National Treasury must strengthen intervention mechanisms

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CAPE TOWN, South Africa

The Portfolio Committee on Water and Sanitation has urged the National Treasury to strengthen its intervention measures in departments facing governance and financial management challenges.

The committee said this could be done by amending the Public Finance Management Act to empower the National Treasury to intervene before departments reach crisis levels.

These sentiments were raised primarily because of the financial predicament confronting the Department of Water and Sanitation (DWS).

“The challenges at the department started emerging around the 2014/2015 financial year and you would have thought that some corrective measures would have been put in place to remedy the situation. The lack of these intervention measures has resulted in a dysfunctional department, barely able to deliver on its core mandate,” said Mr Mlungisi Johnson, the Chairperson of the committee.

While amendments to the Act would be ideal, the committee reiterates that it does not in any way advocate for the National Treasury to appropriate the power and authority of departmental accounting officers.

“What we need is a mechanism that will enable National Treasury to urgently intervene in necessary cases,” Mr Johnson emphasised. 

The consequence of this lack of intervention is the DWS’s R1.8 billion in preliminary accruals and payables for the 2017/2018 financial year. Of this amount, R904 million is for infrastructure projects, where payments could not be made due to the department having insufficient cash in the bank. As a result, the department has had to adjust its annual performance plan downwards to prioritise the payment of accruals.

What we need is a mechanism that will enable National Treasury to urgently intervene in necessary cases

The committee considers it unacceptable that no new projects will be entered into in the current financial year as a result of the burden caused by accruals. The committee reiterates that the value of accrual is directly linked to the department’s inability to plan.

Meanwhile, the committee has welcomed the new Minister of Water and Sanitation’s vision to remedy challenges. Of critical importance is the commitment to collaborate with National Treasury and the Office of the Auditor-General to improve governance and financial management at the department.

Moreover, departmental restructuring to ensure alignment of functions to capabilities is welcomed. The committee has for a number of years highlighted its discontent with the lack of clarity about functions, the mismatch of skills and the number of Deputy Directors-General at the department. The committee further welcomes the establishment of a planning, monitoring and evaluation component that will be essential in dealing with the department’s planning deficiencies.

The committee also called for the speedy appointment of the Director-General who will drive the department’s new vision and strategic objectives. “A permanent accounting officer is necessary in any institution to ensure governance and to put in place processes to guide the department in achieving the vision set out by the executive authority,” Mr Johnson emphasised.

The committee has, for its part, committed to work with the department in the remaining months of its term to turn the ailing department around.