Department of Transport Quarterly Reports, Capacity Building Session with AGSA; with Deputy Minister

20 August 2019

Chairperson: Mr M Zwane

  • Meeting Summary
  • Meeting report
  • Department of Transport Quarterly Reports
  • Areas of Non-Achievement
  • Fourth Quarter Expenditure Analysis Report
  • First Quarter report
  • First quarter finance report
  • Auditor-General: Capacity Building Programme
  • DOT’s response
  • Further discussion
  • AGSA’s response
  • Adoption of minutes
  •  

    Meeting Summary

    The Deputy Minister, newly appointed Director General (DG) and the Chief Financial Officer of the Department of Transport gave the Committee a report of the performance reports for the final quarter of 2018/19 and first quarter of 2019/20. After the report was presented Members expressed their frustration and disappointment with aspects of the reports, but they were also optimistic that the appointment of the new Director General would bring about some much-needed positive change in the Department.

    In the second half of the meeting, the delegation from the Auditor General of South Africa (AGSA) presented their capacity building report to the Members. They also explained the recent amendment to the Public Audit Act which gives the AG’s office power to implement consequence management within government departments and their entities. The Committee welcomed the exciting changes at AGSA and expressed their willingness to help wherever they could with oversight.

    Meeting report

    Opening remarks

    The Chairperson told the Committee that he had heard that if it continued on the same trajectory it was on before Parliament had closed, it would become one of the most efficient committees in Parliament. He encouraged the Members to continue to aim for excellence. He welcomed back Ms Dikeledi Magadzi, Deputy Minister of Transport, and her team, and assured her that the Committee existed to assist her whenever she needed help.

    The Chairperson then moved onto the agenda and asked that it be adopted.

    Mr Hunsinger (DA) thanked the Chairperson for his words of welcome and asked if it would be possible to raise the point about the Committee Week and the programme on the agenda.

    The Chairperson asked Mr Hunsinger if he wanted the point to be raised on the agenda.

    Mr Hunsinger clarified that this was about the week of the August 26 to 30 which he understood had been indicated in the programme as a “Programme Week”.

    Mr L McDonald (ANC) said the week was also indicated in the Parliamentary programme as a “Committee Week,” so the Committee had planned a full week from Monday evening until Friday. Parallel to the Committee’s plan there was a session which had been planned for questioning the President on Thursday, and subsequently caucus meetings had been announced as well as other related meetings within various political parties variances on the Thursday. This would make it difficult for Committee Members who wanted to participate in the Committee Week to engage with entities.

    Mr Hunsinger suggested that the Committee would not be able to resolve the issue right now, but it was important that he bring it to the Chairperson’s attention so that the available structures could resolve the conflict of interest for Members who wanted to adhere to caucus lines, but also wanted to participate.

    The Chairperson acknowledged that the situation was indeed a difficult one.

    Ms M Ramadwa (ANC) said that the Committee appreciated the issue that Mr Hunsinger had raised, and asked that the matter be addressed by the Chairperson, and feedback be given to the Committee once it had been resolved.

    Mr Hunsinger agreed that this would be acceptable.

    The Chairperson moved to the briefing of the Committee by the Department of Transport (DOT) on its fourth and first quarter expenditures. He warned the Department’s team that those who were not a part of the team during the previous administration should not use this as an excuse, since they were here now and needed to take account of both the good and bad things that had happened.

    Deputy Minister Magadzi told the Committee that the Department had hit the ground running since the Minister and Deputy Minister’s appointment, and many positive changes had taken place in the Department, with the most exciting development being Mr Alec Moemi’s permanent appointment to the role of Director General (DG). She was confident that he would be able to deal with the challenges, particularly the vacancies which had been in the Department for a while. He would be following the Minister’s approach of fixing only the things which needed fixing, and leaving those that did not. The DOT had upped the stakes and just like the Committee, was striving for excellence.

    Mr Moemi said the Department accepted the challenge of taking up the responsibility which the Chairperson had put forward, and said that members of the Department would take full accountability for all that had transpired before and after the financial year.

    Mr L Mangcu (ANC) requested that the Committee get a brief background on the DG in order to better acquainted with him.

    The Deputy Minister apologised for not having introduced the DG earlier. She said he had been DG in the Department of Sport for seven and a half years and had been a part of the fourth, fifth and now sixth administration, and had now joined the Department. In the 20 days he had been with the Department, he had made a significant impact and it had been evident that he was a true leader. He often went on site to follow up and monitor projects which the DOT funded, and to see a DG do this type of work made her confident that results in the Department would improve significantly. The Minister had set up a “war room” in the Passenger Rail Agency of SA (PRASA), and in the past two weeks, the DG had been working very well in this war room and giving instructions efficiently when problems concerning trains arose. Despite not being a technical person, he was up to the task, as he had shown.

    Department of Transport Quarterly Reports

    Mr Moemi assured the Committee that he and his team would be as transparent as possible about the challenges that the Department and its entities were facing, which would allow the Committee to to highlight and prioritise the oversight priorities it needed to focus on.

    The Department was in the process of reviewing the annual performance plan (APP) on the basis that it had to plan for the next financial year. The current performance plan was in place, but improvements could be made to it, especially around target setting as well as the interventions to achieve the outcomes so that the Department could begin to measure more impact, rather than actual activities. The current plan had been approved by the previous Committee, and the Department would have to work with it until 31 March 2020.

    The DG gave an example of what the review process involved, as well as what would form part of the Department’s planning session. A programme like the Taxi Recapitalization was currently more focused on scrapping taxis which were not roadworthy and giving taxi owners a subsidy to buy new vehicles, but it did not go far enough in also measuring the impact of the service which the government was subsidising for citizens. These were the type of targets that the Department would want to set and assess in the future, both in terms of their service impact as well as their efficacy. For now, the Department would continue with what they have on the APP that had been approved, and report on it now.

    The report on the January-March 2019 quarter would also be focusing on the optimal performance of deliverables in terms of the medium term expenditure framework (MTEF) period, and the presentation would be looking at compliance with relevant statutory requirements, which required the Department to report to the Committee on a quarterly basis. The DG added that the first and fourth quarter had been overtaken by many events which had not been reported in this period.

    Programme 1: Administration

    In the first quarter, there were 25 targets and 22 were achieved. The administrative targets were mostly achieved. Notable progress had been made with the transport sector socio-economic transformation programme that had been submitted to the previous Committee, and the Committee targets had been achieved. The Department had conducted two community outreach programmes dealing with people with disabilities and children.

    The recently released Auditor General’s (AG’s) report showed that the Department had been able to reduce the findings significantly compared to the previous audit. It still faced a challenge in dealing with irregular expenditure, but had now implemented action plans to ensure that it was totally eliminated. It had so far been able to eliminate fruitless spending, although it was still faced with a few unauthorised expenditures which it would address. The Department had a new audit action plan which still needed to be signed off with the Treasury. The Minister had met with the AG to give feedback on the targets and action plan, which would be signed off within the next two weeks.

    The Department had already implemented the risk management strategy and had managed to mitigate a lot of risk. However, it was very litigation heavy, due particularly to its mandate, and the goal of the strategy was to reduce the core issues and to mitigate those risks. The Department had begun with legislative amendments to alleviate the areas where it was prone to risk, including strengthening the operations and capacities of the entities posing the greatest risk. Entities such as the Road Accident Fund, the South African Maritime Safety Authority (SAMSA), PRASA and, to a lesser extent, the Cross-Border Road Transport Agency (CRBTA) remained areas of focus for risk management.

    Programme 2: Integrated Transport Planning

    In this programme, the Department had 10 priority pilot projects, which had been reported on in its annual report. The performance of these projects had been quite good, and they were confident that they would be able to roll them out on a long-term basis. The key focus in this area was on green strategies and the new notion of autonomous vehicles. The Department had to move with the trends and in 10 years, both electric and self-driving vehicles would be on the roads. It was important that the DOT promotes and addresses the challenges that face the rollout of the green transport strategy, particularly around the issue of infrastructure to support electric vehicles. The Department was currently busy with its Integrated Transport Plan (ITP) to review the international trends on these issues, as well as looking at the long-term development of automotive parts in collaboration with the Department of Science and Technology.

    Programme 3: Rail Transport

    In this programme, the Department was looking at pricing, as the cost of doing business had become a big issue. This emanated from PRASA’s separation from Spoornet/Transnet.  When this separation took place, the agreement was that the party that used the rail network the most would own the network, and the other party would have to lease from it. Currently there were corridors where PRASA used the network more than the other party, yet Transnet refused to let go and hand over to PRASA. The Department was currently discussing the matter with the Department of Public Enterprises (DPE) and hoping to resolve it, because freight charges and passenger tariffs were not the same.

    The Department needed a single regulator for the whole Department, and was currently working on a Bill to address this issue, which Cabinet had indicated would be ready by April 2020. Because of this, the Department would have to move the deadline for this issue and would come back to report to the Committee at a later stage. The idea around the Bill was to address the matter of access to rail networks and to liberalise the market a little bit to ensure competitiveness, but also to ensure that the tariffs on these rail networks were affordable.

    The Rail Safety Bill had been approved for submission to Cabinet for consideration, and after approval it would be put forward to Parliament. The importance of the Bill would be discussed when it was presented to the Committee, but its purpose was also to ensure that the Department employed technological advancessuch as drones to monitor the flow of trains and to also monitor and respond quickly to cable theft in order to to reduce the number of railway accidents.

    Programme 4: Road Transport

    The Department was continuing to monitor the S’hamba Sonke road maintenance programme and produce reports on a quarterly basis, detailing the thorough inspections and bilateral meetings with the stakeholders involved.

    The DG referred to the draft Bill for founding legislations of road entities which the Department had developed, and had also recently proposed some amendments. This was something where the Department was looking to strengthen the area of road maintenance, as well as road safety.

    The DOT had a national road safety strategy whose core pillar was “Arrive Alive.” Its weaknesses included it being a seasonal campaign, mostly during the main holidays. However, the Department was looking to revolutionise the campaign and turn it into an all year round campaign and expand it to the day-to-day lives of citizens through hosting school initiatives on road safety, as well as targeting vulnerable road users, such as cyclists and pedestrians.

    In an effort to make the roads much safer for users, the Department was planning on launching anti-fraud and corruption strategies. It was currently engaging with law enforcement agencies and the Road Traffic Management Corporation (RTMC) to incorporate within the RTMC a new unit targeting corruption involving traffic officers. The new initiative would consist of casually dressed traffic officers posing as ordinary citizens committing deliberate offences with the intention of being stopped, and if they were asked for a bribe by an officer, the corrupt officer would be arrested immediately. This programme was aimed at handling the problem of corruption which allowed unroadworthy vehicles to stay on the road.

    Programme 5: Civil Aviation

    The Department had completed a curriculum on civil aviation and was now looking at a special focus school on civil aviation and building an academy to accommodate the shortage of skills in this sector. The focus of this academy was to ensure that the country had specialists in this sector to prevent the erosion of the capacity of entities such as South African Airways (SAA), due to a lack of skills. The Department was looking at first enrolment into the civil aviation school which would happen if it managed to get the curriculum approved in time. The Department’s plan was to start with one school and depending on how that went, to expand to creating more schools. It was working on a similar project in the maritime sector as well.

    Programme 6: Maritime Transport

    The DG said the Department had been facing problems with DPE over the National Ports Authority (NPA), and the President had agreed to intervene in and help resolve it. He explained that currently the NPA was still under Transnet’s control, and it brought in a lot of money for Transnet, which was perhaps why it refused to let go of it. However, there was no investment by the Transnet National Ports Authority (TNPA) into the expansion and growth of the ports, and port fees were among the highest in the world. To reduce the backlog and to make the ports attractive and more efficient, corporatisation had to happen.

    What the Department was doing to catch up to the rest of the world was to introduce the Seafarer’s Passport, which had just been finalised and had been sent through to the Department of International Relations and Cooperation (DIRCO) for comments and the instruments necessary for ratification. Once the process had been completed, this would help seafarers as well as South African ships to be registered on the Department’s portal register, and be able to cross international waters with ease.

    In this quarter, the Department had also been working on the Merchant Shipping Bill, and stakeholder input had been considered. The draft Bill would be presented to the economic cluster. It had also been approved for submission to Cabinet. The legislative programme was going to be busy, with amendment bills and new bills being brought forward. All of them were intended to help the Department’s operations to proceed smoothly.

    The content and communication work stream of the Department’s implementation plan for the 2020 World Maritime Day had been finalised as targeted in the period under review, and a lot of work had gone into it.

    Programme 7: Public Transport

    The Integrated Public Transport Networks (IPTN) plans for two districts, Tshivembe and Gangala, had been developed as targeted, and the rollout and implementation would follow. The Department would share the documentation with the Committee regarding this.

    The Department had also approved the inclusion of scholar transport as well as cross-border transport in this quarter, and some work had also been done with the cross-border agency. There had been blitzes and inspections of trucks crossing the border, and these would continue.

    The Department had also engaged with the Department of Basic Education (DBE) regarding the efficiencies necessary for scholar transport. There were a few things that it was working on to improve the contracts which were valid for scholar transport. The Department of Sport had previously implemented a programme to allow school children to play sport after school on Wednesdays, but the children had found they could not do this because, due to the contract agreement, transport vehicles left at a particular time. The Department was working to ensure that its programmes aligned with all other sectors.

    Regarding the Integrated Public Transport Network, the Department had been engaged around the issue of George and was trying to find solutions. George had had some challenges. Firstly, phase 1 had had to be skipped due to disputes with the local taxi industriy and community members, and the roll out had been done on phase 2, which was currently operational and working well. The Department was close to finding a solution with the taxi industry and this was something which it would report on at the next meeting with the Committee.

    The Ekurhuleni trunk route was the first of its kind, and it would now be operational as the buses were ready to operate. In Buffalo City, bilateral project meetings had been conducted and the Department was now looking at the progress which had been made, including the projects in Nelson Mandela Bay. In Polokwane, the Department was making a case for supporting the municipality to finalise the route, as well as get the stock to start operating buses. Although it was unlikely to meet the deadlines for Polokwane, there would be an operational route before the end of the financial year. In Tshwane, the Department was constantly monitoring the expansion plans of the Areyeng bus service, particularly into the townships, to ensure that it was operational on most key routes.

    In Cape Town, there were disputes with the current MyCiti owners around what was perceived as favouritism for the Golden Arrow Bus Service. The Department was looking at how to balance this out as well as support the owners of MyCiti. The taxi owners also believed that they had been grossly wronged, as the agreement had been that for the main routes from the airport to the city, the taxi bodies would have been joint owners with Golden Arrow. However, their licences had been withdrawn in favour of shares in the scheme and therefore the taxis were not operating, and they had had to make money from the scheme. The DG said that both the provincial and city authorities should have withdrawn the operating licence of Golden Arrow for the same route, but this had not happened and Golden Arrowhad  even increased its fleet for the same route after the taxis had left. T taxi owners had complained that this arrangement had not been working for them, and the Department agreed with them.

    The Department had pushed the Transport Appeal Tribunal Bill and in this quarter it had managed to have it approved for submission to Cabinet.

    Areas of Non-Achievement

    Areas of non-achievement had included the Single Transport Economic Regulator (STER), where there had been delays owing to a prolonged process of consultation. The Department had been told they needed to refer to the National Economic Development and Labour Council (NEDLAC) due to the nature of the problem. The Department was also doing internal modelling and price costing. This was a priority project, and there would be coexistence for some time as a safety measure until the Department was confident enough to know that this was a project that would work. It expected to be ready with the project by April 2020.

    The National Rail Bill had been submitted to Cabinet for approval and that consultation and engagements were under way. The Department still had to receive feedback both from Treasury and the DPE in order to allow for the process to continue.

    With regard to civil aviation, the Department had drafted regulations for Airports Company Amendment Act and these regulations had been submitted to the Minister for approval. The Department was now in the process of reviewing this act in consultation with the Airports Company of South Africa (ACSA) and the amendments would soon be finalised. The regulations would help to provide certainty for ACSA regarding the management of airports and improving efficiencies at airports.

    Regarding the implementation of the Air Traffic and Navigation Services (ATNS) Management Act, the Department had been monitoring the process and the draft regulations had also been submitted to the Minister.

    The Department was required to have met the deadline for the Air Services Bill by March 2019, but the Bill had been discussed with those who advise the Department it had had to review some portions of the draft Bill. It was currently looking at the finalisation of the Bill, but due to its nature, did not want to rush the process.  It was confident that it would still be able to submit the Bill before the end of the financial year.

    Fourth Quarter Expenditure Analysis Report

    Expenditure Per Programme:

    Mr Collins Letsoalo, Chief Financial Officer, DOT, said the Department had spent 99% of its budget. In the administration programme it had spent over 74%; in integrated transport planning 79%; in rail transport 100%; in road transport 100%; in civil aviation 82.5%; in maritime transport 92%; and in public transport 92%.

    Under-expenditure had been mainly due to vacant positions in most areas of the Department. The biggest chunk had been in public transport, particularly the area of taxi scrapping, since the provider of the taxi scrapping project had not yet been appointed. A rollover had been requested for this project in order to accommodate the backlog in this area. The taxi scrapping project had seen a large amount of under-spending due to the low demand for compensation — the taxi owners were not demanding the service as they argued that the scrapping allowance was too small. The allowance had since been increased and it was hoped to the demand for the scrapping allowance would increase as well. In goods and services, the under-spending of R237 million was due to outstanding invoices for the lease of office buildings, the delay in the appointment of service providers for the taxi scrapping project, and the implementation of the IPTN. Mr Letsoalo also provided the Committee with comprehensive details of the DOT’s virements and rollover requests

    First Quarter report

    Mr Moemi said that during the presentation of the fourth quarter performance, he had presented the progress of the first quarter. Most of the targets mirrored each other due to the fact that they were implemented on a longitudinal basis. The DG offered to go through the key issues reflected in the first quarter report.

    He said that during this quarter, the Department had achieved 20 of its 21 targets. The only unachieved target was in public transport. It had undertaken two community outreach programmes in administration, and had continued to receive the monitoring reports throughout the quarter.

    As required, the Department had submitted a human resource development plan before the deadline of May 2019, as legislated. The monitoring reports around risk areas had been done. In the ITP branch, it had conducted a benchmarking exercise on the transport sector information communication technology (ICT) strategy.

    It had also done a literature review on the “Pathway for Autonomous Vehicle Technology,” and the study results would be shared with the Committee. The Department was required to have a preliminary report and finish the strategy for autonomous vehicles by the end of the financial year.

    In rail transport, the rail access regime guidelines had been completed as targeted as well as the international benchmark report to see how the rest of the world promoted private sector access to rail networks. The Department was confident that the future Single Economic Regulator would utilise these guidelines. The private sector participation framework was also completed and the Department had completed a monitoring report on this which would be shared with the Committee soon. The importance of this framework was that it was bringing policy certainty to the private sector regarding the guidelines for their participation in the industry.

    In road transport, a consultative meeting had been held with freight logistics to resolve the issues which had been identified and to engage with stakeholders. These issues had included the transportation of counterfeit goods, as well as human trafficking. Through the CRBTA, the Department would enhance the registration and monitoring platforms for all cross-border transportation.

    In Civil Aviation, a concept paper for aviation training had been completed.

    An analysis had been conducted on public maritime education, and the institutions which were of focus were the Durban University of Technology and the Maritime School of Excellence, and some work was also being done with the DBE in this regard. The Department had conducted some situational analysis on the Southern African Development Community (SADC) coastal shipping, and work was continuing to create a single regulator for all coastal activities in the SADC region.

    The draft Marine Pollution Prevention Amendment Bill should be completed within the period under review. A marine energy efficiency programme had been developed and would be discussed with stakeholders, but the concept document had been finalised as targeted.

    Mr Moemi said the Department had done detailed public transport network plans in two district municipalities, Amathole and Capricorn, and it was moving forward with other rural districts, as planned.

    Costing plans had been done for the taxi recapitalisation programme, although there were taxi owners who did not like the scrapping allowance and argued that the R124 000 being offered was too little. However, the Department believed that the taxis that had to be scrapped were not worth even that much, and therefore this calculation was correct.

    The DG gave an update on the bus service situations in Mbombela, Msunduzi and Rustenburg. Starting with Mbombela, he said the Department was set to launch at eThekwini on 1 September but after the Department had gone to inspect, it had been discovered there was a snag list which needed to be addressed first, otherwise most of the things were ready. One of the key concerns, however, was the pricing list the municipality was working on.

    The Department also had to start discussing the type of investments it makes, particularly in smaller cities where the population size did not justify the type of investments it was making. The key questions it needed to be asking was whether cities such as Mbombela and Rustenburg really needed buses like the Bus Rapid Transit (BRT) system, or whether it was not better to introduce services which operated on the main routes, like in the town centres. The number of people who would be accommodated by these services compared to the subsidies going into these projects did not justify the investments. in those areas. The money that was being invested in BRT should rather be used to buy ordinary buses, and more people from the remote areas would be accommodated too.

    First quarter finance report

    Mr Letsoala said that around 21% had been spent on administration, with the lowest expenditure for integrated transport planning and public transport. For public transport some of the under-spending was due to the difference between the financial year-end of the municipalities and that of the Department. Spending on road transport was sitting at 26%, and spending on rail transport was at 21%. He gave a detailed description of the various areas of under-expenditure, much of which was attributed to unfilled vacancies, and the taxi recapitalisation programme.

    The CFO referred to the transfer payments which the Department transferred to its implementing agents. The conditional grants included the Provincial Road Maintenance Grant, where the projected cashflow was R2.6 billion, and all R2.6 billion had been spent; the Public Transport Operations Grant, where the expenditure was currently R1.01 billion, with R65 million under-spent; the Public Transport Network Grant, where nothing of the R64 billion budget had been spent as these grants went to the municipalities; and the R11 million Rural Roads Asset Management Grants, where nothing had been spent either.

    With regard to public corporations, PRASA had already been given R3.4 billion out of a total R16 billion. For PRASA the issue of capital spending still remained a concern, and this was being discussed with Treasury. For the South African National Roads Agency Limited (SANRAL), R21 billion had been budgeted and of that, R5 billion had been expended. RTMC expenditure was currently at R105 million — the Department had projected to give this entity R52.5 million, but due to cashflow implications, it had decided to give them more than they needed. For the Railway Safety Regulator, the expenditure was the whole amount of R63.5 million which had been budgeted. The Port Regulator had also spent R9 million projected expenditure. Other transfer payments were available to the South African National Taxi Council (SANTACO) (23.8 million), higher education institutions (R11.7 million) and international organisations (R19 million).

     

    Auditor-General: Capacity Building Programme

    Mr Palani Sokombela. Business Executive: Auditor General of South Africa (AGSA) said that the AG’s office thought it was important to have this capacity building meeting with the Committee so that Members could use the AG’s reports effectively for oversight, and also help them with the budgetary review and recommendations report (BRRR). The team would also like to explain the new powers of AG in terms of the Public Audit Act, as there were certain amendments that had become effective in April 2019. He explained the AGSA’s mission, mandate and objectives, and provided a broad outline of the work which the AG’s office performed. However, he made it clear that it did not guarantee completeness and accuracy of all the information, or provide assurance that service delivery had been achieved, or that all applicable laws and regulations had been complied. Furthermore, if there was fraud which had been found or suspected, it was followed up and was investigated and that there would be consequence management. However, this was not the primary responsibility of the AG’s office.

    Types of audit

    Ms Mary-Ann Whitford, Senior Manager: AGSA, described the types of audits conducted by the AG’s office. There was the mandatory audit that was specified by legislation, and done on an annual basis, the audit of the annual financial statement, the audit of compliance with laws and regulations, and the audit of predetermined objectives. She clarified that not all programmes were audited, as the AG rather looks at those that were materialistic and drove the mandate of the entity or department.

    Another type of audit was a discretionary audit, where investigations are conducted and the audit report on factual findings, allegations and financial misconduct. A third type of audit was the special audit that reports on factual findings and performance audits. She described the types of audit outcomes – clean audit, unqualified audit with findings, qualified audit, adverse audit and disclaimer – and commented that all entities and departments should aim for a clean audit.

    Ms Whitford explained the differences between irregular expenditure, fruitless and wasteful expenditure, and unauthorised expenditure. She commented that previously the trend had been that after findings had come out showing non-compliance, generally not much had been done and also very little of the money lost had been recovered. Consequence management needed to happen at the departmental level, but the AG’s office had now factored consequence management into the Public Audit Act.

     

    The causes of poor audit outcomes were:

    • Slow or no response to recommendations. This was when the AG finds that nothing had been done over a certain period to rectify a certain issue. This was an issue in many entities and departments.
    • Instability/vacancies /competencies. This refers to the capacity gaps founds by the AG, and unethical behaviour by leaders.
    • Inadequate consequences, This is where leadership’s inaction or inconsistent action to addressing persistent transgression creates a culture of ‘no consequence’. This was something that had been driving irregular expenditure, and was also something that the AG had been focusing on in the past few years.

     

    The AG had been trying to be more proactive in its approach, so it had implemented a Status of Records review. This entailed the AG team coming in and looking at certain aspects of a department or entity during the financial year and evaluating whether any commitments had been made with the AG. This was then reported to the accounting officers at the department or entity. This was a way in which the AG tried to provide assurance.

    The AG engages with executive authorities as regularly as possible — at least three to four times a year — and also looks at the annual performance plans of departments, shares audit outcomes with the relevant personnel and gives updates on progress of current audits. The AG team also attends and provides briefings during public hearings and oversight visits, and the AG himself attends road shows after each audit cycle.

    Ms Whitford moved on to the Public Audit Act (PAA) amendments, starting  off by defining the main changes in the act and pointing the Members to the words “material” and “irregularity”. She defined “irregularity” as the existence of a contravention — a law was broken, there was fraud, or somehow what needed to be done had not been done. “Material” referred to a money loss, misuse of resources and there being substantial harm caused to the public. If the AG identified a material irregularity, it was reported it to the accounting officer, who would then investigate and follow up in order to carry out consequence management, If the AG finds that the situation is bad and the department cannot handle it itself, the AG then refers the case to public bodies, such as the Public Protector or Special Investigating Unit (SIU). Once the whole finding has been formulated, the AG tells the entities involved that they would need to take remedial action, and if this is not followed, the AG could issue a certificate of debt to an accounting officer, who would become individually liable for the amount. The Act had come into effect on 1 April 2019, and would be in effect for all audits that the AG was processing now.

     

    Combined Assurance Model

     

    Mr Nikolas Mokoena, Senior Manager: Technical Support, AGSA, said that the Combined Assurance Model was built in as a part of the AG’s audit process. He was confident that the model would enhance accountability and governance if all the providers did what they needed to be doing.

    Management assurance was the first level of assurance, where the role players were primarily responsible for taking the first action and ensuring that entities complied with laws and regulations.

    The second level of assurance was oversight assurance. These people were tasked with following up on instructions issued by senior management and also for testing internal controls. At the third level, oversight committees, public accounts committees and the National Assembly would call departments and entities to account. He described the criteria that the AG team uses to evaluate portfolio committees.

    Mr McDonald referred to the DOT’s first and fourth quarter reports on the Integrated Public Transport Network, where it had said it visited municipalities to conduct inspections and bilateral meetings. However in both quarters no inspections had been done at Mangaung. This was of concern, as the Department had given the municipality R500 million, but nothing had been happening with that IPTN.  He said that in the last few months, the Road Accident Fund had used a marketing manager to give children chairs at schools. He asked why the entity would need a marketing manager, and whether its social responsibility should not be about teaching people how to claim from the fund “without using lawyers instead!” Why was PRASA focusing on building houses and malls when this was not a part of its core business? Finally, he suggested that rather than getting involved with the developments of the 4th industrial revolution, it should focus its expenditure on transporting people within the country efficiently.

    Mr Mangcu suggested that perhaps the Department needed to reassess its policy direction in the 6th Administration, and referred to funds being transferred to provinces, such as for S’hamba Sonke and the Rural Road Asset Management System. It did not seem clear what the respective roles of the Department and the provinces were, yet money was involved. He expressed his frustration with the traffic police who were always on the road, but seemed to be doing nothing as the number of road accidents recorded was increasing. He also criticised some inconsistencies in the presentation.

    Regarding the Integrated Transport Plan’s Programme 2, dealing with the Green Transport Strategy and Automated Vehicles, he asked why the Department was not using automated vehicles to overcome the issue of fraud and corruption, using technology such as drones instead of pedestrians. Regarding the availability of stations for electrical vehicles, he said that some cities had gone to compressed natural gas (CNG) for their BRT — what was the Department’s view on CNG?

    Was the S’hamba Sonke programme supported in every province? Could the Department give the Committee one project per province, so that Members could each go and inspect it and satisfy themselves as to where the money was being spent? He asked for the status of the draft Bill for founding legislation for road entities to be clarified.

    He referred to the DOT’s anti-fraud and corruption strategy and suggested the Department should take into consideration what the main causes of road accidents were. His assessment was that they were mainly due to human error, which pointed to the way people obtained their driving licences, yet no one in the Department had touched on this. How was the Department going to use technology to eliminate the human element effectively?

    Mr Mangcu said there was inconsistency in both reports on maritime, which caused him to question whether there was anything happening in this programme. He asserted that the Department had been producing many documents and calling them outcomes, and added that these documents had been produced without synergy between them.

    He questioned the Department’s expenditure on buying 400 buses in the listed cities, and wanted to know why the Department wanted to buy new buses when the data showed that the existing buses were not being used effectively. He was unsure what the role of the Department was for giving guidance to cities for systems, as each city seemed to have its own system that it had developed.

    The Department had to try to re-establish what their role with scholar patrols was, and how it was going to go about conducting this programme. This was a project which was in shambles, yet more money kept on being invested.

    Mr Mangcu also referred to the challenge of the recurring cross-border issues, particularly at the Lesotho/South Africa border, and commented that he had not seen what was being done to resolve this issue.

    He agreed with the DG on discontinuing the Integrated Rapid Public Transport Networks and establishing what the new course of action should be. The Department needed to establish whether there was value for money in the project.

    He also commented on the difference between rail expenditure and performance. It had been reported that the rail expenditure was at 100%, yet the portfolio was the worst performing.

    Finally, he emphasised the Committee’s desire to see consequence management, as well as a proper account on what the grants given to the provinces were doing.

    Mr J Bilankulu (ANC) said the Department needed to establish what its mandate and priorities were in the framework of the National Development Plan (NDP). It had given itself a positive rating on the human resource framework, but of the R11.4 million budgeted, only R466 000 had been spent. He questioned whether the Department disregarded human resources. From an HR perspective, it needed to make sure that it was well equipped to deal with matters that arise, and no bottlenecks hindered it from achieving its set goals due to a bureaucracy that did not function well. The Department’s modus operandi needed to be centred on transparency.

    He said the Integrated Transport Plan seemed to be ambitious, and while the Department had to catch up with the rest of the world, it also needed to be cognisant of the inequalities which existed within South Africa. While the ITP looked at autonomous vehicles, the DOT also had to ensure that transport was integrated in the country. It needed to decide whether the Department wanted to keep people on the road with automated vehicles or take them off it, and to achieve it would have to provide examples of how they planned to do this. In this programme, the allocation of money needed to go hand in hand with the equipment required, and with the necessary technocrats to advise the Department on how to integrate transport and move the vast masses of the population at a fraction of the cost. The programme did not address how costs would be slashed for the end user and improve efficiency in that space.

    Mr Bilankulu said there seemed to be too many champions for the National Road Safety strategy programme. Too much money seemed to be spent on the same item without any coordination of who was going to head the project. This made it difficult for the Committee to assist with cost savings in the Department.

    The Department had referred to an “NAFC Task Team,” and he wanted clarity on what this forum was, how it was established and who it accounted to. It was not clear what the expenditure for this forum looked like, and what the Department’s role was.

    Mr Bilankulu asked for clarity on the paper dealing with the aviation training landscape in South Africa, particularly how the DOT would be interfacing with the Department of Higher Education on the curriculum. Was this even a part of the Department’s mandate? If so, was it supposed to invest in this programme?

    He commented on the taxi recapitalization programme was a noble venture, but he was concerned that it was also aimed at formalising an informal sector. Unless the stakeholder relations unit was strengthened and there was interaction with the industry, the Department was going to find that it was spending money on recapitalisation that was not going to find its way back into the fiscus and the state through taxation. Were the state and the users going to gain from investing in this project? He also questioned the inconsistencies in the amounts under-spent on public transport, yet the rollover requested was less than what was underspent.

    Mr K Sithole (IFP) raised a concern around scholar transport, as this programme was currently not controlled by the Department alone — the DBE was involved too. What mechanisms could be used to ensure that this programme was under the sole control of the Department of Transport? He also enquired about the timeframe of the taxi recapitalization programme as there were many taxis which needed to be scrapped, yet the budget for this project could not be infinite.

    He commented on the Road Accident Fund’s awareness campaigns, saying had attended one its campaigns in Tsakane and was not impressed by the presentation, as it seemed to be missing some key information points.

    He asked why the Department did not have a policy dealing with the subsidising of taxi commuters when a large percentage of the commuting population used taxis more than other modes of public transport. He commented that in the taxi industry many people were dying due to drivers fighting over routes and he requested that the Department explain what types of mechanisms they might have to remedy this issue.

    He asked the Department to clarify what system it used for the transfer of funds from one sector to another. He was also concerned about the expenditure of R14.9 million in Integrated Transport Planning in quarter 4, when the projected value of the project was R20.7 million. He was trying to establish the nature of the management of these projects and understand why there was under-spending on some of them.

    Mr P Mey (FF+) asked what the possibilities were of having new railway lines being built in South Africa. He was referring specifically to the Eastern Cape, and the Nelson Mandela Metro area. It would be a wonderful initiative by the Department if the line could be extended to the rest of the metro’s northern areas, including KwaNobuhle and Joe Slovo and back to Uitenhage, as this would allow many more people access to train transport.

    Mr Hunsinger said his concerns had been covered previously by many of the Members, so he would be focusing on three issues. He wanted to know about the amounts set aside for the Taxi Recapitalization Programme, and for an update on what the Department was doing about it, around this issue. Secondly, he criticised the under-spending of R640 million of the budget, and asked the DG to explain how he would work on preventing this from happening in the future. Many of the key performance indicators (KPIs) and key performance areas (KPAs) being reported by the Department were not measurable nor relevant, and therefore should not be in the reports as they did not reflect the issues on the ground. Would the DOT follow a new approach to target setting to mitigate this issue and actually report on actual targets that would have an impact on service delivery?

    Regarding the National Road Safety strategy, he asked about the alignment of the different documents, such as the draft Road Policy of 2018, and how the DG would ensure that these documents related to each other, as there was a need to address issues of trucks and truck drivers. Trucks were being destroyed and drivers being killed on the road daily. A goal of the draft Road Policy had included establishing safety requirements with a baseline by 2018. Had these baseline requirements been achieved in 2018? He urged the DG to address the issue of trucks urgently, as there was a lot of fear and panic among both drivers and owners of fleets.

    Mr T Mabhena (DA) said his understanding was that civil aviation under the DOT was a directorate on its own, and it seemed to be underperforming according to the report — some targets were at 50%, and others at less than 50%. He suggested that maybe a situational analysis be undertaken to identify the problems, with a plan and timeline to fix them. When a national department was performing at under 50%, this implied that the service on the ground was severely impacted.

    Why had the Department’s audit committee had not been consulted regarding the unauthorised expenditure? He also commented that irregular expenditure during a time of austerity measures reflected an issue of poor leadership.

    Mr Mabhena said the Committee welcomed the effort to establish a single transport regulator, but believed that the budget for the project must somehow come from Treasury and not from the DOT itself, as issues might arise because the funding was coming from the same organ meant to keep the regulator in check.

    Regarding the IPTNs, it did not make sense for buses and taxis to compete for the feeder routes, as the objective of the trunk route was to have the feeder buses operating on these routes, yet the buses were empty because the taxis were competing on the same route.

    He commented that Arrive Alive was a popular seasonal campaign, but it it had not achieved its purpose of decreasing the number of road accidents. He added that there were also challenges on the roads at the times when Arrive Alive was not operating.

    Finally, he asked for the progress on the dispute resolution for cross-border transport on the road between the Free State and Lesotho.

    Ms Ramadwa asked about the road maintenance grants in the 2019/20 performance information. A grant of R320 000 had been transferred to Limpopo but had not been spent, and she wanted to know why. She commented on the Department’s under-spending and overspending in the RTMC, and specifically asked for an update on how far it had got with filling the vacant positions. How did the Department aim to address scholar transport when the problems around this issue involved other departments such as Education and Public Works, particularly in Limpopo?

    Ms N Tolashe (ANC) referred to the fourth quarter analysis and commented that the under-spending was glaring, and expressed the hope of seeing progress with the spending in future. She asked for the Committee to receive a monthly report on the progress the new DG was making to address this matter.

    She was worried about scholar transport and how the Department had explained itself. In the provinces, this initiative had been hijacked by the taxi industry who were non-compliant, and bus accidents were cause when there was gross overloading of school children. She asked the DG to explain the role of each department — Transport, Basic Education and Roads — in this project; and for Cabinet to give clear instructions. She also commented on the non-uniformity of Arrive Alive, and suggested that it should stop being a seasonal campaign.

    DOT’s response

    Deputy Minister Magadzi acknowledged all the questions that the Members had asked, and requested that the DG respond only to some these questions at the meeting, and to others in writing by 27 August.

    The Chairperson agreed.

    Mr Mabhena asked when the Members would receive the response from the DOT regarding the briefing that took place before the recess.

    The Chairperson responded that the written responses had been sent out, but for those who had not received them, they responses would be sent to Members again.

    Mr Moemi responded on the issue of scholar transport, and acknowledged that there had been a tug of war between the DOT and the DBE. A report by the Public Protector had been issued that was quite binding. It had addressed the issue of doing away with the unsavoury efforts of transporting children. Because the project was contracted at the provincial level and intergovernmental fiscal relations were currently not ideal, this was an important matter for Parliament to deal with urgently, as largely sectored departments were faced with the issue of having responsibility and no authority. The only leverage a national department had to direct a provincial department was through the provincial allocations in terms of the Division of Revenue Act (DoRA), which refers to the withholding of funding when there were conditions of non-compliance. However, the challenge with this was that funding could be withheld only for 90 days, after which the funding either had to be transferred anyway or the money had to be surrendered back to the National Revenue Fund. The provinces know this, so enforcement of certain rules was quite difficult for the Department. To counter this, the Department was aiming at working with other departments in order to try and strengthen compliance as well as giving traffic officers much more power on the roads.

    Responding to the comment that the Department seemed to be confused about its mandate, the DG agreed that the perception may exist, but the Department was very clear about the rules and the scope within which it was operating. There had been two schools of thought — one which suggests that it was important to have a capable state that does everything on its own, and the other which believes that the government must provide the regulatory framework and allow the market to do the rest. These schools of thought were not mutually exclusive, and where they intersected was where the Department sought to operate.

    Further discussion

    Mr McDonald asked for clarification on the template that had been prescribed by the AG’s office for use by the Department. Would steps be taken against the 11 entities in the transport portfolio which had had unqualified audits with adverse findings over the past years?

    Ms Ramadwa asked how a department could sometimes receive an unqualified report when there was an outcry for service delivery in different communities, as these things did not seem to correlate.

    Ms Tolashe referred to the AG’s new powers, and asked if they could be applied retrospectively to malfeasance in previous years.

    The Chairperson commented that Ms Tolashe’s question had already been answered — the act had come into effect in April 2019, and would be phased in as they moved forward.

    Mr Mangcu said the challenge that politicians faced was that what was on paper and what the departments say they were doing did not correlate with what was on the ground, so there were service delivery protests. Although the presentation had been insightful, how were Members supposed to bridge the gap between what the departments say and what was happening in reality? He also asked the AGSA team to explain what they were looking for when they conducted the pre-auditing of the APPs.

    Mr B Yabo (ANC) requested that unexplained acronyms and abbreviations not be used in capacity-building presentations. The assumption should be that the Members did not understand anything.

    Mr P Modise (ANC) said the report had been an eye-opener which had helped the Committee to broaden its understanding. After AGSA had made recommendations, what other measures did it have to ensure that its recommendations were being implemented?

    Mr Hunsinger asked about the pre-assessment phase of the AG’s office, and questioned what criteria it used regarding service delivery and impact. Why was consequence management such a scarce item on KPIs and KPAs, as it was hardly present in any department or entity? He asked if debt recovery would be seen as a worthy KPA, and whether or not the team would encourage political leaders to implement consequence management and debt recovery in future strategic plans. He also asked for information about the Afro 4000 diesel-electric locomotive, where capital had been spent and goods not received, but locomotives would be auctioned off in an effort to recover the capital.

    Mr Mabhena referred to the phenomenon which exists in local authorities where entities set very low KPIs in order to tick boxes and spend very little of their budgets, even though the communities were protesting. He asked to what extent it could be said that a municipality was financially healthy when they had either reached their borrowing limit or were on the verge of reaching it.

    AGSA’s response

    Mr Sokombela explained that in the DOT, the office of the AG audits all of the entities and portfolios except Air Traffic Navigation Services. He clarified that there were 14 entities in total.

    He said the over the years, the frustration of the AG’s office had been that their mandate had been limited to giving recommendations which departments and entities sometimes chose not to follow. The section of the amended Act now provided the AG’s office with powers of consequence management and would allow the AG to instruct accounting officers to take action against the person who had been found to be acting unlawfully. When an accounting officer did not implement the relevant actions, then a certificate of debt would be issued. Going forward, he thought that there would be improvements in service delivery.

    He explained to Ms Ramadwa what the Management Report was. It was a report with all the audit findings that the AG’s office had for a specific entity or department, but it was not a public report — it was only for the department or management.

    Mr Sokombela acknowledged the issues raised by Members about service delivery, but said it was difficult to respond to them because the AG’s office only followed what their mandate states, so checking whether there were inconsistencies between service delivery and what the report says was something outside the scope of the mandate. The AG’s office was tasked only with checking that departments were accounting properly in terms of the money and were open and transparent about the targets which were not achieved. That was where the other oversight structures come in and ask the questions. He commented that clean audits were the foundation of service delivery, but the two did not always go together.

    The new powers the AG now had through the amended Act was being phased in, and 16 new audits had been conducted, PRASA being one of them. The AG’s office would be reporting on what had been found after the break. This was something the AG’s office had never done before, and therefore they wanted to be careful about how they used this new power. The 16 audits that had been done were to test how the new powers could be used, and it had been a wonderful experience so far.

    Referring to Mr Mangcu’s question, he said the office sometimes did experience instances where what was said on paper did not correlate with what happens on the ground. In such instances, the AG’s office does investigate that the claims the Department makes, and correlates them when auditing performance information. However, when auditing the annual performance reports, these investigations do not take place — only certain selected objectives were selected and tested.

    Regarding asset verification, he confirmed that that was the responsibility of the AG and they did indeed verify whether assets existed or not.

    A pre-audit of the APP was offered as a proactive audit process. What the office of the AG also did was to look at the APP before it was brought to the Portfolio Committee and interrogate it. The purpose of this was to establish whether the targets were SMART (specific, measurable, achievable, reliable and timebound). The office of the AG also gives feedback to the Portfolio Committee regarding this.

    Mr Sokombela apologized to Mr Yabo for the abbreviations, and said this had been an oversight on the part of the AG’s office.

    He reiterated that AGSA hoped that once it started implementing their amended legislation, they would be able to enforce corrective action.

    Regarding Mr Hunsinger’s questions, he said that they did follow up on consequence management. However, the challenge they faced was that it was difficult to compel departments and entities to include these as a part of their KPIs because the choice rests with the entities themselves. The AG does follow up to ensure that unregulated expenditure is investigated and consequence management takes place, and if it does not happen, this is reported. The type of consequence management prescribed varies from case to case.

    On the issue of the Afro 4000 contract, he requested that the AGSA team be allowed to respond when they come to table the audit outcomes of the Transport Portfolio.

    He agreed that it was a risk for entities to set their KPIs low, but the procedures of the AG’s office require that all KPIs relevant to the mandate of the entity must be included in their APP and if not, the AG’s office reports on this. He admitted that the low spending of the entities was a concern for the AG’s office as well, but they also report this as a part of the unachieved targets.

    On the health of municipalities, Mr Sokombela said the AG’s office looks at the balance sheet of the municipality and if it has more liabilities than assets, then it is reported as having financial problems. They also examine the liquidity of the municipality.

    The Chairperson asked if the AG’s office audited all the institutions where government money was, including the judiciary. If it did, where was this information? He assured that Mr Sokombela that he did not have to respond.

    Adoption of minutes

    The Chairperson went through the minutes and asked for corrections.

    Mr Hunsinger made a minor correction on the second page.

    Mr McDonald moved the adoption of the minutes with the change.

    The minutes were adopted.

    The meeting was adjourned.

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