Expenditure Report for the First Quarter of 2010/11 (Vote 29): Department of Environmental Affairs Briefing

Meeting report

Ms Esther Makau, Chief Financial Officer, Department of Environmental Affairs (DEA), presented the Department’s Expenditure Report for the First Quarter 2010/11. She said that it had been decided to compare the expenditure for the first quarter of 2010/11 with the expenditure per quarter for 2009/10. She indicated the priorities of the Department within each of its programme areas. Programme One, Administration, prioritised the provision of strategic leadership, centralised administration, executive support and corporate services. Programme Two, Environmental Quality and Protection, focused on minimising non-compliance with environmental legislation, preventing and reducing pollution, increasing the turnaround time for processing basic national environmental impact assessments (EIAs) and improving air and atmospheric quality. Programme Three, Oceans and Coastal Management,  sought to ensure the integrity of the coastal zone and oceans by performing two assessments of the ocean environment per year as well as assessing seals and seabirds once every three years. Programme Four, Climate Change, focused on the establishment of a coherent approach to climate change response for South Africa by developing a climate change response by 2011/2012. Programme Five, Biodiversity and Conservation, prioritised the promotion of equitable access and shared benefits by concluding bio prospecting agreements and the expansion of the conservation estate by coordinating the implementation of the national strategy for the expansion of protected areas. Programme Six, Sector Services, Environmental Awareness and International Relations, focused on promoting the empowerment of designated communities by creating permanent and temporary jobs and training through the expanded public works programmes. A subordinate priority was to maintain South Africa’s leadership role in global environmental affairs.

Ms Makau noted that in the first quarter of 2009/2010 expenditure as a total for all the programmes was 17% of the funds allocated for the financial year; in the second quarter it was 22%, in the third quarter 29%, and in the fourth quarter 32%. This totalled 100% expenditure of the R2.6 billion provided to the Department for the financial year, excluding tourism.

Ms Makau noted that in the current financial year the Department’s expenditure in the first quarter as a total for all its programmes was still 17% of the funds allocated for the financial year. Ms Makau then analysed this percentage into the figures spent in each programme in the first quarter: Administration – R40 million, Environmental Quality and Protection – R73 million, Oceans and Coastal Management – R53 million, Climate Change – R19 million, Biodiversity and Conservation – R91 million, and Sector Services, Environmental Awareness and International Relations - R166 million. This totalled R444.5 million out of a possible R2.6 billion.

Ms Makau explained how the money had been spent in Programme One. This included management, corporate affairs, financial management and office accommodation. In terms of office accommodation she highlighted that the Department had not yet received its first quarter claims from the Department of Public Works. She pointed out that one of the biggest areas of expenditure for the Department within Programme One in the First Quarter had been the Bid Development Cost; this was because the Department was in the process of acquiring a new building. She noted that the biggest expenditure within this programme was the compensation of employees, which was currently costing R18.5 million. Returning to the Bid Development Cost she noted that the bulk of the R4.1 million spent had gone toward the procurement of a Transaction Advisor for the procurement of the new building through the Public Private Partnership (PPP). The expected completion date for the building was 2012. Other achievements within Programme One included the coordination and finalisation of a delivery agreement for Outcome Ten and the compliance with tabling requirements.  

In Programme Two, Environmental Quality and Protection, the Department spent R73.8 million with the biggest expenditure being the transfer to the South African Weather Service. Ms Makau also pointed out that the Department had not made any transfers to Buyisa-e-Bag due to the fact that Buyisa-e-Bag had not provided a business plan as required by the Department. Providing closer analysis of actual activity within this Programme she returned to the most expensive items in the breakdown. These included compensation to employees at R17.8 million, performance bonuses at R3.2 million, domestic travel at R2.1 million, foreign travel at R1.7 million, and other operational expenditure at R3.7 million, making a total of R28.5 million.

As to achievements Ms Makau noted that 67 out of the 74 EIAs had been processed, the Refuse Removal Policy had been drafted and finalised, all 48 applications received from unpermitted waste disposal sites had been processed, and the air quality research database had been redesigned.

In Programme Three, Oceans and Coastal Management, Ms Makau pointed out that in the first quarter a total of R53 million had been spent. This was broken down into Integrated Coastal Management at R27.8 million, and Coastal and Oceans Assessment and Research at R25 million. She explained to the Committee that, from this programme, a number of personnel had been transferred to the Department of Agriculture, Forestry and Fisheries (DAFF). The DAFF’s personal database had not been ready at the time of transfer and so the DEA had paid R16.2 million in salaries and performance bonuses of R4 million, for the personnel in the meantime. The Department had also paid R25 million towards the operating costs of its vessel. This would be corrected during the budget adjustment process.

Achievements for Programme Three included the appointment and training of team members for the Gough Island relief voyage. Research programmes on certain species of shark had been initiated, the intention to declare East London/Border as a Marine Protected Area had been issued, and comments on it had been received.

Ms Makau noted that in Programme Four, Climate Change, only R19.1 million against a budget for the financial year of R554 million. She explained to the Committee that included in that budget figure was a lump sum of money to be used for the replacement of the Polar Research Vessel. Instalments for this would be paid in September 2010 and January 2011. The Vessel would be delivered in early 2013. In light of this she mentioned that there was not actually much money set aside for this programme. She noted that the largest expenditure went to the relief voyages to Marion Island and staffing and operational costs for the SA Agulhas.

Achievements in this programme included the Climate Change Policy Engagement, which was drafted in May 2010, the Climate Change Roundtable also held in May 2010, the drafting of the Climate Change Green Paper, and lastly the framework for the Climate Change Green Paper which had been presented to the Intergovernmental Committee on Climate Change.

In Programme Five, Biodiversity and Conservation, Ms Makau noted that a large proportion of the expenditure went towards various transfers to public entities. iSimagaliso Wetland Park Authority had received R5.3 million, The South African National Parks had received R38 million, and the South African National Biodiversity Institute had received R35 million. In her analysis of activity for Programme Five she explained that the bulk of expenditure after transfers went towards the compensation of employees and performance bonuses. In terms of achievements within the Programme, work had commenced on the rehabilitation of 89 wetlands; the National Biodiversity Framework had been launched during the Green Economy Summit; 100% of the Convention In Trade on Endangered Species (CITES) permits had been assessed; and the Department was currently promoting the International Year of Biodiversity.

In Programme Six, Sector Services, Environmental Awareness and International Relations, Ms Makau explained that the largest expenditure had occurred in the area of Social Responsibility, Policy and Projects. Of the budget provided of R661 million, R65 million had been set aside to create jobs and R71 million was going to be transferred. As to spending in other areas she pointed to the other key focus areas for the Programme, which included R13 million on International Cooperation, R8.8 million on Environmental Awareness, and R60 million on Infrastructural Investment.  She reiterated that infrastructural investment referred to ear marked funds to be transferred to the Department’s public entities. These would not be transferred until the Department had received the implementation plans. She noted that R17.2 million had been spent on the compensation of employees and R2.5 million on the hosting of the Green Economy Summit. Global Environmental Affairs had cost R6.2 million, domestic travel R3.4 million, foreign travel R2.9 million, and the Expanded Public Works Project (EPWP) R71.7 million. Other operational costs had consumed R2.9 million.

As to the achievements for Programme Six, Ms Makau noted that the Department had hosted the Green Economy Summit in May 2010, the BASIC Ministerial Meeting in April 2010 and, through the Expanded Public Works Programme (EPWP), the Department had created new work opportunities and training.

In terms of economic classification she noted that the Department was still at 17%. Within this, overall compensation was at 32% and total transfers and subsidies at 21%. Ms Makau noted that most of the Department’s money went towards its transfers to public entities and its projects. She explained that compensation had peaked in the first quarter, partly because of the DAFF personnel expenditure and partly because the Department had had to pay Occupational Specific Dispensation (OSD) for the whole of the previous year. As to current expenditure until 30 June 2010, she mentioned areas where the most money had been spent; these included consultants and advisory services R42 million, travel and subsistence R16.2 million, operational expenditure R5.5 million and communication R2.4 million.  Turning to the composition of the current expenditure she noted that it consisted of printing publications, international membership fees and resettlement costs. The most expensive element of operating expenditure, as noted, was the voyages to Marion Island.  Returning to travel and subsistence charges she directed Members’ attention to Annexure C, which provided an analysis of local and international travel per programme.

Ms Nosipho Ngcaba, Director-General, Department of Environmental Affairs, added that the Commission for Sustainability was currently being coordinated by the Department. She noted that this Commission met annually in New York and would also be meeting in Rio de Janeiro in the near future. She informed the Committee that this Commission dealt with chemical, waste, sustainable production and mining. Also a Summit for Ministers of Developing countries dealing with Climate Change had been hosted. She also listed other key meetings such as trilateral meetings with key countries across South Africa’s borders. She also noted that the Global Environmental Planning Meeting had been hosted by South Africa two years previously and would be taking place again this year providing opportunity for new formulas and new ideas.

Ms Makau drew attention to Annexure A which explained the use of consultants in the quarter, expenditure on whom had totalled R43.8 million. She noted that in Programme One consultants had helped with reports, drafting of legislation, administration, and software support and program maintenance.  In Programme Two they provided information on air quality, environmental management and assessment. In Programme Three it was established that there was a single consultant who dealt with operation of the vessels. In Programme Four consultants provided project management and dealt with the vessels. She raised the point that the Department had been discussing whether or not to continue to call these people consultants or to begin to refer to them as something more operational. This was due to the fact they were less consultants and more operational service providers.

Ms Ngcaba added that their job was operational in nature and that these people were widely used due to the fact that they are the sole providers of this service currently. In turn they took responsibility for the vessels and provided an important support function.

Ms Makau, returning to Programme Five, noted that consultants were largely used to construct databases and design systems and promotional materials. She stressed that these people were also considered specialised consultants, in that they would never be able to provide this service through the Department either currently or in the long term. Finally, in Programme Six, the Department spent R3.5 million on consultants for the quarter. Consultants provided and designed various materials, hosted events such as the Green Economy Summit and maintained and created databases.

On transfer payments Ms Makau informed the Committee that for the first quarter the Department had transferred R262 million. She explained to the Committee that the money for each programme such as the South African Weather Service had been subdivided into specific areas with the first and most important being financial assistance; other money was ear marked for specific projects within these programmes. In terms of the South African Weather Services R45 million was provided as part of financial assistance, R52.3 million for infrastructure development and R7.6 million for the modernisation program. For the South African National Parks R24.4 million was provided as part of financial assistance and a number of other smaller figures for various other projects. Turning to iSimangaliso Wetland Park she highlighted that R4 million had been provided as part of financial assistance and R1.2 million for forestry rehabilitation. In terms of infrastructural development she pointed to the fact that the Department had not transferred any money, as it had not received a specific request for this. She explained that R25 million had been provided as part of financial assistance for the South African National Biodiversity Institute and R2.5 million for climate change research. In terms of infrastructural investment the Department was still waiting on a business plan. She noted that under projects for the South African National Biodiversity Institute it had transferred 71 million; she explained that this was for the EPWP. This amount was broken down further into four areas: sustainable land base livelihoods, working on waste, working for the coast and training programmes. She explained that outside of these transfer payments the Department also made transfer payments to foreign governments and international Institutions, these could be understood as membership fees. Finally the Department also made transfer payments to non-profit Institutions although she noted that with some of these the Department was either waiting for Treasury approval or the organisation’s business plan.

Returning to Capital Assets Ms Makau reiterated that the bulk of the money available had been set aside, totalling R467 million, for the replacement of the Polar Research Vessel.

In light of the Department’s first quarter expenditure, Ms Makau suggested that some of the challenges facing the Department included the shortfall compensation of employees’ critical posts, shortfall for ministerial expenditure on environmental issues, accommodation allocation shortfall, use of goods and service and decreasing donor funding. She noted that the Department had always experienced a shortfall of around R30 million in terms of accommodation but it had made applications to the National Treasury to try and cover this. She noted that this shortfall was mainly caused by the increase in the cost of rent, water and electricity. In terms of this it was still not receiving the correct funding from the Department of Public Works.

Ms Makau highlighted that there were limited funds available for Foreign Aid Assistance as many of the projects currently running would be coming to an end during the 2010/11 financial year. She noted that the more donor funds decreased the greater the need for the Department’s own funding to increase in future years.

Ms Ngcaba, in closing, highlighted that in terms of the PPP cost there were guidelines established by the National Treasury requiring certain steps to take place. She informed the Committee that the Department currently had a preferred builder but that environmental specifications had been slowing down the process. She suggested that their auditing process and internal controls of the Department were still effective and that it was often easier to call on consultants to fill a post, in particular when the Department found itself constrained by financial issues.

Discussion
The Acting Chairperson noted that the Department was a focus for the country in terms of protection from pollution. He questioned what the Department was doing in terms of development in the rural areas. Noting the lack of skill in certain areas he asked what the Department was doing in order to address this issue. He questioned the amount of compensation employees were receiving, particularly since it was so prevalent in their budget.  He took issue with the fact that certain companies had not provided a business plan as this was affecting delivery he asked for clarity on how the Department was dealing with this issue. He queried how the report from South African Weather Services dealt with R1.1 million previously unaccounted for. He asked for clarity over the use of consultants versus internal staff

Dr Z Luyenge (ANC) congratulated the Department on its leadership as demonstrated by the report and by keeping the Committee informed. He questioned how well informed the entire Department was in terms of information on programmes. He stressed that it was necessary for the entire Department to be up to speed. He raised the issue of skills transfer between consultants and Departmental employees. In cases where the expenditure on programmes was less than 40% he queried what the Department’s plan for these programmes was. He asked for clarity on the membership, functioning and purpose of the Intergovernmental Committee on Climate Change. He reiterated the invisibility of the Department at regional and rural levels. He noted that the issue of the environment was coming across as something for the upper echelons and only for those experts who were whiter than white.

Ms J Manganye (ANC) asked for clarity on the Green Scorpions and their operations. She asked for clarity on disposal sites and how they came into existence.

Ms A Lovemore (DA) asked for clarity on the criteria used in selecting non-governmental organisations (NGOs) for support. She questioned how other organs of Government were hindering the Department’s ability to train staff and implement programmes. She also asked for additional information where the courts would be situated.  She took issue with the vagueness with the usage of the word ‘some’ in terms of data presented


Mr G Morgan (DA) asked for an update on the ocean’s management in light of the less than satisfactory presentation earlier in the year on this.  He asked for more information on the NMPR legislation. He asked for an update on the status of the Pan-African Parliament directives. He asked for an update on Vele Colliery, opposite to Mapungubwe, and whether there was application for a Section 23 clarification. In terms of waste he asked clarity on when batteries as a highly hazardous industry would appear on the KPA. He raised the issue of non adaptation of the plan to deal with Climate Change particularly in terms of its association with poverty alleviation.

Ms H Mdude (COPE) asked who the Department’s stakeholders were and who was considered a stakeholder. She asked for clarity on research and policy analysis and the meaning of climate change innovation. She asked how long an EIA on average took to complete and what redesign meant. She raised the issue of transaction advisors and their position. She also questioned whether or not the Department was doing enough in terms of Climate Change and whether or not the Department was taking this issue seriously. She questioned the measures being used to curb the pouching of abalone and whether there were enough boats

The Chairperson highlighted the R4.1 million and questioned what the Department was actually doing and for what period of time. He also questioned whether compensation was for bonuses or salaries. He asked for clarity on who conducted research on climate change - departmental staff, academics or consultants.

Ms Ngcaba invited the Committee to come and meet the Department. She stated that there was no issue within the Department regarding hierarchy but rather that the Committee had always requested specifically that the Director-General (DG) be present at presentations. In terms of compensation of employees Ms Ngcaba argued that it was actually not high. She also offered to present an organogram explaining the structure of the Department. She noted that the performance compensation included salaries. She noted that the Public Service Act made provision for performance bonuses and that these were being applied largely at the lower levels.

In terms of business plans not being provided, Ms Ngcaba explained that the Department was working on these but did not have a legal means currently to intervene, although this was being rectified.  She noted that the Department had a governance framework for entities, which was being applied, but they did not have an instrument to make this happen at speed. In terms of the R1.1 million she stressed the need for the Committee to call Weather Services and the board to obtain the information necessary.

With regard to consultants and the transfer of skills, Ms Ngcaba stated that within the Department’s Service Level Agreements skills transfer was a central requirement of the tenders. She was doubtful that the Department would ever reach a point where it would not need outside consultants as these were central to gathering information utilised in Departmental decision-making. She noted though that the Department could improve in its use of consultants. The Intergovernmental Committee on Climate Change was solely a governmental structure without outside stakeholders and provided valuable information.  

In terms of the PPPS being used at local level, Ms Ngcaba noted that this was possible and that a number of other governmental units had utilised the PPP process in order to build their buildings and implement waste management service. She stressed that they were undertaking work in terms of medical waste and the PPP model. The systems act posed a challenge in terms of this as it does not allow for outsourcing of this function. She informed the Committee that they were piloting the Systems Act in terms of waste management in Mafekeng.  She informed the Committee that it was supposed to receive a presentation on the Green Scorpions, and this had been moved forward. In the meantime, environmental inspectors were being deployed at local government level. This would provide a system for ensuring that legislation for which the Department was responsible was being implemented at all levels.

Addressing the issue of landfill sites, Ms Ngcaba explained that an assessment of the 580 had been undertaken; a number of these were illegal dumpsites. The Department then undertook to establish which were ideal and which were problematic. Those that were causing environmental damage were closed and would be rehabilitated. The Department, after it had undertaken the audit, communicated to the municipalities what and where their disposal sites were. She noted though that the Department had struggled to get municipalities to submit applications for landfill sites and so consultants were brought in to guide municipalities.

In terms of service provision, different NGOs were being utilised in different areas. The Wildlife Society of South Africa (WESSA) had become the administrative unit responsible for the work of Ndolyethu. The EIA training program could not be rolled out because the National Performance Results Act (NPRA) agreements had not been brought into effect by the Department of Mineral Resources. She noted that this was a politically sensitive issue particularly since the law had not been brought into effect. She highlighted that they were waiting for guidance from the Department of Mineral Resources who had recently employed a new DG. The DG had stated that she was still coming to terms with the new law. Ms Ngcaba noted that alignment between the Departments would be crucial in terms of the law. The Department had issued a compliance notice in terms of Mapungupwe. Prior to this it had issued a precompliance notice and the company involved did not respond positively. The Ministers had then met on the issue and agreed that the Government would not be held to ransom by a company that was undermining legislation. The company’s activities included breaking the threshold of removal of vegetation and water abstraction, which required a water licence; there were issues around setting up a landing strip which infringed on the Protected Areas Act. Ms Ngcaba highlighted that these were just a few of the issues. The Department had met with the Company and informed it that it would have to stop operations until it had received the required approvals.

The issues around Section 13 indicated that the Department was attempting to streamline. Ms Ngcaba raised the issue of carbon footprints and how the Department was working to reduce its own footprint. In terms of the Oceans Strategy the Department had considered what an ideal situation for it to pursue was. Thereafter it had undertaken the process by analysing the Biodiversity and Protected Areas Act. She agreed that the Marine Protected Areas Act had some deficiencies, particularly in terms of oversight. She noted that there were gaps in the Biodiversity Act in terms of applied knowledge for other industries. The Department has decided to have the Oceans function as a separate function. Ocean strategy would be one output of this. She reminded the Committee that it was a large area and that in other countries Oceans had its own Department or entire Ministry. The Department had become of aware of issues such as increased sewerage in the sea and the closing up of marine estuaries. She suggested that the Committee ask the Oceans Branch to present its thinking.  

Turning to waste, Ms Ngcaba agreed that there was a need for the inclusion of batteries in waste, but suggested that the Department had included them, but the inclusion had been omitted from the report. In terms of Climate Change, a review of the adaptation plans was underway with the Department of Science and Technology particularly reviewing which areas of the country were going to be the most vulnerable in terms of the effects of climate change. The Department had identified a gap in terms of alignment of plans, but plans were at an advanced stage and were an area of response on which the Department was focusing. The work on climate change still lacked funding, but the Department was dealing with the main building blocks. She informed the Committee that the Department would be presenting its Green Paper to Parliament on 01 September 2010. This paper would deal with Copenhagen and Post Copenhagen in particular. The Green paper would highlight what the Department had covered and the formal process that would ensue after it had been approved by Cabinet. The Department was working with the Department of Science and Technology, Universities and NGOs to deal with Climate Change. She stressed though that the Department could not separate innovation from other areas.

Addressing the issue of polluted waters, particularly around the reef, Ms Ngcaba suggested that perhaps there would always be serious impact on the environment, particularly for deep level mining. She stressed the need for better technologies and the minimisation of open cast mining, arguing that the Department was simply a role player in the reef matter, and highlighting that the Department of Water Affairs had a stronger responsibility in this regard. Legally the Department had very few responsibilities. She offered to make the asset register and audit report on this available. She explained that the Transaction Advisors were provided for the PPP process. These people could be understood as an extension of the National Treasury. The Transaction Advisor helped guide the PPP process in terms of safety, legality and maintenance. These people added value but could not be kept in that capacity in the Department. She offered to undertake an independent assessment of this value. In terms of abalone she informed the Committee that the Department was no longer responsible for this. The vessels mentioned were utilised for science, particularly in Antarctica. The Department no longer had its own enforcement vessels but instead contracted out to other Departments for this.

In terms of visibility, Ms Ngcaba stated that the Department was trying its best but that there was always room for improvement. She noted that it had trained staff in district municipalities. She asked for the areas where Members felt it was not visible so that she could provide a report on what it was doing in terms of this. She informed the Committee that the Department had been in conversation with the Department of Higher Education in attempt to address the issue of accessing skills for some of the Department’s work particularly open space planning and management. She was hopeful that there would be more training programs aimed at Green Economy through the Further Education and Training (FET) colleges.

Ms Makau stated that in terms of under spending the Department was in the same position it found itself in last year and so did not envisage things to change by the end of the year. She also added that that there were programs for education running at primary level instilling an environmental focus.

Ms Lovemore reiterated her question on health care risk. She also asked for clarity on the role of the Department within the National Planning Committee.

Ms Ngcaba stated that the Department was not slowing down on medical waste and offered to send out an additional report on this. On EIAs and the ‘average time’, she informed the Committee that there were regulated timelines in order to ensure EIAs would be processed faster. She stressed that all timelines were not specifically regulated to make the EIA processes and systems better. Addressing the National Planning Committee she had stated that the Department had invited itself into the Planning Commission and had recently presented to them. The presentation had highlighted the resources the Department could offer the Planning Committee particularly with regards to special management and its link to sustainable development. 

The Chairperson thanks the Department for its thorough presentation and its time.

The meeting was adjourned.