Municipal Water Infrastructure Grant readiness: Department of Water Affairs, National Treasury & South African Local Government Association briefings

Committee: Standing Committee on Appropriations

Chairperson: Mr E Sogoni (ANC)

Date of Meeting: 05 Mar 2013

Summary

The Committee heard briefings by the Department of Water Affairs, National Treasury and the South African Local Government Association on the Municipal Water Infrastructure Grant (MWIG).

A comprehensive presentation was given by DWA on the needs and overall challenge of the Interim/Intermediate Water Supply Programme (IIWSP), its goals, scope, aims, purposes and objectives. The presentation also discussed the cost of water supply, linkages between IIWSP and the Municipal Water Infrastructure Grant (MWIG), implementation, collaborations, financial allocations and cost flow. The presentation also covered issues of governance, project management, involvement of Water Boards, progress, planning, challenges and risks.

The National Treasury (NT) began with the constitutional rights and responsibilities for water services, the challenge of ensuring access to water and funding available in the local government transfer system. The Presentation looked at MWIG in terms of its goals, purposes and outcomes, capacity to implement projects, sustainability and a review of the local government conditional grants.
The South African Local Government Association touched on the grant conceptualisation process, comments on the MWIG, comparing the Municipal Infrastructure Grant (MIG) and MWIG, funds, challenges and lastly, recommendations.
The Members raised concerns around budgets, capacity, consultants, planning and implementation, role-players and the long-term solutions. The Chairperson said that everyone could agree that MIG was not performing and more organisation was needed. It was important to consult the appropriate role-players. Advice from SALGA was important.


Minutes

The Chairperson welcomed all in attendance. He asked the presenters for the day to introduce themselves. Turning to the Department of Co-operative Governance and Traditional Affairs (CoGTA), he said the Department did not take the Committee seriously. He noted the Committee usually wanted senior officials of the Department and it was clear that CoGTA did not take the Committee seriously by not bringing senior members from the Department.

He said the agenda for the Committee meeting today would cover discussions on the new Municipal Water Infrastructure Grant (MWIG). He said it was important, for the grant to be passed, that there were clear and proper arrangements around its administration and the clear inclusion of stakeholders. He noted the Minister of Finance did report about this grant in the medium-term budget policy statement (MTBPS) of 2012.

He asked that the Committee bear with the Department of Water Affairs (DWA), as it did not make its presentation ready for Members until that morning. He would not go into why the presentation was not delivered on time but warned the Department about this for future presentations as the Committee had a rule that it would like to have the presentation three days before the meeting so that Members could familiarise themselves with it.

Department of Water Affairs briefing
Mr Trevor Balzer, DWA Acting Director-General (DG), introduced his delegation. He apologised to the Members for the late presentation but took note of the Committee’s rule.

Mr Balzer began by looking at the content and structure of the presentation would look at background and overview, implementation readiness, challenges and risks and the conclusion. He noted the Interim/Intermediate Water Supply Programme (IIWSP) was initiated in 2012 by the Minister as recognition of the plight of the many people without services, particularly in rural areas. The programme would initially focus on the 24 District Municipalities (DM) with the highest backlogs and therefore merge with the existing initiative to address 2014 water backlogs (would subsequently not be limited to the 23 DM and target un-serviced areas in all Water Services Authority (WSA)). The programme was initiated by the DWA as part of its leadership role. The programme would facilitate solutions and where possible provide direct support and funding in areas that were not covered by existing projects which were projects covered the Bulk Infrastructure Grant or the Municipal Infrastructure Grant (MIG).

Looking at the need and overall challenge for IIWSP, Mr Balzer said there was a risk that the 2014 service delivery targets for basic services to all South Africans would not be met. A key problem identified towards this target was not necessary funds but also institutional capacity and effective planning. The IIWSP was envisaged by DWA as a “Grant – in Kind”, where the DWA together with Water Boards and other sector partners could play a more direct role in assisting the WSA in overcoming challenges. A key part of the envisaged approach was to deploy experts and engineers and capacitate / enable them to introduce quick solutions where possible.

Turning to the aims and purposes of the programme, he outlined that the purpose of this programme was not to duplicate other existing programmes or initiatives but to supplement them were there were gaps and to also provide some short –term and quick win solutions. The programme also envisaged addressing functionality-related problems and not only addressing new infrastructure requirements. The programme was part of the new paradigm promoted by the DWA of “source to tap – tap to source”.

Mr Blazer noted the goals/scope of the programme stating that some goals were that all communities living in settlements greater than 50 households must receive a minimum interim water supply before 30 June 2015 either through a permanent water supply scheme or an interim or intermediate water supply intervention. In addition to the Interim, Intermediate, Intermediate Water supply interventions facilitate a solution to the “hot-spot” areas related to water service delivery challenges in the 24 priority DMs before 30 June 2015.

The supplementary goals were to maximise job creation. He said a strong emphasis must be placed on the development of jobs for the unskilled rural people through the implementation of the strategy. This should be done by ensuring that labour intensive construction methods were chosen, ensuring that the interventions selected, had job creation as one of the key selection criteria, ensuring the direct involvement of the communities with regard to management of the water supply interventions and promoting the development of women co-operatives. Another supplementary goals was to promote innovation, “back to basic”, indigenous technologies and new ideas and that the processes adopted must allow for innovation, the adoption of indigenous appropriate solutions and the introduction of new successful ideas. This could be achieved through research, community involvement and participation and through a media campaign / competition requesting submission of innovative ideas from the public and private sector.

Mr Balzer discussed the objectives of IIWSP which were to facilitate and ensure adequate planning and the development of B/P for each WSA that would ensure the provision of interim and intermediate water supply for all communities, facilitate the involvement of various stakeholders to support the WSAs in the implementation of various interventions, identify secure funds and support the implementation of various interim / intermediate interventions where there were gaps in the allocation of funds from existing programmes, assist the relevant WSAs to accelerate the implementation of various existing projects and interventions that were aimed at providing water supply services and to identify and where possible provide additional training and support to ensure the sustainability and effective management of the various projects implemented.

Looking at definitions of interim/intermediate water supply intervention, it was said an interim / intermediate water supply intervention was an intervention that would ensure a minimum interim water supply and could be any of the following: new water supply infrastructure that could be subsequently upgraded to supply a minimum of basic water supply, a temporary water supply system that did not involve fixed infrastructure belonging to the Water Service Provider (i.e. roof rain tanks, etc), any appropriate intervention that repaired or re-commissioned dysfunctional existing infrastructure or water resources to supply a minimum interim water supply, the acceleration of planned infrastructure projects to supply basic water, a water supply system that made use of the most optimal existing and localised water resources and could be developed and commissioned within a period of 12 months in order to provide minimum interim water supply (this could include local bore-holes, streams or single purpose dams that had been converted into multi-purpose dams).

Mr Balzer explained the cost of water supply (all WSA) noting that the total infrastructure need was a total of 757 700 households or a population of 1.56 million. The total cost to address the backlogs were in the order of R27 billion this was in comparison the total cost to address backlogs in the 24 priority DM was R21 billion. He said there were 635 981 households with no services in the (formal) DMs while there were 170 078 households with no services in the informal settlements.

Looking at the scoping of basic water needs in the 23DM, the gaps in the table were due to the updating of information and incomplete assessments. The categories of needs in 24 priority DMs were divided into communities having no formal water infrastructure (17.8%), communities requiring extension to existing infrastructure (35.8%), communities with access to infrastructure but no access to water because of functionality problems (28.2%) and communities with access to infrastructure but no access to water because of source problems (18.1%).

Mr Balzer then turned to the approval of MWIG by National Treasury and said as part of the IIWSP, the DWA motivated to NT the approval of funds based on a holistic need assessment. The NT had informed the DWA in December 2012 that a new Grant had been approved to fund the IIWSP, referred to as the Municipal Water Infrastructure Grant (MWIG) with R4.3 billion allocation for the 2013 Medium Term Expenditure Framework (MTEF). The Grant was approved as a schedule 5 Part B specific purpose allocations to municipalities and not as a Schedule 6 Part B: Allocations-in-kind to municipalities for designated special programmes. The decision to make MWIG a schedule 5 instead of schedule 6, could affect the purpose, aims and performance of the IIWSP. DWA had engaged NT to try and change the schedule but this had not been successful. The intention was to try and change it if possible during 2014. (Slide 13)

The linkages between IIWSP/MWIG were explained as the IIWSP being developed by DWA while MWIG was the name used by National Treasury. It was noted MWIG would fund the IIWSP as the IIWSP was a bigger programme that would try and secure additional funds and bridge the planning between different grants and programmes.

Mr Balzer stated implementation readiness was looked under the areas of consultation, corporate governance, governance, programme management, planning, financial allocation and delivery models.
Looking at the meeting between the Minister and the mayors of the 24DM, it was said the Minister met with Mayors and Provincial Members of the executive Councils (MECs) in the 24 DM areas on the 13 August 2012. The IIWSP was communicated and well received by the DM representatives and commitment to prioritise and work closely was secured. Some comments raised by the DM were that unauthorised/ illegal connections needed to be addressed (lack of capacity relating to monitoring and control to be looked at), bore hole water was not preferred and was not reliable, problems in connection with water sources and infrastructure that did not serve poor communities, lack of funding to pay for water tankers to be addressed, lack of funding for operations and maintenance (O&M), MIG grants not being used properly by local municipalities hampered service delivery which must be addressed and institutional arrangements and models to cross-subsidise to address O&M were to be looked at. These comments were considered and taken forward in the DCoG\DWA working group.

Turning to the DCoG/WSA/DWA collaboration, the Minister of CoGTA and Minister of DWA had set up a joint programme in May 2012 to strengthen partnership between DWA and DCoG towards accelerating access to water services. A high-level task team was established with dedicated working groups established with representatives from both DCoG and DWA and other relevant stakeholders. The terms of reference and work plan for the working group were related to accelerated water services delivery and the development of high-risk areas. Links between the IIWSP / MWIG and broader basic water supply programme were identified. Membership of the working group was to be extended to technical directors of the 24 DMs with the first meeting scheduled for 8 March 2013. Intensive planning activities were also led by DWA over the last six months in direct and constant consultation with all relevant WSA.

Mr Balzer discussed governance, tools and guidelines noting the MWIG framework had finalised the setting out of responsibilities, process for approval, purposes, outcome, outputs and some conditions. A comprehensive IIWSP strategy / implementation plan was developed, various guidelines would be developed, term contracts for the procurement of bore-holes and planning PSP were developed, business plan templates were developed, terms of reference for provincial co-ordination planning committees were developed.

Mr Balzer outlined the conditions specified in the framework were that all receiving municipalities would be required to conclude formal agreements with DWA prior to implementation of the project(s) as DWA had standard agreements for the Regional Bulk Infrastructure Grant (RBIG) that it would adopt for MWIG for April 2013. Projects were to be identified by municipalities and must form part of the Integrated Development Plan (IDP) and Water Services Development Plan (WSDP) of the relevant municipality and DWA planning progress was directly linked to the WSDP process of WSA. Identification of the project was to be completed by March 2014 and inclusion of all projects in municipal B/P and WSDP by September 2013. A technical team comprised of DWA, DCoG, Water Boards, WSA, and the Municipal Infrastructure Support Strategy (MISA) must approve all designs and interventions of any project to be funded where the cost of the project was above R20 million.

DWA had approved the provision of additional support from Umgeni Water, and would also make use of capacity within the infrastructure unit. More conditions were that all projects must have suitably approved technical reports before funds could be transferred and assessment guidelines must have been developed. DWA must be part of the adjudication panel for the appointment of contractors while a workshop with guidelines would be held within DWA by April 2013, to train officials on key issues in assessing tenders. If a WSA was deemed not to have adequate capacity, projects must be implemented and managed by Water Boards or through alternative service providers appointed after agreement with the National Treasury. Water boards had been briefed and shareholders agreements were in the process of being changed which was to be completed by July 2013.

Further conditions were that where necessary, DWA, in consultation with the WSA, must facilitate service level agreements for the appointment of Water Boards as service providers to operate and manage the water supply once the project was completed, on behalf of the WSA. Standard service level agreements were available. It was important to ensure adequate consumer and community participation, involvement and education for each project.

Existing communication /awareness material by DWA would be revised and made available to WSA by April 2013. If a project was to provide water services to rural communities consideration and priority must be given to establishing a Community Based Organisation (CBO) to manage or assist with the management of the water supply after the project was completed along with the involvement of the Water Research Commission (WRC) who developed a rural water supply strategy to assist with guidelines. Other conditions were that the WSA must ensure that the project was sustainable and remained functional after the project was completed and was supported by means of an asset management plan, a feasibility and business plan assessment guidelines include O & M plan and were available (from RBIG), all projects having an impact on water resources must be aligned with any relevant water resource planning study and strategy developed or adopted by DWA and water resource planning was required to sign off any related feasibility study.

Additional conditions were that funds would only be transferred by DWA for work undertaken or implemented which would be made part of the agreement and specific conditions would vary from project to project. Projects must be part of an overall commitment by the WSA on how to eradicate all water supply backlogs in its area of supply. Holistic business plans for each WSA would be developed in conjunction with MISA and WSA with guidelines developed while the pilot was currently being developed by September 2013. When  the implementing agent (IA) was a Water Board or any other service provider, the IA must maintain and operate the completed infrastructure on behalf of the WSA for a minimum period of two years or until the municipality had capacity and resources to manage and operate effectively. This condition was included in standard agreements, to be reviewed and discussed on a project by project basis.

Mr Balzer moved onto programme management and the progress of capacity stating the National Task Team was established along with a National Steering committee. Provincial Planning committees were merging with RBIG / ACIP committees (Terms of Reference revised), DWA National and Provincial Programme managers were appointed, planning support contract appointed, additional support contract approved (Umgeni Water) and commitment to support from Water Boards were secured (in principle).

The project management unit involved a DWA- led capital expenditure (CAPEX) committee to consider all projects of a capital nature especially funding and implementation. There was also the involvement of regions and the Umgeni programme management.

Looking at the involvement of Water Boards, he said the commitment from Water Boards to assist in the roll out of the programme was obtained. The proposed role was discussed and agreed to with the Water Boards. The Water Boards would assist in developing consolidated BP for each of the 24 priority DMs, contribute to the funding of various initiatives of the Interim and Intermediate programme, assist the DWA in the overall management of the programme, become Implementing Agents where possible, strive to become the WSP for the operation of failing water supply schemes particularly in rural and weak municipalities, develop in-house capacity / expertise with regards to rural water supply / supply of water services. Shareholders agreement of Water Boards had currently been modified to include programme as a key performance indicator while the next step was to define the direct involvement of each Water Board for the programme.
The motive behind the involvement of the Water Boards was devised with the aim to change the existing paradigm and role of Water Boards and make them more directly involved in assisting WSA and municipalities in service delivery objectives. Water Boards, were effectively an extension of government and they need to play a more proactive role in assisting the DWA and the water sector. Water Boards had some water sector expertise which was needed to maximise the use of and to ensure that Water Boards rise to the challenge, DWA needed to give them an adequate mandate while the Water Boards needed to do things differently from the past.

Mr Balzer talked about the planning progress noting the first step was for each settlement to be categorised according to a specific need requirement in the following priority classes in the 24 DMs (comprehensive reports had been developed and verified with WSA): class 1 - communities having no formal water infrastructure, class 2 - communities requiring extension to existing infrastructure, class 3 - communities with access to infrastructure but no access to water because of functionality problems and class 4 - communities with access to infrastructure but no access to water because of source problems. The second step involved proposed projects and actions for the short, medium and long term to address specific intervention requirements for each settlement or group to be finalised end March 2013.

The financial budget allocations were as follows:
2013/14 – R602 million
2014/15 – R1 059 million
2015/16 – R2 671 million
Total -   R 4 333 million

The initial budget allocations were done according to needs (not projects).  Budget allocations were indicated and published in the Division of Revenue Act (DORA) according to WSA and according to the Local Municipalities (LM) within those WSAs. It was envisaged once the planning had been finalised in the next few months budget allocations would be adjusted accordingly. (Slide 33)

Mr Balzer turned to the provisional cash flow noting that cash flow projections took into account that considerable planning still needed to take place in the first few months.

Looking at the IIWSP implementation models/partners, WSA was the IA with assistance from key stakeholders (DWA, Water Boards and DMs). Water Boards would implement through service level agreements (long term). Water Boards would also function as implementing agents, in farming communities there would be Water User Associations. There were also the roles of NGOs, DWA infrastructure unit for construction and the DWA regional office, through project management support and support through the RRU. A key point was that the WSA must always play a key role irrespective of model.

Turning to challenges and risks, the first risk was that the WSA would not be able to conform to the strict conditions. The mitigation for this was to ensure support to enable all the requirements to be met. The second risk was that WSA, with little capacity, would not accept alternative implementing agent arrangements. The mitigation was to develop a protocol to escalate issues to a political level if necessary. The third risk was inadequate funding to provide additional project management support to municipalities that were IA (schedule five). The mitigation was to facilitate the availability of resources from WBs, MISA and DMs. The fourth risk was of MWIG not meeting core objectives of the IIWSP, of providing some water to all. The mitigation was for continuous monitoring and strict adherence to project evaluation criteria with an emphasis to complete overall WSA business plans for service delivery. The fifth risk was that interventions would not be maintained by WSA after the project was completed. The mitigation was to ensure an O&M contract for a minimum of two years were in place for large projects. WSA would be held liable in accordance to agreement while MISA was to provide institutional support for sensitive projects. The last risk was of under expenditure by programme and WSA. The mitigation was to introduce ready projects in the beginning and motivate for schedule six in 2014/15 DORA if the current model was not working. The overarching mitigation arose from the instructions from the Minister to put in place a project management unit to be up and running from the 1 April. Some staff would be deployed to the unit on a permanent basis while others would be on a temporary basis.

Mr Balzer concluded by noting DWA had already carried out a lot of work in preparation for the IIWSP and MWIG, considerable more work needed to be done before actual construction took place, the greatest risk was related to the fact that MWIG was now schedule five but it was initially conceptualised as a schedule six (grant-in kind), it was anticipated that some projects could start implementation within the next three months and DWA together with other key stakeholders was ready to start implementation of the new programme.

National Treasury
Mr Steven Kenyon, National Treasury Director: Local Government Budget Process, outlined the presentation, which would cover constitutional rights and responsibilities for water services, the challenge of ensuring access to water (using 2011 census results), and funding available in the Local Government (LG) transfer system. The bulk of the presentation would look at the Municipal Water Infrastructure Grant by looking at the goal, purpose and outcomes of the grant, conditions for the grant, ensuring sufficient capacity to implement projects, ensuring sustainability and a review of local government conditional grants.

Looking at the constitutional rights and responsibilities for water services, he highlighted the Bill of Rights, as access to water was a constitutional right explicitly stated in terms of Section 27 of the Bill of Rights. In 2011 only 85% per cent of households had access to at least this minimum level of service (8.8% had no access to piped water). Looking at the responsibility for delivery, in terms of schedule 4B of the Constitution, water reticulation was the function of local government while Section 154 stipulated that national and provincial governments had a responsibility to help build the capacity of municipalities to perform their functions.

In terms of access to water (2001 vs. 2011 census results) rural areas had the biggest backlogs but were making the fastest reductions, while urban areas were extending access to the largest number of households.

Mr Kenyon looked at the comparison with outcome nine targets and based on the 2001-2011 performance, the 2014 targets were looking increasingly unlikely to be achieved in time. The “2014 projection” of 89% access to water assumed no change in policy or implementation and the introduction of MWIG was a significant intervention to accelerate the eradication of backlogs in rural areas.

Turning to the fiscal context, he noted there were substantial increases in infrastructure transfers, especially since 2007 and funding for water and sanitation was a major part of this.

In introducing the Municipal Water Infrastructure Grant (MWIG), he said DWA submitted a request for
R2 billion in the Budget Process for the 2013 MTEF to accelerate the rollout of water infrastructure and ensure all households had access to clean water (IIWSP). Given the larger scale of backlogs revealed by the 2011 Census, R4.3 billion was proposed for this new grant in the 2013 MTEF. Part of this would be funded through the reprioritisation of funds from the Municipal Infrastructure Grant (which had a long history of under spending – MIG was only reduced by 1-3%). Additional funds were also added to the grant and when looking at the MTEF allocations for MWIG, all projects were located within the 23 priority districts.

Mr Kenyon discussed the MWIG goals, purposes and outcomes. The strategic goal was to assist Water Services Authorities (WSAs) to provide water supply services to consumers currently without services, particularly those in rural areas. The purpose was to facilitate the planning, acceleration and implementation of various projects that would ensure water supply to communities identified as not receiving a basic water supply service. The outcomes were for increased household access to water supply enabled through interim, and/or intermediate and/or localised water supply projects to communities identified as not receiving a basic water supply service, access to water supply enabled through the development of new infrastructure and/or refurbishing and/or upgrading of existing infrastructure to communities identified as not receiving a basic water supply service, reduction in water losses and non-revenue water, and access to water supply which was implemented in an appropriate and sustainable manner and which culminated in effective asset management.

The conditions for MWIG were that all conditional grants had frameworks that specify conditions and responsibilities for the grant. If these conditions were not met, DWA could withhold or stop the transfer of funds, giving them powerful tools to ensure the successful implementation of the grant. All receiving municipalities would be required to conclude formal agreements with DWA prior to implementation of the project(s). Projects were to be identified by municipalities and must form part of the Integrated Development Plan (IDP) and Water Services Development Plan (WSDP) of the relevant municipality. A technical team comprised of DWA, DCoG, Water Boards, WSA, and MISA must approve all designs and interventions of any project to be funded where the cost of the project was in excess of R20 million.

Further conditions were that projects must have suitably approved technical reports before funds could be transferred, DWA must be part of the adjudication panel for the appointment of contractors, if a WSA was deemed not to have adequate capacity, projects must be implemented and managed by Water Boards or through the appointment of alternative service providers agreed after consultation with the National Treasury. Where necessary DWA in consultation with the WSA must facilitate service level agreements for the appointment of Water Boards as service providers to operate and manage the water supply once the project was completed on behalf of the WSA and ensure adequate consumer and community participation, involvement and education for each project. If a project was to provide water services to rural communities, consideration and priority must be given to establishing a Community Based Organisation (CBO) to manage or assist with the management of the water supply after the project was completed. The WSA must ensure that the project was sustainable and remained functional after the project was completed and was supported by means of an asset management plan. All projects having an impact on water resources must be aligned with any relevant water resource planning study and strategy developed or adopted by DWA.

Mr Kenyon turned to the capacity to implement projects. He stated that the DWA had used its expertise and knowledge of the existing situation and available water resources to allocate funds to areas where there was a need and projects could be implemented speedily. Water boards had agreed to partner municipalities in implementing the projects and would contribute their expertise in partnership with rural municipalities in both the construction and operations phases. Agreements had already been signed between municipalities and water boards.

In discussing sustainability, many water projects had been built but had since ceased to function. This must be avoided in future. Municipalities would be ultimately responsible for ensuring the sustainability and on-going operation of their water schemes. The MWIG framework required water service authorities to “ensure on-going effective and efficient operations and maintenance of the projects once completed.” Sustainability should be addressed in the municipal IDP, WSDP and the business plan for each project. The new local government equitable share formula provided a subsidy of R275 per household per month for free basic services (for households with an income below R2 300 per month). This included R86 for water (including 10% provided for maintenance). Implementing MWIG as a direct grant ensured the municipality that would operate and maintain a scheme was also part of its design and construction.

Mr Kenyon concluded by looking at the review of local government infrastructure grants. He said that the Minister of Finance announced in the 2013 Budget Speech that municipal infrastructure grants would be reviewed and realigned. This review would use the results of the 2011 Census as a starting point to assess the performance of the existing grant system. The review would be collaborative (involving national departments, SALGA and the Financial and Fiscal Commission (FFC)) and would include extensive consultation with municipalities. The future role of MWIG (and other grants funding water infrastructure) would be considered as part of this review but the urgent need for services meant the introduction of this grant could not be delayed until review was completed.

South African Local Government Association (SALGA) briefing
Mr William Moraka, SALGA Manager: Water Services Unit, began by looking at SALGA’s understanding of the grant conceptualisation process stating that Minister of Water and Environmental Affairs had a meeting with 23 District Mayors on the 13 August 2012. The mayors supported, in principle, the challenges faced by their DMs. The mayors were requested to co-operate with this process, i.e. a need for such an intervention. Consultations were undertaken with the technical Directors of DMs to scope the challenges and develop action plans. The above process resulted in the conceptualisation of the grant.

SALGA’s comments on the grant establishment included, amongst others, that the country previously had a proliferation of grants that were administered by various national and provincial departments. The lessons learned from that experience was that it became very difficult to facilitate integrated infrastructure development under such circumstances. This led to the consolidation of grants to MIG and later the Urban Settlements Development Grant (USDG) in the case of cities. This appeared to be reversal of that progressive trend. National prioritisation overrode local priorities. Municipalities would again be placed in a situation where communities might be saying that their number one priority was a road but the municipality would say that such a community would in fact get a water supply because available funding for capital expenditure was conditional on its being spent on water supply. The conclusion was that SALGA did not support the creation of the grant.

Some of the challenges outlined were that there were no clear coherent policy imperatives that underpinned the creation of MWIG and related grants (e.g. RHIP), grant establishment was not underpinned by spare capacity in the water sector to accelerate delivery - service providers would be used and not necessarily government’s own skills. There was an administrative burden of complying with MWIG processes as contained in the DORA framework. The grant was limited to DMs only – provinces and municipal areas where LMs were WSAs would not benefit. There was limited alignment with sanitation services, limited new funds and the urgent funding needs at municipal level relates to refurbishment and replacement of ageing infrastructure.

SALGA’s recommendations were that the devil was in the detail of this new grant- DWA, SALGA and municipalities must work together to define a common goal in the implementation of the grant. DWA, DCoG, NT and SALGA should explore the possibility of developing a coherent policy response to the infrastructure challenges faced by municipalities.

Discussion
Ms A Mfulo (ANC) wanted to understand why the presentation was not given in time for the Committee to go through, especially as it was a long document. She did not under how the Department could have secured budgets when there was no planning in place. She wanted to know the reason for NT making the project schedule six instead of schedule five. She wanted clarity from DWA on retail activities. She also questioned how the Department secured the funding from Treasury. She felt it more feasible to make sure that existing grants (like MIG) were working for the municipalities instead of creating new grants, added to the fact that she did not understand how this new grant would work. She asked if consultants would be used for the new grant and where would ownership – nationally or provincially.  She asked if CoGTA was consulted on these processes. She emphasised there should be a clear implementation plan for this grant.

Mr M Swart (DA) said that water was a serious issue as everyone had the right to water. He said the matters of sanitation and skills training were vital to the grant. He questioned where the budget schedule handed to the Members came from and if it was correct.
Mr N Singh (IFP) said project management was added to the budget sheet handed out – this meant consultants. He agreed fully with SALGA and noted he found it strange that the Department had received double the amount for which it had asked National Treasury. He said this was the first time he had seen this in Parliament even though water was a good cause. He saw the MWIG as a short to medium term solution to deal with very urgent needs and so questioned the medium to long-term plan in terms of reticulation and sanitation. He wanted to know how these would tie into each other. He noted this was the case with temporary housing never turning into a permanent solution. He was also concerned with capacity at the municipal level and the use of consultants and technical people. He wanted to know what would drive the provision of water to schools, clinics and public facilities through this grant in these particular areas. He was glad to see most of the problems resided in KwaZulu-Natal as 36% of the budget would be going to this province and asked about the specific DMs in KwaZulu-Natal. Turning to the hotspots, he felt it better to provide according to needs of communities instead of service delivery protests
Dr S van Dyk (DA) asked if all the role players were aware of the concepts and purposes behind the grants. He asked if the right planning, asset and risk control was in place. He said that, at the end of the day, the buck stopped with the Department and it was accountable to National Treasury. He asked if the Department could ensure the Committee that the money would be spent effectively, efficiently and for the purpose it was allocated for.
Mr J Gelderblom (ANC) questioned the involvement of youth in this plan and raised the problem of rural areas and the lack of technical support, which led to the use of consultants in these areas. He said the problem was exasperated by the insufficient numbers of engineers in South Africa. He said the problem of maintenance was seen by the Committee on its oversight trips and should be a focus area. He felt the plan of the Department was good but more planning was needed along with better co-ordination and buy-in from LMs.
Ms R Mashigo (ANC) noted the problems with SALGA as well as the problems with the councillors overseeing these projects and municipal capacity. She said the money for the grant came from money that was under spent funds.
The Chairperson said there appeared to be a lack of consultation with SALGA and CoGTA judging by the presentation. He said all the Members agreed that this consultation needed to be improved. He said the point made by Ms Mashigo about capacity of the Department itself to administer the grant was an important point.
Mr Balzer said the Department had done a lot of planning especially in terms of planning for the water requirements for the next ten years. The Department did not identify any DMs in the Western Cape and Gauteng but that did not mean that there were not needy communities in these provinces. He said the grant was a beginning where a start needed to be made, especially in closing the gaps in certain communities in access to water. He said the Department did preparatory work through a technical task team in anticipation of Treasury funding. He noted a lot of work still needed to be done and some projects would only start in the next financial year with the quick-win programme due to begin immediately. He said there was a collaborative arrangement project with CoGTA that had begun even before the project was initiated. 
Mr Stephen Marais, DWA Chief Director: Water Services Management, spoke about the planning process which he said started nine months ago in collaboration with all municipalities and operators in the field. He said planning was community based and the problems in each and every single community were fully outlined. He said this meant the problem could really be addressed instead of simply throwing money at it. He said the action list part of all 23 priority DMs was completed and the Department was looking into how it were going to deliver per community. The other part of the process was to look at the water services development plan and IDP links in alignment with MIG and all other associated grants.
Mr Swart asked if this programme covered sanitation as well.
Mr Balzer noted that it did not, but the Accelerated Community Infrastructure Programme (ACIP) embraced both water and sanitation.
The Chairperson noted SALGA was still forgotten in the talk of consultation.
Ms Thandeka Mbassa, DWA Deputy Director-General: Regions, said that critical questions were asked in preparation for this presentation but the Department was still battling with many other questions especially those related to the implementation deadline of 1 July. She said all national departments needed to go the extra mile in aiding local government to deliver on its mandates and this was one of the aims of the project. Where there were gaps, the Department needed to help and could not hide behind what the constitution said it could or could not do.  She said the key was to work together and embrace the money had been made available for this fund in a holistic manner.
Talking about job-creation, she noted the process would be labour intensive and student and graduate programmes were being looked into but she emphasised there was potential to create jobs. She noted the problems with capacity and the use of consultants and maintained the aim should be on building capacity within the Department itself. She said the Department was working closely with the Water Boards and MISA and the deployment on engineers was working so well. She noted the job creation and said these were labour intensive and there was potential to create jobs if the Department worked well with the municipalities. She admitted to the weaknesses with consultation and noted the Department’s relationship with SALGA was not what it used to be and noted it could not be excluded from such an important process.
The Chairperson wanted a response to the comment by SALGA that the grant was not new money.
Mr Balzer noted there was a lack of technical staff in municipalities and because of this it could not be said that external capacity would not be made use of in the form of engineers, specialists to do environmental assessments, and contractors. He said this was a challenge going forward but there was a need to supplement capacity.
The Chairperson said this was understandable but the Members were concerned about the over-usage of consultants. He noted the Department had previously suggested the moving of some of its water skilled employees over to the municipalities.
Mr Kenyon said the Department had approached the National Treasury with a bid for R2 million for two years. He noted that the Treasury saw that there was a lot more that the Department could do as in refurbishment and in other areas and additional money was made through the budget process. He noted there was no such thing as new money anymore and that all money must be saved so SALGA was quite correct. He said that money was acquired from savings made, as on provinces and national departments, while the rest of the money was reprioritised from the MIG. He said the National Treasury was in talks with the Department on the fine details of the grant. He noted this was a new grant so implementation would be difficult. He also had concerns about maintenance.
The Chairperson questioned if the grant was running for three years and what happened after those three years.
Mr Kenyon said there was no firm decision on that yet.
Ms Mfulo asked if it really was savings or a result of under spending from Departments. She questioned implementation in rural areas and the plan for what was going to happen exactly in these areas by 1 July.
The Chairperson said that these questions emphasised questions asked before.
He said everyone could agree that MIG was not performing and more organisation was needed. He felt it important to consult the appropriate role-players. He also felt that advice from SALGA on these matters were important and said SALGA had a role to play in this process.
The meeting was adjourned.