The Department of Water and Environmental Affairs briefed the Committee on its Strategic Plan for 2009-2014. Its first presentation on financial objectives dealt with budgeting allocation in the Department and in the Water Trading Entities. It addressed issues of capacity and the reasons for the under expenditure, most of which had occurred in connection with the De Hoop Dam, along with challenges that the Department had faced.
The second presentation dealt with a new Monitoring and Evaluation system that the department planned to set up by 2011, with a focus on the benefits that this would have. The current systems for monitoring included manual systems, in-year monitoring reports, reports received from sector partners, and quarterly financial and non-financial reports, among other mechanisms. The reason for changing this system included the need for a fully-automated system where real-time information could be gained instantly. This would be linked to a balanced score card, aligning activities and objectives.
The third presentation dealt with the objectives of Corporate Services. It set out the challenges that the Department faced, particularly around lack of capacity, and the steps taken to address these challenges, along with the financial implications. The main areas included the development of a skills base, the contribution towards the goals outlined in the National Policy on Gender Equality, and the need to increase knowledge of water and improve public involvement.
The Committee asked questions about the difficulties that arose by reason of the fact that the Department was both the regulator and planner on infrastructure and water pricing, whether there was vetting of service providers, how often the asset register was updated and valued, and whether there had been decentralisation of financial functions to the regions. A Member expressed his concern that lack of capacity was toted by many departments as a convenient excuse for under performance, noted the importance of seeing tangible outcomes, and expressed his particular concern that the Department seemed to be under spending without any real cause to do so. The Department explained how the under spending occurred, and that it was based on the cash, rather than accrual, accounting systems. Several questions were directed to the problem that the Department had unskilled people, the lack of maintenance of infrastructure, and the importance of addressing these issues. Members asked for a Board presentation on the Komati Basin Water Authority. They commented that the subsidies effectively given to the agricultural sector and Catchment Management Agencies were unsustainable, and called for clarity on the allocations, asked what would happen to donor funding if sanitation services were moved, asked about the new Departmental structures and their timeframes, expressed concern that the future planning might neglect the existing structures, and noted the need for enhanced visibility, particularly public education on water issues. The Blue and Green Scorpion proposals were addressed, and it was noted that compliance and monitoring must improve. The Department was asked why it had not employed more persons with disabilities, and whether there was sufficient capacity in the Legal Services section.
Department of Water and Environmental Affairs (the Department or DWEA): Strategic Plan 2009-14: Presentation on Finance Strategic Objectives
Mr Onesmus Ayaya, Chief Financial Officer, Department of Water and Environmental Affairs, briefed the Committee on the key functional areas that the Department wished to focus on, the challenges surrounding these, and departmental expenditure trends.
Mr Ayaya noted that the key functional areas in the branches included supply chain and asset management, financial accounting and reporting, and budgeting and planning, and discussed them in fuller detail (see attached presentation). The achievements of the Department in the past were then discussed, with specific focus on the Water Trading Entity (WTE), the creation of an updated asset register, and the development of financial management processes and procedures.
Mr Ayaya then discussed the challenges that the Department had faced in the past, which had included a lack of capacity, specifically in the Eastern Cape, infrastructural challenges, the problematic configuration of the Department and the challenges faced in the WTE.
The key performance areas that the Department had identified were the improvement of financial management and the organisational growth and development of the Department. The reasons for arriving at these were discussed in full detail (see document attached).
Mr Ayaya addressed the manner in which the Department allocated funds. He noted that the largest amount fell under compensation of employees, and justified this as being necessary to ensure that full-time staff were employed, rather than there being an over-reliance on consultants. He also addressed how monitoring of the funds would occur.
Mr Ayaya noted the under expenditure of the Department in the past, and gave reasons for this. The main area of under expenditure was in regard to the failure of the De Hoop Dam project, where the Department’s request to National Treasury for a rollover of funds was not granted. Other aspects concerned the accumulation of unpaid invoices after the end of the financial year.
He then discussed the earmarking of funds, and of the allocation of funds for the current financial year, noting where these funds would be spent.
The structure of the Office of the Director General and Corporate Services was discussed, and an explanation of the directorate given, along with the funds allocated to each post.
Mr Ayaya, in discussing the appropriation of the National Water Resource Infrastructure Branch, drew the Committee’ attention to the Komati Basin Water Authority (KOBWA), as he felt this had been neglected in the past. The budgets of regional operators were also discussed in fuller detail.
The remainder of the presentation dealt with donor funding, Medium Term Expenditure Framework (MTEF) allocations, and a fuller explanation of the WTE’s expenditure and revenue.
Department’s Monitoring and Evaluation System
Mr M Thibela, Director of Corporate Planning, DWEA, briefed the Committee on the new Monitoring and Evaluation System that the Department was planning to put into place.
Mr Thibela gave a brief background to the development of the system, and the reasons for this in the context of the various policies and regulatory prescriptions with which it needed to align.
He then outlined how monitoring was occurring within the department, which involved manual systems, in-year monitoring reports, reports received from sector partners, and quarterly financial and non-financial reports, among other mechanisms.
The future initiative was then discussed, and the reasons behind it given. These included the Department’s need for a fully automated system where real-time information could be gained instantly. He said that this would improve performance and efficiency and would be linked to a balanced score card, which would align activities to the overall objectives of the Department.
The objectives of this system included the effective alignment of the Department’s strategic plans with government-wide programmes, efficient service delivery, effective evaluation on an individual and organisational level, and improved compliance with various statutory requirements. A fuller explanation of the balanced score card was given.
The date for the implementation of this was set as February 2011, but a phased-in approach would commence in the middle of the 2010/2011 financial year.
Presentation on Corporate Services and Strategic Outputs
Ms Nobubele Ngele, Acting Director General, DWEA, briefed the Committee on the planned Corporate Services Strategic Outputs, and the challenges faced within the Department.
She outlined the key functional areas which were to be addressed, as including Human Resources, Gender and Disability and Legal Services. She discussed the past achievements in these areas, which included the drafting of a Human Resource strategy, the launch of the Women’s Organisation, and the reduced vacancy rate.
Ms Ngele then discussed the challenges faced by the Department and set out what the Department had planned in response. The challenges included the attraction and retention of critical skills, the meeting of employment equity targets, the improvement of public knowledge around water affairs and organisational growth and development
The reasons for the selection of the key performance areas were discussed, which included the development of a skills base, the contribution towards the goals outlined in the National Policy on Gender Equality, and the need to increase knowledge of water and improve public involvement.
The costs of these proposed objectives were then discussed (see attached presentation).
Mr G Morgan (DA) noted that Division of Revenue Act (DORA) had addressed the problem of the Department being both regulator and planner. He asked if there was a forum in the Department that discussed this, how these functions would be split between entities, and whether this could be accomplished internally or through the amendment of legislation.
Mr Ayaya responded that it was a concern that since the Department owned the infrastructure and therefore set the prices, it should not be responsible for monitoring the enforcement, and concern that there should be a third party having oversight. This issue was being considered through an institutional re-alignment, which would lead in to consideration of the legislation relating to the issue.
Mr Z Luyenge (ANC) asked if there was any vetting done by the Department on service providers.
Mr Ayaya said that a costing had been attempted for the exercise of conducting a vetting, and this had amounted to a substantial sum. Because of this, a reorganisation within the Department needed to be done in order to have fuller information on tenders and the capacity to carry out the necessary background checks. At a pre-set time, an internal auditor would inspect suppliers, where necessary, but there was no formal vetting of suppliers being done
Mr Luyenge asked how often the updating and evaluation of the asset register happened. He asked if any financial functions had been decentralised to the regional departments in order to fast track service delivery.
Mr Ayaya said that in terms of the updating of the asset register, the accounting policy was complied with, and for the WTE the Department complied with the international financial reporting standards, which required interim testing at the end of every financial year. He said that this applied to the bulk infrastructure, which was fixed. He said that a team of Directors and Chief Directors had been employed in the last two years, and that one of these people looked solely at the accounting issues on assets, which involved ensuring that the asset register was updated before financial statements were prepared. He added that for the first time, interim financial statements had been prepared last year in September 2008, to give an indication of where the Department stood, and to ensure that the issues raised by auditors were addressed.
Mr Ayaya noted that a number of the Department’s functions were decentralised. At a regional level, procurement for anything amounting to under R1 million could be done, but anything exceeding this had to be adjudicated by the national Office. He said that once the budget had been allocated to regions, it was up to them as to how that budget was spent. However, there was oversight by the national Department, and if necessary, regions would have to account for their over expenditure.
Mr Luyenge was concerned that the issue of a lack of capacity was being used as a scapegoat for Departments to justify underperformance, and noted the importance of seeing tangible outcomes.
Mr Luyenge noted that the Appropriation Act governing financial expenditure in South Africa had resulted in certain changes to the systems, including to exchequer funding. The Department seemed to regard such funds as a saving element. He added that exchequer funds could not be earmarked for further developmental projects. He noted that there was a suspense account for “unused funds”, and was concerned that the Department seemed to see the amounts allocated as one of these accounts, although he noted that unused funds could properly occur if there was justification, such as the death of an employee or something similar. He was concerned that it appeared that the Department was deliberately under spending and that this was extremely worrying.
Ms H Ndude (COPE) commended the Department on the progress made on projects such as the asset register. She asked why employees who were obviously untrained and did not have sufficient skills were employed in the first place. She said that an investigation needed to be done to discover how this occurred and these people should be removed. The challenges around the escalating risk of service failure, and the increasing backlog, were worrying. She reminded the delegation that the lessons learned from Eskom must apply to all departments. Infrastructure could never be allowed to deteriorate because its replacement would be extremely expensive. She asked what planning had been done to ensure that maintenance of this infrastructure remained stable in the long term, as the loss of such infrastructure would be disastrous.
Mr Ayaya said that there were two approaches necessary when dealing with the backlog. The first entailed the National Treasury accepting that this Department effectively subsidised agriculture, and that would entail the Department receiving additional augmentation to maintain its existing infrastructure in a workable condition. He added that a thorough analysis and asset verification had been done, after which this was translated into revenue, and it was realised that there was no problem with the current pricing strategy. However, if the Department was not allocated the necessary funds to achieve its aims, then the alternative would be to change the pricing strategy, which would entail consultation with all the stakeholders involved before prices changed and any form of price capping was removed. He added that the review of the pricing strategy was under way, and that this was a necessary part of achieving the Department’s goals.
Ms Ndude thought it would be useful to have a presentation by the Board members of KOBWA. She noted that this was supposed to be a joint venture but much more had been put into the project from the Department’s side.
Mr Ayaya noted that KOBWA had not been raised in any previous meetings. He said that this was a key resource in water security, and felt that it was the prerogative of the Committee to address this issue, as the model of the project may need reviewing, to ensure it complied with its original objectives.
The Chairperson added that the regions should be invited to the presentation on KOBWA.
Ms A Lovemore (DA) was concerned that the subsidies given to the agricultural sector and the Catchment Management Agencies (CMA) were unsustainable, as more money was being spent supporting the infrastructure than was accrued through operations. She asked how this was to continue. She asked whether the CMA was valuable and what mechanisms for review of this were in place.
Mr Ayaya said that subsidies to agriculture were discussed under the issue of backlog.
Ms Lovemore noted that there was R25 million allocated in the budget for capacity development, which was a small amount when compared with the R107 million spent on supporting the CMA. She asked for further clarity on the issue.
Mr Ayaya said that the R25 million allocation was in place to show that something was being done to enhance capacity. He added that a funding proposal had been submitted to the National Treasury, to build capacity in the technical field. This funding was to be used for the Department’s internal Learning Academy, which trained 172 graduates. He said that this was included in the funds that the Department was earmarking. The Department believed that it could comfortably spend this amount, without having further rollovers. In terms of the capacity challenges, 27 interns were being trained, who were being paid R5 000 per month. They would later fulfil functions currently being outsourced to provisional service providers (PSP), who charged a great amount.
Ms Lovemore asked if the donor funding that the Department received was linked with water or with sanitation services, noting that sanitation services would be moving to the Department of Human Settlements. She asked if this funding would be lost, and how this would affect the Department’s financial planning.
Mr Ayaya said that the donor funding would have to follow the function to which it was assigned, and added that if the function remained with the Department, for example in the regulation of sanitation, then the funding would also remain with the Department. He said that this was an agreement with the European Union (EU), and unless this changed the Department would still execute its mandate in this regard.
The Chairperson asked how long Mr Ayaya had been with the Department.
Mr Ayaya said that he had assumed duty on 2 July 2007.
The Chairperson asked if the structure within the Director General’s office was new.
Mr Ayaya said that the Office of the DG, the Chief Operating Officer, the Director of Corporate Planning, and the Director of Transformation were existing structures. The rest of the posts were proposed new positions, and so additional funds needed to be allocated to these. Once the Minister of Public Services approved these positions, the Department would be able to move, but he cautioned that it seemed that this budget might need to be re-allocated, as even if the positions were filled immediately, the budget would not be spent within the next six months. He noted that this structure was not finalised.
The Chairperson asked for clarity on the under spending, and asked why this was identified as a challenge. She asked why the National Treasury (NT) had not approved the R200 million which the Department had requested, and added that it seemed that the projects were not budgeted for by the Department.
The Chairperson felt that many of the problems of capacity had to do with misplacement of skills, as for instance a social worker might be employed to fill the position of a Chief Financial Officer. She was concerned that the Department intended to increase the number of agencies in the CMA, as there was already difficulty managing those that existed at present. She asked what the Auditor-General had commented in respect of the under spending.
Mr Ayaya explained that the underperformance of about 12 or 13 particular employees arose because those people were originally brought in to the Department to perform certain functions, but that the Director General was considering how to remove them from the system. He would prefer that more funding was allocated to training existing employees rather than hiring new staff who would not be able to perform properly until some time had passed.
In respect of the under expenditure, Mr Ayaya admitted that this was not an ideal situation. The Auditor-General would conduct a compliance audit, and would highlight any unauthorised expenditure where the budget vote was exceeded. Under expenditure would be viewed in the context of how much the Department had achieved. The Department used a cash basis of accounting, so that what was recorded in the appropriation statement in the Annual Report was what had been paid out. The outstanding invoices of suppliers, which had accrued but not been paid, would not be reflected in the system. This accounted for the large under expenditure reflected in the Audit Report. National Treasury had been asked to permit the “theoretical” under expenditure to be carried through to the following year. In cases where under expenditure was foreseeable, Parliament and National Treasury would be requested to allow adjustments to be made to the budget, and ensure that the money was well spent elsewhere.
Mr Ayaya said that previously there had been no financial structure in the regions, where the Head of Corporate Services had also been responsible for finances. These functions were separated in June 2008, and a structure was put in place to ensure that people with a financial background handled this area. He added that there were some areas where the post had not yet been filled, but that the process of filling these posts was under way.
Mr J Skosana (ANC) was concerned that the Department's future planning would lead to a neglect of the existing structures. He noted that there little visibility at both a regional and municipal level, and this issue needed to be addressed as a priority. Overall, however, he commended the plans.
Ms Ngele agreed that the regions were the implementing arm of the Department, and said that on the previous day the Executive Committee had met to discuss the problems that they faced. On Friday 21 August the Department would meet to discuss the re-allocation of funds to address these problems at regional and municipal levels.
Ms Ndude noted that timeframes should be set up in order to address the issue of organisational alignment within the Department, ensuring that it had sufficient capacity, because she was concerned that if this did not happen, the issue would be unnecessarily prolonged.
Ms Ngele agreed that timeframes needed to be set up so that the Committee could monitor the progress made by the Department. She assured the Committee that future presentations would take this into account.
Mr Morgan asked if closer links could be created between the Blue and Green Scorpions (monitoring water and environmental issues). He said that he was aware that one of the draft clauses in the Environmental Laws Amendment Bill, although not finally adopted in the Act, recommended the accreditation of the Blue Scorpions. He asked how many Blue Scorpions the Department had, and what training they were given. He noted that there were approximately 1 000 Environmental Management Inspectors (EMIs), and that they were accredited to various institutions, and asked if the training and placement of these was similar to that of the Blue Scorpions. He added that if this was not the case, then it should be considered, as he felt that the Blue Scorpions could work well at a municipal or institutional level.
Ms Ngele said that there had been meetings with the Minister about how to create links between water and environmental matters. She said that she had presented two models; one being a set services model, and the other a centre of expertise model. In the latter model, she said that compliance and monitoring could be better addressed. She added that the Minister thought it unnecessary to have both Blue and Green scorpions, and aimed to create synergy wherever possible. Ms Ngele added that the messages needed to be packaged for the same audience in the context of water and environmental affairs, as it was now the case that the Minister represented both areas. If there was any litigation, it would not be something limited to this Department alone, and so a common platform to share the expertise must be created. The Minister had to approve the model in respect of the Blue Scorpions.
She admitted that in terms of compliance and monitoring, environmental affairs was far ahead, and much needed to be learned from them. She said that although the Blue Scorpions existed, they did not have any formal training or accreditation, and said that they were given the title because the Department wanted to instil within them a sense of passion for their work. She added that the Department wanted to change this situation, and wanted them to be properly trained. She expressed hope that experience could be shared with environmental affairs in this endeavour.
Ms Lovemore noted that more than R8 million was allocated in the Directorate for Gender and Disability. She said that this Department seemed to be on track in regard to gender employment issues, but had been unsuccessful in employing those with disabilities. She asked why, in light of this funding, only 1% of those employed were persons with disabilities.
Ms Ngele said that there was a general belief amongst managers that persons with disabilities would not perform, and so it was necessary to educate managers out of these views. In the current year, the managers’ performance agreements had stipulated that they reach the 2% mark for employing persons with disabilities. The majority of the funding was used for gender issues, and she admitted that the disability employment issue needed serious improvement.
Mr Luyenge noted that the need for a monitoring and evaluation (M&E) system had been discussed for a long time, and it was good to see this finally happening, but thought that it could be implemented sooner than anticipated, even without a fully developed structure. He asked if the legal section would be able to deal effectively with litigation if it arose, and to prevent it if possible.
Ms Ngele said that there was insufficient capacity in legal services at present. She said that on the following day interviews would be held to fill the position of Head of Legal Services, as a seasoned individual was needed to lead the team. She said that at present there were approximately 20 pending litigation matters, but noted that these take time, and that quarterly reports were submitted to the Minister on outstanding cases.
Mr Luyenge noted that at regional level there was a situation in the past where employees were effectively redundant, and asked if this situation still existed. He asked what exit strategies that would not lead to unemployment existed if it was discovered that an employee at a regional level was un-trainable.
Ms Ngele said that the issue of redundant staff was a continual struggle in government. She said that when the former Department of Water Affairs and Forestry was created, it had employed some people from the previous homeland states, without doing a proper skills audit, which meant that many people were improperly placed. The starting point, under the fair labour practices, would be to do a skills analysis and match individuals against job profiles. If a person was found unsuitable for a particular job, then the option of retraining that individual must be explored, or of moving the person to another position. A new severance package was introduced last year in an attempt to deal with this. It was difficult to apply to young employees, as they would effectively end up unemployed. Another issue was that many municipalities were unwilling to accept any transferred employees older than 55 years of age, which resulted in the municipalities rejecting 80 possible staff. There needed to be negotiation on this issue between the Department, the Water Boards and municipalities.
Mr Skosana thought that since co-operative governance existed, employees needed to be absorbed into other areas if they could not perform in their current positions.
The Chairperson asked what kind of media campaigns and community projects existed to improve public understanding of water related issues. There were such campaigns in regard to environmental, but not water matters.
Ms Ngele admitted that the campaigns were not very sophisticated and were primarily linked with national days, such as Water Week, but did not go much further. This was an area where other projects must be considered.
The meeting was adjourned.
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