CHAPTER 2

OVERVIEW OF HOW GOVERNMENT IS WORKING

2.1 BACKGROUND AND CONTEXT

2.1.1 Introduction

This part of the Commission's report constitutes an overview of how government is working. It spells out insights into ministries, departments and provinces. This is done through the examination of key themes and issues which have emerged from our studies and investigations. Precisely because this is an overview, much detail and substantiation have been omitted. The detailed evidence for the overview is to be found in the four substantive chapters (chapters 3-6) of the report which focus respectively on:

• Transforming the structures and functions of government;
• Human resources management and development;
• Budgeting, financial management and accountability;
• Information management, systems and technology.

2.1.2 Background

The nineties witnessed a radical shift from the politics of conflict and confrontation to the politics of negotiation and consensus building in South Africa. This sea change, which resulted in the Interim Constitution of 1993 and the New Constitution of 1996, is important as it fundamentally altered the conception of societal transformation and nation building in South Africa.

The major achievement of this process has been the democratisation, for the first time, of South African society. While problems abound, even the most determined sceptics are likely to note the shared conviction among South Africans that "democracy is here to stay." There exists little, if any, threat to democracy itself. The very appointment of this Commission, we hope, is another indication of the widespread commitment to transparency and open governance. It is seldom that a newly elected government would subject itself, so soon after assuming office, to an independent and rigorous examination. We commend the President and the Government for this measure.

In the past three years several government departments and provincial administrations have introduced far reaching institutional changes and policy reforms. The injection of "new blood" into the public service after 1994 has generally resulted in an improvement in the extent of service provision. There have been remarkable cases where new and old managers within the public sector have worked effectively together and mobilised their limited resources to produce innovative and creative ways of improving the service. At the same time, however, there are departments and provinces which have lagged behind in this respect.

In the White Paper on the Transformation of the Public Service (WPTPS), released in 1995, the Government outlined a broad policy framework for transforming the South African public service in line with the following vision:

The Government of National Unity is committed to continually improving the lives of the people of South Africa by a transformed public service which is representative, coherent, transparent, efficient, effective, accountable and responsive to the needs of all (WPTPS, para. 2.1).

In pursuit of this vision, the Government developed the following mission statement:

The creation of a people centred and people driven public service which is characterised by equity, quality, timeousness and a strong code of ethics. (WPTPS, para. 2.1)

These statements were premised on a fundamental re-definition of the role of the state and its relationship to civil society, based on a partnership between them rather than the antagonistic relations that had prevailed in the past. They were also consistent with the relevant provisions of the Interim Constitution (Section 212 (2) (b) and Principle XXX of Schedule 4) as well as Chapter 2 of the White Paper on the Reconstruction and Development Programme (November 1994).

Chapters 3 and 10 of the New Constitution of South Africa (1996) make provision for an integrated, inter-sectoral, and co-operative approach to governance. These provisions commit all three spheres of government (national, provincial and local) to be transparent in policy making and inclusive in its approach. The New Constitution further stipulates that the public administration should adhere to a number of principles including:

• A high standard of professional ethics be promoted and maintained;
• Services should be provided impartially, fairly, equitably and without bias;
• Resources should be utilized efficiently, economically and effectively;
• People's needs should be responded to;
• The public should be encouraged to participate in policy-making;
• Public administration should be accountable, transparent and development-oriented.

Since 1994, the political landscape has been altered, with the introduction of the new central, provincial and local spheres of governments. New national and provincial departments have been established through the amalgamation and restructuring of former apartheid administrations With a few exceptions, most of these have now gone through some form of participatory strategic planning exercise and have formulated their own visions, missions, policy objectives and strategic plans, albeit of varying depth and quality. These have in many cases been made public through the publication of Green or White Papers, provincial Growth and Development Strategies or other policy documents. Greater difficulty has been experienced, however, in securing the necessary buy-in from staff and other stakeholders to ensure effective implementation of such visions and plans.

Three processes appear to have been followed in developing strategic plans, corporate plans or business plans. The first has been an inclusive one, involving the free participation of management and staff, and quite often the involvement of external stakeholders. The level of participation, and enthusiasm on the part of the various constituencies has generally led in such situations to positive outcomes and the broad acceptance of the new mission and vision statements and strategic plans.

The second process has been characterised by the limited or partial involvement of key constituencies. In such cases senior management usually takes the lead, with limited involvement from staff and unions, and typically little involvement from civil society. Such strategic plans are generally met with resistance on the part of those who feel that they have been excluded from the process,

The third process involves those departments and provinces (far fewer in number) that have delayed developing and implementing new strategic plans. A number of reasons are usually given to justify such delays. These include the effects of the "Sunset Clauses" in the Interim Constitution, the time consuming nature of the amalgamation and restructuring of apartheid administrations, delays in the appointment of key personnel, and resistance to change on the part of some senior managers.

2.1.3 The Inheritance - Challenges and Achievements

Our review of the public service has brought home to us vividly how fundamentally flawed was the machinery of government which the first democratic government of South Africa inherited in 1994. This was constructed and managed for the purposes of regulation, control and constraint, and not for those of community empowerment and development. The instruments necessary to begin the process of reconstruction and development simply did not exist. A new machinery and a new culture of governance had therefore to be created. The enormity of this challenge cannot be over-estimated.

Overall, a major achievement has been the re-integration of government, following the country's balkanization under the apartheid system. This involved the complex and difficult task of rationalising and integrating the eleven former administrations of the RSA and the "independent" and "self-governing" homelands into a single unified public service, operating at national and provincial levels. Typically, these various administrations brought with them different accounting and financial systems, different levels of job grading, skills and experience and, in some cases, a different work ethic. The complex nature of this task accounts for many of the problems that continue to afflict the new public service, including corruption and the incompatibility of systems. Considering the abiding self-interest built into these former administrations, the mere achievement of bringing them together is no mean feat. In fact, in regions such as the Eastern Cape and Northern Provinces, many of the persisting problems can be attributed directly to this incorporation process. In the Northern Cape, however, the problems arose differently. Because it was a completely new province, it had no existing public sector infrastructure to draw upon.

Given this situation it was hardly surprising that the new political leadership viewed its inherited public service with a degree of suspicion and scepticism. Nor was it surprising that one of the top priorities for the new Government was the appointment of new senior public servants from within its loyal political ranks. The Commission acknowledges that there was a threat, real or perceived, of political sabotage by intractable incumbents of the previous dispensation. We also acknowledge the need for "political appointments" within the service as a cushion against unsupportive public servants. It has become evident to the Commission, however, that some of those new appointees have not been able to offer much beyond political loyalty, due to the lack of skills. We were also concerned that, in general, senior public service appointments have generally reflected the ethnic or racial composition of the Minister. While we understand the rationale for political appointments into the public service, we feel that this should be an interim and not permanent feature of the service, and wish to emphasise that skill and competence, rather than political loyalty, should be the guiding norm in future, especially as the threat of political sabotage diminishes.

As can be expected, a number of new ministers and senior public officials assumed office without any previous experience or, in some cases, formal training. Often they walked into ill-equipped offices without any "phasing in" or formal hand-over from their predecessors. This, combined with a general distrust of public servants from the previous order, could only exacerbate the existing sense of insecurity and incapacitation. Compounding this was lack of clarity of roles between elected and appointed officials, a recurrent problem in both national and provincial departments.

From the standpoint of the citizen, the result has been a growing gulf between popular aspirations and expectations on the one hand, and government performance on the other. To some extent this was inevitable given the magnitude of the problems inherited from the past and the lack of resources for overcoming them.

The so-called "Sunset Clauses"(in particular Paras 236/7/8 of the Constitution of the Republic of South Africa 1993) were an additional constraint on transformation, forcing the state to carry many senior civil servants who were anxious, de-motivated and, in some instances, hostile. These sections continue in force in the 1996 Constitution (Schedule 6 para 24 sub-sections 1/2/3 ) unless they are amended, repealed or inconsistent with the new Constitution. Nor are any proclamations issued under these sections affected unless they are likewise amended, repealed or inconsistent.

Recent legislation driven by the Department of the Public Service and Administration (DPSA), and in particular The Public Service Laws Amendment Act 1997, has made it easier in theory for the Government to dismiss incompetent or non-performing officials. But in practice the disciplinary and dismissal process remains slow. The situation is further compounded by the large numbers of supernumerary personnel retained within the public service, as well as by the weaknesses of the Voluntary Severance Package (VSP) scheme. As will be seen later in this report, the operation of the VSP scheme has resulted, somewhat perversely in many cases, in the loss of competent staff and the retention of the "dead-wood."

Given this background, the Commission concludes that what is remarkable is not that there are short-comings in the governance system but rather that it has managed "to stay afloat." We must record how impressed we have been by the progress already made in response to the challenge posed by the flawed inheritance from the previous regime. The magnitude of the task is self-evident. Yet already under the Interim and the new Constitution, a new state has been created with democratic and accountable institutions. A national public service has been and is being re-engineered and re-motivated out of the miscellany of cadres serving the old regime. Its personnel have been integrated into new structures serving national and provincial government that have become remarkably more representative in a relatively short space of time. The aims and objectives of government are being made manifest in a steady flow of policy developments, set out in consultative Green and White Papers. In general, state departments appear strong on policy but weak on delivery. A start, albeit slow and hesitant, has nevertheless been made in giving effect to new policies across the whole spectrum of government.

We shall in succeeding chapters specify the major weaknesses which our investigations and studies have revealed and make proposals in this regard so that the public service at all levels, we believe, will be able to perform better than it does now.

We doubt if our findings will come as a surprise to those working in government. Many of the issues and recommendations in this report were in fact identified and suggested by public servants interviewed by the Commission, many of whom are themselves labouring under the burden of making the best they can of the existing structures and systems and the shortage of necessary skills. We wish to begin our report by acknowledging the commitment, energy and enterprise which many ministers, MECs and public servants are bringing to their work, and to commend them accordingly. We believe they will welcome the opportunities for betterment in the performance of the public service which our proposals are intended to achieve.

What follows summarises our overall impression of how government is working. This is preceded by some assumptions about our point of departure.

2.1.4 Assumptions and Strategic Framework

The Commission is aware of the difficulties arising from the assessment of a public service in transition. It is common knowledge that the measures, strategies and institutions required for transition need not be the same as those required for longer-term consolidation. In fact, in some cases such transitional measures could frustrate the longer-term goals of the public service.

The Commission is mindful of this dilemma and has tried as much as it could to distinguish between short, medium and long-term recommendations. Even then, we caution against inflexibility. We have considered carefully each and every recommendation and are confident that they form a sound basis for a solid public sector.

We have decided at the outset that we would not be evaluating the substance of government policy, as this clearly fell outside our terms of reference, but have noted the absence of policy where this has impinged on service delivery. The only exception in this regard is that of the Department of Public Service and Administration (DPSA) whose substance and policy constitute the focus of our investigation. Even with this caution at the back of our minds, we had to confront initially what amounts to a policy question, namely: What Ought the Public Service to Be Doing?

In trying to get to grips with this question we needed to go beyond the platitude that the purpose of the public service is to serve the government of the day. This is true but hardly helpful. We felt that it was impossible to continue this process unless we agreed, however tentatively, on some common understanding of how the state sees its role. Our approach was to refrain from defining these parameters in the abstract, but rather focus on how the current state defines its role. We considered and debated the following options which are well amplified in the Constitution:

• The state as a creator of the conditions necessary to reach national goals;
• The state as a facilitator;
• The state as a nation-builder;
• The state as a provider of the socio-economic environment.

Given the significance of the Government's Macro-Economic Strategy for Growth, Employment and Redistribution (GEAR) we felt that it was useful to see how the state was defined in that policy document, notwithstanding the many reservations that were aired about it before the Commission. In GEAR the state is primarily perceived as a facilitator that creates the conditions within which civil society acts. In particular, GEAR's objectives were to:

• Reconstruct the economy and orientate it further towards the export sector;
• Reduce poverty;
• Promote a higher level of economic growth which leads to a sufficient number of new jobs to reduce unemployment;
• Set limits on future government expenditure in order to meet internationally acceptable norms regarding the budget deficit as a percentage of GDP.

The authors of the GEAR document stressed that the new macro-economic strategy was and should continue to be consistent with the principles of the RDP. Whilst acknowledging that the degree of compatibility between GEAR and the RDP has become a subject of heated debate in South Africa, the Commission itself believes that the government should continue to strive to realise the broad principles of the RDP, particularly in relation to the introduction of an integrated, programmatic, needs-based, results-oriented and people-centred approach to service delivery.

The last objective of GEAR listed above, combined with a realistic suite of economic scenarios for South Africa in the medium term, has important financial implications for government. These objectives set clear limits on government spending and size. This leaves government with very little leverage, especially with salaries currently constituting a major part of the current expenditure of the consolidated national and provincial budgets. The picture is uneven. On average, however, according to figures supplied by the Department of State Expenditure (DoSE), remuneration constituted 39.1% of these budgets in 1994-95, 36.2% in 1995-96, 38.2% in 1996-97 and 39% in 1997-98. These percentage figures would be higher if other contractual payments were included.

The high levels of expenditure on public sector remuneration, calculated at R70 billion per annum, is in part due to the development of nine provincial public service administrations as required by the Constitution, as well as the retention of staff inherited from the former Bantustan bureaucracies, particularly in the Eastern Cape and Northern Province. One of the consequences is a very high number of "supernumeraries," calculated currently at 54,000 (DPSA Survey, April 1997).

The salary situation is also confused. On the one hand, departments constantly refer to their failure to attract high calibre people because of poor salaries. Yet, ironically, salaries constitute a high and ever growing aspect of the budget. High public sector employment, especially at lower skill levels, and the lack of a workable mechanism for retrenchment and redeployment of staff, makes it exceedingly difficult to keep within budgetary constraints on the wage bill. While public service salaries appear to be reasonably competitive with the private sector both at the top and at the bottom of the salary scale, the lack of competitive advantage is evident in technical and specialist positions, for instance for engineers, doctors, lawyers, finance and IT personnel. In these areas it is very difficult to recruit and retain capable staff.

Already salaries are rising as a proportion of departmental budgets which have been centrally capped. This in turn impinges on other essential expenditure. Moreover, it will be difficult for government to raise tax rates any further to improve tax receipts if the country is not to exceed internationally competitive levels of tax. Obviously, more effective systems of tax collection are important but the constraints on spending will remain. The main conclusion is that prioritisation will continue to be a key component of good governance. This implies the careful selection of priorities or " trade-offs," a process which is hard to implement in a democratic society where everyone wants his/her expectations to be fulfilled. The number of state employees will have to be limited if the civil service is to be seen as a good, motivational employer. Our views on the size of the public service are elaborated in greater detail in the section on rightsizing (Section 3.2) in Chapter 3 of this report.

International norms for government employment as a share of population for upper-middle level countries such as South Africa would require the reduction of approximately 320,000 public service personnel, at an estimated cost to the fiscus of approximately R16 billion per annum over the next three years. Into this three-year total of R48 billion would have to be factored the cost of training of such employees for employment in other sectors of the economy or self employment. Apart from the additional social costs of such an operation (including their effects on unemployment), the Commission believes that these financial costs are unaffordable. It is also dangerous to accept international norms at face value in view of disparities in the description of employees described as public servants.

The view that the state is responsible for the provision of services is, as far as the Commission is concerned, self-evident. This does not mean, however, that the state has to undertake the actual provision. What is required, in the view of the Commission is a relatively small but highly motivated, focused and well-paid public service This can only happen if core functions are clarified and if public servants adhere strictly to the public service Code of Conduct. In addition, the Government will need to seriously consider alternative service routes and outsourcing to other providers, particularly through creative and innovative partnerships with the private and community sectors.

In the light of this conception of the state, the question of what the public service ought to do would largely be shaped by three considerations:

In the light of the above, it is important to try and specify the specific yardsticks against which government performance should be measured. Or, in other words, what should a professional civil service look like?

2.1.5 A Professional Public Service

2.1.5.1 Promoting Leadership in Government

A professional public service requires professional leadership. International experience suggests that the senior official or officials responsible for exercising this leadership function should be located within the Office of the President, with the necessary management support. It would then be the responsibility of the designated officer (who could and perhaps should also be designated as Head of the Public Service) to promote the continuing development of the senior professional cadre. Regular meetings of this cadre will encourage and facilitate effective coordination of government policy.

2.1.5.2 Creating a Professional Service Ethos

This is one of the nine enabling objectives for a democratic and efficient public administration set out in the Constitution. As such it is of considerable strategic importance for the enhancement of the Government's capability, and should be fully understood.

The concept is that at the highest levels of the public service (Director General, Deputy Director General, and Chief Director) the professional skills required are qualitatively different (though not necessarily more important) from those required at lower levels. At the lower levels, skills and experience necessarily relate to the specific responsibilities of each line department. At the higher levels these technically related skills become progressively less dominant. They are displaced by more generic and transversal skills and competencies, related in particular to the formulation of policy, the development and management of strategic vision and plans, the management of human and other resources, the coordination of policies across government, handling public relations and the media, and the management of the often sensitive interface between appointed and elected officials. Thus, the skills base for top management runs across the whole of government. The incumbents of these posts have the responsibility to pass on these skills to the management cadre and potential cadres below them.

This development is now widely recognised, particularly in Commonwealth countries such as New Zealand, Australia, the UK, Canada and Malaysia where the top cadre has been designated as a distinct component of the public service, the Senior Executive Service. The number of grades in this top echelon varies from country to country. In the UK it comprises Grade 5 (Assistant Secretary) to Grade 1 (Permanent Secretary). No such gradings are suggested in this report, however.

It has also been recognised in such countries that those officers already in or about to enter the senior management cadre will benefit from training to develop the capacities they will increasingly need to exercise. Such training is often given in collaboration with the private sector, as in the UK "Top Management Programme." It naturally follows that a senior management cadre so created will take on a distinctive professional ethos, incorporating all the values appropriate to a public service at any level plus the values and standards appropriate at these highest levels of activity. This ethos will, of course, condition the development training programme .

Three supporting structural developments will be important to foster such a professional service ethos in the South African context. Firstly, regular meetings of the senior cadre will be necessary to encourage and facilitate better coordinated programmes of government policy. Secondly, efficient management support will be necessary to facilitate the continuing development and renewal of the cadre within the recommended Office of Public Management, to be located within the Office of the President. Thirdly, structures and processes will need to be put into place to ensure that the ethos created within the senior cadre is successfully cascaded down to other levels of the service.

2.1.5.3 Setting the Standards of Public Service Performance

Current standards of service delivery satisfy neither the public nor the officials who aspire to serve them. This is hardly surprising, given the problems faced by the new Government when it took office in 1994. But the Commission believes that improvement, even dramatic improvement, is possible. This, we suggest, imposes two tasks on the Office of the President. The first is to initiate and sustain a national programme of public service standards, however modest. This would be a public declaration of what citizens could and should expect from service delivery. Such service standards would need to be put forward by line ministries and departments, in consultation with their provincial counterparts. The second is to institute a system of rewards for outstanding service delivery and the achievement of designated standards. Whilst the additional costs of such a process would most likely be very small, the potential benefits can hardly be over-stated, as is shown by the widespread international experience.

2.1.5.4 Eliminating Corruption

In moving towards a more professional ethos in the South African public service, it will be necessary to eliminate the corruption and fraud which unfortunately is still widespread in parts of the service. Whilst it was not part of the PRC's brief to investigate corruption, we were naturally concerned at the instances of fraud, mismanagement, abuse of authority, and lack of accountability when these were revealed to us. In different parts of this report we therefore make recommendations, inter alia, for strengthening accountability, introducing more effective and prompt control and disciplinary systems, providing incentives for exemplary behaviour, and introducing training courses in public service ethics.

2.1.6 The Political-Administrative Interface

A weakness in our present system of governance is the uncertainty, even confusion, as to the relative responsibilities of ministers and MECs on the one hand, and senior officials on the other. This became very clear in much of the evidence presented before the Commission. If ministers and MECs act as managers, involving themselves in details of administration, and if senior officials act as politicians, involving themselves in political processes outside their departments, this is to the detriment of their proper and necessary roles. Within the governance of the modern democratic state there is need for both elected and appointed officials with distinct but complementary roles. There is a wealth of international experience, in a variety of differing constitutional contexts, which points to the need for a clear definition of these roles.

Elected officials, such as ministers and MECs, should bring the following to their offices:

• Authority endorsed by the democratic process;
• Skills of political leadership in determining and promoting policies to meet the needs of society;
• The obligation to consult with the President/provincial premiers and colleagues for the policies pursued and the decisions taken by their Departments;
• The ultimate responsibility to account to the President/provincial premiers, to the National Parliament/provincial legislatures, and to the public for what has been done or not done by government.

Appointed officials, in contrast, should bring to their offices:

• The proven ability, knowledge and experience required to carry out the tasks of government in the field to which they are assigned;
• The status derived from having been appointed on merit rather than through patronage;
• The obligation to put their ability, knowledge and experience to work in support of the minister/MEC;
• The responsibility to account, either directly or through senior officers, to the relevant minister/MEC, to parliament or the provincial legislature as required, and to the public for the performance of their departments.

These roles of elected and appointed officials thus require different but complementary skills which must be combined for effective governance. Elected officials needs skills in political debate and public presentation, and in translating popular concerns into deliverable policies, for example. These are not likely to be shared by the public service officials working for them. At the same time, appointed officials need professional and technical skills in financial and general management, which similarly are not likely to be shared by their ministers and MECs.

International best practice suggests that the following are the key roles of elected and appointed officials respectively:

The Role of Elected Officials should be:

• To provide vision and policy direction;
• To oversee and monitor the implementation of policy;
• To secure from colleagues support in the form of necessary resources for their ministries and departments to effectively carry out policy;
• To represent the ministry in cabinet and parliament or, the case of MECs, to represent the provincial department in the provincial executive council (EXCO) and legislature;
• To account publicly for the performance of the ministry;
• To take collective responsibility for cabinet decisions;
• To be accountable to the legislature for their actions.

The Role of Appointed Officials should be:

• To inform and advise elected officials accurately, completely and on time;
• To implement policy and ministerial decisions efficiently and effectively, and in particular in ways which provide value for money;
• To be fully accountable to ministers/MECs and, where appropriate, parliament;
• To utilise in the carrying out of these functions all relevant sources of data and advice, whether within or without the machinery of governance, so as to give their ministers/MECs the broadest possible basis for policy consideration and determination.
• To co-ordinate, control, manage and communicate within their departments.

Given the difficult and complex nature of the transition in South Africa, it is remarkable and noteworthy that substantial, and in many respects successful, progress has been make towards these ends. But we are not there yet. We therefore believe it is important that authoritative guidance on the roles and relationships of political and administrative persons be issued by the President and endorsed by parliament as a foundation for the future governance of South Africa.

There is also a need to ensure a common understanding among ministers, deputies, MEC's and appointed officials of the machinery, systems, principles and practices of government and administration. This is to increase knowledge and skills but also to avoid conflicts inherent in the political-administrative interface. Such measures are also necessary to underpin the investment in the long-term development of a professional managerial corps throughout the public service.

We see the Code of Conduct already published by the Public Service Commission as a valuable contribution towards meeting this requirement. But the purpose and aims of the code cannot be fully met by promulgating it in the President’s name. Guidance and support will be necessary for both elected and appointed officials, if the code is to become a living reality.

2.1.7 The Objectives of Reform

It is essential to recognise that the reform and continuous development of governance in South Africa has to begin at the centre of government itself and will need to embrace the totality of government structures, from the Presidency and Cabinet to ministries, departments and provinces.

The objectives of reform can be plainly set out. Government must be able:

• To formulate policies which are well-founded on relevant data, coherent and well coordinated, fully and prudently costed to ensure value for money, and prioritized within available resources;
• To facilitate the efficient and effective implementation of such policies, and to ensure that they are regularly monitored and reviewed.

From our international specialist studies we observed that the Government has four main instruments at its disposal to pursue its objectives effectively. These are:

• The structures of the Government (including ministries and departments, organisational components, associated executive and/or advisory agencies, commissions, and the like);
• The personnel employed in government, or attached to in an advisory or consultative role (for example, from the private sector, non-governmental organisations, civics and trade unions);
• The financial and physical resources of government (including its revenues, and capital assets of land, buildings, equipment and so on);
• The information base of government (the national statistical data and the operational data relating to resources, personnel and performance in service delivery without which government cannot effectively operate).

The Commission has addressed each of these instruments separately in our review. Our detailed findings and recommendations, derived from our consideration of these four issues, are set out in chapters 3-6 of this report.

Following a general overview and assessment of the structural and functional challenges that have faced the process of building a professional public service in South Africa, we will look in this overview at the main government structures and how they are working.

2.2 OVERVIEW AND ASSESSMENT OF THE REFORM PROCESS

The wholeness of government is weakened, indeed threatened in South Africa by both structural and functional defects. Structurally, the national machinery is too fragmented. There are too many departments with too narrow a focus. The whole machine is headed by too many ministers supported by too many private offices, directors general and their support staff. This in turn has created major problems of coordination. In addition every separate department is potentially another self-regarding vehicle for thrusting policies at provincial and local government.

Functionally, there exists what many have described to us as a vacuum at the centre of government. Somewhere between the offices of the President and Deputy President, and between these and the departments lies a space which is conventionally filled in virtually all systems of government by a central secretariat or cabinet office. The function of such an office is to ensure that issues and policies requiring consideration by the President, Deputy President and Cabinet are identified, that the ground work for their presentation is thoroughly prepared with all the relevant departments involved, that there is comprehensive and comprehensible briefing, that policies and outcomes are properly and promptly secured and recorded, that implementation follows, and that progress is effectively monitored.

Some of the other main problems and challenges revealed by the PRC's investigations to have beset the reform process are highlighted briefly below.

2.2.1 Lack of Clear Vision and Strategic Direction

Three years after the political settlement in South Africa, and despite the national vision contained in the WPTPS, there seems to be a lack of consensus on a common and shared vision. Instead a plethora of visions have been developed by departments and provinces, often quite different from each other in content, context and direction. Variations in vision statements appear to have been inspired by different interpretations of the New Constitution, the RDP, the WPTPS, and more recently GEAR. Similarly, whilst most departments and provinces have embarked upon some form of strategic planning, there have been significant variations in how such plans have been developed, the degree of participation and buy-in by staff and external stakeholders, and the ways in which the policy outcomes have been implemented and evaluated.

2.2.2 Lack of Vision-Building and Strategic Planning

Vision building and strategic planning has also been adversely affected in some departments and provinces by the lack of clarity in the respective roles and responsibilities of:

• National departments and their provincial counterparts (with a number of provincial departments claiming that their national counterparts had done little to build their capacity);
• Political leaders and senior administrators (with a number of senior officials complaining about inappropriate political interference);
• Provincial Directors-General and their political heads on the one hand, and provincial departmental heads on the other.

2.2.3 Lack of Skills and Capacity

In many strategic planning processes, much of the work has been facilitated by outside consultants, with little evidence of any significant skills transfer to staff within the organisations. With a few exceptions, therefore, it does not seem that strategic planning processes have made a major contribution to the building of public sector capacity. Within the public sector, there is also little agreement as to where the strategic planning functions should be placed. Although some departments have established inclusive and participative transformation units, others have not. There is little doubt that the lack of in-house expertise and capacity has hindered the process of setting new goals and priorities. Another factor is the degree of "new blood" that has been brought into senior positions within departments and provincial administrations. Where there has been significant change in this respect, new ideas tend to have been generated at a faster pace. However, the relative inexperience of many "newcomers" in the formal and informal ground-rules of the organisation has in some cases meant that they have struggled to win broader acceptance for these ideas.

2.2.4 The Lack of Effective Organisational Arrangements

A number of departments and more particularly provinces have not as yet designed new and more effective structures in line with their new vision, strategies and functions. This has been especially evident in those provinces that have had to go through the difficult and time-consuming exercise of amalgamating and integrating a number of former apartheid administrations. Such provinces have clearly become overwhelmed in the rationalisation process, to the detriment of other forms of structural innovation and improvements in service delivery.

2.2.5 Lack of An Appropriate Communication Strategy

In many departments and provinces the lack of ability to communicate internally and with clients has severely affected efficiency. There are reports that cabinet decisions are not always adequately communicated to Heads of Departments. In addition, strategic plans, vision and mission statements, together with strategic objectives and goals, are frequently not adequately communicated to key stakeholders. This has often led to confusion and the stifling of opportunities for mutually beneficial inter-sectoral collaboration.

2.2.6 Lack of Coordination

Effective coordination within and between the spheres of government is clearly vital, especially if the public service is to contribute meaningfully to the kind of integrated approach to reconstruction and development advocated in the RDP, WPTPS and other policy papers, as well as to the system of co-operative governance spelled out in the 1996 Constitution. However, virtually all of the studies initiated by the Commission pointed to serious weaknesses in the current structures and mechanisms for coordination, both within departments and provinces and between the different spheres of government. The lack of effective coordination mechanisms was also highlighted as a major problem by most departments and provinces who made presentations before the Commission.

2.2.7 Lack of Effective Monitoring and Evaluation Mechanisms

Present institutional arrangements within government also lack monitoring and evaluation systems to measure performance and evaluate policy outcomes. Annual reports, which national and provincial departments prepare, are largely dry, skeletal and not always helpful. These largely fail objectively to outline successes and failures of the previous year. In addition, they are not flexible enough to give immediate feedback to policy makers and implementers.

2.2.8 Conclusions and Recommendations

From this brief overview of the transformation process, the Commission believes that there is an urgent need, inter alia, for:

• A clear and commonly accepted national vision, elements of which can be found in a range of policy documents from the RDP to GEAR.
• Clear and unequivocal commitment to change, particularly on the part of political leaders and senior public service managers.
• Institutional re-engineering, to cluster and re-configure a number of government departments, as well as to foster multi-disciplinary and multi-sectoral approaches to reconstruction and nation building, to develop innovative horizontal coordinating mechanisms, and to simplify current government bureaucratic procedures.
• Mechanisms to review legislation, in particular to ensure compliance with the New Constitution.
• An effective communication strategy, to ensure that every structure of government has built-in mechanisms for effective communication, vertical and horizontal as well as internal and external.
• Improved systems of human resources development, to build the skills and capacity required by the new public service in South Africa.
• Effective forms of inter-sectoral coordination, both vertical and horizontal, to foster better integration in policy-making, goal setting, and the implementation and monitoring of programmes and projects.
• Improved systems of monitoring and evaluation, in order to ensure efficiency and effectiveness within government, and objectivity in measuring policy outcomes.
• Improved opportunities for participation by staff and customers-citizens, which will be vital, in the Commission's opinion, to secure the necessary levels of ownership and support for the change process.

2.3 THE PRESIDENCY AND CABINET

2.3.1 The Office of the President

"What is the role of the President's Office in the initiation, formulation and coordination of policy, what is the filtering down process of policy from cabinet to departments, how is the work of Directors General coordinated and by whom? It does seem Chairperson from the questions posed as well as other signs that we, who in a sense are working at the centre of government, pick up that there is a concern at times even a pre-occupation with what is described as coordination of government or actually lack of coordination of government." (Statement made by Professor Jakes Gerwel, Director General, Office of the President, before the PRC, 25.09.97).

"There is a problem in so far as the coordination of the policy. We inherited a Cabinet Secretary from the old Apartheid Regime. Literally Comrade Mandela just went into the same office that Mr. De Klerk, Mr. Botha and their predecessors had previously occupied. There were no changes whatsoever - completely none. The only thing that really happened there is that the office was divided into three -- one for Mandela, the other for De Klerk and the third for Mbeki...De Klerk’s office was better resourced than the others in so far as personnel and everything was concerned. The office of Mandela is the smallest office of a President I've ever seen in my life up. That of Mbeki was about the same, with the most senior public servant there being a Chief Director. There was nobody really politically responsible for running the administration of the Presidency, due specifically to the nature in general of the Government of National Unity. There was also nobody senior enough to take decisions there on the questions of administration in general." (Statement made by Dr Zola Skweyiya, Minister for the Public Service and Administration, before the PRC, 07.11.97).

These statements reflect the Commission's concerns regarding the management of the Office of the President, as well as the relationship between the offices of the President and Deputy President. A substantial number of directors-general and some ministers have intimated to the PRC that, rather than being the source of administrative support and locus of effective coordination, the Presidency has occasioned a tremendous amount of frustration. With respect to the relationship between the Offices of the President and Deputy President, the Commission was concerned about what we saw as a potential overlapping of support structures and functions, especially in the context where the distribution of powers and functions between the two offices appear to be ambiguous, and where there are two DGs, two legal advisers and other parallel structures with little relationship to each other and which are potentially conflicting.

The submission of the Office of the President to the Commission suggested that the nature of this office was not only characterised by the core requirements of the public service but also reflected the personality of the current incumbent. From the point of view of the Commission, this was by no means exceptional in international experience and may well have been necessary in South Africa in the exigencies of the 1994 transition. The Commission, however, in considering the long-term future of the office, adopted a more structural approach to the matter. Its recommendations on the offices of the President and the Deputy President and its approach to the re-configuration of ministries and departments (which will be discussed in a later section of this overview) are therefore based on efficacy, function and economies of time and cost.

As indicated above, this should be the core and apex of the whole system of governance in South Africa. But currently it is not providing the necessary support required for the Head of State or for the effective running of government as a whole. The evidence before the Commission left us in no doubt but that the current process of policy formulation and decision taking by the Cabinet and ministers is unsatisfactory. Ministers collectively are not as well served as they should be in this respect. Their decisions are often taken without effective coordination, both laterally across departments, and vertically between national departments and their provincial counterparts. Many of the other changes recommended in this report will not be effectively implemented, we believe, if these questions surrounding the role of the Offices of the President and Deputy President are not first resolved.

In South Africa, the Office of President has to support and service two distinct functions:

• The role of Head of State, with a heavy international and diplomatic workload as well as the role of representative of the nation;
• The role of Head of Government, with a heavy workload overseeing the functioning of government as a whole, presiding over cabinet, and participating actively in the whole range of national, provincial and local affairs.

The Commission identified a number of roles and responsibilities which we believe should be contained within the Office of the President. In many countries these roles are separated, each served by its own dedicated structures and personnel, though necessarily closely linked. The work-load is not significantly reduced if they are combined, and each still requires its distinctive support.

We therefore see the need for four separate entities to be identified in the Office to the President:

• The Private Office, whose role would be to meet the day-to-day requirements of the President, in terms of diary management, incoming and out going correspondence, briefing for engagements both internationally and domestically, record-keeping with regard to meetings and all necessary follow-up action, parliamentary affairs, political liaison and consultation, and transportation and related logistical requirements.
• Office of the Cabinet Secretariat (OCS). The role of the OCS would be to support and service meetings of cabinet ministers whether under the chairmanship of the President or Deputy President or any other minister. This function would also cover meetings of the President and/or ministers with provincial premiers and parliamentary portfolio committees, as well as international ministerial meetings. It would be the function of this office:

• To determine for ministers the arrangements and agenda for cabinet, cabinet committees and other ministerial meetings;
• To commission and present briefing memoranda;
• -To maintain records of all meetings; and most importantly,
• To secure from ministers and departments the required follow-up action.

The OCS would also be expected to play an important role in inter-departmental and inter-governmental coordination. As such it would need to liaise effectively with a number of special strategic inter-departmental planning, priority determination, programming and budgeting units, as well as with the Inter-Governmental Forum and MINMECs. In particular the OCS would be expected to play a key role in overall policy coordination and planning, especially though not exclusively in the budgetary and financial fields. This would involve regular liaison with the Departments of Finance and State Expenditure. It will be the function of the OCS to ensure that departments consult with it and appropriate role players in respect of policy and draft legislation. This will avoid the tabling of contradictory or inconsistent cabinet memoranda, and enable the OCS to identify timeously any possible unintended consequences of draft legislation and policy.

In addition to the Cabinet Secretariat, there are two central ministries which support the President and the Cabinet in the whole range of governance, namely the Ministry of Finance and the proposed Office of Public Management (see below). Besides these central agencies there will also be the required cabinet committees, supported by the relevant committee of the Cabinet Secretariat, headed by the Cabinet Secretary, reporting directly to the President.

• The Office of Public Management (OPM), which would replace the DPSA as it is currently constituted. The role of the OPM will be to discharge the responsibility of the President for the efficient and effective coordination and direction of public service. The OPM will consist of a number of specialised strategic support units that would take responsibility, inter alia, for HR practices, personnel, affirmative action and employment equity, industrial relations, policy formation, planning and general oversight of the service. The OPM will also provide support to the Cabinet Secretariat for purposes of the coordinated implementation of government policies. Two important units currently in the Office of the Deputy President (the Office on the Status of Women and the Office on the Status of Disabled Persons) will formally be located as chief directorates within the OPM. This will enable them to promote and integrate their respective projects more effectively and with more clout than is currently the case. A new unit entitled the Organisational Review Agency will similarly be located in the OPM. Its functions are elaborated in Section 2.5.7.8 below. The direction and oversight of the OPM would be the responsibility of a minister, as this would facilitate the necessary separation of the President from the day-to-day oversight of the OPM.
• The Office of the Public Service Commission (OPSC), which would replace the Public Service Commission as it is currently structured by the 1996 Constitution. The OPSC, we recommend, should be a lean, independent, statutory commission consisting of 3 senior, experienced managers (drawn from the public and private sectors) to monitor, inspect, review, and assess the performance of the public service and to make recommendations and advise the President and Parliament and, where appropriate, the provincial premiers and legislatures. The OPSC should have a small but expert support service for this purpose, as indicated in more detail in Section 2.5.5 below.

Clearly, all the four units above would need to work co-operatively together on a day-to-day basis.

In recommending the above, we have not distinguished here between the roles of the President and Deputy President, since the allocation of duties will be determined between them. It would, however, be necessary in any arrangement for the Deputy President to have comparable private office support. Nor have we set out an elaborate organogram with numbers and grades of the senior posts required to support the Office of the President in this way. Such details would need to be researched and planned at greater length. We are of the view, however, that there would be no significant increase in costs as a consequence of these recommendations, and probably a saving resulting from the proposed restructuring of the DPSA and the PSC.

The Commission believes that the Office of the President, in line with its constitutional mandate, should take up its responsibilities for the more effective coordination of cabinet and government as a whole, including monitoring and following-up its decisions.

If, within the Presidency, letters are not answered or even acknowledged, and if priorities of policy and programme cannot be judged independently or effectively coordinated, not only is the Head of the State and Government let down, but a signal is being sent throughout government. Our proposals for strengthening the Office of the President, along the lines set out above, should help to enhance the prestige of the presidency abroad, the cohesion of the country internally, as well as the image of the President generally. The core function of the office, in the view of the Commission, will be to render effective support to the President and Cabinet so that they can take informed decisions that can filter down timeously to the relevant organs of government through effective and professionally managed structures.

It should be clearly understood, however that we make no case for extravagance or self- indulgence in strengthening these offices, but for the deployment of administrative discipline and professional skills so that, qualitatively, they can perform and be seen to perform to the highest standards, and set a benchmark of quality in governance overall. To this end, it will be necessary to define the responsibilities which these offices have to undertake. For this purpose, we regard the Office of the President and the Office of the Deputy President as one. The distribution of duties between them will be largely determined by their personal relationship and the circumstances at any particular time, although each of them will of course need a private office.

In the view of the Commission the support system for these responsibilities is not adequate and the organisation and design of the Office of the President is in need of strengthening. Existing structures are currently deliberately lean "to reflect the nature and style of the incumbent." There is no guarantee that without formal structures to facilitate, monitor, communicate and co-ordinate policy in the future, that these will be effective. At the very least, systems need to be institutionalised and standardised.

2.3.2 A Central Cabinet Secretariat

From the above it is clear that the Commission believes strongly that the Cabinet could and should be involved much more deeply in policy formulation and coordination across government as a whole. In particular it should facilitate closer collaboration between the relevant ministerial sectors, between national and provincial spheres of government, and between these sectors and spheres and the key central ministries of Finance, State Expenditure and (as currently constituted) Public Service and Administration.

This in turn requires in our view a strong and effective Central Secretariat equipped with personnel of the highest calibre and with appropriate professional skills. Such a secretariat should not confine its functions to running the private offices of the President and Deputy President, but should play a key role, together with the proposed Office for Public Management, in ensuring clearer direction and more effective coordination at the apex of government, as well as thoughout the public service as a whole.

Our proposals for a Central Cabinet Secretariat and Office of Public Management would, we believe, substantially strengthen the apex and core of the National Government. We have not, however, thought it right to go into the detail of how the Office of the President, enhanced as we suggest, should be organized. Decisions of principle would need to be taken on our recommendations and only in the light of those decisions would it be practicable to draw up an organization chart and write the job descriptions for the posts that would need to be filled for adequate reform.

2.3.3 The Office of the Deputy President (ODP)

The constitutional provision for the Office of the Deputy President (ODP) in the 1993 Constitution was unchartered territory for the post-apartheid state. The Interim Constitution allowed for two such deputies with delegated powers from the President. The 1996 Constitution is silent on the precise role, functions, staffing and structure of the ODP except in so far as it requires the President until April 30 1999 to consult with him/her in respect of the development and execution of policies of the National Government, including all matters relating to the management of the Cabinet and the performance of cabinet business as well as certain appointments under the Constitution (See Note to Section 84 of the Constitution of the Republic of South Africa, Act 108, 1996).

The precise structure and functions of the ODP would therefore appear to revolve around its responsibility to assist the President in carrying out the functions of government, ensuring cohesiveness in these functions, and providing advisory services including political, legal, economic, programmatic and administrative support when required. It is, however, an office in a state of development, and needs to be assessed in terms of its ability to provide the necessary support to the President.

Over the past three years the ODP has assumed a distinctive character as an authoritative locus for a number of important units and policy fora. These enjoy the status of the office to make their maximum impact on the country but have no formal relation to each other except in so far as they are priority "projects", for the most part developmental and transitional in character. These structures include the Youth Commission, the RDP (after the closure of that office), and the offices on the Status of Women and Disabled Persons. In the case of the latter offices, their interventions in national policy, although important, have depended to a considerable extent on the energy of their personnel. Structurally these two offices function separately from the DPSA which formulates policy and provides the substance of the regulatory framework on issues of concern to them, such as equity and employment practices in the public service.

In addition, three important cabinet committees have been established within the ODP, comprising ministerial clusters to provide greater coordination and cohesion in the development of government policy-formation. The significance of these committees could well increase either in the ODP or the Office of the President after the transitional period ends in 1999. The three committees are on Economic Affairs, Social and Administrative Affairs, and Security and Intelligence Affairs.

Presently, the outcomes of the discussions in these fora are of an advisory nature and the mechanisms by which they feed into the inter-governmental and cabinet structures are unclear. As ad hoc bodies they are informal but of some importance, not least for the purposes of policy cohesion and the articulation of guidelines to the three advisors in the Deputy President’s Office (for economic, legal and political affairs respectively).

The Coordination and Implementation Unit (CIU) is a new unit in the process of formation in the ODP. Its performance could not be assessed by the Commission as it is largely in the planning stage. The unit will be overseen by a Deputy DG in the Deputy President's Office, and will be divided into four parts, each headed by a chief director with responsibility respectively for coordination and implementation in the following broad sectors:

• The Social Sector (encompassing Education, Health, Housing and Welfare).
• The Economic and Development Sector (encompassing Finance, Trade and Industry, Public Works, Transport and Tourism, and Minerals and Energy);
• The Justice System Sector (encompassing Correctional Services, Safety and Security and Justice);
• The International Relations Sector (encompassing Foreign Affairs, Defence, Home Affairs and Trade and Industry).

The CIU by itself will not be able, of course, to guarantee the necessary coordination. This will also involve a greater commitment to coordination from all departments and agencies, especially by senior managers. Nevertheless, the CIU could and should play an important facilitating role. However, if the CIU is shortly or eventually to provide the necessary support for cabinet committees, its structure would need to conform more directly with the existing committee structure, unless this is to be radically changed. As the functions assigned to the ODP are dependent on the tasks delegated to it by the President, the precise form of the ODP will change from time to time, depending on the exigencies of the moment, and cannot be fully anticipated. The terms of reference of the CIU, however, provide an important basis for strengthening support to the Cabinet and the implementation, coordination and management of government policy. It would, however, be more appropriately located in the Office of the President.

Currently the terms of reference of the CIU overlap widely with the activity of the Office of the President, namely:

• To co-ordinate policy and governance;
• To integrate, and synthesize all spheres of government;
• To monitor the implementation process;
• To co-ordinate the different clusters;
• To reconcile different government activity as one whole.

Yet the functional relationship of the CIU to the structures in the Office of the President is unclear. This will have to be resolved if the unit is to be effective in the short term. Further consideration is needed as to whether the CIU is the appropriate design for a structure within the proposed Office of the Cabinet Secretariat. If effectively managed, the CIU could well help to strengthen efforts to communicate policy, coordinate inter-sectoral activities and monitor progress but it could not do this without an immediate interface with the Office of the President.

2.4 INTER-GOVERNMENTAL RELATIONS (IGR)

Whilst inter-governmental relations (IGR) are only at a formative stage in South Africa, the relationship between and within the different spheres of government has emerged as an issue of key concern to the Commission. We were particularly concerned with the management of inter-governmental relations and the viability of the mechanisms for the communication of cabinet policy to departments and provinces throughout the government machine. In this, the role of the centre, the efficacy of existing structures, and their capacity to implement national policies were a cause for considerable concern. Our views on this subject are further elaborated in Annexure 4, attached to this report.

2.4.1 Weaknesses at the Centre of Government

Concerns about weaknesses at the centre of government were a recurring theme during the public hearings of the PRC and in the specialist and process studies conducted by the Commission’s task teams.

In view of these shortcomings the Commission has dealt at length with the inter-sectoral management of affairs between and across the three "spheres" of government. Similarly, in view of the importance attached to this matter, the Commission initiated specialist studies to examine the issue of Inter-Governmental Relations in more detail and to make recommendations as to how relations might be improved (see Annexure 4).

Of considerable interest to the Commission was the viability of the structures and mechanisms established so far to promote and co-ordinate IGR. In addition to the Cabinet and line ministries, these include the Inter-Governmental Forum (IGF), MINMECs, the NCOP and various Technical Committees.

2.4.1.1 The Inter-Governmental Forum (IGF)

This body was established to provide an opportunity for consultation and joint decision-making between ministers and premiers on all matters of mutual interest. It is, however, an informal body and has no legal basis for the decisions reached by its members. No legal mechanisms are available to ensure that governments adhere to the decisions taken by the IGF. It depends therefore largely on mutual trust.

The permanent members of the IGF are all at the heart of the public administration system and are central to inter-sectoral coordination. They presently include the Minister of Provincial Affairs and Constitutional Development, the Minister for the Public Service and Administration, the Minister of Finance, the Director General of the President's Office, the nine provincial premiers, and, ex-officio, the President and Deputy President. The main functions of the IGR are the establishment and implementation of an integrated and coordinated IGR policy framework; multi-sectoral or lateral policy issues, finance and fiscal matters and constitutional concerns.

The coordination of this body rests with the Minister for Constitutional Development who presides over meetings and presents the decisions of the IGF to cabinet.

2.4.1.2 Ministerial Forums (MINMECs)

These are sectorally-based meetings of national ministers and provincial MECs, established to promote co-operation, coordination and communication between the national departments and their provincial counterparts. MINMECs comprise a national minister and members of the executive council (MECs) in each of the provinces, e.g. the Minister of Finance together with the MECs for finance in each of the provinces. Depending on the sector, MINMECs reportedly meet fairly regularly, and discuss the implementation of government policies and the division of financial and other resources. Their deliberations are less overarching and more sectoral and detailed in character than the matters discussed by the bodies such as the Cabinet or the Inter-Governmental Forum.

The responsibilities of the MINMECS include:

• The harmonisation of legislation within a given sector;
• The division and deployment of financial resources;
• The harmonisation of programmes on a national basis;
• Consultation and negotiation on national norms and standards;
• The integration of inter-governmental policies and strategy;
• The formulation of joint programmes and projects;
• The sharing of sectoral information;
• The assignment of roles and responsibilities between spheres of government.

2.4.1.3 The National Council of Provinces (NCOP)

Chapter 4 of the 1996 Constitution makes provision for an NCOP, which provides a direct channel for provincial governments to participate in policy formulation at national level. Structurally the NCOP comprises a ten person delegation from each of the provinces including four "specialist" delegates, (the premier/or delegate, plus three others) who, within their level of competence, can issue legislation of common interest to all provinces which can feed into the national legislative process. The impact of this relatively new structure has still to be felt by government but, given its inclusive character and its potential to marshal provincial opinion, it is likely to play an increasingly significant role.

However, the NCOP is designed more for the discussion and determination of broad policy than for the management of inter-governmental relations. Nevertheless, the desirability of a formal linkage between the premiers and the Office of the President as a means of communicating policy and avoiding potential conflicts is a matter needing serious consideration on the part of government.

2.4.1.4 Technical Committees

Quite a number of technical committees have been established to support the political structures for IGR, and to promote co-operation and consultation at the administrative level. The most prominent of these structures is the Technical Inter-Governmental Committee (TIC) established as the administrative support structure of the Inter-Governmental Forum (IGF). It discusses matters falling within the responsibility of the IGF and makes proposals on how to address them. It also facilitates, guides and monitors the implementation of decisions taken by the IGF and reports back on progress. This body meets on a quarterly basis and is chaired by the Director General of the Department of Constitutional Development.

In addition to the TIC there are technical committees for each of the twenty MINMECS. Each of these committees is supported by an array of sub committees, both technical and inter-sectoral, and is attended by all the relevant national and provincial DGs.

2.4.2 Overall Assessment of Inter-Governmental Relations

Having noted the instruments and developing forms of IGR, it is to some extent possible to assess the system as a whole. In doing this we are mindful that our Constitution is less than two years old. It is therefore not surprising that the form of inter-governmental relations, as set out in the Constitution, is in many ways not working as smoothly as intended. A culture of inter-governmental relations, based on technical capacity, has still to evolve.

Inter-governmental relations in South Africa (as elsewhere) are shaped by political, administrative, legislative and financial factors and these individually and collectively impact on the overall performance of the system of government.

2.4.2.1 The Marginalisation of the IGF

The IGF has recently been subject to severe criticism, especially from provincial governments. Amongst the points of critique raised are the following:

• Because MINMECS are responsible for most line function coordination between national and provincial departments, there remains relatively little for the IGF to do.
• Agendas of the IGF contain few matters of substance or importance and they lack focus.
• There is a feeling that most IGF meetings are of an informative rather than of a consultative and deliberative nature.
• Ministerial attendance of IGF meetings has been poor, particularly on the part of national ministers, and this reflects the lack of importance attached to this structure by the National Government.
• The relationship between the IGF and other IGR structures, MINMECS in particular, is unclear and confusing.
• The IGF appears to have little if any decision making authority.
• The establishment of the NCOP has served in some ways to further marginalise the IGF.

Our conclusion is that the efficacy of the IGF is open to considerable uncertainty, given its increasingly limited use. Meetings of the IGF initially took place on a monthly basis, but in 1996 these were rescheduled to bi-monthly meetings, and in 1997 they were further reduced to quarterly meetings.

2.4.2.2 MINMECs: Constraints and Deficiencies

The contribution of MINMEC structures to inter-governmental co-operation and coordination has been substantial, but the institution, as a whole, has not been without its limitations. Amongst the stated shortcomings of the MINMECs are the following:

• They are highly sectorally focused and pay insufficient attention to related functional areas; as a consequence, they encourage the fragmentation of policy formulation;
• The large number of MINMECs necessitate numerous meetings and this leads either to poor attendance or attendance by low ranking officials;
• MINMEC agendas are dominated by issues which should more properly be dealt with by technical committees;
• MINMEC meetings are dominated by the National Government and do not really lend themselves to consensual decision-making;
• The management of meetings, the preparation of supporting documentation and the conduct of proceedings are poor;
• There is a lack of clarity over the decision-making authority of MINMECs and insufficient capacity to implement decisions.

These constraints, notwithstanding, MINMECs do have an important role to play in promoting IGR, and a number of departments are attempting to overcome the deficiencies identified above. A more effective means for promoting multi-sectoral coordination between MINMECs is, however, clearly necessary if the present fragmented and uni-sectoral approach to policy formulation is to be overcome.

2.4.2.3 Technical IGR Structures: Uneven Performance.

The technical committees and structures set up to facilitate IGR have had mixed success. While some are clearly functioning well and are actively promoting the development of integrated government systems, others appear to be functioning with little effect or not at all. Technical structures set up to coordinate activities between national and provincial line departments are generally functioning well, but inter-sectoral committees have had only limited successes. The Technical Inter-governmental Committee, for example, has been severely criticised for its failure to promote more effective IGR at the national level.

Special task teams, however, have been successful in bringing together inter-sectoral teams from national and provincial departments (examples include the National Sanitation Task Team, and the Inter-Ministerial Committee on Young People at Risk). The success of these teams appears to stem from their results orientation, their specific terms of reference and set time frames.

2.4.2.4 IGR Between National Departments: Poor Coordination and the Limited Role of the Centre

Without exception officials interviewed at the national level spoke of the poor coordination of activities between national departments. This appears to be due in no small measure to the fact that there has not, hitherto, been an effective mechanism for ensuring coordination of administrative activities at this level. It is significant that virtually all the committees, technical teams, and working groups set up to promote IGR, focus on relations between national and provincial departments, while relatively little attention has been paid to strengthening co-operation and coordination between national departments.

It is evident, moreover, that IGR was not a strong feature of the previous political dispensation and many national departments operated with a considerable degree of independence. The Bantustan system and the racial segregation of areas and services also served to fragment governmental activity to a considerable extent. Although both the Cabinet and the State Security Council did coordinate activities to an extent, their focus was often narrow and their focus oppressive. The State Security Council, as might be expected, focused its attentions on security issues, the promotion of the economy (countering sanctions) and other issues important to the survival of apartheid rule. As a consequence, there has not been a strong historical foundation or institutional memory of effective IGR on which to build.

In addition, the Interim Constitution did not provide any guidance on the question of IGR, and this issue was only addressed in the Final Constitution. For the first two years of the new Government, therefore, there was uncertainty as to what form IGR should follow.

2.4.2.5 Gap at the Centre of Government

It is evident that the National Cabinet provides a focal, and generally effective platform for coordinating national policy. However, once policies have been made at this level, there is no institution in place to follow decisions up, both to ensure that they are being implemented and to ensure that this is being done in the agreed manner.

At one stage it had been thought that the Director General in the Office of the President, who is also Secretary to the Cabinet, would play such a coordinating role. It was also felt that this same DG could perform a function similar to that of the Secretary to the Cabinet in the United Kingdom, and in a number of Commonwealth countries, and assume the role of head of the civil service. This never transpired, however, in part due to the fact that the DG's role was confined, in practice, to a more limited role of administrative secretary to the President's Office and the Cabinet itself. The Commission's proposal for the creation of a head of the public service addresses this.

2.4.2.6 Role of the Department of Constitutional Development (DCD)

In an effort to address the above shortcoming, the Department of Constitutional Development has assumed a proactive role in promoting inter-sectoral IGR. However this is an intervention that has not been welcomed by all other departments and could, if not carefully pursued, aggravate rather than promote IGR. This is because there needs to be a clear distinction between the Department's defined role of promoting IGR and its presently assumed role of coordinator. At present the two roles are blurred, and it is doubtful whether the Department carries sufficient political stature to be able to fulfil the role of coordinator. Our proposal for the establishment of a Chief Directorate for Inter Governmental Relations, located in the Office of the President, seeks to remedy this.

Some steps have, in any event, been taken at the national level to promote more inter-sectoral coordination. These include the establishment of the Budget Council (an expanded version of the Finance MINMEC, which includes Directors General of the Departments of Finance and State Expenditure), the Treasury Committee (comprising the ministers of Finance, Home Affairs, Labour, Trade and Industry) and the Coordination and Implementation Unit (CIU) currently being set up in the Office of the Deputy President. This collective involvement of departments with a stakeholder role to play in coordination is, in our view, one which should be encouraged.

2.4.2.7 IGR within the Provinces: Failures in Coordination

Failure to coordinate policy at the national level has had a "knock-on" effect in the provinces. Perhaps the most glaring examples of the shortcomings of uni-sectoral IGR is to be found in the sphere of budgeting. Broad agreement on sectoral policy in areas of concurrent responsibility is generally reached through the various MINMECS. Provincial budgets are, on the other hand, approved through the Budget Council (the Finance MINMEC) applying formula derived by the Financial and Fiscal Commission (FFC). However, as there is no formal institution through which the Budget Council and individual MINMECS are able to discuss policy implementation, there is invariably a mismatch between available funds and the programmes agreed upon by the MINMECS. This is a serious deficiency that needs to be addressed urgently by government.

Inter-sectoral coordination within the provinces is limited and the development of integrated programmes is not taking place. This is due partly to the confusion that prevails in certain provinces over the coordinator role of the provincial DG, but it is also due to a failure to institutionalise inter-sectoral meetings, to coordinate policy formulation, and to ensure that policies are implemented collaboratively. In a number of provinces there appears to be poor coordination between the treasury and line departments and this leads to a situation where programme budgets do not match available funds.

A further constraint at the provincial level relates to poor coordination between policy makers and administrators. Officials interviewed at national and provincial level spoke of the problem of policy decisions being taken without consideration being given to local capacity.

2.4.2.8 IGR and Local Government

Very few IGR structures have been set up to promote coordination between local government departments and the other two spheres of government. Despite the provisions of the 1996 Constitution, local authorities have yet to be integrated as a distinct sphere into the broader system of government. Formal institutions to promote inter-governmental relations between local and national and provincial governments are either embryonic or non-existent. As a consequence, where concurrent responsibilities extend to the local level, these are generally not integrated with national and provincial programmes. Part of this has to do with the fact that the focus of IGR thus far has been on the relations between national and provincial governments, but it also has to do with the variable capacities of local government.

2.4.2.9 The Impact of Financial Systems on IGR: Mismatch of Budgets

The formula and procedures for the financing of the different spheres of government are addressed in detail in Chapter 5 of this report. However, mention must be made of the impact which the financial regimen is having on IGR and on the performance of provincial and, to a lesser extent, local governments. A failure to coordinate sectoral programmes with national and provincial budgets is, in particular, an ongoing problem in many of the provinces.

2.4.2.10 Review of the Legislative Framework: Continuing Impact of the Previous Social Order

Many of the dimensions of IGR between and within the three spheres of government continue to be shaped by legislation derived from the previous political order. Much of this is inappropriate for a democratic non-racial society, especially as it serves to perpetuate the fragmentation of service delivery.

It is widely recognised internationally that the codification of IGR in legislation is in no way a sufficient condition for improved inter-governmental coordination. However, as a report prepared by Department of Constitutional Development makes clear:

• The Constitution requires that there be an Act for inter-governmental relations and the settlement of inter-governmental disputes; this is a mandatory requirement and the National Government has no discretion in this regard.
• Co-operative government is a legal norm governing all official conduct and creating positive and negative obligations for all spheres of government which is enforceable in court. If government does not take the lead in providing a coherent interpretation of this regime, a justiciable norm will be established. That is to say, the interpretation presented to the Constitutional Court on the day will be established as the legal precedent that will shape policy choices, with potentially far reaching practical consequences.
• There is already in existence an informal, pre-constitutional system of inter-governmental relations, which is regularly criticised for its inefficiencies. Positive legal steps need to be taken to alter this system.
• The right time for policy and the completion of an appropriate evolutionary cycle are facts which are neither self-evident nor mutually exclusive of government taking a lead in guiding the development of IGR in a balanced way.
• The Constitution does not specify whether IGR and dispute settlement should be dealt with in more than one Act, nor does it preclude other, non-legislative ways of providing for inter-governmental relations. These need to be elaborated.

2.4.2.11 The Commission's Concerns regarding IGR

Although the Department of Constitutional Development's proposed White Paper on IGR will, in the first instance, provide a guide to policy, it should also help to establish a framework for subsequent legislation. Current policy concerns relate to the following issues:

• The extent to which the national departments should be responsible for the implementation of co-operative government;
• The type of policy instruments required to fulfill that responsibility;
• The timing of policy and legislation;
• The scope, goals and objectives of policy;
• The establishment of a balance between the natural evolution of IGR and the need for prescription;
• The content of policy.

2.4.2.12 Conclusions and Recommendations

The following summary conclusions represent the most significant issues to emerge from the PRC's review of IGR.

• The Commission's review of the multiple structures established to promote IGR in the public service, suggests that in and of themselves they are probably adequate to redress the diverse dimensions of inter-governmental relations. What is required, instead, is the more efficient operation of these structures, and a better understanding of their objectives.
• The institutionalisation of procedures (processes) and the routinisation of meetings is essential. There will also need to be some sanction to ensure compliance with regulations.
• Improved information flows between and within sectors in all three spheres of government is a matter of considerable importance. It is evident that provincial officials and political office bearers are often not well briefed before entering into negotiations with other levels of government. Because of this, they commit provincial departments to the implementation of policy which they lack the administrative and financial capacity to fulfill.
• There needs to to be greater attention paid to the strengthening, and where necessary creation, of mechanisms to engage civil society in the processes of inter-governmental relations.
• Inter-governmental relations between local government and the other two spheres of government are weak and will need to be strengthened as a matter of urgency.
• Communication is poor. It is evident that decisions taken at the highest policy levels (the Cabinet, IGF and MINMECS) are not always adequately conveyed down to the implementing department. Alternatively, decisions taken are not adequately monitored and followed up. In that respect, the IGF is not functioning well and it should be either restructured or abolished.
• There is a strong need for the development of a coordinating mechanism at national level. The establishment of the Coordination Implementation Unit in the Office of the Deputy President could fulfill this role. The transfer of the IGR function from the Department of Constitutional Development to the Office of the President is a matter of priority.
• Consideration should also be given the creation of a stronger portfolio for the Secretary to the Cabinet as the head of the civil service. There is a need for an effective mechanism to follow up decisions taken by the Cabinet in order to ensure that policy is being implemented and that it is being implemented in the correct manner.
• There is no institution assigned responsibility for overall planning at either the national or provincial levels; this will need to be addressed. In the provinces, such an activity should be vested in the DGs office.
• There is a pressing need for the transmission of a coherent national vision for development from the National Government; at present the RDP has faded into obscurity in certain quarters, while GEAR remains highly controversial.
• There needs to be far greater clarity on the responsibilities of the different national departments, and a clearer demarcation of responsibilities to avoid unnecessary overlap, duplication and conflict.
• There needs to be a review of political portfolios at national and provincial level in order to ensure that there is congruence between them. The present configuration of portfolios appears ad hoc, and creates problems for IGR and inter-sectoral coordination.
• There needs to be greater clarity on the obligations of different spheres of government where there are concurrent responsibilities. This will require both detailed discussion and, in certain instances, legislation.
• A review of legislation on operational matters is a matter of urgency in many sectors, and may call for the blanket repeal of certain acts.
• It needs to be recognised that a lack of capacity exists in all three spheres of government (but particularly at provincial and local levels). This is a serious constraint to efficient IGR and that this will need to be addressed.
• Serious consideration should be given to the asymmetrical devolution of functions (i.e. the devolution of some of the functions to provinces and municipalities where there is capacity to undertake services rather than delaying such devolution until there is capacity overall) as has been proposed by the Department of Housing. This could go some way to redress problems of capacity without violating the provisions of the Constitution.
• A closer integration of budgeting processes with sectoral and inter-sectoral planning processes is vital to the implementation of more effective IGR.
• Further expansion and development of Internet and E-Mail systems and extensive training in their usage would help to facility information flows between officials in the different spheres of government.

2.5 NATIONAL MINISTRIES AND DEPARTMENTS

As we have indicated earlier, there is no intention in this overview to give a blow by blow account of departments and ministries. We adopt a two-pronged strategy here. In the first place, we provide, in a separate appendix at the end of this report (Appendix 3), a list of comments and observations made by individual Commissioners in respect of specific departments. These do not constitute the Commission findings, but simply impressions gleaned by Commissioners. They are merely intended to assist departments and ministries in their planning.

Secondly, we identify issues, whether department-specific or cross-cutting, which are worthy of the Government's attention. These are discussed below.

2.5.1 Differing Concepts of Transition

All departments claimed to be engaged in some form of transformation. Yet the conceptualisation of transformation varies considerably across the public service -- with some departments emphasising representivity or accountability, and other placing a greater premium on service delivery or institutional change (see Section 4.2 in Chapter 4). Few departments seem to have adopted the holistic and integrated approach to transformation advocated in the WPTPS. Transformation strategies have sometimes differed according to the nature of departments. Direct service departments such as Health, Education, Welfare and Water Affairs seem to have been better able to link their transformation programmes to service outcomes than those rendering indirect services such as Finance, State Expenditure and Public Works.

Part of the problem may have been the understandable zeal of the new Government to drastically turn things upside down overnight, which is some cases seems to have resulted in intolerable overloads and inefficiencies. Change clearly has to be prioritised and focused.

It seems that the prevailing attitude in most departments is that internal transformation and service delivery are seen as "trade-offs," rather than as complementary parts of an integrated and holistic process. This has been particularly evident in the Departments of Housing and Transport, where internal transformation, affirmative action and capacity building do not appear to have been priorities. The Departments of Agriculture and Health, on the other hand, seem to have achieved a better balance between service delivery and internal transformation than other departments (see the statistical analysis of public service personnel in Annexure 2 attached to this report).

In the case of the Department of Health, the reorientation of the focus of policy to primary health care and the integration of the department into a single entity from 14 former departments reflects two major aspects of the department’s transformation. The management of change in hospitals, where the practice of discrimination was still rife, and the extension of health care provision to rural populations were equally important steps in the transformation of the health system. The latter included the unification of the health system from its fragmented structures, reduction of disparities in health service delivery, increased access to integrated services based on primary health care principles, and priority to the care of children and women. Partnerships with NGOs, International Donor Agencies and Science Councils and close collaboration with health related departments has led to an increase in capacity and important improvements in inter-governmental relations. At the same time the reorganisation of human resource management has succeeded in changing the profile of the managerial echelon in the Department from 99.6% white males prior to 1994 to 50% in 1997. Despite these achievements, there are a number of issues which the PRC pointed to and which remain to be addressed (see Issues Section in Appendix 3).

All the finance-related departments (Finance, State Expenditure, and the SA Revenue Services) have experienced difficulties in transforming the racial, gender and occupational profiles of their personnel. The ratio in the Department of Finance (DoF), for example, is currently 60% white and 40% black, most of the latter falling below the management echelons (see the statistical analysis in Annexure 2 attached to this report). The DoF admitted that it had failed to recruit women and Black males in sufficient numbers in specialist fields, largely, they argued, because they were competing with the private sector for the same market. An added problem was in their view the shortage of Black people with specialist accounting skills due to lack of access during the apartheid period. This weakness is evident in other "professional" departments where lack of representivity is linked to skills shortage. Prominent among them are Water Affairs, Transport and Land Affairs.

The Departments of Justice and Foreign Affairs have avoided the introduction of well-articulated affirmative action policies and strategies, preferring instead to rely on a "flexible approach" or "placement guidelines." This has resulted in few changes in the transformation of the profile of personnel in the department, as well as relatively few institutional changes that normally accompany effective affirmative employment programmes. The statistical analysis contained in Annexure 2, attached to this report, illustrates the lack of progress in such departments.

The Commission strongly urges government to avoid any unwarranted correlation between the race and ethnicity of elected persons and the senior officials they appoint in their departments.

2.5.2 Service Delivery

The Commission noted the encouraging improvement in service delivery that has taken place in a number of national departments since 1994, although we felt that there was still scope for further progress. Other departments have done less well, however. Those in a near crisis situation include Education, Safety and Security, Correctional Services and Justice. Reasons given for lack of delivery range from structural limitations (including the lack of capacity and problems associated with the rationalisation process) to the lack of will and ability on the part of senior public service managers. In Chapter 3, Section 3.7 on "Managing Service Delivery," we examine these and other constraints in greater detail.

There is no doubt that the difficult task of rationalising and integrating the administrations of the RSA and the former "Bantustans" has pre-occupied many departments over the past three years, at the expense of service delivery. There is also no doubt that this task was more complex in some departments than others (and particularly in those that have collective oversight of the criminal justice system). Nevertheless, the Commission believes that, despite such problems, more could and should have been done to improve the levels and quality of service provision. To reverse this situation there is an urgent need for bold policies for strategic transformation and a management cadre with the political and administrative will to implement meaningful change. In particular, the criminal justice system needs to be reconstructed, as a matter of urgency. The widespread responsibility of the Department of Justice to ensure that the courts, tribunals and related institutions function effectively and efficiently is a basic requirement of a democratic environment. Failure to effect this mandate in facilitating appropriate legislation, creating the necessary policy frameworks and ensuring that courts and the prosecutorial services function in a way that serves the democratic dispensation, seriously undermines the conditions for co-operative governance and frustrates the efforts of other organs of the state, civil society and individual citizens to develop such a culture.

The crisis in these departments has been widely covered and stems from a variety of sources. The departments are inadequately coordinated, erratically restructured and apparently dysfunctional at some levels. Greater management capacity in all of them is required at senior level. Escapes from prisons have been chronically regular and there has been a notable failure to provide credible assurances that mechanisms are in place to avoid these in the future. Provincial heads were instructed to achieve a 50% drop in escapees by the end of 1997. However, no strategy is in place to achieve this. Similarly, the Education Department seems to lack a coherent strategy for implementing its numerous policy documents.

2.5.3 Inter-Sectoral Communication and Coordination

The flow of information between and within departments and spheres of government is currently not well managed. The Commission noted with concern, for example, that the Department of Constitutional Development (DCD), with such an important inter-sectoral role, was hardly appraised of the Deputy President's Policy Coordination and Implementation Unit (CIU). Similarly, where inter-departmental and inter-sectoral linkages occur, they are often untidy, and compounded by recurrent overlaps. The relationship between the DCD and the Department of Finance regarding inter-governmental fiscal relations requires further clarification.

The Commission has also discerned some confusion, especially in the provinces, regarding government policy. This is particularly the case with respect to the RDP and GEAR. In some cases there was a strong belief that the RDP and not GEAR was the provincial policy. At the same time a number of departments, agencies and provinces do not always seem to march in concert.

The problem extends to policy implementation. There appears, for example, to be conflict between the Department of Public Works and other departments such as Health, Education and Justice. The latter have complained about delays arising from their dependence on Public Works. Similarly, it is evident that coordination is weak between the departments of Foreign Affairs and Trade and Industry. There is also confusion about the Department of Labour's role in the development of policies which affect the public service, and concern about possible duplication with the activities of the DPSA. The same confusion is evident in the relationship between the legal services section in the Department of Labour and the state attorneys in the Department of Justice. These and other anomalies were identified by the PRC during the public presentations by departments and provinces.

2.5.4 The Department of Public Service and Administration

The high quality of the DPSA’s activities and their contribution to the future excellence of the public service is recorded elsewhere in this report. The purpose of this section is to assess the role, place and structure of the department to give better effect to the approaches it has taken to improve the quality of the public service. Since its establishment in 1995, the DPSA's main preoccupation has been to drive the transformation process. Given the problems associated with the other agency charged with a major responsibility for driving transformation, namely the Public Service Commission (see below), this pre-occupation is quite understandable. It is evident to the Commission that the DPSA may well have evolved differently if the PSC had been able to play a more proactive role in accelerating the transformation process.

The key question, put by one of the Commissioners to the DPSA (though not answered) was "After transformation - what is the role of the department?" Obviously transformation is an on-going process but the pace and intensity are likely to diminish by the year 2000. The thrust of all the PRC's task team reports is that there is likely to be increasing delegation from the DPSA to the departments and provinces. Once the major elements of transformation have been broadly achieved, therefore, and the public service is more "stabilised" at national and provincial levels, the Commission believes that there will no longer be a continuing need for a large department of public service and administration.

The Commission therefore recommends instead that a leaner Office of Public Management (OPM), strategically located in the Office of the Presidency, would be more appropriate and would provide the Office with the necessary authority to engage more effectively with other departments and with the provinces.

2.5.5 The Public Service Commission (PSC)

The Commission believes that the mandate of the Public Service Commission requires refinement. In addressing the role of the PSC, we debated whether we were grappling with an institution whose primary value we accepted, or whether we were trying to find a role for an institution we had inherited. In Canada and the United Kingdom, the purpose of the PSC was primarily to protect and advance the principle of merit. In practice, this involved an important advisory role in senior public service appointments.

In South Africa the principle of merit tends to be politically and emotionally loaded. We do not believe that this need be the case. Simply put, our conception of merit is the ability or potential to meet the requirements of the position without unnecessary stress on certification and long experience in the public service. Rather, due emphasis should be placed on the possession of appropriate competencies, experience and skills. Where certification is professionally essential, it should not be the sole reason for the appointment of the person.

It is to be expected that, given the evolving political environment of the public service, new skills and qualifications will be imperative. Personnel with long experience in the South African Public Service will not necessarily be an advantage to the service where inappropriate attitudes to transformation are perpetuated.

Nevertheless, even if the PSC’s role were to be limited to an advisory one in respect of senior public appointments, it is clear that its present size and budget would be out of proportion to its task. Our view is that the PSC should be reduced substantially and located in the Office of the President. Much of the investigatory and complaints monitoring activities of the Commission could and should should be outsourced, where appropriate, as suggested below.

Chapter 10, Section 195 (1) of the 1996 Constitution replaces the national and provincial service commissions established by the Interim Constitution with a single independent and impartial Public Service Commission, comprising 14 commissioners, five of whom will be appointed by the President with the approval the National Assembly and nine (one per province) who will be appointed by the President on the nomination of the provincial premiers and with the approval of the provincial legislatures.

The main functions and powers of the new PSC set out in the 1996 Constitution are:

• To promote the values and principles of public administration set out in section 195 of the Constitution throughout the public service;
• To investigate, monitor and evaluate the organisation, administration and personnel practices of the public service, and in particular the adherence to the values and principles set out in section 195, as well as to public service procedures;
• To propose measures to ensure effective and efficient performance;
• To give directions aimed at ensuring that personnel procedures relating to recruitment, transfers, promotions and dismissals comply with the values and principles set out in section 195 of the Constitution;
• To advise national and provincial organs of state regarding personnel practices;
• To report its findings and recommendations at least once a year to the National Assembly or Provincial Legislatures as applicable;
• To report issues of immediate operational concern to the relevant executive authority;
• To investigate grievances of employees and recommend appropriate remedies.

With the exception of this last function, which we feel could be more appropriately handled through the conciliation and mediation services established by the 1996 Labour Relations Act, the Commission believes that these should continue to be the core functions of an independent public service commission.

To fulfil its constitutional obligations the PSC Commissioners will need to be assisted by able personnel and supplied with the necessary resources. In this regard it is anticipated that the Commission's Office will consist of a fairly small post establishment with a high level workforce. This will inevitably involve further reductions from the PSC's current staffing complement of 148, as well as training and re-training of those staff that do remain.

In coming to this conclusion, we have been mindful of the need to provide a rationale, as well as to address a number of serious problems and challenges that will inevitably confront our proposal. In arriving at our rationale for a major change in the composition and nature of the PSC we identified two broad and related reasons for calling the continued existence of the organisation as currently constituted into question. The first relates to the roles and relationships of the new body. The second relates to its likely efficiency and cost-effectiveness.

It was not clear to the PRC how the PSC would interact with key departments, such as the DPSA, the Auditor-General, the Public Protector, the Departments of Finance and State Expenditure and the Central Bargaining Chamber. Given the current roles of many of these existing bodies in the monitoring and evaluation of public service delivery, it was not immediately apparent to the PRC what "added-value" the PSC would bring in this regard. Nor was it clear whether the PSC would be responsible for ensuring that the public service was representative, efficient and effective, or whether it would simply report on defaulting departments after which it would be left to other structures to make the appropriate interventions. If the latter, an inspectorate could well be more appropriate, some of its personnel being outsourced from the private sector, research and tertiary institutions, according to the specialisation needed.

Whilst the Commission appreciated the need for an independent body to promote the enabling values and principles governing the administration of the public service as set out in Chapter 10 of the Constitution, it did not consider the proposed revision of the structures of the PSC (as outlined in the Constitution) cost effective or necessarily efficient for this undertaking. We were particularly concerned about the cost of the PSC in times of financial stringency, especially as the appointment of the 14 new PSC commissioners (with salary packages equivalent to those of ministers) is likely to be based on political acceptability as much if not more than professional and technical expertise in the areas of monitoring, evaluation and research. Similarly, we were equally concerned about the appropriateness and relevance of the skills and competencies of many of the current staff of the PSC to the new needs of the organisation. If the PSC is to remain, there would clearly be an important need to bring in new blood, as well for the redeployment, training and re-training of current staff.

In the view of the Commission, therefore, a less elaborate and more professionally managed body would be more suitable for carrying out most of the monitoring and standards-preserving functions outlined above.

The mediation of grievances, which is also one of the contemplated functions of the new PSC, could in our opinion be more appropriately undertaken through the mediation and conciliation mechanisms established by the 1996 Labour Relations Act.

The PRC's proposal, if accepted, may require a constitutional amendment, requiring a two-thirds majority in the National Parliament. As this may take some time to arrange, this gives rise to a more immediate practical difficulty, associated with the fact that the 14 new PSC commissioners are about to be appointed. The PRC therefore recommends an immediate moratorium on this process, whilst the implications of our proposals are being fully considered.

We realise that our proposal is of direct concern to the provinces in respect of standard setting and monitoring regarding the ethos and comportment of the public service, as addressed in the Constitution through the nomination of 9 of the 14 PSC commissioners from the provinces. The PRC proposal changes this. The Commission, however, is not sure whether this will be a big loss, especially as it is unclear whether the new PSC will be in a position to establish effective provincial offices in any case.

Such provincial units would be required to report both to the Premier and the Provincial Legislature. In addition there should be an effective coordinating structure to ensure effective and regular communication and liaison between their work and that of the independent commission located in the Office of the President.

The Commission therefore recommends:

• That serious consideration be given by the President to replacing the PSC as envisaged in the 1996 Constitution by the alternative structures recommended in this report.
• That if the Commission's recommendations in this regard are accepted, an appropriate Constitutional Amendment be prepared, if necessary, for consideration by the National Parliament.
• That in the interim an immediate moratorium be placed on the appointment of the 14 new PSC commissioners.
• That if the Constitutional Amendment is approved by parliament, a central public service monitoring and inspection unit be established in the Office of the President, as an independent commission of 3 eminent and experienced persons.
• That this unit be responsible for the constitutional functions outlined above, with the exception of that of investigating grievances of employees which in future would be more appropriately handled by the mechanisms established under the 1996 Labour Relations Act (though the new unit would have general oversight over these processes and report on them to the President and Parliament).
• That lean parallel monitoring and inspection units be established in the offices of the provincial premiers to carry out similar functions with respect to the nine provincial administrations.

2.5.6 The Restructuring of the Department of Public Works (DPW)

The Department of Public Works is one of the departments at a national level which has attempted to fundamentally restructure in line with its attempts to redefine its role and functions as defined in its policy white paper Public Works Towards the 21st Century. The main innovation is to change from being the main developer and landlord of the public sector to playing a more strategic property development and facilities management role.

By emphasising high level project management and facilities management skills and outsourcing the basic maintenance and professional functions associated with their current role, the department should be able to reduce their staff complement from about 8 000 to about 3 000 personnel. It is envisaged that this will be accompanied by an expansion of outsourcing opportunities for historically disadvantaged SMMEs in line with the department’s affirmative procurement policy. This role is critical as far as empowerment is concerned.

While the Commission is supportive of the change in emphasis, it is concerned that this new policy thinking has yet to manifest itself at the level of implementation. The Commission noted the number of complaints voiced about the current DPW services which were seen to be a serious impediment to the service delivery responsibilities of line departments. The Commission therefore believes that the DPW should ensure that its internal transformation process goes hand-in-hand with the delivery imperatives of its client departments.

2.5.7 Independent Agencies

A more detailed study is required into the process which underpins the declaration of certain departments or units as autonomous or independent units. This applies specifically to the SA Communication Services (SACS), the Centre for Statistical Services (CSS) and the South African Revenue Services (SARS). What are the considerations here? In respect of the latter, we are dealing with an organisational component of government that is under-resourced in terms of personnel, capacity and specialist expertise for the fundamental role it has to play. The Commission recommends that SARS should retain its administrative independence, participate where applicable in matters of policy in respect of the areas pertinent to its function, and embark upon an immediate programme of capacity building.

In respect of the Central Statistical Services (CSS), the independence of this organisational component of government, and its ability to provide objective information and data timeously, is vital to efficient governance. It must therefore be able to carry out its tasks without undue constraints and pressures of any kind.

2.5.8 New Ministries and Structures

2.5.8.1 Size and Clustering of Ministries/Departments

In addressing the question of ministerial and departmental clusters, the Commission is aware that there is no ideal model of ministerial structures and groupings. The same applies to the number of ministers and departments. The Commission does not accept the position that a small number of ministries or departments is an inherent cost saving device. The financial cost may be an understandable trade off with other social and political costs. A large number of ministries may create problems of coordination and management, but may present opportunities for focus and specialisation. During the early stages of a new government, such as in South Africa in the period since 1994, a case can be made for a significantly large number of ministers and departments. This would, amongst other things, enhance the degree of specialisation in government. In addition, new and inexperienced political and administrative leaders would not be encumbered by large and unwieldy portfolios.

There is another dimension of transition politics which has a direct institutional impact on the size and structure of departments and ministries. It is, for example, relatively unproblematic to keep ministries and departments to the minimum in the circumstances where there is complete alignment between them and a considerable amount of delegation can take place. However, where there is an insufficient level of trust between the political and administrative leadership and where ministers have little confidence that the policies of the government of the day will in fact be carried out, they will tend to take on more "hands on" responsibility for administrative matters than would otherwise be the case.

In direct, practical terms, the Government of National Unity, prescribed by the interim constitution, reserved certain ministers for minority parties. Added to this were political pressures arising from demands for greater representivity according to race, gender, ethnicity, region, as well as by demands by senior members of the Liberation Movement for senior positions in government. All these factors contributed to what, in purely objective terms, might seem to be an unnecessarily bloated number of ministries and departments in the post-apartheid period.

While the Constitution specifies the maximum number of Ministries, the Commission is not convinced that it is necessary to fill all of them. The situation is considerably easier especially in the case of departments. We believe that a substantial reduction in ministries and departments is possible without compromising the work of government. Currently there are thirty four national departments. We believe that not only is this number too high, but the departments themselves are poorly coordinated. There appears in particular to be no real justification for the existence of 15 deputy ministers. If this trend continues there will soon be one deputy minister for every minister. The Commission could not fathom the logic of underpinning the assignment of deputy ministers to one specific ministry rather than another. A possible justification for such a high number of deputy ministers would be that they are training grounds for future ministers. This does not really hold, however. Since ministers are appointed at the sole pleasure of the President, it would be unreasonable to expect future presidents to be restricted by their predecessors in the appointment of ministers. In any event, where quality civil servants have been appointed, the need for a large number of deputy ministers will be reduced.

Both the Presidency and the Finance department have set good examples in containing their expenditure on staffing. We believe, however, that in their determination to lead by example, they may have undermined their capacity for effective government. There is a clear lesson here for other departments. We have already made specific recommendations in respect to the restructuring of the Presidency. We recommend further that the department of Finance reassesses its staffing requirements and recruit, as a matter of urgency, appropriate personnel. Furthermore, we strongly urge that the department uses this opportunity to address the representivity imbalance.

2.5.8.2 Proposed Creation and Re-configuration of Ministries and Departments

In this section the Commission makes a number of recommendations for the short to medium-term re-configuration of ministries, departments, organisational components and agencies. Later in the section we provide a possible approach to the longer-term re-engineering of the structures of government (see Section 2.5.8.10).

In the short to medium-term, the Commission proposes the disestablishment in their present form of the following ministries and agencies, and their associated departments:

We furthermore propose the replacement of these ministries and agencies by the following re-configurations:

In addition to the above, the Commission considered a number of ministries and departments which would logically form coherent and viable combinations. The ministries which the Commission believed were naturally related and to which subsequent consideration should be given include the following suggested combinations:

Given the current lack of effective coordination between the departments of Foreign Affairs and Trade and Industry (noted in Section 2.5.3 above), the Commission also firmly believes that trade officials in embassies should report to the relevant diplomatic representative and not to the DTI.

In making these recommendations, the Commission makes no substantive judgement regarding the suitability or otherwise of the political or administrative personnel in the ministries and departments earmarked for re-configuration. Instead we were guided by how best to enable government and the public service to meet their obligations. We focused mainly on the core functions of departments, and used three main criteria to inform our proposed reconfigurations -- coherence, size, and the imperatives of the transition. The latter notion of core functions also enabled the Commission to employ this logic in respect of outsourcing and the question of right-sizing.

2.5.8.3 Re-configuration of Education Ministries

The re-configuration of the education-related ministries was motivated by the fact that, in our opinion, the current Education portfolio is too large and unwieldy. For this reason for the most part, and despite the exigencies of reconstruction and development, it has not been able to give sufficient impetus to policy on higher education, despite the monumental Report of the National Commission for Higher Education (NCHE). This makes it difficult for tertiary institutions to adopt benchmarks for transformation. At the same time, the Ministry of Arts, Culture, Science and Technology appears incoherent and far too contrived. In the view of the Commission, Arts and Culture should therefore be separated from this ministry and become part of a new Ministry of Education and Culture. Moreover, the Commission could see no rationale for a special ministry of sports and recreation, and therefore proposes that these activities also be represented within this new ministry as a directorate.

We also propose that a new Ministry for Higher Education and Technology should be created to promote the development of science and technology in the tertiary institutions and science councils. These would then be driven by one ministry, thereby better enabling it to focus on its core responsibilities and the coordination of policy, while the department of Education and Culture would cater for generic education, including culture and sport. The two Education Ministries would divide between them the functions previously carried out by the Ministry of Arts, Culture, Science and Technology.

2.5.8.4 Ministry of Justice and Rehabilitation

While there were conflicting submissions before the Commission on the question of combining the justice ministries, we nevertheless came to the view that the Ministries of Justice and Correctional Services should be merged into a single ministry, the Ministry of Justice and Rehabilitation. The functional line between the two current ministries is overlapping and problematical and their separation has tended to undermine the efficiency of the judicial system. The question of the integrity of the Ministry of Safety and Security was considered by the Commission. Our opinion at this point is that a function of the Justice System is precisely to monitor the police. The separation of Justice from Safety and Security, under these circumstances, seems to make a great deal of sense.

2.5.8.5 Phasing-Out of Constitutional Development

There are departments with core functions that are blurred and unfocused. There are also departments which appear to be typically "transition" departments. The Department of Constitutional Development (CDC), displays both of these characteristics. The department is located within the Ministry for Provincial Affairs and Constitutional Development, which also has oversight over local government matters. The Commission was sceptical as to whether the responsibility for local government would or should remain a responsibility of this ministry and department beyond the year 2000.

In so far as the residual duties of the DCD regarding inter-governmental relations (IGR) are concerned, the Commission recommends that these be undertaken by a directorate in the Office of the President where the necessary authority for its various interventions across departments and provinces will be greater. This is not to suggest that the department has not hitherto acted with considerable sensitivity as a "trouble-shooter" for problems related to IGR. In fact the Commission’s assessment was that the DCD had carried out these duties with considerable aplomb. In fact the main rationale for the department at times appears to have been to deal with the transitional problems of IGR, especially where these have yet to be consolidated as our new Constitution takes root, or where existing structures are failing.

For these reasons we believe that the DCD has been largely involved with phasing in the Constitution. Hence the confusion of its mandate, particularly in regard to the provinces. For instance, what is the relationship between the Minister and Provincial Premiers? The functions of the DCD therefore seem to be either temporary and ad hoc, or simply too big for a single ministry.

2.5.8.6 A New Ministry and Department for Local Government

With the phasing out of the Ministry for Provincial Affairs and Constitutional Development, the Commission recommends that a new ministry dealing exclusively with the matters of local government be created. In the view of the Commission, local government requires much more focused and persistent attention than it has hitherto enjoyed. As indicated in Chapter 1 of this Report, the demands for effective service delivery and the relationship of local government to the two other spheres of government, make it imperative that it should be firmly located in its own ministry.

2.5.8.7 Phasing Out of the Department of Public Enterprises

The department of Public Enterprises is a small department of 39 people which exercises general oversight of State Enterprises. Given that a number of these enterprises are likely to be restructured, the Commission could see no real justification for the expense and dedication of a minister, and staff establishment, specifically to this function, especially as an inter-ministerial committee has been set up in the Office of the Deputy President to exercise general oversight of these matters. It is recommended accordingly that the Ministry and Department be phased-out as soon as possible, and that the six major State Enterprises for which they currently have oversight be transferred to the appropriate line departments as follows:

• Transnet which should be aligned with the Department of Transport
• Eskom which should be aligned with the Department of Energy and Mineral Affairs
• Denel which should be aligned with the Department of Trade and Industry
• Safcol which should be aligned with the Department of Water Affairs and Forestry
• Alexkor which should be aligned with the Department of Energy and Mineral Affairs
• Aventura which should be aligned with the Department of the Environment and Tourism until the arrangements for its restructuring have been completed.

The final accountability and oversight of these should lie with the Department of Finance in all the above cases.

The remaining enterprises whose status is somewhat different from the above six include Armscor; the Industrial Development Corporation; SA Rail Commuter Corporation; SA Post Office; the Atomic Energy Corporation; SA Broadcasting Corporation; Soekor; Mossgas; Abakor; SA Airports Company; Air Traffic and Navigational Services; and Sun Air. It is recommended that the location of these be transferred to the Department of Trade and Industry, or other appropriate line ministries, subject to review by the proposed Organisational Review Agency. Financial accountability and oversight will again lie with the Department of Finance.

2.5.8.8 Executive Agencies within the Office of the President

The Commission has already recommended in Section 2.3.1 above that a number of the existing agencies in the offices of the President and Deputy President be re-configured, and that a number of new units or agencies be created.

These new and re-configured units would include:

• The private offices (of the President and Deputy President);
• The Office of the Cabinet Secretariat;
• The Office of Public Management (which would take on the functions of the DPSA and incorporate the existing offices on the status of women and persons with disabilities);
• The Office of the Public Service Commission;
• The Coordination and Implementation Unit.

To these units, the Commission proposes to add three additional agencies, as follows:

• A coordinating agency for Inter-Governmental Relations (led by a Chief Director), which would deal with inter-sectoral and inter-governmental relations but not local government. This body would take over the coordinating functions currently carried out by the Department for Constitutional Development. Consideration should be given to the question of whether the CIU might usefully take on this role, to obviate the need to set up another separate agency.
• An Organisational Review Agency within the proposed OPM to carry out the on-going process of evaluating and re-configuring the structural organs of government. Such an agency should be for a term of three years in the first instance, and its personnel should preferably be drawn from wider civil society in order to enable persons at the cutting edge of management practice to be appointed to undertake the tasks in hand.
• An Information Management and Systems Agency, to co-ordinate all public service IMST initiatives. The agency will be led by a Chief Information Officer (CIO), at Chief Director level, who would have a support staff and would interact with the rest of government and the private sector through two new committees which would also need to be established. These are (i) a Policy Committee, comprising senior managers of those departments and/or provinces engaged in general IMST policy as well as including a number of private sector managers; and (ii) a Technology Forum, comprising the IMST Managers from the key user departments and provinces.

2.5.8.9 Intelligence Agencies

The Commission did not consider it timely to look in great detail into the intelligence agencies. We were also advised that the Department of Justice had undertaken a study into these structures. However, the department could not see its way clear to releasing this report to the Commission.

Given that a full enquiry was not possible, we were therefore unable to make detailed recommendations. One of the issues which we would have liked to have discussed is the wisdom of having three intelligence units. Notwithstanding the sensitivity of the subject, we would have similarly appreciated an opportunity to comment on the extent to which transformation strategies for the streamlining of the intelligence services were in place, as well as their efficacy in terms of cost and perceived effectiveness.

2.5.8.10 Using Business Process Re-engineering (BPR) in the South African Public Service

The Commission believes that current proposals to restructure the public service will not bring significant changes in numbers employed or methods of work unless such initiatives are part of a more fundamental attempt to re-engineer the business processes of the state. With appropriate business process re-engineering, however, we believe that the public service will be able to meet the national objectives for service delivery while at the same time achieving the targets set down in GEAR. BPR is likely to be the only approach for ensuring that departments overcome their functional parochialism and embrace the "one-stop shop" or "single window" approach to the delivery of service as advocated elsewhere in the report.

While the Commission has concerns about the current functioning of the various justice-related ministries and departments (see above), we nevertheless feel that much might be learned from the design and operation of the National Crime Prevention Strategy (NCPS) Model. This was a view supported by public sector participants at our focus groups. The NCPS model is based on a coordinated and multi-sectoral approach (intra-governmental and inter-governmental) to crime prevention, involving a range of government departments (from the obvious justice and security related departments such as Safety and Security, Correctional Services, Justice, Defence and the Intelligence Services to Education, Health, Welfare, Housing, Transport, the DTI, and Foreign Affairs), as well as the private and community sectors. As such it offers a fundamental challenge to many of the narrowly construed approaches to crime prevention, which have tended to focus almost exclusively on action plans within one or more of the departments of the criminal justice system

The current tender should see a new criminal justice process being designed by mid-1998. The tender provides the following:

• A business architecture of the ‘as is’ and ‘to be’ situation;
• An information architecture of the ‘as is’ and ‘to be’ situation;
• A technology architecture indicating candidate applications and products;
• A technology infrastructure;
• An implementation plan showing long-term and fast-track projects.

The Commission believes that the above structure can be used on other business process re-engineering exercises. It believes that the value of such an approach is that it starts with the business imperatives, then moves onto information requirements, before grappling with the technological details. Not only does this method ensure that information systems are aligned with business objectives, but by focusing on the business issues initially, it is likely to assist senior management in the public service buy into the re-engineering project.

Another valuable feature of the NCPS model is that it seeks to integrate political leadership and senior management into the project process. This is achieved by a multi-tiered project structure involving all the departments involved. At the highest level, the project is coordinated by an inter-ministerial committee. Reporting to the committee is the User Board for Information Management, Sharing and Process Integration comprising the senior managers of all departments. Each department has an individual champion or structure to ensure that NCPS projects are supported within the departments. The Commission believes that this structure helps bring about greater commitment from the political and administrative leadership.

It is likely that the NCPS re-engineering initiative could result in a significant re-organisation of departmental responsibilities if the senior managers associated with the key departments wholeheartedly embrace the concept. However, it is believed that this will only occur if there is sufficient pressure from above to overcome departmental efforts to maintain their existing structures.

While the NCPS re-engineering project is already in progress and only requires support to ensure that the full implications of the re-engineering exercise are adopted, the Commission also believes that most other public sector functions could be subject to a similar approach. By way of example, we therefore suggest below how some existing departments might usefully be re-organised. It should be noted that this example is merely being presented to illustrate the possibilities of BPR. Ultimately the BPR Task Team would need to examine these options and proposals in much more detail.

Currently the Departments of Transport, Public Works, Housing, Land and Agriculture, Constitutional Development and Water Affairs and Forestry are involved in development and infrastructure delivery at both national and provincial levels. In addition, both Health and Education take responsibility for infrastructure delivery at a provincial level. The Department of Tourism and Environment also has functions which overlap with these areas. Since all these departments have functions dealing with infrastructure delivery and development planning, it is proposed that these functions be grouped into three new Departments.

Firstly, all development and planning functions could be grouped into a Department of Integrated Development Planning. Such a department would incorporate the key development related functions of the national departments of Transport, Public Works, Water Affairs and Forestry, Land (and Agriculture), Housing, Constitutional Development (local government functions) and Environment. The amalgamation of functions would have theoretical or policy implications because it promotes coherent and integrated development planning. This new department would focus primarily on development policy.

The second department, Infrastructure Delivery, would group all the procurement and construction related functions of the above departments. Such an integration would ensure that scarcely available expertise in the field of procurement, public and private partnership relations, infrastructure delivery and maintenance would be concentrated in one department focusing on the implementation of policy. It would also ensure that there was one public sector point of contact with the private sector construction industry.

The third Department, Economic Development, could include all the functions directly related to the development of the domestic economy. This department would therefore take over functions from Trade and Industry, Tourism, Agriculture, Transport, Public Enterprises, Labour, Minerals and Energy and the industrial development functions of the above infrastructure delivery departments.

As noted earlier (in Section 2.5.8.2), the Commission also believes that the foreign trade functions of Trade and Industry should be consolidated with those of Foreign Affairs in order to ensure a more coherent representation of South African interests abroad. We also see a case for amalgamating the Departments of Finance and State Expenditure. The service provision components of the departments of Health and Welfare might be better integrated into a consolidated department of social services. The social security component of Welfare could be combined with the Unemployment Insurance Fund responsibilities of the Department of Labour to create a comprehensive social assistance agency.

In considering these restructuring proposals, it is important to realise that integration needs to involve the integration of all levels of operation in each functional area. In some cases, this will result in ‘one-shop-stop’ service points for the integrated departments. The imperative for integration however must balance the need to improve functional coherence within the limits of a manageable organisational form and size.

We believe, however, that such integration should also make more economic use of scarce management personnel since functions previously spread across a number of departments will now be concentrated. Since the business of national departments has shifted significantly from service delivery to policy formulation, we feel that such an integration as proposed above will be workable.

Although the Commission realises that such a fundamental restructuring would need fuller investigation by the BPR Task Team, we nevertheless believe that such a re-organisation will not only dramatically improve infrastructure and service delivery but should also create significant opportunities for creative approaches to rightsizing and outsourcing.

2.6 PROVINCIAL ADMINISTRATIONS

2.6.1 The PRC's Investigation and the Provincial Review Reports

The Commission's approach to the provinces was influenced partly by the existence of the reports by The Task Team Appointed to Investigate Administrative/Managerial Issues Affecting the Provincial Administrations (The Provincial Review Reports or Ncholo Audits). The DPSA task teams investigated all provinces and reviewed a variety of issues, including the provinces' institutional design and capacity to deliver government policy and services. Other issues covered in the review included operational managerial practices and systems, human resource management practices, and financial management systems. All nine Provincial reports were submitted to the Commission in September 1997 by the Minister for Public Service and Administration, Dr Zola Skweyiya. The DG of the DPSA, Dr Paseka Ncholo, also briefed the Commission on the process and outcomes.

The Commission chose not to replicate these detailed studies. At the same time we were not unmindful of the fundamental differences in the respective mandates of the Task Teams and the PRC. We also considered it our duty not to assume the veracity or otherwise of these reports. To that end, we chose to augment these reports with submissions from five provinces, namely, Kwa-Zulu Natal, Gauteng, the Northern Province, the Eastern Cape and the Western Cape. The other four provinces, Mpumalanga, the North-West, the Northern Cape and the Free State, were accommodated through specialist and process studies. This, we feel, gave the Commission a fair overview of the situation in the provinces (further detail on the provinces is provided in chapters 3-6 of this report and the annexures attached to it).

Within the provinces visited and surveyed by the Commission, the thrust of the Ncholo audits was not substantially challenged. This means that, while certain details and factual claims in the reports were queried from province to province, we have no reason to doubt the substance of the Ncholo reports as a whole. The following are some of the core issues and problems raised in the audits:

• There is widespread confusion over the different roles of the political and administrative leadership in the provinces. In addition, managers are often not held accountable for service delivery objectives.
• A whole range of problems abound in the area of human resources management, the chief of which is the lack of skilled staff and capacity. In addition, there are high vacancy rates, poorly managed disciplinary and misconduct procedures, protracted appointment procedures, and confusion around the Voluntary Severance Packages.
• Financial decision-making is over-centralised and funds are generally poorly managed. There is no penalty for over-spending and, as a result, managers do not take financial performance seriously. There is widespread perception that procurement procedures are tedious and unnecessarily bureaucratic and not responsive to departmental needs.
• There is a general lack of strategic planning in the provinces and, where it does take place, it is often driven by external consultants.
• Information Technology is in poor state due to a variety of factors, including lack of funding for training and the lack of skilled staff. This results in very poor quality of information for management.

These problems were often compounded by the failure of management to focus on delivery requirements, a restrictive rather than enabling regulatory framework, and poor communication, coordination and access to key information.

Through our own investigations, the Commission confirmed many of the problems and challenges highlighted in the Ncholo audits. These were more serious in some provinces than others. Amongst the five provinces evaluated, the Northern Province and the Eastern Cape appear to have the most serious capacity problems. Staff morale seemed low and the leadership appeared to have been overwhelmed by the weight of the challenges facing the provinces. The Western Cape and Gauteng seemed to have functioned better than other provinces, although the Commission did have concerns about the Western Cape's progress with respect to representivity and transformation. It was refreshing, in the case of Gauteng, to be offered not only problems but solutions as well. We would recommend that these solutions are shared with other provinces through the appropriate inter-governmental structures.

During our review of the provinces, we were enormously encouraged by their openness. Officials openly and non-defensively drew our attention to the many problems that exist. This eased the burden of our work substantially. This does not mean, though, that they were uncritical of the Ncholo audits. Their chief concern was that the audits, while fairly describing the situation, failed to locate the problems in an historical context. As a result, the provinces felt that they were unfairly portrayed as "failing" rather than as "battling to cope with the enormous challenges facing them." The Ncholo audits, they therefore felt, were essentially one-sided and incomplete.

Whilst the Commission shares these concerns, we were not particularly surprised by the shortcomings of the Ncholo audits. The task teams had to operate within a very short time-period, and their brief was very much to focus on "what had gone wrong." This was stated openly by Minister Skweyiya, in his public submission to the commission:

"Quite early we did detect that there were problems. I went to different Provinces, found that there were problems and talked to the premiers...About August last year, we travelled with Messrs. Mbeki, Manuel and Moosa to the Eastern Cape and Northern Province and looked at what was happening. All of them maintained there was no problem. And we could not just pick up what was wrong. We knew that there was something wrong. So in the end we decided, generally decided from this Department, that something needed to be done. And despite that quite a number of Provinces were not prepared to accept that politically. It is only now...that they (the provinces) have come out openly and said that there are problems and they need to be assisted in general."

Despite their limitations, therefore, we believe that the Ncholo audits, under tremendous time pressures, succeeded in pointing to real and potential problems in provinces. The data uncovered, however poorly nuanced, is still extremely valuable. What is of equal if not greater importance, however, is the question of what has happened to the recommendations of the task team reports. There is some confusion here. According to the DPSA, in submission to the PRC:

"Cabinet decided that each line Ministry should take responsibility for its corresponding departments at the provincial level and most of the implementation process is taking place at that level."

If the process went no further than this, there would have been cause for concern. Given the enormity of the problems identified in the Ncholo audits, this solution appears too easy a way out. In the light of the challenges faced by many national ministries and departments, the Commission fears that they are likely to give only secondary attention to this task.

As is evident from his submission to the Commission, Dr Ncholo offered a somewhat different account of how the Government proposes to deal with the findings and recommendations of the provincial review reports:

"We meet with the Provincial DG's to deal with the strategic issues. Each province has taken the Report (seriously and) indicated what the problem areas are, what interventions are required, what activities are desirable (and) as a result... has put time-frames (on tasks, stating) who must take responsibility... (This) is what we monitor on a regular basis, looking at every programme and so on... In the provinces where programmes have not emerged and have not been lodged with our office as such, we are actually involved with the donors in trying to ...(determine) levels and areas of intervention."

If the latter reflects current cabinet policy, the Commission wishes to endorse this approach.

Dr Ncholo named Mpumalanga, the Northern Province, and the Free State as the leading provinces in terms of the implementation and the development plans to address the problems identified in the task team reports "The DG of each province takes personal responsibility for ensuring that the recommendations of the Report are implemented at every level," within a time-period of one year.

2.6.2 Provincial Coordination and the Role of the DG

A number of additional problems cut across the provincial reviews. One is the lack of effective coordination within provinces and the ambivalent role of the provincial DG. It has become imperative that the relationship between the provincial director-general, heads of departments and the head of the premier's secretariat be clarified. The role of the director-general is particularly undefined. Part of the ambiguity stems from the National Government's original conception of provinces as equivalent to national departments (as reflected in the 1994 Public Service Act). The assignment of one director general who is also an accounting officer is symptomatic of this wrong match.

The 1997 Public Service Laws Amendment Act seeks to redress such anomalies, weaknesses and problems, in particular by explicitly recognising each provincial department as a legal entity in its own right. Furthermore, the 1997 Act establishes an original line of authority in that it confers the power of executing authority to ministers and MEC’s. This implies that ministers in the case of national departments and MECs in the case of provincial departments will now be (politically) responsible for matters such as internal organisation, appointments, promotions, and career incidents.

Nevertheless, the 1997 Act does not explicitly and satisfactorily clarify the exact status and role of the provincial DG. Whilst it has removed the DG as chief accounting officer, the new Act does not positively define the new role of the provincial DG. Greater clarification is clearly urgent, especially, in the view of the PRC, as it would still be crucial to establish a strategic management and coordination centre in the provincial administrations. The provincial DGs could well play an important role in this context.

2.6.3 Relations between National and Provincial Departments: The Case of the Secretariats for Safety and Security

Other problems emanate from the lack of symmetry between national and provincial governments. Provincial governments departments are not mere duplication of national departments. And yet, one comes across automatic and needless duplication of functions. A notable example concerns the Secretariats of Safety and Security. At a national level, the secretariat assists the minister in the civilian oversight of the police, particularly through its role in monitoring the operational wing of Safety and Security. At a provincial level their functions are much more complex, grass roots and potentially conflictual. There is a perception at national level that the provincial secretariats may be perceived to be interfering with the line functions of the Provincial Commissioners and the operational aspects of policing.

The PRC chose in this respect to deal with the question of broad policy. It examined the degree to which there has been transformation in the process of policing and received submissions from the provinces in respect of all their departments, including Safety and Security. It also met with the MECs in Gauteng, Mpumalanga, and the Western Cape, and discussed the role of the provincial secretariats at national level with the Secretary for Safety and Security, the National Commissioner and the Minister for Safety and Security. In the view of the Commission the provincial secretariats do have a major role to play in assuring civilian oversight of the police, and in monitoring the operational wing of the SAPS, through the activities of community policing forums (CPFs). In the process they can also play an important role in helping to ensure proper representation of communities within the CPFs, and in helping to educate such communities as to their partnering role in the prevention of crime.

As a result of our interviews at national and provincial levels, the Commission recommends that the Department of Safety and Security ensure that proper guidelines are established for the functioning of the provincial secretariats, providing in particular greater clarity as to the roles of the respective partners, and ensuring that a culture of crime prevention is emphasised rather than relying unduly on law enforcement. While the draft White Paper of the Department stresses the significance of local government in the monitoring and civilian oversight of policing operations, the provincial secretariats will continue to have a monitoring role to ensure that local authorities diligently undertake their responsibilities to establish CPFs, and that their functions are competently carried out. Until such time as local government is in a position to undertake the above functions effectively, the secretariats will need to continue their activities.

Such activities will include:

• To promote democratic civilian control, oversight and direction of the provincial police services;
• To facilitate policy directions for transformation;
• To render a support service to provincial offices of Safety and Security;
• To initiate targeted crime prevention programmes;
• To enhance coordination of departments such as Housing, Education and Welfare as stakeholder partners in crime prevention.

It must, in our view, be understood that the whole concept of community policing is one of partnership which requires mutual trust and co-operation between the police, the public, local authorities and the provincial secretariats. This has been lacking hitherto.

2.6.4 The Issue of Centralisation-Decentralisation

The relationship between the national and provincial governments, regardless of the affiliation of the ruling party, is likely to be tested in future. Throughout our investigations, it became clear that provinces resented being "treated as Bantustans" of national government. While the PRC did not accept that this was the Government’s intention, it noted that national government often doubts the capacity of provinces to assume greater responsibility than they have at the moment. This concern is captured in this expression of exasperation by a senior cabinet minister:

"When we all came into government, each and everyone, looked after his [sic] own department and so you don't like... anybody to touch your turf. It became worse with the Provinces. In 1994 all the premiers were shouting: Give me my powers! My powers! And everything. So we had to rush, work very, very fast to devolve powers directly to the Provinces. And from then onward they didn't want anybody from national government. What they expected from national government was money and nothing else but money. And it became very difficult."

In general, the Commission felt that the problem of centralisation/decentralisation should not be posed as a trade-off. An intelligent system of government will, of necessity, include elements of both these trends. The imperatives of national unity, social equality, and overall policy coherence should not be overlooked. The 1996 Constitution provides for a relatively strong system of central government in areas such as security, defence, and macro-economic policy, which implies the need for an appropriate institutional system to support central government in carrying out its constitutional mandate. The Constitution simultaneously opens the way for a substantial decentralisation of functions to provincial and local government. This is reflected in the notion of concurrent powers.

In addition to the Constitution, the National Government has encouraged the principle of decentralised government, particularly through such policy documents as the RDP and WPTPS, and the new Public Service Laws Amendment Act (1997) which was steered through parliament by the MPSA/DPSA. In view of the importance of this matter, a special study was undertaken by the Commission on inter-governmental relations.

Most policy documents offer general statements on decentralisation. However, we believe that its specific meaning and content in relation to the management and administration of core government activities requires greater clarification than has so far emerged. What has become essential is that an appropriate institutional framework be created through which various core functions necessary for more effective service delivery can be moved closer to the points of delivery.

Decentralisation can operate at a number of levels. In terms of service delivery, this opens the way for developing flexible systems and approaches. Such a system should encourage and co-ordinate the existence of multiple service delivery agencies (e.g. executive agencies) -- with various degrees of institutional independence, responsibility and accountability -- within a common policy framework which applies norms and standards, targets, outputs and outcomes. In terms of management, this may involve full managerial accountability and discretion over critical functions such as expenditure, procurement, staff appointments, salaries and service benefits, and training. This should ideally occur in a context of sufficient checks and balances and oversight -- not only at the level of departments as corporate entities -- but also components within departments which enjoy specific forms of independence from direct, line function control.

Given our earlier comments regarding the Eastern Cape and Northern Province, we urge the Government to maintain constant vigilance over these two provinces. We are concerned that in these cases we are dealing with much deeper problems than may have at first appeared to have been the case. The Commission is also not persuaded that the leadership in the provinces have, at the time of the interviews, come to grips with the enormous challenges facing them, or begun to address the issues concerned satisfactorily.

Our investigation brought to our attention vividly the fact that in the rush to devolve powers, insufficient attention was given to the capacity of the provinces to assume these powers. It is also sad but true that the unintended consequences of the federal system, and the sunset clauses in the Interim Constitution, have been deleterious to the public service in the provinces. The existence of the provinces has tended (though only temporarily we hope) to consolidate the bloated civil service of the Bantustan and the various apartheid administrations. Furthermore, given the poor financial control culture of some of these former administrations, it is not in the least surprising that the controls currently in place in the provinces are in many ways seriously defective.

2.7 BUILDING RESOURCES AND CAPACITY FOR GOOD GOVERNANCE

The focus of this overview so far has largely been on the structures and functions of government. Given the importance of such issues and the terms of reference of the Commission this is not surprising. However, while the many structural changes we propose above are a vital and necessary part of creating a more efficient and effective system of co-operative governance in South Africa, they will not by themselves be sufficient to ensure the development of a practice and culture of good governance. Other important and related interventions will be essential, therefore, particularly in the areas of human resources development; the effective management of the public service's scarce financial resources; and the development of IMST resources not merely as an important support function but as an integral component of improved forms of governance and service delivery.

These three crucial components of the move towards more effective forms of governance in South Africa are discussed in more detail in chapters 4-6 of this report. What follows is a summary of the main issues and concerns raised during the Commission's investigations, as well as some of the key recommendations for addressing them.

2.7.1 Human Resources Development

The urgent need to develop South Africa's human resources has been stressed in a variety of policy documents, including the RDP White Paper, the WPTPS the Department of Labour's recent Green Paper on a Skills Development Strategy for Economic and Employment Growth in South Africa (1997). Underpinning this urgency are two facts: the first is the growing awareness that "investing in people" is the most productive investment a country or organisation can make; and the second is the realisation that South Africa currently ranks last out of 46 countries (at a similar stage of development) in terms of its human resources development performance (World Competitiveness Yearbook, 1996), a fact that is attributable in the main to the legacy of apartheid.

With respect to the public service, the WPTPS stresses that the effective mobilisation, development and utilisation of human resources is not only an important transformation goal in its own right, in building individual and institutional capacity for good governance, but also critical for the success of the transformation process more generally. Accordingly, a coherent and holistic strategic framework for human resource development will need to be developed at both national and provincial levels. This will entail a number of related elements, including:

• The elevation of the role and status of human resource development within the overall framework of government policy;
• The development of effective and lifelong career development paths for all categories of public servants;
• The improvement in employment conditions;
• The introduction of effective performance management and appraisal systems, and the use of incentives to reward individual and team performance;
• The basing of promotion and career advancement on performance rather than on seniority or qualifications.
• The introduction of effective systems of staff development and training for all public servants, within the context of a national training strategy;
• The introduction of affirmative action strategies to improve the representativeness of the service, so that it can draw upon the skills and talents of all South Africans, and derive the benefits of the broader perspectives that a more representative service will bring.

Since the publication of the WPTPS, a number of additional policy papers and documents have been produced by the Department of Public Service and Administration (DPSA) which have an important bearing on human resources management (HRM) and development (HRD) in the public service. These include:

• The White Paper on Transforming Service Delivery (1997);
• The White Paper on Public Service Training and Education (1997);
• The Draft White Paper on a New Employment Policy for the Public Service (1997);
• The Green Paper on a Conceptual Framework for Affirmative Action and the Management of Diversity in the Public Service (1997); and
• The Green Paper on A New Law for a New Public Service: Policy Proposals for a New Public Service Statute (1996).

In addition to developing these far-reaching policy documents, the government has also taken steps to clarify the role of key implementing structures in the human resources field, and notably the DPSA, the Public Service Commission (PSC), and national departments and provincial administrations. Under the 1997 Public Service Laws Amendment Act, departments and provinces will assume much greater responsibility for human resources matters than previously. The details of the devolution of managerial responsibility and accountability for human resources matters are spelled out more comprehensively in the recently launched White Paper on Human Resources Management in the Public Service. The White Paper sets out a framework under which departments and provinces will to a large extent determine their own human resources policies and practices, and under which line-function managers will be expected to take on much more responsibility than hitherto for the human resources function. Human resources management will therefore no longer be the sole responsibility of personnel practitioners, but rather will become a core competency for all public service managers.

2.7.1.1 Issues and Challenges

Whilst significant, albeit variable, progress has been made across the public service towards the objectives for human resources development laid down in the WPTPS (as shown in detail in Chapter 4), a number of important challenges remain. Some of the main issues and problems raised during the Commission's investigations included the following:

• The fragmented and un-coordinated approach to HRD across the public service, resulting in the absence of resources and accountability for ensuring that public servants are empowered and developed to take on the challenges they face.
• The lack of a strategic, needs-based, outcomes-based and competency-based approach to HRD, directly related to the developmental needs of the public service as outlined in the RDP, the WPTPS and other related policy documents.
• Lack of effective systems for strategic planning and review of HRD.
• The relatively low priority still accorded to HRD in some departments and provinces, illustrated by the fact that HR functions are often led by lower grade officials (Assistant Directors and Deputy Directors), with little or no direct access to strategic decision-makers.
• The lack of funding for HR, and the effective management of HR budgets.
• The lack of coordination and communication.
• The limited use of performance management systems.
• The persistence of discriminatory barriers to access and entitlement, in terms of recruitment, promotion and access to staff development and training opportunities.
• Limited progress in achieving representivity at the senior management level, particular in relation to gender, at the technical and professional levels (in relation to both race and gender), and at all levels in relation to disability.
• Inflexible and discriminatory rules and regulations (The Staff Code and PAS) which rendered a flexible approach to HRD difficult.
• The inappropriate nature of the training and education that is provided by many in-service and external providers.
• The low priority accorded to training and eduction in many departments and provinces, and the low level and uneven nature of provision.
• Problems with the role of the South African Management and Development Institute (SAMDI).

2.7.1.2 Observations and Recommendations

• The transformation of human resource practices in the public service is critically important in building skills and capacity for good governance, and needs to be given greater priority and to be systematically integrated into broader departmental policy and strategic plans, as well as into the budget cycle.
• The strategic importance of human resource management and development should be reflected in the status and reporting lines of the responsible human resources managers. Currently many human resources managers operate at the middle management level, with no direct links to the strategic decision-making processes. This situation must be reversed by rasing the status of such managers and establishing direct lines of reporting to the Head of Department.
• Clear guidelines as to what human resource planning entails should be developed by the DPSA/OPM. The DPSA should also consider including guidelines on policy formulation and implementation with respect to human resources in the proposed management guides which will shortly replace the public service staff code. It will also be necessary for the DPSA to assist departments in developing an approach or formula for determining the ratio of the HR budget to the overall departmental budget.
• All managers, including line-function managers, must be trained to understand the importance of human resource planning, management and development, particularly in the light of the responsibilities that will be delegated to managers under the 1997 Public Laws Amendment Act and the recent White Paper on Human Resources Management.
• Departments should utilise multi-year planning cycles. The Medium Term Expenditure Framework (MTEF) provides an opportunity for rationalisation of human resources planning. Amongst other things, this will cover succession planning, career pathing and representivity imperatives.
• The role of provincial Corporate Services units in human resource development should be focused on the provision of advice and support in planning and capacity building. This will include consistent reference to the strategic priorities of the province in identifying the broad training and development programmes.
• A holistic human resources development strategy needs to be developed by departments and provinces, with clear development planning, career paths, training opportunities, staff retention policies and accelerated development mechanisms targeted at the most disadvantaged within the public service, as well as at those who are being recruited to redress the racial imbalances at the more senior levels.
• ·A systematic review also needs to be carried out by departments and provinces (with support from the DPSA/OPM) of current recruitment, promotion, training and development practices in the public service, with a view to determining how these may discriminate against Black people, women and people with disabilities. This should form the basis for the formulation of more effective AA strategies.
• Existing legislation needs to be revised and new legislation introduced to promote affirmative action. Effective mechanisms will need to be put into place to ensure that such legislation is adhered to. Laws against sexual harassment in the workplace should be enacted and implemented.
• All public service departments and agencies should be required to draw up effective affirmative action and employment equity policies and strategies, particular in relation to gender and disability.
• Strategies specifically targeting the disabled as a disadvantaged group would have to include specific recruitment and selection strategies at different entry levels; staff development and training; career pathing; the necessary modifications and adaptations required to provide an adequate working environment for the disabled; as well as plans for improving service delivery to people with disabilities outside the sphere of public service employment.
• AA plans and programmes should be accurately costed and appropriate budgetary provision made, within the context of the new approaches to budgeting and costing proposed in Chapter 5 of this report.
• The introduction of performance-related contracts for Heads of Departments (as recommended in the WPTPS and strongly endorsed by the Commission) should include specific AA targets (particularly in relation to gender and disability), thus giving HODs the necessary incentive to take a more proactive approach to affirmative action and representivity.
• Awareness training for senior managers should be introduced to enable them to plan and implement effective strategies for women and the disabled in particular. This should be part of a broader awareness campaign both inside and outside the public service.
• Special programmes, such as valuing and managing diversity, should form part of public service affirmative action strategies to prevent the "old" bureaucratic ethos perpetuating itself as new candidates are recruited to the service. A change in ethos is critical to changing the public service into an effective, efficient and representative arm of government.
• AA strategies should also address issues of social class. A wider focus is called for to address the needs of the most deprived and subordinate sections of the public service to provide them with more effective skills development, career pathing opportunities, and the means for upward mobility.
• Monitoring and evaluation of the transformation process should take place on a regular basis to enable departments to assess the extent to which change is taking place. This should go beyond the monitoring of figures relating to representivity by examining qualitative changes in the environment, practices and processes of the departments.
• The importance of Human Resources Provisioning (HRP) should be more widely recognised and acknowledged within departments, and its current "Cinderella" status significantly enhanced. The systematic planning of HRP should be improved and linked to broader strategic policies and plans for HR, service delivery and representivity. This will be particularly important given the current move the decentralise human resources management functions to departments and provinces.
• Clear HRP policies and procedures should be developed by departments and communicated to staff at all levels. Recruitment, selection and advertising policies should be designed to attract the best candidates possible from the widest pool, whilst at the same time enabling departments to promote a possible external image of themselves as a progressive and caring employer.
• All actual and potential recruiters (including line managers where appropriate) should be trained in how to recruit, interview and select candidates in a way that empowers rather than disempowers candidates.
• Comprehensive induction processes should be developed and introduced for all new staff. Probation should be more actively managed to enable new incumbents to familiarise themselves quickly with their environment and their jobs.
• The DPSA/OPM should initiate a broad-based discussion of the various models of performance management available to ensure accountability and coordination across the public service. A comprehensive management development programme should be initiated, not to train managers in one system or model of performance management alone, but to introduce them to a variety of mechanisms for coordinating work and improving performance.
• A phased approach to performance management should be adopted, linked to the overall transformation of the public service, and the specific transformation and service delivery goals of individual departments and provinces. The responsibility for this process should lie either with Heads of Departments or be located in the HOD's office.
• There is need for departments to exercise greater flexibility in the sourcing of training and education. If departments conduct needs assessments systematically and consistently, it should be possible to fully rationalise the role of SAMDI and other training and development providers, along the lines recommended in The White Paper on Public Service Training and Education (WPPSTE).
• The South African Management and Development Institute (SAMDI), as currently constituted, does not have the capacity to effectively undertake the on-going process of public management training; accordingly its staffing and infrastructure should be rationalised and its role and location clarified. One possibility is that SAMDI could be incorporated as a training and education unit in the proposed Office of Public Management.
• The Commission recommends that SAMDI should cease over time to be a direct provider of training, and confine its functions instead to ensuring that public management training needs are met by other appropriate providers, especially the Schools of Public Management at tertiary institutions, but also including competent training providers in the private and NGO sectors. It should also oversee the maintenance of high standards befitting the requirements of a professional civil service.
• Consideration should also be given to transforming SAMDI into a Sector Education and Training Organisation (SETO) for the Public Service (as proposed in the WPPSTE), with a key role in the strategic planning, coordination and accreditation of public service training and education.
• There is a general need for the development of a comprehensive set of training and education programmes by each department. This would ideally be based on needs assessment, linked in turn to the strategic priorities of the department, and integrated into the budget planning process.
• There is a need to standardise the involvement of line-function managers in determining training and development programmes. This is related to the integration of human resource development into the broader planning cycles of the department.
• In addition to in-service training and education and formal courses, there is a need to increase the use of secondment and other informal staff development initiatives (such as work shadowing and mentoring) as a strategy for rapid skills development, especially in areas of critical shortage.
• Systematic use of benchmarking should be introduced in departments in line with the competency-based approach to human resource development envisaged in the National Qualifications Framework.
• For lower grade workers, it will be critical to utilise linkages with the National Qualifications Framework for developing career management and succession planning.
• The urgent need for an assessment centre or assessment processes is indicated by the career management and succession planning imperatives indicated in the White Paper on a New Employment Policy for the Public Service.
• In line with the proposals in the WPPSTE, the Commission recommends that a formula for departmental training and education budgets be developed by the DPSA, in collaboration with the Department of Finance.

2.7.2 Budgeting and Financial Management

Financial planning and budgeting is crucial because it is concerned with the allocation of scarce public resources (financial and human) in such a way that policy priorities are realised. If the policy and strategic planning processes are not fully synchronised with the budgetary and financial processes, the likelihood is that policies will be introduced without the necessary funds or capacity for their successful implementation, with the attendant risk of popular frustration and unrest Sound financial management is also vital as a necessary complement to the budgeting process, and in particular to ensure that taxpayers' money is used in an efficient, cost-effective, responsive and accountable way.

When proposing changes to the way the government and the public service functions it is important to have a clear understanding of the relation between budgeting, policy objectives and human resource issues. Proposals regarding the one cannot be dealt with in isolation from the others. To start with, the fiscal constraints faced by government are largely fixed (through commitments made in GEAR and by available revenues). Obviously the Cabinet needs to prioritise what it wishes to do (deliver) within such constraints. Once this has been decided, and translated into specific delivery output targets for each of the departments, it is then a matter of deciding what mix of inputs are needed to produce the outputs specified. A very important component in this mix of inputs is personnel. Personnel are a major expense for nearly all department and it is therefore imperative that every post (and person in the post) fulfils a specific role in ensuring the effective delivery of the specified outputs. For this reason it is imperative that control over posts, job descriptions, remuneration and over hiring and firing be devolved to departmental managers that are responsible for the delivery of department's specified outputs within the set of budget constraints. Failure to devolve the responsibility will create a situation where managers are responsible for budgets and outputs but do not have control over a major input as well as a major expense item on their budgets.

The international experience shows that financial and budgetary reform, buttressed by wider public sector reforms, can significantly improve service delivery and restore government’s credibility among domestic citizens and overseas investors. In fact, in an increasingly integrated global economy, good fiscal management itself constitutes a competitive advantage.

2.7.2.1 Issues and Challenges

Chapter 5 of this report demonstrates in some detail the substantial progress made since 1994 in South Africa towards budgetary and financial reform (particularly though not exclusively through the

introduction of the Medium Term Expenditure Framework) and indicates that further legislative and policy changes are in the pipe-line to build upon and consolidate the achievements that have been made. Whilst the Commission acknowledges and applauds such progress, its investigations have revealed a number of outstanding issues and challenges that still need to be addressed. These include:

• The reliance on incremental budgeting which focuses on inputs rather than outputs; this means that budgets concentrate on where money will be spent rather than focusing on results ( what has been achieved with public funds, and what value for money has been achieved). As a result, cabinet and parliament are not fully informed of the service-delivery consequences and financial implication of policy decisions
• The lack, therefore, of an effective system for performance or results-oriented budgeting that is strategically linked to the planning processes for service delivery.
• The use of out-dated forms of costing and accounting systems which make it difficult to disaggregate and identify the true costs of inputs and programmes, and which therefore inhibit effective planning.
• The format of budget documentation is complicated and inaccessible. It does not provide Cabinet and other policy makers with sufficient information to accurately weigh up the cost implications of new policy proposals.
• The budget is therefore not used as a management tool which allows public managers to know up front what the outputs of service delivery will be.
• The almost total lack of popular participation in the budgetary processes.
• The lack of effective parliamentary oversight over the budget process.
• The persistence of "unfunded mandates" (new or additional spending obligations arising from policy decisions when the source of funding for the additional cost has not been made explicit).
• The lack of clear and well-coordinated structures within the National Cabinet and provincial EXCOs for the management, coordination and effective political oversight of budgetary and financial matters, and in particular for the effective integration of the strategic planning and budgetary processes.
• Continuing weaknesses (including mismanagement and corruption) in financial management and administration, compounded by the lack of an effective ethos of probity within the public service, the lack of accurate records and information, and the lack of effective monitoring, control and disciplinary procedures.
• The need for the structures that exist to promote inter-governmental relations in the budgetary and financial fields (such as the FFC, the Budget Council, and the Intergovernmental Forum) to improve the coordination of sectoral programmes with national and provincial budgets.
• The lack of appropriate incentives to line managers to encourage them to exercise responsibility and ensure accountability for outputs and outcomes (in line with national priorities, norms and standards), matched by increased flexibility in regulations governing the employment of staff and the procurement of inputs.
• The lack of timely financial management information means that managers cannot compare actual expenditure and delivery progress with planned expenditure and delivery. They cannot therefore take pro-active steps to pre-empt potential bottlenecks.
• An over-centralised and over-bureaucratised system of tendering and procurement which inhibits a prompt and flexible approach by line managers to service delivery;
• The lack of effective IMST systems and support (see the section on IMST below), which are vital for sound budgeting and financial management;
• Difficulties in recruiting and retaining qualified personnel in the financial field (especially amongst Black people and women), compounded in the public service by competition from the private sector.

2.7.2.2 Observations and Recommendations

• The Commission recommends that a Finance Committee be established as a sub-committee of cabinet to promote the effective integration of the strategic planning and budgetary processes, and ensure effective political oversight of them. This committee would be chaired by the Minister of Finance, and its decisions would take the form of recommendations to full Cabinet.
• Similar finance committees should be established in the provinces. These would be chaired by the MEC for Finance and would report to the provincial EXCO.
• Appropriate technical planning committees should be established to support the work of these finance committees at both the national and provincial levels. These should work closely with the Cabinet Secretariat, the new Coordination and Implementation Unit, and officials from Finance and State Expenditure, to ensure greater integration between the planning and budgeting processes.
• Reforms should take place in the structures of inter-governmental relations, in line with recommendations contained earlier in this chapter, to facilitate the more effective reconciliation and harmonisation of national and provincial priorities, and the coordination of sectoral programmes with national and provincial budgets.
• A Task Team should be appointed and headed by the Minister of Finance to draw up plans and options for a Performance Based Programme Budgeting (PBPB) system, on which the MTEF will based, for discussion and approval by the extended Cabinet (cabinet ministers and provincial premiers). Support from the extended Cabinet should signal political commitment at the highest level for the introduction of this new budgetary approach.
• This PBPB system be based along the lines proposed in Chapter 5 of this report. The PBPB system will link service delivery outputs of departments and their broader impacts on society (outcomes) to the public resources used to generate them. Policy makers will be provided with better information on which to base decisions and plans. So too will public service managers, parliament and the provincial legislatures, and civil society.
• To facilitate the implementation of the PBPB approach to budgeting, a system of activity-based costing be devised and introduced throughout the public service, to replace the current system of resourced-based costing. Such a system will be designed to ensure that all the input costs associated with a particular programme can be identified, that the analysis of estimated future costs of such inputs is used effectively to forecast future programme costs, and that the MTEF based on the new approach to PBPB reflects the true cost of service delivery.
• Current computerised systems should be modified and up-dated to provide the necessary information required by activity-based costing. Appropriate guidance, support and training should also be provided to ensure the success of this new costing system.
• In the longer-term serious consideration be given to the phased introduction of an accrual accounting system to replace the current and flawed system of cash accounting.
• When new norms, standards, programmes or policies that have cost implications for one or more spheres of government are adopted outside the normal annual budgeting process, the financial implications should be presented to Cabinet/EXCO as part of the decision-making process before final approval is given. Policy should never be approved without accurate costing.
• To promote more effective managerial responsibility and accountability, the current move towards performance-related contracts for heads of department should be expedited (and extended to cost centre managers within departments) to promote greater managerial responsibility and accountability for results. This will also involve the formulation and implementation of appropriate performance measures, the introduction of more effective monitoring systems, legislative and other changes to afford managers the necessary flexibility over recruitment and procurement procedures, and the provision of guidance and support to enable managers to exercise their decentralised powers efficiently and effectively.
• The role of the National Parliament and provincial legislatures in the budget process should be enhanced, inter alia, by modifying the timing of the budget cycle to allow additional time for parliamentary scrutiny and oversight; by revising the format of the "White Book" of budget estimates to furnish MPs/MPLs with as much relevant information in as accessible a manner as possible; and by instituting effective capacity building programmes for parliamentarians and their support staff.
• More structured opportunities should be created for popular debate and involvement in the budget process, and more time should be structured into the process to allow for public hearings by the relevant national and provincial financial committees. Budgetary information should be provided in a more accessible, timely and user-friendly form.
• The National Government and each provincial government should establish a Programme Review Unit, most probably within the Finance or State Expenditure Departments. Such a unit will help to create a coordinated framework for conducting programme reviews and administrative efficiency reviews.
• Each department or agency should be required to produce an annual report that would include, inter alia, an account and assessment of service delivery over the year (against planned outputs and outcomes), with an associated cost analysis.
• As the Auditor-General’s traditional role as the watch-dog of procedural financial control will be diminished under the new budgetary system, the role of the AG should be re-focused on the performance evaluation of all key service delivery departments at national and provincial level.
• Priority should be given to reforming the fundamentals of finance administration, particularly in relation to systems for financial and payroll controls, cash management, and asset and liability management.
• Task teams, organised by the DPSA/OPM and the Department of Finance, should be established to work with departments and provinces in developing and strengthening their capacity in the area of financial management. In particular such teams will assess the effectiveness of current systems, processes and capacities; identify specific changes, training and other support required;
• Provide appropriate "on-the-ground" training to key staff on new systems or processes, or on existing processes that are not currently fully utilized; and develop, in conjunction with departmental and provincial staff, a written financial reference guide that provides a detailed step-by-step description of standard processes as a further aid to staff training, development and awareness.
• The Commission endorses the decentralised approach to procurement proposed in The Green Paper on Procurement Policy, but recommends that a phased and gradual approach to implementation be adopted. This may well entail the retention of the Tender Boards whilst capacity to operate the new system is developed.
• Appropriate guidance and support should be provided to departments/provinces to assist them in balancing the needs for cost-effectiveness in procurement with the broader socio-economic aims related to the development of SMMEs (who presently win only a very small proportion of tenders, despite the Government's commitment to Black empowerment).
• The Commission recommends that a major development and upgrading of IMST takes place, in line with recommendations in Chapter 6 of this report, to assist the processes of reform and performance in the public service in general, and in the areas of budgeting and financial management in particular. This is to overcome the current situation where much of the data necessary for accurate and effective costing is lacking.
• More specifically, systems such as FMS and PERSAL be supplemented by a system of financial management and monitoring designed to generate regular reports on service delivery and associated expenditure. The focus of such reports should be on areas such as expenditure patterns, service delivery and performance measures and indicators.
• A major investment in human resources development needs to take place in line with the recommendations in Chapter 4 of this report, and within the new framework recently laid down by the White Paper on Public Service Training and Education. This will be vital to ensure that the necessary skills and capacity are built for the new systems of budgeting and financial management proposed above.
• In this regard, special attention will need to be focused on issues such as the recruitment and retention of capable staff; changes in the post classification and salary structures to ensure that competitive salaries are paid for those staff whose skills are in scarce supply; and the recruitment, training and fast-tracking of officials from previously under-represented groups.

2.7.3 Information Management, Systems and Technology (IMST)

The Commission noted in its hearings that there is a growing awareness of the vital role that information management, systems and technology (IMST) can and should play in the processes of public service reform and consolidation, not merely as an important support function but as an integral component of improved forms of governance and service delivery. Technology and systems have been used for transaction and control purposes in the South African public service for many years. In many cases -- such as the transversal financial and personnel management systems (FMS and PERSAL), the case management systems used by the Police, the motor vehicle registration systems used by Transport, the pensions and unemployment insurance systems used respectively by Welfare and Labour, and the subsidy management system used by housing -- the use of IMST is now essential. In these circumstances, what matters is whether these systems work properly. It is not a question of whether or not to have IMST, but whether we have good or bad IMST.

In recent years the use of IMST has extended to developing management information systems to assist senior management in their strategic management and policy roles. Although many of these systems build on the base transaction and control data systems mentioned above, they have been coupled with more general policy-oriented databases. IMST is also being used increasingly to deliver services directly to the public. Indeed in the international arena this is currently one of the most exciting developments in the IMST field. The range of services that can be delivered directly using IT include information and transaction kiosks which enable citizens to access their Government institutions 24 hours a day. The also include advances in IT-enabled medicine and education where international expertise can be delivered to remote areas via Internet technology or equivalents. Although South Africa has yet to advance very far along these avenues, it is likely that IMST enabled delivery will become an option in the near future.

2.7.3.1 Issues and Challenges

From the Commission's hearings, investigations and studies into this area, we are convinced that there is quite a high level of awareness and understanding among senior managers in the public service about the need for and uses of IMST. But current systems and technology applications in the public service cannot, in their current form, come close to meeting the requirements of the new South Africa. The problem consists of two realities:

• The huge financial resources that the country has already invested in technology and systems;
• The dire need for the public service to leverage this investment in its quest for transformation.

This massive investment has been made in a highly fragmented manner and economies of scale are not being realised. The hearings conducted by the Commission have highlighted the fact that a huge cost has been borne by the South African public without any appreciable benefit in the form of greater service delivery or a more efficient and effective public service. Perceptions gathered from state officials also indicate that the current IT assets are not regarded as contributing significantly to service delivery or transformation objectives. In most cases, both the public and officials believe that current systems and technology may even act as a major constraint on realising these objectives. In an area of human endeavour that demands that individuals acquire knowledge and skills as an on-going process, the public service has not benefited appreciably from the billions spent, nor does it have any significant pool of skilled IMST resources.

During its investigations into the role of IMST the Commission became aware that a number of government departments (notably the DPSA and the Department of Communications) are working towards a vision and policy for IMST in government (see Section 6.2 in Chapter 6 for more detail). Notwithstanding the worthy efforts of such departments, there are a number of important problems that are currently preventing IMST from making the kind of contribution to public service performance and reform that it could and should be making. These include:

• The lack of commitment throughout the public service to buy-into such a vision;
• The absence, therefore, of an overall IMST strategy and implementation plan for the public sector;
• The widespread use of incompatible platforms, networks and applications;
• The lack of a coordinated approach to the use of IMST;
• The lack of information sharing;
• Unnecessary duplication of functions and systems between line departments and provinces;
• The low level of investment in IT training, especially for Black people and women;
• The lack of executive and senior manager awareness;
• Problems in procurement.

These problems have been exacerbated by the pace of technological change, which has speeded up considerably since the introduction of the Internet. Internet technologies have accelerated the rate of innovation and the supply of technology products in the marketplace. This has added an additional important variable in the problem-set outlined above by introducing excessive technological choice.

2.7.3.2 Observations and Recommendations

• The Commission is of the view that IMST should be driven primarily by the business objectives of the state, and not the other way around. Although IMST can significantly change the manner in which the public service conducts its business, we believe that this transformation must be shaped by the strategic and operational requirements of the public service, particularly in relation to the provision of efficient, effective and equitable service delivery.
• The Commission therefore strongly supports the position that all important decisions regarding IMST should come from the senior political and managerial leadership of the state and not be delegated to the technologists.
• There should be an immediate procurement moratorium on all large (above R5 million) information management systems and technology. This would be designed to create the political will to get the public service to agree on some basic standards to facilitate future data exchange and inter-operability.
• It is proposed that the process to agree upon such basic standards be driven by an Inter-Ministerial Task Team and involve all affected departments and the provinces through focus group and working group structures.
• The most immediate need would be for standards required for exchange of information between different systems. The unique identifier plays a crucial role in that respect, but network standards will also be required. Common formats for electronic exchange of information between government and private institutions, companies as well as the public should also be established based on Internet related techniques. A programme for establishing other standards would need to be agreed by the inter-ministerial task team. Ultimately however, there would be a need for a more holistic business, information, systems and technology architecture for the public service.
• The Commission proposes that the above projects should be consolidated into a national information management strategy, information systems strategies and an information technology strategy for the public service. Such a strategy would of course need to be in line with any national information society strategy for the nation as a whole.
• It is proposed that a Chief Information Officer (CIO) be located in the Office of the President to co-ordinate all public service IMST initiatives. The CIO would have a support staff and would interact with the rest of government and the private sector through two new committees which would also need to be established. These are A Policy Committee, comprising senior managers of those departments and/or provinces engaged in general IMST policy as well as including a number of some private sector managers; and a Technology Forum, comprising the IMST Managers from the key user departments and provinces.
• In developing the above standards, architectures and strategies, the Commission proposes the acceptance and introduction of the lead agency concept whereby a particular state agency would be given primary responsibility to co-ordinate a whole-of-government IMST initiative in relation to a specific set of IMST functions in conjunction with other participating departments. In order to ensure inter-agency co-operation, personnel and resources would need to be shared on a programme and/or project basis, but ultimately the Minister and Senior Management responsible for the lead agency would be held accountable for performance.
• Coupled with the lead agency concept, which is largely a short-term measure, the Commission proposes that in the medium to longer term the current functional differentiation of the public service be addressed on the basis of business process re-engineering (see Section 2.5.8.10 above).
• In order to address the critical skills shortage in IMST in the public service, the Commission proposes that a systematic skills development plan be designed and implemented to train new entrants to the information management and technology field. This will entail in particular a new four year internship programme which would lead to an accelerated but nevertheless equivalent qualification to those currently offered by tertiary institutions. Although this programme would be open to all, special emphasis should be given to seeking interns from historically disadvantaged communities to ensure that representivity is addressed.
• The implementation of electronic government is probably the best way to build capabilities that enable the public not only to access information but to conduct transactions with government departments. The Commission therefore recommends that government give serious consideration to migrating to completely electronic communication within the next five years.
• The Commission proposes that new procurement models be used in the development, operation, maintenance and upgrading of information management system and technology. We suggest that avenues be explored to ensure that risks and rewards are appropriately shared between the public and private sectors.
• The Commission believes that emergency measures have to be undertaken immediately to ensure that the systems are Year 2000 compliant. A ‘Crisis 2000’ project office should be convened immediately to coordinate and project manage all the Year 2000 initiatives in the public service in liaison with similar private sector initiatives and projects.

Contents Chapter1 Chapter 2 Chapter 3 Chapter 4
Chapter 5 Chapter 6 Chapter 7 Appendicies