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Job Creation Requires Sound Administration

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From a speech by Bobby Stevenson to the Eastern Cape Provincial Legislature who sat this afternoon to consider the report of the Standing Committee on Public Accounts (Scopa) for the 2010/2011 financial year for provincial departments:

When your education system malfunctions, learners future job prospects become more limited. When civil servants trade with the Province at the expense of the Private Sector, you limit opportunities for job creation.

When corruption, maladministration and over invoicing is rife, you have less money for job enhancing projects such as roads, infrastructure, which is the lifeblood of our economy.

When shoddy workmanship due to a lack of supervision requires the Province to spend R2.3 million on rectifying 75 000 homes which, if better spent elsewhere, would have a much greater economic impact. R2.3 billion spent on a youth wage subsidy would create 200 000 jobs. This puts into context the wasted opportunity cost of mismanagement.

When one analyses the Auditor General’s reports for the 2010/11 year, one cannot escape the conclusion that this Province is suffering under the yoke of a job crushing administration. The tragedy is that no real action is taken against those responsible so there is no deterrent, hence the repetative findings in this report.

If we want a different outcome, we need to do things differently. I believe a consolidated, quarterly updated report on these findings and recommendations needs to be debated in this house every three months.

Secondly this report needs to be considered a lot earlier so that it remains relevant.

There was non compliance in a number of areas:

Creditors not paid within 30 days – 69% of Departments;
Irregular expenditure not prevented – 69% of Departments;
Awards to officials or close family members – 69% of Departments;
Written quotes not obtained for jobs between R30 000 – R500 000 – 46% of Departments.

The irregular expenditure that took place in the Province in the year under review, as a result of non compliance with supply chain management legislation amounted to R2.3 billion (R2 billion or 85% related to Education). A further R2.2 billion of irregular expenditure related to non compliance in the area of compensation of employees of which R1.9 million was attributed to the Department of Education.

Education and Health incurred R114 million of fruitless and wasteful expenditure, mostly due to employees who could not be verified and employees incorrectly calculated leave gratuities. Do we still have ghosts?

What is alarming is that R3.5 billion or 79% of the R4.7 billion of the unauthorised, irregular, fruitless and wasteful expenditure was not reflected in the financial statements but only detected through the auditing process.

Almost R1 billion (R979 029 million) of contracts were awarded to civil servants or their close family members in this Province. Altogether 637 contracts were awarded to Provincial Officials involving R924 840 million. A further 66 contracts were awarded to close family members of Provincial Officials totalling R54 189 million.

No declarations of interest either by the suppliers or the officials accounted for 485 cases or R891 million. The Education Department contributed to the bulk of these cases,  being 530.

There are a host of irregularities when it comes to insider trading – that is officials doing business with the Province – non declarations by bidders and officials as well as officials with interests participating in the supply chain management process.

This Province must adopt a simple policy that officials should not be able to do business with this Province as a matter of principle. One does not have to change the constitution to do this. Councillors cannot trade with Municipalities – this has been outlawed by the Municipal Finance Management Act. Legislation should be introduced at Provincial or national level to outlaw this practise and this Province must put it’s weight behind it.

We must adopt a simple practise in the interim and that is that any supplier or official who fails to declare an interest or who participates irregularly in the process, will immediately nulify the contract. They should also be blacklisted.

Given the crisis that this Province is in, when it comes to poverty, inequality and unemployment, we cannot afford to waste one cent on maladministration, corruption,  over invoicing and shoddy workmanship.

We need every cent we can to improve the lives of the many and not enrich the lives of the few. It is time for the Premier and the MEC’s to take tough action against those responsible for non compliance with the treasury regulations and the provisions of the PFMA. There can be no excuse for this, particularly so in the case of the biggest rotten apple in this Province – the Department of Eduction.

Lack of leadership is a primary cause of this Province’s poor audit outcomes. This lack of leadership is resulting in the wrong environment being created in this Province which adversly impacts on our ability to grow our economy and create jobs.

The time for action is now and this Legislature must ensure that MEC’s are held accountable for their Departments.

Bobby Stevenson, MPL

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Port Elizabethan

This author is a 'catch-all' for occasional articles and letters written to MyPE. The Author of each article can be found in the signature at the bottom of each individual article.