Appropriation Bill [B1-2013]: Hearings with Departments of Communications and Water Affairs

Standing Committee on Appropriations

28 May 2013
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The 2013 Appropriation Bill hearing with the Department of Communication, did not take place. It transpired that the Director General was not present to lead the delegation. The Chairperson and Members of both the Standing Committee and the Communications Portfolio Committee questioned the legality of powers delegated to the Deputy Directors General. There was general insistence that the Executive Authority had not adhered to the Public Finances Management Act. Various Members of both Committees felt that a firm stance had to be taken, and that matters had to be cleared up with the Minister. There was a request for a caucus, after which the hearing was adjourned and postponed to a later date.

The briefing by the Department Of Water Affairs dealt with the state of readiness and strategy to effectively spend the 2013/14 allocated budget. There was a budget overview per programme, and it was indicated how the Annual Performance Plan was aligned to the programmes.  Desired outcomes were jobs, infrastructure, real development and improved municipal service delivery. Budget allocations per programme were matched to outputs.  Transfers were withheld from municipalities that failed to meet deadlines. There was a review of bulk infrastructure programmes.  Water boards had been appointed as implementing agents. The Accelerated Community Infrastructure programme had been matched to provinces. Mega projects with the Water Trading Entity were discussed.  Progress at various dams -- the De Hoop, Nwamitwa, Clanwilliam, Tzaneen and Hazelmere dams -- was described. The Nandoni pipeline for bulk raw water delivery to Medupi and Matimba power stations, was discussed.  

Members asked if the Department knew which municipalities were lacking in infrastructure. A Member asked if there was the human resource capacity to collaborate with the water boards. There was a request for an explanation of irregular expenditure.  Inadequacy of planning and managerial capacity was commented on, as well as the loss of leadership ability due to a lack of permanent appointments. The use of consultants caused concern, especially when there was a duplication of functions and a lack of skills transfer.

The Department was asked if it was providing value for money. Spending was adequate, but the percentage of achieved targets was low.  Efficient internal auditing was questioned, taking into account the high level of irregular expenditure. The Chairperson and another Member were severely critical of the fact that funds were being taken from municipalities that were not performing, and given to those who did perform. There was criticism of the failure to hold contractors responsible in terms of the Labour Relations Act. The Chairperson commented that the bulk of expenditure was not in line with the Annual Performance Plan. Expenditure and predetermined objectives had to be aligned. The Department had to state what was being done to address capacity challenges.

Discussion was severely limited by time constraints. There was little opportunity for the Department to respond to questions. The Chairperson requested written responses by 4 June.
 

Meeting report

Appropriations Bill: hearing with the Department of Communications
The Chairperson said that the Standing Committee wanted to know how the Department of Communications (DOC) was spending its funds, and how it was responding to infrastructure challenges. The Chairperson and Members of the Communications Portfolio Committee had been invited.

Mr S Kholwane (ANC), Chairperson of the Communications Portfolio Committee, supported the concept of the two portfolio committees being jointly present at the hearing. It was a move away from the silo approach.

The Chairperson noted the absence of the DOC Director General (DG), who was not there to lead the DOC delegation.

Ms R Mashigo (ANC) commented that the purpose of the hearing was to commit the DOC to an appropriated budget amount. There had to be a written apology from the DG.

Ms A Mfulo (ANC) agreed that it was questionable whether the DG was taking matters seriously. She asked whether the two Deputy Directors-Generals present were empowered to take decisions.

The Chairperson noted that the DG had called him on the preceding Sunday. He had advised the DG that an apology had to be put in writing. The Public Finances Management Act (PFMA) was clear that the only person who could lead a delegation in terms of the law, was the DG. The issue of the delegation of powers was involved. The DG was the accounting officer and could delegate powers in writing.

Ms Mashigo asked if such a letter of delegation had been sent to the Department.

Mr Sam Vilakazi, Deputy Director General: Administration, DOC, said that there was a letter of apology.

Ms R Lesoma (ANC), a Member of the Communications Portfolio Committee, asked if a letter had been received.

The Chairperson noted that somebody had been sent to check for a letter. There was a written apology, dated 23 May.

Ms A Muthambi (ANC), a Communications PC Member, proposed a caucus.

Mr C Kekana (ANC), also a Communications PC Member, agreed with Ms Muthambi.  Officials had a “laid back” attitude. They needed to know that they had to come with delegated powers.

The Chairperson said that the fault was not with the Department. An apology had been received. It was an internal fault.

Ms Mfulo insisted that the question was whether the power to make decisions and provide comment had been properly delegated.

The Chairperson asked that only Members should remain in the room, so that the matter could be discussed confidentially.

The Chairperson said after the internal caucus, that it was a difficult situation. The Standing Committee was not aware of DOC challenges. There would be a meeting with the Minister about the matter. The issue of delegation was clouded. Parliament was guided by the Constitution, which meant that it was guided by law. It was not acceptable to act outside of the law. The DOC had to protect itself and the integrity of presentations. He respectfully asked that the hearing be adjourned. The meeting with the DOC was postponed until further notice.

Appropriations Bil: hearing with the Department of Water Affairs

The Chairperson said in an introduction, that the Department of Water Affairs (DWA) had been invited to talk about resources and appropriations for 2012/13. The Chief Financial Officer (CFO) had stated that there had been a 96% level of spending. The capacity was there. The question was what the DWA was doing about the alignment of expenditure with predetermined objectives in the Annual Performance Plan (APP). In 2010/11, 35% of the budget had been spent on matters that were not included in the APP. The Department had to report on the alignment between the budget and predetermined objectives.

Mr L Ramatlakane (COPE) commented on the delegation of powers to DDGs, as he had not been present at the earlier discussion. He said that the PFMA did not grant authority for powers to be delegated from the DG. The Executive Authority (EA) did not have the power to amend the Act. The EA would have to testify before the Committee. The Minister had to explain where power had been derived from. The DWA also had an Acting DG leading the delegation, but it had been correctly handled. It was still problematic, however, as there was no way of knowing that the Acting DG would be present in future. There had to be certainty that what was undertaken would be delivered. It was an Executive Authority issue that had to be raised firmly by the Standing Committee.

The Chairperson said that a letter of apology had been received from the Minister.  Authority had been delegated to the Acting DG.

Mr Ramatlakane felt that an important issue had been raised. The Minister of Communication had to say what the situation was. He proposed a discussion with the Minister of Public Service and Administration, and Parliamentary legal advisers, to get things correct with regard to Acting DGs and the delegation of powers to DDGs.  In future there had to be an official letter in support of whoever was leading the delegation.

Briefing by the Department of Water Affairs
Mr Trevor Balzer, DWA Acting Director General, took the Committee through a budget overview, by programme, which covered administration, water sector management, water infrastructure management, regional implementation and support, water sector regulation, and international water cooperation. He indicated how the Annual Performance Plan (APP) was aligned to various programmes.  Desired outcomes were jobs, infrastructure, local government, real development, and improved municipal service delivery. With regard to enhanced DWA capacity, the overall vacancy rate was just over 10%. The Committee was taken through budget allocations per programme, matched to outputs.  In adherence to the Division of Revenue Act (DORA), transfers were sometimes withheld from municipalities who failed to meet deadlines.

The Regional Bulk Infrastructure Programme had started the 2013/14 financial year with 73 projects under construction, of which 16 would be completed during the financial year. 30 projects were in the design or tender phase, with a budget allocation of R507 million. The DWA had appointed water boards as implementing agents, to ensure that the allocated budget for 2013/14 would be spent. The Municipal Water Infrastructure Grant (MWIG) would address the 4.8% of the population without access to water.

Ms Thandeka Mbassa, DWA Deputy Director General, Regions, took the Committee through allocations for the Accelerated Community Infrastructure Programme (ACIP) per province. The ACIP was for areas where infrastructure was under pressure.

Mr Balzer added that the ACIP improved water management infrastructure, to stop water losses.

Ms Zandile Mathe, Acting DDG, Infrastructure, provided a summary of mega projects with the Water Trading Entity (WTE). The De Hoop dam would supply water to domestic and industrial users in the middle Olifants River catchment area. The construction of the Nwamitwa dam was aimed at providing an ecological reserve, and a domestic and irrigation supply assurance. The Clanwilliam dam would be raised by 13 metres to establish emerging farmers and address dam safety aspects. 46 km of pipeline was under construction to deliver bulk raw water from the Mokolo dam to Medupi and Matimba power stations, and to Exxaro, as well as for the expected domestic growth in Lephalale municipality. The existing Tzaneen dam was being raised to augment domestic water supply. The Hazelmere dam had been raised to augment the water supply to the KZN North Coast.

Discussion
Ms R Mashigo (ANC) asked about the ACIP.

Ms Mbassa replied that the Accelerated Community Infrastructure Programme was for areas where infrastructure was under pressure.

Ms R Mashigo (ANC) asked if it was separate from the Municipal Water Infrastructure Grant (MWIG).

Ms Mbassa replied that it was.

The Chairperson asked how many projects were running in Ms Mathe’s area.

Ms Mathe replied that there were few projects, but they were all very large. There were eight in total, and R3 billion was invested.

The Chairperson noted that labour unrest at Nandoni was related to external contractors, not local unions.

Ms Mathe replied that the unrest had caused a two-month delay. At Bushbuck Ridge, the Premier had signed a memorandum of understanding (MOU) to ensure that water would move from bulk distribution to the taps. The Department would see to it that Nandoni water reached the taps. Sites would be vacated in September.

Mr Kwathelani Bologo, Acting Head, Sector and Grant Support, Municipal Infrastructure Support Agency (MISA), said that MISA had entered into a partnership with the DWA. There was too much money in the system.  R30 billion was directed mostly to municipalities. There was a joint action plan. There were challenges with the Water Service Authority. Workshops were planned with the districts. Allocations to municipalities were gone through. Municipalities were monitored for their capacity to spend funds, and to eradicate backlogs. Municipalities had to cooperate to accelerate basic services.

The Chairperson asked if it was possible to pick up on municipalities that had no infrastructure. He asked if it was known which municipalities lacked infrastructure.

Mr Bologo replied that 24 districts had been prioritised by Cabinet. 4 000 households were affected. It was possible to say which villages were affected by infrastructure challenges.

Mr Balzer noted that there was cooperation with MISA to roll out programmes that dealt with needs.

Mr Ramatlakane asked if the human resources were in place to collaborate with the Water Boards. He asked about the cost implications of the two-month delay at Nandoni.  What was meant by a 10% vacancy rate -- 10% of what?  Did it refer to technical skill, or the technical capacity required.

Mr Ramatlakane asked that the irregular expenditure of R207 million, reported by the Auditor General, be explained. Fruitless and wasteful expenditure amounted to R34 million. The Auditor General had also found inadequate planning and managerial capacity.  The DWA had had 46 variation orders, which called into question its planning.

Mr Ramatlakane asked about the relation between the use of consultants and the lack of internal capacity. A lot of money was going to consultants, instead of to projects.  The leadership ability in the DWA was questionable, due to a lack of permanent appointments. It was linked to capacity.  Only 43% of the cases brought to the Presidential Hotline had been dealt with – was this due to a lack of capacity?

Mr Ramatlakane asked if the DWA was producing value for money. In 2011/12, spending was at 90.4%, but only eight percent of targets had been achieved. That did not show value for money. Something was wrong. There was a lack of capacity.

The Chairperson said that Mr Ramatlakane’s last question was relevant to the passing of the budget. There were big problems regarding the relationship between expenditure and performance, especially with regard to Programme Four.

Mr M Swart (DA) asked if there was efficient internal auditing in the DWA. There had been irregular expenditure of R1 billion.   He noted that the water licences of some mines were still outstanding. He asked about negotiations with the mines to get water to the population.

Ms A Mfulo (ANC) referred to the moving of funding from underperforming, to performing, municipalities. It was one of the things that obstructed progress. Nothing was done for the weakest links in the chain. She asked if there were plans to improve the performance of weak municipalities.  She expressed concern about the lack of permanent appointments. Everybody in the DWA seemed to be in acting capacities, and there was lack of clarity about the filling of vacancies and job creation. The State of the Nation Address had stressed job creation. There had to be decent jobs to have an impact on households.

Ms Mfulo asked how contractors were monitored. There was too much outsourcing.  Contractors were not told to adhere to the Labour Relations Act, and unrest followed. There was outsourcing without skills transfer. Consultants were leaving with departmental information.  IT service management was not good.

The Chairperson said that there would not be time to attend to all the questions. A date had to be found for a workshop. There had to be comments on key questions. There had been movement from a 65% alignment between expenditure and performance in 2010/11, to eight percent in 2011/12. That meant that the bulk of expenditure had not been in line with the Annual Performance Plan.  Departments had to align expenditure with predetermined objectives. The state of alignment had to be attended to in quarterly reports. Annual Performance Plans had to be clear. If there was a lack of alignment, time spent to approve the budget, was wasted.

The Chairperson remarked that the use of consultants could not be entirely avoided. There were problems when consultants were used for the same function as staff. The DWA had to indicate where consultants were being used, and why.

The Chairperson asked that the Department provide answers to the day’s questions in writing by 4 June.  The DWA’s answers would be used in the Committee report.

The Chairperson referred to what Ms Mfulo had said about withholding funds from municipalities. Section 35 of the Municipal Finances Management Act (MFMA) instructed national and provincial government to support municipalities. Transgression against that principle had to stop. A way had to be found to pick up those who were responsible, in reports. He asked how the DWA justified taking money away from municipalities, when the Constitution prescribed the support of municipal capacity by national and provincial government. The Division of Revenue Act also prescribed that reasons had to be given for withholding funds. The DWA had to report on what was being done to address capacity challenges.  Ms Mathe had indicated the limits of  DWA powers. It was known that some municipalities did not have capacity. The National Department had to provide capacity. There had to be integration of services, so that it could be cascaded down. It was not a matter of no resources being available. It was an achievable objective.

The Chairperson asked Ms Mathe to explain how the budgets for large projects were broken down, in terms of how much the DWA intended to spend.

The Chairperson referred to the transfer of funds to municipalities, and how that was directed. When the Municipal Infrastructure Grant (MIG) was passed, note had not been taken of issues of capacity. The National Department had to supply funds as conditional grants until capacity had been built.

Mr Balzer undertook that the Department would provide answers by 4 June.  
The Chairperson adjourned the meeting.
 

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