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WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
2 April 2003
BUDGET BRIEFING BY DEPARTMENT OF WATER AFFAIRS AND FORESTRY
Department of Water Affairs & Foresty Budget 2003/4 PDF file format (link to Treasury website)
Department's Review of Budget 2003/04 (Text document)
Accompanying graphs of Budget Review
Table 3: Provincial Distribution of 2003/04 Budget
The Department (DWAF) presented its 2003/4 Budget. The Committee discussed the privatisation of forests and the transfer of their water schemes and sanitation projects to municipalities as well as the fact that the Working for Water campaign was not being funded by Treasury.
Mr M J Mabala, Chief Financial Officer of DWAF, presented the budget for 2003/04 to the Committee. His presentation is attached to this report.
Mr E Sigwela (ANC) referred to the high figures in Table 3 (Provincial distribution of 2003/4 budget) under the heading of non-allocatable funds.
Mr Mabala answered that these amounts could not be linked to spending in a specific province. The money would be spent, however, and at the end of the financial year the Department would show where the funds were specifically spent.
Chief C Maluleke-Hlaneki (ANC) wanted to know where the premier's special projects were indicated.
Mr Mabala responded that discussions had been held with the premiers about projects. Most amounts agreed upon were listed under the non-allocatable funds heading while some were in the provincial budgets.
The Chairperson wanted know why Table 3 indicated R8 billion as the figure for total expenditure while it showed that the DWAF would receive R6 billion from Treasury.
Mr Mabala explained that the difference between the figures amounted to the revenue the department would collect.
Mr G B D McIntosh (DA) questioned the figures in Table 3, stating that there was a difference of R4 billion between the amount received from Treasury and the total listed.
Mr Mabala stated that he did not have the details. The Director General, Mr M Muller, assured the Committee that the R6 billion was the correct figure. That is what the Department would spend. There could have been double counting in the figures as the trading account was augmented with money from Treasury.
Mr McIntosh said that this was a very serious problem and was unacceptable. The Committee could not consider the budget without proper figures. Accountability is predicated upon knowing how much money the Department would receive and from where.
The Chairperson stated that the department should come back with the correct figures so as not to create a wrong impression.
Mr Mabuza (ANC) said that it seemed as if only Table 1 and 2 were correct.
The Chairperson insisted that at the following week's briefing on DWAF's Strategic Plan, the correct figures should be presented.
Mr McIntosh commented on the Department's goal of transferring ownership of forests within ten years. He asked the Department to identify the beginning of the ten year period. It had been noted that the forestry department felt that this was happening too slowly and that the costs of running the forests were high. He asked what DWAF was doing about the problem.
The Director General replied that substantial transfers of forests have been completed already. A number of forests have been handed over to SAFCOL and would be privatised shortly. Forests which were classified as Category A and B were in the process of being privatised. Those in Category C, which were smaller woodlots, would take longer. Indigenous forests would also be handed over soon. DWAF had explained to the Treasury at the beginning of the last financial year, that the transfer of forests would take time and that some slippage would happen. This had happened and DWAF was now carrying the costs. DWAF would be conservative in its budgeting from now on.
Mr McIntosh asked for an explanation as to why water services was listed in the trading account and noted that the totals in Table 2 did not add up. He stated that it seemed as if DWAF was concentrating on the areas that were previously Bantustans. He felt that water provision should be for all.
In reply, Mr Muller explained that the water services program is a trading service and therefore is listed on the trading account. Poor areas would be transferred to local government. Government was also augmenting free water. DWAF was trying to eradicate the "us" and "them" attitude which prevailed in the previous Bantustan areas. While areas remain divided, DWAF was making efforts to bridge the divisions.
Mr S Simmons (NNP) referred to Table 2 and remarked on the 9,48% increase in the budget and asked if this translated into an increase considering the inflation rate.
Mr Mabala explained that inflation is considered by Treasury and figures are adjusted during the year.
Mr Sigwela questioned the 7% increase in water services and also wanted to know about the effect of inflation. He said that on the ground it did not seem as if DWAF programs were translating into an increase in water services. Was spending monitored to ensure that money was actually spent on projects?
Mr Muller said that there was a rigorous system of monitoring and follow up for all projects.
Chief Maluleke-Hlaneki (ANC) wanted clarity about water boards that had been phased out and also wanted to know about the mechanisms used to choose water board members. He asked about the panels that chose the officials.
Mr Muller said that the Kalahari East and West water boards had been phased out. Water board appointments were done according to regulations in the Water Services Act. This act also stipulated the constitution of selection panels.
Mr P H K Ditshetelo (UCDP) asked why the IT functions were outsourced. He wanted to know if it could not be done in-house. He also wanted to know what plans DWAF had for areas where there was very little ground water.
Mr Muller replied that the IT was outsourced four years ago as it was found that the public sector could not keep these professionals because of competition with the private sector. The government unit SITA does provide IT services, but where departments had specialist functions, IT had to be outsourced. He maintained that DWAF had a very effective system and even in outlying areas this system was operating effectively. Transferring water to areas with low supply has always been a difficult decision to make. DWAF would always consider where the biggest need was and act upon that.
The Chairperson asked why outsourcing of IT has not led to a decrease in expenditure for administration costs.
Mr Muller responded that administration costs have increased not as a result of IT but rather as a result of restructuring. Ms. M Modipa, Deputy Director General Corporate Services of DWAF, explained that the whole department was being restructured. The total cost of restructuring would be R292 million. R20 million was received from Treasury to do small business training for those who were being retrenched. This had been decided in the bargaining council with the unions.
Chief Maluleke-Hlaneki wanted to know where the R20 million was being used as forestry officials had told the committee that they did not have funds.
Ms. Modipa explained that the R20 million was only for staff related issues and not for the running of forests.
Ms M Ngwenya (ANC) wanted to know how much of the increase in expenditure for water services was designated for sanitation. She asked what mechanism was in place for local governments to be involved in the work.
Mr Mabuza also wanted to know what was being done about sanitation as the committee had heard the previous week from the sanitation task team about appalling conditions in certain areas.
Mr Muller said that there were good projects and programmes underway. The programmes involved training local people to do the jobs. The trained people were then taken to another project site where they trained others. This process took time, but it was working. Other organisations such as the Umvhula Trust were also being used. Delivery was doubling each year. R380 million per year was budgeted for sanitation and it is hoped that this problem can be eradicated by 2010. In the past year R200 million was spent on sanitation. The biggest problem facing DWAF has been creating the capacity for communities to handle the projects.
The Chairperson asked about the state of the water schemes being transferred to local governments. He also questioned how DWAF determined the capacity to receive RDP projects which were transferred without staff or budgets. He asked why funding for the Working for Water programme was being ceased if government was still reviewing the situation.
Mr Muller replied that DWAF was negotiating with local governments about the transfer of water schemes and would enter an agreement with each municipality outlining the terms of the transfer. These transfers would be complicated. They were however being done in line with the Division of Revenue Act (DORA). On the final point, he said that Treasury is not convinced about the effectiveness of the poverty relief programmes and is currently evaluating them.
Mr Mabuza wanted an explanation for the differences between Table 3 and Graph 1 in the documents handed out.
Mr Mabala explained that R6 billion was received from Treasury and from the trading account. The R1,9 billion in the table was without augmentation. This figure was augmented with funds from the R4 billion received from Treasury for water services and water management.
Ms R Ndzanga (ANC) wanted the equipment trading account clarified.
Mr Muller explained that this account was for the purchase of equipment such as bulldozers. Any profit made on this account was paid back to Treasury.
Mr McIntosh asked how donor funds were handled. He also noted that the operation of water resources had decreased by R300 million. He asked what the state reserve fund was for and asked where the transfer of schemes were accounted for in the budget.
Mr Muller said that they try to build donor funds in the budget systems and assured the member that it was recorded. The decrease in the operation in water resource management for the upcoming year by R300 million was because the Working for Water campaign was not being funded. The state reserve was for water for the poor. The transfer of schemes was accounted for in water services.
The Chairperson asked what was being done to recover the R257 million in outstanding loans indicated in the budget. He also questioned whether any corrective measures were being taken to address negative remarks about DWAF in the Auditor General's audit report.
Mr Muller replied that most loans were paid back on time, but that DWAF was obligated to guarantee loans given by the Land Bank. DWAF regarded the AG's report seriously and acknowledged that it needed a new accounting system. This would be done in the new financial year. Mr Mabala added that not all the information was available when the audit had been done. They were addressing this.
Mr S Phohlela (ANC) wanted to know what was meant by the heading 'special and professional services' in the budget.
Mr Mabala explained that this referred to contractors used in projects and consultants.
Chief Maluleke-Hlaneki (ANC) said that he was aware of water services areas where whites were living in DWAF houses even though they did not work for DWAF. Black employees, on the other hand, had to travel to get to these areas. Many black employees worked on the basis of temporary contracts even though they had worked for years while whites who had worked less time were employed on a permanent basis. Finally, he asked if it was possible for members to get cards so that they could visit the DWAF's facilities at any time.
Ms. Modipa replied that these issues were being identified as restructuring was being done and that DWAF was very sensitive to these issues. An audit was being conducted and these issues were being addressed.
Mr Muller said that members were welcome to visit facilities but that access cards could not be issued to members as security and health issues were involved. He said that a letter could be written and distributed to the facilities instructing them to allow members to visit.
The Chairperson asked the Director General to come back with such a letter. He also suggested that they have another meeting at which the Division of Revenue Act would be discussed.
The meeting was adjourned.