Department of Tourism budget & Strategic Plan 2010-2013, Committee Report adoption

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Meeting Summary

The Department of Tourism briefed the Committee on its Strategic Plan and budget. The Department was tasked with research and had released two studies; one showing that there was sufficient accommodation to cater for visitors during the World Cup, and that much of the accommodation was approved by MATCH and  released, and the other relating to price increases, which showed that only Gauteng and North West had increased their prices but that these were still well affordable for foreign visitors. The Department noted that the Committee would be visiting Gauteng to study World Cup readiness and suggested that, in addition to officials from the Department accompanying the Committee, officials from the Local Organising Committee and Gauteng Tourism should also attend. 

The budget and allocations were then summarised. It was stressed that the Department of Tourism had recently been created from the former Department of Environmental Affairs and Tourism and that it had not received the full allocations that it had requested. This meant that some posts were not able to be filled. Some funds were granted for earmarked purposes or with specific conditions attached. The Department would continue to engage with National Treasury to increase the allocation. 

Members asked when the permanent appointments would be finalised, why the budget had decreased after the World Cup, and what was being done about the vacancies. Members asked about the distinction between public works programmes and the incentive for the Extended Public Works Programme, and the Business Trust Fund. Several questions were asked about SA Tourism, including its mandate, the oversight role that the Department played, how funds were divided, how the regional offices were served, the relationship with the embassies and trade missions, and whether there was not duplication of marketing. It was decided that SA Tourism should give a separate presentation to the Committee, although some further details were given at this meeting. Members also asked about the Lake Gariep project, donor funding, the Department’s participation in expos, and whether it produced publications in various languages. Members questioned the expected numbers of visitors for the World Cup and expressed their dismay that no confirmed numbers were available, with estimates differing between the Local Organising Committee and FIFA.

Members voted to support the adoption of the budget and strategic plans, and also adopted the Committee’s Report on the Strategic Plan and budget.


Meeting report

Chairperson’s opening remarks
The Chairperson asked the Department of Tourism (the Department) to note that the Committee would be visiting Gauteng shortly and would like to have someone from the Department to accompany them. The Committee would be examining World Cup readiness, in particular concentrating on accommodation and signage for tourists, and fan parks in Rustenburg; the Committee wanted to focus on this province because it was hosting 75% of the visitors. He also asked the Department to keep updating the Committee on the expected number of visitors attending the workshop.

Department of Tourism Strategic Plan and Budget 2010-2013
Mr Dirk Van Schalkwyk, Acting Director General, Department of Tourism, thanked the Chairperson for his opening remarks and suggested that the Committee also ask some officials from the 2010 Local Organising Committee and representatives from Gauteng Tourism to accompany the Committee, as most of the mandates mentioned by the Chairperson fell under their control. He noted that, for instance, signage, was the responsibility of the Local Organising Committee. The Department of Tourism had conducted research  and had released two studies. One, dealing with accommodation, proved that there were sufficient beds in South Africa, and that the FIFA component MATCH had released a lot of this accommodation. The other study was about price increases, which showed that only Gauteng and the North West Province had increased their prices, sometimes as high as 100%, but that even this was not out of reach for tourists coming from abroad.

Mr Ralph Ackerman, Chief Financial Officer, Department of Tourism, noted that the budget would show the three years spread of the allocated budget, and also what the shortfall was after the split of the former Department of Environmental Affairs and Tourism. He noted that the Department had started its budget discussions with National Treasury as early as July 2009. This submission to the National Treasury was made during the global recession so the Department’s requests were fairly modest. The National Treasury’s actual additional allocation was R47.73 million, broken down to cover increase in capacity (R10 million), compensation of employees (R2.49 million), compensation to SA Tourism employees (R3. 22 million) and the Expanded Public Works Programme incentive (R32.06 million).

The additional funding requested by the Department from the National Treasury was set out (see attached document for all figures). Amounts were also received from the former Department of Environmental Affairs and Tourism. There were also earmarked funds, with specific conditions. In addition, amounts for devolution of public works, Expanded Public Works Programme (EPWP) funding, and the social responsibility programmes also impacted upon the funding, and these were to be used only for specific purposes. The total baseline allocation was funds we can only use for their intended purpose. The Department had received less than requested, and would continue to engage with National Treasury to increase the allocation. 

Mr Ackerman added that the Department had not been able to fill about 100 posts, due to the lack of funding for compensation for employees, as the total amount received through the MTEF allocation for 2010/11 was R89.631 million, which, as at 1 April 2010, was sufficient only to pay 208 people. He stressed that the Department needed to fill about 100 more posts to allow the Department to function optimally and was advertising for staff.

Discussion:
Mr F Adams (Western Cape, ANC) wanted to know when the appointment of a permanent Director General would be finalised. He also wanted to know why there was no strategy in place to increase growth in the Tourism sector beyond the 2010 World Cup, noting in this regard that the budget showed that funding would actually be decreased in the two years after the World Cup. He wanted the Department also to explain what it was doing with regard to the vacancy rate .

Mr Van Schalkwyk said it was important to understand that there was a split in the former Department of Environmental Affairs and Tourism, which also resulted in a split in the finances. There were now three main branches to service, namely tourism growth, tourism and tourism evaluation. The three year process involved phasing in staff and finances to make it a more sustainable process. Mr Van Schalkwyk noted that funds were realigned to meet the core objectives.

Mr van Schalkwyk noted that an announcement on the permanent appointment of a Director General was imminent as Cabinet was deciding on this appointment on 21 April 2010.

Mr B Nguni (Free State, ANC) posed a question regarding the public works incentive fund and the business Trust Fund. He wanted the Department to give more clarity on what these funds are for.

Mr A Nyambi (Mpumalanga, ANC) wanted to know how the incentivised EPWP differed from the normal Public Works programme.

Mr Van Schalkwyk reiterated his earlier statement that funds were re-aligned to connect to the core issues. The main focus in the Department was on job creation, training, infrastructure management and Social Responsibility Programme (SRP). National Treasury had set aside funds to incentivise job creation. The money was initially split between Environmental Affairs and Tourism, with the main focus of these incentivised funds being on jobs, not infrastructure development. These funds came with strict conditions attached to them. The two programmes currently running were the Incentivised Public Works Programme and the Business Trust Programme and these funds were already committed for this financial year.

Mr R Lees (KwaZulu Natal, DA) enquired about the oversight role that the Department played over SA Tourism. He asked to see the latter’s  Annual Report.

Mr Van Schalkwyk noted that he sat on the board of SA Tourism and that SA Tourism had signed various governance agreements. The Department held bi-literal meetings with this body and the Minister, and it must submit quarterly reports that were signed by the Minister. The SA Tourism budget included allocations for the International Marketing Council and the Grading Council. Mr Van Schalkwyk noted that the setting up of international offices took up most of their money.

Mr B Mnguni (Free State, ANC) wanted some clarity on how funds were divided for the two programmes.

Mr Van Schalkwyk said the distribution of funds was decided by the Department of Public Works (DPW), based on performance. Each department had to motivate how it was going to spend the money. The Department of Tourism had decided to use the incentivised public works programme to train chefs in South Africa. This fells in line with the Sector Education and Training Authorities (SETAs) and skills development, and creating jobs and facilities improved access to rural areas.

Mr Ackerman noted that National Treasury allocated R250 million for the Expanded Public Works Programme, and the Department would be motivating for an increase to this amount. The Department of Tourism was one of the few departments that had received extra funds, in this time of fiscal austerity. Mr Ackerman noted that the Department of Environmental Affairs had a R100 million cut.

Ms E Van Lingen (Eastern Cape, DA) brought to the Committee’s attention an example from the Brazilian Parliament, where hotel students serviced its Parliament. She added this could be done in South Africa.

The Chairperson also wanted to know how the Department serviced the regional offices and what coordination was in place to ensure marketing was taking place from a central point.

Mr Van Schalkwyk told the Committee that the Department did not have regional offices. Provinces had constitutional obligations to take regional planning forward, meaning that there were nine marketing agencies. The Department did have a presence in all nine provinces with the Social Responsibility project, and shared offices with the Department of Environmental Affairs. 

Mr van Schalkwyk noted that the mandate of SA Tourism included marketing South Africa. There was a draft bill in process that emphasised this. The Department would be identifying the roles of national and provincial government, but he stressed that there must always be alignment and concurrency between the work of the two spheres of government. The Business Trust was established in 1994 to transform industries. In tourism, this had resulted in enterprise training. The Department also aimed to extend this type of funding over three years. The Business Trust has been given key performance to meet. Their mandate had also been altered to set up businesses, and not just strengthen existing business.

Ms S Chen (Gauteng, DA) reminded the Department that the learnerships it offered must be focused on tourism and skills.

Ms Van Lingen added that there should be a service project that brought tourism students to the service of smaller towns and municipalities to expand their services, and asked how best to assist local municipalities to make this happen

Ms Chen also stressed that there could be confusion with dual marketing, where provinces and municipalities marketed their own parts of South Africa. She noted that there was a need also to join forces with the embassies.

The Chairperson noted Ms Chen’s idea of increasing the capacities of municipalities to provide expanded services.

Mr van Schalkwyk noted that there were close relationships with the embassies, but this in itself had some problems because the embassies had diplomatic status and SA Tourism offices had trade status. It was the mandate of SA Tourism to market South Africa.

Mr Van Schalkwyk reminded Ms Chen that tourism was broad and there were compliance issues the Department always had to take into account.

Mr K Sinclair (Northern Cape, ANC) noted that there was an initiative to develop a lake in the Eastern Cape, and there was a large amount of money was invested but nothing had come of the project. He noted with distress that tensions between the provincial and national government could be the cause of failure.

Mr Van Schalkwyk commented that he was aware of the Lake Gariep Dam Project. He was currently unaware of the details of the project as it was not on the Tourism or Environmental books. However, he assumed that it was a Department of Water Affairs issue.

The Chairperson also added that it was not ideal to have many different agencies signing agreements with provinces and municipalities, without the knowledge of the Department of International Relations. He stressed that only the President should be signing agreements on behalf of South Africa.

Mr van Schalkwyk noted that the Tunako Fund was the only project that involved donor funding, which was paid directly to the province where the project was taking place. This was the normal process that donor agencies use. He noted that SA Tourism was accountable, through the Board that was appointed by the Minister in accordance with the Act. As was usual, a Board would normally consist of 8-10 members. Appointments to the Board would be advertised and after nominations were made, there would be a screening process.

Ms B Sete, Acting Deputy Director General: Tourism Growth, Department of Tourism, indicated that South Africa’s participation in the Shanghai Expo had been secured through SA Tourism, giving South Africa the opportunity to establish business links.

Mr van Schalkwyk added that one of the successful projects of the National Business Initiative was the Tourism Expo for Educators, Learners and Industries. This was managed by the National Business Initiative.

Many of the Committee Members were anxious to hear about the work done by South African Tourism.

Mr van Schalkwyk stated that the budget of SA Tourism was R631 million and its primary  mandate was to market South Africa.

Ms Parishka Gobrie, Compliance Manager, SA Tourism, noted that this organisation focused on international marketing by reviewing the various international portfolio markets. She said a detailed breakdown of monies spent in 2010/2011 in overseas markets was available. Core markets included Europe and America .The Grading Council had a budget of R15 million and its sole mandate was to grade tourism establishments in South Africa.

Mr Lees questioned where exactly was this money being spent.

Ms Gobrie responded that marketing South Africa was very expensive - the total for the past financial year to market South Africa exclusively was R601 million. SA Tourism entered into joint marketing agreements in the form of expos available in different countries.

Mr van Schalkwyk added that the SA Tourism Strategic Plan indicated the specific trade in the various countries in which it operated. He added that SA Tourism would not only participate in expos, but would sometimes host its own. He added that SA Tourism could perhaps explain its mandate to the Committee in a dedicated session.

The Chairperson agreed that SA Tourism would be called to present a full briefing on its work.

Ms Chen queried whether SA Tourism’s various offices published booklets advertising South Africa in various languages.

Ms Gobrie confirmed that booklets were indeed printed in various languages.

The Chairperson brought to the attention of the Committee that the London Book Fair was currently taking place, where the focus was on South Africa. He queried whether SA Tourism was participating.

Ms Gobrie said she would check with the marketing office in London, and report back.

Mr Sinclair commented that SA Tourism was using international services, but questioned what procurement was being used.

Mr van Schalkwyk replied that SA Tourism needed to comply with the Public Finance Management Act.

Mr Sinclair noted the fear that tourists would not come to South Africa for the World Cup and questioned the expected number of visitors.  

Ms Van Lingen added her concerns about safety of people, especially women, visiting South Africa.

Mr van Schalkwyk noted that MATCH was dealing with the Local Organising Committee and the Department of Tourism was dealing with accommodation. The predictions on visitor numbers were not clear. FIFA expected 400 000 visitors, the Local Organising Committee had put the numbers at 300 000. Mr Van Schalkwyk also noted that he sat on the Local Organising Committee and wished to express that South Africa should feel proud of what it had achieved. He could not comment on security. He noted that SA Tourism would be hosting an Indaba, and the Committee would be formally invited to the presentation. The President would be opening the event, whose theme was “Play the Ball”.

Mr Nyambi insisted that the Committee must have detailed figures of tourists expected, and that research could be conducted to get an informed number.

The Chairperson added that where there had been investment, there should be returns. He questioned what would happen if the teams  did not make it to the later stages of the competition, and their supporters did not then visit the host cities where so much had been invested.

Mr van Schalkwyk replied that research around accommodation had been done. The Department knew how many beds were available within an 80km radius. The estimate that the Department had was that there would be 350 000 to 400 000 visitors, and this was based on research. Most participating football teams opted to make their training base in Gauteng, and one team opted for Kimberley; therefore the Department knew the provincial breakdowns.

Committee Report on adoption of Strategic Plan and Budget of Department of Tourism
Members supported the adoption of the Strategic Plan, and the Budget of the Department of Tourism.

Members adopted the Committee’s Report on the adoption of the budget.

The meeting was adjourned.

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