COMMENT BY THE PUBLIC SERVICE COMMISSION ON THE MEDIUM TERM BUDGET POLICY STATEMENT

1. COMMENT BY THE PUBLIC SERVICE COMMISSION ON THE MEDIUM TERM BUDGET POLICY STATEMENT 4 NOVEMBER 2014

2. OUTLINE OF THE PRESENTATION • Introduction • Focus of the presentation • Overall assessment of the 2014 MTBPS (including MPAT) • Leadership, HRM practices and labour relations • Governance and Effective and Efficient Performance within the Public Service • Concluding Remarks

3. INTRODUCTION • The PSC is established by the Constitution of the Republic of South Africa, 1996, as one of the institutions to strengthen the oversight role of the legislatures over the Executive and Administrative branches of the state to facilitate transparent and effective policy formulation and implementation. • In terms of section 196(4) of the Constitution, the powers and functions of the PSC are to- • promote Constitutional Values and Principles in the Public Service • investigate, monitor and evaluate the organisation and administration, and the personnel practices of the Public Service • propose measures to ensure effective and efficient performance within the Public Service • give directions aimed at ensuring that personnel procedures (recruitment, transfer, promotions and dismissals) comply with the basic values and principles set out in section 195 • report on activities to the National Assembly and to Provincial Legislatures in respect of activities in Provinces

4. INTRODUCTION (2) either of own accord or on receipt of a complaint: investigate the application of personnel and public administration practices and report to the relevant EA & Legislature investigate grievances of employees in the Public Service and recommend remedies monitor and investigate adherence to applicable procedures in the Public Service advise National and Provincial Organs of State regarding personnel practices in the Public Service Values and Principles

5. INTRODUCTION (3) The PSC is accountable to the National Assembly and interacts with Parliament and the Provincial Legislatures regularly, reporting on its activities and the performance of its functions as required by sections 196(4)(e) and 196(6) of the Constitution. The PSC’s main objective is to provide effective technical oversight over the public service nationally and provincially. To this end, the PSC conducts evidence-based research, monitoring and evaluation involving the gathering and collation of qualitative and quantitative data on public administration for use by the Legislatures and the Executive. The PSC also conducts inspections at service delivery points as well as public hearings on topical issues.

6. INTRODUCTION (4) • SCOA requested – • an overall assessment of the 2014 MTBPS, • an assessment on the strategies available to significantly improve management practices in the public services through significant improvements in MPAT scores in the medium term • comment on what can be done to improve governance and effective and efficient performance within the Public Service • Data used- • Annual reports for the 2011/12, 2012/13 and 2013/14 FYs • Other data available, e.g. PSC tools and research, National Treasury, Presidency (DPME), Stats South Africa, Vulindlela, DPSA

7. FOCUS OF PRESENTATION • Data in this presentation will focus on the following departments in accordance with the five priorities of Government.

8. OVERALL ASSESSMENT • With the call for reduced public spending; doing more with less, it is of vital importance for the Public Service to focus on smarter planning. • This should be supported by improved reporting template(s) to provide a platform for departments to show how additional resources contribute to improved performance and/or service delivery. • The need for joint and integrated planning to achieve the National Development Plan milestones can not be overemphasised. • This is reinforced by the need identified by the Minister of Finance for better alignment and coordination across government which has the potential to improve programme effectiveness without requiring additional funds. • The reality for the next 2 to 3 years is that budget will inform planning. • Therefore, the Public Service should look into introducing the costing of the implementation of annual performance plans, similar to the initial decision to cost all legislation before implementation.

9. OVERALL ASSESSMENT (2) • The ongoing neglect of appropriate management action in cases of poor performance needs to be revised. • As recommended last year, the continuous and random scrutiny by Parliament of each and every institution’s performance against plans, and an assessment of their capability to deliver results is required. • This should start with the Presidency, that should ensure that sectoral annual performance plans are well integrated and clearly articulate how priority policies will be implemented. APPROPRIATED BUDGET • Furthermore, as stated before, it will require support to Parliament to analyse and interpret annual reports. Annual reports are currently not always user friendly. • Most importantly, we need to ask whether the division of the national appropriation, in terms of national, provincial and local government, deals adequately with the call for improved performance and better service delivery?

10. MANAGEMENT PERFORMANCE ASSESSMENT TOOL (MPAT) SCORES • The 2013 results suggest that MPAT has succeeded in creating awareness and commitment to improving management performance. MPAT. State of management practices in the Public Service: Results of management performance assessments for the 2012/13 financial year. 2013

11. MPAT SCORES (2) Some significant findings from MPAT: • Across all the MPAT standards measured in 2013, 50% of national and provincial departments’ scores are compliant (at level 3), of which 42% (21% overall) are at level 4. • Whilst KPA 1 (Strategic Management) and KPA 2 (Governance and Accountability) had compliance levels of 69% and 58% respectively, KPA 3 (Human Resources Management) and KPA 4 (Financial Management) were at 34% and 56%. • This is the case for the three standards within the Strategic Planning KPA where the compliance for Strategic Plans is 90%, dropping to below 60% for Annual Performance Plans (APPs) and Monitoring and Evaluation (M&E). This suggests it is easier for departments to complete the planning templates than link these to feasible implementation strategies and performance targets.

12. LEADERSHIP, HRM PRACTICES AND LABOUR RELATIONS • The PSC has observed challenges regarding compliance with the legislative framework and prescripts governing public administration. This has resulted in research in the following areas: • An assessment of the implementation of the policy framework on the appointment of Ministerial Staff in national and provincial departments (2014). • An assessment of the implementation of the Human Resources and Finance delegations framework by departments (2013). • Report on the Effect of the Turnover rate of Heads of Departments on the Performance of Departments (2012). • Factsheet on blockages in the filling of posts in the Public Service (2013). • Guide on governance practice for Executive Authorities and Heads of Departments (2014)

13. LEADERSHIP, HRM PRACTICES AND LABOUR RELATIONS (2) • Roundtable discussions were facilitated to deliberate on the challenges around the State of Human Resources, Grievance and Discipline Management in the Public Service, the implementation of PILIR, the OSDs and the PMDS. • Key findings and observations made by the PSC included: • Instability at the HoD level negatively impacted on the working relationship between EAs and HoDs and on the achievement of departmental objectives. Although elections have generaly had a negative impact on the turnover rate of HoDs, this has so far not been the case in 2014. • Stability at the HOD level will enhance departmental performance, ensure institutional memory, boost staff morale, and maintain relations with key stakeholders and inspire public confidence. • Challenges are experienced with the implementation of the PMDS, resulting in a high level of dissatisfaction amongst employees. This is primarily because key aspects of performance management are neglected.

14. LEADERSHIP, HRM PRACTICES AND LABOUR RELATIONS (3) • Role clarification of EAs and HoDs requires further attention, e.g. HODs are accounting officers in terms of the PFMA whereas EAs have authority over HRM issues in terms of the PSA. • The main causes of blockages in the filling of positions include insufficient delegation of authority and lack of competency to execute delegated authority, delays at Executive Authority and HoD approval stages and continuous re-structuring of departments. • Most departments are unable to comply with the strategy to reduce the recruitment period and the vacancy rate in the Public Service. Challenges in implementing the OSD in some sectors were observed. • There has been non-compliance with the legislative frameworks that governs the delegations of powers. This is compounded by the fact that HR powers are not delegated to DGs and other levels.

15. LEADERSHIP, HRM PRACTICES AND LABOUR RELATIONS (4) • A legislation based Compliance Policy Framework for Ministries should be developed by the DPSA. • Measures should be put in place to ensure that the capacity of the state is strengthened by making succession planning compulsory. • The conflict resulting from the PFMA & PSA in terms of HR and Financial powers and responsibilities should be addressed. • All departments must review their delegations in terms of the Frameworks issued by DPSA and NT. • To improve the implementation of the PMDS, clear terms of reference for moderating committees should be put in place. Actual performance should inform scoring and not the budget available (Bell Curve). • There is a need for legislative intervention to address potential conflict between EAs and DGs based on different roles given by PFMA and PSA.

16. LEADERSHIP, HRM PRACTICES AND LABOUR RELATIONS (5) • The DPSA needs to critically assess the outcome of the implementation of OSDs with the intention to review the tool as a recruitment and retention strategy. • Departments must assess the skills gaps and requirements of posts on their establishments. This must be done with specific reference to posts that have delegated authority. • Given the importance of human resource management, which pivotal to effective public administration and service delivery, it is essential that grievances are well-managed. • The inability of departments to comply with the timeframe in which a grievance should be resolved, continues to hamper the timeous resolution of grievances in the Public Service. • Poor records management and the subsequent unavailability of documentation on decision-making processes also impacts negatively on the resolution of grievances

17. GOVERNANCE • Evidence presented focusses on: • Expenditure vs. Performance • Quality of performance information • Vacancy rates • Filing of Performance Agreements (PAs) by Heads of Department (HoDs) • National Anti-Corruption Hotline • Financial Disclosure Framework • Financial Misconduct

18. GOVERNANCEEXPENDITURE VS. PERFORMANCE Information Sourced from Departmental 2011/12 and 2012/13 Annual Reports: * Unq, wf – Unqualified, with findings ^ Excludes baselines targets - (1) % achieved performance targets from departments Agriculture, Forestry and Fisheries, Basic Education, Health, Public Works, RDLR and Dti were counted manually.

19. GOVERNANCEEXPENDITURE VS. PERFORMANCE (2) Information Sourced from Departmental 2011/12 and 2012/13 Annual Reports: * Unq, wf – Unqualified, with findings ^ Excludes baselines targets - (1) % achieved performance targets from departments Agriculture, Forestry and Fisheries, Basic Education, Health, Public Works, RDLR and Dti were counted manually.

20. GOVERNANCE EXPENDITURE VS. PERFORMANCE (3) • Noteworthy increases in the achievement of planned targets for - • CoGTA (+43%) from a 43% achievement in the previous year, with a slight decrease in spending. • Eleven (11) of the departments’ performance increased over the past financial year, and Public Works obtained a unqualified audit opinion from a disclaimer in 2011/12 and a qualified audit in 2012/13. • Only three (3) departments performed below 60%, Departments of Health, Public Works and Rural Development and Land Reform. • In the case of the Department of Health, one should take into account the number of planned targets for this Department (125), against some departments with only 30 planned targets.

21. GOVERNANCE PERFORMANCE – IMPROVED CoGTA Programmes % Performance Targets Achieved CoGTA Annual Reports 2012/13 & 2013/2014

22. GOVERNANCE PERFORMANCE – UNDERPERFORMANCE (3) • Health Programmes % Performance Targets Achieved Department of Health Annual Reports 2012/13 & 2013/2014

23. LEVEL OF EXPENDITURE IN 2014/15 • Level of expenditure against norm (41.66%) in August 2014 23

24. GOVERNANCEQuality of Performance Information N = No findings Y = Findings

25. GOVERNANCEQuality of Performance Information (2) • Although there has been slight improvement in terms of the usefulness of the information, the quality of performance information remains poor. • Of concern is the Departments of Agriculture Forestry and Fisheries, Basic Education, CoGTA and Labour, which for the last three (3) financial years received findings on both usefulness and reliability of performance information. • Noteworthy is the EDD and Dti, where there have been no findings pertaining to usefulness and reliability, for the last three (3) financial years. N = No findings Y = Findings

26. VACANCY RATES Vulindlela: DPSA Strategic HR Performance Report for the end of the 1st quarter of 2014/15 (June 2014),

27. GOVERNANCEFiling of Performance Agreements (PAs) by Heads of Department (HoDs) • There has been a significant decline in compliance with the submission of PAs by HoDs on the due date (30 June 2014), a mere 25% (3 depts) for the selected national departments, in comparison with the previous financial years. 44% (4 depts) submitted PAs after the due date. *As at September 2013 * As at October 2014

28. GOVERNANCE National Anti-Corruption Hotline (NACH) • The low feedback rate is generally attributed to lack of management and investigative capacity within departments to effectively deal with reported cases of corruption. *As at October 2013 *As at October 2014

29. GOVERNANCE National Anti-Corruption Hotline (NACH) (2) • As shown in the previous year, only three (3) departments achieved above 60% closure rate. • However, there was an increase in the overall cases closed, from 32% of the selected departments in 2013to 54% (+22%) for 2014. • Departments of concern pertaining to the feedback rate are as follows: • Human Settlements (6%) • Health (14%) • Agriculture, Forestry and Fisheries (17%). • *As at October 2013 • *As at October 2014

30. GOVERNANCEFinancial Disclosure Framework (FDF) • All members of the Senior Management Service (SMS) 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. Fact Sheet on Monitoring Compliance with the Financial Disclosure Framework for the 2012/2013 Financial Year * NB: Stats provided are preliminary and therefore may change.

31. GOVERNANCEFinancial Disclosure Framework (FDF) Fact Sheet on Monitoring Compliance with the Financial Disclosure Framework for the 2012/2013 Financial Year * NB: Stats provided are preliminary and therefore may change.

32. GOVERNANCEFinancial Disclosure Framework (FDF) (2) • Only a 100% compliance rate by the due date is acceptable. • 50% of selected national departments had a 100% compliance rate at 31 May 2014. • Noteworthy is the Department of Labour that achieved a 100% compliance rate in 2014 after maintaining a 0% compliance rate for two (2) consecutive years. • Of major concern is the Department of Human Settlements, which maintained a 0% compliance rate for the past two (2) years, from a 100% compliance rate in 2012. • During 2014, there was improvement in compliance for the Departments of Basic Education and Rural Development and Land Reform. • However, EDD, Justice and Constitutional Development and Public Works which achieved a 100% compliance in 2013, did not manage to maintain it.

33. GOVERNANCE • Even though the relationship between output targets and expenditure is not a direct one, overall there seems to be an improvement in the achievement of targets for the 2013/14 financial year (for the selected national depts). • However, this could be attributed to a few new indicators where departments did not first establish a baseline for performance. • The management of performance information is an essential basis for improving performance and speaks to the reliability of the information. • The general lack of compliance management and support performance management processes by EAs and HoDs has a negative impact on performance and ultimately service delivery. For instance, how and what is measured if performance agreements are not in place? • The challenges can only be dealt with if the foundation of strategic planning is addressed; identify and develop SMART indicators with support management systems for performance information.

34. EFFECTIVE AND EFFICIENT PERFORMANCE • Evidence presented here focuses on: • Quality of service delivery • Electricity • Access to water • Education • Health • Housing • Delivery in relation to need • Unemployment and government programmes • Development orientation

36. PERFORMANCE (2) Service delivery • Level of satisfaction with the public healthcare facilities 3 Statistics South Africa, Statistical Release, P0318, General Household Survey 2013, June 2014

37. PERFORMANCE (3) SERVICE DELIVERY • The reason for increases in the number of protests while service delivery has increased, relates to the quality of services. • % of h/h living in RDP houses with weak or very weak roof by province 4 Statistics South Africa, Statistical Release, P0318, General Household Survey 2013, June 2014

38. PERFORMANCE (4) SERVICE DELIVERY % of h/h living in RDP houses with weak or very weak walls by province 5 Statistics South Africa, Statistical Release, P0318, General Household Survey 2013, June 2014

39. POVERTYACCESS TO FOOD • Vulnerability to hunger and access to food (households and persons). 6 Statistics South Africa, Statistical Release, P0318, General Household Survey 2013, June 2014

40. POVERTY(2) ACCESS TO FOOD % of h/h experiencing food adequacy/inadequacy by province, 2013 7 Statistics South Africa, Statistical Release, P0318, General Household Survey 2013, June 2014

41. UNEMPLOYMENT LEVELS • Unemployment rate by province Statistics South Africa, Quarterly Labour Force Survey, Quarter 2, 2014 (Pg. xvi)

42. WORK OPPORTUNITIES • Work opportunities created by the EPWP in the various sectors: EPWP, Third Quarter 2013/14 (Cumulative: 1 April 2013 to 31 December 2013) & First Quarter 2014/15 (Cumulative: 1 April 2014 to 30 June 2014)

43. DEVELOPMENT ORIENTATION • Stats SA General Household Survey (2013) • The percentage of households that fully own the dwellings they inhabit increased slightly from 52,9% in 2002 to 61,4% in 2008, before declining to 54,9% in 2013. • This increase was accompanied by a decrease of 4% points 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 12% in 2013. Department of Human Settlement Annual Report 2013/2014 43

44. DEVELOPMENT ORIENTATION (2) • Increasing access to housing remains a key focus area. Through entities reporting to the Department of Human Settlements, access to housing finance will be facilitated, thus bridging the rural-urban dichotomy in the human settlement environment. • A total of 48 of the 49 National Upgrading Support Programme (NUSP) Municipalities are provided with technical assistance, with additional support requested from 3 municipalities; 2 of the 3 are currently being assisted resulting in a total of 51 municipalities receiving assistance. These 51 municipalities represent 605 informal settlements. • The Department upgraded 71,766 households well-located informal settlements with access to secure tenure and basic services. • Furthermore, the Department provided 12, 101 households with on-site sanitation in rural areas. Department of Human Settlement Annual Report 2013/2014 44

45. CONCLUDING REMARKS • Within the current economic climate, the challenge of closing the gap between ‘what is required vs. what can be afforded’ is one shared by governments across the world. • Therefore, greater accountability is required to manage the scarce resources of government. • The underpinning factor for improved accountability is to ensure that the ‘right things’ are being measured using the ‘right information’ – performance information should be reliable and useful. This will create a foundation for more effective and efficient performance and service delivery management, grounded on evidence-based decision-making. • Overall there has been an improvement in the achievement of targets, however three (3) departments achieved below 60%. • As stated in the recent State of the Public Service (SOPS) Report, this could be attributed to the overall lack or inadequate leadership within the organisation.

46. CONCLUDING REMARKS (2) • It is imperative that measures are put in place to ensure that Strategic Plans are translated into feasible implementation strategies and performance targets, supported by effective financial management. • Therefore, there should be clearly articulated milestones for the achievement of the National Development Plan, which should then be translated into the respective strategic plans. • The importance of integrated planning to jointly achieve priority area targets cannot be overstressed enough. • Human Resource Management (HRM) remains the poorest performer of the four (4) MPAT areas, attributed to poor or lack of effective performance management of SMS and HoDs, and lower levels for planning and disciplinary cases. • The alignment of strategic-, financial-, and human resource management standards, could contribute to finding a balance between actual performance and expenditure.

47. CONCLUDING REMARKS (3) • An effective and efficient Public Service is undermined by poor ethics and corruption. • The perception currently is that corruption is high amongst government, therefore the Public Service should ensure that anti-corruption measures and capacities are strengthened to deal swiftly with corruption cases. • Although there is a minimal improvement in the overall feedback rate of NACH cases, it still reflects a below 60%. This is generally accredited to lack of capacity within departments, which raises doubts on whether the strategy of Minimum Anti-Corruption Capacity (MACC) is working or whether centralised capacity should rather be created. • In addition, studies by the PSC on ethics and corruption have highlighted the fragmentation in relation to the elements, and stated that this may be the area where government need to rethink its strategy in dealing with corruption.

48. CONCLUDING REMARKS (4) • The emphasis to ensure that service delivery is not negatively effected by the MTBPS is welcomed, in particular after the spike in service delivery protests. • Increasing access to housing should remain a key focus area for Government, as clearly seen by the decline of households that fully own the dwellings they inhabit from 61,4% in 2008 to 54,9% in 2013.

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