Budget and Integrated Implementation Plan: briefing continued

Meeting report

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE
16 May 2001
CONTINUATION OF BRIEFING BY DIRECTOR GENERAL ON BUDGET VOTE 22: JUSTICE AND CONSTITUTIONAL DEVELOPMENT

Chairperson: Adv J De Lange

Relevant Documents
Briefing to the Portfolio Committee on Budget 2001
Position of Acts: 30 April 2001
Department of Justice And Constitutional Development Legislative Programme 2001
Establishment of Justice Resources Trust(see Appendix)
Report on the transformation of State Legal Advisory services
South African Law Commission Programme
Budget Vote 22

SUMMARY
The Committee was addressed on issues surrounding the budget specifically with regards to the allocation of money to the courts and to the Master’s Office.

MINUTES
Mr Pikoli (Director General Department of Justice) emphasised that the Departments previous manner of budgeting was unsatisfactory. Each year the Department would consider the budget from the previous year and effect a small increment. This was not an activity based budget system. Mr Pikoli said that there was a move towards zero-based budgeting (a method of drawing up budgets without the figures or previous situations being taken into account, based on a fundamental revaluation of objectives, method and sources – each year the manager has to justify the expenditure that appears in the budget). Zero-based budgeting would compel government departments to look at their activities in order to determine whether they were in line with their priorities and mandates. Consideration of these factors was necessary for the proper realignment of the budget with the core functions of each Department. The Department of Justice would only be able to engage itself in this scheme from the beginning of 2002. The budget would be reallocated to reflect the Department’s priorities and courts would be given first preference in that process. Judges and magistrates would be afforded the opportunity to make presentations regarding their respective court structures so that the Department could budget properly.

Discussion
Mr McKenzie (Chief Financial Officer, Department of Justice) expressed his opinion that the Department would be able to implement a zero-based budget by March 2002.

Dr Delport (DP) said that staff costs were the largest cost in the budget and asked if staff costs would be included in the Department’s budgeting system.

Mr McKenzie replied that the Department’s Personnel Budget was far greater than the Business Units Budget. He added that the Department would consider various factors such as court effectiveness, court sitting times, case finalization times and other factors in determining whether or not to reduce this budget.

The Chair remarked despite progress in other areas of the budget, there remained a problem with unauthorized expenditure. He added that this was due to overspending on service delivery (presumably running the courts) and not because of corruption. He said that it was necessary to determine where overspending was occurring in order to reprioritise and restructure the budget.

Mr Pikoli replied that he had acquired the services of a chief accountant to submit financial statements for the 1999 - 2000 financial years in order to determine areas of overspending. Mr Pikoli said that it was probable that unauthorized expenditure was caused by mismanagement in the Department such as lack of approval for certain expenditure.

Mr McKenzie added that in the past the problem of overspending was exacerbated by the lack of regular monthly financial statements. Hence it was difficult to identify areas of overspending. The proposed system will provide management with this information and the Department will be able to reduce overspending.

The Chair asked how long it would take for the accountant to produce the financial statements of 1999-2000.

Mr Pikoli replied that the process would entail identifying the core areas or services where there had been overspending but did not indicate how long this process would take.

Mr McKenzie insisted that the Department was a service providing industry and hence argued that the Department present a budget containing minimum needs and a list of prioritised enablers. If these prioritised enablers were sufficiently attractive to the decision makers, then additional funding would have to be allocated for the relevant purpose.

The Chair asked the value of the Justice Budget for the current financial year.

Mr Pikoli replied that it was R3.5 billion.

The Chair asked what value was allocated to the courts.

Mr Pikoli replied that R1.5 billion was allocated to the courts. This amount included Magistrates salaries but not Judges salaries.

Mr Pikoli explained that the other R2 billion is allocated as follows:
Master’s Office = R8 million
Legislative Services such as the State Attorney and State Advocates = R104 million
Legislation = R17.5 million
CFO = R36 million
Human Resources = R48 million
ISM = R200 million
PEC (Public Education & Communication) = R7 million
Independent Bodies = R346 million
Legal Aid Board = R312 million
Security = R30 million
NPA (National Prosecuting Authority) R422 million
Judiciary = R349 million
CEO = R15 million

Mr McKenzie explained that the above business unit budgets were split into amounts for each region and each region would decide how to allocate the funds.

The Chair asked for a practical explanation of how the Department allocated money towards the courts, and the factors and the criteria that which the Department considers in making the allocation.

Mr Jiyane (Justice) replied that ensuring the availability of additional resources would ensure efficiency within the court systems. The Chair interjected saying that the committee would engage in a discussion about the structure and functioning of the courts later and reiterated that he wanted a practical explanation of the allotment of funds for the courts.

Adv P du Rand (Chief Director: Administration of Courts) explained that R 1,2 billion had been allocated for staff and personnel salaries. The remainder of the budget had been allocated towards operation requirements such as administration, stationery, equipment, professional and special services and miscellaneous expenditure. Professional and special services included witness fees and expert witness fees. The amount also included the State Attorney’s fees.

The Chair stated that the study tour of Gauteng had revealed that the court budget had decreased over the past two or three years and that it had only increased in 2000.

Mr Pikoli informed the Committee that R30 million had been spent upgrading the infrastructure of the courts in 2000/2001. This amount was spent on transcription services, franking machines, maintenance, transcription machines, court recording equipment, upgrading of telephone systems and publications amongst other things. This was also spent in equipping the children’s courts with the installation of closed circuit televisions in 178 courts. He acknowledged that most of the problems were due to ineffective planning. Mr Pikoli said that this would be remedied by formulating an integrated planning system.

The Chair insisted that courts be given first priority if the Department reorganised its budget. He maintained that the existing courts be given preference over new courts in the budget. He reiterated that he wanted to see a reprioritization of the budget towards the infrastructure of the courts, particularly in disadvantaged areas. He also said that he wanted a thorough analysis of the courts budget over the last five years to examine whether the budget had increased or decreased.

Mr Pikoli added that the Department has completed 40 major building projects since 1996 costing R350 million. Last year the Department used R154 million for capital works and the balance of R500 000 was carried forward to the current year. An amount of R193 million has been allocated for the current year. Mr Pikoli assured the committee that this sum would be used in its entirety and for its intended purpose.

The Chair stressed that the Department still needed to tour courts in the townships (specifically in the poor areas) and that money must be used to upgrade the infrastructure there.

Mr Pikoli continued and said that towards the end of last year the Department negotiated with the Department of Public Works and it was agreed that the Department of Justice would take over part of the work that the Department of Public Works was doing. The projects that the Department of Justice have taken over are the so-called "ramp projects". These projects are aimed at conducting repairs and maintenance. Mr Pikoli confirmed that some of these projects had already been finalised.

The Chair asked for some clarity on the DG’s statement with regards to the "ramp projects" and asked whether the Department would continue renovating the existing courts or focus more on the new courts.

Mr G Jordaan (Department of Justice) replied that a budget for new court buildings had already been set aside, as had the budget for the "ramp projects’ that Mr Pikoli had referred to

The Chair again insisted that the Department needed to send a delegation to inspect the Daveyton and Tembisa courts. He invited Adv. Du Rand to explain how the budget of the courts was structured and set out. He specifically asked for the criteria used to decide how the budget should be allocated to the courts.

Adv Du Rand replied that the court budget was previously dealt with by the Regional Offices and not be his branch. A regional office was required to state the amount necessary for a particular magistrates office. The amount would be submitted to the Regional Office concerned, which would submit it to the finance section at Head Office. Now that the budget is allocated to the Department , the total amount is split amongst the various provinces and courts are each provided with the amount of money they require.

The Chair asked if the money allocated to each court was an estimate.

Adv du Rand replied that the amount was based on zero budgeting and confirmed that his Unit would be responsible for court budgeting in future.

The Chair asked that information relating to the criteria used to assess the courts budget be provided to the committee before the committee was next addressed on the courts budget. He later assumed that there were no criteria for the determination of the budget of the courts and maintained that the amount allocated to the courts was based on an estimate. He insisted that the Department determine criteria to devise an appropriate budget for the courts.

Adv du Rand responded that he had difficulty trying to answer the Chairperson’s question because currently the finance department was responsible for allocating funds. He said that they would be in a better position to explain the criteria used for allocating funds.

The Chair replied that Adv du Rand’s answer was unsatisfactory because the Justice Department had, since 1994, been the financial responsibility of the Chief Director : Administration of Courts. He added that it was the team’s (referring to the Administration of Courts addressing the Department) responsibility to make representations to the finance Department to increase the courts budget. The Chair stressed that he did not want to hear excuses relating to the lack of proper budgeting for the courts.

Adv du Rand conceded that his Department had not finalized criteria for budget allocation but that it was currently devising these criteria.

Mrs SM Camerer (NNP) wanted to know if a budget had been projected for equality courts legislation. She intimated that there had been no budget for this in the previous years and asked the extent of the budget if it was present.

Mr Pikoli replied that the Department had not included a budget for equality courts. However, the Department did submit a request to the National Treasury in 2000 and the Department had not been allocated anything for equality courts. Mr Pikoli confirmed that the Department would look to this issue and request the budget from National Treasury.

The Chair opined that equality courts would soon have to be implemented since equality was one of the fundamental tenets of the constitution.

The meeting was adjourned.

Appendix

DEPARTMENT OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT

ESTABLISHMENT OF JUSTICE RESOURCES TRUST
The main objective of the Justice Resources Trust is to provide the Masters’ of the High Court with resources, by way of funding or in kind, for the more efficient delivery of services to the fiduciary services industry and the general public.

PURPOSE
The purpose of this Memorandum is: -
1.1 To inform the Board of the exact nature of the Justice Resources Trust; and
1.2 To obtain approval for the formation and objectives of the Justice Resources Trust

SUMMARY
2.1 The idea of the Justice Resource Trust was conceived as a result of, inter alia, the significant role the Master of the High Court plays in the lives of most South Africans irrespective of colour, creed and background as well as financial institutions. The Master is also involved in the administration of deceased’s estates, trusts, insolvency’s, liquidations, estates of minors and persons with disabilities.

2.2 The main business of the Justice Resource Trust will be to obtain funding and resources from the private sector in order to supplement and satisfy the needs of the Masters’ of the High Court in South Africa in order to ensure enhanced service delivery to fiduciary services industry and the general public.

2.3 In order to undertake the above-mentioned, the Justice Resource Trust will be guided by an Advisory Board, which will be convened and constituted by the Masters’ of the High Court. The Advisory Board will identify critical resource needs and present it to the Trustees for the allocation of resources, be it cash or kind.

2.4 The proposed Justice Resource Trust will yield the following benefits:
Improved service delivery in line with the Batho Pele principles
Private sector fiduciary services practitioners will be able to participate through funding and representation on the Board of Trustees of the Justice Resource Trust
Jobs can be created
Serious consideration can be given to discriminatory legislation and the rationalisation of legislation pertaining to the administration of estates
The Justice Resource Trust will create the infrastructure and platform, which can become a powerful departure point for long-term development such as the Central fiduciary website-online communications, Probate registry (streamlining and fast tracking current processes) and a Central South African Wills Registry.

3. DISCUSSION
3.1 Background
The proposed Justice Resources Trust was borne of the following factors:
The economic significance of the Masters’ Division in re-circulating millions of rands, which become frozen in deceased and insolvent estates annually, back into the economy through the processing of such estates to finality;

3.1.2. Recurring bureaucratic red tape which has prevented the Masters’ Division from coping with the demands of population and economic expansion through lack of resources and revised work structures;

3.1.3 The financial harm suffered by the banking sector, trust companies, insolvency practitioners, attorneys and chartered accountants due to the fact that the Masters’ Division falls far short of private sector levels of efficiency and service delivery

3.1.4 The antiquated manual methods of accounting employed in the Masters’ Division, Guardians Fund, nationally which administers public funds in excess of R1 Billion

3.1.5 The lack of electronic infrastructure necessary to streamline work
processes and levels of service delivery;

3.1.6 Poor salary levels which have resulted in experienced personnel leaving the Masters Division for the private sector

3.1.7 Indiscriminate recruitment procedures, which do not meet the high levels of legal expertise required in the Division;

3.1.8 Critical staff shortages whereby a national workforce of 437 personnel are expected to process, from inception to conclusion, in excess of 77 000 deceased and insolvent estates and trusts manually each year. The minimum duration for finalising a deceased estate is not being less than 6 months while the majority of insolvent estates are finalised in not less than 12 to 18 months, due to inherent legal complexities

3.1.9 The continual inability of the State to recognise and address the aforementioned factors; and

3.1.10 Thousands of Black Intestates are left out in the cold.

3.2 Motivation for the Establishment of the Justice Resource Trust
3.2.1 The Justice Resources Trust constitutes a mechanism whereby private sector interest groups are able to provide funding, human resources, technological assistance and private sector expertise to the Masters’ Division without having to compromise the integrity and statutory independence of the Masters’ Division or the Department of Justice and Constitutional Development;

3.2.2 By virtue of the proposal, the Justice Resources Trust seeks to provide assistance to the Masters’ Division similar to that which Business Against Crime initiative contributes to the criminal justice system

3.2.3 By means of a duly registered trust registered in terms of the Trust Property Control Act 57 of 1988 the Justice Resources Trust will act as a conduit for donations from well wishers in the private sector, to be administered by trustees consisting primarily of financial specialists with a banking background, academics and industry representatives allied to the Masters’ Division;

3.2.4 The Justice Resources Trust seeks to address the efficiency, transparency, accountability and accessibility of the Masters’ Division through technology solutions

3.3 Terms of Reference for the proposed Justice Resource Trust
The Justice Resources Trust will:

3.3.1 Obviate the requirement of having the State Tender Board approve of cash donations, as it will not involve donations of such nature;

Utilise funds at its disposal to employ computer technicians, programmers and legal staff in the Masters’ Division subject to the Public Service staff codes and to monitor the progress of such staff through regular inspections;

3.3.3 Assist in providing innovative solutions to bottlenecks in the administration of the Masters’ Division

3.3.4 Conduct statistical and other research to ensure that the Masters’ Division functions optimally;

3.3.5 Address the issue of encompassing Black Intestate Estates meaningfully through the employment of social workers, interpreters;

3.3.6 Enhance the image of the Masters’ Division and promote public awareness of the services offered;

3.3.7 Administer and to invest all funds donated to it judiciously and more efficiently than is capable of any government department;

3.3.8 Be guided by an Advisory Committee consisting of the Masters’ of the High Court

3.3.9 Lend anonymity to all donations received so as not to compromise the integrity and impartiality of Masters’ Division personnel

3.3.10 Constantly upgrade the technology within the Masters’ Division

3.3.11 Fund the development of specialised hardware and software programmes to facilitate the speedy processing of Guardians Fund payments, calculation of estate duty and the like;

3.3.12 Provide and promote high levels of management skills within the Division;

3.3.13 Increase service delivery to unprecedented levels;

3.3.14 Apply part of its funding to keeping pace with and importing administrative procedures from overseas countries;

3.3.15 Provide technology to monitor all work statistics within the Division;

3.3.16 Conduct overseas research to rationalise local legislation to achieve horizontal equity in South Africa, in tandem with international practice

3.3.17 Provide electronic infrastructure to facilitate the Cross Border Insolvency Act; and

3.3.18 Enable the Masters’ Office to render enhanced levels of service delivery to widows, orphans, mentally disabled persons, creditors, and heirs irrespective of colour, creed and background across the length and breadth of the Country.

3.4 Organisational and personnel implications
3.4.1 In respect of the Justice Resources Trust, the issue of human resources will only apply to the trustees thereof. The infrastructure, equipment, materials and financials will be provided by the Administrative Trustee to be appointed and such Trustee will be a representative of the Private Sector.

3.4.2 In respect of the Masters’ of the High Court, the only resources required would be the respective Masters’ of the High Court who will convene and constitute the Advisory Board. Their existing infrastructure will be used in support of their activities as members of the Advisory Board.

3.5 Financial implications
3.5.1 It is not possible to present an accurate financial budget at this stage. Once the concept of the Justice Resource Trust has been approved by all interested parties, it will be necessary to present the business case to institutions such as
Association of Trust Companies in South Africa
Law Society
Chartered Accountant of South Africa
Afrikaans Handels Instituut
South African Chamber of Business
Association of Insolvent Practitioners in South Africa
Other industry players

A well-known merchant bank indicated that it was keen to provide financial assistance towards the end of last year. The interested party discussed a figure of R20 million.

3.6 Communication implications
In order to ensure wide support and commitment to the Justice Resource Trust, a comprehensive communications strategy needs to be developed, the purpose of which will be to popularise the Trust and its functions and to ensure Private and Public Sector partnership.

3.7 Constitutional implications
The proposed establishment of the Trust is consistent with the Constitution in that it ensures access to Justice and aims to promote fundamental human rights of people.

3.8 RESPONSES OF OTHER DIVISIONS/ COMMITTEES/ BODIES CONSULTED
Discussions were held with the Masters’ of High Court who are in support of the establishment of the Justice Resources Trust as well as with some organisations in the Private sector such as the merchant bank that have already indicated the possibility of financial support. This memorandum has already been tabled with EXCO and members have approved of the establishment of the Trust.

4. RECOMENDATION
In the light of the afore-mentioned, it is recommended that the Board approve of the formation and objectives of the proposed Justice Resources Trust.

CONTACT PERSON
Mr M Tshishonga
Deputy Director-General
(012) 3151218