Department of Transport Annual Report Presentation 2016/17

1. Department of Transport Annual Report Presentation 2016/17 1

2. Contents • Background • DoT Overall Performance • Performance per Programme • Human Resource Management • Human Resource Development • DoT Equity Statistics • Governance • Areas for Improvement Identified • Best Practices • Financial Statements 2016/17

3. Key Focus Areas for the Report • Performance of the Department of Transport (DoT); • Non-financial and financial results; • DoT Organisational Health and Capability to deliver on policy objectives.

4. Background • Report focuses on the progress made with the implementation of programmes & projects in 2016/17 • Focus was on optimal performance of deliverables in terms of the MTSF & MTEF • Targets were guided by the outcomes-based approach (Outcome 4, 6, 7 & 10)

5. Overview of the Transport Sector for the 2016/17 Financial Year • NDP emphasizes necessity of sound economic infrastructure as a pre-condition for economic growth; • The APP 2016/17 highlights the DoT’s commitment to address major social and economic challenges facing the sector through interventions aimed at accelerating service delivery, increasing job opportunities, rural development and skills development; • This report emphasizes the DoT’s continued restatement of the need for increased investments in public transport infrastructure, restructuring of current subsidies to promote integrated settlements and transport infrastructure projects to improve access to opportunities for the urban and rural poor.

6. DoT Overall Performance (2016/17) • Total Number of targets - 53 • Targets Achieved - 50 targets • Targets Not Achieved - 3 targets Overall % Achievement – 94.3%

7. DoT Comparative Analysis: Performance per Programme per Quarter (2016/17)

8. DoT Annual Performance (2016/17)

9. DoT Year-to-year Performance Comparison

10. Key Achievements Programme 1: Administration • Transport Sector Gender Empowerment Policy was approved for implementation in March 2017 • Total of seven (7) community outreach campaigns were conducted on Gender, Disability, Youth and Children. • The Department exceeded the DPSA target of 5% of staff establishment by appointing 56 interns, which translates into 8.1% during 2016/17. • 411 (61%) staff members were trained against the set target of 60%. • 46 new bursaries were awarded to the serving employees. Total number of employees on bursaries amount to 146 for the reporting period.

11. Key Achievements Programme 2: Integrated Transport Planning • Implementation of the NATMAP 2050 commenced with the successful identification and profiling of priority pilot projects. Adraft implementation plan was also developed for identified priority projects. • Review of the White Paper on the National Transport Policy was finalised and the Policy was submitted to Cabinet • Draft Road Freight Strategy was reviewed and submitted to Cabinet • Draft Road Tariff Determination Framework was developed as targeted during the period under review • Green Transport Strategy was finalised and submitted to Cabinet

12. Key Achievements Programme 3: Rail Transport • Legislative review and analysis were conducted and the draft National Rail Bill developed • Rail sector priority areas needing economic regulations were analysed; and a regulatory review and analysis was conducted. Draft economic regulations were subsequently developed for the rail sector • Draft branchline model for Private Sector Participation (PSP) was developed • Stakeholder consultations were conducted on the draft National Railway Safety Regulator Amendment Bill and the Bill was submitted to Cabinet during the period under review.

13. Key Achievements Programme 4: Road Transport • Oversight and monitoring of approved Provincial Road Maintenance Grant (PRMG) projects were conducted through site visits and quarterly bilateral consultationsin line with DoRA requirements. • Draft Access Road Development Plan (ARDP) was developed and consultations on the draft ARDP were conducted in all provinces • The Administrative Adjudication of Road Traffic Offences (AARTO) Amendment Bill was submitted to Parliament • The Road Accident Benefit Scheme (RABS) Bill was submitted to Cabinet • The Road Safety Strategy submitted to and approved by Cabinet • Inspections of all active VTCs, DLTCs and DGOs were successfully conducted over the four quarters.

14. Key Achievements Programme 5: Civil Aviation • Airports Company and ATNS Amendment Bills were submitted to Cabinet • National Civil Aviation Policy (NCAP) and National Airports Development Plan (NADP) were submitted to Cabinet • Air service arrangements were reviewed with nine (9) States during the period under review. • Civil Aviation Amendment Bill was submitted to Cabinet • Amendment Bill for the rationalisation of the Air Services Licencing Act and the International Air Services Act was developed and consultations were conducted with the State Attorney during the period under review.

15. Key Achievements Programme 6: Maritime Transport • Draft Maritime Transport Policy was submitted to Cabinet during the period under review • Draft Merchant Shipping Bill (2016) was developed • Inland Waterway Strategy was submitted to Cabinet • Project Plan for the 2020 IMO World Maritime Day parallel event was developed

16. Key Achievements Programme 7: Public Transport • Rural Transport Strategy was submitted to Cabinet • Draft Integrated Public Transport Network (IPTN) plan was developed in one (1) district municipality • Stakeholder consultations were conducted on the draft Taxi Recapitalisation Review Report and the Report was subsequently submitted to Cabinet • Stakeholder consultations were conducted on the draft Integrated Public Transport Turnaround Plan and the Plan was submitted to Cabinet • Draft Public Transport Safety Improvement Plan was developed • National Land Transport Amendment Bill was submitted to Parliament

17. Notable Challenges to be Prioritised for Remedial Action Programme 2: Integrated Transport Planning • Though the Harrismith Hub Framework Implementation Plan was developed and submitted to Cabinet as targeted, there were pertinent issues that were identified that threatens to delay approval and subsequent implementation of the Framework. • Corrective measures: A political resolution will be sought between the DoT and the Free State Province to ensure that the issues are addressed.

18. Notable Challenges to be Prioritised for Remedial Action Programme 3: Rail Transport • Though consultations were conducted with SANRAL, Transnet and Provinces on the White Paper on the National Rail Policy and the National Railway Safety Strategy, both the White Paper and the Strategy could not be submitted to Cabinet as targeted. During the consultation process, several issues needing further investigations were identified. • Corrective Measure: Research is currently being conducted on the identified issues and pending the outcome, the White Paper will be submitted to Cabinet in the 2018/19 Financial Year • Finalisation of the National Railway Safety Strategy is also dependent on the finalisation of the White Paper on the national Rail Policy.

19. Human Resource Management Vacancy Rate • DoT staff establishment increased from 872 to 889 during period under review due to creation of 17 additional posts for the National Public Transport Regulator as at 01 December 2016. • Number of filled posts equals 672, thus translating into 217 vacancies (24% vacancy rate). This vacancy rate is not a true reflection as most of the positions are not funded due to cost containment measures

20. Human Resource Development Initiatives • 56 interns were appointed, translating into 8.1% of staff establishment, thus exceeding DPSA target of 5%. • 411 staff members trained and 46 new bursaries awarded during the period under review. Total number of employees on bursaries stands at 146. • 5 employees attended donor funded international programmes and 4 female SMS members were accepted for TETA Leadership Development Programme for Women • Comprehensive skills audit exercise completed within 12 months with 95% response rate • MoUs signed with 11 institutions of Higher Learning where 803 learners were enrolled.

21. Employment Equity Statistics Race • African – 91.7% (target – 79.5%) • Coloured – 1.36% (target – 9%) • Indian – 1.96% (target – 2.5%) • White – 4.98% (target – 9%) Gender • Male – 285 (43%) target = 54.20% • Female – 377 (57%) target = 45.80%

22. Employment Equity Statistics SMS • Male – 62 (62%) • Female – 38 (38%) (Target = 50% female representation in SMS) Disability • Male – 3 • Female – 10 • DoT Disability Status – 1.96% (Target = 2%)

23. GOVERNANCE

24. Risk Management • DoT Strategic and Operational Risk Registers compiled and monitored for the 2016/17 financial year. • Risk Champion Forum and Risk Management Committee meetings held on a quarterly basis to ensure that key risk controls are in place and track implementation of risk mitigation strategies • Risk Management is a standing item in Executive Committee meetings, Audit Committee Meetings as well as Strategic Management Committee of the DoT.

25. Minimising Conflict of Interest • Financial Disclosure Framework – All SMS members sensitized to disclose financial interest so as to identify conflict of interest • 100% compliance with SMS Disclosure Framework • Declaration of interest for all procurement as a measure to minimise conflict of interest in SCM (SBD 4 Form and SBD 9 Form)

26. Code of Conduct • 100% of new appointees were inducted on the Code of Conduct • SMS training on disciplinary matters related to violation of Code of Conduct

27. Internal Control • Action plans to address audit findings for 2015/16 financial year were developed and monitored on a quarterly basis; • Progress reports on the implementation of action plans were monitored on a quarterly basis and presented to Audit Committee meetings; • Compliance reviews were conducted on PFMA, Treasury Regulations, DoRA, Financial Policiesand SCM Prescripts. • Loss Control Committee meetings were facilitated to ensure optimal safekeeping of departmental assets by Branches.

28. Internal Audit and Audit Committees • Audit Committee complied with its responsibilities - Section 38 (1) (a) (ii) of the PFMA and Treasury Regulation 3.1.13 • Audit Committee has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with the Charter and has discharged all its responsibilities as contained therein. • Among the responsibilities of the AC, the following were done during the period under review: • Review of the effectiveness of Internal Control systems • Review of effectiveness of internal audit function • Review of risk areas of the Department • In-year management of quarterly reporting • Evaluation of Annual Financial Statements and reporting on predetermined objectives • Compliance with laws and regulations

29. Areas of Improvement Identified • Oversight of sector state-owned entities and the management of transversal functions with Provincial Departments remain critical areas where the DoT will focus in the short to medium term. Internal and external engagements will be conducted to ensure that the Department improves its performance in optimally delivering on these important tasks. • The Department has commenced its development of a 3-year Evaluations Plan in the quest to strengthen performance evaluation in line the DPME National Evaluation Framework. During the 2016/17 financial year, the evaluation of the Learner/Scholar Transport Policy commenced as the initial step to improve evaluation of DoT and sector programmes and projects.

30. Best Practices • Regular and vigorous EXCO deliberations on performance information • DoT Internal Planning, Monitoring and Reporting Guidelines were amended to incorporate standard operation procedures for managing red flags identified during quarterly reporting phases. • The exercises of predetermining quarterly and annual evidence and the management of Technical Indicator Descriptions by EXCO has resulted in improved completeness, accuracy and integrity of the DoT performance information.

31. Department of Transport Annual Financial Statements 2015/16

32. Contents • Report of the Auditor-General • Report of the Accounting Officer • Overview of financial results • Unauthorised, Fruitless and Wasteful and Irregular Expenditure • Sponsorships / Gifts and Donations received • Events after the reporting date • Other • Statement of Financial Performance • Expenditure breakdown for 2015/16 • Expenditure on major projects • Statement of Financial Position • Notes to the Annual Financial Statements

33. Report of the Auditor-General

34. Report of the Auditor-General (continued)

35. Report of the Accounting Officer Overview of financial results – Departmental revenue: The Department did not expect to receive dividends of R255.6 million, and expected revenue from unspent conditional grants of R80 million for the year.

36. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure:

37. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure (cont.): Administration underspent R21.7 million on Compensation of Employees and R7.5 million on Goods and Services, mainly due to under expenditure in projects of Management and Communications. The under expenditure was shifted across Programmes, mainly to reduce the over expenditure in Road Transport. The final savings of R46,000 in Transfer Payments and Machinery & Equipment could not be shifted across Programmes. Integrated Transport Planningunderspent by R1,9 million due to savings on the Harrismith Hub project, which was taken over by the province. The savings were shifted across Programmes to reduce the over expenditure in Road Transport.

38. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure (cont.): Rail Transportunderspent by R1.7 million on Compensation of Employees and by R1.9 million in Goods and Services. Under expenditure and savings were shifted to cover over expenditure in other Programmes. A rollover of R1.452 million was requested for the Interim Rail Economic Regulator project, which represents the final under expenditure. Road Transport overspent on Goods and Services by R260.3 million due to expenditure of R269.1 million on the eNaTIS. Funds were shifted across Programmes to reduce the over expenditure in Road Transport. Civil Aviation underspent by R43.5 million on Goods and Services, mainly due to funds of R47.84 million that were earmarked for the upgrade of a satellite tracking system that was not spent. The Programme also underspent by R2.3 million on Compensation of Employees. Funds were shifted from other Programmes to cover over expenditure on projects, mainly Watchkeeping Services, to remain with the unspent earmarked funds.

39. Report of the Accounting Officer (continued) Overview of financial results – Programme expenditure (cont.): Maritime Transport overspent on its Goods and Services by R15.6 million, mainly due to additional expenditure on the Oil Pollution project, and incurred a loss of R22.1 million due to the write off of a debt of the South African Maritime Safety Authority. The shortfalls were covered by shifting funds from other Programmes. The remaining under expenditure of the Programme reflects the balance of unspent earmarked funds. Public Transportunderspent on a number of projects, mainly, the Review of the Taxi Recapitalisation Model (R51.4 million), the Implementation of Integrated Public Transport Network Plans in District Municipalities (R27 million), Technical Oversight and Support (R9.1 million) and the ShovaKalula bicycle project (R6.4 million). A total of R98.3 million was shifted to other Programmes to cover over expenditure, mainly in Road Transport and Maritime Transport. The remaining under expenditure of the Programme reflects the balance of unspent earmarked funds.

40. Report of the Accounting Officer (continued) Overview of financial results – Virements:

41. Report of the Accounting Officer (continued) Overview of financial results – Virements (continued): Compensation of employees: Most Programmes experienced under expenditure on Compensation of Employees, which was shifted across Programmes to reduce the over expenditure in Road Transport and to compensate for shortfalls. Goods and services was underspent mainly in Public Transport and Administration. Funds were shifted to Road Transport to reduce the over expenditure due to eNaTIS that was not budgeted for, to Maritime Transport to cover the additional cost on Oil Pollution and the write off of a debt of the South African Maritime Safety Authority, to Rail Transport to increase the transfer to the Railway Safety Regulator and to Civil Aviation to cover the over expenditure on a number of projects.

42. Report of the Accounting Officer (continued) Overview of financial results – Virements (continued): Machinery and equipment was over and underspent between Programmes and over expenditure was covered by shifting funds across Programmes. Foreign governments was overspent mainly for the African Civil Aviation Commission (AFCAC) and the International Civil Aviation Organisation (ICAO). Savings in membership fees for the International Maritime Organisation was shifted to cover the over expenditure on ICAO and to partially cover the over expenditure on AFCAC. Householdswas overspent because more taxis were scrapped than budgeted for and leave pay was under budgeted for. Funds were shifted within and across Programmes to cover the over expenditure.

43. Report of the Accounting Officer (continued) Overview of financial results – Rollovers requested: National Treasury did not approver the rollover.

44. Report of the Accounting Officer (continued) Unauthorised, Fruitless and Wasteful and Irregular Expenditure: • Unauthorised expenditure: • Unauthorised expenditure amounted to R1,338,165,000 at 31 March 2017: • An amount of R R1,207,374,000 was allocated to the Department in 2016/17 as a direct charge against the National Revenue Fund to offset unauthorised expenditure that was incurred during 2008/09 and 2009/10 as a result of over expenditure on bus subsidies. • Over spending of Road Transport in 2013/14, 2014/15 and 2016/17 because eNaTIS is unfunded represents the balance of unauthorised expenditure of R1,338,165,000.

45. Report of the Accounting Officer (continued) Unauthorised, Fruitless and Wasteful and Irregular Expenditure (continued): • Fruitless and wasteful expenditure: • Fruitless and wasteful expenditure that was declared and not yet transferred to receivables, amounting to a total of R1,603,946 is made up as follows: • Intangible assets procured in prior years that are not used R845,196. • Services paid for but not delivered for which litigation was finalised R447,500. • An overseas trip that was undertaken that exceeded the authorization by R147,523, which is under investigation. • Other fruitless and wasteful expenditure under investigation R52,181. • To be written off R78,334. • To be recovered R33,212.

46. Report of the Accounting Officer (continued) Unauthorised, Fruitless and Wasteful and Irregular Expenditure (continued): • Irregular expenditure: • A total of R93,843,538 was declared as irregular expenditure in 2016/17: • Relating to prior years: Contract extended for a period of five years without following procurement procedures R92,139,498. The case was investigated and is still under investigation by the Special Investigating Unit and the Hawks. • Relating to the current year: Six cases were declared as irregular totalling R1,704,040 because work was done after expiry of a contract, approval was not obtained to appoint a sole provider in two cases, no process was followed for an event, vehicles were rented without approval to deviate from the prescribed vehicle group and no approval was obtained to reject a bid.

47. Report of the Accounting Officer (continued) Unauthorised, Fruitless and Wasteful and Irregular Expenditure (continued): • Irregular expenditure (continued): • Ten cases of irregular expenditure incurred in prior years and in the current year amounting to R10,433,356.60 were condoned. • Of the remaining 11 cases, disciplinary proceedings were initiated in 7 cases. Disciplinary steps could not be initiated in 2 cases because the irregular expenditure was identified after the responsible employees left the employ of the Department. In one case the responsible employees must still be identified and in the other, disciplinary steps have not yet started.

48. Report of the Accounting Officer (continued) Sponsorships / Gifts and Donations received – Financial Statements Note 28 and Annexure 1G:

49. Report of the Accounting Officer (continued) Events after the reporting date: A number of eNaTIS assets were stolen from service centres in Tshwane. The RTMC indicated that it requested the city of Tshwane to provide them with a security improvement plan before the assets would be replaced. Other: The RTMC has taken over the eNaTIS and related services on 5 April 2017 following a Constitutional Court judgment on 9 November 2016. The RTMC appointed a service provider to verify and value all of the eNaTIS assets, to compile a complete, accurate and compliant asset register and to facilitate the transfer of the assets from the Department to the RTMC. The eNaTIS assets were taken up at cost or fair value of the assets as at the date of acquisition and appropriate prior year adjustments were made to the financial statements.

50. Statement of Financial Performance