Department of Environmental Affairs briefing on Strategic Plan and budget; Review of Expenditure Trends & MTEF allocations 2009-2012

Meeting report

Election of Acting Chairperson
The Chairperson was absent from the meeting due to an illness and the committee thus elected Ms B Mabe (ANC; Gauteng) to act as Chairperson in her absence. The Department of Water Affairs issued an apology for its unavailability due to commitments in the United States. The committee did not have quorum to consider or adopt committee minutes.

Briefing by the Department of Environmental Affairs

Ms Nosipho Ncgaba, Director-General: Department of Environmental Affairs outlined the Strategic Plan tabled the previous week. She noted that according to Section 24(b) of the Constitution, all South Africans had a right to an environment that was not harmful to their health and to have the environment protected for the benefit of present and future generations.

The condition of South Africa’s environment was deteriorating and South Africa ranked among the world’s 20 biggest greenhouse gas emitters. Areas of concern included water and air pollution, waste management and services, exploited natural resources, water quality and health of aquatic ecosystems, destruction of wetlands, water availability to sustain the natural environment and provision of services such as water purification and carbon sinks, and alien invasive species and reliance on fossil fuels. Coastal development and over-exploitation of natural resources from the ocean and coastal zone threatened the environment, as did ozone depletion and mining activities. Joint Committee meetings, particularly with the DMR, would address the challenge of mining development and long term effects of mining both on the environment and on human health.

Land degradation and soil erosion remained a serious challenge and undermined the productive potential of the land.

Environmental applied research capacity had stagnated over the last 10 years owing to insufficient capacity to innovate and implement cleaner solutions and technologies.

The DEA was guided by the need for sustainable conservation and management of the environment for enjoyment by future generations, as well as land and coastal economic activities.

Ms Ncgaba indicated programmes that supported the execution of the Strategy Plan were those of Administration and Support, Environmental Quality and Protection, Oceans and Coastal Management, Climate Change, Biodiversity and Conservation, Sector Services, Environmental Awareness and International Relations.

The DEA’s role in linking medium term strategic framework priorities was to facilitate a Green Economy strategy and create jobs; improve Environmental Impact Assessment (EIA) processes; to work closely with the Department of Rural Development and Land Reform (DRDLR).  Further to respond to the sector demand for education and skills development by co-operating with the Department of Education, South Africa Qualifications Authority (SAQA) and Sector Education and Training Authorities (SETAs). With respect to health, investment in the environment would minimise the cost to public health, through effective management of air quality and waste.

DEA would also ensure compliance with environmental laws and co-operate with the Justice Cluster on environmental crimes to prevent poaching activities.

DEA intervention lent itself to labour intensive work and there was potential for contributing to job creation in Waste and Coastal Management, as well as Open Space Management in municipal areas. Local government functions would be supported to a point where they were themselves able to plan properly for environment and open space management in general.

DEA continued to lead and support the negotiation process to achieve a global environmental regime for climate change and continued to reinforce the Trans-frontier Conservation areas, a Southern African Development Community (SADC) initiative, to improve infrastructure.

The Monitoring and Evaluation Outcome 10 of the Presidency, which was to protect and enhance the environmental assets and natural resources, was a priority of the DEA. Co-ordination of the National Departments, Provinces and Municipalities which had bearing on this Outcome would be led by the DEA.

Ms Ncgaba set out the strategic objectives of the DEA.

Strategic Objective 1, related to protecting, conserving and enhancing environmental, natural and heritage assets and resources. This would be done by implementing the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and Threatened or Protected Species (TOPS) Regulations and Bio-prospecting.  Access and benefit sharing of the National Ocean strategy.  Conserving and mitigating threats to biodiversity (through a regulatory framework; rehabilitation of land and wetlands; expansion of land under conservation; declaration and management of world heritage sites.  Building of a sound scientific base for effective management of natural resources (research programmes).

Strategic Objective 2 was the proactive planning, management and prevention of pollution and environmental degradation. This was done through Environmental Impact Management and Assessments, Environmental Quality Protection legislation.  Conducting enforcement action; capacity building and legal and information management support services to the Inspectorate.  An improved waste management system, and ensuring air and atmospheric quality.

Strategic Objective 3 required the DEA to contribute to sustainable development, livelihoods, Green and inclusive economic growth through facilitation skills development and employment creation. There would be poverty alleviation and job creation programmes of infrastructure projects, environmental education and awareness.  Feasibility of a new non-consumptive marine sector.

Strategic Objective 4 was that the DEA should respond and adapt to climate change impacts through the National Climate Change Response Policy and Biodiversity Climate Change Strategy, and mitigate greenhouse gas emissions.

Strategic Objective 5 was to contribute to a better Africa and a better world through a global sustainable development agenda. This included preparation for the hosting of the United Nations Framework Convention on Climate Change (UNFCCC), Congress of the Parties (COP) 17 and Kyoto Protocol Conference of the Members of Protocol (CMP) 7, as well as South Africa strategic research presence in Antarctica and the Islands.

Strategic Objectives 6 to 9 were corporate related and required the Department to ensure adequate human capital and good working conditions, enhance efficient service delivery.  Practice equitable and sound corporate and co-operative governance, and enhance the DEA’s reputation through intergovernmental cooperation and coordination.

The objectives set out in the Strategy Plan were in line with what had been funded by the National Treasury (NT) under the National expenditure allocation.

The DEA’s MTEF baseline increased by only 0.0004% therefore did not have the capacity for implementation of legislation processed through Parliament. DEA had received additional funds for the Expanded Public Works Programme (EPWP) Incentive Scheme (R65 million), Climate Change Conference preparation for 2011 (R4 million), and Compensation of Employees adjustments (R19 million). Baseline allocations to fund the increased DEA mandate operations and its public entities in the last years had been insufficient. Furthermore, personnel baseline funds were now shared with the Department of Tourism, and with the Department of Agriculture in respect of Fisheries staff. The DEA had a serious challenge in regard to funding. It had submitted requests to NT for funding. It was experiencing a shortfall of 15-20% which meant that posts would not be filled for some time.

DEA Budget 2010/11 to 2012/13
Ms Esther Makau, Chief Financial Officer, DEA, presented on the previous trends of expenditure and the challenges faced by the DEA. Over the past three to four years, DEA had spent 99.9% of the budget and had been forced to limit expenditure. Because of co-implementation of the environmental mandate, the DEA had to identify only the top strategic risks. Furthermore, the shrinking budget and insufficient allocation of the baseline caused an inability of DEA to deliver and implement systems which would integrate, co-ordinate and increase the knowledge base of the DEA.

DEA took in consideration that inflation had affected occupancy and buildings and rentals had grown faster than the Medium Term Expenditure Framework (MTEF) allocation. Donor funds were decreasing, which required a major increase in MTEF allocations for programmes whose lifespan had extended beyond the availability of the donor funding. Co-funding with the programmes with Agriculture or Tourism would also cause inflexible movement of funds.

The Auditor-General (AG) had emphasised performance audits as a priority. When reviewed, DEA could not afford to have a lower MTEF allocation. Requests to NT for DEA mandates included a baseline of R3.4 billion. Adjustment estimates to fund the environmental mandates were R450 million. The actual allocation to the baseline for 2009/10 was R68 million. R34 million was cut, rendering the percentage increase to baseline at below 1%. Where there was an increase in the outer years, it was due to specific projects such as the replacement of the SA Agulhas. EPWP incentives and compensation of employees earmarked for increases. NT had, across the MTEF, cut funding of the public entities SA National Parks (SANPARKS), South African National Biodiversity Institute (SANBI) and MCM due to the surplus of retained incomes. The impact of the decrease in grants which would slow infrastructure development was compounded by the transfer of funds to Tourism, Fisheries (including Agriculture) as well as employee compensation to Fisheries.

DEA had to prioritize R64 million year-on-year to operate vessels for Marine Coastal Management. Most transfers went to public entities. For every R3 billion received by DEA, around R1.5 billion went to public entities, R600 million went to EPWP and DEA’s R700 million was split between user goods and service. This ratio was used to describe funding of infrastructure to the public entities, namely Isimangolisa, SANParks, SANBI and South African Weather Services (SAWS). It excluded MCM.

NT was interested in the ability of a public entity to fund itself fully. However, with the shrinking budget and global recession, the public entities had begun to declare deficits to NT. The DEA was unsure what policy NT would use to assist public entities that showed deficits. The problem of deficits was expected to continue for a long time as they operated on an accrual, not a cash basis.

The DEA would present to the NT on the strategic plan, quarterly reports, attempts to reduce deficits and efficiency savings of the public entities.  And ask for an explanation on the surplus retained by NT and what could be done to assist these entities.

Despite reduction of non-priority programmes and implementation of fixed budget and monetary control, the co-funding, the PPPs, and the increase in all occupancy costs increased exponentially when compared to the MTEF allocations. Although DEA had a trend of unqualified audits in the past years, it expected, in light of its present budget, to encounter problems in performance.

DEA consistently linked performance to strategy plans, the MTEF, operational plans and individual performance plans. Quarterly and annual reports highlighted the challenges and successes of DEA and each year, DEA scrutinised what could be accommodated by the budget.

Discussion
The Chairperson asked how the department would seek to reach out to ordinary people as per one of the stated goals in the strategic plan. She asked what the auditor general had said about the department’s recent budgets and expenditure. She sought clarity on the decent jobs provision statement in the strategic plan. She asked whether the department had audited land already under conservation as noted in its stated goal of achieving 7% land conservation. She asked about where Environmental Impact Assessment reports were sent to and how effective they were dealt with.

Ms Ncgaba said the department strove to be a people centered organisation making outreach one its main goals with high priority, this would be done through environmental awareness programs which would conscientise people about the department and its work. A call centre was also setup to deal with people and their everyday concerns on environmental issues. She said that the idea of providing decent jobs was addressed by the President of the Republic in his State of the Nation address and the department was obligated to provide employment that not only provided decent living wages but provided a training framework to improve workers skills in different areas.

She said that the department consistently received unqualified audit reports and managed its money well although the provisions were insufficient. The department had indeed conducted a land audit to ascertain the percent under conservation protection (6.1%) and had then set a target of 7% from that. The EIA reports were sent to provincial department offices and dealt with at provincial level, where there were shortfalls in achieving targets, consultants from the national department were sent to assist.

Ms N Magadla (ANC, KZN) asked the department about its main areas of concern and whether the department felt the pace of delivery was sufficient and acceptable.

The department was concerned with bad land management in the country, illegal use of water through the construction of canals to divert river water causing erosion and flooding and the introduction of alien plants to local land with adverse implications for local plants. The department was working extensively to rectify and prevent these issues form arising in the future.

Mr G Mokgorro (ANC, Northern Cape) sought clarity on whether the loan given to South Africa to build a coal station contradicted the ideal of seeking to build a South Africa that was free of emitting greenhouse gasses and endangering the ozone.

Ms Ncgaba said that the department took into consideration the short term issues affecting energy delivery in the country and resolved to take a long term view of changing the manner in which energy was procured and rendered. The department thus stood behind the Eskom World Bank loan, the department noted that a switch from coal to other cleaner forms of energy would happen eventually.

Ms Magadla asked about the frequency of once off payments in the budget presentation and why the department had only budgeted for the medium term.

The department said that once off payments were not repeated on an annual basis and were provided according to need and justification by a section of the department. The department said that spending could only be allocated in the medium term because that was when the NT provided the funds prior to the start of a new fiscal cycle.

Mr D Worth (DA, Free State) asked which department was in charge of funding vessels to Cape Agulhas.

Ms Ncgaba said that the DEA was responsible for that funding after logistics and outstanding issues were dealt with.

The Chairperson said that she was impressed by the departments 97% expenditure of budget rate with unqualified audit reports; she said that this showed the department was effective. She asked whether the department was moving to a new building and whether it had been approved by the department of Public Works and Administration. She asked why the environmental expenditure increase was so low.

Ms Ncgaba said that the department was in the process of building a new building to house some of its officials and they had gotten the department of Public Works and Administration’s approval. She said that the low increase was due to funds being allocated by NT and limitations on surplus spending.

The meeting was adjourned.