Department Budget Vote; State of the Nation Address; Committee Reports: oversight visits

Meeting report

CORRECTIONAL SERVICES PORTFOLIO COMMITTEE
7 March 2006
DEPARTMENT BUDGET VOTE; STATE OF THE NATION ADDRESS; COMMITTEE REPORTS: OVERSIGHT VISITS

Chairperson:

Impact of the State of the Nation Address (2006) on the Department of Correctional Services
Department of Correctional Services Budget Vote 20
Report of the Portfolio Committee on Correctional Services on its visit to prisons in the Northern Cape (available shortly Committee Reports)
Report of the Portfolio Committee on Correctional Services on its Visit to the Durban Westville Correctional Centre in KZN (available shortly Committee Reports)
Draft Committee Programme March 2006

SUMMARY
Ms N Dollie (Committee Researcher) briefed the Committee on her reports on the impact of the State of the Nation Address on the Department of Correctional Services as well as on her report on the Department’s budget for 2006/07. The delegation from the National Treasury also did an impromptu briefing relating to its allocation to the Department. Members raised concerns about the fact that despite the Department having often complained about a lack of funding, they appeared to habitually under spend. The debate around the future of the still incomplete four new generation prisons featured quite prominently. The Committee would meet with Minister Balfour and the Department of Correctional Services to try and find explanations for the concerns that had been raised. The Chairperson said that in the State of the Nation Address the President had also mentioned the Jali Commission. Since the Committee has not yet met with the Jali Commission, they would request Judge Jali and the Minister to brief them on the Commission before dealing with that section of the report.

MINUTE
Impact of the 2006 State of the Nation Address

The President, in the State of the Nation Address, had referred to a study that had found that only 54% of respondents had faith in the Justice cluster’s ability to deal with crime in South Africa. The building of four new prisons, the reduction of the number of children in prison and the implementation of the recommendations of the Jali Commission were identified as key focus areas for 2006. These focus areas would have a number of implications for Parliament. One such implication was that Parliament would have to request regular briefings by the Department of Correctional Services (DSC) to ensure that progress was made in the areas identified as high priority.

Report on the Department of Correctional Services Budget 2006/7
The report identified the relationship between the priorities of Government as identified in the President’s State of the Nation Address and Government’s Programme of Action (2005); and the Correctional Services budget for 2006/07. It also aimed to contextualise the Correctional Services Vote within the broader framework of the Budget as a whole. It identified the key aspects of the Department’s Budget Vote for 2006/07 and the Medium Term Expenditure Framework (MTEF) and highlighted the relationship between the priorities identified in the Department’s Strategic Plan (2006/7-2010/11) and its budget for 2006/07.

National Treasury Briefing
Mr J Johnson (Acting Director: Protection Services Cluster–Treasury, DCS), said that after consideration of certain cost drivers, Treasury would be reluctant to increase the Department of Correctional Services’ budget.

The Department received funding for up to 202 000 prisoners. Today the prisoner population averaged at 155 000 prisoners. This should translate into substantial savings.

The Department had reduced its overtime expenditure and had also reduced its medical aid expenditure from R790 million to R540 million. This meant that there was room for re-prioritisation in its baseline. The Department might complain that in this Medium Term Expenditure Framework (MTEF) Treasury did not make a large allocation to them. Treasury based its allocation on cost drivers. Due to the reduction in the offender population, savings had been made.

Treasury could not be harsh with the Department if the Department was frank concerning the reasons for not being able to spend the allocated money. At the end of February 2006 the Department’s expenditure should have been at 92%. It was at 79%. The Department spent, on average, R700 million per month yet in March they would have R1.2 billion at their disposal. This was due to the savings mentioned above. The Department should not be penalized for these savings, but rather be given room to re-prioritise their funding.

The Department outsourced its feeding scheme to a service provider. They were talking about outsourcing the vehicle fleet management capacity and there was talk of a new head office. He questioned if these were areas that needed to be prioritized. The standard norm in the industries as well as in Government was to do feasibility studies before committing funds. The Public Finance Management Act (PFMA) clearly indicated that feasibility studies needed to be conducted before the construction and procurement of facilities.

In the allocation letter dated 1 December 2004, which was sent to the National Commissioner of Corrections who was the Department’s accounting manager, it was stated that DCS had been allocated R80 million for 2006/07 and R170 million for 2007/08 towards the implementation of its White Paper on Corrections. These amounts would increase in line with inflation. This would allow the Department to gradually increase their capacity. Treasury could not allocate the R2 billion needed to implement the White Paper on Corrections in a once off payment. Treasury gave the Department money for the implementation of their nutrition services (the three meal system) – R40 million in 2005/06, R50 million 2006/07 and R70 million in 2007/08. This would enable the Department to create the capacity and employ the personnel to provide this service.

Due to the current economic situation the Department had made a substantial saving as far as their public and private partnership (PPP) contracts. The PPP contracts had been budgeted for on the assumption of an 8% increase in inflation. The reality was that there was an increase of just 4.5%. This difference translated into a R20 million to R30 million saving annually.

The cluster argued that they had the capacity to better manage their public works funds. The Department had been allocated R1 billion for the building of new facilities. Maintenance did not happen timeously. An agreement had been made that the Department of Safety and Security would be the pilot and that the planned maintenance funds that was with the Department of Public Works (DPW) would be allocated to the DCS. DCS, in addition to the capital works budget, received R670 million for their own maintenance. They still had a relationship with DPW in terms of the execution, but they were managing the funds.

In November 2003 DCS approached the Committee to inform them that as part of their new protocol they would review the existing arrangements relating to the new generation prisons. Treasury funded the consultancy that followed. To date no final outcome of the review has been received. The funds were rolled over to 2005/06 financial year. This was a process that should by now have been concluded.

In summary Mr Johnson said that every Department requested additional allocations. Treasury could not simply "thumb suck" when it came to additional allocations. It increased allocations after careful consideration of the primary cost drivers. In the DCS there had been considerable savings due to a decrease in the prison population as well as decreases as far as over time and medical aide expenditure. The Department should thus re-prioritise and use the money to do what they had to do.

Mr Pieter Erasmus (Deputy Director: Protection Services Cluster, Treasury) informed the Committee that the Department, over the first 11 months of the 2005/06 financial year, had spent on average R650 million. The amount available for the last month of the financial year was about R1.9 billion.

Mr Johnson said that across many Departments spending had suddenly doubled. This was called "fiscal dumping" because often Departments spent money in areas that were not that important.

He suggested that the Department should give the Committee an update of the expenditure to date as well as their projected expenditure. It was difficult for Treasury to give an accurate reflection of what the situation was within the Department as they stood outside it. The Department might have better information in terms of commitments that still needed to be concluded and might contest some of Treasury’s assumptions.

Mr Thomas Ntuli (Treasury: Researcher)) said that he was concerned that the DCS failed to indicate whether they would be under spending – "they were just waiting for the end of March so that they would be able to ask for a roll over".

Discussion
The Chairperson pointed out that after the Committee’s meeting with the DPW, it was decided that the Committee would schedule a meeting with the Minister of Correctional Services to discuss progress on the four new generation prisons. The DPW had informed the Committee that the Department of Correctional Services had indicated that it was necessary for them to review their budget in consultation with National Treasury before they reach a decision about whether or not to continue with some or with all four of the prisons. DPW had also indicated that the tender for the main contract for Leeuwkop had been delayed due to the need for an environmental impact assessment. The current situation was a cause for concern especially since the Committee had approved a budget for all four prisons.

Mr Johnson said that National Treasury shared the Committee’s concerns. Three years previously, DCS had approached the Committee with the protocol that they had intended to follow whenever they built new prisons. This protocol included feasibility studies. He suggested that perhaps the DCS was experiencing problems precisely because it had not done a proper feasibility study. They had about R1billion in their baseline allocation for the building of new prisons. In line with Government’s commitment to increase infrastructure in vestment, all capital works of the prisons, start up costs, operational costs as well as the personnel were funded.

The size of the prison population was a factor in the building of new prisons. When Treasury decided to fund this project they did so believing that the prisons would go a long way towards alleviating overcrowding. Treasury was committed to the project. The average prison population has since decreased from 187 000 to 150 000.

The baseline allocation for the next three years was R1,2 billion in the first, R1,2 billion in the second and R1.3bilion in the third year. The assumption was that with a growth of another 5% in the fourth year the money would be available in the baseline.

The DCS said that the current design was not in line with their rehabilitation strategy. A consultant was approached and the new generation prototype was developed to facilitate the rehabilitation strategy. In line with White Paper on Corrections priorities, Treasury was of the opinion that the construction of the prisons should have been concluded by now. The prisons were supposed to be ready for use in 2004/05. This date was postponed until 2005/06. To date nothing has happened.

There were many other infrastructure developing projects that could have been funded. Treasury perhaps needed to get back to the Minister’s Committee and the Budget to review the R1billion per year that DCS had at its disposal for infrastructure.

The Chairperson was pleased to learn that the National Treasury shared the Committee’s concerns. The DPW had indicated that the boom in the construction industry had led to the increase in the cost of material and labour. He asked if this could be the cause for the delays as well as the financial problems that DCS appeared to be facing.

Mr Johnson reminded the Committee that the DCS had initially indicated that it needed R150 million for the project. The amount had then increased to R200 million. The latest figure was R650 million. In the report on their expenditure DCS reported that it was under spending on facilities as well as capital works. Treasury believed that with proper planning all the prisons could be built.

Mr J Selfe (DA) pointed out that the rehabilitation approach alluded to in the 2005 State of the Nation Address had two components. One was quantitative and the other was a qualitative. He said "although there might be the right amount of staff, they were not the right sort of staff to be able to fulfill the rehabilitation mandate" This was especially true of social workers, psychologists, educationists and health workers. He thought that in this respect there were some things that were lacking both in the DCS’s strategic plan, their budget as well as in the research report.

Ms Dollie agreed that there was a lot of information that could have been included in the reports but was not. It was important to look more closely at the budget as well as the Department’s strategic plan.

Mr Johnson added that Treasury did not merely consider figures but also considered the policies DCS had in place, in particular those that related to rehabilitation. Treasury was aware of the vacancies as far educationists, psychologists, social work professionals as well as vocational councilors. If the DCS were embarking on a new direction Treasury would have loved to see them prioritising the recruitment of these types of professionals.

He said that DCS has made major strides in terms of employment: it managed to increase employment from 33 000 to 35 000. Due to lack of capacity in terms of training facilities it might be difficult to take in a larger number of recruits. While the White Paper on Corrections outlined their plans in terms of corrections and rehabilitation as key focal areas, their strategy as far as recruitment of these professionals still remained unclear.

The Chairperson pointed out that on their oversight visits professionals often complained about their salary packages. DCS maintained that Treasury did not want to increase their budget. Psychologists, social workers, nurses, doctors and teachers possessed skills that were scarce in Correctional Services. He asked why Treasury was not looking into this matter. Rehabilitation was a corner stone of corrections but without appropriately skilled professionals rehabilitation was virtually impossible. He said that DCS could do nothing about acquiring appropriately skilled professionals if they did not have the funds to pay them.

Mr Johnson responded that as far as health services, professional nurses and social workers were concerned, Treasury, in consultation with Department of Public Works and Administration (DPSA) developed and implemented a scarce skills and rural allowance framework within DCS. Officials benefited from this development.

Treasury believed that there was an over supply of qualified educationists in South Africa and that educational services could thus not be qualified as scarce skills. DPSA would guide Treasury in terms of which particular postgraduate degrees could be classified as scarce skills.

As far as psychologists were concerned The DCS could formulate its own scarce skills framework in consultation with the DPSA. Nationally the DCS employed less than 20 psychologists. A psychologist with a master’s degree should be employed at post level 6. The DCS did have options as far as finding solutions was concerned. Perhaps there was a number of custodial staff with Psychology 3 who could be appointed as vocational councilors or psychologist’s assistants. DPSA allowed the DCS to formulate a scarce skills framework for their own particular post classes. Once such a framework has been approved their compensation could possibly be improved.

The DCS has, to the detriment of warders and their take home pay, managed to reduce its over time expenditure substantially. They had also managed to reduce their medical aid expenditure. They should be given credit for their achievements in this regard. Treasury’s expectation was that these savings should translate into the appointment of more staff. Treasury would not have a problem if the DCS wanted to up the salaries of their psychologists, for example, as long as they fulfilled the requirements as defined in the scarce skills amendment framework of the DPSA. It was up to DCS to formulate these strategies and to then put them before the authorities. Treasury did not always approve everything. The accounting officers and the Minister also had some freedom to approve certain things.

The Chairperson informed the Committee that at a Chairperson’s meeting a concern had been raised that when it came to department budgets, portfolio committees were becoming nothing more than "rubber stamps". They were not doing justice to the voters by simply agreeing or disagreeing without probing and asking for explanations. He urged Members to do exactly that. The Committee did not have a negative attitude towards anybody but needed to have answers to their questions.

The Chairperson said that it was very helpful that Treasury had also briefed the committee on some if the issues. He raised concerns regarding the outsourcing of "human resources". He said that the Minister of Labour had once asked why human resources were being outsourced. He questioned why the DCS outsourced recruitment. In the budget, money had been allocated to the human resource division but now recruitment has also been outsourced. The Committee needed answers regarding this matter. Each year money was being approved for the new head quarters and yet no progress had been made.

Ms S Seaton (IFP) said that it was very worrying that the DCS failed to spend its allocation, yet each year they said that certain things could not be done due to insufficient funds. Progress on the four new generation prisons have been delayed for years. He asked how the Department could have R1.9 billion unspent. It was time for the Department to provide the Committee with some answers. The situation was unacceptable and the Committee needed to do something about it.

Mr B Fihla (ANC) asked whether the rehabilitation of "lifers" in PPP prisons was not a "waste of time and money". He asked why these prisons did not focus on the rehabilitation of the youth who would be released from prison. They would be able to use the skills they had acquired in rehabilitation and training programmes. PPP facilities provided for such training. He questioned why youth who were incarcerated in correctional facilities could not at least pass through a PPP facility before their release.

The Chairperson followed up and said that in the Limpopo province the PPP had signed a contract with DCS. Members were aware that one section of that prison was closed now due to violent outbreaks. According to him the contract no longer existed. Two inmates had died in this prison and 1 500 others had been removed to correctional facilities. The Committee would have to seek answers when they met with the Minister and the Department on that coming Thursday. The two PPP prisons were consuming the whole budget. It was a waste of money. He said that Mr Fihla had been referring to the wasting of resources. He questioned why these facilities could not be used as training centers for the youth. The Committee would make a recommendation to this effect and "the Department must do it", so that one could get value for the money spent. If the contracts could not be cancelled these facilities should provide training for the youth.

Mr Johnson said that the Committee had decided a few years ago that the contract should be reviewed and renegotiated. Treasury had also insisted that this should happen, as the prisons were too expensive. The renegotiation could include moving maximum-security prisoners from these facilities and then using the facilities for young offenders. The tariffs and the types of services also needed to be reviewed. Initially the average cost of a prisoner in DCS facilities was R105 per day while in the PPP prisons it was R220 per day. The cost of keeping a prisoner for every day that the PPP facility in Louis Trichardt was not operational should be deducted from the account that is given to DCS. From a financial management perspective this should translate into savings. Government paid its account diligently. In the same manner the prison should be paying the penalties as stipulated in the contract. He asked if the DCS had the systems in place to verify details in order to ensure that no corruption was taking place.

The Chairperson said that at the coming meeting the Committee would interact with the Department and the Minister regarding the concerns that had been raised at the meeting. He requested that Treasury should also be present at the meeting. He was aware that it was not possible to have all the answers but the Committee still needed to get some answers.

Tabling of Committee Reports
The Committee tabled the Report of the Portfolio Committee on Correctional Services on its visit to prisons in the Northern Cape as well as the Report of the Portfolio Committee on Correctional Services on its Visit to the Durban Westville Correctional Centre in KZN.

The meeting was adjourned.