1. Presented by Ms Koko Mashigo: AA Chairperson

2. Purpose is to update the Portfolio Committee on Public Service and Administration regarding developments since its recertification. PSETA refers to previous presentations made to the Portfolio Committee on 16 April 2013 and 26 July 2012. PSETA has been an ‘unfunded’ entity since its establishment as government departments do not contribute the 1% skills levies in terms of the Skills Development Levies Act, like all other employers. 2

3. PSETA is established in terms of the Skills Development Act (SDA) and listed as a Schedule 3A public entity reporting to the Minister of Higher Education and Training (MHET), as the Executing Authority Legislative mandate derived from the SDA, Skills Development Levies Act (SDLA) and Public Finance Management Act (PFMA) and National Skills Development Strategy (NSDS) III In November 2010 MHET announced the new NSDS III landscape and re-certified SETAs for five years, in line with the life span of the NSDS PSETA was re-certified for only 1 year up until 31 March 2012, to allow for its repositioning as an independent SETA and for a viable funding model to be finalised PSETA has since been re-certified up to 31 March 2016 3

4. PSETA functioned as a sub-programme within DPSA PSETA assumed operational independence from DPSA as of 1 April 2011. PSETA continues to receive a ring-fenced allocation from NT via DPSA for administration/ operational costs (R23mill) PSETA participates in the GSETA Forum and Public Service Skills Committee (sub-committee of HRDC) coordinated by DPSA DPSA is a critical employer stakeholder on the PSETA Accounting Authority, drives skills planning for sector, analysis of skills demand and supply, joint projects on rural youth development, career guidance etc 4

5. During 2010, MHET and MPSA established an Inter-Ministerial Task Team to recommend a viable funding model for PSETA The IMTT was led by DHET and consisted of representatives of DPSA and National Treasury. The IMTT produced a Cabinet Memo, that introduced the payment of levies (30% of 1% of payroll) by government departments to PSETA and other government related SETAs. The Cabinet memo was formally supported by MHET and MCOGTA (endorsements in writing) and presented to Cabinet on 23 November 2012. 5

6. On 23 November 2012 Cabinet took a decision on the Utilization of training budgets in Public Service, its prime intention is to regulate how monies on education, training and development are spent Directive was signed by MPSA on 30 March 2013, effective 1 April 2013 Provides for 30% of 1% to be allocated to SETAs – 1/3 for admin and 2/3 for discretionary grants 50% of 1% retained by departments for up skilling of current employees 20% of 1% to be utilized for unemployed Directive provides PSETA with a budget of +/-R100 million Other beneficiaries: ETDP SETA, SASSETA, HWSETA, and other SETAs that have line function departments amounting to +/- R1 billion for skills development in PS for qualification development, research, quality assurance and discretionary grant projects 6

7. During June 2013, the Premier of the Western Cape challenged the legality of the Directive Subsequently the officials within National Treasury issued letters to government departments requesting them to withhold payments to the PSETA; due to uncertainty of the status of the Directive and capacity of PSETA (see attached letter) This caused huge reputational damage to PSETA, as the entity’s capacity to manage the funds was questioned. Moreover, the lack of levy contributions to PSETA impacts on the 2013/4 Annual Performance Plan 7

8. PSETA APP approved by MHET was based on the envisaged funding model facilitated through the DPSA Directive i.e. R100.8 million for 2013/4 FY To date PSETA has received R4.5 million from only some provincial departments (we have since learnt that we have to return the monies back to the departments) As a result, the Accounting Authority was forced to review the APP to only provide for the ring-fenced allocation of R23,3 million (from DPSA) and a conditional NSF grant of R33, 5 million for 2013/4 The implication of this is that PSETA can only carry out NSF projects that meets the needs of the NSDSIII, and not impact on training interventions for the Public Service Sector, as no levies are being contributed by government departments. 8

9. On 27 August 2013, PSETA received a presentation by the Advisory Task Team on the National School of Government The ATT proposed areas of collaboration between PSETA and NSG, and also the migration of certain legislative functions to the NSG The engagements between the ATT and PSETA have not been concluded A formal response has been submitted to the ATT With the eminent launching of the NSG on 21 October 2013, PSETA is not certain about the implications that the new institute will have on PSETA’s functions and funding. The ATT in its presentation indicated that it will engage National Treasury on the scope of PSETA and a financial model 9

10. PSETA is back to where it was in 2010, with no viable funding model Cannot deliver on pre-determined objectives – APP had to be amended Relies on NSF to fund core business projects, only for unemployed, rural youth and artisanships Limited impact on Public Service Education and Training due to limited resources (as reflected in Sector Skills Plan) Impact on staff morale – high staff turnover - PSETA cannot match remuneration packages of other SETAs Staff establishment based on proposed funding model – posts now frozen 10

11. PSETA calls on the Portfolio Committee to intervene as follows:  Facilitate an urgent meeting between MPSA, MHET and MoF to discuss: Status of the Directive; Clarity on PSETA’s role in professionalizing the Public Service in relation to the National School of Government; Funding model to carry out its legislative mandate. 11