Broadcasting Amendment Bill: adoption of NCOP changes; Annual Report 2007/08 of Department of Communications & Sentech

Meeting report

The Chairperson welcomed everyone and announced that the South African Post Office had requested and been granted a rescheduling to the following week for presentation of its Annual Report.

Broadcasting Amendment Bill (the Bill): National Council of Provinces (NCOP) proposed amendments
Mr Herman Smuts, State Law Advisor, Office of the Chief State Law Adviser, tabled a copy of the amendments that had been proposed by the National Council of Provinces to the Broadcasting Amendment Bill. He read through the amendments (see attached document for details), noting that Clause 1 had been rejected.

In Clause 2, paragraphs (a), (b) and (d) were to be omitted. He explained that frequency planning was not a function of the South African Broadcasting Corporation (SABC) Board.

Minor changes had been proposed in respect of Clause 4, with technical amendments on line 33 and 40 of page 3. However, a new paragraph (b) had been proposed on line 42, reading:
“(b)The National Assembly may, by the adoption of a resolution, recommend the dissolution of the Board if it fails in any or all of he following:

(i) Discharging its fiduciary duties;

(ii) adhering to the Charter, and

(iii) carrying out its duties as contemplated in section 13 (11)”

He pointed out that none of these amendments changed the control and the objects of the SABC which was given six new services.
 
In addition, a new subclause (5) was proposed to be added on page 4, after line 11, to read that “A quorum for any meeting of the interim Board is six members.”

Mr Smuts then noted a change to the Long Title. The phrase “to substitute the definition of “appointing body” was to be removed. Instead the wording “to delete “frequency planning as one of the fields of qualifications, expertise and experience which the members of the Board of the South African Broadcasting Corporation Limited must have when viewed collectively” was to be inserted.

Discussion
The Chairperson asked whether, after agreement on the appointing authority, everything else followed.

Mr Smuts responded that this was so. He added that it was not considered by the NCOP to be appropriate that the Speaker should assist with the selection process of the SABC Board. In addition, he noted that Clause 4 provided for the dissolution of the SABC Board, but that this could only happen if there was an enquiry.

Mr K Khumalo (ANC) stated that it seemed that the NCOP Committee had arrived at a decision that bound all other parties. It was clear that the Executive should not be concerned directly with the selection of the SABC Board . He added that neither he nor his party, the ANC, agreed with the view of the DA. Although he wished to reserve the position of the ANC, he felt that they would accept the position of the NCOP.
  
The Chairperson asked whether there were any other suggested amendments.

The Chairperson then asked the Parliamentary Legal Advisor to comment whether the amendments could be considered.

Ms Zuraya Adhikarie, Senior Parliamentary Law Advisor, expressed the opinion that in terms of Parliamentary Rule 270 no new amendments could be considered at this stage.

Ms L Yengeni (ANC) expressed the opinion that this was fair.

The Chairperson then asked the Committee to consider the NCOP changes to the Broadcasting Amendment Bill, clause by clause:

Members agreed unanimously to accept the changes to Clause 1.

Members noted that the amendments proposed to Clause 2 were consequential amendments and agreed unanimously to them.

In respect of Clause 4, Mr Smuts pointed out that the changes that had been made in effect tidied up the wording of amendments that, in principle, had already been agreed to in respect of Section 15(1)(a) of the principle Broadcasting Act.

Ms D Smuts (DA) sought clarity whether the NCOP version was in fact the same in principle as the NA version.

Mr Smuts confirmed that it was.

The Chairperson and Mr Smuts debated whether the NCOP version was in fact closer to what the Committee had wanted, and agreed that this was so.

The Chairperson asked whether all were agreed, and no one indicated a contrary viewpoint.

Mr Smuts stated that the Bill would now be redrafted and printed correctly as soon as it could be managed but that until such time the summary that he had distributed that morning reflected the wording.

Ms D Smuts sought confirmation that the Executive would not be appointing the SABC Board.

Mr Smuts gave her the assurance that this would not happen.

Members then considered the Objects clause of the Bill, and approved it.

Members agreed to all the changes that had been made to the Bill by the NCOP, and resolved to support the Bill as amended.

Department of Communications (DOC): Annual Report 2007/08.
Ms Lyndall Shope-Mafole, Director General, Department of Communications, said that the Department of Communications (DOC) was working towards achieving higher rates of investment in the economy, with increased competitiveness and broadened participation. This would contribute to a building a better world and improving the capacity of the State to deliver.

She summarised the achievements over the past year. She noted that there had been greater commitment by government to invest in basic ICT infrastructure, and to this effect the Electronic Communications Act had been amended, enabling the licensing of Infraco. There had been development of a business plan for the establishment of a National Wireless Broadband Network by Sentech, forming the basis for the connection of 500 Dinaledi Schools. Because of the sensitive nature of the information provided by the sector, an information management protocol was adopted, in order to facilitate the development of an Integrated Infrastructure Plan across government departments. Further achievements included the implementation of 2010 ICT guarantees and those for the FIFA Confederation Cup, and the development of policy guidelines on the rapid deployment of electronic communications facilities.

In order to broaden participation in the economy an ICT skills strategy was adopted and finalised, an e-skills Council was established, initial funding was allocated for Sentech's wireless broadband roll out (which was to form the backbone of ICT communication in South Africa), a concept document for the Meraka e-skills Institute was developed, and Phase 1 of Sentech's wireless broadband network was started. The mapping of 233 Dinaledi schools with related government sites had been completed. The Department had commenced with preparation of the Set Top Box (STB) Subsidy Policy; together with a strategy for the development of the Set Top Box manufacturing sector and the STB specifications had been completed. Site preparation for Digital Terrestrial Television (DTT) roll out had been completed, a draft Local and Digital Content Development strategy had been developed and also a draft ICT Small, Medium and Micro Enterprise (SMME) strategy, a draft Disability and ICT Strategy, and a Youth and ICT strategy. A Youth Information Society and Development (ISAD) Programme had been adopted by the National Youth Commission.

Ms Shope-Mafole noted that the systems and processes had been improved upon in order to improve the capacity of the Department to deliver effective business management. The Department had received an unqualified Audit Report. An Open Source Software migration plan was developed, and the Department had commenced with the implementation of an Electronic Document Management System. She noted that there had been more than 50% compliance with targets set for involvement of  women and persons with disabilities. In order to meet the requirements of the Independent Communications Authority of South Africa (ICASA), additional funding had been secured, the oversight role on State Owned Enterprises (SOEs) had been improved, and there had been effective participation in all Forum of South African Directors-General (FOSAD) Clusters, with a new cluster being developed for Information Society and Development (ISAD) . The ISAD Intergovernmental Relations Forum had been put into operation.

Ms Shope-Mafole noted that the Department had caused the Protocol on the Policy and Regulatory Framework for NEPAD’s  ICT broadband Infrastructure Network for Eastern and Southern Africa to be ratified. Progress had been made in the construction of the international submarine cable, Uhurunet and the terrestrial cable UmojaNet. There had been a launch of the New Economic Partnership for Africa’s Development (NEPAD) e-schools Demo Project. The Department had been an observer at the Organisation for Economic Co-operation and Development (OECD), had participated in the World Radio Communications Conference and influenced its outcomes. It chaired the African Support Committee, which co-developed the African position at the Universal Postal Union (UPU), and participated in the World Summit on the Information Society follow-up programmes, as listed in the presentation. 

Ms Shope Mafole noted the establishment of the FOSAD Cluster, which had eight sub-committees. The main focus of attention was on Apex Priority 3, which aimed to increase the uptake and usage of information communication technology by both individuals and government. There had been development and implementation of a framework for Professional and Secretarial support to ISAD.  There was also preparation for the Presidential International Advisory Council on ISAD and the consequent launch of the e-Skills Council. Professional support had been rendered to the ISAD intergovernment relations forum meetings. The Municipal Websites portal had been established and was being maintained. Further achievements included the development of a Knowledge Management audit report, a draft Knowledge Management strategy and Toolkit, and a review of the current project management policies, procedures and templates in line with the Project Management system.

In terms of youth involvement, Ms Shope-Mafole indicated the addition of a National Youth ISAD programme, together with the launch of the e-Comparatives, National Digital Repository (NDR) for Cultural Heritage, and Youth e-literacy programmes, all of which targeting young people. 460 young persons were recruited in all 9 provinces, 400 Youth e-Co -operatives were formed and registered with the Companies and Intellectual Property Registration Office (CIPRO), and e-Cooperatives were trained and applied their skills through the development and support of municipal websites in Mpumalanga. The Marievale army base was approved as an African Youth e-Village programme and the process of transferring this property from the Department of Defence had commenced. The Youth e-Literacy Programme was launched and registered as a National Youth Service (NYS) project in the NYS Unit of the Presidency. 377 young people were trained on e-literacy at Tshwane University of Technology (TUT). About 25% of these people were then, in conjunction with the Department of Health, placed in health institutions in four provinces.

Mr Harry Mathabathe, Deputy Director General: Finance and ICT Enterprise Development, DOC, then led the members through the Statement of Financial performance statistics provided on slides 19 – 26 (see attached presentation for full details)

Discussion
Mr K Khumalo (ANC) remarked that this Annual Report was much the same as previous years, and he regarded it as concealing more than it revealed. The Department had repeated its call for more money, rather than effectively using what it had available. He suggested that it would be more to the benefit of South Africa to adopt an approach of “how much more can be done with one rand”, rather than “where can the Department get another three rand.”

Mr Khumalo commented that he believed the ICT impact upon the country was too widely-dispersed, as there was no one body with effective control, unlike other State departments which had a focus.

Ms Shope-Mafole said that ICT was going to lead to quality education in South Africa, and quality education was going to reduce poverty.

Ms Mameetsa Mphahlele, Chief Director in the Office of the Director General, DOC, stated that ICT was going to benefit many people, especially the young, by making a consolidate input into the economy.

Mr Khumalo commented that although the Department appointed the Boards of the subsidiaries, such as the South African Post Office, there was no indication of the problems and their underlying causes, nor did there seem to be effective control of them. 

Mr Khumalo questioned the Set Top Box Subsidy and Manufacturing Sector, saying that he could not see that there had been engagement, and he asked who would benefit from this, and why such persons seemed to be favoured.

Mr R Pieterse (ANC) also expressed concerns about the Set Top Boxes. He feared that these would probably not be manufactured, but only assembled in South Africa. 

Ms Shope-Mafole responded that in regard to the Set Top Box manufacture she wanted to know why there were personal attacks being launched against her and her partner. She assured the Committee that neither she, nor any one closely connected to her, would be gaining a financial advantage from this. She insisted that Set Top Boxes would benefit South Africa and the entire industry.

Mr Khumalo sought details on the synergy with regard to the NEPAD Broadband and also details of the other State institutions which were to co-operate or be involved.

Mr Pieterse expressed the view that the Annual Report should be more detailed and, rather than listing the achievements, should provide an analysis, a note of the problems to be faced and why they were problematic.

Ms D Smuts (DA) agreed with Mr Pieterse that the Report contained a list of “achievements” but she was of the view that this did not look great. The DOC claimed to be concentrating on empowering or creating competitiveness in the IT sector, yet the Department had opposed the attempts of Altech in creating a climate for greater competitiveness. She asked whether the decision to appeal had been taken by the Minister, after fully considering the question, or by the Director General, for such decision was inimical to greater competitiveness. ICASA had apparently been prepared to abide by the judgment of the Court.

Ms Shope-Mafole explained that the Minister alone took the decision to oppose the Altech judgment,  and that the Minister would attest to the supporting affidavits upon which the Supreme Court of Appeal action was based. She conceded that she, as Director General, had to consider all the aspects of the proposed application, including all the issues and the matters in support of the allegations, and in this regard she would be guided by the legal advisers and would then present the Minister with a summary of what has been considered and the views, which the Minister would use as a basis for making the decisions.

Ms Smuts suggested that the actual approach to the under sea cable was contrary to creating greater competitiveness and hence lower costs.

Ms Smuts queried whether the decision by Sentech had been made after due consideration of all the facts, and whether wireless broadband was going to be adequate.

Ms Shope-Mafole said that Sentech would succeed, despite the blogging interference which had been encountered. Of course this was being done in the USA and Canada. She said that in South Africa guidelines were still needed around security issues.

The Chairperson asked whether the undersea cable was receiving the attention it deserved. He enquired about the reason for the delay in construction and implementation. He wanted to know whether the Executive had taken a decision, since, in his conversations with the Minister of Finance, he had been informed that there was no money for this project. 

Ms Shope-Mafole said that with regard to the under sea cables there had been no decision by Cabinet, but the Department felt that it was part of the NEPAD programme and should be developed accordingly. There were three areas or arms of ICT, and there was a Memorandum of Understanding, but no separate decisions, which made this an area of priority. She added that the DOC wished to co-operate with other departments, agencies, entities, and countries, particularly with Kenya. She believed that the undersea cable would be a major success. It was part of NEPAD, it would happen, and other developing countries were going to benefit from it.

Mr Pieterse expressed the concern that the DOC, similar to so many other State Departments, had revealed in its Annual Report a high percentage of non filled posts, and he asked why this was so.

Ms Shope-Mafole responded that the vacancy rate was a historic measure. When the Annual Report was comprised there were no approvals for the salaries and wages of the vacant posts at that time. These salaries and wages might well have been approved subsequently and the posts filled, thus reducing the vacancy rate, but this would not appear in this Annual Report. She noted that although 226 posts were reflected as vacant, the current position was that in fact 98 posts were vacant, meaning that the vacancy rate was in fact quite low.

Mr Pieterse wished to know at what level such vacancies existed.

Ms Smuts pointed out that the Annual Report had reflected, on page 60, that five people were remunerated in excess of the salary band for their positions. She asked why this was so. She added that she was inundated with complaints about malfeasance in the Department.

The Chairperson added that he felt that the Report could be a lot clearer, and agreed that it appeared that there might be deliberate obfuscation in the compiling of the report.

Ms Shope-Mafole conceded that there were difficulties in compiling the report.

Ms Smuts added that the Human Resources department seemed to be making jobs for people without regard to their capabilities, experience training or fitness.  
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Ms Shope-Mafole denied that this was so, and suggested that many people complained for their own personal reasons and not to the benefit of the Department.

Ms Smuts asked again about the performance review.

Ms Shope-Mafole explained that the compilation of statistics was an ongoing work in progress. The statistics upon which the Annual Report was based were those figures dating from six months before the date of the Report. There was a challenge in persuading the schools, and other role players, to take up the opportunities presented. She added that there was a concentration on schools in the outlying rural areas and poor schools in the urban areas, and that although a school might choose to participate and enjoy the benefits afforded, there might be a delay if the infrastructure still had to be installed in that area. 

The Chairperson expressed the opinion that this explanation was a little thin.

Mr Khumalo noted that the Members of the Committee were trying to be helpful to the Director General and the Department. However, he remained concerned that there were too many variances and inconsistencies for him to follow, and he supposed the other Members had a similar problem. He wondered whether the Director General was acting for South Africa or Africa, and why the Department felt obliged to participate in all these other activities, which he saw as aside from its core mandate.  He personally was unhappy about the Vodacom / Telkom stand off and the Altech decision, and he wondered how these matters were going to assist the ordinary people on the ground.

Ms Shope-Mafole responded that the Vodacom / Telkom matter was an old story and she felt that both Vodacom and Telkom should rather report the situation to the Committee. Altech was again another example of something that was contrary to the applicable law, and this was the reason why she and the Minister had taken opposing action.

Mr Pieterse expressed his understanding of some of the problems that the Department faced, and his support for some of the efforts, but added that he felt that the young unemployed people were not being well served at present. With regard to the Set Top Box subsidy, he asked whether economies of scale had been considered. He maintained that a supplier would quote one price for an item, but that if the numbers were increased, then the contingent quantity discount principle would apply, with the result that if more units were purchased, the lower the price for each unit would be. He again asked what benefits could be seen from the current approach

The Chairperson asked what was happening in Government and whether the government departments were co-operating with one another.

Ms Shope-Mafole explained PMC had been established, but had taken six years to become operative. She had investigated the matter, and such systems in Ireland, Finland and Mozambique were working. She noted that an ICT culture needed to be developed for government to be efficiently run. She added that the PMC system had many positive aspects. It was being started in Malaysia, and South Africa would follow.

Ms Shope-Mafole said that she felt that she was being personally attacked. Many people had done very well but had not attracted the kind of intense attention that she was now receiving. She submitted that she was creating an environment in which people would be advantaged and benefited, and could also advance the national interest.

In respect of the comments around the vacancies, she noted that employees in her Department reported that they had received offers of employment from elsewhere. If these employees were regarded as good and effective, then the DOC would often make a counter offer to try to retain their services. She monitored every counter offer, and personally signed each of these offers. She was fully cognisant of every aspect of such person’s performance, potential and salary.

Ms Shope Mafole felt that the remarks around the Set Top Boxes were another example of an unwarranted investigation into her and her Department. She took pride in the fact that nothing untoward had ever been, or would be discovered. She personally believed that the Set Top Boxes would lead to alleviation of the current situation where children were going hungry to school and she noted that R35 million was a relatively small amount, given the fact that it was absolutely crucial for poor people to be uplifted
    
Mr Khumalo responded that if Parliament was effectively to perform its oversight duties and obligations, then it was necessary that the Members must have the discretion to ask any and every question which they saw as impinging on a department and its activities. Members of Parliament were elected by the taxpayers, and were thus the agents of the taxpayers, who were entitled to know where their tax payments were going and how they were being utilised. ICT was a difficult subject to master and monitor, but this monitoring must be done.

Mr Khumalo took the Chair for the afternoon session.

Sentech Annual Report 2008 briefing
The Chairperson noted that it was general policy that all Board Members of an institution should be present when the Annual Report was presented, but unfortunately, owing to constraints of notice and other commitments, some of the Board Members were unavoidably elsewhere.

Ms D Smuts remarked that there were only two members of Parliament present.

Mr Colin Hickling, Chairperson, Sentech, expressed the opinion that the lack of funding was a problem for Sentech. However, it its application to become an entity listed in  Schedule 2 entity of the Public Finance Management Act (PFMA) was successful, then Sentech would be authorised to raise its own funding and the lack of funding would be obviated. He further explained that variations in the exchange rate also influenced Sentech's finances. Most of its purchases were made from abroad. Although they were ordered at a particular time, when the delivery date arrived and payment was due the exchange rate might have turned against South Africa, with the result that the purchases cost more than budgeted for, despite all efforts to ensure that there was adequate budgeting and funding for its projects.

He noted that after a profitable period in the late 1990s and early 2000s, Sentech’s financial position had declined seriously, due to the anticipated funding for rollout for a national broadband wireless infrastructure that did not materialize. He set out the original budget requests and illustrated how these had not been met. He stated that in 2007/08 Sentech reported a modest pre-tax profit of R28 million, which was attributable to interest earned on the funds allocated by Government.

The radio and television networks had continued to perform above service level targets, and Phase 2 of the Digital Terrestrial Television (DTT) migration had been completed. The telecommunications networks achieved 99/97% availability against a target of 99.8%.
 
Ms Beverly Ngwenya, Chief Operating Officer, Sentech, explained that Sentech was concentrating on projects that would be beneficial to South Africa and would also be job-enriching. In respect of the Dinaledi Schools, it had been anticipated that 233 schools would have been provided with coverage by March 2009. In year one, Sentech required R671 million in Capex, and R221 million for operational expenses. However, only R500 million had been allocated. The coverage to the anticipated number of schools would not happen, due to the delays in finalisation of the business and funding model.

Mr Mohammed Siddique Cassim, Chief Financial Officer, Sentech explained that Sentech's funding was fully compliant with Integrated Finance Organisation (IFO) standards but that Sentech, and South Africa, needed investment in order to grow. He explained that a difficulty currently experienced was that much of the funding was ring fenced and so was not available to be diverted to other projects. Addressing the budget, he explained that salaries and wages reflected an increase of 8%, because this was the premium that was required for short-supplied skills and training, and that staffing was a problem, although considerable attention was being paid to retention programmes. The financial performance was tabled, and detailed explanations were given for the figures (see attached presentation). The budget for 2008/09 was tabled, showing that there was likely to be an operating loss. A summary of the DTT funding was then given. 

Discussion
Mr Pieterse said that it seemed that there was a difficulty with National Treasury actually appreciating and understanding what was required, as it consistently provided less then was asked for. He asked what Sentech was saying to National Treasury that caused such a situation to develop.

The Chairperson asked what NWBN stood for.

It was explained that this stood for the National Wholesale Broadband Network.

Ms Smuts said it seemed that the Department of Communications had taken a decision and simply imposed NWBN on Sentech, and she wondered about its actual feasibility.

Ms Ngwenya stated that the Department had declared the Post Office to be the vehicle for Uhurunet, but there was the need to have the business plan and also the capacity determined. She added that Sentech needed to go into the rural areas to deliver on their service undertaking. However, the commercial enterprises were staying away from such areas in favour of the more profitable operations
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Ms D Smuts asked which was the better option – expansion, or the NWBN operation.

Ms Ngwenya said that satellite was costly but secure, whereas terrestrial installations were cheaper but less secure. In summary, going digital was easier, but wireless had advantages
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Mr Hickling said that there was Government encouragement or persuasion to go that route, but no funding. He said that Sentech simply could not cover the costs of what was required of Sentech. In Sweden an operation similar to Sentech had been taken over and funded by the Government. By contrast, a similar operation in Spain had been cast off by the Government. It was now up to the market in Spain to provide funding for that Spanish operation. This illustrated the problems.

Ms Ngwenya said that if the services were required then somebody must pay. The question was whether the payment must come from government or private enterprise. A further addition to the costs was the remuneration for scarce skills, which was a national problem and which would remain, if not be further exacerbated, in the future. Tenders were one way of restraining costs, but the formerly advantaged sector of the economy tended to benefit from these tenders. Sentech, in respect of marketing, was unlike other institutions, for it delivered to entities like itself which had to use the services, there being no other suppliers, and so it was a question of “like marketing to like” which was not cost-effective.

The Chairperson then pointed out that Sentech used several billion rands, and it was argued that such monies could be better allocated. He did not wish to continually be confrontational, but he felt that better uses of the money should be found.

The meeting was adjourned.