative impact on some metrics; • Capacity constraints in the procurement function; • Corporate and structural changes, which in affected the ICT acquisition, spend through SMME entities; and • Significant investments made on strategic projects as part of operationalising the business model resulted in cash flow constraints.
148 9.7.2 Financial performance The group financial performance is summarized as follows: It is clear from the above that SITA has not performed well in the current year compared to the previous years.

The company has had many challenges in the current financial year but still sustainable and financially sound.
• Dividends: There were no dividends declared for the current financial year ended 31 March 2019; and • Internal Controls: The Board has the ultimate responsibility for establishing a framework of internal controls.

The controls are designed to provide cost effective assurance that assets are safeguarded and that liabilities and working capital are efficiently managed.

The internal control environments were effectively managed by management and monitored by the internal audit department.
During the year internal controls operated effectively.

9.7.3 Audit opinion SITA received unqualified audit report with findings on Audit of Performance Information and compliance with legislation.

SITA received the same audit opinion for the past 3 consecutive years being 2016/17, 2017/18 and 2018/19).
The following includes the control deficiencies raised by AG: • Inadequate process and systems to prevent Irregular expenditure; • Compliance with PFMA and SCM prescripts; • Weakness pertaining to IT Governance and IT general controls; • Effective controls around Contract Management; and 149 • Record keeping and reconciliations.
The main root causes for the findings raised by AG includes: • The review and recording processes were not always effective to be able to detect and correct misstatements in the financial statements; • Ineffective contract management and incomplete contract register due to lack of capacity within the Supply Chain Management (SCM) division; • Poor record keeping with the SCM division leading to information not always readily available for audit purposes; and • IT Controls had not been adequately designed or implemented to enable an effective IT control environment.
9.8 .ZADNA -- R14 million The .za Domain Name Authority (.ZADNA) is a not-for-profit organisation that manages and regulates the .za namespace.

.ZADNA is accountable to the South African Department of Telecommunications and Postal Services, but does not receive government funding which means it is exempted from complying with the Public Finance Management Act.

There was a total of 120 targets for the year, and ZADNA achieved 118 (98%) of the targets.
There were 2 targets (2%) that were not achieved are deferred to 2019/2020 ZADNA is mandated to: • Comply with international best practice in administration and management of the .za namespace in compliance with international best practice • Licensing and regulate registries • Licensing and regulate registrars for respective registries • Publish guidelines among others.
9.8.1 Operational highlights 150 .ZADNA’s priorities in the Policy and Regulation work area focused on the review of the .ZA General Policy and the draft SLR Policy.

The review of the .za SLD General Policy focused on issues relating to direct registration.

.ZADNA achieved its targets in these areas.

The .ZADNA team’s performance in education and awareness surpassed the set targets.

The stakeholder engagements improved so much that .ZADNA surpassed its target.
The roll-out of .ZA Registrar-Reseller Development Project also proceeded as planned.

The project had over 200 young people being exposed to the ISP opportunities and .ZADNA also trained in the targeted 30 NHI sites as committed to in the 2018/19 budget vote speech.

The ZADNA Board’s work in enhancing the corporate governance environment bore fruits as more internal policies and controls were approved and implemented.
A risk management strategy, containing a detailed risk register was also compiled and approved by the Board.

In addition to the already documented risks, Techcom helped ZADNA management compile a risk analysis of .ZADNA’s ICT infrastructure and of the risks inherent in the administration of the .ZA namespace.

The ICT risks were added to the 2018/19 Risk Register.

The revised Risk Register was approved and endorsed by .ZADNA’s Internal Auditor’s for purposes of the 2018/19 financial year.
In addition, a company-wide Risk Management Plan was approved and included in the 2018/2019 Annual Performance Plan.

.ZADNA reported on a quarterly basis on its risk management and mitigation strategies.

.ZADNA co-hosted the 2018 ZAIGF with the Department of Telecommunications and Postal Services from 16-17 October 2018 in East London.

The .ZA namespace continues to grow with aid from conducted awareness and educational campaigns, coupled with innovation of new methods to register .ZA domains.
There were 1 222 372 million registered .ZA domain names by 31 March 2019.

However, .ZADNA’s main challenge remained the uncertainty surrounding revenue generation from paid domain name registrations, which was due to the .ZACR fee dispute.

Management resultantly looked at alternative ways of receiving revenue and this resulted in .ZADNA exploring SLRs as an alternative revenue source in an attempt to avoid over reliance on a single source of revenue.
.ZADNA is looking forward to the finalization of the ICT Policy White Paper process that will see the ICT regulators (including .ZADNA) being integrated in the near future.

151 Furthermore, during the 2018/19 financial year, .ZADNA deferred the employment of new staff due to financial constraints which was caused by ongoing fee dispute between ZACR and .ZADNA.
The ZACR-.ZADNA fee dispute outcome was in favour of .ZADNA; however .ZADNA experienced challenges in the enforcement thereof as ZACR elected to review the decision.

After numerous engagement meetings between the ZACR and the .ZADNA Board, the parties came to an amicable solution, which resulted in the conclusion of a settlement agreement between .ZACR and .ZADNA.

The .ZA namespace grew lesser during 2018/2019 with 37 257 new registrations than in 2017/18 where 46 711 new registrations were achieved.
There were 1 222 372 registrations by 31 March 2019 compared to 1 170 472 the year before.

9.8.2 Financial performance The 2017/2018 Financials had to be restated to take into consideration the effect of the ZACR Settlement Agreement.

The revenue was initially recorded at R7 per domain during the arbitration process.
ZADNA and ZACR entered into a settlement agreement which resulted in the additional R5 (R12-R7) being recovered with effect from June 2016 hence there is a surplus for 2017/2018 and 2018/2019.

The arbitration outcome was in favor of ZADNA, and in accordance to the settlement agreement the revenue is been collected from ZACR from for the periods starting June 2016.

The amount of R 3 236 841 has been collected already at financial year end.
Revenue was restated in the Financials to be at R12 per domain name fee.

Revenue for the year amounted to R14million, see table below: 152 Legal expenses increased from R1 271 309 in 2018 to R1 471 633 in March 2019.

The increase is a result of the ongoing registry fee increase arbitration between .ZADNA and ZACR and other investigations which took place.

The expenses are expected to decrease substantially in 2019/2020 since the arbitration has been concluded.
Communications and awareness expenses decreased from R1 210 485 in March 2018 to R 77 611 in 2018/2019, The decrease was inevitable due to the shortfall in revenue, which was the result of the extended registry fee increase arbitration.

Rental increased from R784 360 in March 2018 to R828 743 in March 2018.

The increase was attributable primarily to VAT and inflating rates on the monthly rates.

And salaries reflect both inflationary adjustments and new employee costs.
They increased by from R 3 111 658 in March 2018 to R 3 340 826 in March 2019.

9.8.3 Audit opinion .ZADNA is not a State entity and therefore audits are not conducted by AGSA.

No further information is provided in this regard in the report except to emphasize that ZADNA achieved another clean (unqualified) audit.
10 Observations 10.1 The Department The Committee noted that: (i) the Department received an unqualified audit; (ii) the Department addressed 83 per cent of the findings raised by the Auditor-General; (iii) the Department did not achieve 2 of its 24 planned 2018/19 annual targets; (iv) the reason for the non-achievement were as follows: a. broadband connectivity and sustenance of 570 identified sites.
The reason for the non-achievement was due to the deviation of 304 identified sites for which still awaits service upgrades and activation; and b. implementation of the National e-Strategy focusing on identified areas.

The reason for the non-achievement relates to the National Digital Skills Strategy which was approved in April 2019, after the close of the reporting period of 31 March 2019.
153 (v) the Department had developed and is implementing an Integrated Action Plan (IAP) to focus on providing a systematic resolution of findings and ensuring that root causes are effectively identified and addressed; (vi) no irregular expenditure was incurred during the financial year under review; (vii) the Department addressed previous cases of irregular expenditure amounting to R17,8 million during the financial year; (viii) fraud allegations at the Department took longer than 3 months to be investigated; (ix) the Department was in the reconfiguration process together with its entities.
10.2 SAPO The Committee noted: (i) with concern that SAPO achieved a qualified audit opinion with findings and commended SAPO for its performance, considering unexpected and rush transfer of functions of the South Africa Social Security Agency (SASSA) grant payments; (ii) that SAPO’s target of Revenue Retention through Operational Effectiveness was not achieved due to the impact of the 2 months’ work stoppage and the decline of mail revenues; (iii) that SAPO’s target to reduce operating costs was not achieved due to the consolidation and optimisation of the regional operations infrastructure network policy being only approved on 5 March 2019; (iv) that SAPO did not achieve its governance performance objective due to the fact that the SASSA project was implemented during the year and bound by strict and short timelines; (v) that SAPO’s overall performance against targets improved by 58 per cent, up 10 per cent from the prior year (48%); (vi) with concern that SAPO obtained a fruitless and wasteful expenditure audit to the amount of R 54 million, with interest, fines and penalties; (vii) with concern that SAPO did not investigate its fruitless and wasteful expenditure; (viii) with concern that SAPO has no Board and that there are only two members of the Board left who were appointed in 2018; (ix) with concern the internal control deficiencies at SAPO in respect of the SASSA social grants; (x) with concern that SAPO’s debt-collection processes was inadequate; and (xi) with concern that fraud allegations at SAPO were not properly investigated.
154 10.3 Sentech The Committee noted: (i) that Sentech received an unqualified audit outcome with no findings and commended Sentech for the achievement of a clean audit and encouraged the entity to share its experience and practice with other entities; (ii) that Sentech achieved 78 per cent performance against predetermined key performance indicators (KPIs); (iii) that Sentech displayed effective leadership during the financial year under review; (iv) that Sentech did not achieve its target to increase sales revenue; (v) that the financial performance of Sentech was due to the volatile currency and slow economic growth, challenges facing community broadcasters and the decrease in revenue outlook in anticipation of analogue switch off; and (vi) that Sentech did not achieve its target to enhance customer orientation.
10.4 SITA The Committee noted: (i) with concern that SITA obtained an unqualified audit with findings; (ii) with concern the performance achievement of 50 per cent on annual targets; (iii) that material financial statements adjustments had to be made for auditing purposes; (iv) that SITA had material findings on its performance information due to insufficient oversight and inadequate implementation of proper record keeping; (v) with concern that SITA had material compliance findings, mainly due to non-compliance of procurement and contract management regulations and poor quality of financial statements; (vi) with concern that previous actions to prevent non-compliance with supply chain management legislation proved ineffective; (vii) with concern that contract management is not effectively implemented to prevent non- compliance with legislation and regulations; (viii) that the record system is inadequate to enable reliable reporting of achievements in the annual performance report; (ix) that SITA did not achieve its target to increase customer satisfaction levels; 155 (x) that SITA did not achieve its procurement target of ICT acquisition spend through SMMEs; (xi) that SITA did not achieve its financial sustainability target in that the percentage of EBIT (Earnings before interest and taxes) was not met; (xii) that SITA has not meet its target to ensure employee satisfaction; (xiii) with concern that irregular expenditure during 2018/19 amounted to R1 030 465 000 and R628 882 000 of it related to irregular expenditure incurred in prior years.
(xiv) that the majority of the irregular expenditure was caused due to competitive bidding processes not being followed in the awarding of a specific contract; (xv) with concern the contradicting presentations between the Chairperson of the Board and the Acting CEO which presented different perspectives on the state of affairs at SITA; and (xvi) with concern that some contracts were awarded to bidders that did not comply with SCM policies.
10.5 BBI The Committee noted: (i) that Broadband Infraco (BBI) achieved an unqualified audit outcome with findings; (ii) with concern that the accounting authority did not exercise adequate oversight responsibility regarding compliance with applicable legislation and related internal controls that resulted in the lack of proper procurement and contract management processes; (iii) with concern that action plans developed to address internal control deficiencies were not adequate in all instances; (iv) with concern that SCM processes were flouted, resulting in irregular expenditure and in contravention of the PFMA; (v) that BBI achieved 18 of the 19 targets, which is an achievement of 95 per cent; and (vi) that the target not achieved was in respect of the percentage of revenue growth due to delayed sales in the billing cycle and commended BBI for commencing to address all audit findings .
10.6 USAASA/USAF 156 The Committee noted: (i) with concern that USAASA achieved an unqualified audit with findings; (ii) that USAASA will undergo reconfiguration before the end of financial year March 2020; (iii) that only two of the four planned targets were achieved; (iv) that the two targets not achieved were (i) the responsiveness of the entity to underserviced communities and (ii) the facilitation of a smooth transition from USAASA/USAF to the Digital Development Fund; (v) with concern that USAF remained unchanged since the last financial year and its qualified audit outcome with findings remained unchanged; (vi) with concern the contradicting presentations between the Chairperson of the Board and the CEO which present different perspectives on the state of affairs at USAASA; and (vii) with concern that the set-top boxes inventory at USAF could not be accounted for and therefore financial statements could not be signed off.
10.7 NEMISA (i) The Committee noted: (ii) that NEMISA achieved an unqualified audit; and (iii) with concern that NEMISA paid exaggerated amount for rental of its premises 10.8 .ZADNA The Committee noted: (i) and commended .ZADNA for achieving a clean audit; (ii) that .ZADNA achieved 118 of the 120 targets which amounts to 98 per cent; (iii) that the Chief Executive Officer was suspended in December 2018 and that the process of appointing a CEO was underway; and (iv) that the two targets which were not achieved, were in respect of the School of Internet Governance project and the maintenance of research, due to the lack of finance.
11.
Recommendations: 11.1 Department The Committee resolved that the Minister should ensure that: (i) the Department and its entities develop an effective system for improving financial capacity, compliance with legislation, and performance reporting; 157 (ii) action plans for mitigating non-compliance forms part of the performance contracts of relevant officials; (iii) the Department and its entities should prioritise to fill key vacancies with suitably qualified persons; (iv) the Department and its entities implement consequence management systems as and when transgressions and poor performance is identified, especially involving irregular expenditure; (v) investigations on all fraud allegations be finalised; (vi) the March 2020 target for completing the reconfiguration of the Department is realised so that it can focus on service delivery; (vii) an implementation plan for rollout of set-top boxes is tabled; (viii) the Committee receives a comprehensive report rationalising the proposed mergers of some of its entities; and (ix) the Committee receives a legislative programme.
11.2 SAPO The Committee resolved that the Minister must: (i) ensure that fraud allegations related to grant payments and cards at SAPO be properly investigated and finalised; (ii) ensure universal access to postal services and prioritise particularly the rural areas; (iii) ensure that all critical posts are filled; (iv) table in the Committee an update report on the appointment of SAPO Board and commit to appoint the Board before end of November 2019; (v) ensure that SAPO properly investigates fruitless and wasteful expenditure; (vi) develop systems to curtail future fruitless and wasteful expenditure; (vii) address internal control deficiencies impacting on SASSA social grants; (viii) expedite the Postal legislation amendments, in particular (i) the Postbank Act; (ii) the Postal Services Act; and (iii) SAPO Act; (ix) ensure that SAPO’s overall turnaround is expedited; (x) ensure that ICASA enforces postal regulation; (xi) monitor SAPO’s upgrading of postal outlets to meet SASSA standards as per the signed Service Level Agreement; (xii) monitor SAPO’s service delivery, in particular USO branches; (xiii) ensure that SAPO and the Postbank maintain SLAs as required in terms of the Postbank corporatisation process; 158 (xiv) monitor SAPO and the Postbank’s implementation of the digital strategy and connectivity of postal outlets; (xv) monitor SAPO’s implementation of the retail property optimisation strategy; (xvi) guard against compromising USO and SASSA grant payments; (xvii) ensure readiness of SAPO e-commerce; (xviii) monitor the implementation of the SIU and Public Protector’s recommendations; (xix) monitor the implementation of the AG’s recommendations of the Annual Financial Statements; (xx) expedite the finalisation of the Postbank banking license application; (xxi) engage further on the separation of the PostBank from the SAPO Group; and (xxii) ensure that the Process Optimisation Strategy and Staff optimization are implemented.
11.3 Sentech The Committee resolved that the Minister must (i) ensure that Sentech promotes diversity and inclusion of females at executive positions; (ii) ensure that Sentech considers the dual illumination project from a state of readiness of the country perspective; and (iii) ensure that Sentech shares its success strategy for maintaining a clean audit opinion.
11.4 SITA The Committee resolved that the Minister must: (i) ensure that SITA fill all critical positions such as the Chief Executive Officer, Chief Procurement Officer and the Chief Financial Officer; (ii) ensure that SITA has a new Chairperson of the Board as the position of the outgoing Chairperson comes to an end; (iii) ensure that there is an action plan in place, with timelines to address audit outcomes; (iv) ensure that there are contingency plans to prevent further non-performance; (v) ensure that consequence management for individuals accused of theft is finalised; (vi) ensure that corrective action is implemented and that the skills deficit is addressed; (vii) ensure that SITA employs skilled staff to stabilise the organisation; (viii) ensure that SITA Executive security is prioritised considering the threats against them; (ix) ensure that SITA improve its SMMEs engagement; (x) expedite amendment of legislation in order to improve SITA effectiveness; (xi) ensure that SITA resolves the recurring irregular expenditure patterns; 159 (xii) ensure that SITA provides an update on the details pertaining to irregular expenditure detailing the involved persons as and when they appear before the Committee; (xiii) ensure that issues raised by the AG resolved expediently including: a.
Issues that resulted emphasis of matters on the unqualified audit opinion (impairment loss of R157 127 000 on intangible assets that was incurred as a result of a write-off).

b. Recurring irregular expenditure/ effective steps were not taken to prevent irregular expenditure; and (xiv) ensure that SITA develops an effective audit action plan to address internal and external audit findings.
11.5 .ZADNA The Committee resolved that the Minister should encourage the disciplinary process in respect of the former CEO of .ZADNA is fast-tracked and that a report is made available to the Committee.
11.6 BBI The Committee resolved that the Minister must: (i) ensure that processes are in place to adequately facilitate BBI’s debt collection processes; (ii) ensure that an action plan is made available to the Committee on how BBI will mitigate audit findings; and (iii) ensure compliance to the PFMA and related legislation on financial reporting of entities.
11.7 USAASA/USAF The Committee resolved that the Minister must: 160 (i) ensure that USAASA presents the reconfiguration plan to the Committee before March 2020; (ii) ensure that USAASA presents an action plan of its plan to mitigate audit outcomes before the end of the financial year; (iii) ensure that financial statements are signed off in respect of the set top boxes inventory at USAF; (iv) ensure that USAASA put processes in place to address the recurring irregular expenditure; (v) ensure that USAASA conducts investigations on irregular, fruitless and wasteful expenditure and take disciplinary steps against liable officials; (vi) ensure that USAASA improves on planning and contract management of USAF projects; (vii) monitor all connected sites in order to ensure consistent connectivity of government institutions, clinics and schools; (viii) ensure that USAASA meet the target on providing Internet access to connected sites (ix) ensure that USAASA reduces overspending on legal and consultants’ fees; and (x) ensure that USAASA meets the target on installation and distribution of set top boxes to qualifying households.
11.8 NEMISA The Committee resolved that the Minister should: (i) ensure that the rental contract matter at NEMISA is investigated; and (ii) ensure that there is consequence management in place for the persons responsible for brokering the exaggerated rental contract.

Report to be considered.

161 4.


BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON TRANSPORT, DATED 22 OCTOBER 2019 The Portfolio Committee on Transport (“the Committee”), having considered the performance and submission to National Treasury (NT) for the medium-term period of the Department of Transport (“the Department”) and its entities, reports as follows: 1.
INTRODUCTION The period under review took place against the backdrop of the initial phase of the implementation of the National Development Plan (NDP) (2014-2019).

As part of its contribution to the NDP, the transport sector had to identify interventions aimed at accelerating service delivery, increasing sector job opportunities, rural development and skills development.

Key priorities in this regard included investments in public transport, maintenance of roads and rail investments.
These had a direct bearing on the Government’s drive to respond to the challenges of poverty, unemployment and inequality.

1.1 Mandate of the Committee The prime mandate of the Committee is governed by the Constitution of the Republic of South Africa, 1996 (“the Constitution”), in respect of its legislative and oversight responsibilities as public representatives.
It is required to consider legislation referred to it and consider all matters referred to it in terms of the Constitution, the Rules of the National Assembly (NA) or resolutions of the House.

It is also required to respond to matters referred to it by Government within its mandate.

In addition, the Committee is entrusted with considering the budgets, Strategic Plans, Annual Performance Plans (APPs) and the Annual Reports of the Department and entities that fall within the transport portfolio.
1.2 Purpose of the Budgetary Review and Recommendation Report 162 Section 77(3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend money bills before Parliament.

This constitutional provision gave effect to the Money Bills Amendment Procedure and Related Matters Act (No.

9 of 2009).

The Act gives Parliament powers to amend money Bills and other legislative proposals submitted by the Executive whenever the Executive deems it necessary to do so.
The Act therefore makes it obligatory for Parliament to assess the Department’s budgetary needs and shortfalls against the Department’s operational efficiency and performance.

This review seeks to establish whether the Department and its entities have achieved their aims and objectives, as set out in their Strategic Plans, as well as whether they continue to fulfil their constitutional mandates within the year under review.
As this is the last BRRR emanating from work done and overseen during the 5th Parliament term, the focus will be on highlighting the key achievements made, as well as challenges encountered during the 2013/14, 2014/15, 2015/16, 2016/17, 2017/18 and 2018/19 financial years, as reported in the Department’s and entities’ 2013/14, 2014/15, 2015/16, 2016/17, 2017/18 and 2018/19 Annual Reports and APPs.
1.3 Methodology The Committee engaged with the Auditor-General of South Africa (AGSA) on its audit findings of the Department and its entities, as well as engaged with the Department and its selected entities on 8, 9 and 10 October 2019 on their performance and audit outcomes for the period under review.

The Committee selected to meet the following entities: 1.

Railway Safety Regulator (RSR); 2.

South African National Roads Agency Limited (SANRAL); 3.

Road Accident Fund (RAF); 4.


Cross-Border Road Transport Agency (C-BRTA); 5.

South African Maritime Safety Authority (SAMSA).

The Committee programmed to meet with SAMSA, however, the entity failed to table their Annual Report in time and the meeting with them was therefore cancelled.

The reasons provided for the failure to table the report on time to Parliament were read out by the Minister to the Committee on 10 October 2019 but has to date not been tabled.
Despite this, the AGSA 163 did report on the audit outcomes and the report will refer to the presentation by the AGSA on this.

6.

Passenger Rail Agency of South Africa (PRASA) as well as: 6.1 Intersite; and 6.2 Autopax; 7.

Ports Regulator of South Africa (PRSA); 8.

South African Civil Aviation Authority (SACAA); and 9.

Airports Company South Africa (ACSA).


The following entities were not programmed or called to meet with the Committee, however, their Annual Reports and/or financial statements were tabled on time and were taken into account for purposes of the report: 1.

Road Traffic Management Corporation (RTMC); 2.

Air Traffic and Navigation Services (ATNS); and 3.

Road Traffic Infringement Agency (RTIA).


The Committee did not meet with the following entity, trading entity and organisations due to the non-tabling of their Annual Reports within the prescribed period: 1.

SAMSA; 2.

Driving Licence Card Account (DLCA); 3.

South African Search and Rescue Organisation (SASAR) including the National Sea Rescue Institute (NSRI).
The BRRR details the analysis of the 2013/14, 2014/15, 2015/16, 2016/17, 2017/18 and 2018/19 Annual Reports and Financial Statements, strategic objectives, budget allocation and financial performance and the recommendations made by the Committee.
The BRRR is based on information accessed through: • The 2018 State of the Nation Address (SONA); • The Department’s Strategic Plan and APPs for 2013/14, 2014/15, 2015/16, 2016/17, 2017/18 and 2018/19; • The Department’s Annual Report and Financial Statement for 2013/14, 2014/15, 2015/16, 2016/17,2017/18 and 2018/19; 164 • The Strategic Plans and the APPs/Corporate Plans of the entities that fall under the Department, as well as their Annual Reports and Financial Statements for 2013/14, 2014/15, 2015/16, 2016/17,2017/18 and 2018/19; • Quarterly reports of the Department; • The report of the AGSA on the audit outcomes of the Department and its entities; • NT Section 32 Reports; • The NDP; and • Oversight visits by the Committee during the period under review.
2.

MANDATE OF THE DEPARTMENT OF TRANSPORT The Department is mandated with maximising the contribution of transport to the economic and social development goals of society providing safe, reliable, effective and efficient fully integrated transport systems that best meet the needs of passenger and freight users.
To attain this objective, the Department is entrusted with the provision of transport infrastructure and services in a manner that is efficient and affordable to consumers and the economy, while ensuring safety and security in all transport modes.
In an endeavour to discharge its mandate effectively and efficiently, the Department has organised itself into the following programmes: • • • • • • • Programme 1: Administration; Programme 2: Integrated Transport Planning; Programme 3: Rail Transport; Programme 4: Road Transport; Programme 5: Civil Aviation; Programme 6: Maritime Transport; and Programme 7: Public Transport.
In terms of the Department’s structure, it was suggested that it boded well for the creation of jobs, the development of the country’s urban and rural communities, as well as the improvement of logistics.
165 2.1 Strategic overview 2018/19 2.1.1 Strategic priorities of government To execute its mandate, the Department is guided by Government’s commitments as set out in, inter alia, NDP 2030, the New Growth Path Framework, the Presidential Infrastructure Coordinating Commission (PICC), the Medium-Term Strategic Framework (MTSF) 2014- 2019, as well as the SONA policy directives.
The Department has focused on improving mobility and access to social and economic activities, maintaining the national and provincial road networks with a view to responding to Government’s strategic objectives.

In addition, emphasis has been on improving public transport for rail and road commuters.
These activities contribute to the realisation of Outcome 6 (An efficient, competitive, and responsive economic infrastructure network) of Government’s 2014-19 MTSF.1 The NDP has identified economic transformation as a catalyst for accelerated economic growth and job creation.
In response to the NDP, the Department has committed itself to:2 • Demonstrating accelerated speed in delivery of services and operations; • Putting together reflection on stakeholder engagement and buy-in; • Laying more emphasis on shared growth initiatives; • Reprioritising optimum resource allocation, distribution and usage; • Supporting diversification of trade patterns; • Supporting industrialisation beneficiation; and • Prioritising capacitating of designated groups with socio-economic skills.
As part of the 2014-19 MTSF and in aligning its programmes to the NDP, the Department oversees the PRASA project with Gibela Rail Transport Consortium train manufacturing plant where they are Manufacturing 600 X’trapolis Mega trains for PRASA/Metrorail over 10 years 1Department of Transport (2017), p. 15.

2Ibid.

166 in Ekurhuleni.
This will ensure that over 65% of trains used in the country are built locally.3 In addition, the Department has undertaken to upgrade the R573 Moloto Road in order to improve access to economic opportunities and social space, as well as address the road safety challenges.4 It is anticipated that the upgrade of the Moloto Road will create approximately 10 000 job opportunities, while the rolling stock jobs are estimated at 65 000.5 For its part, the 2018 SONA underscored the need to invest in infrastructure.
It also placed emphasis on local procurement as regards the rail rolling stock programme (rail modernisation programme).
In addition, reference was made to speeding up the implementation of road maintenance.6 Finally, SONA 2018 committed Government to changing the way boards of state-owned entities (SOEs) are appointed so that only people with expertise, experience and integrity serve in these vital positions.7 Whilst striving for excellence and integration of sustained transport services, the Department and broader transport sector are crucial role players in the achievement of the NDP.
In July 2014, Cabinet adopted the MTSF, which continues to be used as the comprehensive five-year implementation plan for the NDP 2030 vision.

The MTSF also serves as a mechanism through which all plans of Government institutions across the three spheres of Government are aligned to the NDP.

This has been entrenched in the Ministers’ Delivery Agreement with the President of the Republic of South Africa.
The Strategic Plan is thus aligned with this agreement in order to ensure that all deliverables are budgeted for and fully implemented.

Of significance to the Minister and the Department are the following key outcomes: Outcome Sub-Outcome Outcome 4: Decent Sub-Outcome 1: Productive investment is effectively employment through inclusive crowded in through the infrastructure build programme economic growth 3Department of Transport (2017), p. 15.

4Department of Transport (2017), p. 7.

5Ibid.


6 Ramaphosa (2018).

7Ibid.
167 • Ensure monitoring of off-takes by end users on the infrastructure programme Outcome 6 – An efficient, Sub-Outcome 1: Regulation, funding and investment competitive and responsive improved economic infrastructure • Establish a Single Transport Economic Regulator (STER) • Develop a Private Sector Participation (PSP) Framework for ports and freight rail, removing barriers to entry for private investment and operations within the context of Cabinet-approved policy and with an analysis of the implication of tariffs Sub-Outcome 3: Maintenance, strategic expansion, operational efficiency, capacity and competitiveness of our logistics and transport infrastructure ensured.
• Improve national transport planning to develop long-term plans for transport that synchronise with spatial planning and align infrastructure investment activities of provincial and local government and clearly communicate the State’s transport vision to the private sector • Ensure development and approval of the Integrated Transport Plan • Develop and implement approved plan and improve market share of containers on rail vs road, to ensure that we move road freight to rail • Improve and preserve national, provincial and local road infrastructure • Strengthen road traffic management • Improve public transport 168 • Strengthen institutional arrangements for public transport Sub-Outcome 6: Coordination, planning, integration and monitoring implementation of strategic integrated projects (SIPs) in the National Infrastructure Plan.
• SIP 1: Unlocking the Northern Mineral Belt • SIP 3: South Eastern Node and Corridor Development • SIP 4: Unlocking economic opportunities in the North West Province • SIP 7: Integrated Urban Space and Public Transport Programme Outcome 7 – Comprehensive Sub-Outcome 5: Increased access to quality infrastructure Rural Development and Land and functional services, particularly in education, healthcare Reform and public transport in rural areas • Improve transport infrastructure and public transport in rural areas • Access Road Development Plan for improving rural road infrastructure implemented • District municipalities implementing the Integrated Public Transport Network Strategy Outcome 10 – Protect and Sub-Outcome 2: An effective climate change mitigation and enhance our environmental adaptation response assets and natural resources • Develop strategic policy and regulatory frameworks and programmes to promote a low carbon economy • Green Transport Strategy and Implementation Plan formulated and completed (Table 1: Ministers’ Delivery Agreement with the President of the Republic of South Africa – information obtained from the Annual Performance Plan 2018/19 p. 14 – 16 – The Annual 169 Report of the Department for 2018/19 did not contain this agreement as was done in the past) 2.1.2 Strategic Priorities of the Department In the 2018/19 financial year, the Department performed its work in line with the following strategic outcome-oriented goals:8 • Efficient and integrated infrastructure network and operations that serve as a catalyst for social and economic development o To achieve this goal, the Department developed policies and promulgated legislation that are set to drive investments for the maintenance and strategic expansion of the transport infrastructure network; and support the development of transport asset management systems in rural and provincial authorities.
The drive of these interventions was to improve the efficiency, capacity and competitiveness of all modes of transport.

• A transport sector that is safe and secure o The Department continued to promote and ensure implementation of policy interventions and strategies that sought to reduce accidents and incidents in the road, rail, aviation and maritime environments.
• Improved rural access, infrastructure and mobility o Through the scholar transport and non-motorized transport interventions, the Department aimed to increase mobility and rural access in rural district municipalities.
• Improved public transport services o The Department ensured an effective, efficient, affordable and accessible public transport system in urban and rural areas through the development and implementation of integrated public transport networks, establishment and strengthening of regulatory entities, refurbishment and acquisition of new rail rolling stock and upgrading priority passenger rail corridors.

• Increased contribution to job creation 8Department of Transport (2019a), pp.

48-50.
48-50.

170 o Implementation of the Broad-Based Black Economic Empowerment (B-BBEE) and commissioning of labour-intensive projects by the Department increased the creation of jobs in the sector.

• Increase contribution of transport to environmental protection o Reduction of green-house gas emissions through the use of more energy efficient modes of freight and passenger transport and promoting the use of cleaner fuels ensured that the impact of the sector on climate change was minimised.
• Effective and efficient management and support.

2.1.3 Challenges experienced in 2018/19 The following were reported in the Annual Report as challenges experienced by the Department during the year under review: 2.1.3.1 Programme 1: Administration Regarding University Funding, there were delays in submission of invoices, which resulted in under-expenditure of R1 426 000.
The Department was unable to deliver of the Compulsory Induction Programme due to unavailability of training materials from the National School of Government.

2.1.3.2 Programme 2: Integrated Transport Planning None.
9 2.1.3.3 Programme 3: Rail Transport 9 The Committee noted that, despite the indication here by the Department per their tabled Annual Report p.27 that there were no challenges experienced in this programme during the year under review, the Department presented contrary information during the engagement with the Committee.
In this programme the Department failed to meet all the set targets and they also indicated in their presentation that a notable challenge to the programme was the delays in processing the STER Bill.

171 Although the Department is pleased that the journey to redress years of underinvestment in passenger rail infrastructure and trains has commenced, PRASA has unfortunately not yet reached a stage where customer needs and expectations are satisfactorily met.
The deployment of new trains and infrastructure improvement has started in Gauteng and is being rolled out to other regions.

PRASA has since its formation in 2009 encountered various challenges, the biggest being the inherited infrastructure and trains transferred from its predecessor, the South African Railway Commuter Corporation.

Following three decades of underinvestment, these assets were old and outdated.
Even though Government was able to secure the required capital injection to modernise PRASA’s rail system (Rolling stock and infrastructure), PRASA has struggled to attract/secure adequate expertise to undertake such an enormous modernisation programme.
The roll out of new trains is merely one of the elements of the modernisation programme and should begin to transform passenger rail travel to a point where it is underpinned by: • Modern, safe and reliable trains for commuters; • Faster trains which will increase capacity on the network; • • Improved overall safety of the trains and reduced energy cost; and Improved predictable service to the passengers.

Challenges were experienced in the development of the National Rail Bill.
The Bill as part of the strategic process was dependent on the finalisation and approval of both the White Paper on the National Rail Policy and the Transport Economic Regulator.

2.1.3.4 Programme 4: Road Transport Due to the delays in filling of vacancies, specifically where staff with procurement experience and skills was required, the procurement of some services for various projects was delayed.
In addition, existing staff have to continuously work long hours and fill the void to work on the day-to-day tasks, especially with Monitoring and Oversight responsibilities.
2.1.3.5 Programme 5: Civil Aviation 172 Regarding Bilateral Affairs: • Cancellation of consultation meetings by foreign authorities due to circumstances beyond control; • Poor or lack of response to proposals to hold air services consultations; and • Synchronising diaries of the political heads in order to sign Bilateral Air Services Agreements that are ready.
2.1.3.6 Programme 6: Maritime Transport There was slow progress in the implementation of the Marine Transport Manufacturing Projects under Operation Phakisa ocean economy as a result of changes within Transnet and the Transnet National Ports Authority (TNPA).
The Department also received negative audit findings on the SAMSA compliance with the Standards of Training, Certification and Watchkeeping for Seafarers Convention, this may result in damage to South Africa’s international reputation as a maritime nation.

2.1.3.7 Programme 7: Public Transport Regarding the National Land Transport Amendment Bill, the report indicates that it was still in Parliament since April 2016 and it is envisaged to be approved in the 2019/ 20 financial year.
The Programme saw a prolonged procurement processes, particularly in relation to the Revised Taxi Recapitalisation Programme (RTRP), which led to underspending on the allocated budget.

There were also low expenditure trends in municipalities due to supply chain and procurement weaknesses and poorly capacitated and performing municipalities.
2.1.3.8 Key policy developments and legislative changes • Administrative Adjudication of Road Traffic Offences (AARTO) Amendment Bill The AARTO Bill: 173 - seeks to introduce electronic method of service in addition to existing methods of - - service (personal and registered); seeks to introduce demerits points; repeals the issuance of warrants by the Registrar and seeks to prohibit an infringer who infringer who does not comply with an enforcement order from being issued with a driving license, professional driving permit or license disc, in respect of a motor vehicle registered in the name of an infringer, until such enforcement order has been complied with or has been revoked.
At the end of the reporting year the Bill awaited assent into law by the State President.

It was assented to during the 2019/20 financial year.
• Road Accident Benefit Scheme (RABS) Bill The RABS Bill seeks to: - - - establish a scheme that operates on a “no fault” basis; establish the Administrator of the scheme; set up an appeals process for victims who are not satisfied as part of eliminating complex and expensive legal processes; - establish simple and accessible procedures for claimants and for the expeditious resolution of disputes; - provide for a comprehensive scheme that provides for victims’ healthcare services, income support benefits, family support benefits and funeral support benefits.
The Bill was before the National Assembly upon the rising of the 5th Parliament and the hope is that it will be revived by the 6th Parliament for further processing.

• National Road Safety Strategy (NRSS) The Department, together with its roads entities, remained unflinchingly driven to work persistently and consistently hard towards the reduction of fatalities on the roads.
The Department spent time with its entities to compile a plan of action (365-Day Road Safety Plan) to be implemented through provinces, and in line with the National Road Safety Strategy.

The Plan consists of well-coordinated and integrated road safety initiatives, interventions and Ministerial special road safety programmes.

Special consultations with the provinces were conducted in order to ensure that all spheres of government were part 174 of the drive.
Furthermore, working with communities in implementing the Plan was primary to the Department for the success of the Plan, for it is the conviction of the Department that “road safety is what you do with the community, not what you do for the community”.
As part of compiling the Plan, the Department embarked on a collective exercise of paying close attention to many aspects such as findings of different researches done on road safety, vehicle population, studying the latest statistics and the trends as well as conducting an environmental scan, which further revealed certain behavioural patterns by road users.
The Plan was, therefore, informed by various factors drawn out of the exercise and it spelled out the necessary actions to be taken in order to be deliberate in addressing the contributory factors.

Some of the pertinent areas of concern that the plan sought to address include amongst others, learner safety, public driver attitude, cycling safety, pedestrian safety, and passenger safety.
Throughout the year, the Department worked continuously to combat road carnage by working with all sectors of stakeholders.
2.1.4 Achievements identified in 2018/19 The following were reported in the Annual Report as achievements by the Department during the year under review: 2.1.4.1 Programme 1: Administration • Human Resources Development and Performance Management and Development System (PMDS) o Skills Programmes: A total of 553 employees including 74 interns were trained in line with the Workplace Skills Plan with 673 training interventions.
Budget spent: R4 814 222.67; 175 o Bursaries: 156 bursaries (4 PhDs) are being managed of which 56 bursars have been awarded during the 2018/19 financial year, 25 bursars completed their qualifications of which seven were Masters degrees.

Budget spent: R2 758 439.83; o Internship Programme: 52 plus 22 (for Municipalities) interns have been appointed (8% of staff establishment) of which four have already been appointed within and outside of the Department.
48 interns are currently on board within the Department.

Budget spent: R2 310 080; o Learnership Programme: Public Administration Learnership for 15 employees is in progress.

Awaiting remediation results for completion; o University Programme: 12 Memorandums of Understanding (MOUs) are being managed including one new MOU with University of Witwatersrand (WITS) for Aeronautical Engineering – the Department is introducing a new model for 2019/20 hence a need to renew all the MOUs.
A total of 953 students were enrolled for 2018 academic year and 187 graduated.

Budget spent: R11 789 000; o Career Outreach Programme: 14 career outreach programmes were conducted to date against a set target of 10 sessions.

A total of 6 233 learners were reached across provinces.
• Performance Management and Development System (PMDS) o Compliance in the submission of Performance Agreements: - Employees at salary level 12 and below: 541 of 547 submitted = 99%; - Senior Management Service (SMS) members: 101 of 103 submitted = 98%.

o Submission of Half-Yearly Performance Reviews: - Employees at salary level 12 and below: 522 of 547 submitted = 95%; - SMS members: 92 of 103 submitted = 89%.
o Payment of performance incentives for 2017/18: - Performance incentives for all the qualifying employees at salary level 1 to 14 were successfully paid before the Department of Public Service and Administration (DPSA) timelines i.e.

31 December 2018 for employees at salary level 12 and below and 31 January for SMS members respectively; 176 - Annual Monitoring Report on implementation of the Risk Management Strategy was developed.
• Risk Management o Annual Monitoring Report on implementation of the Risk Management Strategy was developed.

2.1.4.2 Programme 2: Integrated Transport Planning The Revised White Paper on the National Transport Policy was submitted to the Minister for Consideration on the 26 March 2019.

Public awareness campaigns on the Green Transport Strategy were held in nine provinces.
2.1.4.3 Programme 3: Rail Transport On the 25th October 2018, the Gibela Local Train Factory, located at Dunnottar Park, Ekurhuleni, was officially launched by the President of the Republic of South Africa.

In December 2018, the first major milestone was reached with the delivery of the first locally manufactured train to PRASA.

The construction of the main car-body shell building and training centre was completed in January 2018 and all manufacturing activities commenced in January 2018.
The local manufacturing of new trains is a catalyst for transformation of Metrorail services and public transport as a whole.

It is the beginning of the rollout of PRASA’s Rolling Stock Fleet Renewal Programme that will result in the manufacture of approximately 7 224 new trains over a period of 20 years.
Whilst the urgent challenge to improve passenger services remains primary, the local manufacturing of these trains has also been designed to achieve a number of key Government objectives such as the delivery of quality services to citizens, revitalization of South Africa’s rail engineering industry through local manufacturing and ensuring local content (65% minimum local content is set) as part of Government’s Industrial Policy Action Plan (IPAP), employment creation and skills development as well as B-BBEE.
177 Central to this programme of procuring new rolling stock is: o The creation of 8 088 direct jobs throughout the supply chain, with the Local Factory targeting a creation of 1 500 jobs.

This is based on a target to achieve a minimum of 65% local content on the new trains.

The Local Factory will further have 99% South Africans employed, with a target of employing 85% historically disadvantaged South Africans and a minimum of 25% females.
By February 2019, Gibela had employed a total of 875 employees across various categories, for both manufacture and maintenance activities.

o A training centre has been established to enable skills development and quality train manufacturing.

In addition, the training programme entails the provision of bursaries for Universities, Technical and Vocational Education and Training (TVET) colleges, internships, learnerships and apprenticeships.
To date, 3 069 individuals have been up- skilled including artisans, trade workers, engineers, engineering technologists, professional engineers, technologists, designers and other staff.

By the end of this programme, 19 257 individuals would have undergone training in various and relevant technical fields.

The Railway Safety Bill was presented to Cabinet in February 2018 and was approved for Public comments.

The Branch conducted provincial stakeholder consultations between February and March 2018.
The Bill was presented to the National Economic Development and Labour Council (NEDLAC) in line with the requirements set by Cabinet.

The Bill was approved after numerous engagements and a NEDLAC report was submitted to the Minister of Transport for the Bill to be submitted to Cabinet for approval.

The Interim Rail Economic Regulatory Capacity Ministerial Task Team (MTT) was established in terms of a MOU between the Minister of Transport and the Minister of Public Enterprises.
The MTT was appointed to assist with strategic guidance and recommendations to the Ministers on guidelines, frameworks, institutional arrangements and capacity requirements relating to rail economic regulation.

o In terms of the MTT’s approved Work-plan, a priority project was on International Benchmarking of Rail Network Access and Pricing.
A workshop was held on 22 October 2018, which was attended by the Department, Department of Public 178 Enterprises (DPE), NT, PRASA and Transnet to discuss current rail access and pricing arrangements.

The intention of the workshop was to engage with the rail entities for the purposes of articulating their overall perception and approach on the thematic areas relating to rail economic regulation.
This process will assist in understanding the current challenges faced by the two entities concerning rail network and access and the development of the ideal regulatory structure and instruments for the rail sector; o Another focus of the MTT was on capacity building relating to economic regulation.

In conjunction with the University of Johannesburg, a short course on economic regulation was developed.
The purpose of the course was to empower officials thereby developing a nucleus of skills and capacity related to economic regulation.

The course took place during February 2019 and was attended by 19 officials from the Department, DPE and NT.
2.1.4.4 Programme 4: Road Transport Road Regulation o National Road Traffic Amendment Bill submitted to the Department’s Executive Committee (EXCO) and the Committee of Transport Officials (COTO); o Developed the Inception report on the Review of Entities Legislation and Mandates; o Completed the Terms of Reference for the Review of Entities Legislation; o The AARTO Bill was approved by the NA and awaiting Presidential Assent; o The RABS Bill was tabled in Parliament for further processing.
2.1.4.5 Programme 5: Civil Aviation Bilateral Affairs o Air Transport Strategy 2019-2024 has been approved for submission to Cabinet.

o To date, South Africa has deregulated air services with 39 out of the 55 African States.

A total of 26 countries have declared their Solemn Commitment to the implementation of the Yamoussoukro Decision (YD) in support of the creation of the Single African Air Transport Market (SAATM).
The YD and SAATM, of which South Africa is a signatory, provides for the full liberalisation of market access between African states, free exercise 179 of traffic rights, elimination of restrictions on ownership and full liberalisation of frequencies, fares and capacities.
Policy and Regulation o The Civil Aviation Amendment Bill was approved by Cabinet and submitted to Parliament, and The Southern African Development Communities Safety Organization Charter was also approved by Cabinet and submitted to Parliament.
2.1.4.6 Programme 6: Maritime Transport The Maritime transport Branch was able to achieve the following during the year under review: o Draft strategies and legislation approved by Forum of South African Directors-General (FOSAD) Clusters - Merchant Shipping Bill; - Maritime Transport Sector Development Council Bill; - Oil Pollution Preparedness, Response and Cooperation Bill; - Maritime Transport Strategy 2030; and - Inland Waters Strategy.
o The following Business Plan projects were achieved: - Request for Proposals for the Emergency Tug Vessel Building Project published; - South African Maritime Business Forum established; and - Inaugural Maritime Transport Industry Dialogue event held.
2.1.4.7 Programme 7: Public Transport o Transport Appeal Tribunal (TAT) Amendment Bill was approved by FOSAD and submitted to Minister on 27 February 2019 for tabling in Cabinet; o Integrated Public Transport Networks (IPTN) funded and monitored in 13 cities (Ekurhuleni, Mbombela, Nelson Mandela Bay, Johannesburg, Cape Town, George, 180 Durban (eThekwini), Polokwane, Msunduzi, Mangaung, Rustenburg, Buffalo City and Tshwane) as at the end of March 2019; o Developed the draft detailed IPTN plans for two district municipalities, Vhembe and Nkangala District Municipalities; o The RTRP was approved by Cabinet and implementation has commenced; o A joint project between the Department and the Departments of Basic Education as well as Planning, Monitoring and Evaluation was undertaken and an Improvement Plan developed.
2.1.5 Significant events and projects for the year The following were reported in the Annual Report as significant events and projects by the Department during the year under review: 2.1.5.1 Programme 1: Administration • Entering into a new partnership with WITS for training of the Aeronautical Engineers.
A new MOU was signed by the two parties; • A new qualification on Road Safety at Diploma level was developed in collaboration with RTMC and was being rolled out from August 2018; • In terms of women empowerment, five female employees i.e.

three SMS members of which one is a disabled and two Middle Managers completed the International Executive Development Programme and International Leadership Development Programme sponsored by the Transport Education and Training Authority (TETA).
2.1.5.2 Programme 2: Integrated Transport Planning None.

2.1.5.3 Programme 3: Rail Transport 181 • The Railway Safety Bill seeks to repeal the National Railway Safety Regulator Act, 2002.
The Act established the Railway Safety Regulator to oversee and promote safe railway operations by an enabling regulatory framework; • The Bill seeks to place emphasis and focus on railway safety and to recognise operators’ role in managing and implementing safety measures with the RSR promoting safety and ensuring compliance; • The International Benchmarking of Rail Network Access and Pricing project aimed to conduct a desktop review of international best practices in access and pricing regimes in rail economic regulation and identifying jurisdictions that may be of interest and applicable to the South African environment.
2.1.5.4 Programme 4: Road Transport • Submitted the draft Roads Policy to Cabinet; • Monitored the overall implementation of the S’hamba Sonke Programme (SSP) in line with the Provincial Road Maintenance Grant (PRMG) budget; • Monitored implementation of the 2016-2030 National Road Safety Strategy; • Conducted stakeholder consultations on the draft Anti-Fraud and Corruption Strategy; • Increased road safety community-based involvement in public education and awareness programmes.
2.1.5.5 Programme 5: Civil Aviation The International Civil Aviation Day (ICAD) is one of the flagship projects whose commemoration is championed by the Department annually.

During the financial year under review, it was hosted in Mpumalanga Province at the old Nelspruit airport and its festivities spread over two days: 07 - 08 December 2018.
The highlights of the first day included the career expo that was supported by 13 organisations and it reached out to a total of 876 leaners from 68 schools invited from across the educational districts of the host province.

The educators who accompanied the learners benefited from TETA facilitated educator’s workshop.

Its outcome was to empower educators assist the learners in making informed decisions when choosing subjects to lead them to careers in aviation.
182 The highlights of the second day included observing ICAD through a formal programme.

This was graced by political principals from local, district, provincial and national spheres of government.

Whilst selected dignitaries offered messages of support, the Minister of Transport delivered a keynote address.

In addition, the Minister of Transport launched the ATNS 3D Mobile Truck simulator.

The day ended with an air show open to the public at no cost.
2.1.5.6 Programme 6: Maritime Transport • Maritime Transport Strategy 2030 The implementation of the Comprehensive Maritime Transport Policy has resulted in the approval by the Directors-General of the Economic Cluster (DGEC) approving the draft Maritime Transport Strategy 2030.

• Overhauling of the Merchant Shipping Act The work on the overhauling of the 1951 Merchant Shipping Act progressed with the approval by Directors-General clusters of the draft Merchant Shipping Bill, 2019.
• Maritime Transport Sector Development Council (MTSDC) Progress towards the establishment of this council gained traction with the approval by the DGEC of the Maritime Transport Sector Maritime Development Council Bill.

The Bill was to be presented in Cabinet once constituted after the May 8 Elections.
• Maritime International Relations and Cooperation Committee (MARETEC) The Committee was established as according to the Comprehensive Maritime Transport Policy to coordinate all maritime international engagements.

• Coordination of the Operation Phakisa Delivery Unit The Branch continued coordinating the work of the Delivery Unit and finalised all the audits as per Quarter targets and reviewed the three Foot-Plan of the Marine Manufacturing Delivery Unit.

• 2020 World Maritime Day Parallel Event.


Progress was made in the constitution of the Steering Committee and the establishment of work-streams and their terms of reference.

The work-streams have continued to progress with this work.

2.1.5.7 Programme 7: Public Transport 183 IPTN operations were launched in two more cities, Polokwane and eThekwini.

3.
3.

OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE 3.1 2013/14 and 2014/15 Table 2: Overview and Assessment of Financial Performance (2013/14 & 2014/15) Programme 2013/14 2014/15 Final Actual Expenditure Final Actual Expenditure Approp.

Expenditure Percentage Approp.
Expenditure Percentage Administration 333 440 315 578 Integrated 74 913 66 373 95% 89% 390 889 377 489 97% 74 974 74 974 100% Transport Planning Rail Transport 11 232 843 11 232 840 100% 15 035 507 15 035 507 100% Road Transport 19 897 209 20 665 564 104% 21 810 020 22 202 862 102% Civil Aviation 245 515 148 602 103 557 102 271 61% 99% 160 966 160 966 100% 101 742 99 623 98% Maritime Transport Public Transport 10 514 190 10 505 616 100% 11 196 571 11 195 677 100% Total 42 401 667 43 036 844 101% 48 770 669 49 147 098 101% (Source: Department of Transport Annual Report 2014/2015) The budget allocation for the Department in the 2014/15 financial year was R48.7 billion.
Transfers and subsidies accounted for R47.8 billion and of this amount, the Department had transferred R14 billion or 29.4% at the end of the First Quarter.

Another R3.3 billion or 16.4% had been transferred to the municipalities and provinces, the majority of which was for the PRMG or SSP: Roads Maintenance (R1.6 billion or 20% of the R7.9 billion)) and the Public Transport Operations Grant (PTOG), totalling R1.3 billion or 25.9% of the R4.8 billion.
184 Rollovers were requested as detailed in the table below: Table 3: Rollovers 2014/15 Programme Programme 1: Administration Transfers to Higher Education Institutions Programme 4: Road Transport Transfer to the RTIA Programme 5: Civil Aviation Review of the National Airports Development Plan Total (Source: Department of Transport Annual Report 2014/15 (2015)) 3.2 2015/16 and 2016/17 R’000 3 281 3 825 665 7 771 Table 4: Appropriation Statement for 2016/17 Programme 2016/17 2015/16 Final Actual Over/Under Final Actual Over/Under Approp.
Expenditure Expenditure Approp.
Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Administration 365 182 365 136 Integrated 77 054 77 054 46 - 422 169 420 824 1 345 88 764 88 762 2 Transport Planning Rail Transport 18 993 457 18 992 005 1 452 18 310 610 18 305 274 5 336 Road Transport 24 878 466 25 055 434 (176 968) 23 164 889 22 889 198 275 691 Civil Aviation 258 267 210 427 47 840 150 383 145 284 5 099 Transport 185 Maritime Transport Public Transport 156 386 153 561 2 825 143 674 142 874 800 11 557 042 11 550 042 7 000 11 334 588 11 328 571 6 017 Direct Charge 3 821 3 821 - Against the Revenue Fund Total 56 289 675 56 407 480 (117 805) 53 615 077 53 320 787 294 290 (Department of Transport, (2016b) Vote 35: Annual Report 2015/16 Financial Year and 2017Vote 35: Annual Report 2016/17 Financial Year).
The budget allocation for the Department for the 2016/17 financial year stood at R56.3 billion.

Of this amount, the Department had spent R56.4 billion by the end of the financial year, indicating an over-expenditure of R117.8 million.

The biggest over-expenditure, to the tune of about R177 million, was in the Road Transport programme.
Transfers and subsidies accounted for R52.3 billion and of this amount, the Department had transferred R13.9 billion or 26.6%, mainly to public corporations and private enterprises by the end of the First Quarter for 2015/16.

The Department had an available budget of R1.2 billion for operations.

By the end of the Second Quarter, the Department had transferred R26.6 billion or 50.7% of its total available budget.
These transfers and subsidies were mainly to PRASA, SANRAL, and to the provinces for the PRMG and the PTOG.

By the end of the Third Quarter, the Department had transferred R38.8 billion or 73.8% of its total budget, mainly to PRASA, SANRAL, provinces for the PRMG and the PTOG respectively, and to the municipalities for the Public Transport Network Grant (PTNG).
A total of 98% of expenditure by the end of the Third Quarter had been under transfers and subsidies, as well as payments for financial assets, with the remaining 2% having been spent on departmental operations.

By the end of the Fourth Quarter of 2015/16, the Department had transferred R52.2 billion or 99.4%.

These transfers had been made to public entities, provinces, municipalities, international organisations and households.
Transfers to provinces and municipalities to the end of the Fourth Quarter of 2015/16 stood at 98.7% of the available appropriation.

This was attributed to the withholding of the final tranche payment of the PRMG to KwaZulu-Natal for not complying with the 186 conditions set out in terms of the Division of Revenue Act.

The Department had transferred 100% of the PTOG and 100% of the PTNG to municipalities.
What follows below is an analysis of how the Department spent its budget allocation per Quarter during the period under review.

Rollovers were requested as detailed in the table below: Table 5: Rollovers 2016/17 Programme Programme 3: Rail Transport: Interim Rail Economic Regulator Total (Source: Department of Transport, (2017)).

R’000 1 452 1 452 3.3 2017/18 Table 6: Appropriation Statement for 2017/18 2017/18 2016/17 Final Approp.
R’000 Actual Expenditure R’000 Over/Under Expenditure R’000 Final Approp.
R’000 Actual Expenditure R’000 Over/Under Expenditure R’000 415 254 83 075 407 466 76 360 7 788 6 715 365 182 77 054 365 136 77 054 46 - (176 968) - Programme R’000 Administration Integrated Transport Planning Rail Transport Road Transport Civil Aviation Transport Maritime Transport Public Transport Direct charge against Revenue Fund Total 56 289 675 54 675 960 (Source: Department of Transport Annual Report 2017/18 (2018)).
59 805 180 5 129 220 56 407 480 (117 805) 187 In the 2017/18 financial year, the budget allocation for the Department stood at R59.8 billion and of this amount, the Department had spent R54.7 billion or 91.4% by the end of the financial year, translating into an under-expenditure of R5.1 billion or 8.6%.

The biggest under- expenditure was in the Rail Transport programme.
Of the R19.3 billion that had been allocated to this programme, the Department had spent R14.5 billion or 75.1% by the end of the reporting period, indicating an under-expenditure of R4.8 billion or 24.9%.

Rollovers were requested as detailed in the table below: Table 7: Rollovers Programme Programme 3: Rail Transport: Transfer Payment to PRASA Programme 4: Road Transport: Transfer Payment to RTMC Total ‘000 838 825 103 750 942 576 (Source: Department of Transport Annual Report 2017/18 (2018)).
3.4 2018/19 Table 8: Appropriation Statement for 2018/19 Programme 2018/19 2017/18 R’000 Final Actual Over/Under Final Actual Over/Under Approp.

Expenditure Expenditure Approp.


Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Programme 1: 434 094 379 809 54 285 415 254 407 466 7 788 Administration Programme 2: 89 982 71 375 18 607 83 075 76 360 6 715 Integrated Transport Planning Programme 3: 15 887 279 15 873 693 13 586 19 333 199 14 515 158 4 818 041 Rail Transport 188 Programme 2018/19 2017/18 R’000 Final Actual Over/Under Final Actual Over/Under Approp.

Expenditure Expenditure Approp.
Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Programme 4: 30 098 760 30 067 108 31 652 27 138 175 27 118 369 19 806 Road Transport Programme 5: 182 253 167 718 14 535 171 165 166 149 5 016 Civil Aviation Transport Programme 6: 129 126 123 993 5 133 128 417 109 327 19 090 Maritime Transport Programme 7: 13 009 800 12 509 758 500 042 12 525 895 12 277 572 248 823 Public Transport Direct charge 10 200 2 976 7 224 10 000 5 559 4 441 against Revenue Fund Total 59 841 494 59 196 430 645 064 59 805 180 54 675 960 5 129 220 (Source: Department of Transport Annual Report for 2018/19 (2019b).
For the 2018/19 financial year, the Department had received a budget of R59.8 billion and of this amount, it spent R59.2 billion by the end of the financial year, that is 98.9% of the available budget, up from R54.7 billion or 91.4% of the R59.8 billion it had spent by the same time in 2017/18.

The Department underspent a total amount of R645.1 million, translating into an under-expenditure of 1.1%.

The biggest under-expenditure was in the Public Transport programme.
Of the R13 billion that had been allocated to this programme, the Department had spent R12.5 billion or 96.2% by the end of the reporting period, indicating an under- expenditure of R500 million or 3.8%.

The Compensation of Employees was underspent in all programmes due to posts that could not be filled.10 10 Department of Transport (2019b), p. 35.
189 3.4.1 Programme 1: Administration By the end of the 2018/19 financial year, the Administration programme had spent R379.8 million or 87.5% of the R434.1 million that had been allocated to it, translating into an under- expenditure of R54.3 million or 12.5%.

The programme underspent R20.2 million on the Compensation of Employees owing to posts that could not be filled.
In terms of economic classification, Goods and Services were underspent by R32.3 million mainly owing to invoices that had not been received for Office Accommodation (R13.6 million).
There was under-expenditure in the Management sub-programme (R8.6 million), Corporate Services sub-programme (R3.5 million) and Ministry sub-programme (R1.5 million) after a total of R13.3 million had been shifted to the Ministry sub-programme to cover expenditure on travelling, as well as venues and facilities.11 Savings of R1.3 million were realised on Other Transfers to Households because less leave gratuities were paid than had been budgeted for.
Funds to the tune of R3.1 million were shifted within the programme from Goods and Services to cover over-expenditure on Payments for Capital Assets.12 3.4.2 Programme 2: Integrated transport planning The budget allocation for the Integrated Transport Planning programme stood at R89.9 million and of this amount, the programme had spent R71.4 million or 79.3% by the end of the reporting period, translating into an under-expenditure of R18.6 million or 20.7%.
The programme underspent R4 million on the Compensation of Employees owing to the posts that could not be filled.

In addition, it underspent on Goods and Services by R14.6 million due to non- or slow spending on the following projects:13 • National Transport Planning Databank because of delays in procurement; 11Department of Transport (2019b), p. 305.

12Ibid.

13Department of Transport (2019b), p. 305.


190 • Review of the National Road Freight Strategy; • Corridor Freight Development that had been advertised late; • Black Economic Empowerment (BEE) Charter Council owing to delays in the appointment of Council members; and • Procedures, Computations and Recouping of Overloading Cost on South African Roads and National Transport Planning Forum due to a cancelled contract.
The Committee noted that, despite the indication regarding no challenges for this programme as reported by the Department per their tabled Annual Report p.27, the Department presented contrary information during the engagement with the Committee.

In this programme the Department failed to meet all the set targets and they also indicated in their presentation that a notable challenge to the programme was the delays in processing the STER Bill.
3.4.3 Programme 3: Rail transport For 2018/19, the budget allocation for the Rail Transport programme stood at R15.887 billion and of this amount, the programme had spent R15.873 billion or 99.9% by the end of the period under review.

The programme underspent R13.6 million or 0.1%.

The programme underspent R0.8 million on the Compensation of Employees due to the posts that could not be filled.
Moreover, it “saved” R0.9 million and underspent R11.9 million on Goods and Services because:14 • Work on the White Paper for Rail Transport had been “done in-house”; • No expenditure had been incurred on the Review of the Branch Line Strategy and a Study on the Integration of Commuter Transport; and • The Establishment of a Rail Economic Regulator had been underspent.

3.4.4 Programme 4: Road transport 14Department of Transport (2019b), p. 306.
191 Of the R30 098 760 billion that had been allocated to the Road Transport programme for 2018/19, the Department spent R30 067 108 billion or 99.9%, translating into an under- expenditure of R31.7 million or 0.1%.

The programme underspent R15.3 million on the Compensation of Employees due to posts that could not be filled.
The programme underspent on Goods and Services by R15.9 million because “no or insignificant expenditure was incurred on” the following projects:15 • Programme Development for S’hamba Sonke; • Automated Profile Measurements; • Capacitate Standard Audits against National Standards; and • Road Transport Legislative Review.

There was under-expenditure on the Decade for Road Safety.
In addition, the Road Transport programme underspent R410 000 on the Payment for Capital Assets because less equipment and furniture had been procured owing to vacancies.16 3.4.5 Programme 5: Civil aviation transport By the end of 2018/19, the Department had spent R167.7 million or 92% against R182.3 million that had been allocated to it during the reporting period, indicating an under- expenditure of R14.5 million or 8%.
The Civil Aviation Transport programme underspent R10.8 million on the Compensation of Employees due to posts that could not be filled.

“Savings” of R2.7 million were realised because the following projects had been “managed in- house”:17 • Implementation of the National Aviation Development Plan; • White Paper on Civil Aviation; • Airlift Strategy; and • National Aviation Transformation Strategy.

15Department of Transport (2019b), p. 306.

16Ibid.

17Department of Transport (2019b), p. 306.


192 3.4.6 Programme 6: Maritime transport For the 2018/19 financial year, the Maritime Transport programme had received R129.1 million and of this amount, it spent R123 993 million or 96%, indicating an under-expenditure of R5.1 million or 4%.
It is worth noting that there is an improvement on the under-expenditure in this programme compared to 2017/18, when of the R128.4 million that had been allocated to it, it had spent R109.3 million or 85.1%, translating into an under-expenditure of R19.1 million or 14.9%.

The Maritime Transport programme underspent R1.9 million on the Compensation of Employees due to the vacancies that could not be filled.
Moreover, the Maritime Transport programme underspent R2.2 million after R9.1 million had been shifted from the Public Transport programme to cover over-expenditure on the Oil Pollution Prevention project.18 The under-expenditure was mainly because no expenditure had been incurred on the International Maritime Organisation (IMO) World Maritime Day Parallel Event.
Savings of R1 million were realised on Transfers to Foreign Governments and International Organisations thanks to the fact that less membership fees were paid to the IMO than had been budgeted for.19 3.4.7 Programme 7: Public transport By the end of the reporting period, the programme had spent R12.5 billion or 96.2% of the R13 billion that had been allocated to it, translating into an under-expenditure of R500 million or 3.8%.
However, compared to the previous financial year (2017/18), the Public Transport programme regressed in 2018/19 because by the end of 2017/18, it had spent R12.3 billion or 98% of the R12.5 billion that had been allocated to it, indicating an under-expenditure R248.3 million or 2%.20 18Department of Transport (2019b), p. 307.

19Ibid.

20Department of Transport (2018), ibid.


193 The Public Transport programme underspent R3.5 million on the Compensation of Employees owing to the posts that could not be filled.
In addition, the programme underspent R149.2 million on Goods and Services and the breakdown in this regard was as follows:21 • Taxi Scrapping project had expired in September 2018 and could only be re-started at the end of the financial year (R34.8 million); • Funds amounting to R30 million for the administration of conditional grants to municipalities had not been spent; • No expenditure had been incurred on the Shova Kalula bicycle project (R20.3 million); • Technical Oversight and Support for Public Transport (R7.1 million); • Empowerment of Small Bus Operators (R6 million); • Moloto Bus Contract Design (R5 million); • National Technical Requirements (R2 million); • The upgrade of the National Land Transport Information System (R15 million); and • Little expenditure had been incurred for accommodation and infrastructure of the National Public Transport Regulator (R9.7 million).
Regarding the Shova Kalula bicycle project, The Committee noted that the Department indicated that there had been no expenditure incurred on this project during the year under review, yet during their presentation to the Committee the Department reported that it had spent R10.4 million on the Shova Kalula bicycle project in 2018 and did not spend on the project in 2019.
The Department reported that “a range of other projects had been underspent” in the Public Transport programme and that savings of R5.5 million were realised on operational expenditure.22 Moreover, the programme underspent R341.8 million on Transfers to Households due to the slow rate at which taxis had been scrapped and because the Taxi Scrapping project could not proceed from October 2018 to March 2019 because of “delays in the adjudication of the new contract”.23 21Department of Transport (2019b), p. 307.
22Ibid.

23Ibid.

194 3.5 Virements 2018/19 Table 9: Summary of Virements24 Programme Goods & Services R’000 4 017 Programme 1: Administration Programme 6: Maritime Transport 9 144 Programme 7: Public Transport Total (Source: Department of Transport, (2019b).
(13 218) (57) Households R’000 57 57 Total R’000 4 017 9 201 (13 218) - An amount of R13.2 million was shifted from Goods and Services in the Public Transport programme to Goods and Services in the Administration programme to cover expenditure on Venues and Facilities of the Ministry (R4 million), to Goods and Services in the Maritime Transport programme to cover over-expenditure in the Maritime Transport programme of R9.1 million on its contract for oil pollution prevention and to Households in the Maritime Transport programme (R57 000) to cover donations made of R10 000 and over-expenditure on leave gratuities of R47 000.
3.6 Rollovers requested 2018/19 Rollovers were requested as detailed in the table below: Table 10: Rollovers Programme Programme 4: Road Transport Goods and Services: Automated Profile Measurements – late signing of contract Goods and Services: Road Transport Legislative Review – delay in the appointment of a service provider Programme 6: Maritime Transport: Goods and Services: IMO World Maritime Parallel Event – to secure the venue for the 2019 dry run Programme 7: Public Transport R‘000 5 884 990 103 750 2 245 24Department of Transport (2019), p. 38.
195 Additional number of vehicles due to the scrapping of illegally converted panel vans as per legally binding recommendation of the Public Protector: • Goods and Services – Additional number of vehicles • Transfers to Households – Additional scrapping of taxis Total (Source: Department of Transport, (2019b).
45 000 341 822 942 576 3.7 Unauthorised, fruitless and wasteful expenditure 2018/19 3.7.1 Unauthorised expenditure The cost of the electronic National Traffic Information system (eNaTIS) maintenance and operations resulted in unauthorised expenditure of R1.3 billion that had been incurred in 2013/14, 2014/15 and 2016/17.
Unauthorised expenditure of R980 375 was incurred in the current financial year as expenditure that had been incurred, but not in accordance with the vote of the programme: Road Transport.25 3.7.2 Fruitless and wasteful expenditure 56 new cases of fruitless and wasteful expenditure concerning “no shows” and one case of value added tax that had been overcharged were declared during the period under review, of which 25 cases amounting to R37 000 were transferred to debt.
31 cases to the tune of R81 000 were to be transferred as debt and one case amounting to R1 000 was under investigation at the time of reporting.

Seven cases amounting to R929 000 were resolved and a further 48 cases amounting to R58 000 from the previous financial year were transferred to debt.26 53 cases of fruitless and wasteful expenditure remained at the end of the financial year amounting to R151 000.
Of these cases, 42 will be transferred to debt (R91 000), nine cases 25Department of Transport (2019b), p. 39.

26Department of Transport (2019b), p. 40.

196 were identified to be written off (R9 000), one case is under investigation (R1 000) and one case must still be investigated (R50 000).

3.7.3 Irregular expenditure During the reporting period, 11 cases of irregular expenditure amounting to R107.2 million were declared, with two of these to the tune of R97.3 million.
Two cases amounting to R646 000 were condoned and one case of R296 000 was transferred to debt.

Irregular expenditure for 16 cases to the tune of R746.1 million remained at the end of the financial year.

Of these cases, National Treasury was requested to condone four that amounted to R638.5 million.27 At the time of tabling its Annual Report, the Department contended that a disciplinary hearing was underway pertaining to one case amounting to R42 million.
The Department further asserted that eight cases totalling R64.6 million were to be considered by the Bid Adjudication Committee (BAC).
One case of R0.9 million had been recommended to the BAC to condone, while two cases totalling R0.1 million were under investigation.28 Two cases amounting to R1.677 million were “still under determination”.29 3.7.4 Measures put in place The Committee noted that the measures listed below (as taken from the Annual Reports of the Department) are identical to the measures put in place in the Annual Reports for 2014/15, 2016/17, 2017/18 and 2018/19.
The Committee further noted that the Department had still incurred irregular expenditure in the current period under review, which would indicate that the measures were either insufficient or ineffective or that the Department had not implemented these measures appropriately.

The Department has therefore not improved or reviewed these measures as requested by the Committee specifically during the 2018 BRRR.

27Department of Transport (2019b), p. 40.

28Ibid.

29Op cit.
197 Table 11: Measures put in place to prevent and/or detect irregular expenditure 2016/17, 2017/18 and 2018/19 2016/17 Annual Report 2017/18 Annual Report 2018/19 Annual Report Measures reported in the Measures listed in the 2017/18 Measures listed in the 2018/19 2016/17 report to have been put report that were put in place to report that were put in place to in place by the Department to prevent and/or detect irregular prevent and/or detect irregular prevent and/or detect irregular expenditure are as follows: expenditure are as follows: expenditure are as follows: •Where appropriate, cases of •Where appropriate, cases of •Where appropriate, cases of irregular expenditure are irregular expenditure are irregular expenditure are referred referred to the Department’s referred to the Department’s to the Department’s legal legal services to determine legal services to determine services to determine whether whether any official can be held whether any official can be any official can be held liable for liable for the irregular held liable for the irregular the irregular expenditure; expenditure; expenditure; •Cases of irregular expenditure are referred to the Department’s Directorate: Investigations and Forensics for investigation when an investigation is required; •Cases of irregular •Cases of irregular expenditure expenditure are referred to the are referred to the Department’s Department’s Directorate: Directorate: Investigations and Investigations and Forensics Forensics for investigation when for investigation when an an investigation is required; investigation is required; •Relevant managers are •Relevant managers are requested to take disciplinary requested to take disciplinary steps against officials who make steps against officials who or permit irregular expenditure; make or permits irregular •Relevant managers are requested to take disciplinary steps against officials who make or permits irregular expenditure; expenditure; •The will not consider condoning •The BAC will not consider irregular expenditure
 until a condoning irregular legal opinion has been obtained expenditure until a legal where applicable and opinion has been obtained •The BAC will not consider condoning irregular expenditure until a legal opinion has been obtained where applicable and where applicable and 198 disciplinary steps were disciplinary steps were disciplinary steps were considered; considered; considered; •The contract management •The contract management •The contract management system monitors all payments system monitors all payments system monitors all payments against orders that are placed, against orders that are placed, against orders that are placed, and will detect payments that and will detect payments that and will detect payments that exceed the contract value; exceed the contract value; exceed the contract value; •The contract management •The contract management •The contract management system will detect any payments system will detect any system will detect any payments that are approved for processing payments that are approved that are approved for processing for which no order was placed; for processing for which no for which no order was placed; order was placed; •Payments for all procurements •Payments for must be processed via Supply procurements must all be •Payments for all procurements must be processed via SCM so Chain Management (SCM) so processed via SCM so that any that any irregular procurement that any irregular procurement irregular procurement can be can be detected before payment; can be detected before payment; detected before payment; •To prevent the occurrence of •To prevent the occurrence of not completing the internal order not completing the internal and requisition forms, the SCM order and requisition forms, component does not make any the SCM component does not approval documents or letters of make any approval documents acceptance available until the or letters of acceptance internal order and requisition available until the internal forms are
 completed; and order and requisition forms •Initiatives to train all officials who are involved in the approval of procurement matters will continue.
are completed; and •Initiatives to train all officials who are involved in the approval of procurement matters will continue.

•To prevent the occurrence of not completing the internal order and requisition forms, the SCM component does not make any approval documents or letters of acceptance available until the internal order and requisition forms are completed; and •Initiatives to train all officials who are involved in the approval of procurement matters will continue.
199 3.8 Findings of the AGSA for the 2018/19 Financial Year During the period under review, the Department received an unqualified audit opinion with findings.

The AGSA, however, made the following findings: 30 3.8.1 Restatement of corresponding figures The corresponding figures for 31 March 2018 were restated as a result of errors in the financial statements of the department, and for the year ended, 31 March 2019.

The restatement of figures is a repeat finding.


3.8.2 Irregular expenditure The Department incurred irregular expenditure as a result of officials not always following the prescribed procurement processes.

The AGSA found that the Department had not taken effective and appropriate steps were not taken to prevent irregular expenditure amounting to R107 175 000, as disclosed in note 26 to the annual financial statements, as required by section 38(1)(c)(ii) of the Public Finance Management Act (PFMA) (No.
1 of 1990) and treasury regulation 9.1.1.

With regard to the failure to take effective steps to prevent this irregular expenditure, this is a repeat finding.

3.8.3 Annual financial Statements and Annual Performance Report 30Department of Transport (2019b), pp.239-241.

200 The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by section 40(1)(b) of the PFMA.
31 The non-compliance to the PFMA is a repeat finding.

A material misstatement of the commitments disclosure note identified by the auditors in the submitted financial statement was corrected, resulting in the financial statements receiving an unqualified opinion.
3.8.4 Procurement and contract management Bid documentation for the procurement of commodities designated for local content and production did not stipulate the minimum threshold for local production and content, as required by the 2017 Preferential Procurement Regulation 8(2).32 Commodities designated for local content and production were procured from suppliers who had not submitted a declaration on local production and content, as required by the 2017 Preferential Procurement Regulation.
3.8.5 Leadership The AGSA found that the leadership of the Department had been slow in exercising its oversight responsibilities to address the deficiencies regarding financial reporting, compliance and related internal controls.33 This is a repeat finding.
3.8.6 Financial and performance management Material amendments made to the annual financial statements related to commitments that were misstated as management did not prepare accurate and complete supporting schedules for 31Department of Transport (2019), p. 241.

32Ibid.

33Ibid.

201 commitments, thereby affecting the accuracy of the amount disclosed in the annual financial statements.
Management did not adequately review and monitor compliance with the PFMA and Treasury Regulations to ensure compliance with procurement processes and to prevent incurring irregular expenditure.

3.8.7 Investigations The AGSA found that two investigations were still in progress on matters related to procurement and contract management.
The outcomes were expected in the 2019/20 financial year.34 At the date of this report, there are five investigations underway by law enforcement agencies, one by the Special Investigating Unit and four by the Public Protector.

The impact, if any, on the financial statements of the Department can only be determined once the investigations are concluded.

4.
4.

OVERVIEW AND ASSESSMENT OF PROGRAMME PERFORMANCE 4.1 Summary of performance Table 12: Overall Annual Performance Targets Total targets set Targets achieved Targets not achieved Success rate Total budget spent 34Department of Transport (2019b), p; 241.

31 26/31 5/31 83.9% R59.2 billion or 98.9% 202 (Source: Department of Transport (2019b).
During the period under review, the Department had set itself 31 annual performance targets and of these, it achieved 26, translating into an achievement rate of 83.9%.35 It spent R59.2 billion or 98.9% of the R59.8 billion that had been allocated to it 2018/19.

The Department did not achieve five annual performance targets, indicating an under-achievement rate of 16.1%.

In contrast to 2017/18, the success rate for the Department regressed in 2018/19.
In that financial year (2017/18), the Department had set itself 37 annual performance targets and of these, it achieved 34 by the end of the reporting period, translating into an achievement rate of 91.9%.36 Some of the achievements by the Department during the period under review were the following:37 • A total of 553 employees, including interns, were trained in line with the Workplace Skills Plan, with 673 training interventions.
In this regard, the Department spent R4.8 million.38 • On 25 October 2018, President Ramaphosa officially launched the local train factory at Dunnottar, Ekurhuleni, in Gauteng.

In December 2018, the first major milestone was reached with the delivery of the first locally manufactured train to PRASA.
The construction of the Gibela car-body shell building and training centre was completed in January 2018 and all manufacturing activities commenced in January 2018.39 The local manufacturing of new trains is a catalyst for the transformation of Metrorail services and public transport as a whole.

It is the commencement of the rollout of PRASA’s Rolling Stock Fleet Renewal Programme that will result in the manufacture of approximately 7 224 new trains over a period of 20 years.
35Department of Transport (2019b), pp.

75-112.

36Department of Transport (2018).

37Ibid.

38Department of Transport (2019b), p. 21.

39Department of Transport (2019b), p. 23.

203 Whilst the urgent challenge to improve passenger services remains primary, the local manufacturing of these trains has also been designed to attain a number of key Government objectives.
These include the delivery of quality services to citizens, the revitalisation of South Africa’s engineering industry through local manufacturing and ensuring local content (65% minimum local content is set), as part of Government’s IPAP.

Other Government objectives that this programme seeks to achieve are employment creation, skills development, as well as the B-BBEE: • The National Road Traffic Amendment Bill was submitted to the Department’s EXCO and COTO.
• The Air Transport Strategy 2019-2024 was approved for submission to Cabinet.

• The draft of the Maritime Transport Strategy 2030 was approved by the FOSAD Clusters.

• The IPTNs were funded and monitored in the 13 cities (Ekurhuleni, Mbombela, Nelson Mandela Bay, Johannesburg, Cape Town, George, Durban, Polokwane, Msunduzi, Mangaung, Rustenburg, Buffalo City and Tshwane).
However, the Department encountered certain challenges: • Since its formation in 2009, PRASA has encountered various challenges, the biggest being the inherited infrastructure and trains transferred from its predecessor, the South African Railway Commuter Corporation.

Subsequent to three decades of underinvestment, these assets were old and outdated.
Even though Government was able to secure the required capital injection to modernise PRASA’s rail system (rolling stock and infrastructure), PRASA has struggled to attract or secure adequate expertise to undertake such an enormous modernisation programme.40 Although the Department has been pleased that the journey to redress years of underinvestment in passenger rail infrastructure and trains has commenced, unfortunately, PRASA has not yet reached a stage where customer needs and expectations are satisfactorily met.41 The deployment of new trains and infrastructure improvement has started in Gauteng and is being rolled out to other regions.
40Department of Transport (2019b), p. 27.

41Ibid.

204 This is merely one of the elements of the modernisation programme and should begin to transform passenger rail to a point where it is underpinned by:42 o Modern, safe and reliable trains for commuters; o Faster trains that will increase capacity on the network; o Improved overall safety of the trains and reduced energy cost; and o Improved predictable service to the passengers.

Challenges were experienced in the development of the National Rail Bill.
The Bill, as part of the strategic process, hinged on the finalisation and approval of both the White Paper on the National Rail Policy and the Transport Economic Regulator.43 There was slow progress on the implementation of the Marine Transport Manufacturing projects under Operation Phakisa ocean economy owing to changes within Transnet and the TNPA.44 Prolonged procurement processes, particularly regarding the RTRP, led to underspending on the allocated budget.
4.2 Programme performance 4.2.1 Programme 1: Administration Table 13: Programme 1: Administration: Annual Performance Targets Total targets set Targets achieved Success rate 5 5/5 100% 42Department of Transport (2019b), p. 27.

43Department of Transport (2019b), p. 28.

44Ibid.

205 Total budget spent R379.8 million or 87.5% (Source: Department of Transport (2019b).

The Department had set itself five annual performance targets under the Administration programme and all of which (100%) were achieved.
The Administration programme had performed in a similar fashion in 2017/18.

For the 2018/19 financial year, the Department spent R379.8 million or 87.5% of the R434.1 million that had been allocated to this programme.

4.2.2 Programme 2: Integrated transport planning Table 14: Programme 2: Integrated Transport Planning: Annual Performance Targets Total targets set Targets achieved Targets Not Achieved Success rate Total budget spent (Source: Department of Transport (2019b).
4 3/4 1/4 75% R71.4 million or 79.3% During the period under review, there were four annual performance targets under the Integrated Transport programme and three or 75% were achieved, while one was not achieved.

The Department spent R71.4 million or 79.3% of the budget allocation for the programme.
The annual performance target that was not achieved was:45 • STER Bill submitted to Parliament The reason provided by the Department for its inability to meet this target was “extensive stakeholder consultations prolonged by the complex process of finalising the Bill”.46 The main cause for “prolonged consultations” was, in, turn, attributed to “the lack of consensus on critical areas in the Bill”.

To break the impasse, the Department had undertaken to 45 Department of Transport (2019b), p. 82.

46Ibid.
46Ibid.

206 continue “consultations with key stakeholders to provide clarity and direction on the STER Bill”.47 4.2.3 Programme 3: Rail transport Table 15: Programme 3: Rail Transport: Annual Performance Targets Total targets set Targets achieved Target not achieved Success rate Total budget spent (Source: Department of Transport (2019b).
4 3/4 1/4 75% R15 873 693 billion or 99.9% Of the four annual performance targets that the Department had set itself under the Rail Transport programme, it achieved three or 75%, while one was not achieved.

The Department spent R15 873 693 billion or 99.9% of R15 887 279 billion in the Rail Transport programme.
The target that was not achieved was:48 • National Rail Bill submitted to Cabinet At the time of reporting, the Department maintained that it could not achieve this annual performance target because “further investigation [was] required on institutional arrangements, market structure and private sector participation for the rail industry”.49 As a corrective measure, the Department stated that it would continue “engagements with the Department of Public Enterprises and National Treasury”.50 4.2.4 Programme 4: Road transport 47Department of Transport (2019b), p. 82.
48Department of Transport (2019b), p. 87.

49Ibid.

50Ibid.

207 Table 16: Programme 4: Road Transport: Annual Performance Targets Total targets set Targets achieved Target not achieved Success rate Total budget spent (Source: Department of Transport (2019b).

6 6/6 0/6 100% R30 067 108 or 99.9% During the reporting period, the Department had set itself six annual performance targets under the Road Transport programme and all of which (100%) were achieved.
The Department spent R30 067 108 billion or 99.9% of the R30 098 760 billion that had been allocated to the Road Transport programme.

4.2.5 Programme 5: Civil aviation transport Table 17: Programme 5: Civil Aviation Transport: Annual Performance Targets Total targets set Targets achieved Target not achieved Success rate Total budget spent (Source: Department of Transport (2019b).
5 2/5 3/5 40% R167.7 million or 92% Under the Civil Aviation Transport programme, the Department had set itself five annual performance targets and of these, it achieved two or 40%, while three or 60% were not achieved.
This was a regression from 2017/18 because in that financial year, the Department had similarly set itself five annual performance targets and all of which (or 100%) had been 208 achieved by the end of the reporting period.51 The Department spent R167.7 million or 92% of R182.3 million that had been allocated to this programme.
The annual performance targets that were not achieved were:52 • Draft regulations for Airports Company Act submitted to the Minister for approval - The Department maintained that the target could not be achieved due to “the non- finalisation of the Bill Amendment process”.53 As a corrective measure, the Department reported that at the time of reporting, the Amendment Bill was “undergoing parliamentary approval process”.
It further averred that the “finalisation of regulations will be prioritised once the Amendment process is finalised”.54 • Draft regulations for the ATNS Act submitted to the Minister for approval - Likewise, the reason given by the Department for not achieving this annual performance target was that the regulations could not be developed “due to the non-finalisation of the Bill Amendment process”.55 As its corrective measure, the Department contended in the same way that the Amendment Bill was “undergoing parliamentary approval process”.
In addition, it stated that the “finalisation of regulations will be prioritised once the Amendment process is finalised”.56 • ATNS Bill submitted to Cabinet - The Department attributed its inability to achieve this target to “prolonged consultations on a complex process; a change of scope from a legislative amendment to repealing and rationalization of two existing legislations into one”.57 At the time of reporting, the Department asserted that “the process [had] been duly refocussed and consultations [had] commenced”.
In addition, it stated that “the medium term [had] been amended to ensure 51Department of Transport (2018).

52Department of Transport (2019b), p. 98.

53Ibid.

54Ibid.

55Ibid.

56Ibid.

57Department of Transport (2019b), pp.

98-99.


209 that the Bill is finalised and submitted to Cabinet and Parliament within the MTEF (Medium-Term Expenditure Framework)”.58 4.2.6 Programme 6: Maritime transport Table 18: Programme 6: Maritime Transport: Annual Performance Targets Total targets set Targets achieved Target not achieved Success rate Total budget spent (Source: Department of Transport (2019b).
3 3/3 0/3 100% R123 993 million or 96% During the period under review, the Department had set itself three annual performance targets and all of which (100%) were achieved.

By the end of the financial year, the Department had spent R123 993 million or 96% of the R129.1 million that had been allocated to it.
4.2.7 Programme 7: Public transport Table 19: Programme 7: Public Transport: Annual Performance Targets Total targets set Targets achieved Target not achieved Success rate Total budget spent 4 4/4 0/4 100% R12.5 billion or 96.2% (Source: Department of Transport (2019b).

58Department of Transport (2019b), pp.

98-99.

210 The Department had set itself four annual performance targets under the Public Transport programme and all of which (100%) were achieved.
The Department had spent R12.5 billion or 96.2% of the R13 billion that had been allocated to the Public Transport programme.

5.

HUMAN RESOURCE MANAGEMENT During the year under review, the Department had 878 posts on the approved establishment and of these, 645 had been filled.

The vacancy rate stood at 26.5%.59 The highest vacancy rate was in Programme 6: Maritime Transport that stood at 37.5%.
The vacancy rates of Programme 4: Road Transport, as well as Programme 5: Civil Aviation Transport followed, with 36% and 33.3% respectively.

6.

SUMMARY OF 2018 REPORTING REQUESTS During the 2018 BRRR, the Committee requested additional matters for the Department to report on.
This year, unlike in the 2017/18 Annual Report, the Department did not report in their tabled Annual Report on progress in addressing the recommendations made by the Committee or the additional reporting requests as indicated below.

The Committee, however, noted that during the course of engagements throughout the year, the Department did address some of these issues.
Table 20: Additional Reporting Requests from the 2018 BRRR by the Committee Reporting matter Action required Timeframe Progress The Department should Written plan from 15 December Not reported on in the Annual submit an improved Action the Department.

2018 Report.

Plan to address the findings of the AGSA, as well as the 59Department of Transport (2019b), p. 199.

211 implementation of the recommendations made by the Committee in this report.
The Department submitted a first report on the action plan to address the 2018 BRRR findings.

The SANRAL Audit Response Plan was submitted on 14 December 2018.

The Department did indicate the measures put in place to address irregular expenditure, however, as indicated above, these measures were repeats of the same measures from the previous year.
In its presentation to the Committee during this BRRR engagement, the Department did present on the Actions Taken and Actions to be taken to address the AGSA findings for the 2018/19 audit.

The Department should Written briefing 15 December Not reported on in the Annual submit a comprehensive from the 2018 Report.

briefing on steps it will be Department.


taking to assist in stabilising its entities (including filling of vacancies, conclusion and evaluation of shareholder agreements, improving the The written briefing was not submitted to the Committee within the deadline as requested in the 2018 BRRR.

212 efficiency of the shareholder representatives on the boards, closely monitoring the implementation of projects and budget expenditure, etc.).
During the past year, the Department indicated its establishment of the Public Entity Oversight Sub- Directorate.

The Department, also briefed the Committee during the year on the steps taken by the Ministry to fill the vacancies in the Department as well as in the entities and submitted a written report on this to the Committee on 1 October 2019.

The Department should Written briefing 15 December Not reported on in the Annual submit a comprehensive from the 2018 Report.
briefing on progress made on Department.

the filling of Board vacancies in entities as well as the filling of all critical posts within the Department and its entities.

The written briefing was not submitted to the Committee within the deadline as requested in the 2018 BRRR.
The Department, however, did brief the Committee during the year on the steps taken by the Ministry to fill the vacancies in the Department as well as in the entities and submitted a written report on this to the Committee on 1 October 2019.

213 The Department should Written briefing 15 December Not reported on in the Annual submit a comprehensive from the 2018 Report.

briefing on progress made on Department.

the TRP and the Review thereof.


The written briefing was submitted to the Committee within the deadline as requested in the 2018 BRRR.

The Committee has, however, not received a full briefing on the review of the TRP by the Department.

The Department should Written plan from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department.

within 60 days of Report.

investigations underway in the Department and all the entities.
the adoption of this report by the NA The written plan was not submitted to the Committee within the deadline as requested in the 2018 BRRR.

On 3 July 2019, the Department indicated that initial responses on the implementation of recommendations made by the Committee during the 2018 BRRR were submitted on the 15th and 20th of December 2018.

The report on outstanding matters, that includes 214 investigations and litigation matters from entities, will be consolidated and submitted accordingly.
There has not been quarterly reports on this matter to the Committee as requested.

The Department should Written plan from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department.

within 60 days of Report.

pending litigation, as well as settlements reached and judgments for and against the Department and all the entities.

the adoption of this report by the NA The written plan was not submitted to the Committee within the deadline as requested in the 2018 BRRR.
However, responses as they relate to the C-BRTA were submitted on 14 December 2018.

On 3 July 2019, the Department indicated that initial responses on the implementation of recommendations made by the PCOT during the 2018 BRRR were submitted on the 15th and 20th of December 2018.

The report on outstanding matters, that includes 215 investigations and litigation matters from entities, will be consolidated and submitted accordingly.
There has not been quarterly reports on this matter to the Committee as requested.

The Department should Written plan from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department.

within 60 days of Report.

human resource management (retentions, secondments, transfers, retirements, training and skills transfers, resignations and dismissals), as well as report on progress in disciplinary matters (including suspensions) in the Department and all the entities.
the adoption of this report by the NA A written plan was not received from the Department.

However, responses as they relate to the C-BRTA were submitted on 14 December 2018.
As far as reporting of progress on the HRD targets within Programme 1 is concerned, the Department does include a summarised overview of its performance (no report on the performance for this item by entities) in their Quarterly Report Presentations to the Committee, which does not contain details regarding retentions, secondments, etc.

or the progress in disciplinary 216 matters for the Department or its entities.
The Department should Written plan from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department.

within 60 days of Report.

the achievement of job creation targets in the Department and all the entities.

the adoption of this report by the NA No written plan was received from the Department.

However, responses as they relate to the C-BRTA were submitted on 14 December 2018.

The Quarterly Reports did not contain figures on job creation.
On 3 July 2019, the Department reported that “job creation initiatives for the sector are aligned to labour- intensive infrastructure projects that the Department reports under Outcome 6.

S’hamba Sonke job creation targets are discussed under the section that covers the Accounting Officers’ remarks.
A detailed plan for job creation will be developed and included in the new strategic plan.” 217 The Department should Written plan from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department.

within 60 days of Report.

the Shova Kalula project.


the adoption of this report by the NA Other than how the project affected the spending or target achievement statistics for the relevant programme per quarter, the Department has not submitted a written plan on the project implementation, nor has it presented Quarterly Reports on this project.

The Department should Written plan from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department.

within 60 days of Report.


the adoption of this report by the NA The Department has not done quarterly reports on progress of projects linked to the grants.

the progress of projects linked with the following grants: -PTOG -PRMG -PTNG -Rural Road Asset Management Systems Grant (RRAMS) -Coal Haulage Grant -Disaster Management Grant • • • • • • The Department should Written plan from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department.

within 60 days of Report.


progress regarding the Moloto Corridor Project and how this affects both the Road and Rail Programmes.

the adoption of this report by the NA The Department has not done quarterly reports on the Moloto Corridor Project.

218 The Department indicated, in the Committee meeting of 3 July 2019 that, at the convenience of the Committee, a briefing can be arranged for a full discussion on all rail related matters, including the Moloto Corridor.
The Department should Written briefing 15 December Not reported on in the Annual submit a comprehensive from the 2018 Report.

briefing on the progress Department.

made to address and/or implement recommendations emanating from Committee Oversight Reports during the year.

The Department has not submitted comprehensive briefings on progress made to address Committee Oversight Report recommendations.
The Department should Written plans from Quarterly reports Not reported on in the Annual submit quarterly reports on the Department of within 60 days of Report.

strategies to address the Transport and: the adoption of this report by the NA.
financial health status of: • • • • • -C-BRTA -RAF -PRSA -SANRAL -PRASA • • • • • -C-BRTA -RAF -PRSA -SANRAL -PRASA Although the Department did submit a Funding Model Action Plan for entities on 14 December 2018, the Department has not done quarterly briefings on the financial health status of its entities.

However, responses as they relate to the C-BRTA were 219 The Department with the C- Written plan from Quarterly reports Not reported on in the Annual BRTA should submit the Department.
within 60 days of Report.

submitted on 14 December 2018. quarterly progress reports on progress regarding: • The implementation of the 1996 Southern African Development Community (SADC) Protocol on Transport, Communications and Meteorology; • The resolution of the impasse regarding the cross- border movements on the RSA/Kingdom of Lesotho route.

the adoption of this report by the NA Quarterly reports on these C- BRTA matters have not been submitted or made to the Committee.
However, a response on the progress (as at 14 December 2018) was submitted on 14 December 2018.

The Department with Written briefing 15 December Not reported on in the Annual PRASA should submit a from the 2018 Report.

comprehensive briefing on Department.


the Werksmans contract from conclusion of the contract in 2015 to the current status of work performed by the firm and include the total expenditure to date relating to the contract in question as well as the progress on resolving the matters raised in the report.
Although PRASA does report in reply to Committee questions during engagements where the Werksmans contract issue is raised, the comprehensive written report as requested from the Department has not been submitted.

220 The Department with Written briefing 15 December Not reported on in the Annual PRASA should submit a from the 2018 Report.

comprehensive briefing on: Department.


Although PRASA does report in reply to Committee questions during engagements where the rescue plan issue is raised, the comprehensive written report as requested from the Department has not been submitted.
- the Get on Track Rescue Plan it intends to implement as well as how this will address the shortages of trainsets currently online and how they intend to increase ridership; - The plan in place to ensure that PRASA complies with the RSR directives; - The plan in place to phase out manual authorisation or how they will ensure that the use of manual authorisation will not lead to another train collision or derailment.
The Department with Written plan from Quarterly reports Not reported on in the Annual PRASA should submit the Department.

within 60 days of Report.

the adoption of this report by the NA This has not been reported on.

quarterly reports on the plan to ensure that regional offices are equipped and properly authorised/delegated functions that would allow them to obtain the required services/spares in order to bring their respective rail services up to acceptable standards.

221 7.
221 7.

OBSERVATIONS 7.1 Tabling and Reasons for delays or non-tabling of Annual Reports By 30 September 2019, the Annual Reports of the Department, as well as eight of the entities had been tabled in Parliament.
By 8 October 2019, PRASA and its subsidiaries tabled their reports with letters indicating reasons for the late tabling thereof listed as follows: “I hereby wish to inform you the Passenger Rail Agency will be tabled late because 2018/2019 Annual Financial Statements and Performance Report were concluded by the Auditor-General on the 25th September 2019.
The AGM concluded the adoption of the Annual report on the 26th September 2019 and the Auditor-General requested three days to read and finalise report before the tabling to the Parliament.

The report only reached the Ministry Office on the 30th September end of business which was late in terms of submission according to the letter dated 30th August 2019 guidelines of submission by the Speaker of the National Assembly which was circulated to all the entities.
In accordance with section 65(1) of the Public Finance Management Act, (Act 1 of 1999) wish to respectfully submit the following Annual Reports of the Prasa and its subsidiary the Intersite and entities for the financial year 2018/2019 for tabling in Parliament.” “I regret to inform you that AutoPax, a subsidiary of PRASA Limited, has a delay in tabling of the Financial Statements and Performance Report.
The Auditor-General of South Africa has confirmed being satisfied with the Annual Financial Statements for tabling in Parliament in the week of 06 October 2019.
“ 222 On 4 and 10 October 2019 respectively, Parliament was informed that the DLCA (through a tabled letter from the Minister) and SAMSA (through the verbal communication thereof by the Minister in the Committee meeting) were not tabling and listed the following reasons and proposed timeframe for tabling: DLCA – “I hereby wish to inform you that the Driving Licence Card Account (DLCA) will not be able to table its 2018-19 Annual Report, financial statements, and audit report as required by section 65 of the Public Finance Management Act No.
l of 1999 (PFMA).

The non-compliance is due to administrative delays at an organizational level emanating from labour impasse that delayed the finalisation of the Annual report.
The AGSA has confirmed that the DLCA's 2018/19 Annual report and financial statements were audited and approved for printing, it is therefore envisaged that the Annual report will be submitted before the end of October 2019.” SAMSA – The Minister in his opening comments to the Committee on 10 October 2019 indicated that the Annual Report of SAMSA was outstanding as the entity was unable to process the report through their Annual General Meeting (AGM) as neither the Minister nor Deputy-Minister were available to attend the AGM.
He further indicated that the AGSA had audited the financial statements of the entity but that the report was not yet submitted to the Ministry for sign off due to the inability to adopt the report at the AGM.

There has been no explanation provided for the non-tabling by SASAR or NSRI, although it is noted that these organisations are not listed as entities of the Department.

The DLCA and SAMSA 2018/19 Annual Reports remain outstanding at the time of completing the report.
223 7.2 Opinions expressed by the AGSA: Audit Outcomes for the Transport Portfolio 7.2.1 Summary of AGSA findings for the Department specifically During the period under review, the Department received an unqualified audit opinion.
However, with regard to only the Department, the Committee noted that the AGSA made findings on the following: 7.2.1.1 Annual Financial Statements and Annual Performance Report The AGSA found that the financial statements submitted for auditing had not been prepared in accordance with the prescribed financial reporting framework, as required by section 40(1)(a) of the PFMA.
A material misstatement of the commitments disclosure note identified by the auditors in the financial statements was corrected, resulting in the financial statements receiving an unqualified audit opinion.

7.2.1.2 Procurement and Contract Management Bid documentation for the procurement of commodities designated for local content and production did not stipulate the minimum threshold for local production and content, as required by the 2017 Preferential Procurement Regulation 8(2).
Commodities designated for local content and production were procured from suppliers who had not submitted a declaration on local production and content, as required by the 2017 Preferential Procurement Regulation.

7.2.1.3 Expenditure Management 224 The AGSA found that the Department had not taken effective and appropriate steps to prevent irregular expenditure amounting to R1.2 million, as required by section 38(1)(c)(ii) of the PFMA and NT Regulation 9.1.1.
7.2.1.4 Leadership The AGSA found that the leadership of the Department had been slow in exercising its oversight responsibilities to address the deficiencies regarding financial reporting, compliance and related internal controls.
7.2.1.5 Financial and Performance Management Material amendments made to the annual financial statements pertained to commitments that were misstated as management had not prepared accurate and complete schedules for commitments, thereby affecting the accuracy of the amount disclosed in the annual financial statements.

Management did not adequately review and monitor compliance with the PFMA and NT Regulations to ensure compliance with procurement processes to prevent incurring irregular expenditure.
7.2.1.6 Investigations The AGSA found that two investigations were still in progress on matters related to procurement and contract management.

The outcomes were expected in 2019/20 financial year.
7.2.2 AGSA findings for the entire transport portfolio 225 The committee noted the following views expressed by the AGSA regarding the audit outcomes of the Transport Portfolio: - Regression: o The audit outcomes of the portfolio have regressed over the five-year period from 29% of unqualified audit opinion with no findings in 2014/15 to 21% in 2018/19.

Some of the auditees have inconsistent audit outcomes.
o PRASA regressed from a qualified audit opinion from the prior year to a disclaimer due to significant material misstatements in the financial statements and limitation of scope imposed.

- Consistent: o SAMSA remained the same with qualified audit opinion as they could not address significant findings from the prior year.

o We commend C-BRTA for retaining its unqualified audit opinion with no findings for the past four years.
- Improvement: o ATNS improved from a qualified opinion in the prior year to unqualified audit opinion with findings.

o RTMC and RTIA also improved their audit outcomes from unqualified with findings to unqualified with no findings.

- Concerns: o Financial statement preparation remains a concern in the portfolio as material adjustments were effected to annual financial statements submitted for audit at ACSA, ATNS, DLCA, The Department, RSR, SANRAL and PRASA.
o Forty-three per cent (43%) achieved unqualified opinions only because they corrected all misstatements identified during the audit.

o Fourteen per cent (14%) was not able to achieve credible financial reporting (SAMSA and PRASA).

o SAMSA qualification areas § Irregular expenditure 226 § Commitments § Receivables § Payables § Property, plant and equipment.
o PRASA disclaimer areas § Property, plant and equipment § Unspent conditional grants § Accumulated surplus § Capital subsidy and grants amortised, subsidy received in advance, operational subsidy § Fare revenue (comparative), Commitments § Risk management, Irregular and fruitless and wasteful expenditure § Cash flow statement, statement of comparison of budget and actual amounts.
o 21% of the portfolio had no material findings only because they corrected all misstatements identified during the audit.

o 29% of the portfolio had material findings that resulted in a qualification or disclaimer conclusion, these were PRASA, ATNS and RAF.

o Stagnation in Reliable reporting of achievements at 71% for The Department, CBRTA, RTMC, DLCA, RSR, PR, RTIA, SAMSA, SACAA and ACSA.
o Reduction in performance at 85% for Usefulness of performance indicators and targets for The Department, CBRTA, RTMC, DLCA, RSR, PR, RTIA, SAMSA, SACAA, RAF, ACSA and SANRAL.
o The AGSA expressed the following top five non-compliance areas under the findings on compliance with key legislation: § Procurement and contract management non-compliance at The Department, RSR, SACAA, DLCA, SAMSA, Ports Regulator, ACSA, SANRAL and PRASA § Material misstatements in submitted financial statements at The Department, RSR, ATNS, DLCA, SAMSA, ACSA, SANRAL and PRASA § Lack of prevention of unauthorised, irregular and fruitless and wasteful expenditure at The Department, RSR, ATNS, SAMSA, ACSA, SANRAL and PRASA § Lack of consequence management at ATNS, SAMSA, ACSA, SANRAL and PRASA § Poor revenue management at SAMSA.
227 o The AGSA made the following remarks regarding the Financial health of the Department entities: § Material uncertainty exists whether 14% of auditees can continue to operate in future for RAF and SANRAL § Regarding Revenue management, the inability to collect monies owed and the resultant impairment of receivables due to amount owed being irrecoverable for RAF, The Department, DLCA, RTMC, SAMSA, RTIA, ACSA and SANRAL.
§ Regarding Asset and liability management there was a deficit for the year – this was, however, not as a result of an over-spending of the auditee’s operating expenditure budget.

Measures must be implemented to address this situation to ensure sustainable service delivery and financial viability for RAF, RTIA and PRASA.

§ Current liabilities exceeding current assets indicating liquidity issues, which means that they will not be able to pay their creditors as payments become due for RAF and SANRAL.
§ Regarding the Net liability position, the AGSA indicated that this highlights a possible risk that the auditee cannot continue its operations at the desired levels, which may lead to an interruption or breakdown to service delivery for RAF.
o Regarding Cash management, the AGSA indicated the following: § Negative cash balance - possible cash flow constraints resulting in a higher risk in the event of financial setbacks and the ability of the auditee to meet its obligations to provide basic services and its financial commitments will be compromised for the Department.
§ Negative operating cash flows - may result in questions about the auditee’s financial viability and its ability to continue operating optimally at its current capacity as a going concern for RAF and RTIA expenditure.
o The AGSA indicated that the Department incurred unauthorised expenditure of R980 375 in the current financial year as expenditure that was incurred but not in accordance with the vote of the programme (Road Transport) and that no unauthorised expenditure was incurred in 2017-18. o The AGSA indicated that with regard to the previous year unauthorised expenditure reported for investigation, there was no investigation required for the unauthorised expenditure of R177 million incurred in 2016-17 as it related to maintenance cost of 228 the eNaTIS system that had to be paid as per court order and there was no unauthorised expenditure incurred in 2017-18. o The AGSA indicated that there was an increase in fruitless and wasteful expenditure from R86.6 million in 2017-18 to R136.1 million in 2018-19 and that ACSA was the biggest contributor to fruitless and wasteful expenditure amounting to R63.2 million identified in the current year related to interest and penalties on revised tax liability resulting from a SARS audits.
Fruitless and wasteful expenditure for ACSA increased with R60.7 million from the prior year.

o Regarding Irregular Expenditure, the AGSA indicated that it had decreased with R1,1 billion from the prior year.
o PRASA, SANRAL and ACSA were the main contributors to irregular expenditure: § PRASA (R3 037 million) – Competitive bidding not followed (R1 740 million), procurement not in accordance with Preferential Procurement Policy Framework Act and SCM policy (R773 million), contract price exceeded (R167 million), payment without contract (R118 million) and other non-compliance with SCM prescripts (R239 million).
§ SANRAL (R419 million) – Procurement without a competitive bidding process (R309.2 million), non-compliance with other procurement process requirements (R103.5 million) and non-compliance with legislation on contracts (R6.5 million).

§ ACSA (R264 million) – Non-compliance with Construction Industry Development Board requirements (R37.5 million), non-compliance with Preferential Procurement Policy Framework Act (R216.5 million) and non-compliance with National Treasury requirements (R10 million).
§ R783.3 million represents non-compliance in 2018-19.

§ R11.1 million is expenditure relating to prior year non-compliance identified in the current year.

o The AGSA indicated the following regarding the regression in SCM compliance: § During the year under review only 7% of the portfolio had no findings.

§ The AGSA remained of the view that all SCM findings should be investigated.
§ The most common findings on supply chain management were: o Not able to audit procurement of R112.3 million due to missing or incomplete information.

o Uncompetitive and unfair procurement processes at 69% of auditees.

229 o Local content minimum threshold for local production not adhered to by three auditees.
§ With regard to allegations of financial and/or fraud and SCM misconduct (at six auditees) the following was indicated: o ACSA – Allegations were not investigated (2017-18) o The Department and PRASA – Investigations of allegations took longer than three months (2018-19).

o DLCA – Investigations of allegations took longer than three months (2017-18) o PRASA – Allegations were not properly investigated (2017-18).
o The AGSA indicated the following regarding the implementation of expanded mandate (Public Audit Act amendments): § Commencement date of the amendments was proclaimed by the president as 1 April 2019.

§ For the Audits of 2018/19 it will be implemented as follows based on the audit outcomes of PRASA: § Type of material irregularity is a material non-compliance (which would be reported in the audit report) that resulted in (or is likely to result in) a material financial loss.
§ PRASA was selected for the phased-in implementation based on the following selection criteria: o Latest audit outcome not clean or unqualified with findings – except if there was a material finding on prevention or follow-up of irregular expenditure.

o High irregular expenditure over the last three years.

o Sufficient coverage across spheres of government and provinces.

§ Material irregularities identified (PRASA): o Unfair procurement process for the purchase of locomotives.
o Competitive bidding process not followed in the award relating to: •Provision of bus services in the Western Cape.

•Provision of surveillance services (drones).

•Provision of security services: § Investigation to be initiated – To be followed up in 2019-20 audit.

230 o Unfair procurement process followed in the appointment of signalling contractors and Unfair award for the control of vegetation: § Investigation to be initiated – To be followed up in 2019-20 audit.
o Competitive bidding process not followed in appointment of general overhaul and upgrade contractors: § Investigation by the Special Investigations Unit – To be followed up in 2019-20 audit.

o Uncompetitive process followed in the award relating to: •Supply and delivery of signalling equipment.

•Repair and replacement of signalling equipment: § Investigation to be initiated – To be followed up in 2019-20 audit.
o Recommendations: § Appropriate action should be taken to ensure the second phase of the investigation is concluded.

§ Effective and appropriate disciplinary steps should be taken against employees found to be responsible.
o The AGSA indicated the following regarding the instability and/or vacancies in key positions: § Instability and vacancies in key positions (including Executive level) has contributed to the regression of audit outcomes § Instability at executive management level at PRASA including, among others the position of Group Chief Executive Officer, Group Chief Financial Officer, Chief Information Officer and Information Security Officer that were filled in an acting capacity for 2018/19.
The position of Group Chief Financial Officer was filled from 01 September 2019.
This has continued to impact the entity negatively and had contributed to the significant deficiencies in the financial management, performance reporting and compliance monitoring processes § Instability at executive management level at ACSA and RAF including the position of the Chief Executive Officer (CEO) and Chief Finance Officer (CFO) that are vacant and have been filled on an acting capacity § The Board/accounting authority at RAF was appointed on an interim basis and the appointment was not done in accordance with the RAF Act.
This has created the instability in leadership to provide effective oversight over the entity.

231 § At SAMSA, the CEO position is vacant since May 2017 and the CFO was appointed during the year § At DLCA, there is an acting head of entity, the incumbent changed during the year.

There was uncertainty about the entity being taken back to the Department or remaining as is, hence no positions were filled.
The CFO and Head of risk positions are still vacant § At the Department, the Director-General (DG) position was filled by acting incumbents since 26 July 2016.

The new DG was only appointed on 1 August 2019.

There are a number of acting Deputy Directors-General (DDGs).
7.3 Committee Observations following the engagement with the AGSA The AGSA indicated that the transport portfolio had regressed in performance and this was evident in the Department for the second year having received an unqualified opinion with findings, which also contained a number of repeat findings; the regression in audit opinion from unqualified with no material findings (clean audit) to an opinion of unqualified with findings of the entities SACAA and the PRSA.
The Department and its entities received the following findings: • Unqualified Audit with no material findings (also referred to as a Clean Audit) – C-BRTA, RTIA, and RTMC; • Unqualified with findings – the Department, DLCA, SACAA, SANRAL, ACSA, PRSA, RSR, RAF and ATNS; • Qualified with findings – SAMSA and Intersite; • Disclaimer – PRASA and Autopax; • Failure to submit and findings still outstanding – SASAR and NSRI.
The Committee was pleased to note that the C-BRTA had been able to retain their unqualified audits with no material findings (clean audit) despite the challenges they face.

232 The Committee welcomed the improved audit findings from unqualified with material findings to unqualified with no material findings (clean audit) from RTMC and RTIA.
The Committee further welcomed the improved audit finding of ATNS from a qualified audit to an unqualified audit with material findings, however, the Committee was of the view that this is still not a favourable outcome and the entity needs to do more to improve on its audit findings.

The Committee expressed concern over the audit outcome of SAMSA as being a qualified audit for the third year in a row, as well as the fact that the entity failed to table its Annual Report to Parliament for consideration.
Of utmost concern to the Committee was the regression of PRASA from a qualified audit to a disclaimer, as well as the poor performance of its subsidiaries Intersite of a qualified opinion and Autopax of a disclaimer opinion.

Although the achievement of prerequisite performance targets is to be applauded, the Committee was of the view that there was insufficient linkages between the meeting of targets and an actual or tangible improvement in service delivery to the people of South Africa.
For this reason, the Committee requested that the Department and its entities move towards the development of key performance targets that would have tangible and measurable results that show actual and/or improved service delivery to all transport stakeholders.

SACAA is commended for being an entity of the Department which managed to achieve all of its targets for the financial year in question and for doing so for the 5th consecutive year.
PRSA, RSR and RTIA were also commended for managing to achieve 100% of their targets for the reporting year.

The Committee was pleased to note that the Department and all their entities were able to submit their financial statements for audit within the required timeframe set by the AGSA, however, it was noted with concern that the Department still fails to ensure that all of its entities table their reports to Parliament for consideration during the BRRR process by the end of September each year.
233 For the 3rd consecutive year, the Committee notes a failure by the Department to ensure that all of its entities table their reports on time and that the Committee was once more unable to engage and perform its oversight function fully over three entities who failed to table within the BRRR process.
Although the Annual Reports of these entities could not be engaged on, the Committee did raise this with the Minister in its engagement with the Department on 10 October 2019 and the Committee noted the comments by the AGSA on the audit outcomes of the DLCA and SAMSA.
The AGSA, however, made no mention of Audit Outcomes for SASAR and NSRI and the Committee therefore had no information to consider for this BRRR (SASAR and NSRI are not generally regarded as entities of the Department even though it and the NSRI receive funds from the Department and the NSRI has in the past submitted Financial Statements to the Committee).
The top five areas of material non-compliance remain the failure to prevent unauthorised, irregular and fruitless and wasteful expenditure, insufficient revenue management, lack of consequence management, non-compliance with legislation and regulations when it comes to procurement and contract management, as well as material misstatements to financial statements submitted for audit.
From the presentations and engagements, the Committee noted those areas where improvements were evident, however, concluded that the Department and its entities had not been able to clear repeat findings through implementing all recommendations and corrective measures by the AGSA and the Committee as made since the start of the current term.
The Department will need to focus more attention on ensuring that action plans are implemented to address prior year audit findings and that sustainable solutions are implemented to prevent a recurrence of findings in the area of compliance with key applicable legislation and financial reporting.
Vacancies and instability of management at the Department, as well as its entities continue to pose significant challenges regarding operations and the creation of a control environment to ensure that basic financial, performance reporting and compliance with laws and regulations are enforced.

234 The accountability for Government spending at SOEs is an area receiving attention in the public, as Government funds and guarantees are being used to sustain some of the SOEs.
The audit outcomes of SOEs continued to regress – most often as a result of inadequate controls, monitoring and oversight.

Instability at Board and executive level played a role in the outcomes of SOEs, and the Department and its entities were not spared this.
The level of oversight by the Department over the entities reporting to it remained a concern for the Committee throughout all budget reviews over the past five years and the Committee welcomes the new branch within the Department to ensure it improves a greater level of oversight over its entities.
The Committee, in its oversight over the Department, has continued to request the Minister to ensure that proper monitoring and oversight is performed over all grant allocation projects in order to see to it that the actual performance targets achieved through transfers translate into actual service delivery on the ground and value for money.
The irregular expenditure does not necessarily represent wastage or means that fraud was committed – this needs to be confirmed through investigations to be conducted by the accounting officer (also referred to as the CEO) or accounting authority (Board) – but losses could already have arisen or may still arise if follow-up investigations are not undertaken.

The track record of auditees in dealing with irregular expenditure and ensuring that there is accountability remains poor.
The significant increase can be attributed overall to continued weaknesses in the SCM directorates in the application of SCM policy and National Treasury Regulations in this regard.

The most common findings for the past five years related to deviations from the prescribed procurement processes.

Three written quotations or competitive bids were not invited to enable the selection of a supplier based on a competitive and fair process.
Although such deviations are allowed, the AGSA found that it had often not been approved; or, if approved, the deviation was not reasonable or justified.

This points to the inappropriate use of management discretion in the procurement process.

In some instances, the accounting officers used their discretion to appoint targeted suppliers without justifiable reasons – thereby failing to ensure compliance with legislation.
The Preferential Procurement Regulations make provision for the promotion of local production and content.

These regulations are aimed at supporting socio-economic 235 transformation.

The Committee highlighted the need for the Department, as well as its entities to adhere to the Preferential Procurement Regulations throughout their engagements, as well as working towards the achievement of radical economic transformation in their respective fields of operation.
The AGSA is of the opinion that as long as the political leadership, senior management and officials do not make accountability for transgressions a priority, irregular, unauthorised and fruitless and wasteful expenditure, as well as fraud and misconduct will continue.

An environment that is weak on consequence management is prone to corruption and fraud, and the country cannot allow money intended to serve the people to be lost.
The Committee continues to impress upon the Department and its entities that all investigations must be finalised within a reasonable timeframe and that all contraventions of legislation and regulations must be acted upon through disciplinary action.
In instances where employees may have resigned, the Committee requested that the Department and its entities must not stop there, but should continue with steps to retrieve losses from those employees and, where appropriate, follow the procedures laid out in the PFMA for possible criminal prosecution.
7.4 Committee Observations with specific reference to entities With specific focus on the entities that appeared before the Committee, the following extracts show concerns noted from the Annual Reports and observations that were made: 7.4.1 ACSA The overall audit outcome of ACSA has remained stagnant compared to the prior years.

The entity received a financially unqualified audit opinion with material findings in compliance with legislation and met 82% of set Key Performance Indicator (KPI) targets.
ACSA’s financial performance was weakened by traffic volumes not increasing as projected, as a result of attrition of previously dominant airlines and time taken to replace that capacity.

236 A knock-on effect of this shift in the entity’s customer market was that non-aeronautical revenue – which is directly related to traffic volumes through airports – did not increase as had been planned.

Finally, ACSA was unable to reconstitute its retail and car hire tenant base due to ongoing litigation.
Total revenues for the year increased by 5.5% to R7.1 billion.

Aeronautical revenue for the year grew by 6.3% to R3.8 billion, (2018: R3.6 billion), with lower growth attributed to lower airport charges.

Non-aeronautical revenue grew by 4.6% to R3.3 billion (2018: R3.2 billion), largely reflecting a weak domestic economy and a difficult operating environment for their retail, car rental, advertising and property rental activities.
The entity’s non-aeronautical revenue accounted for 47% of total revenue, compared to 47% in 2018 and 48% in 2017.

This compares favourably with the global picture of modern airport operations, which sees an even split of revenue stream.

The current tariff promulgation, which allows for a 5.8% increase in airport charges in 2018/19 with no further increases until 2021, applies until 31 March 2021.
ACSA continuously engages in the review of the economic regulatory framework with stakeholders to provide clarity and certainty on tariff decisions going forward, including through an appeals mechanism included in the Airports Company Amendment Bill.

The Group remained within a primarily refurbishment and replacement cycle during the year and thus capital expenditure was in line with depreciation.
Cash and short-term investments decreased on the back of the repayment of the AIR01 bond in March 2019 to the amount of R2 billion that, in turn, reduced the total liabilities to R9.4 billion (2017/18: R11.6 billion).

The Committee voiced its concern over the marked increase in expenditure on security costs at the entity.
The Group experienced significant cost pressures with respect to security costs, a R158 million increase compared to the prior year across all airports, as a result of regulatory amendments which increased the scope of security services for land-side security.

Other security-related scope increases were also introduced due to heightened security measures, additional deployment at access gates and remote sites, as well as K9 services.
Additional bad debt to the amount of R93 million has been provided for in terms of the entity’s new accounting treatment regarding primarily airline customer non-payment of arrears.

Airline customers are placed on a cash-basis when certain levels of arrears are reached.

237 The Committee voiced concerns regarding the progress of investments into concessions by ACSA.

The Group made no further equity injections into its concessions.
A cautionary was issued in February 2019 following an offer for the 10% equity stake in Mumbai International Airport Private Limited.

The Guarulhos International Airport concession reduced its negative impact on profitability by 72% for the period to December 2018, while the exchange rate strengthened further to enhance the Group’s balance sheet.
7.4.2 SACAA Although the entity achieved a 100% of its targets, it regressed in its audit outcome from an unqualified audit with no findings to an unqualified audit with findings.

SACAA reported a net operating surplus of R2.1 million for the period ending 31 March 2019, against a budgeted surplus of R1.2 million.

This has resulted in a positive variance of R0.9 million.
The entity is a self-funded public entity that relies on a combination of revenue streams to fulfil its mandate and business operations.

The revenue streams consist of mainly the Passenger Safety Charge (PSC), User Fees, Fuel Levy, as well as a grant earmarked for the investigation of aircraft accidents and incidents.
Over 75.7% of the SACAA’s total revenue is derived from the PSC, and hence the organisation pays attention to industry developments that may have an impact on passenger movements and related numbers.

The Committee noted that in February 2019, the Minister of Transport, with the concurrence of the Minister of Finance, approved an annual increase of 5.3% on the PSC for 2019; bringing the amount to R24.86 per ticket.
The amended regulations were published in the Government Gazette and became effective from 1 May 2019.

A review of the 2018/19 financial year figures indicates that the PSC accounts for 75.7% of total revenue, User Fees 14.2%, Fuel Levy 3.6%, the grant from the Department was 3.1%, and Other Income 3.4%.

These percentages are fairly constant when compared to previous years.
As the PSC is the biggest contributor to the revenue, the passenger numbers will have a major impact on financial performance, and these numbers are closely monitored on a monthly basis.

238 The Committee questioned whether the entity still required the grant from the Department.

7.4.3 PRSA The entity achieved 100% of its targets, however, it regressed in its audit outcome moving from an unqualified audit with no findings (clean audit) to an unqualified audit with findings.
The Ports Regulator has answered to President Ramaphosa’s call to reduce port and other administered prices in the economy, in approving a decrease in Port Authority tariffs of - 6,27% for the 2019/20 financial year, as announced at their press conference on 30 November 2018.
Mindful of the country’s slowing economic growth over the tariff period, coupled with the need for investment in the country’s port infrastructure, the Regulator opted to add R539 million to the Excessive Tariff Increase Margin Credit to ensure that overall average tariffs in the outer two years of the period under review and beyond, remain close to the inflation target band, bringing the balance in this important savings facility to over R3,15 billion.
The Committee raised concerns regarding the need for the country to have tariff pricing that would put us on a more equal competitive footing with worldwide port tariffs.

The entity, in support of economic development, indicated that the Port Tariff Incentive which was developed in the previous year continued.
Whilst no award was made in this respect, The Port Tariff Incentive continues to serve as a mechanism by which cross-subsidies within the port tariff structure may be implemented, quantified, as well as be fair and in the public interest.

A reduction in tariff, if justified and approved, will be granted through the amendment of a specific tariff line.
The performance incentive system, published as part of the current tariff methodology, called Weighted Efficiency Gains on Operations, allows the TNPA as a regulator of operators, to gain or lose up to 5% profit for up to 10% increase or decline (respectively) on year-on-year performance for a basket of measurable indicators.
The 2019/20 tariff process will herald the first time in which a Weighted Efficiency Gains on Operations award/disincentive will be determined under this important programme and Port Consultative Committees across the country have played a key role in the consultations in this regard.

239 The Committee is concerned that the Regulator has no Board and the tariffs that were due to be set in November 2019 may not materialise.
The absence of the Board also meant that the Tribunal of the Regulator could not convene.

The Committee also noted the continued dependence of the Regulator on the finalisation by the Department of the STER Bill which has been delayed for a number of years.

7.4.4 C-BRTA During the reporting period, the Agency achieved 12 out of 13 targets that were set for 2018/19 financial year, constituting a performance level of 92.31%.
The Committee noted that the Agency’s financial sustainability remains a key challenge as the Agency funds its operations through one primary stream being revenue generated from issuance of permits to South African operators.

The financial constraints faced by the entity has impacted on its ability to achieve all of its targets for the year under review.

The permit tariffs were last increased in 2014 and the permit tariff regulations were currently under litigation.
The non-adjustment of the permit tariffs on an annual basis may create a situation where the Agency is unable to raise adequate revenue to fund its operations.

The draft permit tariff regulations were gazetted for public comments in March 2018 and comments received are being considered by the Agency and the Department before finalising the permit tariff regulations for promulgation and implementation.
The non-promulgation of the 2018 Permit Tariff Regulations remained a threat to the Agency’s financial sustainability in the year under review.

Cost containment measures were instituted to afford the Agency a fighting chance against an eminent financial disaster which negatively affected some of the planned organisational targets.

The target for the implementation of prioritised interventions, as per the Enterprise Architecture Roadmap, was not achieved for the year as projects had to be reprioritised.
There was also uncertainty in the Agency due to the litigation of the 2014 Permit Tariff Regulations that was 240 pending for the major part of the financial year.

The matter was subsequently concluded in favour of the Agency in February 2019.

On the regulatory side, the Committee once more noted concerns relating to the challenge on issuance of passenger permits for RSA/Kingdom of Lesotho route.
The said impasse started in 1999 and has since been a challenge that affects and impedes normal passenger cross-border movements on the RSA/Kingdom of Lesotho route.

The Minister of Transport established a National Ministerial Task Team tasked with the responsibility of developing a lasting solution to the impasse and its work is still in progress.
The Committee voiced its concerns that the Board of the Agency had four vacancies as at the end of March 2019, as was thus not constituted in line with the provisions of the Cross-Border Road Transport Act (No.

4 of 1998).

The vacancies on the Board negatively affect the composition of the Regulatory Committee, which is a quasi-judicial structure established in terms of the Cross-Border Road Transport Act.
The recruitment of Board members is the purview of the Minister of Transport and the matter has been accordingly escalated to the Minister and the Department.

The term of office of the current Board expired at the end of April 2019 and has been extended for a period not exceeding six months.

A total revenue of R399.163 million was recorded for the period ending 31 March 2019, of which R194.801 million is permit revenue.
It was noted with concern that the permit revenue was below target by 13% (R28.985 million), and down by 9% (R18.798 million) on the same period last year.

Included in the revenue of R399.163 million is an amount of R162 million of unclaimed refunds which was written back as the claims had prescribed during the year.

Penalty income increased from R29.974 million in the previous financial year to R41.644 million.
Although the penalty revenue has increased, revenue received is utilised to service the agency principal relationship with the RTMC and therefore does not relieve the financial burden to the Agency.

The judgement handed down by the Gauteng High Court on 28 February 2019, which dismissed the application by the Central African Road Services challenging the authority of the Minister to promulgate the 2014 Permit Tariff Regulations, was a positive development.
The court judgement upheld the validity of the regulations thus enabling the Agency to review tariffs on an annual basis.

241 Financial variances were noted for the following reasons: The budget was based on the permit tariff increase which did not materialise as anticipated.

The permit tariffs will be increased by 4.7% in the next financial year.
During the year, the Agency applied the Prescription Act on claims previously recognised as provision, which resulted in recognition of revenue in terms of the Standards of Generally Recognised Accounting Practise 23.

This revenue was not budgeted for as it was not anticipated.

Interest income was 21% more than budgeted, which was mainly due to more cash reserves being invested in call and fixed deposits due to cost cutting measures and delays in projects.
Fines were not budgeted for in respect of the financial year under review.

This was due to the unanticipated reorganisation of the law enforcement function during the last financial year after the budget had been finalised.

Following the tariff increase not having been published, only critical positions were filled in the 2018/19 financial year.

This expenditure was more than budgeted for.


Although savings were realised due to cost saving measures that had been implemented during the year in light of the delays in effecting the permit tariff increases, the impact of the provision for doubtful debts resulted in operating costs being more than budgeted for.

The delay in implementing certain projects resulted in certain capital projects not implemented timely resulting in a lower depreciable amount.
An administration fee due to the RTMC was not budgeted for in respect of the financial year under review.

This was due to the unanticipated reorganisation of law enforcement function during the last financial year after the budget had been finalised.
The Committee once more stressed its concern regarding the failure by SADC countries to fully implement the 1996 SADC Protocol on Transport, Communications and Meteorology (the Protocol) and bilateral agreements in regard to road transport which negatively impacts the seamless movement of cross-border road transport and significantly contributes to the challenges faced by the cross-border industry as a whole.
The full implementation of the Protocol in regard to road transport, and bilateral agreements would lead to efficient cross- border transport regulation and transportation and, in turn, culminate in reduction of challenges facing the sector.

The Committee proposed that the issue be raised at the next meeting of the Committee of Ministers.
242 7.4.5 RAF It was noted that during the financial year, the former Minister of Transport appointed an interim Board comprised of 11 members for the RAF, two of whom were members of the previous Board to ensure continuity.

Despite the persistent challenges with regard to the financing of the Fund and the changing legislative environment, the RAF maintained the view that it was making steady progress in meeting its strategic targets outlined in the APP.
During the financial year under review, the entity received increased fuel levy contributions amounting to an additional R6 billion to its coffers.

During the 2019/20 Budget speech in February 2019, an additional 5 c/l for the RAF Fuel Levy was announced by the Minister of Finance, effective from 1 April 2019.

This increases the fuel levy to 198 c/l and is estimated to add an additional R800 million to the Fund’s income in the 2019/20 financial year.
While the financial assistance provided for in the Budget is welcomed and appreciated, given the tough economic climate and the competing priorities for government’s resources, the Committee noted that this increase remains insufficient to match the RAF’s R272 billion actuarial claims liability.

During the year under review the Committee noted that the RAF achieved 77% of the targets contained in the APP.

This was lower than the 91% achieved in 2017/18.


In response to this concern the RAF impressed that the performance should be viewed against the Fund’s determination to set stretched targets in terms of its 2015-2020 Strategic Plan and the challenges faced in attracting medical experts to register on the RAF’s Panel of Medical Experts.

The year saw a sharp increase in new claims registered and reached a peak of 328 173 new claims, which is 56 240 more than in the previous financial year.
New personal claims grew by 12.4% and supplier claims increased by 13%.

In the view of the RAF, this increase can be attributed to the improved access to the RAF’s services and the higher visibility achieved during their outreach initiatives.

243 A total of 229 534 claims were finalised, which represents an increase of 13% compared to the number of finalised claims in the previous financial year.

The Fund paid an amount of R40 billion in claims – which is R6 billion more than in the preceding year.
An amount of R11.2 billion in claims was finalised but could not be paid out due to cash constraints.

However, the entity indicated that these payments will be honoured in the next financial year through the monthly income received via the RAF Fuel Levy.

During the year under review the RAF finalised an average of 869 claims60 each working day.

The average loss-of-earnings claims increased in value by 11% to R767 506 while the average in general damages claims increased by 8% to R462 130.
The Committee indicated a concern regarding the high amount of budget spent on legal and other cost payments.

The mutual average value of legal and other cost payments was R192 748, with the RAF share accounting for 20% and the plaintiff share for 80%.

The Fund’s position is that it would prefer it if this money was increasingly spent taking care of claimants and paying for rehabilitation and other post-crash responses.
The Committee indicated that there is a need to consider the possibility of capping the amounts that can be charged as legal fees in these cases or improving the ability of victims/claimants to access the direct claims process.

Outstanding claims increased by 26% to 309 710 at the close of the financial year.

This is due to an increased number of registrations as well as claims finalised caused by the high growth of new claims registered.
This was also influenced by an increase of 25% in the number of open and reopened claims, totalling 234 244, where compensation has not been paid as well as 75 466 outstanding legal claims.

Reopened claims decreased by 31%, which points to the fact that claims are not being classified as ‘finalised’ prematurely.

The Committee observed that RAF continues to experience financial challenges, which in turn increases the backlog in finalising claims received.
The financial health status of the entity remains a risk to the fiscus and intervention is required.

The claims process continues to be regarded as cumbersome and that it still takes far too long to finalise claims and pay awards out to victims or claimants.
The view was expressed that, while it was noted that the entity and the Department was working towards the finalisation of the RABS Bill during the year under review (and waiting for the finalisation of the process which started in Parliament on the Bill 60 229 534 claims finalised based on 22 working days per month.
244 but was stalled due to the rising of the 5th Parliament), alternative options may have to be considered, such as the possibility of amending the Road Accident Fund Act in a manner that could assist the fund to decrease its claims liability.
7.4.6 RSR The Committee noted that during the reporting period, the RSR had set itself 16 annual performance targets and it achieved 100% of them.61 Conversely, in 2017/18, the entity had set itself 18 annual performance targets and of these, it achieved 13 or 72.2%.62 The final Safety Management System (SmS) and Safety Management System Report (SMSR) Determination was published on 18 May 2018 through a government gazette; this established the legal requirements for the SmS and SMSR.
An updated Safety Permit Application Guide aligned to the SmS and SMSR Determination was also communicated to the operators by the RSR.

The Guide includes a Safety Permit Conformity Assessment Methodology tool that clarifies the requirements contained in the SMSR Determination and must be used by operators to demonstrate compliance with the requirements contained in the SMSR Determination.

The Regulator regarded this as a major accomplishment.
Based on occurrences in the rail industry over the past year, it is clear that the communication of safety critical messages between safety critical grades is not standardised within organisations or across the industry, which increase interoperability risks between different operators.

It is for this reason that the RSR embarked on a process to develop a verbal safety-critical communication protocol for railway operations.
The protocol seeks to clarify what verbal safety-critical communication is; provide the procedure for using it and ensure safe and seamless railway operations.

The Determination on Verbal Safety Critical Communication is to be used as a tool to mitigate the risks associated with verbal communication in the railway operations in South Africa and will be published as a regulatory tool by 31 March 2020.

61Railway Safety Regulator (2019), pp.

36-45.

62Railway Safety Regulator (2018), pp.

32-39.


245 The 2018/19 financial year has been a turbulent year for the railway industry.

Equally, the RSR was confronted with its own set of challenges.
Not only has the RSR undergone major restructuring, including an overhaul of its business model, to strengthen the organisation’s regional operations by focusing on core functions, it also had to make, what it regards as tough and unpopular decisions, to ensure that operators put safety at the centre of their rail operations as was evident in the resulting court matter between the regulator and PRASA during the year under review.
In this regard, the Committee urged the RSR, rail operators and the Department to ensure that the safety of the passengers on the rail system remains the focus of their daily operations and that the Regulator should be supported in instances where a need arises for it to take steps, which the operators may regard as “tough or unpopular”, in order to ensure that passenger safety remains the primary aim.
Their Annual Report showed that the Board of the RSR had approved a financial recovery plan, which outlined various measures aimed at ensuring a more efficient, productive and sustainable organisation.

The RSR implemented the plan knowing fully well that it would be an arduous task.
Among the measures adopted in the financial recovery plan were the revision of the organisational structure, introduction of voluntary severance packages, non-renewal of fixed- term contracts and the cancellation of irregular contracts.

A process to redesign the organisational structure was embarked on; and after an exhaustive process of consultation, the Board approved the structure that was communicated to all staff on 19 December 2018.
7.4.7 SANRAL The entity indicated that contracts to the value of R5.2 million were awarded to black-owned companies, while white-owned entities secured projects valued at R3.3 million.
This represented a strengthening of participation by black contractors in the construction and maintenance of national roads, as the proportion of contracts awarded to them increased to 71% (from 64% in 2017/18) and the share of value to 61% (from 53% in the previous financial year).63 The presence of black women among emerging construction contractors was 63South African National Roads Agency Limited (2019a), p. 50.
246 particularly encouraging, with 25% of total contract value secured by companies owned by black women.64 The drive for the empowerment of black-owned small, medium and micro enterprises (SMMEs) was sustained during the period under review, with 72% of contracts and 83% of the value of work accruing to black-owned SMMEs.
The relevant figures for 2017/18 were 59% and 77% respectively.65 The entity allocated the highest amount to date – to the tune of R25 million – to bursaries for staff members and university students studying engineering and delated fields, as well as scholarships for high school leaners performing well in maths and science.

This programme is geared towards improving racial and gender equity in the sector.
The Committee noted that SANRAL had experienced some challenges during the year under review due to some projects having been affected by community unrest or disputes over the project implementation or road designs.

Despite these challenges, it was noted that SANRAL managed to award contracts for several major projects, including:66 § The strengthening of the R511 between Brits and Beestekraal in North West.

This R172 million contract was awarded to NZK Footprint Engineering.
The commencement date was January 2019 and the completion is scheduled for July 2020; § The construction of the cable-stayed bridge across the Msikaba River on the green fields section on the N2 Wild Coast in the Eastern Cape.

This challenging 36-month engineering project – the 580-m bridge will be the second longest main span bridge in Africa – was awarded to the Moto/Concor Joint Venture.
Valued at R1.9 billion, the project is scheduled to be completed in January 2022; § The design review and supervision contract for an upgrade of the N11 from the Newcastle industrial area through to Madadeni, east of Ladysmith in KwaZulu-Natal.

The upgrade will improve road alignment, making it more direct and will double the capacity of the road to a dual carriageway of freeway standard.
The estimated construction cost is R531 million and the consultant is BVI Consulting Engineers Western Cape; 64South African National Roads Agency Limited (2019a), p. 50.

65South African National Roads Agency Limited (2019a), p. 70.

66South African National Roads Agency Limited (2019a), p. 31.

247 § Construction of pedestrian facilities on the N2 between Umlaas Canal and Wandsbeck Road in eThekwini, KwaZulu-Natal.
The project seeks to eliminate hazardous use of the road shoulder by large numbers of pedestrians and provide safer crossing facilities.

It is valued at R29.4 million and was awarded to GNS Civils; § The location and prospecting for new sources of road building materials located within 50 km of national roads in KwaZulu-Natal.

Valued at R22.6 million, the contract has been awarded to FDKL Engineering Consultants.
The Committee noted that the overloading of heavy vehicles remains a major problem on South African roads and takes a toll in terms of damage to roads and risks to road safety and noted that SANRAL has set up weighbridges on national routes across the country and works with local law enforcement authorities to impose penalties for overloading.

In 2018/19, approximately 7.2 million vehicles were screened using weigh-in-motion devices at weighbridges.
A total of 1.86 million that had been possibly been overloaded were directed for weighing on the static scale and 25% of these were found to be overloaded.

Approximately 7% of drivers of overloaded vehicles were charged.67 At Bakwena weighbridges, fines to the value of R7 million were imposed during the year under review and fines totalling R2.4 million were collected.
At Trans African Concessions weighbridges, fines to the tune of R8.7 million were imposed and an amount of R672 000 in fines was collected.
Two traffic control centres on the N3 concession route reported imposing fines to the value of R5.1 million and collecting R1.9 million.68 As part of SANRAL’s engineering for road safety initiative, the entity embarked on the major overhaul of the infamous Moloto Road by installing traffic calming features, closing of illegal access routes, proper fencing and new pedestrian walkways.69 The Agency experienced continued financial pressure on the toll portfolio due to the sustained under-collection of the Gauteng Freeway Improvement Project’s (GFIP) e-toll fees.
An amount of R5.8 billion was transferred to the toll portfolio to offset the shortfall due to the non-payment 67 South African National Roads Agency Limited (2019a), p. 48.

68Ibid.

69South African National Roads Agency Limited (2019a), p. 76.
248 of tolls by many users of Gauteng freeways.70 The Committee noted in its engagements with the Minister that the newly undertaken GFIP/e-toll discussions were in the process of being finalised and that a pronouncement on proposals were due by the end of October 2019.
The entity’s investment in road development, improvement and maintenance for the year was R12.7 million, 19% lower than the preceding year.71 Though this reduction was partly planned to due to constrained income, it was also affected by tender delays attributable to the combined effect of supply chain reforms initiated by NT and the introduction of the Preferential Procurement Policy Framework Act in 2017, as well as project interruptions owing to financial difficulties of contractors.
The Committee noted that significant delays were experienced on the following road projects:72 § The completion of the Polokwane and Musina ring road projects were delayed owing to Basil Read experiencing cash flow problems and applying in June for voluntary business rescue; § There was slow progress on the N1 upgrade between Holfontein Interchange and Kroonstad.
Penalties were imposed in May 2008 at a rate of R30 000 a day; During the reporting period, SANRAL had set itself 37 annual performance targets and of these, 29 or 78.4% were achieved, while eight or 21.6% were not achieved.

The Committee noted the following findings from the AGSA audit and impressed upon SANRAL that these matters had to be addressed.
Irregular expenditure to the tune of R419.2 million was incurred due to non-compliance with prescribed procurement prescripts.73 In 2017/18, irregular expenditure incurred by the entity stood at R347 million and this was again owing to non-compliance with procurement prescripts.74 70South African National Roads Agency Limited (2019a), p. 13 71Ibid.

72South African National Roads Agency Limited (2019a), p. 37.

73South African National Roads Agency Limited (2019b), p. 41.
74South African National Roads Agency Limited (2018), p. 38.

249 Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R419.2 million, as required by section 51(1)(b)(ii) of the PFMA.

The majority of the irregular expenditure was caused by expenditure not approved by duly delegated authority.75 Effective steps were not taken to prevent fruitless and wasteful expenditure to the tune of R2.7 million, as required by section 51(1)(b)(ii) of the PFMA.
The majority of the fruitless and wasteful expenditure was caused by interest charged as a result of non-payment of invoices within due dates.

The AGSA found that some of the contracts had been awarded to bidders based on evaluation criteria that differed from those stipulated in the original invitation for bidding in contravention of Treasury Regulations 16A6.3(a).
Some of the goods and services of a transaction value above R500 000 were procured without inviting competitive bids and a deviation had not been approved by NT, as required by paragraph 8 of the NT instruction note 3 of 2016/17.

In addition, the approval of the procurement was not authorised by the accounting authority, as required by section 56 of the PFMA.
This non-compliance was identified in the procurement process for the administrative building.76 The AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure, as required by section 51(1)(e)(iii) of the PFMA.
This was owing to proper and complete records that had not been maintained as evidence to support investigations into irregular expenditure.77 The AGSA found that there was a slow response by senior management to address previously reported deficiencies pertaining to oversight regarding the financial reporting process, including detailed reviews of the financial reports by delegated officials, compliance and related internal controls.
Although an action plan to address audit findings had been completed by management, it was ineffective in timeously addressing the reported control deficiencies.

75South African National Roads Agency Limited (2019b), p. 43.

76Ibid.. 77Ibid.
250 This stemmed from the fact that an appropriate level of management and governance structures did not adequately monitor the status of addressing the findings and did not ensure that the lack of progress was escalated for further intervention.78 It should be underscored that the AGSA had made the similar finding in this regard in 2017/18.79 7.4.8 PRASA The Board of Control presented the Annual Report fully aware of the massive challenges faced by the Agency during the 2018/19 financial year, pertaining to the following: § Adherence to good corporate governance and ensuring organisational and leadership stability; § Arresting the decline in the business performance, particularly the Rail business; § Ensuring the availability, reliability, predictable and safe commuter and passenger service; § Resolving organisational inefficiencies in the manner in which it deploys and manages its resources; § Addressing and fixing massive irregularities as reported by the Public Protector, the AGSA, and NT; and § Dealing with a declining stakeholder confidence and a high rate of customer dissatisfaction against the service PRASA provided during this period.
The Annual Report confirms that PRASA still faces a massive cash shortfall on its operational expenditure budget, which has accumulated over several years, caused by rising operational costs, declining revenues, and a stagnant operational subsidy.

Whilst the Board ensured that management implemented strict cost containment measures over the years by curbing and cutting costs where absolutely necessary, this has not yet improved the Group’s financial position.
This is as a result of operating costs increasing at a rate higher than own revenue generated and subsidy.

Total revenue was at R13.7 billion at the end of the financial year, compared to total expenses which stood at R15.5 billion.

The subsidy has been increasing by inflation while own revenue has been on the decline due to the lack of maintenance, vandalism and theft of assets and the open nature of the rail system.

78 South African National Roads Agency Limited (2019b), p. 44.
79South African National Roads Agency Limited (2018), p. 41.

251 The Committee expressed its concern over the poor performance by the entity with specific concerns regarding passenger safety and the reliability of the services provided by PRASA.

It noted that this poor performance is also reflected in fare revenue collected for year ending 31 March 2019.

Both commuter and long distance passenger rail and bus services failed to meet the revenue target of R2.9 billion.
The total fare revenue collected for the 2018/19 period amounted to R1.5 billion – a 15.9% below budget.

The current state of the business and the organisation’s failure to deliver on its primary mandate, to ensure that rail ultimately becomes the backbone of public transport and the mode of choice, now informs PRASA’s Get-On-Track Turnaround Plan for execution during the 2019/20 financial year.
During the 2019/20 financial year, the Minister set up a War Room which focuses on giving life to the PRASA Get-On-Track Rescue Plan through improving service performance for both the commuter and passenger service.
The entire organisation has been mobilised around the three work streams:- (i) Service Recovery, (ii) Safety Management, and (iii) Accelerated Capital Programme, that aims to ensure: § Improving On-time Performance; § Reducing train cancellations; § Ensuring reliability of infrastructure and assets; § Ensuring safety of passengers, public and staff; § Protecting infrastructure and assets; and § Fast-tracking the modernisation programme.
The Committee noted with concern that PRASA received an even poorer audit outcome of a disclaimer for the reporting year.

With its subsidiary Autopax also receiving a disclaimer and Intersite receiving a qualified audit.

Noting the instabilities in the filling of vacancies in the entity, as well as the continued need to extend the interim board appointment periods, one could not have had expected much 252 improvement in target achievement or audit findings for the past three consecutive years.
The achievement in the reporting year in question of merely 26% of the pre-determined objectives for the PRASA Group is unacceptable and the entity should work towards ensuring that it achieves all its set targets.

With regard to Intersite, for the 2018/19 financial year, Intersite’s financial results reflect a loss of R18.1 million whilst for the prior financial year; the entity reflected a profit of R6.7 million.
This loss has come about due mainly to the cancellation of the retainer that was previously approved by the Shareholder that the company had also budgeted to receive during 2018/19.

The 2018/19 financial year was meant to be the last period that Intersite is to receive a retainer from the PRASA Group as going forward the entity strategised to generate revenues from direct investments in property or real estate developments and optic fibre commercialization and thereby become financially self-sustaining.
The Committee noted that following key impediments to performance for Intersite since its inception to date including the following: § § Intersite has an unfunded mandate and this has been the case since its inception; Intersite doesn’t get capital budget allocation from PRASA and this has been the case since its inception; § Intersite is unable to borrow funds from Financial Institutions due to restrictions placed on PRASA and the fact that PRASA is a schedule 3 B entity in terms of the PFMA; § Assets that were supposed to have been transferred from PRASA to Intersite for commercialization purposes have not been transferred from inception to date.
These include amongst others the select PRASA stations and landholdings; the managed property portfolio; the renewable energy program, and the advertising portfolio; § Convoluted roles between the mandate of Intersite and the mandate of other PRASA divisions which over the years has resulted in inward focus and unhealthy internal competition.
As part of the PRASA Turnaround Strategy, the PRASA Group Governance Committee, at its February 2019 seating, recommended that PRASA Corporate Real Estate Solutions (“PRASA CRES”) a division of PRASA and Intersite, a PRASA subsidiary, be consolidated into a single entity.
Amongst some of the issues that the consolidation would help address are the following: 253 § The strategic re-alignment and positioning of the secondary mandate; § Strategic repositioning of the PRASA property portfolio; § Rationalization of similar functions; and § Addressing overlapping mandates and roles.
In this regard, a Steering Committee comprising Intersite and PRASA CRES Executive Management has been set up and has already produced a preliminary consolidation report for consideration by the PRASA Group Exco, the Group Board Governance Committee and the Group Board itself.
The consolidation report has put three options on the table as to how the consolidation of these two entities can be undertaken, namely: § Consolidate into a division: Consolidate the two entities into a division and close the subsidiary; § Consolidate into a subsidiary: Consolidate the two entities into a subsidiary and do away with the division; and § Consolidate into a division but retain an investment vehicle: A hybrid model that entails the consolidation of the relevant functions into a division but with a wholly owned investment vehicle (Intersite) being retained for specific investments transactions and structuring purposes.
A final decision as to which option is the preferred one by the PRASA Group Board is still pending.

Once that decision is made, that will allow for the Steering Committee to start with the engagement process with all relevant stakeholders in order to get their inputs as a prelude to implementation.

In the interim, the two entities continue to operate as business as usual and with each entity implementing its approved Strategic Objectives, Business Plan, APP and Budgets.
The Committee was of the view that this process had to be finalised urgently in order to provide stability on these two subsidiaries.

With regard to Autopax, the Committee noted with concern that the subsidiary has an interim Board and acting CEO and is clearly in dire financial straights.
An ongoing investigation into allegations relating to human resource management and procurement processes is being conducted by the Public Protector, in terms of section 182 of the Constitution of the Republic of South Africa.

There is also an ongoing investigation into allegations relating to the 254 contravention of the Competition Act of South Africa, 1998 (Act No.

89 of 1998) being conducted by the Competition Commission.
The Committee also noted that the board of directors of Autopax has not taken a resolution to commence with business rescue proceedings and did not deliver a written notice to each affected person setting out the criteria referred to in section 128(1)(f) of the Companies Act of South Africa, 2008 (Act No.
71 of 2008) (Companies Act) as well as its reason for not adopting a resolution to begin business rescue proceedings while the company is financially distressed, as prescribed by section 129(1) and 129(7) of the Companies Act.

The Committee noted that Autopax not only has an ageing fleet of buses and pending reports on ongoing investigations, but it also was found to have a lack of corporate governance and fraught with financial mismanagement.
With no viable plan to turn performance around for the subsidiary, the Committee was concerned regarding the viability to continue its operations.

The following entities did not make presentations to the Committee during this BRRR process due to time constraints, as well as late or non-tabling of annual reports.

7.4.9 ATNS In the period under review, billable movements reduced by 2.6% compared to the 2017/18 financial year.
In addition, operational challenges, as well as fleet and schedule optimisation by airlines in the market has resulted in schedule and capacity reductions which have negatively impacted our financial performance.

The financial year under review was challenging for ATNS, with performance lagging during the first half of the year.

In addition, movement in the leadership structures and internal governance issues played an adverse role.
However, ATNS recorded improved performance during the second half of the year.

From a safety perspective, ATNS performed well compared to the previous year.

Its safety ratio is used to measure the number of safety events attributed to its operations per 100 000 movements.

During the reporting year, the entity recorded an improvement in the safety ratio of 3.84 per 100 000 (2018: 5.19 per 100 000).
255 From a financial perspective, ATNS total revenue increased by 4.7% to R1.7 billion (2018: R1.6 billion), primarily driven by the 7.5% tariff increase, leading to an increased tariff revenue of R1.4 billion.

While total revenue increased, billable movements decreased by 2.6% (2018: 0.43% increase), mainly due to the operating context.

Although numerous cost containment initiatives helped to contain spending, the entity’s net operating expenses increased by 8.2% to R1.4 billion (2018: R1.3 billion).
The increase is largely due to increased staff costs, telecommunication expenses, corporate social investment projects and the impact of the fluctuating foreign exchange rates on its repairs and maintenance, as well as contract maintenance costs.

Capital expenditure was R252 million (2018: R305 million) mainly due to fewer projects carried out during the year under review.

ATNS’s balance sheet remained strong with a liquidity ratio of 4.61:1 (2018: 4.33:1) and its gearing is at 0.3% (2018: 0.5%).
This puts ATNS in a better position to raise funding for imminent capital expenditure.

7.4.10 RTIA Due to time constraints the entity was not called to brief the Committee during this BRRR process.

The Agency achieved 100% of the its targets for the year under review.

This is an increase in performance of 12.5% year-on-year, compared to the 2017/18 period achievement of 87.5% targets.
This comes at a time where the Agency did not have a Board after the term of the previous Board and its sub-committees expired on 31 July 2018.

The Ministry of Transport has since been working to appoint a new Board to the Agency.

Whilst such attempts were underway; the Registrar, as the Accounting Officer had to assume the automatic role of the Accounting Authority, as provided by section 49(2)(b) of the PFMA.
This automatic legislative arrangement was a duty confirmed at the previous AGM which was held on 10 September 2018.

Although the Committee did not meet with RTIA for the BRRR process, it felt that there was a need to raise its concerns that the indication of a 100% achievement of KPIs was not a true reflection of the impact felt on the lives of road users by the work performed by the Agency when one considers the numbers of fatalities still experienced on our roads.
There was also a 256 concern regarding the measurable outcomes of the prayer day events hosted and paid for by the Agency.
The Agency’s stakeholder consultation programme continued and the final consultations with the Committee, as well as the Select Committee on Business Development culminated in the implementation and the finalisation of the voting mandates for the AARTO Amendment Bill in the different provinces, as well as at the NA and National Council of Provinces (NCOP) level, where the Amendment Bill received positive votes from 8 provinces at both levels, except for the Western Cape Province which voted against the Amendment Bill in both instances.
This process was finalised with positive votes at the NA, which meant that the Agency and the Department had completed the legislative education project which commenced in 2017.

The Agency subsequently finalised the concept and model of AARTO Legislative Education, wherein it is planning to embark on massive educational drive of all key stakeholders on the tenets of the AARTO legislation as soon as the President of the Republic signs the Amendment Bill into law.
The most critical of the challenges which confronted the Agency was the forfeiture of its surplus of R117 million at the time where it requires all the liquidity it can amass in order to spearhead the AARTO Rollout processes.

Still on the issues of liquidity, the Agency further experienced challenges in achieving its revenue collection targets and this was caused by a series of stand-offs between the Issuing Authorities and South African Post Office (SAPO), which impacted on the service of notices.
Whilst this situation had a negative financial impact as mentioned earlier; the further concern is that such non-issuance of infringement notices created uncertainties in the law enforcement environment because no sooner do infringers get to know of such impasses than they continue with their unabated trends of reckless behaviour.

7.4.11 RTMC Due to time constraints the entity was not called to brief the Committee during this BRRR process.
257 RTMC achieved 96% of the targets set out in its APP for 2018/19.

Only one target was not achieved and a plan of action has been put in place to ensure that it is achieved.

To position the RTMC as a responsible corporate citizen, the Board approved the Environmental Sustainability Strategy.

The Strategy seeks to advocate for environmental sustainability, reduce greenhouse gas emissions, promote the use of technologies, drive good governance and promote responsible consumption.
The Board also approved seven state of road safety reports.

These reports confirmed that fatalities had declined by 8% this financial year.

However, more interventions need to be put in place in provinces, particularly those that contributed the highest number of fatalities such as KwaZulu-Natal, Gauteng, Eastern Cape, Limpopo and Mpumalanga.

An analysis of road safety statistics over the past three years demonstrates how RTMC has begun to turn the corner.
Evidence shows that road fatalities are beginning to decline.

Over the past three years, deaths on South Africa’s roads have been reduced from 14 071 in 2016 to 12 921 in 2018.

The entity acknowledges that it will not meet the United Nation Decade of Action goal to reduce road fatalities by 50% by 2020, with the year 2010 as the baseline.
It is common cause that a decline in road crashes is preceded by a period of relative stability, this is where they find their performance at this stage of the period of the decade.

RTMC is, however, confident they have made progress.

The road fatalities per 10 000 registered vehicles have decreased from 16.04 in 2010 to 11.47 in 2018.

This has been achieved against the backdrop of a phenomenal increase in the number of vehicles in the country over the same period.
The numbers of registered vehicles increased from 9.8 million to 12.4 million in the corresponding period.

The Committee observed that sight must not be lost of the concerns raised above under the C- BRTA discussion and how C-BRTA was affected by monies due to the RTMC.
From various engagements with the Committee and the entities, it became evident that there was also a need to ensure compliance to MOUs and ensure an improved working relationship between the C- BRTA and RTMC law enforcement units as well as the correlation between the RTMC and the RTIA in the achievement of their targets towards reducing road fatalities.
7.4.12 DLCA (notes per AGSA input) 258 The trading entity failed to table its Annual Report in time for the Committee to consider its performance during this BRRR cycle and it received an unqualified opinion with material findings.

Financial statement preparation remains a concern in the transport portfolio as material adjustments were effected to annual financial statements submitted for audit at DLCA.
Non-compliance areas highlighted by the AGSA for the entity were identified as procurement and contract management, and material misstatements in submitted financial statements.

Areas of concern in internal control were identified as insufficient proper record keeping, and review and monitoring of compliance.

Regarding revenue management, the AGSA indicated that the entity showed an inability to collect monies owed and the resultant impairment of receivables due to amount owed being irrecoverable.
In terms of fraud and lack of consequence management at the entity, the AGSA found that investigations of allegations took longer than three months (2017/18).

At the DLCA, there is an acting head of entity, the incumbent changed during the year under review.

There was uncertainty about the entity being taken back to the Department or remaining as is, hence no positions were filled.

The CFO and Head of risk positions are still vacant.
During a recent oversight visit by the Committee to the entity, the Acting Head of the Entity indicated that there is a material risk related to the card production machine which will no longer be able to be serviced.

The service provider for the production machine will stop maintaining it due to the machine having aged.

Bearing in mind the machine has been in use since 1998.

The decision is based on newer technology and unavailability of spare parts.
This was the only machine of its kind in the country and a new card format is being considered which will require a new type of production machine as well.

259 7.4.13 SAMSA (notes per AGSA input) SAMSA remained the same with qualified audit opinion as they could not address significant findings from the prior year.

The AGSA identified the SAMSA qualification areas as: § Irregular expenditure; § Commitments; § Receivables; § Payables; § Property, plant and equipment.
Non-compliance areas in the entity were identified and indicated as: § Procurement and contract management; § Material misstatements in submitted financial statements; § Prevention of unauthorised, irregular and fruitless and wasteful expenditure; § Consequence management; § Revenue management.

Areas of concern were identified as: § Leadership was not effective; § § Improper record keeping; Ineffective risk management.
Areas that requires intervention is: § Review and monitoring of compliance; § Ineffective daily and monthly controls.

Senior management provides limited or no assurance.

Under revenue management, the AGSA found that the entity had an inability to collect monies owed and the resultant impairment of receivables due to amount owed being irrecoverable.
260 The AGSA found that the entity failed to investigate previous year fruitless and wasteful expenditure that had been reported for investigation, as well as previous year irregular expenditure reported for investigation.

At SAMSA, the CEO position is vacant since May 2017 and the CFO was appointed during the year.

The entity was scheduled to meet with the Committee but failed to table its Annual Report in time for consideration or inclusion into this report.

8.
8.

RECOMMENDATIONS 8.1 Observations and recommendations from the Budget Vote Report 2019 8.1.1 The Committee made the following observations: 8.1.1.1 General The Committee noted that there were some errors in the tabled APP for 2019/20 which the Department undertook to correct.
Furthermore, there was a concern that a number of targets contained in the APP had no target delivery dates or finalisation dates and that some dates indicated under new targets for the Maritime Transport Programme had been pointed out by the Department as being incorrect.

8.1.1.2 Use of consultants The overall allocation to compensation of employees increases from R496.7 million in 2018/19 to R534.7 million in 2019/20.
This year, expenditure on consultants (business and advisory 261 services) is set to increase from R266.2 million to R463.8 million (which, shockingly, is almost equal to the overall allocation to compensation of employees for the previous budget cycle), indicating an above-inflation increase of 65.6 percent.

The exponential increase for consultants (business and advisory services) is linked to changes in the Integrated Transport Planning and Public Transport programmes.
Conversely, funding for the use of consultants in the Maritime Transport programme declines from R17.0 million in 2018/19 to R9.7 million in 2019/20 (a decrease of 45.8 percent in real terms).
The Committee was adamant that the Department cannot continue spending this much of the budget on consultants, especially while government is required to work towards a reduction in the wage bill, a reduction in the use of consultants and a drive towards ensuring that internal capacity of the Department and its entities is strengthened.

8.1.1.3 Public Transport Network Grant (PTNG) The budget allocation for the PTNG increased from R6.3 billion in 2018/19 to R6.5 billion in 2019/20.
The Committee noted that the implementation and/or rollout of these projects differ in each municipality despite past targets having been for operations to begin in nine cities by the end of 2018/19 whereas the actual progress indicated in the APP of 2019/20 was that only six had begun operations (one of which is a pilot of a small scale service).
The Committee further raised concerns regarding the progress on the planned targets for roll-out of the IPTNs in the municipalities when such progress is compared to the billions of allocated funds already spent on the projects.

It was noted that the Department had issued an instruction to scale down plans and big ticket infrastructure in these projects, but to rather optimise modal technologies based on realistic demand volumes.
Designed projects or earlier plans in smaller cities have been amended to focus mostly on supplying new vehicles, few stations and shelters/stops and other related infrastructure such as depots.

262 It was noted that the Department will be working on a Regional Integration Strategy as a new indicator in the APP for 2019/20 and that this is targeted to be submitted to Cabinet by March 2022.
8.1.1.4 Provincial Road Maintenance Grant (PRMG) The Committee observed that the budget allocation for the PRMG: roads maintenance component increased from R10.3 billion in 2018/19 to R10.6 billion in 2019/20.

The PRMG: Disaster relief component decreased from R210.0 million in 2018/19 to R206.2 million in 2019/20.

The PRMG: Mpumalanga coal haulage roads maintenance component increased significantly from R501.1 million in 2018/19 to R526.2 million in 2019/20.
During its presentation, the Department indicated that a trend had emerged over the past few years whereby some Provinces would decrease their allocation of provincial funds to road projects in years where the PRMG grant transferred from the Department had an increased allocation.
The Committee noted its concern of such practices and indicated that this must come to an end as there should be guidelines by which the Department would support grant allocation increases based on reciprocated commitments in funding and spending capacity from the provinces for these road maintenance projects.

8.1.1.5 Moloto Road upgrade and Moloto Development Corridor For SANRAL, R3.3 billion is allocated over the medium term for the upgrade of the R573 (Moloto Road).
The Committee noted the decrease in the budget allocation from R1.8 billion in 2018/19 to R1.7 billion in 2019/20 for the Moloto Road upgrade.

The Committee noted that there has been progress regarding the R573 Moloto Road that connects the three provinces of Gauteng, Mpumalanga and Limpopo.
During the year under review, the relevant Provincial Departments for Mpumalanga and Limpopo provinces had transferred their sections of the road to SANRAL, while the relevant Department in the Gauteng province had not yet done so.

The Committee, 263 however, was pleased to be informed by the Minister on 10 October 2019 that Gauteng had finally signed and agreed to transfer the remaining section of the Moloto Road to SANRAL and the full extent of the planned work could commence.
The Committee was, however, concerned about the slow progress of this originally planned five-year upgrade project and also noted that the rail portion of the Development Corridor project has slowed despite the PRASA Corporate Plan of 2018/19 indicating that for 2018/19 the entity will target to finalise funding with the Department and NT by the Second Quarter.
It was further noted with concern that neither the budget allocation nor the Department’s APP for 2019/20 makes any mention of the Moloto (Rail) Development Corridor.

The Department indicated to the Committee that fiscal constraints were affecting the rail portion of the Moloto Corridor project and that the focus had been shifted to prioritise the R573 Moloto Road project.
Treasury had not allocated funds to the rail project due to affordability concerns and there had been discussions that this project may have to move to the PICC.

In this regard, the Department indicated that the Minister of Transport and the Minister of Finance will be meeting to discuss this issue.
During the 2018/19 budget briefing, the Department indicated that it has concluded a review and assessment of the Putco Moloto subsidised bus services contract, which included a detailed census to determine current demand.

The outcome of this review and whether or not a new contract would be introduced to replace the current one based on the outcome of the passenger census and the current demand had not been presented to the Committee yet.
8.1.1.6 Non-toll road network The budget allocation for the non-toll network increased (more than doubled) from R5.1 billion in 2018/19 to R12.3 billion in 2019/20.

During the previous year, the Department had to ensure that SANRAL does not default on payments related to the GFIP and therefore had to shift/transfer funds in order to do so.

This year, the funding allocation to the GFIP project has been significantly reduced and allowed for the increase in budget to the non-toll road network.
264 The Committee noted that the following non-toll road projects were planned for the MTEF 2019 – 2022: • N12 Johannesburg to Klerksdorp • N2 Richards Bay to Ermelo • N2 Botrivier to Port Elizabeth • N12 Benoni to Witbank • R72/N2 Port Elizabeth to East London • R300 Cape Town Ring Road.
8.1.1.7 Vacancies and Acting Positions The Committee noted that the end of term for members of boards at various entities are near, that some boards were not fully constituted which may affect their performance and reporting, that some advertisements were already published for filling these vacancies, and that PRASA still had an interim board.
The Committee highlighted a serious concern regarding the Ports Regulator’s expenditure that is expected to increase at an average annual rate of 10.2 percent, from R31.1 million in 2018/19 to R41.7 million in 2021/22, mainly driven by two additional personnel to its economic regulation programme.

The Committee was of the view that it is concerning that such a massive increase is intended to only be used for two additional personnel.
It was further noted that numerous vacancies also still exist in the Department and in the executive of its entities, which led to an increase in the reliance on acting placements and could have contributed to further instability in the Department and entities.

This remains a concern to the Committee as these issues have been highlighted over several years by the Committee, as well as the AGSA.
In this regard, the Committee wanted to highlight that the recommendations made by the AGSA for the Budget Review of 2017/18 as expressed in the Annual Report(s) of 2017/18 indicated that the root causes for entities with negative outcomes were: 265 • Key management posts are vacant or filled with staff in acting positions, which contributes to lack of accountability; • The governance structures in some of the entities are not fully constituted which results in ineffective oversight; • Where an action plan had been put in place, it was not monitored at the appropriate level and the lack of progress was not escalated for further intervention by senior management; • There is a slow response in addressing ongoing deficiencies with compliance to laws and regulations and lack of consequence management in respect of staff that do not perform their allocated responsibilities; and • Some entities lack the discipline of ensuring that internal controls to ensure that accurate and complete financial reporting and compliance to laws and regulation are adhered to.
The Department reported on progress in filling board vacancies, as well as senior management vacancies in the Department.

The Committee was concerned that the Department could not indicate a timeframe by when these vacancies will be filled.

8.1.1.8 Scholar Transport The Committee noted the increase in budget allocation to the Rural and Scholar Transport sub- programme under Programme 7.
However, the Committee also noted the emphasis in the Budget Review documents, under the headline of Portfolio Committee on Basic Education, that together with relevant authorities, the Department should fast track the implementation of plans to allocate ring-fenced funds for learner transport.

The NT is part of the task team on this issue.

The ring-fencing can only happen once a policy decision is taken on whether the function lies with the Department of Basic Education or the Department.
Furthermore, under the heading of Scholar Transport, it was indicated that government conducted a study on the delivery of scholar transport services during 2018.

A steering committee with members from the Department of Basic Education; the Department; the Department of Planning, Monitoring and Evaluation; and NT has been established to take this work forward.
The report revealed several data gaps and inconsistencies in the way services are delivered and reported on in different provinces, making it difficult to establish a common 266 national approach to improving the service.

Two work streams were indicated to be established during 2019.

The first will deal with the data gaps and attempt to determine whether the function should be led by the transport or basic education sector.
The second work stream will deal with the costing of the service and will provide input during 2020.

The Committee raised concerns regarding the challenges faced by rural learners in obtaining access to scholar transport.

Furthermore, concerns were raised regarding the modes or types of transport provided to learners which are not suitable or safe for the transportation of learners and often leads to overloading and contraventions of road traffic laws.
Concerns were also raised regarding the lack of uniformity in scholar transport provision in the various provinces and challenges faced in the management, financing, implementation and oversight over scholar transport.

8.1.1.9 SANRAL funding concerns as well as impact of GFIP thereon The Committee continues to raise concerns regarding the going concern status of SANRAL due to poor collection on GFIP e-toll project.
The Committee also noted the massive decrease in funding to the SANRAL: GFIP from R6.3 billion in 2018/19 to R550.5 million in 2019/20.

The Committee was hopeful that delays would be minimised in implementation of critical projects which were in the past delayed due to toll resistance.

The Committee also noted delays in various SANRAL projects due to contractors withdrawing from some sites because of local community protest regarding these projects.
The Committee indicated that the Department should ensure that projects rolled out in communities make use of the skills within that community and that SANRAL and provincial departments responsible for roads and transport matters implement an Inter-Governmental Relations Strategy to assist in resolving these issues.
The Committee was optimistic about the possible progress in rolling out the possible R128 billion investment in road infrastructure projects which includes: • N1-N2 Winelands Project 267 • N2 Wild Coast Highway Project • N2 Durban South to North Project • N3 Gauteng Durban Corridor Project/Van Reenen Development Project (formerly indicated as the De Beers Pass project) • N3 Pietermaritzburg to Durban Project.
The Committee was concerned that one of the key focus areas indicated by SANRAL for 2018/19 was the cooperation with the Department on developing a fresh Toll Roads Policy and that this has not yet been finalised.

8.1.1.10 PRASA Modernisation project The Committee noted a significant increase in budget to PRASA Capital from R91.9 million in 2018/19 to R600 million in 2019/20, as well as the PRASA: Rolling Stock Fleet Renewal budget going from R4.7 billion in 2018/19 to R5.8 billion in 2019/20.
The Committee expressed the hope that the current interim board will not allow the allocated funds to PRASA Capital to lie idle again as in previous years but that this will be wisely spent where services are in most dire need.
The Committee was of the view that until and unless the current service and safety concerns are adequately addressed, the modernisation project will not be able to progress as more budget has to be spent on refurbishment of vandalised and outdated coaches and infrastructure to ensure services are able to run.
The Committee noted with concern that the performance in and expenditure of budget of R2.4 billion for the station modernisation programme runs the risk of being delayed due to the cancellation by NT of all station modernisation contracts.

268 The Committee was adamant that the signalling system and telecommunication upgrades projects were of utmost importance to prevent a repeat of the rail collisions experience during the last two years.
8.1.1.11 Taxi Recapitalisation Project (TRP) The Committee noted the targeted implementation of the recommendations of the TRP by March 2020.

However, the revised policy has to date not been presented to the Committee.

The revision and implementation of the policy therefore appears to be delayed and the targets set for implementation of the project have failed to be accurate in recent years due to a reduced uptake thereof by the industry.
The current project has no termination date which creates no urgency for compliance or uptake of the project.

Furthermore, the Committee is concerned that the Department may not be utilising the data it has from the operating licence and permit databases to identify and contact owners of vehicles that may be qualifying for scrapping.
The Committee indicated that the value allocated for pay out to the industry in terms of the project is perceived as insufficient by the industry to warrant an uptake in the project and hopes were expressed that the reviewed project will remedy this, as well as the need to ensure a taxi (maintenance) services value chain exists.
The Committee also noted the recent Public Protector Report 37 of 2018/19 on the Illegal Conversion of Toyota Quantum Panel Vans into Mini Bus Taxis and that the findings might impact this programme.

(The Committee must still consider this report and table its own report in the House).
8.1.1.12 Funding Models and Turn-around Strategies of Entities The Committee is concerned that the funding models and/or turn-around strategies of the entities are not being processed or implemented as a matter of urgency (or that there appears to be new strategies submitted every six months), which, if left to continue as is, will lead to financial ruin of these entities and a lack of service delivery to citizens.
269 8.1.1.13 Legislative Programme impact on Entities The Committee noted that a review was planned of the founding legislation of road entities by March 2020.

It further noted that the Civil Aviation Amendment Bill that was tabled in November 2018 may need to be revived by the 6th Parliament, as well as the RABS Bill and National Land Transport Act Amendment Bill that were not finalised during the tenure of the 5th Parliament.
The Committee also indicated its anticipation for the tabling of the long-awaited STER Bill and noted the progress reported by the Department on this.

The Committee noted that there is a need to receive a full and comprehensive list of legislation that is proposed which would include the current status of progress on these matters.
From the Department’s amended Strategic Plan (presented in 2018/19), the Committee also noted that in the current 2019/20 financial year, the Department intended to bring the Merchant Shipping Bill to Parliament, as well as the TAT Amendment Bill.
The Committee also noted that during the next financial year, the Department intended to meet the following targets: • Submitting the draft Maritime Transport Sector Development Council Bill to Cabinet by March 2020; • Developing the Railway Safety Bill for submission to Cabinet by March 2020; • Submitting the draft National Road Traffic Amendment Bill to Cabinet by March 2020; • Submission of the Transport Appeal Tribunal Amendment Bill to Cabinet by March 2020; • Submitting the STER Bill to Parliament by March 2020; • Submitting the Air Services Licencing Amendment Bill and International Air Services Amendment Bill to Cabinet by March 2021; • • Implementation of the National Rail Act by 2020/21; Implementation of the Railway Safety Act by 2020/21; • Draft Bill for Founding Legislations of Road Entities to Parliament by 2020/21; and • Developing the South African Maritime and Aeronautical Search and Rescue Amendment Bill for submission to Cabinet by March 2021.
270 The Committee continues to urge the Department to plan for the tabling of legislation to Parliament early enough in the five-year planning cycle to prevent the lapsing of bills and the rush to process these in the outer years of the Parliament cycle.

8.1.1.14 Optimal use of revenue generating streams of entities The Committee noted that some entities, such as ACSA and PRASA, that have access to property do not make optimal use of possible advertising revenue or retail revenue generating streams.
8.1.1.15 Road Safety Programmes The Committee noted the reported decrease in the 2019 Easter Holiday Road Death statistics, even though this year the holiday fell outside of the school holiday time period and that may have affected the statistics.

The Committee noted the implementation of road safety programmes by various road transport entities.
8.1.1.16 Increased Promotion Required of Universal Access The Committee noted the Department’s commitment in the medium term, to continuing with the planning and construction of universally accessible IPTNs and Bus Rapid Transit (BRT) systems in identified local and metropolitan municipalities.

However, universal access is the goal of enabling all citizens to reach every destination served by their public street and pathway system and is not limited to access by persons using automobiles.
Travel by bicycle, walking, or wheelchair to every destination is accommodated in order to achieve transportation equity, maximize independence, and improve community liveability.

Wherever possible, the Committee continues to urge that the Department ensures the promotion of the need to have road and transport facilities designed to allow safe travel by 271 young, old, and disabled persons who may have diminished perceptual or ambulatory abilities.
By using design to maximize the percentage of the population who can travel independently, it becomes much more affordable for society to provide paratransit services to the remainder with special needs.
The Committee, therefore, was of the view that the Public Transport, Road and Rail Programmes do not make sufficient provision for the promotion of universal access as the 2018/19 APP appeared to only focus on the IPTN rollout with such service considerations and that this type of access may be further constrained with scaling down of IPTN infrastructure with regard to stations or stops, as well as the suspension of some rail station modernisation contracts.
8.1.2 The Committee recommended that the Minister ensure: 8.1.2.1 General The Department correct all errors and inconsistencies or contradictions pointed out in their tabled APP for 2019/20.

8.1.2.2 Use of consultants The use of consultants is monitored by the Department, and that the Department ascertains whether the services rendered provided good value for money.

In addition, the Department should indicate whether the consultants transfer relevant skills to the employees of the Department.
The Department must furthermore brief the Committee on all consultants used with reference to their scope of work and the expenditure linked to these appointments within 30 days of the adoption of this report by the House.
8.1.2.3 Public Transport Network Grant (PTNG) 272 The Department monitors the spending of the funds by the 13 IPTN/BRT implementing cities and ensures that the funds are spent as per the Division of Revue Act to warrant that value for money is achieved and services are delivered to the citizens.
Quarterly reports on progress should be delivered to the Committee, as well as indications on whether or not any of the cities stands a real chance of having their funding allocation stopped due to a lack of progress.

8.1.2.4 Provincial Roads Maintenance Grant (PRMG): Road maintenance component The Department monitor the expenditure of the Roads maintenance component of the PRMG and briefs Parliament quarterly on progress, as well as the breakdown of the 2019/20 budget allocation per province.
8.1.2.5 Moloto Road upgrade and Development Corridor The Department deliver quarterly updates to the Committee on the progress made regarding the Moloto Road upgrade and Moloto Development Corridor (Rail) programme.

8.1.2.6 Non-toll road network The Department ensure that the budget allocation for the SANRAL road maintenance programme respond to the challenges of unemployment, poverty alleviation and inequality.
8.1.2.7 Vacancies and Acting Positions That the appointments are made with due consideration of gender parity principles for all critical vacancies that need to be filled in Senior Management, as well as throughout all levels of the Department, executive of the entities, as well as board vacancies.

273 That Board members of entities are appointed without delay so that the entities are able to discharge their legislative mandates optimally.
The Minister is also requested to report to the Committee on this matter, as well as the Department’s plan for ensuring future Board member vacancies are filled timeously within 30 days of the adoption of this report by the House.

Furthermore, that the Minister ensure that all other vacancies in senior management in the Department and the executive in the entities are filled and reported on to the Committee within 60 days of the adoption of this report by the House.
8.1.2.8 Scholar Transport Once the work-streams have determined the best suited department for the project, that the Scholar Transport Policy and regulation thereof is rolled out uniformly and monitored by the relevant department.

Until such determination is finalised, the Department must ensure that one set of regulations is set out and implemented nationally on scholar transport norms and standards, which must be done through regular meetings with and cooperation with the Department of Basic Education.
The Department should also hold regular engagements with Provincial Departments with which the function resides to assist in improving scholar transport, as well as report back to the Committee on progress on a quarterly basis.
8.1.2.9 SANRAL funding concerns, as well as impact of GFIP thereon That SANRAL is assisted with formulating a suitable funding model that could aid in resolving the impact on its finances from the rollout of the GFIP project, as well as manage current project stoppages related to the general objections on all toll projects by finalising the development of a fresh Toll Roads Policy.
The Minister also needs to address the going concern issues raised for SANRAL by arranging meetings between the entity, the Department, as well as NT.
SANRAL should also be assisted with support towards the achievement of its Strategic Objective to foster cooperative working relationships with all spheres of Government and the SADC member countries through the possible expanding of its scope towards becoming a road 274 agency for the SADC as this could help support the development of infrastructure in the region, as well as economic integration.

The Department is to report to the Committee on a quarterly basis regarding the above recommendations.
8.1.2.10 PRASA Modernisation project That PRASA improves their current services and safety through the rollout of the turnaround strategy in a manner that would allow for the entity to focus further on the modernisation project.

The entity should also indicate progress towards the devolution of authority to regions for effective management and rail operations through quarterly reports on the above to the Committee.
PRASA should ensure that quarterly briefings are presented to the Committee regarding updates and progress on its rolling stock fleet renewal programme, the refurbishment of coaches, as well as the upgrading of signalling systems.

8.1.2.11 Taxi Recapitalisation Project That the revision of the policy is finalised as soon as possible and ensure that value chain aspects are covered in the revised project model.
That targets for the project are set more accurately in order to reduce the over-reliance on underspent funds from this project to cover over expenditure in others.

The Department must present the reviewed policy to the Committee within 90 days of the adoption of this report by the House.
8.1.2.12 Funding Models and Turn-around Strategies of Entities That all entities with turn-around strategies and new funding models are given the required assistance, guidance and oversight required in order to implement these strategies and models that would allow them to be self-funding and reduce the increasing reliance on the national fiscus in the pursuit of service delivery.
The Minister also needs to address the going concern 275 issues raised for entities by arranging meetings between the entities, the Department, as well as the NT.

The Department is to report to the Committee on a quarterly basis regarding the above recommendations.
8.1.2.13 Legislative Programme impact on Entities That the Department and its entities ensure that their planning for legislation to be submitted to Parliament for processing is done in such a manner that would allow for the thorough processing thereof during the Parliament Cycle and not to rush submissions in the outer years of the MTSF.
The Department is requested to submit a full and comprehensive list of legislation that is proposed which would include the current status of progress on these matters within 60 days from the adoption of the report by the House.
8.1.2.14 Optimal use of revenue generating streams of entities That entities with ownership of property which could serve as a source of additional revenue through advertising or retail rentals, ensure that all spaces are used optimally in order to increase revenue generated by the entities towards self-reliance.
8.1.2.15 Road Safety Programmes That the Department ensure that there is synergy pertaining to the implementation of the road safety programmes by the various entities so that the programmes can complement each other in achieving a reduction in the carnage on the roads, as well as ensuring that budgets for these programmes are optimally allocated and not duplicated.
8.1.2.16 Increased Promotion Required of Universal Access 276 That the Department and its entities increase the implementation of projects and/or programmes aimed at increasing Universal Access to all modes of public transport and for all transport and road infrastructure.

8.2 Observations and recommendations from the Strategic Plan and APP Report 2019 The Budget Vote debate of the Department took place on 9 July 2019.
Due to the fact that the Department and entities tabled their APPs on 2 July 2019 and the limited timeframe within which to engage on these between tabling and the Vote, the Committee, therefore, was not able to receive briefings on the APPs of the Department’s entities prior to the Budget Vote Debate.
Accordingly, the Committee engaged on the APP and Budget Allocations for 2019/20 with the Department on 3 July 2019 and undertook to schedule presentations by the Department’s entities on a later date in order to receive briefings on their amended and/or new Strategic Plans, and (specifically for the entities) 2019/20 Corporate Plans or APPs.
The Committee subsequently met with the entities of the Department, including the NSRI, from 27 August 2019 to 10 September 2019 on their 2019/20 Budgets, APPs and Corporate Plans.

The Committee has not finalised its 2019 Report on these matters, however, the matters raised during their engagements with the entities on their plans for the 2019/20 financial year were taken into consideration and raised during the engagements with the entities and the Department for purposes of completing the BRRR.
8.3 Recommendations made by the AGSA for the Budgetary Review and Recommendation Report for the 2018/19 financial year The role of the AGSA is to reflect on the audit work performed to assist the Committee in its oversight role of assessing the performance of the entities taking into consideration the objective of the Committee to produce a BRRR.
277 The AGSA recommends the following to the Department and its entities: § Permanent boards in entities with a mix of appropriate skills and competencies should be appointed (repeat recommendation); § Executive management positions should be filled with appropriately skilled and experienced personnel (repeat recommendation); § Develop and implement action plans to address audit findings (repeat recommendation); and § Implementation of a culture of consequence management (repeat recommendation).
The AGSA recommends the following to Committee: § Monitoring and regular follow-up with the executive authority and the accounting officer/authority on: o Appointment of permanent boards and audit committees to ensure that they are fully constituted with members with the appropriate skills and experience for effective governance and oversight over the entities; o Management of vacancies to ensure stability of leadership; and o Progress on action plans put in place by the entities to address undesirable audit outcomes.
§ The culture of consequence management should be enforced in the portfolio.
8.4 The Committee recommendations for the 2018/19 financial year Budgetary Review and Recommendation Report The Committee recommends that the Minister, through the Department, should ensure the following: 8.4.1 Recommendations specific to the Department and of General Application to entities 8.4.1.1 Due to the observation that the Department indicated the exact same measures to address AGSA findings as it had in previous year, the Committee implores the Minister to 278 ensure that stronger measures are put in place to address the audit findings effectively and that they are implemented in a manner that will ensure that the Department improves its audit outcome for the 2019/20 financial year.
In relation to this recommendation, it is imperative that the Department strengthen its oversight over the entities and report on progress made to remedy all matters raised by the AGSA; 8.4.1.2 The advertising and filling of board, CEO, as well as senior management vacancies, as indicated in the paragraphs above, should be prioritised in the Department and the affected entities.
In order to achieve the SONA 2018 commitment made by Government to changing the way boards of SOEs are appointed, the positions filled should be with people who have the relevant expertise, experience and integrity to serve in these vital positions.

This will allow the Department as well as the entities to operate and report effectively, and do so within the parameters of applicable legislation.
The Department, with its entities, must report on current efforts underway to finalise the filling of posts and ensure that it presents an implementable strategy to address future vacancies; 8.4.1.3 The Department must implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself.
The Department should ensure that the targets set in their Strategic Plans and APPs going forward adhere to the AGSA’s SMART principles and ensure that sufficient records are available to prove that those targets had been met.

Management in the Department should ensure that it is possible to validate the processes and systems that produce the indicator to enable them to produce the required evidence (through improved record keeping) supporting their reported performance.
Conversely, they should adhere to the requirements of the Framework for Managing Programme Performance Information (FMPPI) to ensure that all indicators are well defined and verifiable and that all targets are specific and measurable i.e.

the nature and required level of performance is clearly specified and measurable.
The Committee also requested that the Department and its entities move towards the development of key performance targets that would have tangible and measurable results that show actual and/or improved service delivery to all transport stakeholders; 8.4.1.4 Effective steps should be implemented to prevent irregular expenditure.
Some of these highlighted by the Committee are: 8.4.1.4.1 Officials who caused the Department or its entities to incur irregular, fruitless and wasteful expenditure should be subjected to disciplinary 279 procedures, and where applicable implement the appropriate measures provided for in terms of sections 81 to 86 of the PFMA.
Section 81(1) stipulates that: “an accounting officer for a department or a constitution institution commits an act of financial misconduct if that accounting officer wilfully or negligently- (a) fails to comply with a requirement of section 38, 39, 40, 41 or 42 or (b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful expenditure”.
In addition, section 81(2) states that: “an official of a department, a trading entity or a constitutional institution to whom a power or duty is assigned in terms of section 44 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty”.
For its part, section 86(1) of the PFMA states that: “an accounting officer is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting officer wilfully or in a grossly negligent way fails to comply with a provision of section 38, 39 or 40”.
In addition, section 86(2) of the PFMA maintains that: “an accounting authority is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting authority wilfully or in a grossly negligent way fails to comply with a provision of section 50, 51 or 55”.
Finally, section 86(3) of the PFMA stipulates that: “any person, other than a person mentioned in section 66(2) or (3), who purports to borrow money or to issue a guarantee, indemnity or security for or on behalf of a department, public entity or constitutional institution, or who enters into any other contract which purports to bind a department, public entity or constitutional institution to any future financial commitment, is guilty of an offence and liable on conviction to a fine or imprisonment for a period not exceeding five years”.
The act also includes provisions for criminal prosecution in cases of gross financial misconduct; 8.4.1.4.2 The Department and its entities must at all times ensure that proper record-keeping is implemented for information supporting compliance and procurement processes and implement consequence management for staff members who fail to comply with applicable legislation in this regard; and 280 8.4.1.4.3 Having noted that the Department had a Loss Control Committee/Division to deal with and ensure the rooting out of irregular expenditure, the Department must present quarterly reports on the progress made by this Committee/Division to ensure that the Department does not incur irregular expenditure going forward; 8.4.1.5 The Committee requests the following with regard to compliance with the provisions of the PFMA: 8.4.1.5.1 The Department should capacitate its Finance and SCM directorates/departments/branches with appropriately skilled and competent personnel to prepare credible financial statements; 8.4.1.5.2 The executive authorities, accounting authorities, accounting officers and senior management should ensure that information used to prepare financial statements are accurate and reliable; and 8.4.1.5.3 The Department must ensure that all officials responsible for reporting in terms of the PFMA are reskilled by ensuring they receive training on compliance with the PFMA, ensure that these staff members undergo refresher courses on the applicable NT Regulations that are implemented from time to time, and receive training on compliance with the King Report on Corporate Governance IV; 8.4.1.6 Control processes should be adhered to in the SCM processes.
Some of these highlighted by the Committee are: 8.4.1.6.1 The Department should identify and address the inefficiencies in the SCM process in the Department, and assist its entities to do the same where needed.
There should be consequences for poor performance and failure to comply with applicable legislation; 8.4.1.6.2 Members of the relevant bid evaluation committee and the CFO should satisfy themselves that all service providers that are recommended for award have all the required documentation in terms of legislation.
The list of recommended bidders should be accompanied by a signed checklist confirming the completeness of required documents; 8.4.1.6.3 Management should properly plan the acquisition of goods and services and exercise sufficient oversight and monitoring of controls to ensure that compliance with SCM policy is achieved; 281 8.4.1.6.4 Recurring non-compliance should be investigated and appropriate action taken against transgressors; 8.4.1.6.5 Furthermore, management should ensure that their own policies and procedures are aligned to the Framework for Managing Performance Information and the PFMA, to ensure that performance reporting requirements are properly processed by the Department; 8.4.1.7 The Department should report back to the Committee on a quarterly basis regarding the projects to which grant funds are allocated and transferred to.
This report must cover its monitoring, tracking and engagement with its provincial and municipal counterparts on the implementation of the PRMG and other applicable grants to ensure that money is used for its intended purpose, to ensure that there is value for money spent and to prevent a future need for roll-overs; 8.4.1.8 The Department should ensure that the budget allocation for projects is strengthened and realistic in order to reduce the high amounts of funds being transferred under Virements; 8.4.1.9 The Department should develop an alternative investment attraction plan in order to make better use of Public-Private Partnerships and the promotion of Private Sector Participation in the funding options for various infrastructure projects, such as the Moloto Corridor Project and other major infrastructure projects planned by the Department; 8.4.1.10 The Committee takes a dim view of the non-compliance and the lack of tabling of Annual Reports in terms of the sections 8 and 65 of the PFMA.
The outstanding Annual Reports that are yet to be tabled before this Committee are of a serious concern.

The Department should ensure, and assist well in time where it is able to, that all Annual Reports are submitted within the legislated timeframes for the AGSA, as well as tabling in time before Parliament.

The outstanding reports should be presented to the Committee as soon as they are tabled and referred to the Committee.
The Committee would work towards submitting a supplementary report on the late received annual reports, should they be tabled in time to do so; 8.4.1.11 The Department must ensure progress from the Rail War Room initiative is made on improving rail operations and deliver quarterly reports on the above to the Committee; 8.4.1.12 The Department must address the issues once again raised regarding the Financial Health for RAF, SANRAL, DLCA, RTMC, SAMSA, RTIA, ACSA, PRASA and its subsidiaries and ensure that a comprehensive plan is submitted to the Committee by January 2019.
This must be followed up by quarterly reports on the financial health of all of its entities; 282 8.4.2 Entity Specific Recommendations The Committee recommends that the Minister, through the Department, should ensure the following is done with specific reference to the following entities: 8.4.2.1 ACSA 8.4.2.1.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.1.2 The entity must ensure that it improves its Financial Statement preparation; 8.4.2.2 ATNS 8.4.2.2.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.2.2 The entity must ensure that it improves its Financial Statement preparation; 8.4.2.3 C-BRTA 8.4.2.3.1 The C-BRTA must, on a quarterly basis, report to the Committee regarding the steps taken in resolving the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route; 8.4.2.3.2 The C-BRTA should report to the Committee regarding the continued engagements on the implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology; 8.4.2.3.3 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments 283 regarding regulation by the C-BRTA not be corrected, the entity will also face liquidity concerns; 8.4.2.3.4 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.4 DLCA 8.4.2.4.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.4.2 The entity must submit quarterly reports to the Committee on progress made regarding the application for approval to move to a new card format and the acquisition/procurement of a new card manufacturing machine.
Should there be a failure to obtain these approvals, the entity must immediately inform the Committee of steps taken to limit service disruptions to card applicants in the event that the current machine is no longer serviced and if it becomes inoperable; 8.4.2.5 PRASA 8.4.2.5.1 General 8.4.2.5.1.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity and its subsidiaries (especially Autopax given its dire financial position).
Should the funding model and legislative impediments regarding regulation by the PRASA not be corrected, the entity will also face liquidity concerns; 8.4.2.5.1.2 The below-than-acceptable performance requires special interventions and a rescue plan that will ensure that, in the next financial year, PRASA, focuses on the following: 284 8.4.2.5.1.2.1 Arresting the current decline in business performance; 8.4.2.5.1.2.2 Focusing on reliability, availability, predictability of the service that is safe and secure and improves customer service satisfaction; 8.4.2.5.1.2.3 Fixing a misaligned and fragmented organisational structure and drive efficiencies and effectiveness in the deployment of resources; 8.4.2.5.1.2.4 Bringing organisational stability and strict governance; and 8.4.2.5.1.2.5 Fast tracking the modernisation programme to improve passenger rail travel experience; 8.4.2.5.1.3 That PRASA improves their current services and safety through the rollout of the current turnaround strategy and the entity should co-operate with the Department to ensure progress from the War Room initiative is made on improving rail operations.
The Department must deliver quarterly reports on the above to the Committee; 8.4.2.5.1.4 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.5.1.5 The entity must ensure that it improves its Financial Statement preparation; 8.4.2.5.2 Intersite 8.4.2.5.2.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.5.2.1 The entity must ensure that it improves its Financial Statement preparation; 8.4.2.5.3 Autopax 8.4.2.5.3.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 285 8.4.2.5.3.2 The entity must provide the Committee with quarterly progress reports on the investigations ongoing as reported by the AGSA; 8.4.2.5.3.3 The entity must ensure that it improves its Financial Statement preparation and that it works with PRASA and the Department to find a viable solution to improve its finances; 8.4.2.6 PRSA 8.4.2.6.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments regarding regulation by the PRSA not be corrected, the entity will also face liquidity concerns; 8.4.2.7 RAF 8.4.2.7.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity and should provide the Committee with quarterly updates on strategies to improve the financial health status and reduction of instances where the liabilities exceed total assets of the RAF as there was uncertainty as to whether the entity would be able to fund their future obligations.
Updates should also be provided on the notable concerns regarding liquidity remaining for RAF; 8.4.2.7.2 The RAF should be supported by the Department and stakeholders in discharging its mandate of efficiently and effectively providing compulsory social insurance cover for to all users of South African roads; rehabilitate and compensate people injured owing to the negligent driving of motor vehicles; 8.4.2.7.3 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.8 RSR 286 8.4.2.8.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments regarding regulation by the RSR not be corrected, the entity will also face liquidity concerns; 8.4.2.8.2 The entity must ensure that it improves its Financial Statement preparation; 8.4.2.9 RTIA 8.4.2.9.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity.
Should the funding model and legislative impediments regarding regulation by RTIA not be corrected, the entity will also face liquidity concerns; 8.4.2.10 RTMC 8.4.2.10.1 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.10.2 The entity must remedy its inability to collect monies owed and resolve the resultant impairment of receivables due to amount owed being irrecoverable; 8.4.2.11 SACAA 8.4.2.11.1 The entity must urgently address its non-compliance to procurement and contract management policies and legislation; 8.4.2.12 SAMSA 8.4.2.12.1 The entity must ensure that it adopts its Annual Report in order for the Minister to table it urgently; 8.4.2.12.2 The entity must urgently address the findings that led to its qualified audit as identified by the AGSA; 287 8.4.2.13 SANRAL 8.4.2.13.1 The entity should co-operate with the Department to develop funding plans to ensure the financial sustainability of the entity and should provide the Committee with quarterly updates on strategies to improve the financial health status and reduction of instances where the liabilities exceed total assets of SANRAL as there was uncertainty as to whether the entity would be able to fund their future obligations.
Updates should also be provided on the notable concerns regarding liquidity remaining for SANRAL; 8.4.2.13.2 With regard to SANRAL, the Ministry must urgently seek to achieve finality regarding the GFIP funding model; 8.4.2.13.3 The entity should ensure its targets meet the SMART principles and ensure that sufficient records are available to prove that those targets had been met.
The entity must also implement sufficient measures to ensure that it achieves all the annual performance targets that it sets itself, as well as develop and implement effective action plans in response to the findings of the AGSA; 8.4.2.13.4 The entity must ensure that it improves its Financial Statement preparation; 8.4.3 Committee recommendations applicable to all entities As the following recommendations have general application to all entities of the Department and for the sake of limiting repetition, the Committee recommends that the Minister, through the Department, should ensure the following: 8.4.3.1 When vacancies in entities arise in critical posts (CEO, CFO, COO, CPO), those appointments should be expedited so that consequence management can be implemented against officials who incur or permit irregular expenditure, as well as fruitless and wasteful expenditure; 8.4.3.2 The Committee requests the following with regard to compliance with the provisions of the PFMA: 8.4.3.2.1 The entities should capacitate their Finance and SCM directorates/departments/branches with appropriately skilled and competent personnel to prepare credible financial statements; 288 8.4.3.2.2 The executive authorities, accounting authorities, accounting officers and senior management should ensure that information used to prepare financial statements are accurate and reliable; and 8.4.3.2.3 The entities must ensure that all officials responsible for reporting in terms of the PFMA are reskilled by ensuring they receive training on compliance with the PFMA, ensure that these staff members undergo refresher courses on the applicable NT Regulations that are implemented from time to time, and receive training on compliance with the King Report on Corporate Governance IV; 8.4.3.3 Control processes should be adhered to in the SCM processes.
Some of these highlighted by the Committee are: 8.4.3.3.1 The entities should identify and address the inefficiencies in the SCM process in the entity.

There should be consequences for poor performance and failure to comply with applicable legislation; 8.4.3.3.2 Members of the relevant board/bid evaluation committee and the chairperson should satisfy themselves that all service providers that are recommended for award have all the required documentation in terms of legislation.
The list of recommended bidders should be accompanied by a signed checklist confirming the completeness of required documents; 8.4.3.3.3 Management should properly plan the acquisition of goods and services and exercise sufficient oversight and monitoring of controls to ensure that compliance with SCM policy is achieved; 8.4.3.3.4 Recurring non-compliance should be investigated and appropriate action taken against transgressors; 8.4.3.3.5 Furthermore, management should ensure their own policies and procedures are aligned to the Framework for Managing Performance Information and the PFMA, to ensure that performance reporting requirements are properly processed by the entity; 8.4.3.4 The entities must each submit a comprehensive action plan to address any and all of the AGSA’s findings and recommendations to the Committee, followed by quarterly progress reports; 8.4.4 Committee recommendations to the Minister of Finance 289 The Committee recommends that the Minister of Finance, through NT, should ensure the following: 8.4.4.1 Assist the Department of Transport and its entities in strengthening their SCM policies and compliance thereto as well as compliance to PFMA provisions and Treasury Regulations; 8.4.4.2 Assist the Department with the finalisation of the feasibility study regarding the Moloto Rail Corridor (following the statement by the Minister in his July 2019 Budget Speech that the finalisation of the feasibility study would be prioritised); 8.4.4.3 Assist the Department to address the liquidity and funding concerns raised by the AGSA specifically for RAF, SANRAL, PRASA, RTIA, PRSA and C-BRTA; 9.
SUMMARY OF REPORTING REQUESTS The Committee requested additional matters for the Department to report on: Table 21: 2019 Summary of Reporting Requests Reporting matter Action required Timeframe The Department should submit an Written plan from the 15 January 2020 improved Action Plan to address the Department.

findings of the AGSA for it and its entities, as well as the implementation of the recommendations made by the Committee in this report.
The Department should submit a Monthly progress written Monthly starting with comprehensive briefing on steps it will briefings from the first report due on 15 be taking to assist in stabilising its Department.

January 2020 entities (including filling of vacancies, conclusion and evaluation of shareholder agreements, improving the efficiency of the shareholder representatives on the boards, closely 290 monitoring the implementation of projects and budget expenditure, etc.).
The Department should submit a Monthly progress written Monthly starting with comprehensive briefing on progress briefings from the first report due on 15 made on the filling of Board vacancies Department.

January 2020 in entities, as well as the filling of all critical posts within the Department and its entities.

The Department should submit a Written briefing from the 15 January 2020 comprehensive briefing on Department.

implementation of the RTRP.


The Department should submit Written plan from the Quarterly reports quarterly reports on investigations Department.

underway in the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on pending litigation, Department.

as well as settlements reached and judgments for and against the Department and all the entities.
within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on human resource Department.

management (retentions, secondments, transfers, retirements, training and skills transfers, resignations and dismissals), as well as report on progress in disciplinary matters (including suspensions) in the Department and all the entities.
within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the achievement of Department.

within 30 days of the 291 job creation targets in the Department and all the entities.

adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the achievement of Department.

transformation targets in the Department and all the entities.
within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the progress Department.

towards prevention of irregular expenditure for the Department and all the entities.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports quarterly reports on the Shova Kalula Department.

project.
project.

within 30 days of the adoption of this report by the NA The Department should submit Written plan from the Quarterly reports within 30 days of the adoption of this report by the NA quarterly reports on the progress of Department.

projects linked with the following grants: • PTOG • PRMG • PTNG • RRAMS • Coal Haulage Grant • Disaster Management Grant The Department should submit Written plan from the Quarterly reports quarterly reports on progress regarding Department.
the Moloto Corridor Project and how this affects both the Road and Rail Programmes.

within 30 days of the adoption of this report by the NA 292 The Department should submit a Written briefing from the 15 January 2020 comprehensive briefing on the progress Department.

made to address and/or implement recommendations emanating from Committee Oversight Reports during the year.
The Department should submit Written plans from the Quarterly reports quarterly reports on strategies to Department of Transport and: within 30 days of the address the financial health status of: • C-BRTA • RAF • PRSA • SANRAL • PRASA • C-BRTA • RAF • PRSA • SANRAL • PRASA adoption of this report by the NA.

The Department, together with the C- Written plan from the Quarterly reports BRTA should submit quarterly Department.
progress reports on progress regarding: • The implementation of the 1996 SADC Protocol on Transport, Communications and Meteorology; • The resolution of the impasse regarding the cross-border movements on the RSA/Kingdom of Lesotho route.

within 30 days of the adoption of this report by the NA The Department, in conjunction with Written briefing from the 15 January 2020 PRASA should submit a Department.
comprehensive briefing on the Werksmans contract from conclusion of the contract in 2015 to the current status of work performed by the firm and include the total expenditure to date relating to the contract in question, 293 as well as the progress on resolving the matters raised in the report.

The Department, together with PRASA Written briefing from the 15 January 2020 should submit a comprehensive Department.
briefing on: - the Progress made due to interventions from the operations of the PRASA War Room; - the Get on Track Rescue Plan it intends to implement, as well as how this will address the shortages of train sets currently online and how they intend to increase ridership; - The plan in place to ensure that PRASA complies with the RSR directives and the Court Order regarding these; - The plan in place to phase out manual authorisation or how they will ensure that the use of manual authorisation will not lead to another train collision or derailment; - The plan to address the concerns raised regarding Autopax; The Department, together with the Written plan from the 15 January 2020 DLCA must submit a comprehensive Department.
plan on how the concerns regarding the card production machine is being addressed.

The Department, together with Written plan from the 15 January 2020 SANRAL must submit a Department.

comprehensive plan on managing the 294 fiscal constraints placed on the entity due to the e-tolling GFIP concerns raised.

10.

CONCLUSION The Committee would, through its oversight and engagements with the Department and its entities, ensure that the AGSA’s recommendations are implemented by the Department and its entities.
The Committee would further request regular feedback from the Department on key issues impacting entities as identified through the oversight process performed by the Committee, as well as the Department’s own internal oversight directorate over the entities.

11.
11.

APPRECIATION The Committee would like to acknowledge the Minister, the Deputy Minister, the Department officials, as well as Board Members and officials of the entities for presentations made and engagements on their Annual Reports and Financial Statements.

The Committee applauds the achievements by the C-BRTA, RTIA and RTMC in receiving Unqualified Audit opinions with no material findings.
The Committee would also like to extend a note of appreciation to its support staff during the year under review and in the compilation and capturing of the Committee reports.

Report to be considered.
Attached – Annexure A: List of abbreviations/acronyms 295 ANNEXURE A: LIST OF ABBREVIATIONS/ACRONYMS Abbreviation/Acronym Meaning AARTO ACSA AFCAC AGM AGSA APP ARDP ATNS AU BAC BARSA B-BBEE BRRR BRT C-BRTA C-BRTRF CEO CFO CNG COTO CPO DG DGEC DDG DGOs DLCA Administrative Adjudication of Road Traffic Offences Airports Company South Africa African Civil Aviation Commission Annual General Meeting Auditor-General of South Africa Annual Performance Plan (Draft) Access Road Development Plan Air Traffic Navigation Services African Union Bid Adjudication Committee Board of Airlines Representatives of South Africa Broad-Based Black Economic Empowerment Budget Review and Recommendations Report Bus Rapid Transport Cross-Border Road Transport Agency Cross-Border Road Transport Regulators Forum Chief Executive Officer Chief Financial Officer Compressed Natural Gas Committee of Transport Officials Chief Procurement Office Director-General Directors-General of the Economic Cluster Deputy-Director General Dangerous Goods Operators Driving Licence Card Account 296 DLTC DPE DPME DPSA eNaTIS ESEID EXCO FMPPI FOSAD GFIP GHG GDP GDYC GTS HRD IA ICAD ICAO ICT IMO IPAP IPTNs IPTTP IRERC IT KPI LDV Driving Licence Testing Centres Department of Public Enterprises Department of Planning, Monitoring and Evaluation Department of Public Service and Administration Electronic National Traffic Information System Economic Sectors, Employment and Infrastructure Development Executive Committee Framework for Managing Programme Performance Information Forum of South African Directors-General Gauteng Freeway Improvement Project Greenhouse Gas Gross Domestic Product Gender, Disability, Youth and Children Green Transport Strategy Human-Resource Development Issuing Authority International Civil Aviation Day International Civil Aviation Organisation Information and Communications Technology International Maritime Organisation Industrial Policy Action Plan Integrated Public Transport Networks Integrated Public Transport Turnaround Plan Interim Rail
 Economic Regulatory Capacity Information Technology Key Performance Indicator Light Delivery Vehicle 297 LPG MECs MEOSAR MLPS MOU MTEF MTP MTSF MTT M&E NA NADP Liquefied Petroleum Gas Members of the Executive Council Medium Earth Orbit Search and Rescue Long Distance (Main Line) Passenger Service Memorandum of Understanding Medium-Term Expenditure Framework Comprehensive Maritime Transport Policy Medium-Term Strategic Framework (2014-19) Ministerial Task Team Monitoring and Evaluation National Assembly National Airports Development Plan NATMAP 2050 National Transport Master Plan 2050 NCAP NCCRS NCOP NDP NEDLAC NICRO NIP NQF NRSS NRTA NSRI NT PEPFRA PFMA National Civil Aviation Policy National Climate Change Response Strategy National Council of Provinces National Development Plan National Economic Development and Labour Council South African National Institute for Crime Prevention and the Reintegration of Offenders National Infrastructure Plan National Qualifications Framework National Road Safety Strategy National Road Traffic Act National Sea Rescue Institute National Treasury Ports Economic Participation Framework Public Finance Management Act 298 PICC PMDS PPP PRASA PRSA PRMG PSC PSP PTNG PTOG RABS RAF RFS RSA RSR RTIA RTMC RTRP SAAF SAATM SABC SABOA SACAA SADC SAMSA SANRAL SAPS SARS Presidential Infrastructure Coordinating Commission Performance Management and Development System Public-Private Partnership Passenger Rail Agency of South Africa Ports Regulator of South Africa Provincial Roads Maintenance Grant Passenger Safety Charge Private Sector Participation Public Transport Network Grant Public Transport Operations Grant Road Accident Benefit Scheme Road Accident Fund Road Freight Strategy Republic of South Africa Railway Safety Regulator Road Traffic Infringements Agency Road Traffic Management Corporation Revised Taxi Recapitalisation Programme South African Air Force Single African Air Transport Market South African Broadcasting Corporation Southern
 African Bus Operations Association South Africa Civil Aviation Authority Southern African Development Community South African Maritime Safety Authority South African National Roads Agency Limited South African Police Services South African Revenue Service 299 SASAR SCM SEIAs SIP SMART SMME SMS SmS SMSR SOEs SONA SSP STER TAT TETA TFR TNPA ToR TRP TVET UN VTC WHO WITS YD South African Search and Rescue Organisation Supply Chain Management Socio Economic Impact Assessment System Strategic Infrastructure Programme Specific, Measurable, Achievable, Realistic and Timely Small, medium and micro enterprises Senior Management Service Safety Management System Safety Management System Report State-owned Enterprises State of the Nation Address S’hamba Sonke Programme Single Transport Economic Regulator Transport Appeals Tribunal Transport Education and Training Authority Transnet Freight Rail Transnet National Ports Authority Terms of Reference Taxi Recapitalisation Programme Technical Vocational Educational and Training United Nations Vehicle Testing Centres World Health Organisation University of Witwatersrand Yamoussoukro Decision 300