1. PSIRA 2016/17 Budget
24 May 2016

2. Introduction
The Private Security Industry Regulatory Authority (PSIRA), was established in terms of Section 2 of the Private Security Industry Regulation Act, 2001 (Act No of 2001). The entity’s mandate is to regulate the private security industry and to exercise effective control over the practice of the security service providers in the public and national interest, and in the interest of the private security industry itself.
The Authority generates its own revenue through the collection of annual levies, and through money received from any legitimate sources.
For over three years, the Authority was involved in a protracted court case over the increases made to its annual registration fees, which was successfully challenged by the Security Industry Alliance (SIA). As a result, the Authority embarked on an Annual Fees Refund drive in which a total of R81 million had to be refunded to Security Service Providers (SSPs) over a period of three years.
In terms of legislative development, in 2012 and throughout 2013, the Portfolio Committee on Police was busy with a review of the PSIRA Act (2001). The Amendment Bill [B27D-2012], which seeks to strengthen regulatory oversight of the private security industry, made significant amendments to the 2001 Act and will have a great impact on the structure and reporting requirements of the Authority going forward. To date the Bill has not yet been assented to by the President. 2

3. Expenditure Estimates 2016/17
Programme
Budget
Nominal Increase/ Decrease 2016/17
Nominal % change 2016/17
R million
2015/16
2016/17
Programme 1: Administration
21.92%
Programme 2: Law Enforcement
19.83%
Programme 3: Communication, Registration (CRM) and Training
10.00%
TOTAL
18.5%
The overall revenue of PSIRA is expected to increase from R199.6 million in 2015/16 to R236.6 million in 2016/17, which is a nominal increase of 18.5%.
The Administration Programme receives the largest increase of 21.9% in 2016/17 compared to the previous FY. Proportionally, it also receives the bulk of the total budget at 42.4% 3

4. Overall financial position 2016/17
In terms of the overall statement of financial performance of the Authority in 2016/17, the following aspects should be noted:
The account for other non-tax revenue is expected to increase from R26.3 million in 2015/16 to R37.7 million in 2016/17, which is a real increase of 34%. The Authority should delineate the revenue received in this account;
All line items within the Expense account of the Authority shows above inflation increases, which should be explained;
In terms of the carrying value of assets, the 2016/17 cash and cash equivalents account decreases significantly form R35.4 million in 2015/16 to R1.5 million in 2016/17, which is a % decrease in real terms. The Authority should explain this significant decrease.
The Accumulated surplus of R50.5 million accrued in 2015/16 is expected to decrease to a deficit of R6 million in 2016/17;
Overall, the total equity and liability position decreases in real terms with 6.09 per cent in /17 compared to the previous financial year. 4

5. Programme 1: Administration
The Administration Programme receives the bulk of the total budget for 2016/17 at 42.43%
Overall, the budget allocation of the Administration Programme increases from R82.3 million in /16 to R100.4 million in 2016/17, which is a nominal increase of 21.9%.
Proportional allocation increases year-on-year, while allocation to core legislative mandate (Programme 2) is decreasing proportionally.
The budget allocation made towards the repairs and maintenance account increases significantly in /17 from an allocation of R754 thousand in 2015/16 to an allocation of R2.9 million in 2016/17, which is a real increase of 264.7%.
The Committee should request the Authority to explain this significant increase, as repair and maintenance costs are presumably included in their rental contract/agreement.
The performance indicators for the Finance and Administration subprogramme have been halved in /17 compared to the previous financial year. Three (3) critical indicators pertaining to effective revenue management (annual adjustment of administrative feed and review of annual fees) and a sustainable funding model (annual review of funding model) have been removed from the 2016/17 APP and should be explained by the Authority.
The annual target for the new performance indicator measuring the percentage of revenue collected should be increased, as an increase in revenue collection will greatly improve the liquidity of the Authority and also decrease the amount of bad debt written off. Bad debt has been a challenge for the Authority over the past years. 5

6. Programme 2: Law Enforcement
The overall budget allocation of the Law Enforcement Programme increases from R73.1 million in 2015/16 to R87.6 million in 2016/17, which is a nominal increase of 19.85%.
The Programme receives 37% of the total budget of the Authority in 2016/17 (second largest).
The increased allocation of 103.5% in real terms towards Lease payments should be clarified by the Authority.
The decreased allocation of 22.2% made towards the travel and subsistence account should be questioned as this is directly in-line with the core mandate of the Authority to conduct compliance inspections at security businesses as well as on security officers.
This should be seen in contrast to the significant increased allocation of the travel and subsistence account of the Communications, Registration (CRM) and Training Programme which increased with 44% in real terms.
Although cost containment measures are in line with National Treasury requirements, it should not impact negatively on core performance.
The Deputy Minister of Police also raised compliance challenges during her budget debate speech, specifically regarding equal pay scales and conditions of employment.
The number of performance indicators for the Law Enforcement Programme was reduced from fourteen (14) performance indicators in 2015/16 to six (6) performance indicators in 2016/17. Of specific concern is the removal of performance indicators for site inspections in specific sectors that was introduced in the previous FY. These sectors included the following:
Retail sector; Health services sector; Educational facilities; Industrial and corporate facilities; and Residential areas. 6

7. Programme 3: Communication, Registration & Communication
The R48.5 million allocation in 2016/17 represents an increased allocation of 3.19% in real terms compared to the R44.1 million allocation in 2015/16 (20.5% of the total budget).
In terms of expenditure estimates:
the travel and subsistence budget grows significantly from R1.6 million in 2015/16 to R2.4 million in /17, which is a real increase of 44.63%.
The personnel expenditure budget also increases from R10.7 million in 2015/16 to R15.1 million in /17, which is an increase of per cent.
The most substantial increase is in the consultancy and professional services budget, which increases with % in real terms from R650 thousand in 2015/16 to an estimated R1.9 million in /17 – not in-line with Treasury’s cost containment measures.
The lease payments budget decreases with 100 per cent in 2016/17 as no funds were allocated to this item in the current financial year.
The Communication, Registration (CRM) and Training Programme identified a total of four (4) performance indicators for the 2016/17 financial year. Of concern is the fact that the targets remains static over most of the medium-term.
The performance indicators for the Communications and Stakeholder Management subprogramme has been reduced significantly from elven (11) to one (1) performance indicator. Presumably, all campaigns have been combined into the one remaining target, however, the separate focus areas of campaigns within the industry is important and may require a different approach. 7

8. Capital Infrastructure & Capital Asset Plan
The original 2014/15 capital asset budget of R6.6 million was significantly increased over the medium-term due to the plan of implementing a new Enterprise Resource Planning (ERP) system. The total capital expenditure budget for 2016/17 increased with per cent in real terms, from R22.8 million in 2015/16 to R28.3 million in 2016/17. The most significant increases within the capital asset budget is on the following items:
The allocation towards computer hardware increases from R750 thousand in 2015/17 to R2.1 million in /17, which is a real increase of per cent.
The allocation towards office furniture increases from R500 thousand in 2015/16 to R755 thousand in /17, which is an increase of per cent in real terms compared to the previous financial year.
The allocation towards motor vehicles receives an allocation of R5.4 million in 2016/17 against no allocation made in the previous financial year (2015/16). 8

9. Key issues for consideration by Parliament
MTSF
Sub-outcome 3: Domestic Stability - The recent increase in protest actions at universities have seen the involvement of private security companies (employed by educational facilities) in the stabilisation of protests. Recently, private security guards at the University of Stellenbosch donned full riot gear. This is the sole preserve of the SAPS, as private security guards are only trained in crowd control (at stadiums etc.) and not in public order.
Sub-outcome 5: SA Borders effectively defended and protected - The regulation of private security companies employed at airports and sea ports of entry should be increased and included as a specific performance indicator of the Authority.
Budget Increases
The above-inflation increases to many line items within the budget of the Authority should be questioned.
The reduction of performance indicators should be questioned, as most of the removed indicators represented valuable performance measurement information.
Performance Indicators 9

10. 1010 10 QUESTIONS OF CLARITY WELCOME
Researcher: Nicolette van Zyl-Gous
Thank you | Enkosi | Ngiyabonga| Dankie 10