Department of Rural Development and Land Reform on its State of Readiness and Strategy to Effectively Spend the 2013/14 Budget Allocation

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Meeting Summary

The Department of Rural Development and Land Reform presented on its state of readiness and strategy to spend their 2013/14 budget. The presentation was made to the Committee who were concerned about the Department’s inability to spend their budget. At 31 December 2012, after nine months, the Department had only spent 50% of its budget. 

The presentation focused on the Department’s strategic goals and objectives, policy and legislative initiatives for 2013/14, and the key priorities – restitution, land reform and rural development. The Department’s budget was split between its five programmes, which were administration, geospatial and cadastral services, rural development, restitution, and land reform. The Department gave the Committee an overview of its 2013/14 budget and Medium Term Expenditure Framework. The Committee was told that the budget was the financial expression of the Department’s Annual Performance Plan. The Department also focused on its strategy for effective budget spending.

The Committee noted that the Department was going to reopen the land claims office and wondered if they had enough capacity to deal with additional land claims. They asked how much current land claims amounted to, if they were paying their suppliers within 30 days, how effective their audit function was, and what they were doing to curb their fruitless and wasteful expenditure. Members expressed grave concern about the number of vacant posts within the Department, especially that of the Acting Chief Financial Officer, whose post had not been filled since 2011. They asked which of the Department’s programmes were affected by the vacancies the most. The Committee also wondered how much money was being spent on litigation costs, what the relationship was between the Department and municipalities, and whether there was any proper data regarding land claims.

Members asked the Department to explain what had happened to the 4 000 land claims that still had to be processed by the Department the last time they presented to the Committee. They wondered if this figure could be quantified and what the backlog was now. Could the Department project how much re-opening the land claims process would be in the long term? The Committee wanted reassurance that the new deadline for land claims would not impact on the pace at which claims that were made previously would be resolved. 

Other questions included whether the state land audit had been completed, how many posts were affected by the R22 million decrease in the compensation of employees, if they could have more information on the Comprehensive Rural Development programme rollout, why Ngonyama Trust land had a specific budget but other communal land did not, and why the filling of vacancies was not included in the measures identified to promote effective budget expenditure. 

Meeting report

Opening Remarks

The Chairperson informed the Department of Rural Development and Land Reform (the Department) that the Committee was concerned about the Department’s ability to spend its budget properly. The Committee was supposed to make recommendations to the House. The question Members were asking themselves, was what was the Department during differently now in terms of spending. At 31 December 2012, after nine months, the Department’s budget spending was at 50%. Somehow, the Department found a way to spend money, but the issue was how the Committee could ensure that the money that was spent was spent in accordance with the Annual Performance Plan (APP).

Mr Mduduzi Shabane, Director-General of the Department, explained that he understood the Committee’s concerns and the Department was mindful about its ability to spend the budget in accordance with the predetermined objectives and the APP tabled in Parliament, against which the budget was allocated. The Department was mindful of the concern because they understood that they had failed in this regard before. The Annual Report for 2011/12 showed this. This year, the Department invested a lot more energy and effort into the APP as well as the development of operational plans for the Department’s programmes where the money would be spent. He would personally ensure that the operational plans were in line with the APP and the budget allocation. He also put together a team that included monitoring and evaluation personal, financial personnel, and personnel from the programmes themselves. He has requested in depth information on all projects in all the programmes.

The Chairperson stated that the Committee should continue with the presentation.

Briefing by Department on its Strategy to Spend the 2013/14 Budget

Mr Pule Sekowane, Acting Deputy Director-General for Corporate Services in the Department, informed the Committee that all the Department’s programmes were organised to give direct effect to Government’s priority number three, which was rural development and land reform. The programmes also provided support to other priorities such as job creation, education and health etc. The planned interventions of the Department have considered the National Development Plan (NDP) and the New Growth Path (NGP).

The Department was working on key policies such as the Restitution Policy Framework, the Rural Development Policy Framework and the Rural Development Agency Policy. Legislative initiatives included the Deeds Registries Amendment Bill, the Sectional Titles Amendment Bill, the Land Valuation Bill and the Land Protection Bill.

Key Priorities for 2013/14

Restitution

This involved re-opening the lodgement date for claims to accommodate communities or individuals who missed the 31 December 1998 cut-off date, and to provide for exceptions to the 1913 cut-off date to accommodate historical landmarks, heritage sites and descendants of the Khoi and San who lost their land long before 1913. Restitution also involved settling 230 land claims and finalising 208 backlog land claims.

Land Reform

The Department was involved in the recapitalisation of 730 land reform farms to improve productivity, in the acquisition and allocation of 311 917 hectares of strategically located land, and they were in the process of looking over the Tenure Reform Policy.

Rural Development

The Departments plan was to continue with the Comprehensive Rural Development Programme (CRDP) rollout in 23 of the prioritised poorest districts, increase job creation through infrastructure projects and rural enterprises, and to progress with phases 2 and 3 of the CRDP.

Departmental Programmes

The Department’s five budget programmes provided the institutional framework to implement its priorities in line with government priority number three – rural development and land reform.

Programme 1: Administration

The focus was to promote good corporate governance and administration. Key results showed that the Department was responding to government’s target of ensuring suppliers were paid within 30 days of being invoiced, they were promoting good financial governance by spending in line with the Public Finance Management Act (PFMA), and they were improving management controls for financial management and non-financial performance information. The Department was also promoting good human resources practices, particularly reducing the Department’s vacancy rate, and developing relevant policies and legislation that align with the rural development and land reform mandate.

Programme 2: Geospatial and Cadastral Services

The Department’s focus was on: The provision of geo-spatial information in support of spatial equity and sustainable development, the provision of sustainable support to municipalities, the provision of training to augment the scarce skills in geomatics, and the investment in the development of the e-Cadastre system, which would enable a holistic view of land ownership.

Programme 3: Rural Development

The Department focused on the provision of infrastructure to support access to basic services in order to promote rural livelihoods, and they were involved in the implementation of the Veld Management Programme and the promotion of skills development and job creation with a bias to the youth.

Programme 4: Restitution

The Department focused on planning and administration of the re-opening of the restitution lodgement process, the settlement of land claims and finalising backlog claims.

Programme 5: Land Reform

The focus was on the provision of support to emerging farmers through the Recapitalisation and Development programme, acquisition and allocation of strategically located land, and the provision of skills development and training support for emerging farmers and the creation of job opportunities in land reform projects.

Overview of the 2013/14 Budget and Medium Term Expenditure Framework

Ms Irene Singo, Acting Chief Financial Officer of the Department, said that the Department’s 2013/14 Medium Term Expenditure Framework (MTEF) budget was the financial expression of its 2012/13 Annual Performance Plan (APP). The 2013/14 budget and APP processes ran concurrently to ensure consistency between the two plans.

The Department identified certain measures to promote effective budget expenditure and improve service delivery. These included:

  • Improved budget and programme planning – extensive consultation during target setting
  • Focus on improving supply chain processes
  • Internal monthly expenditure monitoring as an early warning mechanism
  • Use of the available government budget monitoring instruments
  • Improving internal governance and planning structures for improved service delivery
  • Using a portfolio prioritisation framework
  • Institutionalisation of a project management framework
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Discussion

Mr M Swart (DA) thanked the Department for the presentation. At the moment, the Department was struggling to settle land claims, but they were going to re-open the land claims office. He asked if the Department had the capacity to deal with the additional land claims that would be forthcoming. Secondly, the Department had made money available in their budget for internal audit purposes. He wanted to know how effective the Department’s internal audit function was. Were all the accounts being paid within 30 days of receiving invoices from suppliers? If not, what was the Department going to do about it. The Department said that they wanted to settle 230 land claims and finalise 208 backlog land claims. When would the Department like to settle this, and what was the value of the current land claims?

Mr Sekowane replied that the Department filled 15 positions last, and currently they had 50 positions filled out of a possible establishment of 72 positions from the funded vacancies. The Department was in the process of looking at its current funded positions. 

Mr J Gelderblom (ANC) stated that he welcomed the DG’s input about how they would tackle the budget spending. The Committee would monitor this. There was an amount of R6.2 million for fruitless and wasteful expenditure in 2011/12. He wanted to know how the Department planned on preventing this from happening again. The Committee was concerned about the number of vacancies in the Department, as it had an effect on implementing the programmes of the Department. Which divisions or programmes were affected the most by the vacancies?

The Chairperson interjected, reminding the Committee that the Department had not had a CFO for the past four years.

Mr Gelderblom noted that this could be one of the questions.

Mr Shabane answered that there was not justification for leaving the Acting CFO position vacant for as long as it was. The Department made attempts to fill in the post when the last CFO left in 2011. Two attempts were made since then to fill in the post, but the Department was unsuccessful. Nevertheless, the Department could have been quicker in filling the post.

The Chairperson asked if the last CFO left in 2011.

Mr Shabane answered in the affirmative.

Dr S van Dyk (DA) noted that a lot of money was being spent wastefully on litigation costs. With other Departments, the Committee also noted that due to poor management, there were clashes with service providers. In the case of land reform, the Committee was aware that money appropriated to this programme was not much. Members were aware that the Department asked for more and more money every year to speed up the land reform process. There was no debate about it – land reform was very much. So, the more effectively money could be spent on the land reform process, the better. He wanted to know what measures were in place and what steps were being taken to minimise litigation costs in this respect as much as possible.

Mr Shabane replied that the Department had performed quite well in terms of keeping down litigation costs. He explained that in 2011/12, the Department’s costs for fruitless and wasteful expenditure was a result of litigation, which was very high at a cost of about R60 million. The Department managed to keep these costs to a minimum. The Department centralised all litigation matters and made sure that costs were paid before it accrued interests. Litigation costs dropped down to about R6 million, which meant that the correct measures were being taken.

Ms A Mfulo (ANC) asked about the relationships between the departments, as well as the relationship between land restitution and the municipalities. People were given land, but then all of a sudden, municipalities were also “inside” that land, controlling it. When the Department gave land back to the people, what did they do to ensure that the municipalities and the Department of Mineral Resources knew about the land? This has caused problems in the past as mining rights were given for land that belonged to claimants. The Department had to ensure that when people received their land back, there were no more obstacles in their way. She also wanted to know how far along the Rural Development Programme was and what the challenges were. She noted that there was not any proper data about land claims once people have claimed their land.

Mr L Ramatlakane (ANC) asked what the Department’s take on land restitution was. He was trying to understand “what was on the shelf” because something like this was always informed by data. There had to be data that informed the Department’s decision to re-open the deadline for land claims. He asked what the Department’s financial projections were, in the medium to long term, for the budgeting aspects of re-opening the deadline for the land claims. The last time the Committee heard about the backlog, it was around 4000. Now, it is 230. It was not quantified in terms of Rands and cents. It would be interesting to know the projections going forward. What happened to the 4000 land claims from before? He wanted to know what happened to the Department’s Turnaround Strategy that was presented in the third quarter. What caused the delay in the appointment of the CFO? He asked the Department to speak to the use of consultants. Was this related to the lack of internal capacity within the Department?

A Member was concerned that not much was said about land restitution and the money for claims, and what was spent on land reform. It seemed that a lot of money would have to be adjusted in the budget. What were the costs around this? She was concerned about supply chain management, asking what happened to it and where the Department went wrong. On the matter of unqualified extension officers, it was important to get experienced officers for land reform.

Dr van Dyk wanted clarity from the Department that the new cut-off date for land claims would not have any negative impact on the claims made before the previous cut-off date of 1998. The Committee wanted to see that the “vehicle that was already on the road” should carry on at the same speed it was going at before. He did not want the Department to slow down regarding land claims.

Mr Swart asked how far the land audit was, so Members could know how much land was owned by the State.

Mr Shabane answered that the audit was completed. The Department was in the process of submitting a memorandum to Cabinet so they could publish the statement audit report.

Ms L Yengeni (ANC) noted that there was an amount of R22 million approved by Cabinet to be reduced from the compensation of employees. She asked what informed this decision. The Department funded the establishment of 3 631 posts and another 698 on top of that. There was an expected increase over the medium term of 682 more posts. How were these posts affected by the R22 million reduction in the compensation of employees.

Ms Singo replied that the National Treasury asked that the departments calculate their budget on a yearly basis. The R22 million stemmed from the National Treasury imposing austerity measures on the Department in the year under review. The Department was asked to cut its budget. This meant that some programmes were not funded. So, the Department had to identify other places where the budget could be cut.

Ms Yengeni responded that it seemed the more the Department spoke, the more questions Members wanted to ask. She felt that the Committee was going around in circles.

The Chairperson said that the last time the Department was before the Committee, Members were told that the issue of the CFO vacancy was going to be sorted out. He thought this was going to be addressed. There were implications when senior posts were not filled. The PFMA was clear about the responsibilities of the accounting officer. He wondered if the PFMA had any meaning for the DG and if he took it seriously. How long should it take for a position like that to be filled? The Public Service Act also spoke to the length of time that a position should be vacant. He asked what the relationship was between the Department and the Department of Agriculture, Forestry and Fisheries (DAFF). Hw could the Committee monitor this relationship. Was the recapitalisation of 730 land reform farms the Department’s responsibility or did that responsibility rest with the DAFF? The Committee also needed more information on the CRDP rollout. Members wanted a comprehensive presentation on the CRDP rollout. He noted that Ngonyama Trust land had a specific budget, and noted that the rest of the communal land around the country did not have a budget. He wanted clarity on this. He noted that the Department had identified certain measures to promote effective budget expenditure and improve service delivery. The filling of posts did not fit into these priorities. How would the Committee be able to measure what the Department has been doing? The Committee wanted this commitment in writing.

Mr Shabane explained that Ngonyama Trust was one of the Department’s public entities. It was the only public entity within the Department, in KwaZulu-Natal, that was responsible for land administration; therefore, the Department needed to provide for the Trust. In other provinces, the provincial department managed communal land; therefore, the budget was in that department. He understood there were broader issues with this, but that was the reality.

Mr Shabane addressed the Members’ questions relating to land restitution. He stated that with having made the decision to re-open the deadline for land claims, the Department had to prepare the relevant policies and legislation. This was submitted to Cabinet, was not out for comment and should be back with Cabinet at the end of June. They would then come back to Parliament with a Bill. There were a few issues that the Department looked at when they decided to re-open the deadline. Firstly, the Department undertook from 2010 a nation-wide consultation with a whole range of people that benefited from different programmes of land reform. This was done with a view to overhaul the current land review programmes because there were many complaints about certain programmes not working. One of the appeals that were made was that many people were left out of the claims process even after the land was given back and people were compensated financially. Historical research showed that there were approximately 7.5 million people that were affected by forced removal in total. Approximately, only 80 000 have made claims today. It was highly likely that a number of people were going to lodge land claims on already settled claims. The Department would have to reopen claims to give people the opportunity to come forward and say they were removed from their land. It would be easier for the Department to ask those that have already settled claims whether they knew the people that were now claiming.

He explained that to date, no less than R6 billion was paid in financial compensation. This amount would increase as more people came forward. The Department would have a better idea of how much the land claims was going to cost once the reopening was concluded and an assessment was done. It was difficult to quantify how much the entire project was going to cost. What makes the costing difficult, was that even if the Department received 100 000 more claims, until one has researched them and determined their validity through evaluation, the Department could jot be sure if compensation would happen financially, or through land restoration, or through alternative land. Some land cost more to settle than others. It also depended on the capacity of the Department to make an estimate about those costs. The Department was going to need a lot in terms of capacity. Fortunately, there was a Land Claims Commission that helped the Department with land claims, negotiations, strategic partnership arrangements and business contracts. The Department wanted the Commission to confine itself now to land reform. There was another branch of the Department that dealt with rural infrastructure. In many instances, claimants claimed farms that needed revitalisation. There was a branch within the Department that dealt with this now. There was also a branch that dealt with enterprise development, which could help with the evaluation and research regarding land claim information, as well as verification of claims.

Mr Shabane added that there were a number of research institutions in the country that had a role to play regarding land claims. They could help the Department research and evaluate land claims. This was critical. The Department already had relationships with institutions such as the University of South Africa and the Human Sciences Research Council. They were brought on board to be part of the Department’s research team over the next few years. He could not put a cost to this plan.

Mr Shabane noted that Members wanted to know what the implications were regarding the backlog of land claims. Several Members wanted to know what happened to this number. He stated that the Acting CFO would answer the question, and added that a comprehensive analysis had been done on the backlog. The figures given in the presentation were “forward looking”.

Ms Singo reminded the Committee that the last time the Department presented to the Committee, they had made a commitment of R5 billion for restitution. The money was set aside but payments were not yet made. The Department embarked on an exercise to find out why the money was not moving before they could request more funding. The Department realised that the majority of the amount was not only being used on the claims, but also for cost settlement support. A plan was made to identify claims that could be settled very quickly, and those that would take more time to investigate.

The Chairperson interjected saying that the Committee still needed more information on the matter. He asked that the Department give the Committee clear, comprehensive answers so that Members did not have to ask follow up questions, as time was running out as well.

Dr van Dyk asked if the DG could devote some time to explain what he meant when he said that the Land Claims Commission should concentrate on the process of land reform. The DG also referred to certain sections of the Department that would also focus on the same thing. He wanted more clarity on the matter.

Mr Ramatlakane noted that the last time the Committee met with the Department, there were still land claims that had to be evaluated and verified. This figure reached 4 000. What has happened with the 4 000 claims? Has the Department completed the verification process on all of them? At what stage was the analysis? This did not have anything to do with money.

Mr Shabane explained that there were two parts to the Member’s question. There were claims that were not yet settled but money was put aside for it. The other part of the question referred to claims lodged before the cut-off date, but were not yet settled. This amounted to 8 627. There was not any financial commitment made towards these claims; they were still subject to the process of verification and validation. He knew that 600 of the 8 627 was in the operational plan, under research. There was some money set aside to research some of the claims. The Department could not quantify this exercise, as they did not know which claims were valid, which were not, which were on state land and whether land would have to be bought for claimants.

The Chairperson informed the Committee that they were running out of time and there were still many questions for the Department to answer. He said that not all the questions and follow-up questions were answered. He asked that the Department submit a written response to the Committee by end of business on Thursday, 6 June 2013.

Mr Ramatlakane asked if the DG could clarify some things in his written response. The DG mentioned an amount of 7.5 million who were affected by forced removal. He wanted more clarity on this figure. What was the acceptable number of claims once the deadline was closed?

Dr van Dyk added that he also wanted to know who was responsible once the Land Claims Commission finished handing out the land.

Ms Yengeni stated that she understood that the Department tried to answer her questions, but she would appreciate it if they could go back to those questions when they did the written response.

Ms Mfulo stated that her questions were not answered, but this could be included in the written response. She also wanted to know how many of the Department’s employees were in acting positions and when these positions would be filled.

The Chairperson informed the Department that they would be able to take a decision on the presentation once Members received all the answers from the Department. The Committee awaited the written response.

The Chairperson adjourned this session of the meeting.

 

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