Department of Environmental Affairs on its Annual Report 2013 & First Quarter 2013/14; Section 32 report input by National Treasury; Auditor-General comments

Meeting report

The Chairperson said that some of the amended Bills from the previous week had reached him, and he would pass these on to Members as soon as they became available. He outlined the programme for the forthcoming days.

Presentation on Annual Report of the Department of Environmental Affairs
Ms Nosipho Ngcaba, Director-General (DG), Department of Environmental Affairs (DEA) led the presentation on the Annual Report (AR) of the DEA. She said that performance objectives had been tabled. The DEA had six programmes.

Programme 1: Administration
Ms Ngcaba reported that the DEA had exceeded its targets in Programme 1: Administration. Employment targets had been achieved, particularly for those with disabilities. The Department of Performance Management and Evaluation (DPME) had conducted an audit, and the DEA had been ranked in the top five of all Departments. The new offices were under construction, and a six star Green Award had already been made on the construction. Under education and improving capacity and awareness, the targets had been exceeded in terms of involving the youth in learnership programmes and bursary schemes. A young career development programme had been held in 108 workshops against a target of 80. 332 people had been trained on environmental management inspections (target 245), including 94 trained on in specialist fields. An additional 138 officials had been trained on environmental impact management (target 70).

Ms Ngcaba listed the key challenges in the programme related to delays in finalising the South African Environmental Outlook report. A few specialist chapters had been delayed, such as that on energy. Alignments was needed with the millennium development goals. Constraints in terms of human resources (HR) also saw a shortfall in the Local Government Support Framework. Public Action to Information Act (PAIA) requests had been centralised to a Chief Directorate in the DEA.

Ms Ngcaba said that 59 of 63 targets had been met (95%). R703 million had been spent of an appropriation of R715 million (98%).

Programme 2: Environmental Quality and Protection
Ms Ngcaba said that under programme 2, Environmental Quality and Protection, the DEA sought to improve the environment for all citizens. Complaints reported to DEA had been investigated within time frames. 89% of complaints had been investigated (target 85%), DEA had finalised 21 criminal cases and handed these over the authorities despite only have the capacity to process eighteen cases. There had been 82% compliance with administrative enforcement notices (target 75%). Rhino poaching had presented a problem. Of 42 planned activities in this area, 22 had been implemented, which was 52% (target 40%). About 37 000 households were benefiting from waste removal services (target 32 402).

Ms Ngcaba listed the challenges. The first was that only 81 facilities (target 85) had been inspected. Various licences had to be checked. Part 8 of Chapter 4 of the Waste Act had not been effected, dealing with the rehabilitation of contaminated land. Norms and standards were being developed to achieve this. Of 615 environmental impact assessments (EIA) received, 88% had been finalised within time-frames. Capacity was more responsive to 400 applications, and the number of EIAs received had stretched the capacity. Part of the challenge was that there was a fund for technical support of state owned enterprises (SOE). DEA wanted to extend this resource and was in discussion with the Department of Public Enterprises (DPE) to develop additional capacity. There were other challenges in processing some applications. Key EIA authorisations had been processed, especially regarding alternative energy.

Ms Ngcaba all 28 targets had been achieved. R324 million had been spent under this programme, which amounted to 100% of the budget.

Programme 3: Oceans and coastal management
Ms Ngcaba said that a number of oceanic projects had been carried out under Programme 3: Oceans and Coastal Management. Eight research projects and two baseline assessments had been completed at Betty's Bay and Robberg. The target had been met. The Green Paper on national environmental management of the oceans had been tabled in October 2012. Targets on protection of the coastline had been fully achieved. A marine protected area (MPA) had been declared in an offshore area and the 2% target had been met. There was full protection in 9.2% and partial protection of 13.5% of the ocean and coastal environment. There was protection of 2% of the Economic Exclusion Zone.

Ms Ngcaba said that of 17 targets, sixteen had been met. 100% of the budget had been spent, which was R540 million. This budget had included the building of a new research vessel, and the contract with Smit Amandla had been expensive.

Programme 4:  Climate change
Ms Ngcaba said that Programme 4 was Climate Change. Sixteen studies had been undertaken in a number of sectors. Key areas had been outlined in the area of work, and there was a framework to implement these flagship projects. Information had been gathered for the 2014 Biannual Report. Other areas of achievement included the continued fine tuning of air quality management. The framework had been tabled in Parliament, including standards for the industry. A vehicle strategy had been adopted together with an air quality policy for poor areas. 72 stations were submitting data into the South African Air Quality Information System (SAAQIS).

Ms Ngcaba listed the key challenges in this programme. Four impact studies had been conducted against a target of nine. There had been a slow rate of response from data providers. DEA relied on the industry. It was difficult to define a baseline. Industries guarded their information lest it fall into the hands of competitors, and the DEA had to sign non-disclosure agreements with industries. HR constraints had made it difficult to finalise projects in four sectors. The climate change programme was new, and had started from a low baseline. DEA had relied on donor funding from the German GIZ agency. This funding had been delayed the appointment of a service provider.

Ms Ngcaba said that DEA was on target with sixteen of seventeen targets under this programme (94%), and the other was off target. R844 000 had not been spent, which amounted to 2.9% underspending.

South African Weather Service
Ms Ngcaba presented the achievements of the South African Weather Service (SAWS). Agro- and Hydrometereology feasibility studies had been conducted. There was 77% accuracy generally (target 71%) and 98.8% for severe weather warning. The SAWS Amendment Bill talked about improving the state's ability to be efficient and accurate in terms of weather warnings. Where accuracy was lacking, there was provision for the SAWS to be called to account. SAWS had achieved 40% readiness of successors (target 30%). In terms of bursaries, 42% of applications were granted (target 40%), of which 85% were from previously disadvantaged communities (PDC) (target 75%). The staff turnover rate had been lowered to 4% (target 6%).

Ms Ngcaba said that one of the challenges was reduced income from the aviation sector due to lower volumes. Some airlines had been liquidated. This factor could impact on the sustainability of SAWS. R13.9 million had been spent out of a budget of R19 million. R4 million had been written off as bad debt, including those of Velvet Sky and 1 Time airlines.

Programme 5: Biodiversity and Conservation
Ms Ngcaba said that Programme 5 dealt with biodiversity and conservation. The international target was to have 17% of land areas and internal waters under conservation. Land under conservation currently was 7.7% (target 7.4%). DEA and South African National Parks (SANParks) had added 1.9 million hectares (ha) to the land under conservation. There were biodiversity plans for species such as rhinos. There were management plans in place for various areas. DEA had undertaken a risk outline for targeted species. A mining and biodiversity guideline had been published in agreement with the mining industry.

Ms Ngcaba said that key challenges were meeting targets in the transformation of the sector. A situational analysis process had been undertaken but the reports had not been completed. The Threatened or Protected Species (TOPS) regulations had been published for public comment, but the marine listing, especially for predators, had been delayed. Some stakeholders had requested additional engagement. The State Law Advisor (SLA) had made comments on National Environmental Management Laws Amendment (NEMLA).

Ms Ngcaba said that of 32 targets, 30 had been met. (94%) 100% of the budget of R568 million had been spent.

South African National Biodiversity Institute
Ms Ngcaba said that the South African National Biodiversity Institute (SANBI) had achieved some targets. Thirty peer review publications on trends, risks and benefits on invasive and endangered species had been published, which met the target. A number of endangered plants had been monitored. Some 21 000 records had been added to the SANBI species occurrence database. (target 12 500) and almost 19 000 records in the database had been verified (target 10 000). These numbers had to be monitored on an ongoing basis. An office had been established to monitor biodiversity. The Minister had published the State of Biodiversity report. A strategy for marine areas had been developed. There had been progress on expanding the botanical gardens estate. A preferred site had been identified in Limpopo and confirmed in the Eastern Cape. Revenue in the terms of the numbers of visitors had been increased, particularly amongst previously disadvantaged groups. The number of visitors had increased by 2%. There had been a 5% increase in the diversification of visitors.

Ms Ngcaba said that challenges included the draft monitoring framework for species in trade had not been developed due to capacity constraints, and there was still a vacant zoologist position. Reports on 60 emerging invasive species had not been finalised due to capacity constraints.

iSimangaliso Wetland Park
Ms Ngcaba noted that the iSimangaliso Wetland Park was represented at the meeting. Three criminal and three civil cases of illegal development had been detected. Invasive and alien species had been removed. Land use areas had been rehabilitated. Cost recovery had been optimised. Adjacent communities had been empowered. Visitor numbers had increased to 541 000, and there had been a 49% increase in revenue at the park (target 2%). The entity had a model that was working. 701 people living in or adjacent to the park had been trained (target 500). Bursaries had been awarded to 47 students (target 25). Visitor numbers had increased by 13% (target 2%).

Ms Ngcaba said that challenges were the retrenchment of a project manager due to funding issues. Funds had now been unblocked. The number of temporary jobs created was 1 528. The target (4 000) had not been achieved due to the liquidation of the main contractor. Three permanent jobs had been created (target 10). The Western Shores project had not been completed. A contract had been terminated due to non-performance. The key challenges were mainly of an administrative nature.

SANParks
Ms Ngcaba said that SANParks had exceeded targets by opening up over 50 000 ha of New Land (target 43 283 ha) and over 244 000 ha of follow-up areas (target 212 203 ha) for alien and invasive specie rehabilitation. Over 213 000 people had participated in education programmes (target 170 000). This was in line with the Committee's request to open up the parks. There had been a 70% occupancy rate (target 68%). The number of visitors had increased to 4.9 million (target 4.6 million). Black visitors had increased to 434 216 (target 411 000). The customer satisfaction index target of 77.5% had been exceeded slightly. Ten community-based socio economic projects had been achieved.

Ms Ngcaba said that key challenges were the continued rhino poaching. There had been an increase of 76% from the previous financial year (FY), all in the Kruger National Park (KNP). A number of suspects had been arrested. There was continued co-operation with the security cluster. Rhino poaching had been prioritised at the NATJOINTS Priority Committee.

Programme 6: Environmental Sector Programmes and Projects
Ms Ngcaba said that Programme 6 was environmental sector programmes and projects. The DEA had contributed to the Extended Public Works Programme (EPWP). Of the overall performance by the DEA, approximately 99 500 work opportunities had been created (target 74274). Of these, 61% were young people (target 55%) and 3 067 small, medium and micro-enterprises (SMME) had been used (target 2 572). At SANParks, 975 941 personal days had been created in terms of temporary jobs (target 767 920). This included 11 038 temporary jobs (target 3 933) and 626 SMMEs had been supported (target 286). SANBI had created 1 619 job opportunities (target 1 400), of which there were 140 001 person days (target 220 000) and 8 847 training days (target 1 400). In terms of restoration of ecosystems, 41 emerging invasive species had been controlled, in excess of the target. 600 beneficiaries had been targeted . The target for control of coastline system target was 2 682 km. On the restoration of eco-systems, 107 wetlands had been rehabilitated (target 100). Invasive species had been cleared from 821 198 ha (target 780 440). Additional funds had been provided to achieve the target in terms of indigenous plants and open space management.

Ms Ngcaba listed the challenges. The target of 55% of work opportunities for women had not been met. Only 892 ha of forests had been converted and cleared of invasive species (target 1710 ha). There had been under performance by the Department of Agriculture, Forestry and Fisheries (DAFF) and Department of Rural Development and Land Reform (DRDL).

Ms Ngcaba said that eighteen of nineteen targets had been met (95%). Actual expenditure was R2.7 billion (budget R3 billion), which equated to 93%. It was the first year of the Green Fund. Funds had been appropriated at the start of the FY, and planning with the Development Bank of South Africa (DBSA) had only started then. Not all the funds had been transferred as a result

Ms Ngcaba told Members that the overall performance of DEA was achieving 95% of its targets and had spent 96% of its budget.

The Chairperson ascertained from the representatives of the entities that they had nothing to add.

Discussion
Mr F Rodgers (DA) requested a report on the Green Scorpions, especially regarding river pollution. On iSimangaliso, he requested a report on the contractor that had been liquidated. He was interested to note that the occupancy rate at SANParks was only 70%, but the Committee had battled for months to find accommodation in the KNP for the rhino conference. Wattle and lantana were alien plants in KwaZulu-Natal (KZN), and he asked how these problems were being treated.

The Chairperson added that an application had been made for the rhino workshop. The only accommodation available had been in an expensive facility, and the date was wrong.

Mr S Huang (ANC) said that there were penalties for contractors. He asked how these could be written off. Another issue regarding SANParks was rhino poaching. There was an increase every year, and the DEA strategy was not succeeding despite increased numbers of rangers.

Mr J Skosana (ANC) congratulated the DEA on finishing within the top five of Departments assessed. On skills development, more effort was needed in order to face the challenges within the DEA. He was worried about environmental activities at a local government level. He asked if there was any plan to integrate strategies between national and local government. This was crucial. He wanted to hear confirmation from the Auditor-General of South Africa (AG) on the report. On rhino poaching, security systems were reporting criminals being arrested on a daily basis. He asked about the state of agreements with foreign countries on fencing. Criminals must be stopped from killing rhino. He was pleased that the Police were apprehending many poachers. The cross-border issues were crucial. On weather warning systems, he asked how these systems were installed in the rural areas or if this was left to chance.

Ms B Ferguson (COPE) felt that the DEA had a 'handle' on the challenges. DEA was continuing to look at Waste Act issues, and she asked what the time frame for this was. She was trying to make sense of the targets for ocean and coastal management. The target figures sounded very low, and she asked if this was normal. She asked when the draft would be completed. The number of people visiting parks still seemed low. It was alarming that the number of arrests in the KNP was still low compared to the number of rhino being poached. She was also concerned about cross-border poaching. She asked where the work opportunities, especially those for women, were located.

Ms D Tsotetsi (ANC) asked if the recipients of bursaries were placed in employment.

Ms Lize McCourt, Chief Operating Officer (COO), DEA, said that the dashboard report went into more detail than what had been in the presentation. Substantial work had been done on waste management against government's Outcome 9. There was a huge priority on waste collection and landfill sites. Financial resources had been found to exercise the functions in local government. The report spoke to Mr Skosana's concerns, looking at all areas of work in the environmental sector executed at local level. DEA was working with a number of organisations to ensure that support was targeted to the correct areas. All the SANParks were included in the 70% occupancy rate. That at the KNP was above this average. It was also an issue of seasonality. There were high rates during the European summer holidays. The Green Fund allocation had been totally committed. There had been a hiccough in that there was no Medium Term Expenditure Framework (MTEF) allocation for the following year. Certainty was needed before DEA could channel funds towards the different entities. Proposals for research and development had been made, and with certainty of funding now the management was now in a position to allocate funds. Some of the projects were on a concessional basis. The next round would be based on income generated and donor funding. The Fund was currently outperforming the available funds.

Mr Andrew Zaloumie, Chief Executive Officer (CEO), Isimangaliso, said that Sinyathe had been contracted in 2011 for a contract of about R80 million. The contract was terminated after R54 million had been transferred due to non-performance, particularly regarding labour. The company had since gone bankrupt. There was an agreement with the auditors on what could be written off and what not. Sinyathe was owed R6 million, but owed Isimangaliso R11 million for penalties and other outstanding fees. This was a conservative position. The under-performance in labour numbers was related to this. The penalties were being used to deliver on the projects and meet the labour numbers.

Mr Monde Mayekiso, Deputy DG (DDG): Ocean and Coasts, DEA, said that the figures on MPA in the coastal areas were different to offshore areas. In coastal areas, the figure was relatively high and above the international norm. the question was now how effective these areas were. It seemed that these areas were effective in terms of production. Offshore MPA had been declared during 2013, and DEA would like to build on these areas. The figure was not bad in international terms.

Mr Fundisile Mketeni, DDG: Biodiversity and Conservation, DEA, said that occupancy figures were seasonal. Old clientele might book years in advance, and this might be the problem experienced by the Committee. TOPS regulations had been delayed. DAFF was amending the Marine Resources Act. Marine species had to be included in the review of TOPS. It was easier to move after the marine amendments had been made. There were issues such as by-catch, boat-based whale-watching and harassment of sharks by divers. The NEMLA had tried to address these issues, which was why the split was being proposed. On rhino poaching, DEA was working with enforcement agencies. The cluster had been influenced. Co-operation with Mozambique was essential. There would be joint enforcement patrols with Mozambique. There would be joint work with the Department of Defence (DoD). The agreement of 2011 had also spoken to human trafficking, gun-smuggling, car theft and cigarette smuggling. The statistics were showing an escalation of the problem despite increased efforts to combat such illegal activities. SA felt that Mozambique was not 100% committed. There had been meetings with Mozambique authorities. There were villages within the trans-frontier park. Mozambique had relocated two of these villages with the aid of foreign donor funds. The other villages would also be relocated. There was still reluctance to re-erect the boundary fence. There was now an agreement to implement a fenced-off security zone. There was an agreement on policy harmonisation. The authorities did not regard rhino poaching with the same degree of concern. Mozambique legislation needed to be harmonised. Botswana would be holding a meeting with the Southern African Development Community (SADEC) on rhino poaching. South Africa would participate. The agreement with Laos was ready for signature. He was hoping that this would be done by December. There had been two meetings with Thailand. There had been a meeting with Cambodia and a framework draft had been concluded. A consignment of rhino horn had been confiscated in Hong Kong. The Department of Justice and Constitutional Development (DoJCD) needed to prepare the agreement as Hong Kong was now ready to make these available for DNA investigation. Once a Memorandum of Understanding (MoU) was signed there was a willingness to co-operate.

Mr Lulama Gumenge, Acting Chief Financial Officer (CFO), SAWS, said that the early warning systems were in place. More accurate warnings could be made at shorter notices. There was radar coverage over most of the country, and lightning warning devices were located in areas where this was more prevalent. The effectiveness of the early warning systems at local level needed to be evaluated. There were disaster management plans at national, provincial and local levels. Particularly at local level, many plans were not effective. The assistance of the Department of Co-Operative Government and Traditional Affairs (COGTA) was needed, and they had pledged support for a drive to implement these plans at the local level. In the South Western Cape, if a warning was issued for snowfall, road management agencies would close the affected roads before the threat could eventuate. A proactive response was needed. He also singled out the Nelson Mandela Bay metro and some areas in KZN had seen improvement. SAWS was working on the local level to ensure integration. There was agreement with the South African Broadcasting Corporation (SABC) on ways of disseminating such warnings in time and as widely as possible.

Mr Ishaam Abader, DDG: Legal Services, DEA, said that river issues were specific to the Blue Scorpions which fell under the Department of Water Affairs (DWA).

Ms Carmel Mbizvo, Acting CEO, SANBI, said that the 2% number for visitors to the gardens might seem conservative, there had been a 3% increase and a 12% increase in income compared to 2011/12. One area of progress was the use of education centres to educate schoolchildren. 158 new schools and organisations had made use of these centres during the year in question. Other activities such as walking and cycling trails, as well as concerts and open air cinemas, were being introduced as well. There was scope for a greater outreach to the communities.

Ms Ngcaba said that the job creation numbers were for infrastructure, but not in the area of increased number of rangers. Unemployed people were used to build roads and other infrastructure. On the targets for participation of women, the programme was national. There was a distribution of projects in all areas by catchment areas. She mentioned a number of examples in the different provinces. In all areas, different species were being targeted. In the number of people employed in a particular area, there would be a target for the number of women, youth and persons with disability. There were challenges in certain areas due to the nature of the work. Work in the fields was felt to be predominantly male due to the use of heavy machinery and toxic substances. There was biological control in some areas. Some acacia species were predominantly from Australia and Europe, and prospered in South Africa as their natural enemies were absent. Part of the solution was introducing these insects where such plants were present.

Ms Ngcaba said that work had been done in the Kokstad area on wattle and lantana. She could check on the detail. Operations were being conducted currently in the mountainous areas. There were plans to absorb staff who were the beneficiaries of bursaries. SAWS was the biggest sector that had continued to provide bursaries and absorb the recipients. They were also the subject for internship appointments..

Mr Abader said that there were 66 environmental inspectors at a national level and several hundred others at a provincial level.

Ms Ngcaba would confirm the number of posts available.

Dr Huang felt that his question had been misunderstood. Rangers were not temporary workers. The target of casual employment had been exceeded threefold. Mr Mketeni had not been present at the Committee for some time. There were many agreements. Rhino poaching was approaching 1 000 in the current year. SANParks were being subsidised. Activities did not seem to be increasing despite an increase in funding. Anybody could sign MoUs, but the real question was how the level of poaching could be reduced. SANParks could never organise accommodation for Members to conduct oversight visits. Two years previously Members had conducted an oversight visit to Isimangaliso. The Committee supported a request for an increase in their budget, but there had been serious under spending. He asked who would take responsibility for the cancelled contract. He asked how many cases were being investigated by the DG.
Ms Ngcaba replied that there had been a budget adjustment for SANParks to deal with rhino poaching. This was to invest in rangers and equipment. There had been a threefold increase in the number of jobs created, and this might be a case of under-targeting.

Mr Themba Mabilane, CFO, SANParks, said that additional funding had been received after the EPWP target had been reached. Additional rangers had been appointed.

Ms Ngcaba agreed that the success rate against rhino poaching was worrying. More equipment was needed. The fence was being re-erected on the Mozambican side of the border. Even the South African National Defence Force (SANDF) did not have the latest night vision technology. Aircraft needed to be able to operate at night. Night vision equipment was needed.

The Chairperson hoped to get further information when the rhino workshop eventually happened.

Mr Skosana said that South Africa had different policies to other countries. It was massive work to integrate the policies.

Ms Ngcaba understood that parliamentarians had been invited from other countries.

Mr Mketeni said that invitations had been sent for environmental issues in general. The invitation could be amended to ensure that the there was more specific discussion on the rhino issue.

The Chairperson was not concerned with other species at present. The idea was to have other parliamentarians present in order to show how South Africa was dealing with the issue. He was worried. He identified four countries in Namibia, Mozambique, Botswana and Zimbabwe. Botswana still imposed the death penalty, and this did seem to be a deterrent to crime in general. He was still waiting for a proposed agenda. On the Monday he wanted to showcase the work being done in terms of law enforcement. The second issue was international steps such as the MoU. A review was needed of the work being done to ensure that the herds grew. On the second day there should be a general discussion on how the black market could be destroyed. Many ideas originated from persons such as Dr Player. The third day would be for the study group and the DEA to investigate the situation in the park. Stakeholders would not be invited to this inspection as some might have ulterior motives. The World Wildlife Fund had done a study on consumer behaviour in Vietnam. He did not know how this study had been conducted, but if this had happened it might make for an interesting input. The agenda needed urgent attention.

DEA Target Dashboard
Ms McCourt said that the DEA had been instructed to develop an integrated scorecard for itself and its entities. The system should indicate the source of the target, the starting date, the baseline performance, and how likely the target was to be met within the given time frame. The MTEF and outcomes approach were being totally integrated. Outcomes deliveries were now a specific chapter in the MTEF going forward. High level indicators were included. One change was that the Annual Performance Plan (APP) and Strategic Plan (SP) of the Departments had to speak to the NTSF directly. The formal adoption of the SP would be in the following term of Parliament. Different terms were being used, and would be standardised across the sector. Everything up to the draft APP should be completed by the end of February. The system should be ready by then, although the plans would only be approved by Cabinet in the new term of Parliament.

Ms McCourt explained the colour coding used in the document. The different reports would still be sent. Green would indicate that a target had been met and dark green that it had been exceeded.

The Chairperson noted that Members were satisfied with the briefing.

Auditor-General on 2013 audit report
Ms Corne Myburgh, Business Executive, AG, said that the Environmental portfolio was one of the better-performing departments. The DEA and all four entities had received unqualified audit reports. AG considered the usefulness of information and reliability. There were no adverse findings in this regard. However, there had been some regressions. Some material errors in the financial statements, especially from SAWS, had to be corrected before the reports could be considered.

Ms Myburgh said that all entities had achieved their targets. SANBI had failed to reach 25% of its targets due to capacity constraints. The rest all achieved at least 80%. There had been findings that had been included in the management report. On integrated technology (IT) the main concerns were about user access, passwords and some other issues. On HR, SANParks and SAWS could not document that recruitment advertisements had been placed. Procurement procedures were generally being followed. Five employees had undeclared interests in supplier.

The Chairperson wanted the names. These people needed to be disciplined.

Ms Myburgh did not have the names to hand, but would find the information.

The Chairperson said that these people should be sacked. This was a serious matter. He wanted a list of the name by the end of the day.

Ms Myburgh said that R78 000 had been disclosed by SANBI as irregular expenditure due to quotations not being provided.

The Chairperson noted the number of issues marked in red and yellow on the presentation.

Ms Myburgh repeated that DEA was one of the better-performing departments. The orange areas were issues not serious enough to be included in the report. The red areas referred to incorrect areas or mistakes in the financial statements. The areas were commitments, where the DEA had entered into contracts but the services had not yet been delivered. There was one disclosure note, but the issue had been raised the previous year.

Ms Myburgh said that there had been a clean report in this regard the previous year. For SAWS, some leases had not been disclosed.

Mr Gumenge said that the lease was on the head office premises. The lease would only start in April 2014. It had not been hidden, but it had simply been an error not to disclose it. A check-list had been created for all leases in the future.

Ms Ngcaba said it was marked in red because this was a 'repeat offence'. The commitment was in terms of lodges. A figure had been inadvertently repeated three times.

Mr Ritesh Ramnanthan, Manager, AG, had located the names of those with interests in suppliers. The first name was ZM Mkhize.

Mr Andries Wessels, Director: Financial Management, DEA, said that the business in this case was with a company that no longer existed.

Mr Ramnanthan said that the finding was on the basis that the person had not disclosed his interest within the DEA and was doing business with other institutions.

The Chairperson could not understand how this Mr Mkhize could be working for two different departments.

Ms Ngcaba said that this was unauthorized.

The Chairperson could not understand how one person could have two jobs in government. This was corruption of the highest order.

Ms Ngcaba said that some people could get permission.

Ms McCourt said that one could apply to do unrelated work in his or her own time. This person ran a company that provided services to the Department of Education. There was no proof that this person had made an application, or had declared this interest. Of the five instances noted by AG, the necessary approval had not been granted. In three cases there was default approval as there was an arrangement that if there was no feedback to an application within a certain period of time, the applications could be deemed successful.. In the other two cases the companies involved no longer existed.

The Chairperson could not understand why there had been no steps taken. This was corruption.

Ms Ngcaba said that the DEA was first investigating the cases before disciplinary action could be taken. She would revert to Parliament once the investigation was concluded.

The Chairperson was flabbergasted with what he was hearing. The civil service could not function in the way that the COO had described. The situation was unbelievable.

Ms McCourt said that the DG had improved the process in application for extra work. This authority had now been centralised in her office. The lapse between application and response was no longer possible.

The Chairperson asked how one could do justice to two jobs at once. The Committee would support every rejection of a such an application due to the impact on the quality of service offered. In terms of delivery of services, this could not be allowed under any circumstances.

Ms Ngcaba said that there was an amendment to the Public Service Act being processed. Perhaps there should be blanket ban on extra remunerative work.

The Chairperson was totally opposed to granting permission for civil servants to undertake second jobs. Those who did so without permission should be fired. The implications of this procedure were a breeding ground for corruption. He instructed the DG to provide a report within a week. The persons involved, including those that gave permission, should be disciplined.

Mr Ramnanthan said that the other problem with SAWS was the prior payment error. The financial statements had to be corrected before they could be presented. In terms of SANBI, there was a technical matter over the disclosure of provisions. There was also an error between the budget and the actual expenditure.

The Chairperson said that the degree of error was in the mind of the AG.

Ms Myburgh explained that if the error had not been corrected, it would have led to a qualification. Departments were obliged to prepare accurate statements, and even corrected errors had to be reported accordingly.

The Chairperson asked why internal audit did not pick up such errors. They deserved punishment.

Ms Ngcaba said that there was a process which internal audit should follow. In the previous year, internal audit had been given a month to check the statements.

Mr Wessels said that controls were based on sampling. Errors could slip through. Attention was paid to areas of error in previous years. It was a small thing and they had missed it.

The Chairperson had difficulty in understanding this. He understood that auditors were especially thorough. He accepted the answer given but could not understand how this had happened.

Ms Esther Makau, CFO, DEA, said that these were not from the main balance, but from the disclosure notes. The financial statements had gone to the auditors three times and all had missed this.

The Chairperson was not drawing any comfort from this. AG had created systems, and the impression was being given of rampant corruption in the Department, but no money had disappeared. He asked when the AG would update its system and provide a user-friendly system that would reveal the real corruption rather than make a major issue of a technical mistake.

Ms Myburgh said that this was auditing. Financial statements were prepared in terms of a framework, and AG had to report on any omissions.

The Chairperson asked why there was not a way to distinguish between real cases of financial crookery and technical mistakes.

Ms Myburgh said that the AG reported on compliance. The five persons named had not had a material impact. The AG had not found any evidence of money going missing or being misappropriated.

The Chairperson said that the way AG reported on these matters often created the impression of widespread corruption where often there was none. Much of what was being reported had no real political value. Nevertheless, he urged the AG delegation to keep up the good work they were producing.

Discussion
Mr Rodgers was concerned that the DEA did not have the appropriate checks and balances. There should be a background check on companies receiving tenders. One of the problems of government was that corruption was not always measurable in monetary terms. Staff appointments were being made without advertisements. He wanted to know who had been appointed in these posts. There was currently an investigation by Deloitte on fruitless and wasteful expenditure on dormant projects. This had been quoted in the AG's report. The DEA planned to spend R28 million on consultants, but had spent over R41 million, a huge increase. He could not understand why it had taken seven months to appoint consultants.

Ms Tsotetsi asked whether the root causes were inadequate leadership or corruption. She asked if there was a risk audit committee in place. She asked if the quoted lack of skills was as a result of vacancies or the incompetency of those occupying office. Where findings were not monetarily quantifiable, there should be some financial implications. Every cent should be accounted for, but she asked at what stage the threshold should be set.

Ms M Wenger (DA) said that there were material errors in the statements of SANBI and SAWS, and a root cause was stated as the lack of consequences.

Mr Huang asked about accountability of the staff. He wanted to see more discipline. He asked how there could be improvement every year, and yet the AG produced a thick report every year. He did not have time to read through the entire document. Members did not have the time to sift the report for the fine detail.

Mr Skosana was wondering. The DEA was always reporting well, but was now entering a difficult situation. The DG needed to be alert and guide the entities. What he was hearing was unpalatable.

Ms Ngcaba responded that the first issue was the Deloitte and Touche report. The DEA had been running projects. Part of what had been inherited was old projects that had ended but not been closed. Auditors had been appointed to assess these projects, and to report on any wrong-doing discovered. This issue was also covered in the Accounting Officer's report. The other matter was the areas of improvement. Some areas of expenditure had achieved savings, and in others more was spent due to daily requirements. The AG report did indicate areas of regression, which DEA took seriously. She had to ensure that the reports from previous years on consultants tightened the process, even if this led to delays. Some control instruments had been implemented for the first time. The AR had been tabled at the end of August. They should have been made available to Members at the time, and the requisite number of copies had been distributed. Lastly, DEA was trying to tighten up. People must be made aware of wrong-doing and staff should be aware of the requirements.

Mr Mnikeli Ndabambi, General Manager, SAWS, said that SAWS advertised its internship programme annually. In this case, some interns had left in the middle of the programme. If a qualified person had come looking for a job at that time, it would not have been cost effective to go through the entire process. This was done annually due to the costs.

Mr Ramnanthan said that the positions at SANParks not advertised were administrative and management posts.

Mr Teboho Mokoena, Senior General Manager, SANParks, would provide the information later.

Ms Myburgh said that the findings on consultants were from the period covered 2008 to 2011, which had only been tabled in 2013. The process had been speeded up since then. One would expect that there would be senior manager to guide the drafting of plans such as the disaster plan. The lack of skills was mainly regarding IT. There should be enhanced capacity within the IT staff. Irregular expenditure might be an indication that the correct process had not been followed.

Ms Tsotetsi said that the finding on unadvertised posts did not refer to interns, but to people fully employed by DEA.

The Chairperson said that there was some problem within Parliament if the Annual Report had not yet found its way to Members.

DEA Financial Statements
Ms Makau said that 95.5% of the budget had been spent. The main problem was the late allocation of the Green Fund. R211 million had had to be returned to Treasury. Spending on current payments was R1.4 billion, R3.1 billion went to transfers and subsidies, of which R29 million had gone to non-profit organisations. R474 million went to capital assets and R161 000 for payments for financial assets. Of the R824 million spent on goods and services, R340 million had been spent on consultants and contractors. This should not all be seen as spending on consultants. The bulk of this had gone to Smit Amandla for the operation of the research vessels. There had been an increase in spending on overseas visits. She said that some payments had been late invoices for COP17.

Ms Makau said that the biggest items listed as other operating expenditure went for air charter services and for the operation of the SA Agulhas. There were fixed costs due to subscriptions payable to professional bodies and international organisations. She gave a breakdown of the R1.2 billion transferred to the entities. There was a combined revenue or R1.3 billion from the four entities, but all had incurred deficits.

The Chairperson congratulated Isimangaliso on its clean audit, despite its relatively low income generated.

Ms Makau said that SANParks had a deficit of R41.3 million. The main factors were flood damage, outstanding forestry grants and operating costs of park restaurants. The deficit of SANBI was R5 million. SAWS had a deficit of R15 million, mainly due to a shortfall in aviation and other commercial income. Isimangaliso had a deficit of R9 million, much of it as a result of a write-off of penalties due from the liquidated contractor. All four had received unqualified audit reports, but SANBI, SAWS and Isimangaliso had all received some negative comments from the AG.

Ms Makau said that R300 million had been received from DBSA for the Green Fund, but only R88 million had been transferred. All the other allocations for transfers to other agencies had been made. R2.2 billion had been allocated for projects under the EPWP. Of this all but R243 000 had been transferred. The balanced was due to unearned incentives and this had been returned to Treasury. She listed the projects that had benefited, the highest allocation being for the Working for Water project at R662 million.

Ms Makau said that foreign donors had contributed R2.8 million, of which R1.4 million had been spent.

Ms Makau briefed Members that 2% of invoices had not been paid within thirty days. The average days to payment was 24.

1 & 2nd Quarter 2013/14 Expenditure report
Ms Makau presented the expenditure report for the current FY for 1 April to 30 September 2013. DEA was tracking well. As at the end of the second quarter, total spending was 41% of the allocation. Programme 1 stood at 42%, Programme 2 stood at 39%. Programme 3 at 51%, Programme 4 at 49%, Programme 5 at 47%, Programme 6 at 39% and Programme 7 at 38%.

Ms Makau showed that in several cases invoices were delayed, or would only be submitted on the completion of the associated projects. Money was also committed to certain projects that had not yet started.

Ms Makau said that 31% of the budget for current payments had been spent, 47% of that for transfer and subsidies and 55% for payments for capital assets. SANBI and SAWS had revenue in excess of expenditure but SANParks and Isimangaliso were currently in deficit. Current spending on EPWP projects was R853 million. Only four of almost 12 000 invoices had been paid in more than thirty days.

Current budget structure
Ms Makau said that R668 million had been set aside for staff compensation. Of this, R11.9 million had been paid for bonuses for staff at level 4 to 12, and R3.0 million for staff at level 13 to 14.

The Chairperson thought that bonuses would only be paid to staff at the lower levels.

Ms Makau said that R777 million would go to Programme 1 (Administration); R113 million to Programme 2 (Legal, enforcement and compliance); R318 million to Programme 3 (Oceans and coasts); R233 million to Programme 4 (Climate change and air quality); R616 million to Programme 5 (Biodiversity and conservation); Programme 6 would receive R3.4 billion (Environmental programmes) and R65 million would go to Programme 7 (Chemicals and waste management).

Ms Makau said that Treasury planned to cut the proposed funding for 2014/15 by R157 million. She presented the revised figures over the MTEF. DEA was requesting an additional R749 million for 2014/15, R1.1 billion in 2015/16 and R1.0 billion in 2016/17.

The Chairperson wanted to see the way in which additional funding would be spent.

Ms Ngcaba said that extra funds had been allocated for licensing.

Ms Makau said that the new funding for the entities was in the form of infrastructure grants.

Mr Rodgers found it difficult to compare the MTEF budget without the current budget being included for comparison.

The Chairperson asked what was important. The important thing to know was what the additional allocations would be for.

Afternoon session
Ms Makau continued that Treasury was planning to cut the allocations to Departments. R250 had been taken from the DEA budget, and would be returned in the following FY. The money for the entities was being allocated for infrastructure. In response to the cuts, there were still requests for additional funding to address the shortfalls. These might be allocated in November, if at all.

Ms McCourt said that the requests were in line with those areas seen to be in deficit. There would be added commitments with the new regime on mining.

Discussion
Mr Huang noted that the bulk of the Green Fund had been returned to Treasury. The money was coming too late, but he felt that the fault lay with the CFO and not Treasury. The Green Fund was an important channel. This was an external grant. It was futile to budget for this fund if it was not going to be used. There was an increase to the SANParks budget. He asked how policies would be implemented in the future.

Mr Rodgers noted that the revenue for the first six months of the FY by SANParks was only 29% of the budget. He asked if they would meet their revenue target.

Mr Huang noted a consultant fee of R110 million for the maintenance of the SA Agulhas. He asked if the fee due to Smit Amandla included the consultation fee, or was just for the maintenance of the vessel.
Ms McCourt replied that the total allocation for the Green Fund had come late. Allocation letters from Treasury normally arrived in November. The letter confirming the allocation of the Green Fund had only been delivered in February. So while the allocated R300 million was delivered, there were no implementation plans in place. For the following year the allocation would be R500 million, and nothing in 2014/15. Treasury only allowed funds to be spent from the allocation to be spent in that FY.

Ms McCourt said that only R100 of the R300 million had been spent. DEA had requested a roll-over for the balance of R200 million, but this was denied. This money was therefore lost. The policy was also to make disbursements to projects as they progressed, not to make a full payment in advance. DEA had requested a cut in the funds for the current year in order to make provision for funding in 2013/14. No projects had been allocated to Eskom. The first window was for local government support, renewable energy and labour intensive waste collection and recycling initiative. A full breakdown could be provided.

Ms McCourt said that there was ongoing discussion on the R24 million shortfall of SANParks. The money had never been forthcoming from Treasury, but the functions still had to be exercised. Funding had now been received for the disaster that had occurred. On presenting the strategic plan, a new risk in the form of municipal rates had been raised. Her understanding was that if the status was maintained, there would be another expense of R80 million per year in the parks with accumulated debts of R300 million. This would be subject to legal scrutiny.

Mr Mabilane was confident that SANParks would meet its revenue targets.

Ms Makau said that the main topics on the list was consultants, but Smit Amandla were essential contractors rather than consultants. They were responsible for the Algoa and the SA Agulhas 2.

Mr Mayekiso said that Smit Amandla fuelled and maintained the vessels, and found their own crew.

Ms McCourt said that the figure included a management fee. A competitive process had been followed in awarding the tender.

Mr Rodgers had a breakdown of the R1.6 billion generated by SANParks in the previous year. He saw nothing about income from capital projects.

Mr Mabilane said that the capital grant was included in the grant from DEA. The CEO had been unable to attend due to an upcoming strategic session. The invitation for this meeting had arrived a little too late.

The Chairperson disagreed. The agenda had been out for weeks, and it was DEA that had changed the date. He noted the presence of the CEO or, in the case of SANBI, the Acting CEO, of the entities. SANParks was the exception. He found this ominous. The Department and the entities must learn that Parliament was not there for their convenience. The Budget Review and Recommendations Report (BRRR) meeting was held at about the same time every year. He disliked the procedure, but it was a legal requirement. The CEO must be informed that his absence was unacceptable, and the preparations for the other meeting mentioned should have been left to his staff.

Mr Wessels said that the figures should reflect the actual income from SANParks separately from government grants. The seasonal trends made them confident that they would receive the budgeted amount of revenue.

Mr Huang said that there had been an increase of over 60% in subsistence allowance.

Ms McCourt said that travel costs had increased because of a substantial increase in local travel to implement projects, especially in rural areas. The money from Treasury for the EPWP required a level of cross-subsidisation. DEA would pay the salaries of managers and for travel as EPWP funding could only be spent on the projects themselves. Another contributing fact was costs associated with travel increasing substantially.

Budget Review and Recommendations Report (BRRR)
The Chairperson read the Budget Review and Recommendations Report. He recommended that the sentence referring to 'striving to achieve an unqualified audit opinion' should be changed to 'maintain'. Some sentences were particularly impressive. He questioned some of the targets listed in the report.

Ms McCourt said that some of the figures referred to full achievement of targets and partial achievement of others.

The Chairperson was impressed that the target of employing persons with disability had been reached, as not many departments had done this. It was not the new building itself that had achieved the six star green rating, but the design thereof. He noted a reference to a Southern Oceans Management Strategy, but had not seen the relevant document. He requested that this strategy be forwarded to the Committee. He did not see some of the resolutions on climate change reflected in the document. He asked where the additional 1.9 million ha of land alluded were to be found.

Mr Mketeni said that it was different parcels of land all over the country.

Ms McCourt said that the land included national, provincial and even private parks. There had been a drive to get the proclamations sorted.

Mr Mketeni undertook to provide a list of the land parcels.

The Chairperson was particularly concerned over the future of the Cape penguin. They had to be encouraged to breed. He found the report to be skimpy on rhinos.

Ms McCourt said that there was a different way of determining how well targets had been achieved.

The Chairperson would like to see botanical gardens in all provinces. He queried what was meant by the worst case scenario involving the failed contractor to Isimangaliso.

Ms McCourt said that the project was for all the facilities on the Western Shore.

The Chairperson regretted this, as there was so much potential in the area. He pointed out that money could not be given to a mountain range.

Ms McCourt explained that the money had been given to the KwaZulu-Natal Conservation Authority for the management of the Maluti-Drakensberg Park.

The Chairperson proposed more sensible wording of that paragraph. He read that Isimangaliso had received an emphasis of matter. He corrected the report to indicate that despite this emphasis, this entity had also received an unqualified audit report. He found the section on international payments to be poorly written.

The Chairperson called for several grammatical and spelling changes. All eight Members present voted to adopt the report.

Mr Skosana said that a lot of matters had been raised with the DWA.

The Chairperson suggested that Members would need to be careful with interrogating the DWA AR the following day.

The meeting was adjourned.