1. 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 YEAR
13 October 2015

2. 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 2

3. 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 3

4. Unqualified with findings
FINANCIAL MANAGEMENT
Audit Outcomes
Audit Findings
2012/13
2013/14
2014/15
Audit Opinion
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
Departmental Annual Reports 2012/13, 2013/14 and 2014/15 4

5. EXPENDITURE VS PERFORMANCE
% of budget spent
% achievement of targets
11/12
12/13
13/14
14/15
99%
97%
98%
53%
77%
70%
73%
99.7%
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
NOTE: The delays in filling of vacancies has been a challenge for the Department for the last four years, which clearly links with the findings of the AG:
Leadership did not implement effective HR management to ensure that adequate and sufficiently skilled resources are in place and that performance is adequately monitored.
Departmental Annual Report 2011/12 – 2014/15 5

6. EXPENDITURE VS PERFORMANCE (2)
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. 6

7. EXPENDITURE VS PERFORMANCE (3)
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:
lack of standard operating procedures for the accurate recording of actual achievements
inadequate review to verify the validity of reported achievements against source documentation
Reasons for deviations on performance information:
Management’s lack of understanding of their approval requirements of Treasury Regulation 5.1.
Management’s lack of understanding of their reporting requirements during the strategic planning phase.
Lack of proper systems and processes and technical indicator descriptions.
Lack of documented standard operating procedures for the accurate recording of actual achievements and technical indicator descriptions for the accurate.
measurement, recording and monitoring of performance. 7

8. CURRENT EXPENDITURE TRENDS
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.
* Information obtained from the National Treasury Website.
The figure shows that monthly spending is below the norm.
Some of the reasons for the under-expenditure for the first quarter included spending less on investigations within the Department which were still under way; late invoicing by the Department of Public Works (DPW) on the operational budget; delays in the implementation of the national upgrading support programme; and advance payments to the government communication and information system (GCIS).
Statement of the National Revenue, Expenditure and Borrowing as at 31 August 2015 (National Treasury Website) 8

9. 30 DAY PAYMENT OF SERVICE PROVIDERS
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 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
Average Invoices paid
after 30 days
Average Invoices
older than 30 days not paid
2014
2015*
Rand value
Number
R926,120
R925,410
131 20
R93,347
R3,748,318 8 4
The Rand value of invoices not paid older than 30 days has increased, but it could be ascribed to the fact that the period covered ends in April, with invoices being carried over fro the previous financial year.
Compliance Progress Report for the period January to April 2015 9

10. ACCOUNTABILITY 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:
2011/12
Submitted after the due date on 08/07/2011
2012/13
Submitted on time on 28/06/2012
2013/14
Not submitted
2014/15*
Submitted after the due date on 06/10/2014
2015/16
Acting DG w.e.f May 2015
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
Reasons for non-submission of outstanding PAs by members of the SMS: Managers fail to finalise PAs on time and Acting appointments.
* Election year: Due date was 31 August 2014
Performance Agreements Stats - PSC 10

11. NACH Stats confirmed by Department - 8 October 2015
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
Cases Referred
% Feedback Received
% Cases Closed
Outstanding Cases
Sept ‘13-‘15 69
100%
17% 57
These %’s could be attributed to the limited capacity within the Department to deal with these matters or it could be an indication that the department does not prioritise these matters.
NACH Stats confirmed by Department - 8 October 2015 11

12. PROFESSIONAL ETHICS (2)
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
2011/12 100%
2012/13 0%
2013/14 0%
2014/15 0%
Financial Disclosure Database 12

13. PROFESSIONAL ETHICS (3)
Precautionary suspensions
Suspensions 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 FY
No of people on suspension
Average no of days on suspension
Cost of suspension (R'000)
2010/11
2011/12 1
127
313
2012/13 2
291
289
2013/14 4
844
2 147
2014/15
499
1 609
The Disciplinary Code and Procedures for the Public Service provides for the suspension of employees in the case of serious misconduct, to enable the employer to conduct an investigation without fear or interference. Such suspensions are on full pay and are not regarded as a sanction.
Data provided by the Department – 8 October 2015 13

14. 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 14

15. TRANSPARENCY (2)
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
Annual Reports (ARs)
2011/12
2012/13
2013/14
2014/15
2015/16
Available on website -
Annual Performance Plans (APPs)
Not available
Departmental Website (Accessed on 06/10/2015) 15

16. TRANSPARENCY (3)
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
Although the number of consultants increased over the years, there has not been a significant increase in the cost of consultants. 16

17. Vulindlela Spread-sheet 2012/13 – 2014/15
GOOD HR PRACTICES
Vacancy Rate (10% norm)
2012/13
2013/14
2014/15
Aug’ 2015
22%
22.2%
14.5%
16.5%
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
The red line depicts the national vacancy rate benchmark of 10%.
The high rate of vacancies in the Programme: Programme Delivery Support correlates with the low level of spending in this Programme at the end of the 2014/15 financial year (70,5% of final appropriation).
Vulindlela Spread-sheet 2012/13 – 2014/15 17

18. GOOD HR PRACTICES (2) 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
Financial year
Dealt with within the Dept.
Referred to PSC
Lodged
Resolved
2011/12 7 9 3 1
2012/13 5 2
2013/14 19 16
2014/15 11 8
Data provided by the Department – 8 October 2015 18

19. Data provided by the Department – 8 October 2015
GOOD HR PRACTICES (3)
The nature of grievances
2013/14
2014/15
Salary and other related issues
64%
18%
Unfair treatment / practices
26%
Recruitment and selection
10% -
Performance Management
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
Data provided by the Department – 8 October 2015 19

20. Data provided by the Department – 8 October 2015
EMPLOYMENT EQUITY
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
Women – the target is 50% at SMS level by March 2009.
Data provided by the Department – 8 October 2015 20

21. Data provided by the Department – 8 October 2015
EMPLOYMENT EQUITY (2)
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 as well as Gender Equality and Job Access Strategic Frameworks/ Implementation Plans that will promote the achievement of equity targets
People With Disabilities – the target: 2% to be achieved by 31 March 2010.
Data provided by the Department – 8 October 2015 21

22. CONCLUDING REMARKS
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 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
The Sanitation function was transferred to the Department of Water and Sanitation in terms of Presidential Proclamation No dated 15 July The
function carried with it two grants, namely the Rural Households Infrastructure Grant (Direct), Rural Households Infrastructure Grant (Indirect) and the Human
Settlements Development Grant (Indirect Grant for Bucket Eradication). 22

23. CONCLUDING REMARKS (2)
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 23

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