Annual reports costs soar - at least R10-million wasted

The simple task of reporting on one's financial records is beginning to become a major drain on state resources. Using a set of replies to parliamentary questions that we have posed over the last six months, we estimate that well over R40-million is being spent on producing these documents every year - which is at least R10-million more than necessary.

Our most significant concern, however, rests with some of the individual cases of enormous waste. The South African Post Office is a classic case in point. The recipient of more than R1.5-billion in financial assistance and bailout money from the Treasury over the last four years, the Post Office spent an astonishing R947 per unit of their annual report - despite the report featuring minimal graphics design or special features, and only amounting to 168 pages.

Compare the cost of the Post Office report with the cost of other similar reports:

• Department of Environmental Affairs and Tourism - 166 pages - R91 unit cost - 55c per page
• Department of Health - 222 pages - R88 unit cost - 39c per page
• Department of Land Reform - 144 pages - R83 unit cost - 57c per page
• South African Post Office - 168 pages - R947 unit cost - R5.63 per page

Out of the total R805 000 budget allocated to publishing the Post Office annual report, an astonishing R576 000 was spent on graphic design, but there is absolutely nothing in the Post Office's very bland and graphics devoid document that suggests how this could have been appropriate.

This is R800 more than the average cost of R146 per report and if worked out on a per page basis, close to twenty times the cost of the Department of Health's annual report.

The top 10 most expensive annual reports are as follows:

Again, there is excessive cost associated with these reports. Whereas the Department of Health produces reports at 39c per page, the Trans Caledon Tunnel Authority (TCTA), Sentech and Council for Medical Schemes, to take three of the examples above, spent R3.18, R2.14 and R1.56 per page respectively. The TCTA alone could have saved R377,000 by printing at the cost that the Department of Health achieves; instead of costing R428,160 in total, it could have spent just R51,000 to print exactly the same number of documents with the same number of pages.

Outside of the top ten highest costs per unit, there are also numerous cases of massive over-expenditure. The Human Sciences Research Council (HSRC) is a typical example - it spent R700 000 on producing its report, but overspent by over R200 000, bringing the total to R909 817.

And among the other unnecessary excesses displayed in the printing of annual reports for the 2008/09 financial year, there are all manner of ridiculous features - including glitter print, dye cut print, digital clocks embedded in the report counting down to the FIFA 2010 World Cup kickoff, photography commissioned specifically for annual reports, and all manner of glossy and matte print papers. While we certainly agree that state entities need to produce reports that look professional and presentable, we have moved far beyond that, into the realm of self-congratulatory, ingratiating products.

The costs associated with producing annual reports are a typical example of where President Zuma's call for "every cent [to] be spent wisely and fruitfully" must be heeded. It is very easy to shrug off the fact that the Post Office is producing R950 reports, or that about R10-million could be saved every year, simply by introducing a new rule into the Public Finance Management Act, to force all state departments and entities to conform to a set of budgetary rules when producing their reports.

Of 34 annual reports for national departments and their state entities released last year, 11 carried a qualified audit opinion, and only one received a clean audit opinion. Considering this fact, it is highly problematic that these departments saw fit to waste even more money on glamorising these details instead of focusing on the real task at hand - getting on with the job and delivering services to the people.

The vast difference in price of the annual reports, ranging from the cheapest at R11 per unit when published on CD, to the R947 per unit for the annual report published by the South African Post Office, demonstrates quite clearly that there are large savings to be made here.

So far, we have tabulated that more than R21 million spent on the 2008/09 annual reports for 17 national departments and their associated entities. Given that there are a total of 34 national government departments, it is reasonable to assume that well over R40 million is being spent every year in an area where cuts in the region of R10-R20 million could quite easily be achieved.

A number of departments deserve to be commended for their efforts not to overspend on annual reports, such as the Department of Health (R88 per unit), Department of Human Settlements (R82 per unit) and the Department of Agriculture (R58 per unit). It must be noted that these departments still produced documents that look professional and aesthetically presentable.

The ANC government needs to address this irresponsible and completely unnecessary and wasteful expenditure as a matter of urgency. Among the requirements set out in the Public Finance Management Act, a restriction should be introduced to limit the amount spent on annual reports, with guidelines to assist national departments in structuring a functional, yet cost effective annual report.

Annexure 1: Cost of Annual Reports by Department (2008/09)

Annexure 2: Cost of Annual Reports by State Entities (2008/09)

Statement issued by Dion George, MP, Democratic Alliance shadow minister of finance, February 4 2010

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