PSIRA 2014/15 BUDGET ANALYSIS

1. PSIRA 2014/15 BUDGET ANALYSIS 30 July 2014

2. MANDATE & NATIONAL DEVELOPMENT PLAN (NDP) Mandate The Private Security Industry Regulatory Authority (PSIRA) is established in terms of section 2 of the Private Security Industry Regulation Act, 2001 (Act No. 56 of 2001). The entity is mandated to regulate the private security industry and to exercise effective control over the practice of security service providers in the public and national interest. NDP Chapter 12 calls for the creation of safer communities by 2030 and is aligned with Government’s strategic goal to ensure that all people of South Africa are and feel safe. In line with the NDP, the Authority strives towards the promotion of a safer community through the regulation of the private security industry.

3. HISTORIC OVERVIEW • PSIRA is a public entity • No direct government funding. Revenue from annual registration fees, fines issued in terms of Code of Conduct enquiries and other disbursement fees. • Financial instability • Turn around plan in 2010 initiated by the Minister of Police • Significant financial losses: 2010/11 FY recorded a deficit of R23 million • Stabilising since then – reducing the deficit • However, AG gave qualified audit opinion in 2012/13 (previous FY) because of unidentified payments received from customers, even though R81 million profit • Had been a Going Concern for past years (financially unstable) • Estimated profit of R17.4 million in 2014/15 FY • Three Deputy Directors for Finance and Administration since 2012 • New corporate head office in Centurion: cost of R87 million over five years • Disposal of previous head office in Arcadia (Pretoria) – sale against the Public Finance Management Act (PFMA) as no approval from Minister was obtained.

4. HISTORIC OVERVIEW • Contingent liability • Not budgeting for contingent liabilities, despite legal challenges • Biggest one: Security Industry Alliance (SIA) • Decade long failure of PSIRA to increase fees led to a massive fee increase: 75% for companies and 900% increase for individual guards employed by companies. • Despite the recommendation from Treasury to implement an inflation-related increase of 9.1% across all categories. • SIA successfully applied for an interdict not to pay, but ultimately lost the court case – appealed. • Council – Accounting Authority and appointed by the Minister of Police • Had significant challenges, but now fully constituted • Private Security Industry Regulatory Amendment Bill B27D-2012 • Approved by both Houses & submitted to the President for assent on 05 March 2014 • Significant amendments • The PSIRA presentation states many concerns previously raised by the Committee as resolved – these must be explained.

5. BUDGET 2014/15 Prog.1: Administration – R92.8 million 9.5% • Financial Position 2014/15 • Revenue: R185.9m • Operating expenditure: R168.4m • Surplus: R17.4m • 2013/14 FY – R81m surplus Prog.2: Law Enforcement – R60.7 million 9.0% Prog.3: Communication, training and registration – R14.8 million 9.6% Financial figures differs in Annual Performance Plan (APP) and Estimates of Expenditure (ENE) for Programme 1 & 3 • Revenue • Sales of goods and other services other than capital assets is expected to increase from R118.6m to R145.7m in 2014/15 compared to previous FY (22.2% nominal increase) • Other non-tax revenue is expected to increase from R33.9m to R38.3m in 2014/15 (12.78% nominal increase) • Transfers received is expected to increase from R1.5m to R1.8 (24.93% nominal increase) • The 2013/14 budget included a detailed breakdown of revenue estimates, like Annual fees, Registration fees and Investment income (to name a few)

6. PERFORMANCE INDICATORS, TARGETS AND BUDGET PER PROGRAMME • In terms of the usefulness of information, the AGSA stated in the 2012/13 Annual Report that many targets were not specific, not measurable and not well defined • The Authority introduced several new targets to improve • Programme 1: Administration • To have a Funding Policy • Several indicators on Corporate Governance and IT • Questions: • Online account payment • Bi-annual review on bad debts • Target for PFMA checklist • Programme 2: Law Enforcement • Targets mostly increased • New target for compliance to minimum standards • Many targets omitted, like recruitment of additional inspectors, training for inspectors and reporting to other agencies • Completion of firearms audit

7. PERFORMANCE INDICATORS, TARGETS AND BUDGET PER PROGRAMME • Programme 3: Communication, Registration and Training • Consists of almost entirely new performance indicators and targets • Was the Communication policies developed and implemented in 2013/14 • Elaborate on the 12 awareness campaigns • The target for Sectoral determination should be explained • Accreditation of training • Research: two topics to be identified during 2014/15. The Authority states that this is a new indicator, but was included in previous APPs with a target of four topics to be identified. Why was the target changed? And the identification of topics are not a service delivery output. When will the research products be finalised. • The Authority should expand on the four surveys to be completed.

8. PERSONNEL • Approved establishment of 278 posts • 222 funded posts • 203 posts filled in 2012/13 • 220 posts filled in 2013/14 • 243 post filled in 2014/15 • Estimated to have 280 posts filled in 2016/17 • Against the approved establishment of 278 posts • 68 vacancies at November 2013 • Increased positions in salary levels 7-10 (172-185 positions) • Should include a comprehensive breakdown of the staff establishment of each regional and provincial office • Also a comprehensive personnel breakdown per programme • No information on proposed training and skills development

9. Nicolette van Zyl-Gous Researcher: PC on Police 021 403 8416 nvanzyl-gous@parliament.gov.za