DWA on methodology & criteria used to decide on the performance targets and indicators reflected in its Strategic Plan and Annual Performance Plan

Water and Sanitation

26 February 2013
Chairperson: Adv J de Lange (ANC)
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Meeting Summary

The Department of Water Affairs (DWA) briefed Members on its approach to developing its Strategic and Annual Performance Plans with particular reference to its methodology and criteria used to decide on performance targets or indicators. It also gave input on behalf of its entities. The Department now tried to ensure that the strategic plan and the annual performance plan (APP) drove to a greater extent the way that the budget was shaped to ensure much better alignment. The Department had engaged with the National Treasury and with the Office of the Auditor-General of South Africa (AGSA). The Department felt that it had dealt with all the issues that the AGSA had raised. This was not to say that the AGSA might not find some issues that needed improvement as one moved forward.

The presentation was in three parts: firstly, the approach to developing the strategic plan and annual performance plan; secondly, the internal process; and thirdly, an overview of the plans, of which the Department gave more detail, with special attention to the matrix of issues which informed the Department’s planning. Special attention was given also to gaps from the 2012/13 financial year using the Balanced Score Card. On this there was extensive discussion on this between the Chairperson and the Department, which noted that the preparation of the Strategic Plan and the Annual Performance Plan (APP) were to be automated later in the 2013 year. A scorecard was a methodology for monitoring performance. Essentially it had been developed in the private sector, but it was being used in government too. The AGSA also participated in the discussion and informed Members of its own particular focus on the capability of the department's information to be verified. The Department sought to ensure that it provided the AGSA with all the supporting documentation. Thereafter, the AGSA would have its own methods to carry out verification. The Department would develop its scorecard into a dashboard. The Chairperson was highly impressed. Once the dashboard was populated, the Committee would want to know the baseline. The Department currently had a manual system, in which the APP was stored in a spreadsheet. The Chairperson urged consultations between the Department, the AGSA and National Treasury. The Department replied that it had already begun engagement with the AGSA's unit on performance monitoring. The Chairperson said that this would make everyone's work easier.

The Chairperson was disappointed that the documents had arrived only that morning. Members commended the balanced scorecard and asked what the time-frames were. Local government support was a key issue. The Water Trading Entity had a debt of R5 billion from the local government side. There was a loss of 60 million cubic metres of water, but it was not clear how the losses were apportioned. How many mines used water without a licence? Members requested the Department in future to include information on the Department's costing, and provide an analysis in terms of race and gender.  If the Department was going to be able to hold itself accountable for achieving all these goals, it would probably the best performing Department.

The Department also presented on the Water Trading Entity (WTE) and on the DWA Methodology and Criteria Used on the Performance Targets/Indicators in DWA Entities. The Chairperson was confident that the entities did their work in full co-operation with the Department and followed the same methodology. The Department noted some similarities in the entities' planning approaches. He noted the Department's oversight role when the entities determined their strategic plans. 

The Chairperson disliked percentages when assessing the completion of projects. He asked the AGSA what other methodologies existed to measure a project in a more realistic way. He had raised the same issue with the Department of Environmental Affairs (DEA). After considerable discussion, the Chairperson could not understand why design and planning took so long, and asked the Department to review its target indicators before the Minister signed them. The Chairperson congratulated the Department for setting itself the target of 100% of received applications finalised. A Member asked about the Lesotho Highlands Water Project, a project under the management of the TCTA. Its debt under management was R16.8 billion. This debt was too big. Government has signed for the second phase of this project. Would the debt be repaid from the water revenue?

The Department replied that Trans Caledon Tunnel Authority would always be managing debt if it was raising funding in advance to implement its projects, and the debt was drawn down by the way water was used over the lifetime of the project. There would always be a debt book. The Department explained how debt was underwritten by guarantees from Government.

The Chairperson wanted the AGSA to give a more ‘nuanced’ presentation of its information. The Chairperson was critical of the current budgeting system, though he knew that there was work being done to change it. In this context, the Department's input was 'magnificent'. The philosophy was sound and the meeting was a success.

Meeting report

Introduction
The Chairperson said that the aim of the meeting was to understand how the Department of Water Affairs (DWA) decided and established its performance indicators and targets, and the thinking behind it and this was a new process. However, the Committee understood that to some extent the Department was locked into the previous years’ framework and there was little scope for sudden changes.

The Chairperson was disappointed that the documents had arrived only that morning. It was very hard for Members to engage properly unless they had the chance to read briefing documents at least the night before.  

The Chairperson welcomed the Office of the Auditor-General of South Africa (AGSA), but regretted the absence of any official from the National Treasury, though he conceded that the latter was very busy with the last-minute preparations for the Minister of Finance’s budget speech later that afternoon.

DWA Approach to the development of the Strategic Plan & Annual Performance Plan presentation
Mr Trevor Balzer, DWA Acting Director-General, said that preparing the presentation was a new experience, in view of explaining the Department’s rationale in deciding and establishing its performance indicators and targets. The Department had undertaken a series of internal workshops, which had included the Minister and the Deputy Minister. The Department was locked into not only its five-year Strategic Plan, which was a rolling strategic plan, but also into its budget allocations. The Department had tried to ensure that the strategic plan and the annual performance plan (APP) drove to a greater extent the way that the budget was shaped to ensure much better alignment than in previous years. The presentation did not include figures, as these would be apparent in the budget speech and subsequent processes. The focus was on the textual part of the APP, which would be tabled in a couple of days. Members should find that there was now 100% alignment of the targets. He noted that there had been engagement with the National Treasury and with the Office of the Auditor-General of South Africa (AGSA). The Department felt that it had dealt with all the issues that the AGSA had raised. This was not to say that the AGSA might not find some issues that needed improvement as one moved forward.

The presentation was in three parts: firstly, the approach to developing the strategic plan and annual performance plan; secondly, the internal process; and thirdly, an overview of the plans, which was where the Department would go into detail.

Part 1: Approach for developing strategic and annual performance plans
Part 2: Internal planning process followed
Part 3: Overview of the strategic and annual performance plans

Part 1: Approach for developing strategic and annual performance plans
Statutory compliance
 National Treasury regulations: Chapter 5 (Department) & Chapter 30 (Entities)
- Prepare a strategic plan with a five-year planning horizon
- Table annual performance plans with a three-year horizon consistent with the Medium Term Expenditure Framework
 Public Service regulations: Part 3 B
Based on the strategic plan, an executing authority should determine the of the Department’s organisational structure in terms of its core and support functions; grade proposed new jobs according to the job evaluation system; define the posts necessary to perform the relevant functions (Slide 4)

 The Presidency Policy framework for the Government-wide Monitoring & Evaluation System
The accounting officer of a department or municipality, or the chief executive officer of a public entity, was required to establish a monitoring and evaluation system for the institution. Primary users of the M & E system would use these source systems to refine their planning and implementation processes. In the case of the Department the Balanced Score Card was selected as the model to use.
 National Treasury Framework for Strategic Plans and Annual Performance Plans

Alignment to the government outcomes-oriented monitoring and evaluation approach (i.e., Programme of Action, Delivery Agreements) and Strategic and Annual Performance Plans.
(Slide 5).

Mr Balzer said that the Department believed that it was in compliance.

What informed the Department’s planning (chart, slide 38 – shown out of sequence)
Mr Balzer explained the matrix of the other issues, which informed the Department's planning. Informing the Department's planning were the strategic plans of the departments shown on the left-hand side – Agriculture, Forestry and Fisheries, Trade and Industry, Rural Development and Land Reform, Human Settlements, Mineral Resources, Energy, Co-operative Governance, Environmental Affairs, and National Treasury. 

Externally the Department co-operated with the United Nations in respect of the Millennium Development Goals (MDGs). 

There were the 12 delivery outcomes of Government. Also there were the development indicators set by the Presidency. There were also the National Planning Commission (NPC) and also the New Growth Path (NGP), the Minister's performance agreements, and the National Development Plan (NDP) [missing from the slide]. 

Then there were the Parliamentary processes – both the National Assembly's Portfolio Committee and the National Council of Provinces (NCOP)'s Select Committee. 

The Department also worked with the provincial growth and development strategy and at the service levels the integrated development plans (IDPs) of the metros and municipalities.

That matrix showed Members on a single page the elements which informed the Department's strategic planning and the development of the APP also. 
(See chart, slide 38). 

Part 2: Internal planning process followed
Government Wide Monitoring & Evaluation Framework (GWM&E)
(pyramid chart, slide 7)
This would typically cover the human and financial resources needed to do the Department's work, moving upward to the activities and processes in terms of what the Department did, moving up to the outputs, such as dams and the regional bulk infrastructure programme, then the outcomes in terms of infrastructure and protecting South Africa's resources, and then finally the impacts in terms of what the Department wanted to change and key issues for change impacted in terms of the National Water Resource Strategy (NWRS) and in the legislative review. He emphasised issues of equity. This was an illustration of the hierarchy of the Department's planning process.

Reviewing 2012/13 goals (third column, table, slide 8)
The Department had reviewed its six goals of the previous year and reduced them to four.

Reviewing 2012/13 strategic objectives (tables, slides 9-11)
The Department had also reviewed its strategic objectives, for example the key objectives for goal one. These were to ensure the availability for water supply for economic development and domestic use, and to implement programmes to create job opportunities. In the latter, there was a linkage to Outcome 4.

The Chairperson corrected Mr Balzer on some points. He suggested a new slide with the current four goals, and the corresponding strategic objectives alongside, with comments. 

Mr Balzer undertook to do so.   

Gaps from the 2012/13 financial year using the Balanced Score Card (chart, slide 12)
There was extensive discussion on this between the Chairperson and Mr Balzer, who noted that the preparation of the Strategic Plan and the Annual Performance Plan (APP) were to be automated later in the 2013 year. He reminded the Chairperson that a scorecard was a methodology for monitoring performance. Essentially it had been developed in the private sector, but it was being used in government too.

The Chairperson, mindful that the AGSA also measured performance, asked if the AGSA used the same balanced score card as the Department.

Mr Wikus Jansen van Rensburg, AGSA Senior Manager: National D, replied that the departmental management could decide on its methodology to measure its performance.

The Chairperson pointed out that the AGSA also measured, and had a colour code. Did the AGSA use the same methodology as departmental management when it produced its audit reports?

Mr Van Rensburg explained that basically the departmental management reported on its targets. Then the AGSA established if the department had achieved its targets.

The Chairperson asked how the AGSA checked that a department was not lying. How did the AGSA verify the information that the department provided?

Mr Van Rensburg explained that if the department had achieved four out of five targets, the AGSA would report that the department had achieved 80% of its targets. The AGSA would furthermore inspect the underlying documentation that the department had used to support the department's information. He gave examples. Essentially the AGSA reported on the capability of the department's information to be verified.

Mr Balzer said that the Department sought to ensure that it provided the AGSA with all the supporting documentation. The Unit of which Ms Marietha Schoeman, DWA Director: Corporate Planning, was in charge, in the office of the Chief Operations Officer, prepared the Department's quarterly reports, and required the various branches to provide supporting documentation. Subsequently, the Office of the AGSA would have its own methods to carry out verification.

Mr Balzer said that there were 15 issues that the Department thought should appear on its dashboard on that scorecard. He explained them.

The Chairperson asked if the Department checked that those issues had improved.

Mr Balzer confirmed this. The management, together with the Minister, and others, would have access to that dashboard, which would show how the Department was performing in the 15 specific areas in that particular year. It was a process that was now being automated. So the APP, once approved, would form the basis of the final population of the information that would be included in the scorecard. 

The Chairperson was highly impressed. Once the dashboard was populated, the Committee would want to know the baseline. He asked Ms Schoeman to provide it promptly. He was very excited by all this.

He asked if, at present, the Department produced figures manually, pending completion of automation.

Mr Balzer replied that this scorecard front-end was brand new. It would be implemented during the 2013/14 financial year. What the Department had at the moment was a manual system, in which the APP was stored in a Microsoft Excel spreadsheet.

Mr Balzer asked if the AGSA had examined the Department's balanced scorecard. He asked if the AGSA agreed with the Department's 15 indicators. If the AGSA had not examined it, he wanted the AGSA to hold consultations with the Department urgently.

Mr Van Rensburg replied said that the AGSA did not prescribe objectives and targets to management. It examined objectives to see if they related to a department's business.

The Chairperson said that even he could not tell the Department what to do. He regarded the Members and delegates as partners with different roles with the aim of creating a good Department. He repeated his call for consultations on the dashboard. He also wanted the National Treasury involved. The dashboard was such a good idea.

Mr Balzer agreed, but said that the Department had already begun engagement with the AGSA's unit on performance monitoring.

The Chairperson was pleased. Everyone's work would be easier. The CFO (she) was already smiling.

Mr Balzer noted the importance of good information systems.
 
Part 3: Overview of the strategic and annual performance plans
Vision, mission, values / strategic objectives /goals
(chart, slide 14)

Programmes per budget (Estimates of National Expenditure (ENE)) structure (table, slide 15)
Mr Balzer noted that the Department sought to link its strategic goals and objectives to the ENE. He noted that there were two separate accounts in the Department, and it sought to avoid double-counting.

Programme 1: Administration (tables, slide 16-18)
The Chairperson said that there was no need for detail. This would be required in the forthcoming budget hearings. He again was highly impressed.

Programme 2: Water Sector Management (tables, slides 19-20)
Mr Balzer said that indicators there would be around the water pricing strategy.

The Chairperson asked if the new water pricing strategy had been published in the Government Gazette.

Mr Balzer replied that it had not yet been published. There was a steering committee at work.

The Chairperson asked Mr Balzer to let him know immediately when the strategy was gazetted. He wanted to engage with it.

Programme 4: Regional Implementation (tables 21-25)
The Chairperson commended the new Mine Water Management sub-programme (slide 25).

Programme 5: Water Sector Regulation (table, slide 26)
Mr Balzer noted a steering committee for the Water Use Authorisation sub-programme.

Programme 6: International Water Co-operation (table, slide 27)
Mr Balzer noted regional and global co-operation, in particular, agreements with Vietnam, China and Japan.

The Chairperson asked him to skip the agreements with international organisations.

Discussion
The Chairperson asked Members to bear in mind that at this stage the Committee was not discussing the budget.

Dr S Huang (ANC) commented on the length of time that Mr Balzer had held his position in an acting capacity.

The Chairperson joked that he was trying to set a record.

Dr Huang was especially interested in the balanced scorecard and commended it. What were the time-frames for goals 1 and 2?

Dr Huang remarked that local government support was a key issue. He noted that the WTE had a debt of R5 billion from the local government side. He did not understand the colour scheme.

Dr Huang noted that there was a loss of 60 million cubic metres of water. However, it was not clear to him how the losses were apportioned. 

Dr Huang asked how many mines used water without a licence.

Ms M Wenger (DA) commended the Department on a comprehensive presentation. If the Department was going to be able to hold itself accountable for achieving all these goals, it would probably be the best performing Department.

The Chairperson agreed.

Ms Wenger wished the Department well.

Ms Wenger had questions on local government but had been covered by Dr Huang. 

Mr J Skosana (ANC) said that the Department's briefing showed hope for South Africans. The achievement of these programmes was a process.

Mr Skosana asked about issued related to the reduction of water crimes. Nationally the Department's plans were very good, but there was no bigger crime than water-leaks in the villages.

Mr Skosana said that the Department's financial status for a couple of years had not been so good. It was not the Department itself that had a shortfall, but the Department's entities. He urged the Department to address these issues in the entities.

Mr Skosana said that it was a good thing to include the water-licensing backlog in the strategic plan.

Mr Skosana said that the major question was acid mine drainage.  The Department was on the right footing in dealing with it. He was confident that the team concerned would bring good results.

Ms D Tsotetsi (ANC) applauded the good work done but asked what challenges the Department anticipated. She asked what was realistic in a given time-frame. 

Ms Tsotetsi expected information on the Department's costing in future presentations.

Ms Tsotetsi sought an analysis in terms of race and gender (slide 21).

Mr Balzer proposed that once the Department had made some progress in populating its scorecard, it would brief the Committee fully. What Members had in front of them was not the final appearance of the dashboard. Hence there were no colours. The Department had deliberately used blue. However, the final product would use the 'traffic light' colours to indicate areas of concern.

The Chairperson said that this was one of the tasks on his list.

Mr Balzer said that the money owed to the WTE was under the dashboard item of revenue generation. The WTE did have a strategy in place to deal with revenue collection. It also had a holistic engagement with the Department of Co-operative Governance, whereby it examined the debt owned to municipalities in general. There were areas where the Department itself might owe money to municipalities in terms of rates, taxes, and other services. 

Mr Balzer said that water losses came under the funding and infrastructure backlog. The Department's programme to address leaks would warrant a separate presentation. It would be presenting next week to the Standing Committee on Appropriations on its readiness to implement that grant. 

Mr Balzer said that the '100' inserted as the target for addressing licensing backlogs was a target for compliance by those who had licences. It was not a target against those who did not have licences. That would be a separate issue dealt with through compliance and monitoring. The Department's compliance and monitoring unit was not yet as strong as the Department wished. It had discussed the matter and resolved on the need to strengthen it.
 
Mr Balzer had a separate report on addressing the backlog of licences. Such licences were quite complex and included stringent environmental conditions.

Mr Balzer replied that the Department did not set targets that were not achievable, but there might be external constraining factors.

Mr Balzer replied that the Department's efforts in regard to water crime were related to the project for 'filling the gaps'. 

Mr Balzer replied that the Department's financial issues were high on the Department's agenda

Water Trading Entity presentation
Programme 1: Administration (tables, slide 29)

Programme 3: Water Infrastructure (table, slide 30-32)

Mr Balzer noted that there were two accounts, the main and the trading account. However, the process followed for identifying the strategic targets was the same as for the Department itself.

The Department aimed to have the asset register fully complete this year, with a view to obtaining a clean audit in 2014.

It was always quite difficult to ensure 100% reduction of irregular expenditure, but one could not target for anything less.

The Chairperson asked the Mr Balzer not to give any further detail, as the Department would have to report under the budget hearings. 

Rationale for infrastructure projects (chart, slide 33; text, slides 34-35)
Infrastructure projects were conducted in a highly regulated framework in accordance with statutory requirements – example the National Water Act (No. 36 of 1998), Water Services Act (No. 108 of 1997), the National Environmental Management Act (No. 107 of 1998), the Public Finance Management Act (No. 1 of 1999) as well as the prescripts provided by National Treasury, Auditor-General and the National Planning Department. Projects were often dependent on multi-year, inter-disciplinary, intra-and-inter-departmental factors. Budgets might originate solely from the fiscus or be a combination of public and private funds. Often the budgets fell into the defined mega-projects categories, which required specific reporting formats. Projects involved intricate stakeholder engagements.

Project Risks (slide 35)
 Construction or builders holidays / breaks
 Inclement weather causing delays
 Acquisition of land
 Labour interventions
 Skills availability
 Stakeholder or Interested and Affected Party (I&AP) engagements
 Environmental Authorisations
 Intra- and inter-departmental co-operation
 Contractual arrangements

The Chairperson pointed out that he did not like percentages when assessing the completion of projects. He
asked the AGSA what other methodologies existed to measure a project in a more realistic way. He had raised the same issue with the Department of Environmental Affairs (DEA). 

Ms Zandile Mathe, Acting DDG: Infrastructure, sought to explain. She said that the figure of 25% was the percentage of a phase (chart, slide 33).

The Chairperson was not satisfied. It appeared to take the Department a whole year to do 'one fifth of the 25%'. Would the Department take five years, at 20% a year, merely to design a project? 'It just looks wrong to me.' He said that Ms Mathe did not appear to understand her own figures.

Mr Balzer explained that it would be necessary to review the full chart for the project. If the Department did 20% of the design in the year 2013/14, it did not necessarily mean that it would have begun the design at the beginning of the year. It might be work that started at the end of the year, with the other work following through quite early in the second year. It was necessary to refer to the project charts for all those projects. He suggested giving a detailed briefing, from conception to implementation, on one of these projects in future. 

The Chairperson suggested doing this at the time of the budget hearings, and suggested including some comments under rationale. He asked Mr Balzer to review the design aspect and wanted further explanation. He could not understand why design and planning took so long. He asked the Department to review its target indicators before the Minister signed them.

Mr Balzer agreed.

Programme 4: Regional Implementation & Support (table 36)
The Chairperson congratulated the Department for setting itself the target of 100% of received applications finalised.

Mr Balzer pointed out that the Department still had to achieve it.

The Chairperson asked if the Department had the licensing backlogs as part of its strategic plan.

Mr Balzer confirmed that these backlogs were included.

Discussion
Dr Huang asked for the AGSA's views on the percentage of 25%. He further asked the AGSA for its views on the allocation of the budget on a multi-year basis.

Mr Balzer replied that the biggest portion of the budget was for phase 4 – construction. This was the part of the budget for which the WTE was responsible. The planning and design would normally happen within the main account, and was considerably smaller than the overall project cost.

The Chairperson understood that the 25% was not the size of the budget but was 'the time' that the Department allocated as part of the project. 

Ms Mathe apologised for a mistake. The 25% was the percentage of a phase.  The biggest portion, in terms of time, of a project – 60% or 70% - was for construction.

The Chairperson asked if the 25% was wrong.

Ms Mathe agreed that this was a mistake, and the Department would have to make a correction.

Mr Balzer agreed.

The Chairperson was content.

DWA Methodology and Criteria Used on the Performance Targets/Indicators in DWA Entities
The Chairperson said that, on the basis on what the Department had reported above, he was not too worried about the entities, as he was confident that the entities did their work in full co-operation with the Department and followed the same methodology.  He did not expect Mr Balzer to go through all the detail of the presentation, but noted that the information would be useful later.

Mr Balzer noted some similarities in the entities' planning approaches. He noted the Department's oversight role when the entities determined their strategic plans. 

Policy and legislative mandate
The key government policies pertaining to water were set out in two policy papers as follows: the National White Paper on Water Policy (1997) and The Strategic Framework for Water Services (2003)

The legislative mandates follow from these policies and were set out in three pieces of legislation: The National Water Act (No. 36 of 1998), The Water Services Act (No. 108 of 1997), and the Water Research Act (No. 34 of 1971)

In terms of the current policy and legislative mandates, it was the Minister who was the custodian, policy maker, and regulator for the water sector. 

The Minister was also a shareholder in all DWA entities listed under the Public Finance Management Act.
(Slide 2)

PFMA Classification of State Entities
(Table, slide 3)

Mr Balzer noted that the Water Users Association was not listed in any of the Schedules of the PFMA. It fell within the ambit of the Water Services Act.

Shareholder responsibility
The Minister as shareholder had distinct responsibilities.

 Appoint all Board members.
 Conclusion of binding shareholder compacts.
 Approval of Strategic Plans and Corporate Plans/Annual Performance Plans.
 Issuing of a strategic intent statement.
 Approval of significant & material transactions.
 Recommendations of borrowing limits to National Treasury.
 Access information to monitor and evaluate performance.
 Enforce accountability and take remedial action.
(Slide 4)

The Minister's responsibilities were distinct from those of board and management.

Board and management responsibilities
 Responsible for ensuring the financial sustainability of the company through coherent utilisation of company’s assets
 Responsibility for development and implementation of the strategy:
 Development of strategic and business plans and subsidiary plans. (Financial, risk management, operational, marketing, etc).
 Appointment of management and staff.
 Management of all aspect of operations.
 Development of detailed company policies (e.g. remuneration, procurement, etc) within guidelines defined by practice notes and implementation of company practice in adherence to the policy.
(Slide 5)

Relationships between institutions and DWA
Public institutions reported to the public and Parliament through Annual Reports and Annual Financial Statements and to the Department with quarterly performance reports.
(Chart, slide 6).

Overview of water boards
They derived their mandate from the Water Services Act 1997 and were listed as Schedule 3b under the PFMA 1999.
(Slide 7)

Oversight role over Water Boards
(Table, slide 8)

The Minister as the sole shareholder: the shareholder management process
Performance monitoring and evaluation
 Quarterly reporting
 Annual Reports including financial statements submitted by end of November every year.
 Tariff Submissions to Parliament by 15 March every year.
 Reporting to the Portfolio Committee –once a year.
(Slide 9)

Selected Objectives & Indicators for Water Boards
(Table, slide 10)

Rationale and criteria for selecting indicators
 Ensure that entities were aligned to government objectives to support and drive development in key sectors.
 Mobilisation of additional financial resources required supporting developmental strategy.
 Roll out of key infrastructure to enable economic and social development
 Indicators to support building a solid institution –run on business principles -financial viability and good governance.
(Slide 11)

The Chairperson asked if the above would be reflected in the dashboard.

Mr Balzer replied that the dashboard currently reflected only the Department itself.

The Chairperson thought that the dashboard must surely include the entities. Catchment Management Areas (CMAs) and water boards all sought to achieve the same objectives as the Department.

Mr Balzer replied that the Minister had the same request. However, he added that the current focus was on getting the Department itself right, before incorporating the entities. 

Strategic formulation, implementation and monitoring cycle
(Chart, slide 12)

Mission, vision and strategic intent
(Chart, slide 13)

Four balanced perspectives
(Chart, slide 14)

Risk management process
 Objective setting (what was our mandate, objectives, etc)
 Risk identification (what could go wrong, what could prevent objectives being achieved, and causes of risk?)
 Risk analysis (what were the chances of the risk occurring [likelihood], what would be the effect when it occurs (impact]).
 Risk response (avoid, accept, reduce or share the risk by developing controls, procedures, etc to reduce risk to acceptable levels).
 Control activities (policies and procedures were established and implemented to ensure the risk responses were effectively carried out).
 Information and communication (information was captured and communicated so that people were able to carry out their risk management duties).
 Monitoring (ongoing management activities and separate evaluations).
(Slide 15)

Overview of other entities
Trans-Caledon Tunnel Authority (TCTA)
Established in 1986 in terms of the National Water Act, was categorised as a Schedule 2 major public entity and was subject to the PFMA. TCTA was engaged in project financing and implementation together with being a specialised liability management entity.  It financed and implemented bulk raw water infrastructure in a cost-effective manner to benefit water consumers.

Projects under management by the TCTA:
 Lesotho Highlands Water Project – Debt under management was R16.8 billion, paid for from revenue generated from water sales.  Loan raised on explicit government guarantees.
 Berg Water Project – Debt under management was R1.6 billion, paid for from revenue generated from water sales, and loan raised by implied government guarantees.
 Vaal River Eastern System Augmentation Project – Debt under management was R2.7 billion, paid for from revenue generated from water sales, and loan raised by implied government guarantees.

Four new mandates had been issued to the TCTA including the Olifants River Water Resources Development Project Phase 2, the Komati Water Scheme Augmentation Project, the Mooi-Mgeni Transfer Scheme, the Mokolo-Crocodile Water Augmentation Project, Metsi Bophelo Borehole Project and Acid Mine Drainage.
(Slides 17-18, chart, slide 19)

Water Research Commission (WRC)
Established in terms of the Water Research Act, 1971. It played an important role in water research by establishing needs and priorities for research, stimulating and funding water research according to priority, promoting effective transfer of information and technology and enhancing the knowledge and capacity of the water sector.

The Chairperson noted that the WRC was the only entity that was really separate. The CMAs and water boards were well-integrated into the Department's day-to-day work.

Mr Balzer said that the WRC did research for other departments.

The Chairperson wanted the WRC to become more focused on the Department to ensure it had a greater impact on government's achieving its objectives.

Mr Balzer said that the WRC's income was limited by the extent to which it received a levy on raw water tariffs of R0.046 on every cubic metre of water sold. The WRC also tried to obtain leverage income.

The Chairperson was very happy with the WRC's work, but wanted to 'create those links' with the Department.

Mr Mbangiseni Nepfumbada, DWA Acting DDG: Water Resources Management, pointed out that there was a link with what the Department was doing.

The Chairperson agreed that much of this work had an impact, and perhaps it would be possible to ask for more money when it was possible to demonstrate by performance indicators that this money was essential to achieve objectives.

Mr Balzer said key research areas included:
 Water resource management
 Water linked ecosystems
 Water use and waste management
 Water utilisation in agriculture

The process conducted to develop the Corporate Plan was characterised by three important elements.
 Firstly, it had been an on-going and iterative process.
 Secondly, it had been consultative, incorporating discussions and considerations from DWA and WRC stakeholders in various forums.
 Thirdly, it had employed both a forecasting and back-casting approaches to the development of strategic objectives, involving an analysis of the WRC’s current positioning in the sector as well as a reflection on developments and potential developments in the external and organisational exercise, which should inform the WRC’s core business.

The top four Lighthouses proposed included:
 The green village concept;
 Water governance;
 Water-sensitive urban design with a focus on wastewater;
 The water-energy-nutrition/food nexus.
 Climate change interventions

WRC reported progress against its key performance areas in terms of new projects, finalised projects and new innovations as follows:

 Knowledge generation
 Knowledge dissemination
- Workshops
- Issues of Water Wheel
- Technical and policy briefs
- Issues of Water SA
 Capacity building (number of students)
 Expansion of the Fund Management System (including short term research projects)
(Slides 20-24

Overview of Catchment Management Agencies
Enabling legislation
Catchment Management Agencies (CMAs) were established in terms of the National Water Act 1998. CMAs were subject to the Public Finance Management Act (PFMA) and related Treasury regulations– categorised as a Schedule 3A entity: “service delivery public entity”. The purpose of the CMA was to delegate water resource management to the catchment level and to involve local communities in the decision-making processes.

Broadly, the initial role of a CMA was articulated in the Act as: managing water resources in a WMA, co-ordinating the functions of other institutions involved in water related matters and involving local communities in water resource management.
(Slide 26)

DWA's oversight role over CMAs: list of documents submitted to the Minister as prescribed by legislation
(Table, slide 27)
As per the PFMA and Treasury Regulations, these included the Annual Report and Financial Statements, Business Plans, Budget of estimated revenue and expenditure for the year, quarterly reports on actual revenue and expenditure and revenue for the remainder of the year, and financial misconduct report.

DWA's oversight responsibilities
(slide 28)
Schedule 4 Part 4:
 Institutional planning outlines the responsibilities of the CMA GB and staff, particularly in terms of the CMA  Business Plan, General matters to be included in business plans, which were the main tool for formal oversight, including:
- Organisational / institutional matters
- Governance
- Functions
- Financial (PFMA) requirements
- Transformation and human resources (HR)
- Employment equity (EE) policy, etc (organ of state and must comply)

Schedule 4 Part 5 outlines the monitoring and intervention by the Minister

Schedule 4 Part 6 outlines records and reports

The catchment management strategy provided the mechanism to influence the vision, priorities and direction that the CMA took.
The catchment management strategy was most important instrument for the integrated management of water resources in a Water Management Area as well as an oversight tool for DWA to audit the CMA.
(Slide 28)

Selected objectives and indicators for CMAs
(Table, slide 29)

Discussion
Dr Huang asked about the Lesotho Highlands Water Project, a project under the management of the TCTA. Its debt under management was R16.8 billion. This debt was too big. Government had signed for the second phase of this project. Would the debt be repaid from the water revenue?

Mr Balzer replied that TCTA would always be managing debt if it was raising funding in advance to implement its projects, and the debt was drawn down by the way water was used over the lifetime of the project. There would always be a debt book. When phase 2 would be implemented, the debt would increase, as TCTA raised funding for this second phase. If one considered the TCTA's performance over time, one could see how the TCTA had managed its liability. Moreover, this was covered in considerable detail in the annual report. That debt was underwritten by guarantees from Government, particularly as to the Lesotho Highlands Water Project.  The other projects were covered by implicit, rather than explicit, guarantees, in which the Department would guarantee the project on behalf of Government.   

The Chairperson remarked on what a pleasure it had been to come to work that day. He echoed what Members had said.

The Chairperson wanted the AGSA, in presentations, to offer greater distinction, by means of colour schemes, between its various audit outcome categories. He wanted a more nuanced presentation of information.

Today's meeting had a proactive aim of helping Members better understand how performance information was arrived at, so that they could engage more effectively in later stages of the budget cycle, including the Budget Review and Recommendation Reports (BRRRs), and the audit reports.

Secondly, the Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009) gave Parliament the power to make suggestions around the budget, although he did not favour undue tampering with a budget, which was a complex process. However, when a department had a dashboard, it was possible to have substantive discussion with it. For example, on whether the department's priorities were right. Perhaps money for fancy lunches could be redirected to infrastructure.

The Chairperson was critical of the current system, though he knew that there was work being done to change it. 

In this context, the Department's input was 'magnificent'. The fact that this Department had put down on paper its thinking in how it determined its requirements was indeed 'magnificent'. It demonstrated the Department's capacity. While, he hoped for better financial results, the philosophy was sound and the meeting was a success.

Committee programme
The Chairperson gave tentative information on the Committee’s programme for the first term. The budget hearings for the DWA were expected to be held on 23 March 2012, in which he hoped to start integrating the work of some of the entities into the Department's budget, particularly around infrastructure. This would be a different approach from that of previous years.  He wanted input also on the Business Process Review – about which the AGSA was worried - and the Water Tribunal. 

The meeting was adjourned. 

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