Parliament 2016/ Annual Report: Acting Secretary to Parliament briefing; Election of Co-Chairperson representing NCOP

Meeting report

Co-Chairperson Smith said that the Committee was sufficiently empowered by the presentations given the previous day by the Auditor-General of South Africa (AGSA), the content advisor, and the research teams.

He said that the former co-Chairperson, Mr S Mohai (ANC) had been reassigned to be the Chief Whip of the National Council of Provinces (NCOP). The NCOP component of the Committee therefore had no Chair, and it had subsequently taken a decision on who would co-Chair with the National Assembly Chairperson of the Committee.

The Chairperson welcomed the Speaker of Parliament and the Chairperson of the National Council of Provinces (NCOP).

Ms B Mbete, Speaker of the National Assembly (NA), said that the Executive Authority of Parliament had asked for the opportunity to be present at the meeting because it would be appropriate for it, together with its team, to have a relationship with the Joint Standing Committee on an ongoing basis, and to be in touch and on the same page about issues relating to Parliament’s finances and their management.

The Committee was new, having been formed when the Financial Management of Parliament and Provincial Legislatures Act had been adopted. It was out of a firm belief that it was necessary to have such legislation that many years ago, Parliament had embarked on a debate about the Municipal Infrastructure Grant (MIG), and after many years of debate and amendments, the Bill had finally been adopted as an Act. Progress had been made in terms of the implementation of the MIG, including the creation of this Joint Standing Committee.

The relationship between Parliament and National Treasury (NT) regarding financial matters was affected in relation to the national budget, hence the importance of the relationship between the Executive Authority and the Committee in terms of its role set out in the Act.
 
The relationship between Parliament and Treasury had been a difficult one for a long time. As Parliament came towards the end of 2016 and early 2017, issues in relation to Parliament’s budget were in a very tight spot. A meeting had been concluded on Monday night with the Minister of Finance and Treasury on the budget of Parliament and historical issues, and this was when she felt that they were making a breakthrough to Treasury. Parliament had been pursuing the strategic objectives adopted in 2014, but by the end of 2016, it was clear that given the financial state in the country – and the rest of the world -- it needed to re-strategise, and establish new priorities within the context of the new realities. It was with that in mind that last month, Parliament had had to re-think, re-strategise, and re-prioritise in line with the realities of the times.

Within the tight purse of Parliament, there was not enough money for Parliamentary staff to receive the kind of increase they were asking for. However, with regard to labour force issues, Parliament was in a better space than some time in 2016, and she believed they were making a breakthrough in this respect.

Mr J Steenhuisen (DA) asked co-Chairperson Smith if the report of the audit committee on the outcomes into the various allegations leveled against the Secretary to Parliament was still on the agenda. It had not been tabled in the agenda for the meeting -- had he perhaps missed something?

Co-Chairperson Smith said that correspondence had been received the previous day (24 October 2017), and this would be formally tabled to the House.

Election of co-Chairperson

Co-Chairperson Smith said that co-Chairperson Mohai had been re-deployed to the NCOP.

Ms T Motara (ANC) nominated Mr D Monakedi (ANC). Mr C de Beer (ANC, Northern Cape) seconded.

Mr Monakedi accepted the nomination, and was formally inducted as co-Chairperson.

Co-Chairperson Smith said that a letter had been received that the audit committee had had a meeting with the Executive Authority on 26 October 2017 to present the findings of the disciplinary action to be taken against the Secretary to Parliament, Mr Gengezi Mgidlana.

Mr Steenhuisen said that the matter needed to be finalised as quickly as possible, because the institution needed a head.

Parliament 2016/17 Annual Report

Ms Penelope Tyawa, Acting Secretary to Parliament, said that the annual report covered the 2016/17 financial year and was readily available on the Parliamentary website. She would be presenting on the targets Parliament had met during the financial year and would also provide measures on the targets that were not met. She would provide details of the budget spent against the set targets and the Annual Performance Plan (APP). The presentation was focused on the core business of Parliament.

24 Bills had been passed in 2016/17, and these divided between the NA and NCOP. The objectives of the legislation were focused on poverty, unemployment and inequality; the equitable distribution of wealth, nation building and social cohesion; land reform, restitution, redistribution and security of tenure.

There were various engagements entailing mass participation of the country. Parliament continued to provide support to enable the independent High Level Panel (HLP) on the impact assessment of legislation passed since 1994, to conduct its work. Engagements comprised of 500 to 700 participants per province, and served a mechanism for the HLP to engage with citiens to execute its mandate of assessing the impact of legislation since 1994.

Public participation was a strategic objective and mandate of Parliament. It looked at how much it interacted and involved the public in participation in the formulation of legislation and ensuring that the public was involved in the work of Parliament. There was an increase in the use of public platforms, with 1.4 million visitors to the Parliamentary website, 1.3 million YouTube channel views, 350 000 Twitter followers, 36 612 Facebook likes, and 1 772 Parliamentary TV broadcast programmes. Submissions and recommendations were allowed from the public on the appointments to statutory bodies such as the South African Human Rights Commission, the Public Service Commission, the National Youth Development Agency, the Public Protector, and the Inspector-General of Intelligence.

There was a lot of work done on legislative sector activities, the Financial Management of Parliament and Provincial Legislature Act (FMPPLA) regulations, the public participation framework, Parliamentary projects and the Parliamentary Institute. The legislative Bill was aimed at establishing cohesion and harmonisation between the nine legislatures and Parliament.

There were 13 international agreements analysed, and 89 policy briefs produced by staff. Parliament had engaged in various bilateral and multilateral engagements including the 60th UN Commission on the Status of Women, BRICS, the Southern African Development Community (SADC), the World Trade Organisation (WTO), and the UN Climate Change Conference.

There was a continued effort to build a capable Parliamentary service. In 2016/17, Parliament had 41 targets and had met 20 or 48.78% of the targets, compared to 33 targets in 2015/16, with 15 achieved (45.45). The overall performance trend was positive, with more targets and a higher achievement rate.

Programme one: Strategic leadership and governance.

There were three targets for this programme and only two were achieved. The Parliamentary Budget Office (PBO) exceeded their target, producing three analysis reports that were presented to the finance and appropriations committees in both Houses of Parliament. A standard operating procedure was developed for the tabling of governance reports, and improved performance was seen in the fourth quarter.

Programme two: Administration.

This focused largely on the training of members. The programme set out five targets and had achieved four. A direct benefit was that a lot of Members took up the capacity-building programmes across the sector. This project was funded by the European Union (EU). When the funding stopped, the project had to be integrated into the baseline of Parliament, and would have to be budgeted for accordingly, because it was central to the empowerment of MPs and their growth, as well as skills development. If the budget was not integrated into the baseline, the project would fail in due course, and this was something that had been communicated to NT. Programme two was also responsible to the compliance and prescripts of the FMPPLA and that spoke to the ability of a turnaround strategy in the processing of tenders and payments. The target had been 10, but Parliament had achieved six.

Programme three: Core business.

This programme involved committees, researchers, legal advice, procedural advice, oversight, public participation, and improvement of law making. The programme had 22 targets. Seven were achieved and 15 were not. The main deficiencies were in the models that were set out for public participation, oversight mechanisms, legislative, and oversight and accountability. It was not that these targets were not met or that Parliament did not allow for public participation or oversight. What Parliament had done was a review of the strategy with the Executive Authority, and refined the predetermined objectives and come out with an outcome not to measure models, but to measure what was done with the models. Parliament had revised the models to produce a performance indicator which would be refined in the future.

Programme four: Support services.

There were seven targets set, but only four were achieved. Three indicators were not met due to the stakeholder engagement plan and communication strategy for Parliament until 2019 not being produced within the targeted time frames. Planned training for communication and media for Chairs of Committees had not been convened. The results of a survey to assess the extent to which people knew about Parliament, were slightly lower than the targets set.

Programme five: Associated services.

The programme had one target, which was the turnaround time for the transfer of budgets to political parties, the turnaround time for reimbursing MPs, and the publishing of the Members’ handbook. The target had been achieved.

On the annual financial statements, Parliament had received a clean audit report – unqualified, with material findings on performance information and compliance with laws and regulations -- by AGSA for the third consecutive year. The average payment days of invoices received from suppliers was 13 days. Parliament had appointed a governance committee to ensure that irregular expenditure was correctly dealt with. A significant balance of irregular expenditure from previous years had been condoned.

There had been a gradual improvement in the work of Parliament in terms of the professionalising of officials and developing strategic plans to develop the annual performance plan (APP) and to move targets from just being transactional to outcome-based. Parliament was monitoring the implementation of action plans from AGSA, and tried to identify remediation, improve internal controls, and address inadequacies. As a result, Parliament had been receiving clean audit reports, and the challenge now was to maintaining this. The report could be sustained only if there was a growing relationship and support from Committees like the Joint Standing Committee on the Financial Management of Parliament.

Parliament had received R1.6 billion from NT at the beginning of the 2016/17 financial year and had spent all of it. 98% of Parliament’s revenue was appropriated funds, with 2% coming from departmental receipts, the National Revenue Fund (NRF) and donor funds. Statutory appropriation, which was the compensation of Members, had historically been overstated, and under-spending had always been surrendered to the NRF. This was an area where Parliament had been relaying to NT that it had a stressed situation with respect to personnel, owing to the fact that Treasury had cut the personnel budget of Parliament without informing them. This was an area where NT could readjust the appropriated funds to ensure that the deficit Parliament was experiencing was balanced.

While the compensation of employees was down by 12%, the compensation of Members of Parliament was up by 21%, and goods and services expenditure was 12% higher. Transfers to nonprofit organizations such as political parties had fallen by 2%, and expenditure on theacquisition of property, plant and equipment was 83% down. Remedial action to deal with negative variances would be monitored, and this depended a lot of on the NT making sure that the Parliamentary budget was corrected appropriately.

If Parliament was not burdened with medical provisions for Members, as well as the Parliament and Provincial legislatures, the real net assets of Parliament would be R155.2 million. Currently, Parliament was in a net liability situation amounting to R855.06 million due to the post-medical provisions made for the former MPs and provincial legislatures. There were currently 974 former Members receiving a medical aid subsidy from Parliament. This concern had been raised with Treasury, as it distorted the budget and needed to be corrected. There had been a positive response from NT, both technical and personnel, and at the level of the Minister.

On the current assets of Parliament, the inventories referred to food and beverages sold at Parliament’s restaurants. There had been a 34% decrease, from R969 000 in 2016 to R635 000 in 2017, due to fewer purchases of inventories informed by reductions in sales as a result of the cancellation of catering by departments as part of the cost-cutting measures implemented by government.

Receivables from non-exchange transactions had decreased by 87%, from R18.3 million in 2016 to R2.4 million in 2017, due to the write off of no work, no pay debt in terms of the agreement between management and organised labour.

Receivables from exchange transactions increased by 89%, from R1.7 million in 2016 to R3.3 million in 2017, due to increased catering sales during March 2017 which had not been paid for by the end of the financial year. As a control measure, Parliament had not provided catering to departments which had outstanding amounts of more than 30 days. Accrued interest had also increased by 74%, from R1.6 million to R2.8 million.

Pre-payments had increased by 12%, from R6.7 million in 2016 to R7.5 million in 2017, due to an increase in prepaid expenditure in relation to subscriptions that Parliament paid for, and membership and association fees.

Cash and cash equivalents had decreased by 6%, from R332 million in 2016 to R311.6 million in 2017, due mainly to the use of Parliament’s retained earnings to fund its shortfall from the appropriation budget granted by NT.

Property, plant and equipment had decreased by 12% from R106.1 million in 2016 to R93.2 million in 2017, due to the depreciation of assets for the entire financial year.

Intangible assets had decreased by 7%, from R16.4 million in 2016 to R15.1 million in 2017, due to amortisation. Heritage assets were not depreciated. There had been an R8 000 increase due to movement in the year.

Finance lease obligations had decreased by 59%, from R449 000 in 2016 to R184 000 in 2017, due to the fact that some contracts on assets such as cell phones, tablets and modems, had expired during the financial year. The average lease term was two years.

Payables from exchange transactions increased by 11%, from R59.4 million in 2016 to R66 million in 2017, due to increased goods received or services rendered by service providers close to year end. Payables from non-exchange transactions increased by 25%, from R43.5 million in 2016 to R54.2 million in 2017, due mainly to more leave entitlement as compared to the previous financial year.

The unspent statutory appropriation had increased by R30.4 million as a result of the increase in the annual budget, from R503.1 million in 2015/16, to R529.7 million in 2016/17, whereas Members’ salaries had not been increased for the 2016/17 financial year. The current employee benefits had decreased by 100% due to the fact that a performance bonus provision was not made for the 2016/17 financial year and the 2015/16 provision was also reversed in terms of the agreement between management and organised labour.

With regard to disclosures, there had been an increase in litigations in 2016/17 compared to 2015/16, particularly by staff members. This included a labour court case for the researchers, and a contestation of protection service officers. Parliament was opposing the case involving the protection service officers and the matter was yet to be finalised.

Irregular expenditure had decreased by 84%, from R15 million in 2016 to R2.4 million in 2017, due to the introduction of the governance assurance committee which looked at non-compliance cases, interrogated them and advised the Secretary to Parliament of the actions to be taken. Irregular expenditure amounting to R13.1 million had been condoned by the Executive Authority. R192 000 was related to the financial year under review, while R12.9 million was related to previous years. The following controls were put in place to prevent irregular expenditure:

• Centralising supply chain management (SCM);
• Formal training conducted in order to upskill officials and bid committees;
• Sampling of purchase orders to check and confirm compliance.

Fruitless and wasteful expenditure had increased by 29%, from R830 000 in 2016 to R1 million in 2017, due to a loss of catering equipment. The business unit had been requested to buy instead of hiring equipment. The business unit had introduced policies and procedures to improve control measures. Fruitless and wasteful expenditure amounting to R18 000 had been condoned by the Executive Authority, with R16 000 related to the current financial year, and R2 000 from previous financial years.

With regard to human resource (HR) management, the key driver of Parliament’s personnel budget, excluding Members, was in the highly skilled production (level C) and highly skilled supervision (level D) ranks. These included researchers, content advisors and librarians. Level C employees accounted for R406.8 million, and Level D employees accounted for R244.8 million.

With regard to vacancy rates, at the last presentation to the Joint Standing Committee, the Executive Authority had provided the Committee with an organogram and breakdown of individual salaries of individual members of staff, and had also indicated that some of the positions were frozen, and some that were vacant and had to be filled because they were critical posts. At the time of reporting, there were 67 active vacant posts. The number had reduced and some frozen positions were unfrozen, particularly those relating to the support for MPs, such as content advisors, researchers and legal advisors. The annual turnover rate at the time of reporting was 46 resignations. The staff component of Parliament sat at 1 376 actively employed. There was not much representation of employees with disabilities. There were only nine persons with disabilities employed by Parliament. There was not enough representation of gender equity as well at the senior and top management level. The bulk of the concentration of employment equity was in the level C and D bands. Management had developed an HR strategy which would be shared in good time with the Committee once the Executive Authority had seen and approved it.

Discussion

Mr Steenhuisen (DA) said that Programme Three was essential to the work of Parliament, and it was clear there was a lot of the misinformation around the core business of Parliament. Only 20 of 41 targets had been met. This was the area with the biggest capacity constraints and where posts were frozen. He asked what strategy was in place.

He asked how many of the NA questions were responded to, and what the quality of responses were. Over the past two years, there had been a decline in the quality of responses from the Executive. While the oversight was being done, the accountability was not forthcoming, and there was a need to measure that going forward.

He said that the Auditor-General had given Parliament 100% for compliance with legislation, but by Ms Tyawa’s own admission, that compliance with legislation was not what it should be.

Mr Steenhuisen said he had a problem with the way communication was done. Public money was used and Parliament was a multiparty institution, but there was an inherent bias with the way the communication strategy was deployed on Twitter and in various releases. Large numbers of Members of the opposition were ignored, while speeches of Members of the Executive were vigorously retweeted by Parliament, and he was happy to provide examples as he had been collecting them in the last few months. There was clear bias to a single party in Parliament, and it was wrong for a Parliamentary communications service to be operated in a biased manner. It was the same with press statements that arose from Parliament, where statements indicated that “the Committee has resolved X, the Committee has resolved Y,” when in actual fact the Committee had not even grappled with that issue, and no resolutions had been passed. It was generally the ‘musings’ and opinions of Chairpersons of Committees being relayed as Committee resolutions. It was wrong and dishonest, and that practice needed to stop since it was not a true reflection of what Parliament was doing. They were the views and opinions of a single politician.

Mr Steenhuisen asked who the MP was that was doing business with Parliament, what the circumstances were, and how it had been allowed to get through SCM, particular given that MPs should have been flagged on the system.

Ms Tyawa acknowledged that certain targets were not met. There was a time where the process was that if the Houses had adopted a strategy and one had targets defined in a manner that was not appropriate, there had to be an engagement as to when those targets would be revisited. With regard to the stakeholder engagement plan, Parliament had never had an institutional stakeholder engagement plan prior to it being set as a target. It had appeared too ambitious when they started, and thought that they would finish in a year or so, but had realised that it needed extensive work, and they had established a particular target to meet, develop and implement the stakeholder engagement plan. They had then decided as management that the plan needed to be revisited. AGSA would work with Parliament to refine the predetermined objectives. A revised APP which went up to 2019 would be submitted to the Executive Authority for approval by both Houses.

When the 67 posts were frozen, Parliament had gone back to division managers and systematically unfrozen the critical positions. Over the past six months, there had been advertisements for content advisors and researchers, and on average there were interviews on going for these positions. Positions for legal advisors were also being advertised.

Ms Tyawa said that NT did not inform Parliament before cutting its budget. They cut R33 million in 2014 and this was taken from compensation of employees. NT was aiming to cut R108 million in the current year. When NT decided that the fiscus was under strain, and decided on a 1% cut, they looked across, and saw the many personnel in the departments and encouraged Parliament to have one on one meetings with the technical officials in NT. Hence why they started by freezing posts, and once they noticed that they were saving costs, they systematically started unfreezing posts.

She said that officials could not necessarily dictate what the quality of responses from the Executive to questions raised by MPs was, but they could possibly have a methodology as to what level the Executive was accounting sufficiently to MPs.

Ms Tyawa said a weakness was that the FMPPA had a timeframe, and once a report was completed, it should be tabled within five days. What made it complicated was that when an audit report was completed, it needed to be tabled immediately so that a presentation given to the Committee was an internally audited quarterly report.

Management would go back and do their own analysis and see how they had covered the area of communication and media, and give a report to the Committee.

Mr Manenzhe Manenzhe, Chief Financial Officer (CFO), Parliament of South Africa, said there was a company called ‘Provox’. The supplier had not declared that he was an MP, and this was a weakness that Parliament needed to work on to ensure that they did not depend only on declarations but to put systems in place to be able to detect that.

Co-Chairperson Smith said the supplier was a member of the DA, and he would share the name privately with Members of the Committee. The important question was what the management of Parliament had done about it.

The DA Members told the Chairperson to share the name.

The Chairperson said that the Member who had done business with Parliament was Mr Sejamothopo Motau, and it was to the tune of R22 000. It was clearly a breach, and it was necessary to remedy that going forward. Mr Motau was still an MP.

Mr Manenzhe confessed it was an area where management had to invest on processes to follow. They were exploring that space so that they sis not necessarily depend on the declaration form.

Mr Steenhuisen said that the internal audit Parliamentary office should have been informed, and the Ethics Committee, so there could be a proper and full investigation. Processes in Parliament needed to be applied without fear and favour, irrespective of who the Member was. This could not be something they found out only in annual reports.

Mr N Singh (IFP) asked if Treasury was aware that Parliament was carrying over the most medical aid benefits for former MPs, because if there was a need for Parliament to get any more funding this would be a classical argument, instead of getting funding from provincial legislatures. Mr Singh asked if there was something that the Committee could be doing, such as looking at different service providers beside ‘ParMed’.

He said that the narrative on overtime as a percentage of personnel expenditure was misleading, and that maybe it was a percentage of all overtime by personnel, and not just individuals.

He was not sure if Parliament should reconsider whether channel 408 was the right channel for the business of Parliament to be exposed to the public. SABC was a public broadcaster, and maybe Parliament needed some engagement with them.

With regard to the Parliamentary Budget Office (PBO), there was legislation that allowed Parliament to question and oversee the budget, but it was not doing that adequately. It was providing a service to the Standing Committee on Appropriations and some other Committees, but when it had been established it should be offering a service to Members who wanted to ask something. He asked if Parliament was thinking of beefing up the capacity of the PBO so that ordinary Members could benefit from the services offered.

Ms Tyawa said the Speaker of the NA and Chairperson of NCOP had met with the Minister of Finance on the matter that Parliament was carrying a budget that Treasury should be processing, like they do with the Government Employees Pension Fund (GEPF). The technical people at Treasury were aware and were working with Mr Manenzhe.

Management would look at page 165 of the annual report on how they were narrating overtime.

She said that there was a proposal on how they could move the Parliamentary channel from 408, because it was a paid channel and data showed that not many people could access it because it part of the DSTV package.

When the PBO was established, Parliament had not applied for its budget to be revisited to include the cost of the PBO. From 2012 onwards, the PBO had been funded out of retained funds and those funds were now exhausted. Parliament had to quantify the budget and put in a PBO allocation as a request to NT.

Mr M Waters (DA) referred to the questions replied to by Ministers, both written and oral, and said the British House of Commons had set up a Committee of MPs so that MPs who felt their questions were inadequately responded to could write to the Committee and if warranted, the Committee could call the Minister before the Committee to explain him or herself, or if question was even taking an undue time to be replied to.

Mr Waters asked how the target dealing with the revised ‘Parliamentary programme to give greater emphasis to oversight and accountability’ was measured exactly, and how they had decided they achieved the Parliamentary programme being more accountable.

There was an under-spending of R93 million on the compensation of Members, and the money was sent back to the NRF. However, according to the figures, only R62.8 million had been sent back. A difference of R31 million was not accounted for -- where was it, and why it was not returned back to the NRF?

Mr Waters said that as far as he knew, the Secretary to Parliament did not have a performance contract in the last financial year, and the Committee had been informed of that three weeks before the end of the financial year. He asked if that was reflected in the annual report, because he did not see it. Given that the head of the institution did not have a performance contract, or that it was signed at the eleventh hour of the year, he asked how Parliament had received a clean audit. It seemed that there was a transgression of the law by the head of the institution, and it was not reflected in the annual report.

He asked on what basis extra money was allocated to political parties, and who took the decision to allocate extra money from what was budgeted.

Ms Rashida Begg, Division Manager: Core Business Support, said that the reference made to the Parliamentary programme was the programme put together by the respective programming Committees of the NA and NCOP, and the fact that more time was allocated to oversight activities. The programme was revised to allocate more time to oversight activities.

Mr Manenzhe said that the R62 million that was reflected on the financial statements was for the previous financial year. The R93 million would reflect in 2017/18. By 31 March 2017, R93 million was what had to be surrendered. The payment had happened after 31 March 2017, in the current financial year of 2017/18.

Mr Manenzhe said that the transfers to political parties were based on political representation in the House. It was one area that was under-funded over the years and it therefore became a problem, because allocations had to be based on the representation of political parties in the House.

Ms Sharonne Adams, Business Executive, AGSA, said that when auditors expressed an opinion they did not say that Parliament had absolutely exceeded on all legislation. Audit reports were based on specific subject matters, and AGSA gave limited assurance on the specific subject matter

Mr Waters asked what had informed the motivation to increase the amount given to political parties, given the austerity measures put in place throughout the rest of Parliament.

Mr A Shaik-Emam (NFP) asked what mechanism was in place for delegations that came back to report to Parliament. In his view, there was very little or no mechanism, and he was not sure what the purpose of sending delegations was when nothing happened once the delegates returned.

With regard to political party funding, clearly Parliament had failed to do oversight as to whether the offices or staff existed. Would the Executive Authority consider that the AG’s office should do an audit on party funding from Parliament, rather than each party having an independent auditor? It would give more credibility to the process and ensure that monies indeed were spent in the way they were intended.

He asked what was being done about irregular expenditure, the consequences that followed, and processes followed to de-regularise the irregular expenditure.

Ms Tyawa said that they were ensuring that a report was produced on each of the visits. The report would be processed through the Committee, because the Members would come from the respective Committees. Management provided the researchers who could put together the report, and it got sent to the respective Committees. Some of the reports had to be tabled at either of the Houses, and the respective Secretary of the House would have to monitor the reports.

Ms Tyawa said that Parliament needed to set up a system. There was a policy that stated that each party’s accounting officer must make sure that they had the details of their constituency offices and make sure that it existed. It was correct that Parliament had not gone out to establish the existence of those offices. Allocations were reconciled, audited, and reported back to make sure that money that was expended was reported on. Where a party could not present reports on monies spent, the chief financial officer (CFO) would then hold back the funding of that respective party.

She said the Executive Authority had established the Governance Committee to allow for each individual official to make a presentation on how irregular expenditure occurred. Where there were issues that seemed like they needed to be looked at, they asked the internal audit to do an assessment whether it was due to weak internal controls or downright misbehaviour. 

Mr Shaik-Emam asked if there was anyone who had been dealt with or warned in the last financial year, and if there had been any consequences for their actions.

Would Parliament ever consider ensuring that the AG’s office audited all Parliamentary funds given to political parties?

Co-Chairperson Smith said that AGSA did audit Parliament’s financials, because that was given via the Independent Electoral Commission (IEC) and to Parliament directly. What the AG did not do was become the external auditor for a political party. If Mr Shaik-Emam was asking if the AG should be an external auditor for political parties, then that was a different question.

Mr Shaik-Emam said that was exactly what he was asking. Parliament needed to have an audit system that would be doing the auditing instead of political parties having their own external auditors.

Co-Chairperson Smith said that Mr Shaik-Emam should bring that question to the Committee dealing funding for political parties, and not to this Committee.

Mr F Essack (DA, Mpumalanga) said that programme two had been only 60% achieved due to ineffective mechanisms for processing tenders and supplier payments. He asked what the ineffective mechanisms were, and how they proposed to correct that going forward.

Mr C de Beer (ANC, Northern Cape) said that the success of any institution or business depended on how healthy the people working there were. The total of employees of in level C and D was 765. He asked how this affected the operations of the institution.

Ms T Motara (ANC, Gauteng) said that R102 million had been overspent on the compensation of employees, but it was not reported as unauthorised expenditure, and she wanted to understand why.

Ms Motara asked what the circumstantial compensation of employees, on which Parliament had spent R10 million on according to page 106 of the annual report, had been for.

She said that targets in the APPs were not aligned to the targets in the annual report. She asked how the adjustment had been done, because it was difficult to gauge which figures were being reported in the annual report.

Ms Tyawa said that when the strategic plan was set four years ago, targets had been set at 100%, but then they had realised that the institution was such that 100% was almost an ambition, and that they should keep to that. However, there were systems and mechanisms in Parliament that ensured that they met their targets. They kept saying that they were fireproof, although in reality it was complex to meet most of the targets.

Mr Manenzhe said that the consequential compensation of staff referred to staff overtime for the whole year, including sick leave allowances. He said that the compensation of employees was aggregated because total amounts over and under-spent had led to an under-spending of R34 million, which as a result would not have led to an individual classification as an authorised expenditure, as if it was a total balance.

Co-Chairperson Smith said “No CFO”. Members were saying that there was a budget for staff and for MPs. If there was overspending on staff, it could not be substituted by the under-spending on politicians, because this was a variance where permission must be asked for and the reason explained.

Mr Manenzhe said that the budget of R778 million was the actual appropriation from NT only. They were only comparing the spent money against what was received for the year, including unspent funds from the previous financial year. R166 million was in the reserve from 2015/16 and had been used to compensate for the difference in 2016/17.

Ms Tyawa said that they had done an age analysis of their staff. On a daily basis, they were signing off ill people and some were taking early retirement Everyday, people were retiring, particularly among the catering staff. When management finished with their re-engineering and re-processing, they needed to refine the level of employment, as well as its recruitment in crucial areas.

Co-Chairperson Smith asked if the management was comfortable that the sick leaves given were genuine.

Ms Tyawa said that they had doctors at the Wellness Centre who verified the sick leave notes once a staff member submitted one.

Co-Chairperson Mr Monakedi asked what process was followed for the condonation of fruitless and wasteful expenditure.

Ms Tyawa said there was a system where it was flagged. Sometimes there were claims for things that were done three months ago without official approval. The system was simple. The immediate manager had to request the particular official to provide a written submission on why and how, and they used internal audit to assist them.

Co-Chairperson Monakedi said he was asking about fruitless and wasteful expenditure, not irregular expenditure. In the presentation, management had mentioned that they had had to condone some fruitless and wasteful expenditure.

Ms Tyawa said that the governance committee first looked at whether Parliament benefited out of wastage, or if it was as a result of not following compliance and approval at the right level of delegation of authority. If everything else was sorted out, then management would look at whether the wastefulness was as a result of someone having stolen money. If they had stolen or done something wrong against the FMPPLA, then it needed to be reported and officials would go through a disciplinary hearing. It had happened where 10 members of staff had had to be taken through disciplinary processes, and then management had asked the Executive Authority to write it off.

Co-Chairperson Smith said that fruitless and wasteful expenditure meant that there was no value for money, which was why it was classified as fruitless and wasteful. The only way they could write it off from where he was standing was if the person was deceased or insolvent, and Parliament could not recover the money from the person. Fruitless and wasteful expenditure could not be condoned. He said that it was Ms Tyawa’s duty as Acting Secretary to prevent fruitless and wasteful expenditure. It was not an after effect.

Mr Steenhuisen said that it would be helpful if the Committee received an itemised schedule in the interim on how the process was implemented.

Co-Chairperson Smith asked for an explanation under contingent liabilities, on who had taken Parliament to court, and for what.

Co-Chairperson Smith said the annual report indicated the Department of Cooperative Governance and Traditional Affairs (Cogta) owed Parliament R97 000 for catering. He asked if they had paid their debt and why Parliament had paid for the functions of a government department.

He said that in 2017, there was a deficit of R164 million and Parliament seemed to have recovered the monies by actuarial gains of R200 million. He asked what the actuarial gains were.

Co-Chairperson Smith said that the audit committee report from 2015/16 to 2016/17 was a cut and paste job. The attendance register was absolutely identical, as well as the information. If the audit committee was going to provide such information, then it would be problematic, as they needed to provide quality assurance. If he was misunderstanding the report, he would be prepared to withdraw his statement, but the reports looked identical to him.
 
Ms Tyawa said that the court case was about the researchers who took Parliament to the Commission for Conciliation, Mediation and Arbitration (CCMA). The amount involved was R35 million which they had lost in their employment compensation, as Parliament had not graded them properly.

Co-Chairperson Smith said he was referring to the R9.5 million labeled ‘other contingent liabilities’.

Ms Tyawa said that they had looked at an estimate to determine how much would be spent if cases were to be found against Parliament. It remained an estimate. Monies were not expended until they were bound to by the Authority.

Mr Manenzhe said that Cogta had paid the money back. The R97 000 had been outstanding as of 31 March 2017. Subsequent to that, in 2017/18 financial year, the money had been paid.

Co-Chairperson Smith asked if money had been paid within 30 days.

Mr Manenzhe said that he was not sure, but would follow up.

Ms Thandi Modise (Chairperson: NCOP) said that the Executive Authority could confirm that they were supposed to receive the audit committee report looking into the issue of the Secretary to Parliament, Mr Mgidlana, on Friday (27 October 2017). The matters referred to the audit committee had increased while it was there. Once the report was received, the Executive Authority would consider it, and if the report said that the Executive Authority should implement disciplinary action, then they would. The Executive Authority was concerned that the report had taken very long, but the decision would be made as soon as possible.

With regard to sick leave, the morale at Parliament in 2016 had been very low. Morale was picking up, and they were thinking that more needed to be done to normalise labour relations at work. Ongoing sessions between the National Education, Health and Allied Workers' Union (NEHAWU), senior management, the top leadership of NEHAWU and the Executive Authority of Parliament were taking place.

In light of the budget cuts, the Executive Authority felt that they needed to re-look their five year strategy and reprioritise goals. Once the revised strategy and priorities were completed, they would be brought to the Committee.

Co-Chairperson Smith said that the next meeting would be on 15 November 2017 to adopt the annual report and look at the Secretary’s mid-term review.

Mr Steenhuisen said that Parliament would eventually have to discuss the role of Parliament in relation to the Executive. This might not be a problem now, but it would probably happen in 10 to 15 years from now, where the Executive could just decide that they did not like the work Parliament was doing and cut its budget in half -- and there was nothing Parliament could do about it. There was a fundamental risk to the independence of Parliament to do its work, since it had to go cap in hand every year to the Executive to get money. This was not the time to have the debate, because of the tight space and austerity at that moment, but it would be a debate they would need to have.

Co-Chairperson Smith said that Mr Steenhuisen was saying that Parliament could not be budgeted for as a department, and that the Committee had the backs of the Executive

Ms Modise said that the meeting on Monday had been very nice and friendly, but with Parliament informing the Minister of Finance that they were the legislature and that the way things were being done was wrong and could not continue. They understood that the economy was not doing well, but hoped that in the future they could get to a place where Parliament could get what they needed in a less ‘boxing’ way.

The meeting was adjourned.