Budgetary Review and Recommendation
Report of the Portfolio Committee on Science and Technology, dated 26 October
2011
The Portfolio Committee on Science and Technology (the Committee),
having assessed the performance of the Department of Science and Technology (the
Department), reports as follows:
1. Introduction
The purpose of the report is to provide an analysis of the performance
of the Department of Science and Technology against its predetermined
objectives. The report includes an assessment of the financial performance of
the Department and its entities for the 2010/11 financial year and records the
observations and conclusions of and the recommendations made by the Portfolio
Committee on Science and Technology during their deliberations.
1.1
Mandate of
the Committee, including provision of Section 5 of the Money Bills Amendment
Procedure and Related Matters Act, No 9 of 2009
The Committee oversees the activities of the Department of Science and
Technology as well as the entities reporting to it. A key element of its
oversight function includes scrutinizing the annual reports and expenditure of
the Department and its entities.
The recently promulgated Money Bills Procedures and Related Matters Amendment
Act, provides for Parliament to make recommendations to the Minister of Finance
to amend the budget of a national department. The Committee must submit an
annual Budgetary Review and Recommendation Report (BRRR) for the Department,
which may contain recommendations relating to funding allocations. This annual
review and analyses of performance includes both financial and non-financial
indicators.
The Portfolio Committee on Science and Technology considered the Budget for
the 2011/12 financial year of the Department on 13 April 2011. The Committee considered
the Department’s 2010/11 Annual Report on 19 October 2011. Engagements with
entities were also conducted during the period under review. These entities included
inter alia the National Research Foundation
(NRF), the Council for Scientific and Industrial Research (CSIR), the Human Sciences
Research Council (HSRC), the Technology Innovation Agency (TIA), the South
African National Space Agency (SANSA), the Africa Institute of South Africa
(AISA) and the
2. Department’s Strategic Priorities and Measurable
Objectives
The Department’s core business is to develop research and development (R&D)
policies in line with the National Research and Development Strategy (NRDS) and
facilitate and monitor their implementation. The Department therefore does not
provide any services to any institution or people. The aim of the Department is
to realise the full potential of science and technology in social and economic
development, through the development of human resources, research and
innovation. The principal goals of the Department are to develop the innovation
capacity of the science system and contribute to socio-economic development,
develop appropriate human capital for research, development and innovation
(RDI), build excellent RDI infrastructure, position
The 2009 – 2014 Medium Term Strategic Framework (MTSF) seeks to build on
the current strategies and programmes already supporting innovation and
research and development in the private and public sectors. The MTSF identifies
technology innovation as one of the critical policy areas required to speed up
growth and transform the economy to create decent work and sustainable
livelihoods. During the current reporting period, the MTSF, the 2002 NRDS and
the 2007 Ten-Year Innovation Plan (TYIP) guided and informed the strategic
priorities of the Department. Furthermore, the 2007 National Industrial Policy
Framework assisted the Department in identifying research, development and
innovation activities that were needed to grow and increase the competitiveness
of strategic economic sectors. In this context, the continued implementation of
the TYIP is crucial. The objective of keeping
·
Operationalising the TIA, SANSA and the National
Intellectual Property Management Office (NIPMO). These agencies represent the
institutional arrangements that will help foster the funding and support
partnerships that are required for the development of cutting-edge science and
technology capabilities in the country. They are also the primary drivers to
create an innovation-enabling environment.
·
Establishing the Centres of Competence (CoCs) and Technology
Platforms in the titanium, downstream flourochemicals, battery technology,
alternative energy, information security, bio-composites and medical devices
sectors. These CoCs aim to build a competitive South African technology base.
·
Continuing with the investment to ensure
The key operational activities of the Department continue to be carried
out by five main Programmes. The five Programmes are:
·
Programme 1: Corporate Services and Governance - is
responsible for the overall management of the Department, and ensures that the
organisations funded, comply with good corporate governance practices, and
align their activities with the National System of Innovation (NSI). It is also
responsible for monitoring and evaluating the performance of the science
councils.
·
Programme 2: Research, Development and Innovation - provides
policy leadership in long-term and cross-cutting research and innovation in the
NSI. This Programme aims to deliver new technology-based industries to the
South African economy, create the appropriate policy and institutional
implementation instruments to deliver technology products and services for the
economy, and develop and implement the appropriate policies to protect
intellectual property resulting from publicly financed R&D.
·
Programme 3: International Co-operation and Resources
- aims to develop, promote and manage strategic international relationships, opportunities and science and
technology agreements that strengthen
the NSI and enable an exchange of knowledge, capacity and resources between
South Africa and its regional and other international partners.
·
Programme 4: Human Capital and Knowledge Systems - aims
to develop and implement national programmes to produce knowledge and develop
human capital and the associated infrastructure, equipment and public research
services.
·
Programme 5: Socio-Economic Partnerships - aims to provide
policy, strategy and direction-setting support for R&D-led growth. Its
strategic focus is informed by Government’s Microeconomic Reform Strategy, the
National Industrial Policy Framework, the TYIP and the National Framework for
Sustainable Development.
3. Analysis
of Expenditure
During the 2010/11 financial year, the Department’s appropriation was
adjusted down by R487.6 million from R4.6 billion to R4.1 billion. By the end
of the 2010/11 financial year, the Department’s total expenditure was R4
billion or 98 per cent of the total appropriation. This under expenditure
equates to R76 million. In comparison, the Department underspent by R77.8
million in 2009/10, spending 98.2 per cent of the R4.3 billion appropriation.
The 2010 Adjusted Estimates of National Expenditure (AENE) and the 2011
Estimates of National Expenditure state (ENE) that R370.1 million and R5.1
million was allocated to Current Payments and Payments for Capital Assets,
respectively. According to National Treasury, an amount of R3.963 million was
shifted towards Payments for Capital Assets for Machinery and Equipment, after
the AENE process. These funds were shifted out of Goods and Services: Agency
and support/outsourced services (Programme 2) and Compensation of Employees
(Programme 1), but remained within the same programme.
Thus, in 2010/11, the Department
spent, according to economic classification, R333.5 million of the R362.6
million (92 per cent) allocated for Current Payments; R3.7 billion of the R3.76
billion (99 per cent) allocated for Transfers and Subsidies and R8.7 million of
the R9 million (97 per cent) allocated for Payments for Capital Assets.
Expenditure according to programme classification amounted to:
·
Programme 1: Corporate Services
and Governance - R188.9 million of the R190.1
million (99 per cent) allocated;
·
Programme 2: Research, Development
and Innovation - R802.7 million of the R826.8 million (97 per cent) allocated;
·
Programme 3: International
Resources and Co-operation - R131.4 million of the R138.5 million (95 per cent)
allocated;
·
Programme 4: Human Capital and
Knowledge Systems – R1.75 billion of the R1.76 billion (99 per cent) allocated;
and
·
Programme 5: Socio-Economic
Partnerships – R1.17 billion of the R1.208 billion (97 per cent) allocated.
4. Overview
of the Department’s Annual Report
All five of the Department’s
Programmes under-spent on their respective allocations. The Department states
that the under-spending in Programmes 2 to 5 was due to staff turnover, the
resultant administrative costs and delays in procuring office equipment as well
as equipment. Virements, effected after the adjustment budget, amounted to
R24.95 million (0.6 per cent of the total adjusted appropriation) and comprised
R11.9 million that was approved by the National Treasury and R13.05 million
that was approved by the Department’s Director-General. Of the total virements,
R15.55 million was moved between major items; R6.95 million was moved between
Programmes and R2.45 million was moved within major items. Programme 5 is the
only Programme that relinquished funds for virements. The receiving programmes
were Programme 1 (R4.45 million) and Programme 3 (R2.5 million). Programme 1
moved R13.05 million from the “Compensation of employees” item to augment the
item “Goods and Services”.
During 2009/10, the Internal Audit
Services performed an audit of the Regional Initiative for Capacity Development
(RICAD). During September 2009, the Department cancelled its contract with
Brentlana for the management of the RICAD project as a result of Brentlana’s
alleged failure to perform. The Department also claimed a refund of all monies
(amounting to R2.39 million) already paid to Brentlana under the contract.
Brentlana disputed the cancellation of the contract and referred the matter to
arbitration. The arbitration proceedings commenced, but has not been finalised
and, therefore, a contingent liability cannot yet be determined.
The Department had irregular
expenditure of R1.366 million, which was deemed not recoverable. The irregular
expenditure comprised R641 thousand for a payment that exceeded a bid
requirement and R725 thousand for non-compliance with secondment processes. No
disciplinary steps and/or criminal proceedings have been pursued in relation to
the irregular expenditure. The Department also had fruitless and wasteful
expenditure of R110 thousand relating to a breach of the Department’s bursary
policy.
The public entities that were
funded through the Department’s vote in 2010/11 are the HSRC (R194.2 million),
the NRF (R749.1 million), AISA (R30.5 million), the CSIR (R685.7 million), the
TIA (R410.6 million) and ASSAf (R10.5 million).
The Department had a vacancy rate
of 7.6 per cent at 31 March 2011, with most of the vacancies occurring within
the Senior Management salary band. Of the Executive staff, the Chief Operations
Officer (COO) post is vacant and Programmes 1 and 5 have Acting Deputy Directors-General.
5. Findings of
the Auditor-General
The
Auditor General (AG) gave the Department an unqualified audit opinion for the
2010/11 financial year since the financial statements presented fairly, in all
material aspects, the financial position of the Department as at 31 March 2011.
No emphasis of matter was reported.
6. Programme Performance
The Department
has achieved many of the performance targets set across its five programmes.
Notable achievements for 2010/11 include:
·
The establishment and operationalisation of the TIA, SANSA and
an interim NIPMO;
·
The establishment of regional offices for the TIA in
·
The establishment of a CoC on Hydrogen Systems Integration
and Technology Validation at the University of the
·
Leveraging R184 million in official development assistance
funding from
·
Supporting 2 359 students;
·
Placing 121 interns in industry and technology stations;
·
Establishing 15 joint RDI initiatives with African partners;
·
Providing 26 companies with Technology Assistance Packages;
·
Publishing 109 scientific and technical papers; and
·
Introducing communal water stations in the
Notable
performance targets set for 2010/11 that were not achieved include the
following:
·
No Research Chairs were established at higher education
institutions (target was 20);
·
No technology-based companies were established (target was
5);
·
The Science, Engineering, Technology and Innovation (SETI)
Human Capital Development (HCD) strategy and implementation plan remains
uncompleted;
·
No new businesses in agro-processing and aquaculture were
established (target was 5);
·
The 10-Year Infrastructure Strategy and Implementation Plan
was not developed because stakeholders’ inputs were not received in time; and
·
The Antarctic Research Strategy and Plan was not approved
due to prioritising the work of the Astronomy Desk.
The 2010/11 Annual Report shows that the Department is progressing in the
implementation of its strategic goals and priority areas.
7. Committee’s
Observations
7.1 Emanating
from oversight activities
In fulfilling its oversight mandate, the Committee undertook oversight visits
to some of the entities and projects, which the Department reported on in their
annual report.
The Committee visited the SKA project and noted that this project
achieved important targets relating to the SKA demonstrator telescope, the
MeerKAT. The Committee encouraged the Minister and the Department to continue
lobbying support for the SKA project and requested that they be regularly
updated with regard to the country’s bidding mission to host the telescope.
The Committee visited the CSIR and was encouraged by its
multidisciplinary research and innovation approach, which was strategically focused
on the areas of energy, health, the built environment, the natural environment,
defence and security, and industry. Notably, these areas are in line with key
government priorities and the needs of the South African people. Particular focus
was the development of dedicated wards for tuberculosis (TB) patients, which were
being constructed at nine hospitals. Also noteworthy was the wireless mesh
network project, which aims to provide broadband networks in rural areas.
The visit to the Titanium CoC gave Members the opportunity to view the
progress made in developing new methods for titanium powder production. The
Committee is keen to monitor what initiatives will come from this project for
future commercialization.
In an attempt to asses how the Department gave effect to government’s
priority of enhancing the health of the South African people, the committee
visited the Centre for the AIDS Program of Research in South Africa (CAPRISA). The
Committee engaged with the scientists and researchers in an attempt to broaden
their understanding about the impact of the clinical trials conducted at the
Vulindlela and eThekwini Research Clinics respectively. The positive outcome of
the CAPRISA 004 tenofovir gel trials, offers women hope in their battle against
HIV and AIDS. The Committee’s concerns regarding the availability of funding
for confirmation studies were raised with the Department. Furthermore, the
Committee requested the Department to investigate an alleged delay by the
Medicines Control Council to approve future clinical trials and registration of
the tenofovir gel.
Dr
Quinton Johnson, Director of The International Centre for Innovation
Partnerships in Science (TICIPS), University of the
The Committee is cognisant of the important role that agencies such as
the TIA, SANSA and NIPMO have to play in facilitating the development of
cutting-edge science and technology capabilities in the country. The Committee
therefore visited TIA and SANSA to establish to what extent they were operational
and executing their mandates. TIA’s report to the Committee confirmed the
migration of seven entities under TIA. The Committee noted that a number of
investments managed by TIA were inherited from the migrated entities. The
Committee will continue to monitor the investment in new projects.
With regard to SANSA, the Committee noted the successful launch of this
entity and the migration of space-related entities’ such as the Satellite
Applications Centre and the Hermanus Magnetic Observatory to the Agency. The
Committee was impressed with the programme themes outlined and indicated that
they would monitor the contributions SANSA would make in the areas identified.
The Committee; and the Chairperson in particular, attended a number of
workshops and seminars on Indigenous Knowledge Systems (IKS) and Intellectual
Property Rights. Given the approximate 3000 species of plants in
The Committee engaged with the Applied Centre for Climate and Earth
Systems Science (ACCESS), which was the latest Centre of Excellence established
by the Department. It was managed by the CSIR as a national programme. ACCESS is an
integrated and end-to-end research and education services and training
programme. Its mandate is the development and implementation of a national and
regional programme to produce a new generation of scientists, technologists and
decision-makers within the Earth Systems Science (ESS) domain. ACCESS is
one of the most important implementation platforms of the TYIP’s Global Change
Grand Challenge and aims to change the way science and education and training
in ESS is done. The Committee in its interaction with ACCESS welcomed the integrated
implementation plan that consolidates the earth systems sciences agenda from
2011 to 2018.
The Committee had a successful collaborative meeting with their
counterparts; the Portfolio Committees on Basic Education and Higher Education,
on improving the quality of education. At this meeting, the Departments’ of Higher
Education, Basic Education and Science and Technology had to explain their
interventions in addressing the low rates in academic achievement in
mathematics and science as well as the low numbers of science, technology and
engineering students progressing to postgraduate studies. The Committees
highlighted a number of shortcomings; yet remain hopeful that these challenges
will be addressed by the Department of Basic Education’s collaborative efforts
between national and provincial departments through their “Action
Plan 2014”, which was developed to improve results by 2025. This further implied
an improvement in the curriculum and content training of teachers. To give effect
to one of the Department of Science and Technology’s strategies of developing
science, technology and innovation human capital to meet the needs of the South
African society, the Committees undertook to have a follow–up workshop to
further elaborate on these educational challenges.
The Committee is keen to hear from the Department more detail on their
role of science and technology in energy security, the development of
alternative energy generation technology and green energy resources to minimize
the impact of climate change.
The Committee notes that intergovernmental collaborative
partnerships are instrumental in ensuring the success of the NSI. Enhanced
co-ordination is necessary even at parliamentary level amongst the various Portfolio
and Select Committees in instances where science and technology issues are
transversal.
7.2 Department’s
annual report deliberation
The Committee was generally satisfied with the Department’s report
format, which improved since the last annual report.
The Committee acknowledged that the Department’s core business was to
develop R&D policies in line with the NRDS and to facilitate and monitor
their implementation. The Department therefore does not provide any services to
any institution or people.
In light of the above, the Committee noted the Departments’ undertaking
to review the manner in which they define their performance indicators to
better align them with their mandate. The current challenge was that
inappropriately defined performance indicators resulted in targets being set,
which when they are not achieved reflects as underperformance.
The annual report briefings by the Department and its entities indicated
that there was concerted effort and progress towards delivering in key priority
areas for social and economic development.
The Committee noted the number of high-level vacant posts, high levels
in staff turnover and staff vacancy rates. The Department assured them that processes
were underway to fill these positions. The Committee, nevertheless, undertook
to monitor the filling of posts.
The Committee was concerned that the programme on the Research Chairs
Initiative was not meeting its targets and requested an explanation from the
Department. The Department attributed not appointing Research Chairs in 2010/11
to their decision to combine the 2010/11 and 2011/12 calls for the hosting of
Research Chairs in an effort to minimize costs and administrative load. The
process was administered by the NRF on behalf of the Department.
The Committee requested an explanation of the irregular expenditure
finding made by the Auditor-General. The Department stated that the expenditure
incurred was not due to fraudulent activity, but due to an oversight of certain
supply-chain management regulations. The Department assured the Committee that
this would not happen again.
Members raised their concern over the future funding of the CAPRISA 008
trials. The Department assured Members’ that they had fulfilled their monetary
obligations.
Members wanted to know why TIA had to apply to National Treasury for
approval for each of its project investments. The Department answered that because
public funds were being used for possibly high-risk investments, the National
Treasury agreed that they would evaluate TIA’s investments on a case-by-case
basis, rather than give them blanket approval to pursue these investments.
Members noted that the Department said very little on the progress made
with the Bio-economy strategy. The Department indicated that the strategy would
be finalized by the end of November 2011. They assured the Committee that
despite the strategy not being finished, work was still taking place in
implementing the objectives of the strategy.
Members enquired about the status of and progress towards finalising the
Antarctica Programme Strategy. The Department stated that the work and
responsibilities pertaining to
Members questioned the efficacy of the R&D Tax Incentive Programme. Though
not as effective as the Department would wish it to be, the objective of the Tax
Incentive Programme was to ensure that there was an overall increase in the
number of private sector companies conducting R&D in
8. Conclusions
The aforementioned entities all reported to the Committee on their
performance and expenditure. The Committee noted the unqualified audited
opinions of these entities with no emphasis of matter, except in the case of
the HSRC.
The Committee, having assessed the work of the Department through the
annual report as well as expenditure patterns through the mid-term review,
commended it for attaining an unqualified audit opinion in the 2010/11
financial year, and for spending 98% of its budget.
9. Recommendations
The Committee recommends the
following:
1.
The Department should strengthen its oversight
function over the HSRC to ensure that reporting of information by this entity
is consistent, without error and that their report on the financial operations
are within the confines of Treasury Regulations and the Public Finance Management
Act.
2.
Noting the important role the South African National
Space Agency has to play in facilitating the development of cutting-edge
science and technology capabilities in the country, the Committee recommends
that the Department /Minister appoint a person, with the necessary financial
expertise to the Board of SANSA. SANSA highlighted the matter at the time of
the annual report interactions with the Committee.
3.
The Committee welcomed that the revised Bio-economy Strategy
would be finalised by the end of November 2011. The Committee would expect that
the Department provide them with a full brief on the Strategy immediately
thereafter.
Report to be considered.
References:
Department
of Science and Technology (2011) Strategic
Plan for the Fiscal Years 2011-2016
Department
of Science and Technology (2011) Annual
Report 2010/11
Department
of Science and Technology (2011) DST
Annual Report, Presentation to the
Portfolio Committee on 19 October 2011