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 YEAR13 October 2015

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

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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

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FINANCIAL MANAGEMENT

4Departmental Annual Reports 2012/13, 2013/14 and 2014/15

Audit Outcomes

Audit Findings 2012/13 2013/14 2014/15

Audit OpinionUnqualified with

findingsUnqualified with findings

Unqualified with findings

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

EXPENDITURE VS PERFORMANCE

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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

% of budget spent % achievement of targets

11/12 12/13 13/14 14/15 11/12 12/13 13/14 14/15

99% 97% 98% 53%77% 70% 73%99.7%

Departmental Annual Report 2011/12 – 2014/15

EXPENDITURE VS PERFORMANCE (2)

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87%

58%75% 72%

98.4% 98.3%

70.5%

100.0%

Achieved Budget spent

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.

EXPENDITURE VS PERFORMANCE (3)

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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:

o lack of standard operating procedures for the accurate

recording of actual achievementso inadequate review to verify the validity of reported

achievements against source documentation

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.

CURRENT EXPENDITURE TRENDS

8Statement of the National Revenue, Expenditure and Borrowing as at 31 August 2015 (National Treasury Website)

Apr '15 May '15 Jun '15 Jul '15 Aug '15

4.8

% 9.3

% 14.

8%

30.

2% 36.

4%

8.3

% 16.

7% 25.

0% 33.

3%

41.

7%

Percentage spending Norm

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

30 DAY PAYMENT OF SERVICE PROVIDERS

Average Invoices paid after 30 days

Average Invoices older than 30 days not paid

2014 2015* 2014 2015* 2014 2015* 20142015* Rand value Number Rand value Number

R926,120 R925,410 131 20 R93,347 R3,748,318 8 4

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ACCOUNTABILITY

2011/12 Submitted after the due date on 08/07/20112012/13 Submitted on time on 28/06/20122013/14 Not submitted2014/15* Submitted after the due date on 06/10/20142015/16 Acting DG w.e.f May 2015

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:

10* Election year: Due date was 31 August 2014Performance Agreements Stats - PSC

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

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

11NACH Stats confirmed by Department - 8 October 2015

Cases Referred

% Feedback Received

% Cases Closed

Outstanding Cases

Sept ‘13-‘15 69 100% 17% 57

PROFESSIONAL ETHICS (2)

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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

2011/12100%

2012/130%

2013/140%

2014/150%

PROFESSIONAL ETHICS (3)

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Precautionary suspensionsSuspensions 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

FY No of people on suspension

Average no of days on suspension

Cost of suspension (R'000)

2010/11 0 0 02011/12 1 127 3132012/13 2 291 2892013/14 4 844 2 1472014/15 2 499 1 609

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

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TRANSPARENCY (2)

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Annual Reports (ARs)

2011/12 2012/13 2013/14 2014/15 2015/16

Available on website

Available on website

Available on website

Available on website

-

Annual Performance Plans (APPs)

Not available Not available Not available Not available Available on website

Departmental Website (Accessed on 06/10/2015)

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

TRANSPARENCY (3)

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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

2011/12 2012/13 2013/14 2014/15

Number 27 Not indicated 271 289

Rand Value R 91,562,139 R 102,196, 000 R 83, 985,008 R 85, 630, 435

GOOD HR PRACTICES

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Vacancy Rate (10% norm)2012/13 2013/14 2014/15 Aug’ 2015

22% 22.2% 14.5% 16.5%

Vulindlela Spread-sheet 2012/13 – 2014/15

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

7.9 14

36.219.4

10.1 13.6

36.927.8

March '14 Aug '15

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

GOOD HR PRACTICES (2)

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Financial yearDealt with within the Dept. Referred to PSC

Lodged Resolved Lodged Resolved

2011/12 7 9 3 12012/13 3 5 0 22013/14 19 16 1 02014/15 11 8 1 2

Data provided by the Department – 8 October 2015

GOOD HR PRACTICES (3)

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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

The nature of grievances 2013/14 2014/15

Salary and other related issues 64% 18%

Unfair treatment / practices 26% 18%

Recruitment and selection 10% -

Performance Management - 64%

Data provided by the Department – 8 October 2015

• 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

EMPLOYMENT EQUITY

2012/13 2013/14 2014/15 Aug’1536%

38%

40%

42%

44%

46%

39%

45%

39% 39%

20Data provided by the Department – 8 October 2015

EMPLOYMENT EQUITY (2)

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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

2012/13 2013/14 2014/15 Aug’150.00%

0.50%

1.00%

1.50%0.30%

0.10%

0.10%

1.20%

Data provided by the Department – 8 October 2015

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

CONCLUDING REMARKS

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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

CONCLUDING REMARKS (2)

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24National Anti-Corruption Hotline for the Public Service: 0800 701 701

Thank you

SiyabongaPSC Website: www.psc.gov.za

National Anti-Corruption Hotline for the Public Service: 0800 701 701