ATC170215: Report of The Portfolio Committee on Higher Education and Training on the Annual Report 2015/16 of the Culture, Arts, Tourisim Hospitality and Sport Sector Education and Training Authority (Cathsseta), dated 15 February 2017

NCOP Education and Technology, Sports, Arts and Culture

REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING ON THE ANNUAL REPORT 2015/16 OF THE CULTURE, ARTS, TOURISIM HOSPITALITY AND SPORT SECTOR EDUCATION AND TRAINING AUTHORITY (CATHSSETA), DATED 15 FEBRUARY 2017

The Portfolio Committee on Higher Education, having met with the CATHSSETA on 02 November 2016 reports as follows:

Section 65 of the Public Finance Management Act (PFMA), 1999 requires that Ministers table annual reports for departments and public entities for which they are responsible for by 30 September each year. The Annual Report 2015/16 of the CATHSSETA was tabled on 15 September 2016, and it is against this background that the Portfolio Committee invited this entity to present its annual reports.

1. Overview and analysis of the CATHSSETA Annual Report 2015/16

1.1 Introduction and background

The CATHSSETA is a juristic body governed by the CATHSSETA constitution and established in terms of the Skills Development Act 97 of 1998. The primary objective of CATHSSETA is to fulfil the requirements of the Skills Development Act and its attendant regulations as well as to strive to achieve for its specific sector, the goals as set out in the National Skills Development Strategy (NSDS) III.

The Tourism and Hospitality SETA was established in 2011, during the relicensing of the SETAs from 1 April 2011 to 31 March 2016. The SETA was renamed the CATHSSETA after receiving the Creative Industries and Heritage sub-sectors from what was then, the Media, Advertising Printing, Packaging and Publishing (MAPPP) SETA.

The vision of the CATHSSETA is to be a leader in skills development within its diverse sector. Its mission is to facilitate skills development through strategic partnership for CATHSSETA to contribute to economic growth.

On 16 October 2014, the Director-General of the Department of Higher Education and Training placed the CATHSSETA under administration. This was necessitated by the failure of the CATHSSETA in meeting its pre-determined objectives and the infighting within the board, and its inability to implement the findings of the Grant Thornton forensic investigation report on irregularities within the CATHSSETA. Therefore, for the 2015/16 financial year, the entity did not have the Board as the Accounting Authority. The Accounting Authority was the Administrator. The Administrator’s term of office had since been extended twice, in October 2015 for another 12 months and extended again for another six months, from 15 October 2016 to 15 April 2017.

1.2 Mandate

The work of the SETAs is informed by the National Skills Development Strategy (NSDS) III, which is the overarching strategic guide for skills development and provides direction to sector skills planning and implementation in the SETAs. It provides a framework for the skills development levy resource utilisation of these institutions as well as the National Skills Fund and sets out linkages with, and responsibilities of, other education and training stakeholders. The NSDS III has eight goals for implementation by the SETAs which are:

• Establishing a credible institutional mechanism for skills planning;
• Increase access to occupationally-directed programmes;
• Promoting the growth of a public FET college system that is responsive to sector, local, regional and national skills needs and priorities;
• Addressing the low-level of youth and adult language and numeracy skills to enable additional training;
• Encouraging better use of workplace-based skills development;
• Encouraging and supporting cooperatives, small enterprises, worker-initiated, non-governmental organizations (NGOs) and community training initiatives;
• Increasing public sector capacity for improved service delivery and supporting the building of a developmental state; and
• Building career and vocational guidance.

The CATHSSETA operates within six sub-sectors, namely, Culture, Arts & Heritage; Tourism and Travel Services; Hospitality; Sport, Recreation and Fitness; Conservation and Gaming and Lotteries.

2. Overview and assessment of programme performance

During the 2015/16 financial year, the SETA had four budget programmes, namely: Administration, Governance, Planning and Learning Interventions. The programmes had a combined total of 75 planned targets. Programme 1: Administration and Programme 4: Learning Interventions had the majority of the programmes, 25 and 34 targets respectively. Of the total targets planned during the 2015/16 financial year, 51 (68%) were achieved as and 24 (32%) were not achieved as planned.

 

2.1 Programme 1: Administration

The purpose of this programme is to enable the CATHSSETA to deliver on the mandate by providing leadership, sound financial management, organisational management, and administrative support. This programme was made up of five sub-programmes, namely:

• Finance.
• Human Resources.
• Marketing and Communications.
• Knowledge Management and Information Technology.

 

There were 25 planned targets under this programme. Of these, 15 were achieved and 10 were not achieved as planned. The targets that were achieved included:

• The finalisation of 100 percent of procurement requests within the prescribed time.
• 100 percent of reduction of irregular expenditure from the past financial year.
• 96 percent of payments processed within 30 days (exceeded the planned target by 6%).
• 76 percent of women in senior management (exceeded the planned target by 16%),
• To ensure 99 percent of IT system availability.
• 100 percent of the entity’s campaign milestones and growth in the use of the entity’s information sharing platforms (exceeded the planned target of 20% by 295%).

 

The targets that were not achieved included:

• Percentage of vacancy rate (12% above the planned target of 15%).
• Percentage of payroll budget spent on training (0.2% below the planned target of 1%).
• 1 percent of people with disability (0% achievement).
• 70 percent of the stakeholders’ awareness survey completed (0% achievement).
• 1 Brand strength rating not completed before the end of the financial year.
• 20 percent of bulk SMS communication sent to stakeholders (0% achievement).
• Percentage of service level agreements (SLAs) with outsourced services (44% below the planned target of 100%).

 

2.2 Programme 2: Governance

The purpose of this programme is to enable CATHSSETA to deliver on its mandate through the provision of governance support services that ensures accountability. This programme was made up of the Office of the Chief Executive Officer. There were eight targets planned during the year under review, and six were achieved and two were not achieved as planned.

The targets that were achieved included:

• Five governance functional structures.
• 80 percent of sampled contracts compliant with contractual terms and conditions.
• 100 percent compliance with applicable laws and regulations.
• 70 percent of mitigation plans implemented to minimise the impact of risk.
• 100 percent of audit findings resolved within the due date.
• One external audit rating achieved.

 

The targets that were not achieved included 100 percent achievement of total targets (40% below the planned target) and non-achievement of two customer satisfaction index rating.

 

2.3 Programme 3: Planning

The purpose of this programme is to provide performance information services that inform management decision-making that lead to the achievement of the CATHSSETA’s pre-determined strategic objectives. This programme was made up of the following units, namely:

• Research.

• Strategy and planning.
• Monitoring and reporting.
• Evaluation.

There were eight targets planned during the year under review and all were achieved. The targets that were achieved included:

• 80 percent of research agenda items.
• Publication of six research items on the entity’s research portal.
• Submission of the sector skills plan (SSP) and annual performance plan (APP)
• Submission of five strategy performance reports.
• 100 percent of remedial action plan per quarterly report.
• One impact assessment study conducted.

 

2.4 Programme 4: Skills Development

The purpose of this programme is to facilitate the delivery of the CATHSSETA core mandate of skills development in the CATHSSETA sector. This programme was made up of five sub-programmes, namely:

• Quality Assurance and Capacity Building.
• Learning interventions and Grants.
• Special Projects.
• Provincial Operations and Chambers.

 

The five sub-programmes had a combined total of 34 targets. Of these targets, 22 were achieved and 12 were not achieved as planned. The targets that were achieved included:

• 110 training providers compliant with legislated requirements,
• 888 learners enrolled in learnership programmes (exceeded the planned target by 288).
•  Number of learners completing learnership programmes (exceeded the planned target of 300 by 399).
•  Number of learners entering bursary programmes (exceeded the planned target of 350 by 148).
• 500 learners entering skills programmes.
• Number of learners completing skills programmes (exceeded the planned target of 250 by 26).
• 320 learners enrolled in work experience and internship programmes.
• 100 artisans entering training programmes.
• 800 sectoral small enterprises directly supported.
• 250 unemployed youth from rural areas supported.
• 50 Technical and Vocational Education and Training (TVET) staff entering training programmes.
• Five CATHSSETA learning programmes licenced to TVET colleges
• Six rural development projects supported.
• Four provincial offices established.
• 30 percent achievement of the provincial business plan.

 

The targets that were not achieved included:

• Number of qualifications, applications submitted to the Quality Council for Trades and Occupations (QCTO) (2 below the planned target 4).
• Number of learners completing bursary programmes (42 leaners below the planned target of 175).
• Number of learners completing work experience and internship programmes (134 below the planned target of 260).
• Number of TVET staff completing training programmes (3 below the planned target of 50).
• Number of TVET staff exposed to industry (50 below the planned target of 200).
• Number of National Certificate Vocational NC(V) learners placed in work integrated learning (WIL) (195 below the planned target of 700).
• Number of Nated / N6 learners placed in a WIL programme (201 below the planned target of 500).
• Number of TVET college staff trained on Organisational Development, Education, Training and Development Practices (OD-ETDP) per college (79 below the planned target of 100).
• No TVET programme submitted (planned target was one).

 

2.5 Financial performance

The CATHSSETA had a total revenue of R316.4 million for 2015/16. The total revenue was made up of R296.7 million from the skills development levy income and R8.2 million from the skill development levy (interest and penalties). The total expenditure at the end of the financial year amounted to R274.4 million. The total expenditure was made up of R205.9 million for the employer (mandatory grants) and projects expenses (discretionary grants), and R68.5 million for administration expenses. Of the R68.5 million, R19.8 million was for cost of employment, which decreased from R24 million in 2014/15. Consultancy and service providers’ fees increased from R4.8 million in 2014/15 to R15.5 million in 2015/16. The surplus at the end of the year amounted to R41.8 million.

An over-expenditure of R28.2 million and R15.8 million was recorded in programmes 1: Administration and 2: Governance respectively. Programmes 3: Planning and 4: Learning interventions’ underspending at the end of the year amounted to R3.3 million and R72.9 million respectively. 

3. Observations

The Portfolio Committee on Higher Education and Training, having assessed the Annual Report 2015/16 of the CATHSSETA, made the following observations:

• The legislation did not compel government departments and public entities to contribute 1 skills levy to the government related SETAs, and this had serious financial implications on these SETAs who were expected to provide skills development programmes to the public sector.
• The clean audit opinion achieved by the entity in the year under review was highly commended.
• The inadequate throughput rate in the skills and training programmes funded by the CATHSSETA was noted as a concern.
• The focus of the CATHSSETA’s skills development projects in cities as opposed to rural areas was noted as a concern.
• The entity exceeded its 10 percent threshold in administration expenditure owing to high operational costs for maintaining support services.
• The delays by the Department in finalising the new SETA landscape was highlighted as a serious concern as it negatively impacted on the SETAs to operate optimally, commit to projects, to fill outstanding vacancies and to deliver on the growing demand for skills development.

4. Conclusion

The performance of the CATHSSETA had improved from 34 percent in 2013/14 to 80 percent in 2015/16. The entity received a clean audit opinion for 2015/16. The interventions implemented by the administrator and his team had managed to strengthen management and governance capacity of the entity which were dysfunctional. The administrator was able to conclude all the disciplinary hearing cases within his control, and there were three outstanding cases that were with the Commission for Conciliation, Mediation and Arbitration (CCMA). The process of recouping funds from those implicated in fraud and corruption were ongoing.

Some of the key highlights for the year under review included the payment of R45 million in mandatory grants and R160 million in discretionary funding. Funding towards mandatory and discretionary grants supported the core delivery / skills programmes of the CATHSSETA. The CATHSSETA experienced challenges, in particular with the completion / success rate at some of its key skills training programmes. The entity committed to embark on a monitoring and evaluation exercise to assess the challenge of drop-out in its funded programmes.

5. Recommendations

The Portfolio Committee on Higher Education and Training having assessed the Annual Report 2015/16 of the CATHSSETA, recommends that the Minister of Higher Education and Training consider the following:

• The filling of vacant critical posts should be prioritised to strengthen the capacity of the entity in fulfilling its mandate effectively;
• The appointment of the new Accounting Authority should be expedited;
• The entity should adhere to the 10 percent threshold for its administration expenditure;
• The Department should exercise sufficient oversight role over its entities, in particular the SETAs to prevent poor governance and performance;
• The CATHSSETA should distribute the skills development interventions across all the provinces;
• The Department should expedite the process of reconfiguring the new SETA landscape; and
• Further engagements should be undertaken to resolve the challenge of government departments and public entities not paying the 1 percent skills levy for training and development.

 

Report to be considered.