PRESENTATION TO THE PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS

CAPACITY OF THE DEPARTMENT OF HUMAN SETTLEMENTS IN SPENDING THE

BUDGET ALLOCATED ACCORDING TO THEIR BUSINESS PLANS AND ANNUAL

PERFORMANCE PLANS15 October 2013

PRESENTATION OUTLINE Introduction Financial Management Expenditure vs Performance Level of Expenditure in the 2013/14 financial year Development orientation Accountability Professional Ethics Transparency Good HR practices Employment Equity Concluding remarks

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INTRODUCTION The Public Service Commission (PSC) is required by the

Constitution to provide an evaluation of the extent to which the values and principles governing public administration, contained in section 195, are complied with.

The PSC was requested to brief the Committee on the capacity of the Department of Human Settlements in spending the budget allocated according to their business plans and annual performance plans.

In its briefing to the Portfolio Committee, the presentation will focus on the Constitutional values and principles.

The PSC has used data from the- Annual Reports for the 2011/12 and 2012/13 financial years Other data available, e.g. PSC tools, Auditor-General, DPME

(MPAT Tool), National Treasury and Vulindlela.

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FINANCIAL MANAGEMENTFinancial year Audit finding Comments in respect of ‘11/12

‘11/12 Unqualified with findings

• Restatement of Corresponding Figures• Material underspending of the Rural

Household Infrastructure Grant• Unaudited supplementary schedules

‘12/13 Unqualified with findings • Invoices received amounting to R22,4 mil

for office accommodation, whereas the department does not occupy the building

• Material underspending of the Rural Household Infrastructure Grant. As a consequence, the Department has not achieved certain of its objectives to provide sanitation services to rural communities.

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Audit outcomes

EXPENDITURE VS PERFORMANCE% of budget spent Achievement of targets

2010/11 2011/12 2012/13 2010/11 2011/12 2012/13

98% 99% 67.4%

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Spending was not within the generally accepted margin of 2% set by National Treasury, which signifies a decline.

Although almost the entire budget is spent, the achievement of predetermined outputs was fairly low and declined significantly from the previous financial year.

Major reasons for underspending: Delayed invoicing by the Special Investigative Unit and SITA. Filling of vacancies. Research projects put on hold pending further consultation with

stakeholders. Delay in the implementation of the National Upgrading Support Programme

which takes up 30% of the Programme 3 budget.

53%77%97.3%

EXPENDITURE VS PERFORMANCE (2)

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With regard to reporting on performance information in 2012/13, the AG found that- Adequate and reliable corroborating evidence could not be

provided for all major variances as disclosed in the Annual Report.

38% of the reported indicators and targets are not consistent or not complete with the indicators and targets as per the approved annual performance plan.

25% of indicators did not relate logically and directly to an aspect of the Department’s mandate and realisation of strategic goals and objectives as per the Strategic Plan.

The AG reported that the Public Protector was conducting an investigation into alleged financial misconduct by the Accounting Officer, but that the matter was not concluded in the financial year.

Spending in the 2013/14 financial year as at 31 August 2013 Monthly level of expenditure is below the norm.

LEVEL OF EXPENDITURE IN 2013/14

Total appropriation Apr May Jun Jul Aug-13 Year to

AugustR 28,110,463 R 979,824 R 936,793 R 1,196,146 R 2,941,412 R 1,399,030 R 7,453,205

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DEVELOPMENT ORIENTATION

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New initiatives, structures and systems were developed and put in place to ensure the establishment of new communities and address the critical nationwide housing backlog.

A total of 243 municipalities in all 9 provinces were supported with assessments of water services development plans (IDPs). This process has assist with ensuring that sanitation projects are prioritised and adequately budgeted for.

The Department supported 45 water service authorities in 7 provinces on water and sanitation hygiene initiatives. RHIP served 27 144 households with sanitation facilities, thus reducing the rural sanitation backlog in 7 benefiting provinces.

The Department through the Informal Settlement Upgrading Programme have improved outputs and have to date provided nearly 190 000 households with upgraded services and secure tenure.

Stats SA General Household Survey (2012) The percentage of households that fully own the dwellings

they inhabit increased slightly from 52,9% in 2002 to 54,5% in 2012.

This increase was accompanied by a decrease of 4.4% for households that partially owned their houses, and a slight increase in the percentage of households that rented accommodation. Households that maintained ‘other’ tenure arrangements increased from 11,7% in 2002 to 13,1% in 2012.

The AR indicates that the Department has revised the finance-linked individual subsidy programme (FLISP) to improve the ability of households on the income category R3 501 – R15 000 to access mortgage finance for housing, thus increasing access to housing finance and the provision of shelter and basic services.

DEVELOPMENT ORIENTATION (2)

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The Development Indicators 2012, launched by the Presidency in August 2013, reflects the following in respect of households with access to sanitation and electricity by 2014:

DEVELOPMENT ORIENTATION (3)

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ACCOUNTABILITY

2010/11 2011/12 2012/13 2013/14

Submitted after the due date Submitted on time Not submitted

EAs and HoDs should visibly support performance management processes and ensure that this cascades down to other levels in the SMS, if the principle of accountability is to be achieved in the Public Service.

Submission of the PA of the HoD by the due date:

The current HoD was appointed on 22 April 2010 and did not qualify for evaluation in the 2010/11 financial year.

The HoD qualifies for evaluation in the 2011/12 financial year and has submitted all documentation for the evaluation. The establishment of the evaluation panel is outstanding.

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PROFESSIONAL ETHICS

Cases Referred

% Feedback Received

% Cases Closed

Outstanding Cases

Aug ’12 113 7% 2% 111

Sept ‘13 268 4% 1% 265

National Anti-Corruption Hotline (NACH) Cases received from the NACH are forwarded to national and

provincial departments in accordance with agreed protocols for investigation.

The strategy to refer cases for investigation to departments is premised on the assumption that departments have the capacity to deal with cases.

The figure shows a substantial increase in the number of cases reported to the NACH in respect of the Department. However, the feedback and closure rate remains unsatisfactory.

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PROFESSIONAL ETHICS (2)

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Financial Disclosure Framework All members of the Senior Management Service are required to

disclose the particulars of all their registrable interests (e.g. companies and properties) to their respective Executive Authorities (EAs) by not later than 30 April each year.

EAs to submit copies to the PSC by not later than 31 May of each year.

As at the end of September 2013, the PSC had received 87% of the forms, with 9 out of 71 forms still outstanding.

The PSC is in the process of finalising the scrutiny of the forms for the 2011/12 financial year.

PROFESSIONAL ETHICS (3)

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FY No of people on suspension

Average no of days on suspension

Cost of suspension (R'000)

2010/11 3 126 R 118

2011/12 0 - -

2012/13 2 123 R311 733

Precautionary suspensions Suspensions should not exceed 60 days and extended periods of

suspension has a negative effect on service delivery, the management of discipline in the workplace and also on the employee, who has a right to work.

In respect of 2012/13, the average number of days on suspension of the two employees are excessive, and could amount to unfair labour practice.

The Department should adhere to the Disciplinary Code and Procedure in this regard.

Financial Misconduct Departments are compelled to report on finalised financial misconduct

cases to, amongst others, the PSC. In the 2012/13 financial year, the Department submitted a nil input,

indicating that no cases of financial misconduct was finalised. However, according to the Annual Report for the same period, irregular

expenditure was incurred as follows:

The Annual Report also shows that 94 systemic findings were made in respect of 17 matters, of which one involves the irregular awarding of tenders to service providers.

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Details of irregular expenditure AmountR’000

Official trip to Mpumalanga not approved R 11

Foreign trip to New York not approved R166

SABC broadcasting services R342

Exceeding of approved contract i.r.o cleaning services R37

PROFESSIONAL ETHICS (4)

TRANSPARENCY• The Department’s Website is user friendly and

most documents are easily accessible. • The Promotion of Access to Information Act, 2000,

Act 2 of 2000 (PAIA), gives effect to the Constitutional right of access to information held by the State and any information that is held by another person that is required for the exercise or protection of any rights.

• Section 14 of the PAIA stipulates that the information officer of a public body must compile a manual containing prescribed information.

• Provision is made for PAIA on the Website. However, no document (i.e. Manual on Access to Information) could be downloaded.

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TRANSPARENCY (2)

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The Annual Reports (AR) are a key accountability mechanisms, but it only serves to promote transparency if it is comprehensive and easily accessible.

The AR for the 2012/13 financial year is available on the Department’s Website. However, as at 08 October 2013, the Strategic Plan and Annual

Performance Plan could not be located on the Department’s website. The AR should, amongst others, reflect information on the Department’s

Service Delivery Improvement Plan and a report on consultant appointments using appropriated funds. Both these reports in the AR were incomplete. Yet the financial statements and the AR reflect that the Department

had made use of consultants, e.g. eight service providers were appointed to assist with implementation of the programme in terms of the appointment and management of contractors within municipalities.

GOOD HR PRACTICES

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The Department indicated that in the 2012/13 financial year a turnaround strategy was implemented, impacting on the vacancy rate. It had embarked on a recruitment drive to fill 268 posts.

Although the average period it takes to fill posts have improved by almost 10 months, the vacancy rate within the Department has not improved.

Vacancy Rate Average period in months of post vacant2012/13 Aug ‘13 2012/13 March ‘13

22% 24.3%% 24.18 14.7

Highest vacancy rates per Critical Occupations – Aug ‘13

No of Posts Number of Posts Filled

Vacancy Rate

Risk management and security services 3 0 100Legal administration & related professionals 7 3 57.1%

Economists 48 23 52.1%

Senior managers 80 48 40%TOTAL 820 621 24.3

Grievance managementThe promotion of sound and fair labour relations in the workplace is an essential aspect of human resource management. Given the importance of human resource management, which pivotal to effective public administration and service delivery, it is essential that grievances are well-managed.

GOOD HR PRACTICES (2)

Financial yearDealt with within the Dept Referred to PSC

Lodged Resolved Lodged Resolved2011/12 7 2 2 12012/13 4 0 3 2

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The nature of grievances: Outcome of performance assessments (58%) Unfair treatment (25%) Filling of posts (13%) Salary problems (4%)

• The MPAT results for the 2012/13 financial year reflects that the Department is not complying in all respects with Human Resource (HR) and Systems Management requirements:

GOOD HR PRACTICES (3)

1 Non compliance2 Partial compliance

3 Full compliance

4 Full compliance and doing things smartly

Standard ScoreHR Planning 2Organisational Design and Implementation 2HR Development Planning 1Pay sheet certification 3Application of recruitment and retention practices 2

Management of diversity 1Implementation of level 1-12 Performance Management System 2

Implementation of SMS Performance Management System 1

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EMPLOYMENT EQUITY

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Designated Group 2011/12 2012/13 Aug’ 13

Black people 93.5% 93.3% 93.2%

Women Target: 50% at SMS level by March 2009

36.4% 39% 42%

People With DisabilitiesTarget: 2% to be achieved by 31 March 2010

0.3% 0.3% 0.3%

Public administration must be broadly representative of South African people, with employment and personnel management practices based on ability, objectivity fairness and the need to redress the imbalances of the past to achieve broad representation

The Department is still grappling with the employment of women at SMS level and people with disabilities.

The PSC’s overall impression is that there are various areas that require improvement within the Department.

Spending trends in the current financial year point to inadequate financial management and a need to put mitigating strategies in place to ensure spending in line with predetermined objectives and targets.

Although it is recognised that the Department was implementing a turnaround strategy during the 2012/13 financial year, which caused high vacancy rates and capacity challenges, the decline in the achievement of predetermined taregts from 77% to 53% in the 2012/13 financial year is cause for concern.

The findings of the Auditor-General regarding the usefulness and reliability of performance information indicate a need for improvement, especially in relation to alignment to the Strategic Plan and APP of the Department.

CONCLUDING REMARKS

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The sustained material underspending of the Rural Household Infrastructure Grant over the last two financial years must be addressed.

Performance management within the Department is problematic. The HoD should set the example at the top and ensure that a signed PA is submitted to the PSC.

There is clearly insufficient capacity within the Department to deal with cases reported to the NACH.

Concerted efforts should be made to address compliance issues, such was the submission of Financial Disclosure Forms, risk management, the management of precautionary suspensions and employment equity.

The Department has already commenced with a massive recruitment drive to fill vacancies to better discharge its responsibilities.

The progress made in the human settlement sector through the provision of upgraded services and secure tenure to 190 000 households is noted.

CONCLUDING REMARKS

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24 24National Anti-Corruption Hotline for the Public Service: 0800 701 701

PSC Website: PSC Website: www.psc.gov.zawww.psc.gov.za

National Anti-Corruption Hotline for the Public Service: 0800 701 701National Anti-Corruption Hotline for the Public Service: 0800 701 701

Thank you

Siyabonga