Department of Human Settlements' Budget Allocation: Analysis of Spending Capacity

1. 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 PLANS FOR 2015/16 FINANCIAL YEAR 13 October 2015

2. PRESENTATION OUTLINE • Introduction • Financial Management • Expenditure vs. Performance • Current Expenditure Trends • Payment of Service Providers • Accountability • Professional Ethics • Transparency • Good HR Practices • Employment Equity • Concluding Remarks 2

3. 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 • The presentation will focus on the Constitutional values and principles • The PSC has used data from the – • Annual Reports for the 2011/12 to 2014/15 financial years • Other data available, e.g. PSC tools, Auditor-General, Department of Planning, Monitoring and Evaluation, National Treasury and Vulindlela • Inputs from the Department 3

4. FINANCIAL MANAGEMENT • Audit Outcomes • 2014/15 key issues in the Auditor-General Report: • Department has materially underspent for Programme 3: Programme Delivery Support. Only 70.6% of the allocated budget was spent, which impacted negatively on the achievement of departmental objectives • A human resource plan was not in place as required by the Public Service Regulations • Leadership did not implement effective HR management to ensure that adequate and sufficiently skilled resources are in place and that performance is adequately monitored • A Special audit on Rural Housing Infrastructure was finalised and concerns raised pertaining to overall management of the programme, monthly processes, oversight over service providers and the quality of structures Departmental Annual Reports 2012/13, 2013/14 and 2014/15 4

5. EXPENDITURE VS PERFORMANCE 73% 99.7% 70% 77% 53% 97% 98% • Except for 2012/13, the spending of the Department was within the generally accepted margin of 2%set by National Treasury • Although almost the entire budget was spent over the past four years and there has been improvement in the achievement of targets, the achievement of predetermined outputs remained fairly low (68% average) • Major reasons for under-spending reflected in the Annual Report: • Late submission of invoices which resulted in payments of approx. R4 million being made in the new financial year • Delays in the filling of vacancies due to the Conditions of Service funding reduction in the 2015/16 financial year 5 Departmental Annual Report 2011/12 – 2014/15

6. EXPENDITURE VS PERFORMANCE (2) • Expenditure vs performance per programme for the 2014/15 financial year • Programme 2: Human Settlement policy, strategy and planning had the lowest achievement of predetermined objectives. This was largely ascribed to a high vacancy rate. 6

7. EXPENDITURE VS PERFORMANCE (3) • With regard to reporting on performance information in 2014/15, the AG found that – • Significantly important targets were not reliable when compared to the source of information or the evidence provided • This was due to the: • lack of standard operating procedures for the accurate recording of actual achievements • inadequate review to verify the validity of reported achievements against source documentation 7

8. CURRENT EXPENDITURE TRENDS • Spending in the 2015/16 financial year as at 31 August 2015 • Monthly expenditure is below the norm. However, spending in August 2015 was closer to the norm. 8 Statement of the National Revenue, Expenditure and Borrowing as at 31 August 2015 (National Treasury Website)

9. 30 DAY PAYMENT OF SERVICE PROVIDERS • Invoices over 30 calendar days that had not been paid • Section 38(1)(f) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) requires accounting officers of departments to settle all contractual obligations and pay all money owing within the prescribed or agreed period • Treasury Regulations 8.2.3 prescribes the period as thirty (30) days from receipt of an invoice • There has been a reduction in the average number of invoices paid after 30 days and older than 30 days, but the average cost has increased • Compliance Progress Report for the period January to April 2015 9

10. ACCOUNTABILITY • Filing of Performance Agreements • If the principle of accountability is to be achieved in the Public Service, EAs and HoDs should visibly support performance management processes and ensure that this cascades down to other levels in the SMS • Compliance with the submission of PAs by the HoD by the due date has been uneven: • The current HoD was appointed during the 2010/11 financial year (FY) and no evidence exists that any HoD performance evaluations have been conducted by the Department • As at 31 May 2015, 93% of SMS members had submitted PAs. 90% of employees’ performance assessments have been completed 10 * Election year: Due date was 31 August 2014 Performance Agreements Stats - PSC

11. PROFESSIONAL ETHICS • 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 that the closure rate by the Department remains unsatisfactory NACH Stats confirmed by Department - 8 October 2015 11

12. PROFESSIONAL ETHICS (2) • 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 • In 2012/13, 87% of the forms of SMS members, including the DG was received after the due date on 20 June 2013 • For the 2013/14 and 2014/15 financial years NO forms were received by the PSC on the due date • The Department confirmed that individual SMS members have completed forms, which were not submitted to the PSC Financial Disclosure Database 12

13. PROFESSIONAL ETHICS (3) • 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 • It is noted that the Department has suspended employees for extended periods Data provided by the Department – 8 October 2015 13

14. 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 • The PAIA manual is available on the Website in the 11 official languages 14

15. TRANSPARENCY (2) • Annual Reports are a key accountability mechanisms, but it only serves to promote transparency if it is comprehensive and easily accessible • The Department’s Annual Reports are easily accessible on its Website. • The most recent Annual Performance Plan for 2015/16 is available on the Website, which shows an improvement from the previous reporting period Departmental Website (Accessed on 06/10/2015) 15

16. TRANSPARENCY (3) • The 2014/15 Annual Report reflects that there is “no human resource plan in place as required by Public Service Regulations”. The Department provided the PSC with a copy of a HR Plan for the period 2012 – 2017, re-issued in October 2014 • The Annual Report should, amongst others, reflect information on the Department’s Service Delivery Improvement Plan (SDIP) and a report on consultant appointments using appropriated funds. No SDIP was approved by March 2015 • Use of individual consultants: • A decision was made by the Department to temporarily augment capacity by means of appointments of consultants from the goods and services budget while the Department takes up the reductions in the compensation budget with National Treasury 16

17. GOOD HR PRACTICES • There has been a moratorium on the filling of posts since November 2014 due to a R54.7 mil reduction in the Compensation of Employees budget • The Department has recently revived initiatives to fill vacancies as a result of some savings accrued from the attrition of staff Vulindlela Spread-sheet 2012/13 – 2014/15 17

18. GOOD HR PRACTICES (2) Grievance management • The 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 Data provided by the Department – 8 October 2015 18

19. GOOD HR PRACTICES (3) • The increase in grievances pertaining to performance management in the 2014/15 financial year is a general trend in the Public Service • Amongst others, it has been found that employees approach the system with a ‘culture of entitlement for merit awards’, thus resulting in employees being mostly dissatisfied with the final outcome of their assessments Data provided by the Department – 8 October 2015 19

20. EMPLOYMENT EQUITY • The target of 50% women at Senior Management level remains a challenge for the majority of departments • It appears that the Department experiences challenges to retain women employees at SMS level, given the decline in the percentage of women at SMS level from the 2013/14 financial year Data provided by the Department – 8 October 2015 20

21. EMPLOYMENT EQUITY (2) • According to the information on PERSAL there has been no improvement in respect of the employment of people with disabilities (PwD) over the past three financial years • The Department is clearly grappling to meet the target of 2% of employing of PwD • The Department has an approved Employment Equity Plan 2015-18 as well as Gender Equality and Job Access Strategic Frameworks/ Implementation Plans that will promote the achievement of equity targets Data provided by the Department – 8 October 2015 21

22. CONCLUDING REMARKS • The Department has maintained its audit record of unqualified audits over the past three years • Although the effective spending of the Rural Household Infrastructure Grant remained a challenge, the Grant was transferred to the Department of Water and Sanitation in terms of Presidential Proclamation No. 37839 dated 15 July 2014 • Similar to the previous financial years, the Auditor-General made adverse findings in respect of the usefulness and reliability of performance information reflected in the Annual Report. There is therefore a need for the Department to improve accountability • The spending norm as at August 2015 shows that the Department has a -5.3% deviation from the norm. Spending has therefore improved 22

23. CONCLUDING REMARKS (2) • The PSC is concerned regarding the maintenance of professional ethics in the Department. There is insufficient improvement in the Department’s ability to deal with cases reported to the NACH and no Financial Disclosure Forms were submitted to the PSC by the due date. The latter impacts negatively on the EA’s ability to monitor and deal with potential and actual conflicts of interest • Employment equity and the filling vacancies still require attention • The available human resource capacity is augmented by the employment of consultants and employees additional to the establishment • The PSC is of the view that the Department is well positioned to spend its budget if the highlighted areas in the presentation are addressed 23

24. Thank you Siyabonga PSC Website: www.psc.gov.za National Anti-Corruption Hotline for the Public Service: 0800 701 701 National Anti-Corruption Hotline for the Public Service: 0800 701 701