REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING ON THE BUDGET AND STRATEGIC PLANS 2011/12 OF THE SAFETY AND SECURITY SETA, CONSTRUCTION SETA AND FIBRE PROCESSING AND MANUFACTURING SETA, DATED 17 AUGUST 2011

The Portfolio Committee on Higher Education and Training, having considered the Budget and Strategic Plans 2011/12 of the Safety and Security SETA, Construction SETA and Fibre Processing & Manufacturing SETA reports as follows:

1. Introduction

The Portfolio Committee on Higher Education and Training considered the Budget and Strategic Plans 2011/12 of the SASSETA, CETA and FP&MSETA on 22 June 2011. This report gives a brief summary of the presentations made by SASSETA, CETA and FP&MSETA to the Committee, focusing mainly on the 2011/12 Budget and Operational Plans and an overview of challenges and successes of the previous financial year. The report also provides the Committee’s observations and recommendations.

The Portfolio Committee on Higher Education & Training was represented by:

Adv I Malale, Chairperson (ANC), Ms Gina (ANC), Mr S Makhubele (ANC), Mr C Moni (ANC), Mr S Radebe (ANC), Ms W Nelson (ANC), Dr J Kloppers-Lourens (DA), Mr A van der Westhuizen (DA), Mr A Mpontshane (IFP) and Mr J Dikobo (AZAPO).

Safety and Security SETA was represented by:

Mr A Witbooi: Chairperson, Mr Z Baloyi: Chief Executive Officer, Mr M Mboniswa: Chief Financial Officer, Ms N Qamata and Mr S Ngoasheng: Senior Manager.

Construction SETA was represented by:

Mr T Mhambi: Administrator, Mr M Fakude: Chief Financial Officer, Ms S Pilusa: Corporate Specialist Advisor, Mr F Lamola: Skills Development and Leanership Manager, Mr A Manuel: Western Cape Regional Manager and Mr T Matobako: ETQA Manager.

Fibre Processing & Manufacturing SETA was represented by:

Mr S Ngidi: Chairperson, Mr S Mkhwanazi: Acting Chief Executive Officer, Mr P Naicker: Acting Chief Operations Officer and Ms G Layzel: Acting Chief Financial Officer.

Department of Higher Education and Training was represented by:

Ms P Moleke: Deputy Director-General, Skills.

2. Summary of presentations

2.1 Safety and Security SETA

Mr Z Baloyi: Chief Executive Officer led the presentation which highlighted the following key issues:

• Safety SETA’s mission is to be an education and training authority that ensures quality provision of skills development and qualifications for South African citizens in the safety and security environment through effective and efficient partnership.
• The profile of the safety and security sector included: Policing with 186 000 employees, Corrections with 41 907 employees, Justice with 18 181 employees, Defence with 74 596 employees, Legal with 59 313 employees and Private Security with 387 544 employees.
• Achievements for 2010/11: The SETA conducted stakeholder road shows reaching all nine provinces, held successful AGM meeting, fully participated in Provincial Skills Development Forums (PSDFs), and implemented Recognition of Prior Learning (RPL) for Policing.
• Challenges: Lack of provincial presence in other provinces besides Gauteng, dropout rate in Adult Basic Education and Training (ABET) programmes, and transfer of Metro Police function from Local Government SETA.

Strategic Plan: Plans for this year:

· The SETA planned to build its internal research capacity. This would assist the SETA in improving its research strategy and develop an effective Sector Skills Plan.

· The SETA planned to establish partnerships with 10 Further Education and Training (FET) colleges and Universities of Technology with the aim to increase access to workplace opportunities for students. The SETA enrolled 3000 unemployed learners for vocational programmes.

· The SETA planned to assist FET colleges through skills development programmes and work opportunities for students. A pilot project at three FET colleges has been implemented.

· The SETA planned to establish partnership with youth structures such as the National Youth Development Agency (NYDA) to assist young people with training and work experience projects.

· Training and development support for small businesses would be prioritized. So far 15 small businesses have been supported.

· The SETA planned to support career and vocational guidance through career exhibitions and distribution of career guides to schools.

Financial Report 2011/12:

• The SETA’s total budget for the current financial year was R204 million, Administration expenses R73 million, Mandatory Grants R96 million and Discretionary Grants R54 million.

2.2 Construction SETA

Mr T Mhambi: Administrator led the presentation which highlighted the following:

• Construction SETA was placed under administration by the Minister of Higher Education and Training with effect from the 31 March 2011.
• In the past six year, the SETA was not able to achieve its modest targets. Mandatory grants were not fully paid to large companies and this negatively affected workplace training in the construction sector. The Adult Basic Education and Training (ABET) programme had been a failure in the construction sector since many employees rejected it. Most employees in the sector had been there for a very long time and Recognition of Prior Learning (RPL) would have been a better option.
• The SETA had more than 300 projects worth R300 million that were not successful. It emerged that 80% of the projects were fraudulent and R214 million was defrauded. The money of the SETA was not utilized for good purposes.
• Poor corporate governance was the main reason for the poor performance of the SETA. Projects were fraudulently managed and the previous board did not take measures to correct the situation. Upon arrival of the new accounting authority, there were no staff personnel in the projects unit of the SETA.
• The new accounting authority had changed the strategic plan of the SETA since it did not respond to the requirements of the National Skills Development Strategy (NDSS III) and the new strategic plan would be submitted at the end of June 2011.
• The SETA had a total budget of R313 million for the current financial year. Lack of levy information led to an unpaid amount of R47 million for mandatory grants at year ends and the grants would be paid by 30 June 2011. The surplus for the current financial year was R187 million.

2.3 Fibre Processing & Manufacturing SETA

Mr S Ngidi: Chairperson led the presentation which highlighted the following:

• The FP&M SETA was an amalgamation of three SETAs namely; Forest Industries SETA, Clothing and Textile SETA and Printing Publishing and Packaging SETA. These new changes were as a result of the new SETA landscape that was implemented by the Minister of Higher Education and Training, Dr B Nzimande as of 1 April 2011.
• The integration work in the newly formed SETA brought new challenges to the SETA. The policies of the three different SETAs had to be streamlined into one to ensure good governance, the sector industrial codes had to be renewed, supply chain management and procurement policies were revised.
• The three different SETAs would keep their accounts until all their books were closed. There would be one central head office of the new SETA and regional offices would be restructured later during the course of this financial year.
• The three SETAs had a total of 100 employees’ altogether. However, due to institutional memory loss caused by restructuring, the current staff complement was 56 people. The SETA had not yet appointed a new permanent CEO and that would be addressed soon.

• The forestry sector profile included forestry, wood products, furniture, pulp and paper. Majority of employers were located in KwaZulu Natal (31%). The clothing textile sector employed approximately 150 000 people, of which mostly were females. The printing packaging and publishing sector employed approximately 49 399 employees.
• Finance: The total levy income budgeted by the FPMSETA in the 2011/12 financial year for the Clothing and Textile sector is R65 million, Forest Industries sector R73 million and Printing Packaging and Publishing sector R94 million. In total the budget of the FPMSETA was R 248 million.

3. Committee Observations

3.1 SASSETA

3.1.1 It emerged that the annual targets for 2011/12 of the SETA contained in its strategic plan were too low and not responsive to government priorities of job creation and training opportunities for young people.

3.1.2 It was discovered that the Department had not finalized the issue of Service Level Agreements (SLAs) with SETAs.

3.1.3 It was noted with extreme concern that the SETA had been underspending for the past two financial years while it presented so many achievements before the Committee. The Committee was further concerned with the poor success rate of the ABET programme in the SETA and management was requested to rectify this challenge.

3.1.4 It was noted with concern that targets for experiential learning were too low while many students were in dire need of workplace learning to complete their qualifications.

3.1.5 The Committee requested a database of all service providers that were responsible for facilitation of learnership programmes.

3.1.6 It was noted with concern that the SETA employed only one person with disability in the entire organization and it was encouraged to do more in this area.

3.1.7 It emerged that the transfer of municipal traffic services in the current financial year posed a serious challenge for the SETA in terms of funding, since this function was with the Local Government SETA and remained an unfunded mandate.

3.2 CETA

3.2.1 It emerged that poor corporate governance was the main reason for the SETA to be put under administration.

3.2.2 The Committee was extremely concerned with the poor performance of the SETA in almost all its focus areas in the past financial year and commended the Minister’s decision to appoint an administrator for the SETA.

3.2.3 It emerged that the strategic plan of the SETA was not responding to the needs of the NSDS III and the new administrator was requested to submit a revised strategic plan to the Committee.

3.2.4 The Committee requested the forensic audit report for its consideration.

3.3 FP&MSETA

3.3.1 It was noted with concern that the integration process of the SETA led to loss of key personnel within the newly formed SETA.

3.3.2 It emerged that the SETA had not finalized the appointment of the fulltime chief executive officer, chief financial officer, chief operations officer and new board.

3.3.3 The Committee was concerned that most of the students that were sent to the Czech Republic to study Masters in Textile Engineering by the former Clothing and Textile SETA had not been placed on fulltime employment.

3.3.4 It emerged that the annual operational targets of the SETA were not clearly articulated and a numeric analysis of the targets were not provided.

4. Recommendations

• All the three SETAs were requested to revise their strategic plan so that they can respond to government priorities of job creation, rural development and training opportunities for young people.
• SASSETA and FPMSETA were requested to expand their physical presence to all the other provinces in the country.
• The Department was requested to finalise the SLAs with all SETA.
• CETA was requested to submit a forensic audit report to the Committee for its consideration.
• It was recommended that SETAs should convene a SETA Forum where they will discuss strategic issues that were affecting each other.

5. Conclusion

The meeting of the Committee with the three SETAs provided an opportunity for Members to obtain a synopsis perspective into the annual and future operational plans of the SETAs. This was the first time the Committee interacted with the three SETAs on their budget and strategic plans. From all the presentation that were made by the SETAs, the Committee was extremely concerned with their targets as they were too low and unrealistic for a country that was in dire need of skills development. The Committee requested that the strategic plans of these SETAs be revised and submitted to the Committee for further consideration. The overall request of the Committee was that there is more work that the SETA could do more than what was contained in their strategic plans.