CHAPTER 7

CONCLUSIONS AND RECOMMENDATIONS

7.1 CONCLUSION

In this report the Commission has tried to re-think fundamentally the role and functions of the public service, and to set out a framework for transformation in which the cornerstones of social need, capacity and cost have been at the centre of our thinking. These are rigorous constraints in a country where resources are sorely stretched, social need is infinite and capacity severely constrained. It is with services in mind that we have approached the four central themes of this report: transforming the structures and functions of government; revitalising human resources management and development; stressing the central significance of Information Technology; and building effective systems for financial planning and budgeting. The latter in particular is essential for the full realisation of our priorities, if the democratic transformation of the public service and the equitable provision of services for all South Africans is to be achieved. Collectively the four themes create the parameters for change and the prerequisites for the development of a culture of good governance.

We have adopted an approach that is frank, bold and, we hope, fair and constructive. We have not hesitated to commend departments and ministries for effective and efficient delivery or to reject outcomes that we have found to be ineffective, expensive and shoddy. Wherever possible we have adopted recommendations to improve the effectiveness of governance and to generate change. The Commission's brief has been to set a framework for transformation in a public service that is in a continuous process of reform and change; sometimes occurring incrementally and at others as expeditiously as our resources, skill and commitment will allow. The aim is to achieve a public service which now and more so in the future will bear the high standard of professional ethics, impartiality, effectiveness and transparency that the Constitution demands of it. That the service should be accountable, responsive to the needs of the people and development-oriented has been intrinsic to our thinking.

7.2 RECOMMENDATIONS

The following is a summary of the main recommendations made by the Commission in relation to the four key themes around which this report has been structured, namely structures and functions, human resources management, budgeting and finance, and information management, systems and technology. These recommendations, and others, are covered in more detail in the Overview and subsequent chapters of the report, as are the issues, problems and challenges which they are designed to address.

7.2.1 Transforming the Structure and Functions of Governance

7.2.1.1 The Need for a Radical Change

• It is the view of the Commission that the system of governance in the new Republic of South Africa is in a number of crucial respects not working well at this stage of the transition process. Too little progress has been made in remedying the inequalities and inefficiencies of the past. The delivery of public services, their costs and quality, leave much to be desired. Given this, we recommend that the role and functions of the public services have to be rethought fundamentally.
• The elements to be covered by such change include:

7.2.1.2 The Need for a National Vision

• There is a pressing need in particular from government for the formulation and transmission of a coherent national vision for development to guide the processes of transformation, reconstruction and development, nation building, democratic consolidation and community empowerment. Currently such a vision is lacking.

7.2.1.3 Rightsizing the Public Service

• The Commission believes that there is no justification for the massive number of public officials, given the resources available and the priorities of government. Furthermore, the inability of the state to compete with private sector salaries may suggest the need for a smaller, professional, highly skilled and well-paid public service. In short, the corner-stone of the new public service should be social need, capacity, and cost.
• Whilst the Commission accepts, therefore, that there is an urgent need for rightsizing in the public sector, located within the macro-economic constraints established by GEAR, we feel that this should nevertheless be driven primarily by the need to improve the efficiency and effectiveness of service delivery.
• For this to take place, however, there will need to be organisational audits in each department, together with organisational redesign to determine optimal staff complements. Heads of departments would have to use staff more productively, prioritise delivery programmes and produce a hierarchy of needs to effect an appropriate annual reduction of personnel over the next three years, commencing with the retrenchment of those supernumerary personnel who cannot usefully be redeployed or absorbed in the staffing establishment.
• For progress to be made on rightsizing, the current moratorium on compulsory retrenchments will need to be re-negotiated with the employees organisations in the Bargaining Chamber.
• Rightsizing initiatives will need to be accurately costed and the costing process will need to take alternative service delivery options (such as outsourcing and public-private/public-community partnerships) into consideration. Such initiatives will also need to be accompanied by programmes to create alternative employment opportunities. This will be essential if the process is to be acceptable to the unions and the public.
• The voluntary severance package scheme has clearly failed to meet its intended objectives, and should be abandoned. Political and administrative heads of departments must be fully briefed about the conditions governing future severance schemes.

7.2.1.4 Strengthening Direction and Coordination at the Centre of Government

• In the view of the Commission the principal objectives of reform are (i) to formulate policies which meet the needs of the people, and which are well-founded on relevant data, coherent and well co-ordinated, fully and prudently costed to ensure value for money, and prioritized within available resources; and (ii) to facilitate the efficient and effective implementation of such policies, and to ensure that they are regularly monitored and reviewed.
• The Commission is firmly of the opinion that these objectives cannot be fully realised without significant change at the apex and core of government. National departments and provincial administrations will not be able to achieve these objectives if they continue to function as at present. By themselves they do not have the capability or authority to remedy the way government works.
• The Commission believes, therefore, that the transformation and development of the governance of South Africa requires a radical re-appraisal of the functions, structures, personnel and management of the Office of President, taken together with the Office of the Deputy President, to ensure greater direction and co-ordination in government policy at all levels.
• In addition to the private office and a number of existing units, the Commission recommends that the Office of the President should be restructured to include:

- An Office of the Cabinet Secretariat (OCS), to co-ordinate Cabinet policy.

- An Office of Public Management (OPM), under the oversight of a minister, which would take on the functions of the DPSA and incorporate the existing offices on the Status of Women and Persons with Disabilities.

- An Organisational Review Agency (ORA), which would be located within the Office of Public Management and would carry out the on-going process of evaluating and re-configuring the structural organs of government.

- An Office of the Public Service Commission (OPSC), which would replace the current PSC, whilst retaining its independence and continuing to carry out the functions laid down by the Constitution.

- The Coordination and Implementation Unit (CIU), which would be transferred from the Office of the Deputy President and which might eventually be incorporated into the Cabinet Secretariat.

- A Co-ordinating Agency for Inter-Governmental Relations, 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.

- An Information Management and Systems Agency, to co-ordinate all public service IMST initiatives.

• In the view of the Commission, the idea needs to be re-inforced that the public service is essentially a unitary entity, operating at both national and provincial levels. Accordingly, the Office of the President should be restructured to avoid overlap and potential conflict. In our view, there should be one DG for the offices of the President and Deputy President combined, and a smaller office for the Deputy President. We recommend in particular that machinery is put into motion to assess whether or not senior personnel in the Presidency have been appropriately deployed and that, where necessary, appropriate corrective measures for the deployment and re-deployment of staff be adopted as a matter of urgency.

• As indicated above, the Commission recommends that a more appropriate location for the offices on the Status of Women and Disabled Persons would be within the proposed Office of Public Management, where their contributions to policy could be more effectively integrated into the overall strategic planning processes.
• Our recommendation for the restructuring of the Public Service Commission is on the grounds of efficiency and effectiveness. In the view of the Commission, a less elaborate and more professionally managed body, led by no more than three Commissioners (rather than the fourteen laid down in the Constitution), would be more suitable for carrying out most of the monitoring and standards preserving functions outlined in the Constitution. Such a body would have a limited staff, supplemented according to need, and would report the findings to the President, as well as to parliament (particularly through the relevant parliamentary portfolio committees).
• We recommend the creation of a stronger portfolio for the Secretary to the Cabinet as Head of the Public Service. An important role for this person would be to coordinate Cabinet inputs, follow up decisions taken, and ensure that policy is being implemented and communicated effectively.

7.2.1.5 Building More Effective Inter-Governmental Relations

• Both national departments and the provinces repeatedly pointed to the fact that weaknesses in the structures and practices of inter-governmental relations (IGR) led to poor coordination within and between different departments and spheres of government, creating an incapacity to implement national programmes and a consequent failure to deliver basic services.
• In view of this, the Commission recommends that the roles and responsibilities of the Inter-Governmental Forum be reviewed and consideration be given to its restructuring or, alternatively, to its abolition. In particular, there will need to be a far closer working relationship between the IGF (if this body is to be retained and we believe it should) and MINMECs in particular and with other IGR structures in general. The present poor information flows and lack of communication between IGR structures often results in contradictory or duplicatory decision making.
• We also recommend that the role of the Department of Constitutional Development in inter-governmental relations be taken over by the proposed Agency for IGR in the President's Office (see above). This is to enhance the status of IGR by giving this agency the necessary authority and political backing to enable it to more effectively oversee, monitor and intervene where necessary in inter-governmental interactions.
• We recommend an inquiry into the functions, needs and relations between the three spheres of government as a matter of urgency. We also recommend the establishment of a Ministry of Local Government (see below).
• We recommend that 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). This could go some way to redress problems of capacity without violating the provisions of the Constitution.

7.2.1.6 Re-Configuring National Ministries and Departments

• The Commission recommends the following rationalisation to enhance efficiency, effectiveness and more effective inter-departmental coordination.
• 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:

- The Ministry of Arts, Culture, Science and Technology;
- The Ministry of Correctional Services;
- The Ministry of Education;
- The Ministry of Justice;
- The Ministry of Provincial Affairs and Constitutional Development;
- The Ministry of Public Enterprises;
- The Ministry for the Public Service and Administration.
- The Ministry for Sports and Recreation;
- The Public Service Commission as presently constituted under the 1996 Constitution.

• The Commission proposes the replacement of these ministries and agencies by the following re-configurations:

- A new Ministry of Higher Education and Technology;
- A new Ministry of Education and Culture (in which Sport and Recreation would be a Directorate);
- A new Ministry of Justice and Rehabilitation (the latter taking over the functions of Correctional Services);
- A new Ministry for Local Government;
- The re-configuration of the Department of Constitutional Development whereby all its current functions other than local government are located in the Office of the President;
- The establishment of the Office of Public Management in the Office of the President to take over many of the functions currently carried out by the DPSA;
- The location of a restructured Public Service Commission an independent commission of 3 people in the Office of the President;
- The establishment of a number of new central executive agencies in the Office of the President, in particular for Inter-Governmental Relations and Information Managemnt, Systems and Technology.

• The Commission believes that a number of ministries and departments would logically form coherent and viable combinations. Such combinations include:

- Water Affairs, Forestry and Agriculture;
- Land Affairs and Environment;
- Trade and Industry and Tourism;
- Finance and State Expenditure.

• Given the current lack of effective coordination between the departments of Foreign Affairs and Trade and Industry, the Commission also firmly believes that trade officials in embassies should report to the relevant diplomatic representative and not to the DTI. We therefore recommend that the international trade function in DTI should be phased into the Department of Foreign Affairs; and that the two departments establish a task team to deal with the details of this transfer, especially in respect of the reporting lines.
• The Commission recommends that, in the case of departments such as Safety and Security, Justice, Correctional Services and Education, serious consideration be given to a major re-engineering and rationalisation at senior levels, as an urgent imperative. The President and responsible ministers are urged to reassess the suitability or otherwise of some of the top echelons of their public managers.
• In view of the singular importance of local government and its inter-connectedness with the two other spheres of government, the Commission recommends that a separate Ministry for Local Government be established to replace the current Ministry of Provincial Affairs and Constitutional Development. In so far as the residual duties of the Department of Constitutional Development (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.
• The Commission recommends that the Ministry and Department of Public Enterprises be phased-out as soon as possible, and that the six major State Enterprises for which they currently have oversight (Transnet, Eskom, Denel, Safcol, Alexkor and Aventura) be transferred to the appropriate line departments. It is recommended that the remaining enterprises 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 of all state enterprises should lie with the Department of Finance.
• The Commission recommends that the Department of Public Works (DPW) be restructured, in particular by out-sourcing those functions that it no longer can successfully supply. However, the coordination role of the management of assets must remain with the DPW, which should restructure to the extent of allowing autonomy without losing the crucial oversight and coordination role which it has hitherto played.
• The Commission recommends that the Central Statistical Services is either (i) retained in its current form but better resourced, or (ii) transformed into an independent statutory organisation, similar to that of the State Enterprises or Science Councils. Furthermore, the CSS should report directly to parliament rather than to a minister in order for it to retain the integrity of its research outputs.

7.2.1.7 Re-Engineering the 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.
• The Commission believes that BPR is likely to be the best 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;

- That the current structural, process and other constraints, delays and blockages in service delivery are successfully overcome (such constraints are identified for example in Chapter 3, Section 3.7.2 of this report, and in much greater detail in the specially commissioned Process Analysis of Service Delivery, see Annexure 7).

• The Commission therefore recommends that a Task Team be established by the Cabinet as a matter of urgency to consider how the business of the public service can be re-engineered. This BPR Task Team might eventually be located with the Organisational Review Agency proposed above.

7.2.1.8 Deputy Ministers

• The Commission could not see any real need for the current large number of deputy ministers. We recommend, therefore, that the current practice of appointing deputy ministers randomly be reversed, a proper rationale for appointments be developed and that, in general, ministerial reliance for support should lie with senior public servants.

7.2.1.9 Provincial Administrations

• 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.
• Whilst the Commission endorses the current move towards greater decentralisation, designed to bring government closer to the people, our investigation brought home vividly the fact that in the rush to devolve powers, insufficient attention was given to the capacity of the provinces to assume these powers. In particular, given the poor financial control culture of some of the former "Bantustan" administrations, it is not in the least surprising that the controls currently in place in some of the provinces are in many ways seriously defective.
• With specific respect to the Eastern Cape and Northern Province, the Commission urges 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 aware of the enormous problems facing these provinces, but is not persuaded that the leadership in them have come to grips with the challenges facing them. We recommend, therefore, that the National Government should not hesitate, in certain dire circumstances, to resume functions delegated to certain provinces or their departments, where those provinces provide irrefutable evidence of inability to carry on those functions.
• In the light of the changes introduced by the Public Service Laws Act of 1997 (see in particular Chapter 3, Section 3.4 of this report), the Commission recommends that the status and role of provincial DGs be clarified in practice and, if necessary, in law. Whilst the Commission supports the "de-linking" of provincial DGs from chief accounting officer responsibilities, we nevertheless feel that it will be crucial, to avoid possible institutional fragmentation, for them to assume a key coordinating role in the provinces.

7.2.1.10 Developing a Professional Management Corps

• The Commission believes that it is essential for government to invest in the long-term development of a professional managerial corps throughout the public service. This belief is based on the Commission's recognition of the need:

- To move away from the traditional career-based model of public service management, in favour of a model based on contract-based employment of the entire management echelon. The present contract system applying to DGs should, in the opinion of the Commission, be progressively applied to other levels of management, from Deputy DGs to Directors;

- To develop all-round managers with experience in a range of portfolios, by creating opportunities for greater mobility;

- To develop a managerial esprit de corps through joint workshops and training opportunities.

7.2.1.11 Alternative Service Delivery

• The Commission recommends that serious consideration be given to alternative service delivery systems, including outsourcing and the development of creative public-private and public-community partnerships. The principles of effectiveness, efficiency, economies of scale, and integrated, one-stop-shop services should guide the selection of the most appropriate service delivery strategy.

7.2.1.12 Monitoring and Evaluation

• Monitoring and evaluation of performance is a very expensive venture. But the costs incurred pale in comparison to those of continued implementation of ineffective, cost-inefficient, and perhaps even harmful interventions. It is for this reason that the Commission recommends as a matter of urgency that more effective systems of monitoring and evaluation are designed, developed and implemented.
• In the view of the Commission this demands a comprehensive strategic intervention, rather than a number of piecemeal reforms. This we believe should take the form of a White Paper on Public Service Monitoring and Evaluation, together with enabling legislation, where appropriate, to ensure the necessary levels of compliance.
  

7.2.2 Managing Human Resources

7.2.2.1 The Strategic Importance and Planning of Human Resources

• 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.

7.2.2.2 Affirmative Action and Representivity

• 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. Norms should be the targets set in the WPTPS.
• 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 required 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.

7.2.2.3 Human Resources Provisioning

• 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 progressive and caring employer.
• All actual and potential recruiters (including line managers where appropriate) should be trained 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.

7.2.2.4 Performance Management

• The DPSA/OPM should initiative 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.

7.2.2.5 Human Resources Development

• There is need for the development of an integrated human resources development policy for the public service.
• 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.
• 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.
• 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/OPM, in collaboration with the Department of Finance. This will be based on agreed norms and standards in relation to (i) the time to be made available for training and education (for example, an average of 5 days per person per year); and (ii) a specified financial target for training and education (for example, one per cent of each spending agency's previous years total budget). A more sophisticated formula should be developed as more reliable data becomes available. Once the annual training and education budget is approved, it will be up to heads of department to implement the agreed training and education strategy.

7.2.3 Budgeting and Financial Management

7.2.3.1 New Structures to Improve Coordination

• 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.

7.2.3.2 Inter-Governmental Financial Relations

• 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.

7.2.3.3 A Performance Based Approach to Budgeting

• 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.

7.2.3.4 New Forms of Costing

• 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 that 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.

7.2.3.5 Overcoming Unfunded Mandates

• 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.

7.2.3.6 Enhancing 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.

7.2.3.7 Strengthening Parliamentary Oversight

• 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.

7.2.3.8 Increasing Popular Participation in the Budget Process

• 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.

7.2.3.9 Monitoring and Evaluation

• 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 co-ordinated 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.

7.2.3.10 Financial Management

• 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.

7.3.2.11 Procurement

• 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).

7.2.3.12 The Role of IMST

• 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.

7.2.3.13 Building Skills and Capacity for Budgeting and Finance

• A major investment in human resources development needs to take place in line with the recommendations in Chapter 4 of this report. 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.
  

7.2.4 Information Management, Systems and Technology (IMST)

7.2.4.1 The Responsibility for IMST

• 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.

7.2.4.2 Procurement Moratorium

• 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.

7.2.4.3 Basic Building Blocks

• 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.

7.2.4.4 National IMST Strategy and Implementation Plan

• 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.

7.2.4.5 Chief Information Officer

• 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.

7.2.4.6 Lead Agency Concept

• 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.

7.2.4.7 Business Process Re-Engineering

• 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 address on the basis of business process re-engineering (see Section 7.2.1.7 above).

7.2.4.8 Skills Development Plan

• 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.

7.2.4.9 Electronic Government

• 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.

7.2.4.10 Public/Private Risk and Reward Sharing

• 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.

7.2.4.11 ‘Crisis 2000’ Project Office

• 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.
  

7.2.5 Local Government

• In view of the importance of local government in respect of the local delivery of services, and its relationship to the other spheres of government, the Commission recommends that a separate inquiry be undertaken into this area by an independent Commission appointed for this purpose. Such a Commission, if appointed, might choose of course to be guided in its work by the methodology, findings and recommendations of the PRC.

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