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:
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 theR190.1 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
· 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.
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
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.
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.
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