REPORT BY THE INTERIM MANAGEMENT TEAM TO THE PORTFOLIO COMMITTEE: PUBLIC SERVICE AND ADMINISTRATION

1. REPORT BY THE INTERIM MANAGEMENT TEAM TO THE PORTFOLIO COMMITTEE: PUBLIC SERVICE AND ADMINISTRATION CAPE TOWN 14 AUGUST 2003

2. Structure of the report Turnaround Strategy Lessons from the EC Challenges and risks Turn around strategy Problem Analysis Background and Introduction

3. Mandate of the IMT • Overall goal of the IMT is to ensure that any service delivery backlogs are addressed and to establish sound management and leadership in the Education, Health, Roads and Public Works and Social Development departments • The IMT is specifically mandated to- • establish turn around plans for the four target departments, including the elimination of service delivery backlogs • address cross cutting issues such as disciplinary matters, procurement reform and human resource management • establish appropriate management structures and back office support • monitor the implementation of the turn around plans and other interventions as well as the use of conditional grants • On the basis of its presentations to the Provincial EXCO and Cainet, the IMT received additional mandates related to specific challenges

4. OPSC National Depts & EC senior Managers DPSA Structure of the IMT Interim Management Team DG:DPSA, DG:OPSC,DG:ECape and HoD of Provincial Treasury [In partnership with National Prosecuting Authority and other law enforcement agencies] Joint Management Teams Specialists and consultants from Specialist Teams Issues based ad hoc teams, e.g. Disciplinary cases

5. IMT Roadmap

6. Modus operandi of JMTs • JMT co-leaders work collaboratively, and the HOD remains accounting officer • The tasks of each JMT were to- • develop plans and strategies to address service delivery backlogs • Identify actions in the areas of Leadership and Management, Finance and Administration, Human Resource Management, Service Delivery and Ethics and Cultural issues • to implement the turn around plan of the department • The roles of the JMTs of each department are now being assessed to improve their effectivness

7. Relationship with other stakeholders • The IMT functions in close co-operation with, and receives support from various partners and stakeholders. These are- • the Joint Anti-corruption Task Team (JACTT) led by the National Director of Public Prosecutions, that attends to criminal matters emanating from the IMT’s work • Intelligence and law enforcement agencies • the Special Investigating Unit • The Office of the Auditor-General • a range of national and (other) provincial departments who provide portfolio specific or cross cutting support (eg. national Health department, SAMDI, provincial treasury of the Western Cape) • the Center for Public Service Innovation and the State Information Technology Agency • The IMT’s operations are emerging as a model for integrated governance with a cross-departmental and cross-institutional sharing of skills and other resources

8. Socio-economic profile • Uneven development – an extremely bi-modal economy composed of: • Two relatively developed port cities • Impoverished rural periphery • Peripheral to minerals-energy complex • Home to migrant workers in the Bantustans • Urban/seaports: small import substituting manufacturing sector (mainly auto) • Rural/hinterland: Livestock economy

9. BASIC CHARACTERISTICS(note that figures may have changed)

10. Poverty • EC poorest province in SA – GGP per capita is half national average • 64% of population live in poverty (household income less than R800/month) • 43% of households earn less than R500/month • Poverty rate rises as high as 80% in former Transkei where households survive mainly on grants and remittances (need to reconfirm figures as these may have changed, though trends remain the same)

11. PROVINCIAL GROWTH & DEVELOPMENT STRATEGY FRAMEWORK

12. Medium term expenditure framework • Increase in equitable share for 2003/4 (6%) and stabilizing through MTEF:R26-R33b • Conditional grants to double during MTEF period • Gradual decline in own revenue over last three years but above budget expectations • Effect of overspending has been negative on the ability of the province to maintain a healthy surplus • Donor support projects in excess of R500m • About R3.4 billion targeted for infrastructure projects in current financial year

13. Spending capacity • Improved spending levels in nominal terms • Delays in payments of social grants arrears

14. Quality of leadership and management at departmental level? Quality of human resource management practices? Financial management and general administrative capacity? Ability to uphold ethics and reduce corruption? Reliability and dependability of public service to deliver on government priorities? Overall effectiveness and efficiency of public service ? Problem analysis: General observation Current Stakeholder Perceptions Positive Negative X X X X X X

15. Service delivery challenges - 1 • Service delivery issues • The Eastern region has suffered from a history of neglect, therefore bearing the brunt of geographic disparities from a service delivery point of view • There is an over-supply of planning activity not matched by implementation capacity • Study of budgets do not indicate an immediate funding problem although a case can be made for historical backlogs

16. Service delivery challenges - 2 • In the Eastern Cape, like other under-developed regions, there is a high dependency on Government for socio-economic development. Government cannot fail this need. In the absence of widely-available alternatives for socio-economic development, Government remains the major provider of- • infrastructure development • services • social security, and • opportunities that stimulate job creation

17. Service delivery challenges - 3 • Job creation and increased social security are just not happening visibly fast enough • There are plans and resources for fast-tracking service delivery in under-serviced areas (such as the Eastern region), however implementation of these plans remain frustratingly slow • Inadequate focus on results and too much time spent on process

18. Analysis of previous interventions aimed at improving service delivery and capacity Number of projects/interventions interventions being implemented as at Dec 2002 • Education : 28 different interventions • Social Development : 20 different interventions • Public Works : 13 different interventions • Health : 32 different interventions See annexure for detailed report

19. Trends in Findings from previous interventions • Shortage of professional/managerial staff • Many managers in acting positions • HR management is weak • Financial management capacity is inadequate • Poor communication • Huge gaps between macro plans and operational plans • Culture of “shifting the blame”

20. Intervention areas mostly focused on • Human resources (performance management, human resource records, training, recruitment, payment of backlogs, salary payments) • Service delivery (various specific areas e.g. payment of grants) • Financial resource management (payment of creditors, Clearing of suspense accounts, budget reviews)

21. Analysis of interventions • Similar type of activities being implemented by the different interventions but supported by different stakeholders e.g. different donors supporting similar type of activities • Repetitive nature of implementing activities which were addressed by previous interventions of sustainability may be attributed to consultants’ contracts that are not performance based

22. Our primary concerns - 1 • Our assessment is that a change in behavioral patterns is lacking and this change is critical for turn-around of the departments • This assessment established that:- • Managers are, continuously, not taking responsibility and they are not displaying a strong sense of accountability - according to managers the problem always is ‘out there” and blame for inertia, under-servicing, poor leadership and management are deferred to systems, inadequacies, interference by unions and stakeholders and historic challenges • In spite of the fact that departments continuously receive audit disclaimers, no action is taken against any manager and the problems are not rectified • Personal responsibility is consistently fudged

23. Our primary concerns - 2 • Unions continue to have undue influence over managers and their decisions, especially in Education, but we have to recognize that a fear factor is prevalent in some of these decisions, although evidence is limited to an incident in Health • Very high levels of corruption are reported, but with limited follow through action • The culture of ill-discipline and acceptance of the poor work ethic, manifests in such behavior as absenteeism and demanding overtime for work that should be done in office hours, accentuated by lack of vigorous management responses

24. Our primary concerns - 3 • A culture of entitlement prevails as epitomized by claims to overtime, performance awards and backlog HR payments • Managers have a significant reliance on outsiders for work that is normal businesses - donors and consultants are seen as only solutions • The authority and power of the Tender Board far outweighs its level of accountability

25. APPROACH • Comprehensive, integrated • Addresses both actual delivery and the conditions that make delivery possible • Mixture of department specific and province wide • There are transversal challenges that have to be addressed to make departmental delivery successful, for example financial management arrangements in the Province • Mix of short and long term • Some solutions are immediately implementable, but will only realise benefits in coming financial years • Some solutions are immediately implementable and will realise immediate benefits

26. CONCEPT

27. Strengthen leadership and management Strengthen Back Office Support Program Management Departmental Turnaround Strategies Rapid and visible Service delivery Ethics and anti- Corruption Strategy Turnaround Strategy Improve Internal controls and accountability Improve HR Management

28. Strengthen leadership and management Improve HR Management Improve Internal controls and accountability Program Management Departmental Turnaround Strategies Rapid and visible Service delivery Ethics and anti- Corruption Strategy Strengthen Back Office Support Turnaround Strategy Strengthen back office support • Decentralize financial delegations back to departments as from May 1; • Delegate procurement powers up to R5m • Source in back office support for two years based on output based contract • In sourcing will focus on financial management,systems, closing of books and expenditure management • Will include human resource management and cleaning of PERSAL database • Separate process for document management

29. BACK OFFICE SUPPORT: PROGRESS

30. BACK OFFICE SUPPORT: PROGRESS

31. Strengthen leadership and management Improve HR Management Strengthen Back Office Support Program Management Departmental Turnaround Strategies Ethics and anti- Corruption Strategy Rapid and visible Service delivery Turnaround Strategy Improve internal controls and accountability • Decentralize Internal Audit function; • Departments to have own Audit Committees; • Internal Audit capacity will be outsourced for first year whilst capacity being developed; • Common audit plan and strategy for rolling out internal audit developed; Improve internal Controls

32. INTERNAL CONTROLS: PROGRESS

33. Strengthen leadership and management Strengthen Back Office Support Program Management Departmental Turnaround Strategies Ethics and anti- Corruption Strategy Rapid and visible Service delivery Turnaround Strategy Improve human resource management • Implementation of resolution 7 proposals • Filling of vacancies • Strategy for attracting scarce skills • Support services companies • Incentives for professionals in rural areas • Internships and strategy for training people in scarce skills Improve Internal Controls Improve HR Management

34. IMPROVE HR MANAGEMENT: PROGRESS

35. Improve HR Management Strengthen Back Office Support Program Management Departmental Turnaround Strategies Ethics and anti- Corruption Strategy Rapid and visible Service delivery Turnaround Strategy Strengthen leadership and management • Increase management to at least 1% of social departments • Competency profiling of all senior managers • Performance agreements for senior managers • Initiate disciplinary processes for managers based on existing forensic and Auditor General reports • Workplace based management development program Improve Internal Controls Strengthen leadership and management

36. LEADERSHIP AND MANAGEMENT: PROGRESS

37. Improve HR Management Strengthen Back Office Support Program Management Departmental Turnaround Strategies Strengthen Management And leadership Rapid and visible Service delivery Turnaround Strategy Ethics and anti-corruption strategy • Advisory Panel for disciplinary cases • Prosecutions for old and emerging cases • Special Commercial Crimes Court • Education and Awareness programs • Hotline • Forensic audits into problem areas Improve Internal Controls Ethics and anti- Corruption Strategy

38. ETHICS AND ANTI-CORRUPTION: PROGRESS

39. Improve HR Management Strengthen Back Office Support Program Management Departmental Turnaround Strategies Strengthen Management And leadership Ethics and anti- Corruption Strategy Turnaround Strategy Rapid and visible service delivery • Service level agreement with Coega. • Priority projects for six departments. • Framework for monitoring projects. Rapid and visible Service delivery Improve Internal Controls

40. RAPID SERVICE DELIVERY: PROGRESS

41. Improve HR Management Strengthen Back Office Support Program Management Rapid and Visible Service Delivery Strengthen Management And leadership Ethics and anti- Corruption Strategy Turnaround Strategy Departmental turn- around strategies Departmental Turnaround Strategies Improve Internal Controls

42. TURN AROUND: EDUCATION • Based on 12 projects • Human resourcing and personnel expenditure • district development • performance management • management (their performance) and leadership • financial services • human resource services • procurement and logistical services • discipline • physical facilities • learning support material • matriculation readiness • school nutrition programme • Was necessary to change the management structure by establishing a project management structure and the infusion of managers deployed from national departments, as well as the appointment of an interim head of department

43. TURN AROUND: HEALTH • Three key focus areas • Improve the management of health services • Improve targeted front line health services in Eastern Region • Improve back office support to health institutions

44. TURN AROUND DRPW Roads and Buildings Area wide buildings and maintenance contracts Property Strategic Asset Management Partner Human Resources Corporate Support Procurement Ethics CBWP Strategy Priority projects (Roads and Buildings)

45. PROPOSED TURN AROUND: SOCIAL DEVELOPMENT • Review current leadership and management cadre • Rid the Department of corrupt officials • Implement initiatives to remove service delivery bottlenecks, particularly to speed up CGS registration and the disbursement of welfare grants. • Celebrate short-term achievements with aggressive targeted communications

46. PROPOSED TURN AROUND: LONG TERM • The long-term transformation will take place on three levels: • A reconfiguration of how the Department interacts with the public, which we call the front office. New partnership model with Home Affairs and Department of Labour to provide a one stop shop solutions • Helping the Department to make the shift from a welfare to a developmental paradigm • A redesign of the Department’s back office. Key would be setting a processing center in the department and establishing a contract management center outside the department but managed by the department

47. PROGRESS AGAINST DEPARTMENTAL TURNAROUND PLANS • Implementation has begun and progress in certain areas is being achieved. • Issues of budget, however, are constraining progress and initiatives are underway to resolve this problem. • Some concerns are also emerging with regard to the buy-in of certain departments in implementing the turnaround plans.

48. CHALLENGES/RISKS • Budget: • Required budgeted to implement is approximately R 240 million. • Departmental and transversal interventions will be funded from savings/underspending. • Departments are busy finalising these allocations, but are experiencing difficulty to balance with ongoing work and commitments. • Buy-in of departments • Success requires ongoing support and buy in from those in leadership. • Revised management structures • Revised management structures are required for the successful implementation of turnaround plans. • Challenges related to the concept • Co-operative nature of the model requires effective lines of accountability, good communication and funding.

49. EXIT OF THE IMT • Concurrently developing critical structure through- - Monitoring and Evaluation mechanisms; - Effective Management structures; and - Dedicated function located in the OTP to drive and monitor after March 2004.

50. EMERGING LESSONS/THEMES • Turnaround is not a quick fix, some solutions only realise its full impact over time • Getting basics right is essential for smooth functioning of higher level activities. A breakdown of basic administrative practices (such as recording leave) in many instances sabotage an output (such as paying out a pension, which cannot be done without a complete leave record) • Setting a foundation for future delivery • A lot of effort is being put into support systems that make actual delivery of services possible. Stable but flexible support systems can accommodate policy changes, but if the foundations are weak, departments battle to deliver and accommodate policy shifts. • Exposing both national and provincial departments to various new ways of delivery (e.g. partnerships, alternative service delivery, benefits of using IT) • The IMT is providing a rich experience in public administration and innovation, drawing on examples of other departments and provinces and tailoring solutions. These experiences can also enrich processes in other departments and provinces