Land reform & Restitution budgets: Departmental & National Treasury further reports

Standing Committee on Appropriations

01 September 2011
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Department of Rural Development and Land Reform (the Department) had been called back to give a follow-up briefing on the Land Restitution and Land Reform programmes, in view of concerns that money was being shifted from one programme to another but that little progress in settling claims was apparent. The Committee had asked that the Department and National Treasury should meet to discuss and try to resolve the challenges around spending. The Department had also been asked to provide further details on the budget for the Land Restitution programme. The Department said that the verification of claims by the Regional Land Claims Commission should be completed by March 2012, and that although the work was not yet finalised, the Department was in a better position to provide estimates over the medium term. The Department was securing approval for additional funds for restitution, to ensure that it did not have to move funds away from Land Reform. National Treasury advised that the baseline budget allocations were R8.7 billion for 2012/13, R9.4 billion for 2013/14 and R9.9 billion for 2014/15. The request for additional funding was still under consideration.

Members still had concerns on a number of issues. Firstly, they queried how estimates could be made when the claims were not yet verified, and wondered if the amounts requested would be sufficient. Secondly, there were concerns that the dates for finalisation kept being moved to the next year, despite the Minister’s assurance that this would be completed in the current year. Thirdly, there were concerns about the numbers of the backlogs, and what exactly had been done to eradicate them. These questions had also been asked at previous meetings. There were questions as to whether the amount of R23 billion over three years would address the need, because at one stage the figure for the backlog alone was mentioned at R12 billion. National Treasury stated that R5.5 million was needed for the backlog, and this would be paid over three years. The Chairperson of the Portfolio Committee on Rural Development and Land Reform, who was present at this meeting, suggested that National Treasury should perhaps pay claims, leaving the Department to concentrate on rural development and land reform, but National Treasury responded that this would be a last resort and the suggestion would be taken on advisement.
Members asked about the court cases in which the Department was involved, and the amount of interest being paid on outstanding claims, and urged that the Department should try to avoid litigation. The Department noted that it was unlikely that the amount of R5.5 billion would cover everything, and although an official from the Department claimed that the Department should be able to pay this out in a period of one year, the Acting Land Commissioner disputed this, saying that claims were at different stages. Members agreed that it was necessary for the Committee to be provided with a document setting out all claims, indicating their categories and stage of finalisation, any payments made, and the payment process, and a forecast. 

Meeting report

Ms R Mashigo (ANC) was appointed as the Acting Chairperson, until Mr Sogoni could attend.

Land restitution programme: Department of Rural Development and Land Reform report
The Acting Chairperson reminded Members that this meeting was a follow-up to a previous meeting held in June. At that meeting the Committee had been concerned by the financial management of land restitution claims, which seemed to show a trend of decreasing claims .

Ms Irene Singo, Acting Chief Financial Officer, Department of Rural Development and Land Reform, provided a context to the presentation, agreeing that this was a follow-up to the meeting in June, and adding that the Committee had requested the Department of Rural Development and Land Reform (DRDLR or the Department) to meeting with National Treasury to resolve challenges around the spending. The Committee had also asked for the budgetary allocation for the Land Restitution Programme, and wanted the Department to provide a plan outlining measures that could be taken to improve Restitution and Land Reform expenditure performance.

She noted that the project on verification of outstanding claims in the Regional Land Claims Commission (RLCC) had started, and it would be completed by 31 March 2012. Although this project was incomplete, the Department was now in a better position to provide estimates, based on the progress made to date, for the Medium Term Expenditure Framework (MTEF).

She said that part of the plan to improve financial management was to secure the approval of additional funding for restitution. This would ensure that no further shifting of funds took place from the Land Reform Programme. She explained that the last shift would normalise the budget of the Department, and allow for improved service delivery. The Department had now taken a strategic decision to prioritise financial compensation and challenges around state land.

Mr Devan Naidoo, Chief Director: Economic Services, National Treasury, provided a breakdown of the budget. He explained that for 2012/13, the baseline was R8.7 billion, increasing to R9.4 billion in 2013/14, and to R9.9 billion in 2014/15. These figures had been calculated by looking at expenditure patterns. He noted that a sizeable amount was spent on the Administration programme, and that most of the under-spending on programme 2 was due to the non-filling of vacancies.

He concluded that on 18 August 2011 the DRDLR had met with National Treasury to try to resolve the challenges facing the Department. He stated that he was aware of the request for additional funding made by the Department but that he could not comment on this at this stage, as the budget was being formulated and would be discussed over the next few weeks.

Ms A Steyn (DA) stated that she still had concerns. She queried how the Department was able to provide an estimate when the project on the verification of outstanding claims was not yet concluded, and wondered if the amount requested would be enough. She also asked why this project had not been concluded, and what exactly had been done in the past year. She also asked what the total backlogs had been and how far the process was to eradicate that backlog.

Mr Sogoni resumed the Chair at this point.

The Chairperson noted the last question of Ms Steyn and reminded the Department that these questions had also been asked at the previous meeting.

Mr M Swart (DA) said that the Committee had asked the Department to meet with National Treasury and sort out budgetary matters, in order to ensure that the budget was sufficient to meet the restitution claims. He added that the deadline to determine the number of claims was set for last year, and it was problematic that the Department had now moved that target to the following year. Ms Singo had mentioned that the Department now had “a better idea” of how many claims had to be settled. He asked what exactly that meant, and what the ballpark figure of claims was likely to be.

Dr P Rabie (DA) asked if the amount of R23 billion over three years would be adequate to address the need. He too wanted to know the exact figures.

Mr S Sizani (ANC: Chairperson of Portfolio Committee on Rural Development and Land Reform) pointed out that this presentation did not indicate any of the results of the meeting between the Department and National Treasury. He suggested that it might be a better idea if the National Treasury took over paying claims, leaving the Department to concentrate its effort on rural development and land reform. He also mentioned that the current figure to clear the backlog was at some stage mentioned as R12 billion, so he did not see that the figures mentioned earlier were likely to make much impact.

Mr Naidoo responded that R5.5 billion was required to clear the backlog. The Department would advise of any additional amounts needed. The amount allocated, solely for restitution, over the MTEF period was R2.4 billion for 2012/13, R1.8 billion for 2013/14, and R1.3 billion for 2014/15

Mr Swart asked if this was an additional amount or formed part of the MTEF budgeting.

Mr Naidoo responded that this represented the outstanding amount and it was part of the current MTEF.

Ms Singo said that a process was under way in which the Regional Land Claims Unit was verifying the restitution claims. She said that the amount of R5.5 billion was a committed amount, that claims had been processed and it was known that this amount was needed to pay claimants. The problem had been that the Department did not have the required funds.

Ms Steyn asked if there was also a backlog for land reform.

Mr Sizani asked why R5.5 billion was being given over the MTEF period, and whether it would not make more sense simply to make a once-off payment to clear the backlog. He was concerned of the additional financial implications of a delay in making payments, and pointed out that this also opened the Department up to possible court action. He asked if this was a processing issue, or an affordability issue.

Mr Naidoo responded that the National Treasury had to account for the capacity of the Department to spend, and that was why the money is spread over the MTEF, rather than being made in one lump sum.

Mr Swart asked how many court cases the Department was involved in, and how much interest was being paid on outstanding amounts.

The Chairperson requested that the Department and the National Treasury should work closely together to avoid court action, as he believed that court actions were currently costing the government an estimated R700 million.

The Chairperson also sought clarity on the figures, which he said were confusing. On the one hand, the Department mentioned a figure of R12 billion, but on the other hand said that it was only claiming R5.5 billion over the MTEF. He echoed earlier concerns that the claims process had already ended in 1998, but there was still a backlog.

Dr Moshe Swartz, Acting Director General, Department of Rural Development and Land Reform, said that the amount of R5.5 billion would not solve the entire problem. Families who needed to be paid had been waiting for over 15 years for their claims to be finalised.

Mr Swart commented that Dr Swartz’s statement was very honest. He was not convinced that the Department knew exactly what was needed. It would be extremely difficult to plan and try to resolve the problem if the Department did not have accurate information. Land restitution was an extremely important issue, but at the moment it was “in a mess”.

Mr S Sizani felt that the Department should not be penalized too heavily. It was following the guidelines set.

The Chairperson asked whether the Department would be able to pay R5.5 billion in one year.
Ms Singo responded that it would.

Mr T Mamphoto, Acting National Commissioner: Land Claims, said that he respectfully disagreed with Ms Singo. He felt that the Department would be unable to move all R5.5 billion in one year, as claims were at different stages. He concurred with Mr Sizani that it might make sense for payments to be made via National Treasury, with input from the Department.

The Chairperson said that Parliament did not want to approve a non-credible budget, and therefore both the budget and the plans must be based on solid research. Land restitution had to be addressed, in order to deal with land reform.

Ms Mashigo asked if more claims could still arise.

Mr Mophuto remarked that large claims were gazetted, according to the policies at the time, but that it was a slow process to finalise these claims.

Mr Naidoo said that National Treasury relied on figures provided for by the Department, and had been advised of the figure of R5.5 billion. Estimates for forecasted commitments would have to be provided by the Department. He also explained that contracts could only be signed and concluded when the funds were available. Any contracts must be consistent with amounts appropriated by Parliament. In regard to the suggestion that National Treasury should make restitution payments, he said that this would typically be a last resort, as that was a set function of the Department.

Mr Sizani asked how many claims had been signed off and were ready to be paid. He noted that Parliament needed to be give documentation setting out the different categories and stages of the claims, and the payment process. He also wanted to know what risk the backlog presented to the State.

Mr L Ramatlakane (COPE) was concerned that the date for Parliament to be provided with such a document, detailing claims and payments, kept shifting. He recalled that the Minister had announced, in the House, that the document would be complete “this year”. He said that if there were blockages in the Department the Minister should ensure that sufficient action was taken that would actually produce results.

Dr Swartz remarked that the Department would continue discussions with National Treasury. He admitted that the targets kept moving. He said that the Department had hired 6 000 young people and placed them at the regional claims offices,  to go through the claims so that the Department could then respond to them.

Mr Naidoo said that it was clear that there was a need to draft and confirm a schedule of payments, to address outstanding claims, and to prepare a forecast. He also felt that there should be one common document to which everyone could refer. He referred again to the comment on National Treasury taking on the responsibility for claims, and said that he would convey this to his office and take advice.

The Chairperson recommended that the Department should modernise its methods, and not just use a paper-based system. The Committee needed to hear a clear pronouncement on how the problems were going to be addressed. He was concerned that money was being spent on litigation and was not being used to address the issue of land restitution. He also requested a breakdown of the money being spent on interest. He said that it was not correct to continue with the situation where resources were being wasted. He also commented that the number of acting appointments at this Department needed to be addressed.

The meeting was adjourned.


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