National Department of Tourism 2009/10 Annual Report
Chairperson: Mr D Gumede (ANC)
Date of Meeting: 18 October 2010
The Committee was briefed by the Department of Tourism on its 2009/10 Annual Report. It was noted that this Department had been formed following the split of the former Department of Environmental Affairs and Tourism. The Department had received an unqualified audit from the Auditor General, but there were some matters of emphasis noted around delays in the submission of performance information, which were explained by the transition process. It was stressed that the Department contributed significantly to the Gross Domestic Product and job creation, and that had been the Department’s main focus and challenge in 2009/10. It was also focusing on domestic tourism, which accounted for about 54% of its work. The industry was, however, faced with challenges beyond its control and still needed to develop more concrete policies, which would in turn create better provisions for its entities and open more opportunities, as well as focusing the marketing. A report was given on performance, concentrating on the programmes for Administration, Branch Tourism and Sector Services and International Relations. The achievements, challenges and corrective measures proposed were outlined, and it was stressed that the Department was striving for sustainable growth and development and efficient service delivery.
Members asked about the delays in presenting the revised legislation to the Committee, asked how the Department was going to spread tourism, and what it planned for marketing and provision of the necessary funds to local municipalities and provinces. The challenges in the coordination of resources were outlined and Members were interested to hear what was planned to address the competition between tourism and economic activities, such as mining, in some areas. Members were interested in hearing how entrepreneurs who had been given awards were being supported further and how their contributions would be harnessed. Members questioned the delay in implementing the Expanded Public Works Programme and stressed the necessity for deadlines to be set and adhered to. Members thought that the Department did not need to use consultants, especially not for outsourcing of strategic planning, and asked for confirmation that what was presented was actually happening at grass roots level, particularly at local government, stressing that structures must be put in place to ensure dissemination of information and coordination between all spheres of government. Members also asked for confirmation about the setting up of internal controls and audit committee. They questioned whether the Department of Trade and Industry’s Tourism Support Programme was working effectively, in light of complaints about the bureaucratic requirements.
Chairperson’s opening remarks
The Chairperson noted that the Department of Tourism (DoT or the Department) was in a period of transition during the 2009/10 period, but that it was now a fully fledged independent department that had just completed its first year. The Committee was interested in examining the multi stakeholder environment of government, private and international players. This Department also had often to deal with other departments over which it had no control and had to try to garner their support, such as Departments of Police or Transport.
He pointed out that the Committee’s mandate required it to look at the Estimates of National Expenditure, the output and outcomes according to the budget that had been approved, and to compare and analyse the Department’s performance against its mandate and objectives. In addition, it was necessary to look at transfers to other departments, and the different stages of this process, only some of which may be completed. Certain issues had been raised, and would need to be considered, around the financial matters, including the use of consultants by the Department, and the donation of funds, mainly by the Department of Environmental Affairs, would need to be accounted for.
He thanked and congratulated the Department on having a clean report, although there were some issues of emphasis. This had included concerns that some information was not readily available and the Committee would also have to consider whether the Department was becoming efficient in delivering on its mandate.
Department of Tourism 2009/10 Annual Report briefing
Mr Kingsley L Makhubela, Director-General, Department of Tourism, noted the presentation would outline the key strategy issues. It was most notable that the most critical expectations of this Department were that it contributed significantly to the country’s Gross Domestic Product (GDP) and job creation, and that was the Department’s main focus and challenge in 2009/10. There was also a great deal to do around domestic tourism, since statistics showed that 54% of work related to domestic tourism and 48% to inbound tourism, respectively.
He noted that the industry was also faced with external challenges beyond the Department’s control. In addition, more concrete policies need to be developed by the Department, which would create better provisions for its entities and open more opportunities, as well as focusing the marketing on ways to attract investment into infrastructure such as hotels.
Mr Dirk Van Schalkwyk, Chief Operations Officer, Department of Tourism, noted that the report had been divided into sections dealing with the various programmes. He would like to emphasis the performance in Programme 1 (Administration), Programme 4 (Branch Tourism) and Programme 6 (Sector Services and International relations). He presented the slides and summarised the achievements contained in them (see attached presentation for details). He covered the budget expenditure, economic classifications, performance information such as the achievements, challenges and corrective measures on key issues like sustainable growth and development, availability of adequate human capital, efficient service delivery and good governance.
Mr van Schalkwyk noted that the Department had received an unqualified audit from the Auditor-General (AG). No unauthorised or irregular expenditure had incurred in the current year. The Department had also complied with all disclosure requirements, classifications and policy frameworks as prescribed by National Treasury. He outlined that all transfers were made in line with Management approval, National Treasury approval and disclosure requirements. However he conceded that the transition to the new Department had caused delays in the submission of performance information, as noted as a matter of emphasis in the AG’s report.
Ms M Njobe (COPE) asked why the new and revised legislation was taking so long to be presented before the Committee. The Department had promised the Committee, at the beginning of the term that it should by now be ready, although she was aware that other departments may also have to be consulted.
Mr Makhubela said that there had been some challenges around the legislation review, and the Department had been over-ambitious in its earlier assessment that it should be able to get the proposed legislation reviewed by now and brought to the Committee. There had been considerable challenges in consulting stakeholders, as well as a number of matters that the Department needed to work through. The biggest challenge was that of registration, which was incorporated in the legal framework. There had been different views expressed as to whether the registration should be mandatory and included in the legislative framework, although, since that principle had been adopted by the House, it would need to be applied. A failure to do so would be contrary to the existing law. There was also a thin line between registration and licensing. In the last meeting it was noted that making registration compulsory would only create more difficult issues. He added that the Department was going to write a mid-term review of the Department’s strategy over the past six months, and would also examine the next six months, possibly re-adjusting some of its activities, and would then give a presentation to this Committee on what the Department believed it was capable of accomplishing in that period. In addition the Department needed to consult thoroughly, because if it failed to do so, it would encounter problems that would affect the whole process.
Ms Njobe congratulated the Department on receiving an unqualified report, and appreciated its work, saying that this showed determination and effort by the members of the Department.
Ms Njobe asked how the Department was going to spread tourism, and what it planned for marketing and provision of the necessary funds to local municipalities and provinces.
Mr Makhubela said that there were some challenges about the coordination of resources that had been allocated for marketing, and this produced a lot of duplication. Each level of government had structures to develop. At the national level, the Department was increasing its institutional capabilities in order to provide assistance to local and provincial governments. However, marketing one small town to a foreign country would be a waste of resources; it would be far more effective to market that town in the context of the broader country, which would also attract more people if the marketing strategies were better aligned. It was also, at the end of the day, the choice of the tourist as to where to visit, so it was important to boost the attractions and attractiveness of the marketing. He agreed that the Department had to work harder on spreading tourism to rural areas.
Mr van Schalkwyk added that there was an equal share of the tourism budget to all provinces and that it was the province itself that would decide how that money was to be distributed. He said that there was a debate about whether the correct amount of funds was going to tourism. He said that the Department was looking into whether or not it would be able to create some budgetary structure that would ensure that those funds were not being used for something else.
The Chairperson asked about competition between tourism and economic industries in certain areas, citing, for instance, the attractions of Nelspruit, which also conducted mining. He said that mining rights were issued to companies, but that their activities should not be detriment to tourism. He asked whether there was a specific team that was working to mitigate any possible conflicts and whether there was mutual agreement between these two industries, to work together.
Mr L Makhubela replied that the Department would consult with SA Tourism (SAT) on the issue of the possible rivalry between mining and tourism, but that this was not the Department’s focus.
The Chairperson asked about the emerging entrepreneurs in the industry who had been given various awards. This indicated that they had certain attributes. He wondered if the Department was working on those attributes and using their strengths as a way to reinforce more tourist facilities, as well as supporting them in paving their way in tourism.
Mr D van Schalkwyk added that although the Department had not really focused on the issue, and did not have a unit to do so, there was nonetheless new legislation that required all mining entities to be approved by the Department of Environmental Affairs (DEA). This Department would try to build in the necessary linkages in its management structure, to ensure that in future the Department was kept aware of the activities in the mining sector, and ensure that these did not conflict with tourism.
Ms Lerato Matlakala, Chief Director: SDI, Department of Tourism, also added to this, in relation to the awards. The Department was currently reviewing how it could manage these awards better, in order to elevate them to a level that would match the new system being reviewed and implemented. The current strategy did not quite match up to that. For instance, some of the awards posed challenges in that, for instance, despite the fact that an entrepreneur may be recognised, there was little after-care support to ensure sustainability, and to allow that entrepreneur to continue to grow and prosper in the sector, which required alignment and support with the provincial governments.
The Chairperson noted that the Department had failed to meet the targets under the Extended Public Works Programme (EPWP), despite the fact that this was an important government programme that created employment. He asked what plans the Department had to meet those deadlines by the end of the year, and whether the Department had been able to identify the obstacles that were causing delay.
Mr van Schalkwyk said that the EPWP planning and implementing processes took a long time, which had resulted in the delay in reaching the phase where people would be employed. Over the next two weeks, at the Lekogtla, the Department would be addressing this issue and trying to find a solution, in order to meet the set deadlines.
Ms Beulah Mosupye, Chief Director: Sector Transformation, Department of Tourism, said that at the beginning of the financial year, the Department had very few projects that would deliver on the EPWP target, and in fact only 50% of the target could be met. The Department had thus embarked on a consultative process with the provinces, explaining the requirements of EPWP, especially that the programme was labour intensive. The Department requested the provinces to submit their proposals for funding before the end of May. They did so, and some of them were excellent project proposals but unfortunately did not meet the EPWP job creation requirements. The Department did further consultation, and extended that deadline to end September. The second batch of proposals were more aligned with EPWP requirements, so the Department was in the process of capturing them, and would be submitting them to the Director General for approval. The Department of Tourism should be able to meet the targets in the next financial year.
The Chairperson asked what motivated the budget in the first place.
Mr Makhubela replied that this was a result of the poor planning system, which why he mentioned that the Department had learned some lessons, and in future would be better streamlining planning and implementation.
The Chairperson said that he did not believe that the Department needed to use consultants in order to develop its strategy and that it was capable of doing that work itself. Whilst he could accept that it might sometimes need to consult, that would surely be in areas of research, or where extra input was needed on specific topics. There was no need to outsource what was essentially a purely government function.
Ms V Bam-Mugwanya (ANC) firstly praised the Department for the work done thus far. The Department had provided much good information, but asked it to confirm that things were actually happening at municipal and provincial levels, and whether those levels had also received the information. She also asked what structures were in place to make sure that this information filtered down, because she had not heard much about what was happening there.
Mr Makhubela said that the MECs and Minister discussed these issues, but that admittedly, coordination between national, provincial and municipal levels remained a huge challenge, and that the Department would look into setting up an internal system where matters such as information, resources and coordination were easily administered
The Chairperson stressed that it was imperative all three levels of government to have mandatory meeting in order to eliminate this problem of coordination. He said, however, that on a positive note, when compared to other departments, this one was doing well, and that the issues identified could hopefully be solved through hard work.
The Chairperson asked that the Department should give more information about its Internal Control Department and Auditing Committee.
Mr Makhumela responded that the Department had recently appointed its own internal auditors, which was required by National Treasury, and that they had a meeting scheduled with the external auditors this month, to discuss legal issues. He noted that the Department was in the process of setting up a unit that assessed high-risk areas and would be setting up the necessary strategies to put appropriate measures in place, especially to deal with transfers, so that the money was used for its intended purpose.
Ms M Njobe (ANC) noted that the Department of Trade and Industry (dti) had given a presentation to the Committee last year about the Tourism Support Programme. This was a newly funded programme but already some positive activities had been achieved, particularly in supporting rural tourism. One area that she had visited was running some positive initiatives, but was short of funds, and she had encouraged the area to apply for funding to TSP. However, it transpired that apparently it was difficult to actually access the funds, because of the administrative requirements. She asked if the Department could help in outlining what the problems may be.
Mr Makhubela replied that he was not familiar with this dti programme. However, sometimes some facilities or programmes had not set themselves up correctly, in the sense that they may not hold tax certificates, or were not paying tax, and government could not grant small enterprises with funding if they were not compliant with tax and other legal requirements. They did face many challenges. The Department would try to look into those problems. The public concerns and complaints may well be legitimate, and attempts would be made to assess the situation and correct any problems.
Mr Makhubela said that the Department was now under immense pressure to continue to obtain clean audits. He certainly did not wish it to get anything other than clean audits while he was in charge.
Mr Makhubela appreciated the support and comments of the Committee, which would be taken into consideration. The Department would continue to try to strengthen its performance. He added that it had been impossible for the Department to attend to the training of 230 000 and more people in the sector and would look to the private sector to train its own staff. However, the Department would try to ensure that all training was done to above minimum standards.
Mr Makhubela mentioned the Tourism Satellite Account, and said that this would help the Department to get a better indication of its resources, transport system and to plan better in terms of tourism’s infrastructure.
The Chairperson urged the Department to continue on its growth path, striving to achieve synergy, transformation, creation of decent jobs and spread of tourism all over the country.
The meeting was adjourned.