ATC130510: Report of the Portfolio Committee on Tourism on Budget Vote 35: Tourism, dated 8 May 2013.
Tourism
Report of
the Portfolio Committee on Tourism on Budget Vote 35: Tourism, dated 8 May 2013
.
The
Portfolio Committee on Tourism, having considered Budget Vote No. 35: Tourism,
together with the Strategic Plan and Annual Performance Plan of the National Department
of Tourism
(NDT) and the South African
Tourism (SAT), reports as follows:
1.
Introduction
1.1
The
Constitution of
1.2 In terms of section 10 ( c ) of the Money
Bills Amendment Procedure and Related
Matters
Act (Act No. 9 of 2009), strategic Plans must be tabled in Parliament after the
adoption of the fiscal framework.
1.3
It is
important to ensure that the strategic plan is tabled within the stipulated
period because the plan provides information for budget review process of the
Portfolio Committee.
1.4
The
budget and strategic plan form the basis of the annual report. The Public
Service Commission (PSC) in its report Evaluation of the Departments Annual
Reports as an Accountability Mechanisms states that the emphasis on measurable
objectives, which should be part of the strategic plan, is to create a contract
between Parliament and the relevant Minister regarding specific deliverables
for which the Minister can be held accountable.
1.5 This
explains the importance of budget and strategic plan process in the calendar
of Parliament and the necessity for departments to table these on time
to ensure Parliament is provided with information required for its oversight
work.
2
The
committee process
2.1
The
Committee when adopting its 2013 second term programme, decided as part of
enhancing its budget review process, to invite the Financial and Fiscal
Commission (FFC) to make a presentation on the budget and strategic plan of the
NDT to indicate whether the budget and the plan are realistic to address
tourism within the developmental agenda of the country.
2.2
On the 13
th
March 2013, the Minister tabled to Parliament the Strategic Plan and Annual
Performance Plan of the NDT for 2010/11 to 2015/16 financial years and 2013/14
review.
2.3
The Minister
further tabled an updated Strategic Plan and Annual Performance Plan of the SAT
for 2013/14 financial year.
2.4
On the same
day, the Speaker of the National Assembly referred these papers to the
committee for consideration and report.
2.5
The
Committee scheduled extended briefing sessions with the South African Tourism
and the NDT so as to present their plans and budgets for the Medium Term
Expenditure Framework (MTEF) period on 23 and 30 April 2013 respectively.
2.6
As part of
the budget review process of the NDT, the Committee engaged extensively on
operational plans of identified areas of the Departments programmes. These
were areas which the Committee observed to have either previously experienced
slow progress in terms of implementation or required close monitoring to
ascertain whether their 2013/14 targets would be met.
2.7
The budget
briefings served to acquaint the Committee with the mandates and programmes of
each business unit in the NDT and the entity.
2.8
In 2012,
Government adopted the National Development Plan as its overarching planning
framework. The Committee expected the Department to ensure that the Tourism
Sector plans were consistent with the National Development Plan.
2.9
The
following appeared before the Committee during the Budget Review sessions: the
Financial and Fiscal Commission; the SAT; and the NDT.
2.10
This report gives a brief summary of presentations
made to the Committee, focusing mainly on 2013/14 2015/16 Strategic plans;
the Annual Performance Plans and the 2013 Medium Term Expenditure Framework
(MTEF) allocations and an overview of allocations per programmes. The report
also provides the committees recommendation relating to the Vote.
2.11
The engagements simultaneously reviewed the past
performances of the NDT and the entity SAT. Both the Minister and Deputy
Minister and the Director General could not attend the scheduled sessions due
to Cabinet business. The delegation led by the Chief Operations Officer
consisted of the senior management officials.
3
Financial
and Fiscal Commission
3.1
Tourism
plays a critical role in the economy of
3.2
In 2012,
tourism made a 10.3 percent contribution to total employment in
3.3
The FFC noted
that if the Tourism Sector contribution grew at the current rate of 1.52
percent per annum, it would fall short by R150 billion of the National
Development Plan (NDP) target of R499 billion by 2020.
3.4
The FFC
further observed the disjuncture in timeframes for targets set for the National
Development Plan and the New Growth Path (NGP). The envisaged NDP 2020 target
is to create 225 000 tourism jobs, while the NGP propounded to create 225 000
jobs in tourism by 2015.
3.5
Spending
performance by the NDT was 96.5 percent of its total in 2010/11 compared to
98.8 percent in 2011/12. The NDT spent 95 percent of its total budget by
February 2013 compared to 92 percent of total budget at the same period in
February 2012.
3.6
The FFC
highlighted the difficulty in assess the overall service delivery impact of the
NDT expenditure because SATs annual report is not consolidated with the NDTs
annual report. The challenge is to ensure the NDT got value for money from the
funds disbursed.
3.7
With the
overall funding envelop of the NDT determined upfront, there could be budgetary
tensions between allocations for SAT and NDT for internal activities. The FFC
argues that the NDT is less likely to receive a major unconditional cash
injection, although there is substantial grant funding for job creation
initiatives that the Department could apply for.
3.8
The NDT
exceeded 92 percent of all its targets for 2011/12. The reason cited for
exceeding targets is that there is better uptake and response to initiatives. The
NDT did not overspend its budget despite 30 percent of its targets being
exceeded by marginal amounts in most cases. Nevertheless, programmes are
implemented efficiently.
3.9
An area that
can be improved is that some indicators are not measurable such as percentage
implementation of workplace skills plan as the indicator did not show how the
skills plan is being measured.
3.10
The FFC made a number of wide ranging recommendations
on intergovernmental fiscal relations as part of its 2013/14 annual submission
to Parliament.
4
South
African Tourism
4.1
The
mandate
of the SAT is to position and market
4.2
4
th
Portfolio Review
the review was implemented from 1 April 2011 up
until 30 March 2014. The Review identified different types of tourism markets
based on the number of tourists visiting
4.3
The
categories identified were core, investment, tactical and watch list markets.
Countries from various continents are then categorized in the types of tourism
markets they ought to fit into. For example, some of the core market countries
for
4.4
5
th
Portfolio Review
the SAT already had its 5
th
Portfolio
Review Outcome which is to be implemented from the 1 April 2014 up until the 30
th
March 2017. In the 5
th
4.5
Most of the
watch
list market
countries formed part of the SA Tourisms hub strategy.
The objective of the hub approach is to link and combine markets of strategic
importance as hubs in order to realize a greater return on investment. It is
also envisaged to commence from 1
st
April 2014 to 2017.
4.6
4.7
Domestic
Tourism Strategy
the objective of the strategy is to grow domestic
tourisms contribution to the tourism economy. SAT used 2009 figures as a
baseline and set targets for 2015 and 2020. For example, the number of adult
travellers in 2009 was 14.6 million; the forecasted targets for 2015 and 2020
were 16 million and 18 million respectively.
4.8
Key
initiatives
some initiatives aimed at boosting domestic tourism
are: to complete a brand audit of the current Domestic Tourism Campaign; the
application of digital best practice into the new campaign execution and to
engage low cost airlines to improve regional distribution.
4.9
Number of
Graded
Establishments
as at the end of March 2013, there were
6 194 graded properties, while the annual target
set is 6 172.
4.10
National Conventions Bureau
(NCB
)- A total of 87 bids had been
secured for
4.11
Human
Resources
SAT staff complement is expected to increase from 189 to 194.
5.
National Department of Tourism
The submission of NDT was captured as follows:
5.1
Policy
priorities for 2013/14
Since
tourism is one of the six priority sectors in the New Growth Path, the NDT is
working to ensure that these key priorities are aligned with governments
objectives in order to receive the desired results. The strategic goals over
the medium term as identified by the NDT are as follows:
5.1.1
Maximize domestic and foreign tourist arrivals to
5.1.2
Expand domestic and foreign investment in South
African tourism industry;
5.1.3
Expand tourist infrastructure.
5.1.4
Improve the range and quality of tourist services;
5.1.5
Increase the impact of tourism on the livelihood of
all South Africans;
5.1.6
Improve tourist experience and value for money;
5.1.7
Improve research and knowledge management;
5.1.8
Contribute to growth and development and expand the
tourism share of Gross Domestic Product;
5.1.9
Improve competitiveness and sustainability in the
tourism sector ; and
5.1.10
Strengthen collaboration with tourist organizations.
5.2
Performance
and Service Delivery information
The
Industrial Policy Action Plan 2(IPAP 2) identifies tourism as one of the
important drivers for job creation in line with the general understanding that
tourism has low barriers of entry for entrepreneurs. The Department has the
Expanded Public Works Programme (EPWP), which is aimed at addressing issues of
job creation as well as infrastructure development.
[1]
The
NDT managed to execute most of their programmes without major hindrances. The
administration programme met and surpassed some targets for example; workplace
skills plan, representation of designated groups, and efficient service
delivery. Furthermore, the Master System plan was reviewed and phase 1 of the
plan was implemented.
[2]
The NDT also reported positive results with regard to compliance with performance
and risk management prescripts; compliance relating to regulatory requirements
and the progress made in respect of scheduled international agreements. In
terms of procurement from Broad Based Black Economic Empowerment (BBBEE) and
Black Economic Empowerment (BEE) enterprises, the NDT achieved the target that
was set at 59 per cent. The system of monitoring Compliance with BEE rating was
piloted and this will assist in ensuring transformation and compliance of the
industry with
tourism BBBEE Charter.
The
communication strategy of the NDT needs to boost its performance where the
implementation plan is concerned because for a number of projects depends
effective communication. The target set for this indicator was 100 per cent and
only 92 per cent of the target (the challenges in this regard were lack of capacity
and logistically-related), were achieved. However, it must also be noted that
the NDT was doing well in terms of high level media interventions that led to
media coverage, as the Department was able to obtain 13 interventions, more
than the target of 8 that was set.
[3]
T
he
SCM audit raised concerns with the R6 million irregular expenditure which was
in contravention of the SCM legislation.
[4]
This
audit finding was incurred d
espite the Departments efforts in
conducting nationwide workshops for Supply Chain
Management (SCM) officials, as well as public and private sector tourism
associations on the implementation and alignment of BBBEE and Preferential
Procurement Framework Act to advance transformation in the sector.
The
NDT managed to perform a lot better in the Expanded Public Works Programme
(EPWP) for the 2011/12 financial year as compared to its performance in the
2010/11 financial year. However, it remains important that more focus be
invested in these projects to bear the desired results and deal with issues of
corruption. This will further improve the Departments contribution towards
decent work through sustainable projects.
[5]
The NDT fell short of its target of full time equivalent jobs; however it
surpassed the target for the number of projects funded by the EPWP.
[6]
The
intake for young chefs for the 2011/12 financial year was reported to be 767
with 531 graduates during the biannual report to the committee; however, the
intake in the annual report rose to 818 increasing the number of graduates to
536 surpassing the set target of 800.
[7]
The Department has also met its target with regards to the rural products
supported, getting two out of two.
[8]
The NDT has over the years done work on niche product development and this year
it has developed a strategy for avitourism, however it is also important for
the NDT to do an evaluation of how these strategies have paid off. For example,
the recent report on cruise tourism has existed for a while yet nothing has
paid off from this exercise.
[9]
The
NDT supported a significant 981 rural enterprises out of the targeted 530 -
this achievement places the NDT ahead of its target by almost 45 per cent. The NDT
however, failed to meet the target set at 3 351 for support of Historically
Disadvantaged enterprises having only supported 2 253 enterprises. The
Department had set a target of 20 black SMMEs to be supported on a mentorship
programme, and exceeded this target by taking 22 SMMEs
through the Mentorship Programme.
[10]
The programmes for youth development are all on track as some of the targets
have been met and finally the target set for the roll out of the National
Tourism Sector Strategy (NTSS) was set at 15, whereas 19 district
municipalities were work-shopped.
The
most worrying factor is that the Departments Strategic Plan in some instances
is characterised by Key Performance Indicators (KPIs) which are not necessarily
within the Departments mandate and power to deliver but are dependent on a
third party. The NDT needs to work hard at creating platforms that allow these
issues to be discussed and further develop ways of addressing overlapping
issues.
On South African Tourism (SAT), 55% of reported targets had not been achieved.
This was mainly because indicators and targets were based on a stable baseline,
while external factors like the global economic slowdown and bad media
reporting on national safety and security had influenced the actual results
negatively. Management needed to review their indicators and targets to
consider external factors.
[11]
5.3
Budget
analysis
The
Department carries out its mandate through four programmes (Table 35.1). The
budget is expected to grow at a moderate rate reaching R1.9 billion in the
Medium Term Expenditure Framework (MTEF) due to the shift in focus and the more
emphasis on Policy and Knowledge services and Domestic Tourism in order to
allow the Department to market
Table
35.1
Programme
|
Budget
|
Nominal
|
Real
|
Nominal % change
|
Real % change
|
||||
R million
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
2012/13-2013/14
|
2012/13-2013/14
|
|||
Administration
|
191.9
|
205.7
|
221.4
|
226.6
|
13.8
|
2.9
|
7.19 per cent
|
1.51 per cent
|
|
Policy and knowledge
Services
|
793.4
|
875.5
|
924.4
|
930.6
|
82.1
|
35.7
|
10.35 per cent
|
4.50 per cent
|
|
International Tourism
|
41.8
|
49.6
|
52.3
|
53.5
|
7.8
|
5.2
|
18.66 per cent
|
12.37 per cent
|
|
Domestic Tourism
|
347.0
|
369.8
|
496.0
|
700.5
|
22.8
|
3.2
|
6.57 per cent
|
0.92 per cent
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
1 374.1
|
1 500.6
|
1 694.1
|
1 911.2
|
126.5
|
46.9
|
9.21 per cent
|
3.41 per cent
|
|
National
Treasury (2013) Vote 35 Tourism
The
budget makes mention of the Cabinet-approved reductions in the MTEF of R12.5
million in 2013/14, R9.6 million in 2014/15 and R59.6 million in 2015/16 and
expresses that the Departmental Targets have been reduced accordingly. An
increase of 9.21 per cent in the Departments allocation has been observed for
the budget year 2013/14 in nominal terms although in real terms that translates
to a mere 3.41 per cent (Table 1). This is due to an increase in three of the
programme budgets.
5.4
Programmes
Programme 1: Administration
Table
35.2
Programme
|
Budget
|
Nominal Increase / Decrease in 2013/14
|
Real Increase / Decrease in 2013/14
|
Nominal Percent change in 2013/14
|
Real Percent change in 2013/14
|
|
R million
|
2012/13
|
2013/14
|
||||
|
|
|
|
|
|
|
MINISTRY
|
33.1
|
37.5
|
4.4
|
2.4
|
13.29 per cent
|
7.29 per cent
|
MANAGEMENT
|
16.7
|
17.4
|
0.7
|
-
0.2
|
4.19 per cent
|
-1.33 per cent
|
COOPERATE AFFAIRS
|
118.2
|
125.8
|
7.6
|
0.9
|
6.43 per cent
|
0.79 per cent
|
OFFICE ACCOMODATION
|
24.0
|
25.0
|
1.0
|
-
0.3
|
4.17 per cent
|
-1.36 per cent
|
|
|
|
|
|
|
|
TOTAL
|
192.0
|
205.7
|
13.7
|
2.8
|
7.1 per cent
|
1.45 per cent
|
National
Treasury (2013) Vote 35 Tourism
The
budget allocation to the Administration Programme is for strategic governance
and risk management; legal, corporate affairs, information technology, and
strategic communications support services to the NDT, and has increased from
R192 million in 2012/13 to R205.7 million in 2013/14. This represents a nominal
increase of 7.1 per cent; a decrease of 1.45 per cent in real terms. This
programme constitutes 13.97 per cent of the Departments total budget, most of
which will be spent through the Corporate Affairs sub-programme to create an
enabling policy environment for the growth and development of tourism. The bulk
of the budget will be utilised to cover funding to improved conditions of
service; IT services, increased travel demand for national and international
trips and the procurement of furniture.
[14]
.
A cost reduction of R2.3 million will be effected in the 2015/16 financial
cycle this reduction will result in less spending on external audit costs, this
costs fall under goods and services.
[15]
Programme 2: Policy and knowledge
services
Table
35.3
Programme
|
Budget
|
Nominal Increase / Decrease in 2013/14
|
Real Increase / Decrease in 2013/14
|
Nominal Percent change in 2013/14
|
Real Percent change in 2013/14
|
|
R million
|
2012/13
|
2013/14
|
||||
|
|
|
|
|
|
|
POLICY AND KNOWLEDGE
SERVICES
|
3.4
|
3.6
|
0.2
|
0.0
|
5.88 per cent
|
0.27 per cent
|
POLICY DEVELOPMENT AND
EVALUATION
|
17.2
|
20.2
|
3.0
|
1.9
|
17.44 per cent
|
11.21 per cent
|
RESEARCH AND KNOWLEDGE
MANAGEMENT
|
17.8
|
21.7
|
3.9
|
2.7
|
21.91 per cent
|
15.45 per cent
|
SOUTH AFRICAN TOURISM
|
754.9
|
830.0
|
75.1
|
31.1
|
9.95 per cent
|
4.12 per cent
|
|
|
|
|
|
|
|
TOTAL
|
793.3
|
875.5
|
82.2
|
35.8
|
10.4 per cent
|
4.51 per cent
|
National
Treasury (2013) Vote 35 Tourism
The budget
allocation for the Policy and Knowledge Services Programme, which has received
the largest allocation in the budget increased by 4.51 per cent in real terms
from 2012/13 financial year. This programme is entrusted with
ensuring strategic tourism sector policy
development, monitoring and evaluation, and research and knowledge management
services.
The South African Tourism sub-programme, which is
tasked with the marketing of
Programme 3: International Tourism
Table
35.4
Programme
|
Budget
|
Nominal Increase / Decrease in 2013/14
|
Real Increase / Decrease in 2013/14
|
Nominal Percent change in 2013/14
|
Real Percent change in 2013/14
|
|
R million
|
2012/13
|
2013/14
|
||||
|
|
|
|
|
|
|
INTERNATIONAL TOURISM
MANAGEMENT
|
4.6
|
3.7
|
-
0.9
|
-
1.1
|
-19.57 per cent
|
-23.83 per cent
|
|
8.9
|
12.8
|
3.9
|
3.2
|
43.82 per cent
|
36.19 per cent
|
|
9.1
|
9.6
|
0.5
|
0.0
|
5.49 per cent
|
-0.10 per cent
|
|
11.8
|
13.8
|
2.0
|
1.3
|
16.95 per cent
|
10.75 per cent
|
ASIA AND
|
7.4
|
10.3
|
2.9
|
2.4
|
39.19 per cent
|
31.81 per cent
|
|
|
|
|
|
|
|
TOTAL
|
41.8
|
50.2
|
8.4
|
5.7
|
20.1 per cent
|
13.73 per cent
|
National
Treasury (2012) Vote 35 Tourism
The
International Tourism Management Programme is responsible for the development
and support of
This significant change is attributed to the
relocation of the international relations Chief Directorate from the
Administration Programme to this programme. There is an expected increase of
the subsistence and travelling budget in the MTEF from R2.2 million in 2011/12
to R9.3 million in 2014/15, this increase will allow for staff to travel
locally and abroad for marketing purposes.
[19]
The high allocation in the
Programme 4: Domestic Tourism
The
Departments budget allocation for the Domestic Tourism Programme has increased
by 6.5 per cent in nominal terms from R347 million in 2012/13 to R369.7 million
in 2013/14. This programme is responsible for the promotion, development, and
growth of sustainable domestic tourism throughout
The
spending focus will mostly be on the
Social
Responsibility Implementation
sub-programme, which focuses on
infrastructure projects under the EPWP programme targeting the youth, disabled,
woman, and SMMEs.
[20]
In past financial years, this programme phase struggled due to corrupt
tendencies in the roll out stages and the Department has actively looked into
these allegations.
[21]
An amount of R3.9 million will also be set aside for consultants who will be
providing business support and advisory services.
Table 35.5 below shows budget allocation for
the Domestic Tourism Programme.
Table
35.5
Programme
|
Budget
|
Nominal Increase / Decrease in 2013/14
|
Real Increase / Decrease in 2013/14
|
Nominal Percent change in 2013/14
|
Real Percent change in 2013/14
|
|
R million
|
2012/13
|
2013/14
|
||||
|
|
|
|
|
|
|
DOMESTIC TOURISM
MANAGEMENT
|
15.3
|
9.7
|
-
5.6
|
-
6.1
|
-36.60 per cent
|
-39.96 per cent
|
SOUTHERN REGION
|
14.5
|
12.4
|
-
2.1
|
-
2.8
|
-14.48 per cent
|
-19.02 per cent
|
NORTHERN REGION
|
13.0
|
17.0
|
4.0
|
3.1
|
30.77 per cent
|
23.83 per cent
|
SOCIAL RESPONSIBILITY
IMPLEMENTATION
|
279.2
|
305.6
|
26.4
|
10.2
|
9.46 per cent
|
3.65 per cent
|
STRATEGIC PARTNERS IN
TOURISM
|
25.0
|
25.0
|
0.0
|
-
1.3
|
0.00 per cent
|
-5.30 per cent
|
|
|
|
|
|
|
|
TOTAL
|
347.0
|
369.7
|
22.7
|
3.1
|
6.5 per cent
|
0.89 per cent
|
National
Treasury (2012) Vote 35 Tourism
6.
Key
issues for the Committee
The
Committee welcomed the proposed budget allocations and medium term strategic
framework as presented. The Committee will closely monitor the following:
-
Progress
on the Extended Public Works Projects investigations.
-
Extended
Public Works Programme projects must in future be project led and managed.
-
Policies
and procedures on pre-determined objectives (PDOs) process at both the Department
and South African Tourism to ensure that objectives set meet the SMART principle
and there are no adjustments made on the reporting.
·
Monitoring mechanism to arrest
potential risks associated with non-
compliance with Supply Chain Management prescripts and
procure through deviations that do not meet the requirements of Public Finance
Management Act.
-
The
process on how South African Tourism strives to address the weaknesses of
the general control environment affecting IT and capacitating of the SAT
with the right IT skills; and
-
Follow
up on how SAT resolves the review process of Annual Financial Statement to
avoid material misstaments and the deficit position of SAT.
-
Given
the role the Department needs to play in contributing to job creation and
meeting the 2020 targets as propounded in the National Development Plan,
the baseline budget for the Department needs to be reviewed for the
subsequent financial years in the MTEF to allow the Department to carry
its mandate effectively.
7.
Conclusion
·
The reviews have presented a picture
that in the quest to deliver excellent service to tourist, the role of Local
Government in delivery of excellent service to tourists cannot be
underestimated.
-
Local
Government provides a critical link in the delivery chain for growth and
development of tourism.
-
The NDT
must intensify to all municipalities its Local Government Tourism
Capacitation Programme, which aims to transfer the necessary skills to
effectively support tourism planning and management across municipalities.
-
The
Department should re-direct spending towards activities that directly or
indirectly create jobs through enhancing productivity performance.
-
In
accordance with prescripts of the Expanded Public Works Programme,
job-creation target groups such as women, youth and people with
disabilities should be included in the reporting of the outcomes measures;
-
There
needs to be close monitoring of reporting against the pre-determined
objectives; and
-
The
Committee resolved to strengthen its oversight role in accordance with the
Constitutional provisions.
8.
Recommendation
The Committee having considered its report on Budget
Vote 35 recommends that the House adopts the report.
Report to be considered.
[1] National Department of Tourism (2012a).
[2]
Parliament of
[3] NDT (2012b).
[4] PMG (2012b)
[5] NDT (2011).
[6] Ibid.
[7] NDT (2012) annual report.
[8] Ibid.
[9] NDT (2010).
[10] NDT (2012) annual report.
[11]
PMG
(2012a).
[12] National Treasury (2013).
[13] I bid.
[14] ibid.
[15] ibid.
[16] Ibid.
[17] Ibid.
[18] I bid
[19] I bid.
[21] PMG (2012b).
Documents
No related documents