DEA, SANParks & iSimangaliso Annual Performance Plans; AGSA input, with Minister

Meeting report

Office of the AGSA on the review of the APP of the DEA

Mr Andries Sekgetho, Business Executive, Office of the Auditor General of South Africa (AGSA), said extensive consultations were carried out in order to make sure that the AGSA and DEA came to a workable solution in terms of the review. The presentation was based on the Medium Term Expenditure Framework (MTEF) requirements and the application of the AGSA, and also highlighted certain risks that may prevail due to the lack of an application of the Framework. He said that the Office of the AGSA regulatory body set rules that everybody had to comply with, while the Department applied and implemented the rules, finally being assessed by the AGSA office on whether compliance was achieved. 

Ms Jolene Pillay, Senior Manager, AGSA, said that its mandate came from the Public Audit Act. The AGSA needed to present an opinion on whether the financial statements were fairly represented in accordance with an applicable financial framework and legislation. She then gave a background to the Expanded Public Works Programme (EPWP). The programme was aimed at alleviating poverty and reducing unemployment. There was the need for a mechanism to be in place whereby government would be able to stimulate the economy primarily as related to four sectors in which government intended to use the programme to increase job creation. She said that one of the sectors identified was the environmental sector which involved the DEA and its entities. The programme involved the use of the line budget; it used expenditure of the Department to help create work opportunities, especially for unskilled workers. It also aimed to provide training and to upscale unemployed employees who may not be able to get employed in other sectors. The programme was coordinated by the National Department of Public Works. 

Ms Pillay said that the AGSA analysed estimates of national expenditure by looking at the 2014/15 Estimates of National Expenditure (ENE) report. It was noted that the ENE stressed the work of the Department as it related to the EPWP. Most of the DEAs work, particularly restoration and rehabilitation processes, sustainable management of land use and conservation, were important aspects of its mandate and had to be implemented with the EPWP. The ENE stressed the important role played by the DEAs Environmental Department programme in realisation of outcome four which the EPWP related to which was inclusive growth and creation of decent employment. There were projects primarily funded by the EPWP. All the projects identified related to the mandate of the Department. 

Ms Pillay highlighted the Modified Cash Standards (MCS). These were a set of standards owned by National Treasury and produced by departments. The information was extracted from the AGSA. Two aspects of the MCS were discussed. The first part related to expenditure and the second part related to implementing agents and how this applied to the MCS. She said that in terms of expenditure, the MCS stated that expenditure represented decreased in economic benefits or services during the reported period that resulted in a decrease of assets. Essentially, expenditure was primarily goods or services or as an incurred liability where services were rendered. The MCS outlined three major classifications of expenditure; current expenditure, payments for capital assets and transfers and subsidies.

Ms Pillay then spoke about implementing agents. She said that a principal agent arrangement resulted from a binding entity (an agent), undertaking transactions with third parties on behalf, and for the benefit of another entity (the principal). She said that the key thing to consider was to look at the arrangement itself and assess whether it was binding or not. The standard required by the department was to recognise or report all revenue that may be collected by the agent in its own set of accounts, but also to report expenditure incurred classified according to the MCS. In addition, the principal was required to report on the assets and liabilities that were incurred in the arrangement. The agent would not recognise all revenue and expenditure that the department needed to recognise. The arrangement meant that an implementing fee was agreed upon and the agent would only recognise the fee under the arrangement. The MCS also specified disclosure requirements in the principal agent arrangement. 

Ms Pillay said that in analysing contracts identified, key considerations were listed. There were requirements of the MCS in determining whether an implementing agent existed. She said that there had to be a binding agreement in place and this was seen in the EPWP. The agreement provided that the implementing agent would perform work on behalf of the department. She explained that significant terms and conditions of the contract were determined by the department. Requirements from the MCS would be to determine whether legislation gave power to the agent to determine terms and conditions of particular arrangements. It was noted that there was no such legislation. The agent did not have the ability to use all resources that resulted from the transaction.  The agent was not exposed to variability when the agent was earning a fixed fee or carrying out a transaction. The agreements belonged to the department and had to be returned at the end of the contract, and any unspent funds were also to be returned. 

She said that in terms of transfer payments, 100% of payments would be under one line in transfer payments. In terms of compliance, MCS continued to work well. However, when there was a difference between MCS requirements versus budgeted amount, the department needed to make sure it complied with the MCS in the first instance. She explained that in terms of compliance, rules of the department would apply to the implementing agent. It was required that the implementing agent would comply with the supply chain legislation as the department was required to. At a minimum it would comply with policies and procedures adopted by the department. This could indicate possible irregular expenditure if the implementing agent did not comply with standards of the department. 

Ms Pillay noted that there were risks such as the misclassification of expenditure. She said that it was required that the implementing agent needed to maintain proper records of spending on assets and liabilities. There was a risk that expenditure would not be classified according to the line items. Transfer processes and contracts may not be fair, critical or transparent. In such cases this could result in issues surrounding misallocation. There may be inadequate information collected from implementing agents. There might be misappropriation of funds therefore internal controls were key. Assets belonging to the department may not be properly managed and/or accounted for. 

Modified Cash Standard (MCS) expenditure classification

Ms Lindy Bodewig, Chief Director: Technical Support Services, National Treasury, said that from an accounting point of view, it was useful to know what officials and employees were being paid and how much was spent on subsidies and assets. The specific categorisation helped to understand exactly how funds were used by departments.  She said that the categories helped with identifying the actual consumption of departments versus what was given away to other sectors of the economy. This was how transfers and subsidies came to be introduced as a classification. This created complications as now accountants were forced to think about the nature of transactions they dealt with. She said that a complexity was then introduced for departments to think about what they were paying for and why, therefore helping in classifying financial statements.   

She said that goods and services, capital assets and transfers and subsidies were highlighted as key. She explained that when one built a house and gave it to a beneficiary, would it be classified as goods and services (through the employment of engineers), capital assets (the house) or transfers and subsidies (to be given to somebody else). These had to be carefully considered as there was a fine line between the three of them which could cause complications.

Ms Bodewig then spoke about exchange and non-exchange transactions. She said that exchange transactions were transactions in which one entity received an asset or service, or had liabilities extinguished and directly faced approximately equal value. Non exchange transactions were when an entity either received value from another entity without directly giving approximately value in exchange, or gave value to another entity without directly receiving approximately equal value in exchange. She said that in order to distinguish between the two, one had to ask the following:

• what am I buying?
• am I receiving something of value?
• does this value approximate the cash disbursed?

For example, when a consultant was paid R1 to write a policy document, something was received in return by the client, but the client was not giving a market value return, so would it then be recorded as a good or service or a transfer payment? She gave more on this by stating that if the DEA appointed consultants to conduct research and to develop a policy position on sustainable production in agriculture, the consultant was appointed through open tender, the amount paid was thus market related. Therefore the transaction was exchange transactions in goods and services. 

Another example she made was of a laptop. The DEA purchased a new laptop for an employee through SITA, with each costing more than R5,000. This would be an exchange transaction of capital assets. When the DEA bought Learning and Teaching Support Material (LTSM) for distribution to schools within a specific district, it took delivery of the LTSM and distributed it to the schools. This would be an exchange transaction. The supplier distributed the LTSM to the schools on behalf of the Department. She said that because the DEA would decide on what was to be purchased and distributed, it still held control of the process, even if this was not physical. If however the school was given control of who to purchase from and what to buy, then the transaction would not be an exchange transaction. There was no value given to the DEA, it was rather a reimbursement. 

Ms Bodewig explained the involvement of an agent in a transaction. She said that when schools were being built and books being bought among various activities, other parties were involved within the process. She said that this would largely be due to capacity issues within the department i.e. limited skills and services. The MCS identified when an agent was in involved in a transaction. An agent principal arrangement could only be arranged where a person appointed someone to do something on their behalf with another party. For example RDP housing where a department would look to the municipality in constructing houses. She said that there had to be a third party, a binding arrangement and an agent in between. The agent was acting on behalf of the principal and the principal recorded the transaction. In a principal-agent arrangement, the principal determined the significant terms of arrangement with the third parties. It determined how resources would be utilized, and was exposed to any variability in the transaction. The principal controlled the transaction with the third party. This would be seen as an exchange transaction. When departments involved agents, the money given to the agents would be classified as an exchange transaction. This was similar to using a service provider to deliver services directly to the beneficiary (LTSM example). 

Ms Bodewig then highlighted grant type arrangements. She said that departments entered into grant agreements with institutions (such as municipalities, NGOs, private companies) to undertake activities often for third parties. Performance criteria were set in the arrangements and payment was made based on the achievement thereof. She said that this institution was responsible for delivery of the output (good or/and service) i.e. determined how the resources would be used and was responsible for any variances that may arise. The department monitored performance and delivery was the responsibility of the institution. The value generation was therefore for the beneficiary, and the funds given to the institution by the department were classified as non-exchange transactions.  

She said that with regards to stipends, in terms of the EPWP, there was a large amount allocated to workers as a stipend. She said that it was discussed in how or what to determine as whether employees were being paid, and what was received in return for the work done by workers and how this would be classified in the financial statements. It was stated that the workers were not getting paid for services they were rendering; the money was money that helped them get to their jobs and towards food. The benefit to these workers was said to be far more compared to the benefit received by the department from the workers. Therefore this was seen as a social grant type scheme therefore non-exchange transfer arrangement. 

She said that in looking at the agent-principle involvement in the MCS, one had to look at whether they had an agent and the role of the agent according to nature of activity. It was up to departments to decide where programmes lied and how they were managed and monitored. Complexities usually meant employing an agent, and the arrangements to this needed to be unpacked and clear in what was the party doing and how they would reflect on the financial statement. 

Ms Esther Makau, CFO, DEA, said that the EPWP accounted for a large portion of total transfer payments. In analysing transfer payments, these also included Working for Water and Working on Fire. The programmes were run according to DEA regulations. EPWP projects were appropriated by National Treasury in the ENE. The DEA therefore complied with NT regulations. She said that these regulations discussed how transfer payments were treated, where they excluded divisions of revenue grants and other allocations to municipalities. It also specified that this was to be done in conjunction with the process of PFMA Section 28(1). 

She said that the DEA consulted with the Chief of the Procurement Offices on their transfer payments. The Chief asked what the DEA did following a transfer payment. Because the DEA followed National Treasury regulations, the Chief received a response. She said that National Treasury regulations stated that an accounting officer must obtain appropriate measures to ensure transfer payments to entities for their intended measures. The measures included regular reporting, internal and external audit requirements (all implementing agencies were supposed to comply with the audit requirements), regular monitoring, scheduled or unscheduled inspection of visits and any other control that the accounting office might deem necessary. Accounting officers may withhold a transfer payment to an entity if s/he satisfied that conditions attached to transfer payments were not complied with. 

She said that financial assistance was no longer required. The agreed objectives were not maintained. Ultimately, it was agreed between DEA and NT that the Office of the AG would look into the DEAs transfer payments audit to make sure that it fit with the EPWP. NT said they would communicate with the different departments and look whether the EPWP followed goods and services or conditional grants. 

Discussion

The Chairperson mentioned that there was an issue around MCS where there was a dispute between the DEA and the AGSA. The dispute was resolved; however this was too late to amend the annual report. He wanted to get a better understanding of MCS and how it was applied. 

Mr R Purdon (DA) wanted clarity on the R10.5 billion over the medium term. Who allocated the funding of the budget to the provinces, assuming that all provinces benefited and how did this filter to municipalities? How was funding weighted? How were local municipalities applying, there were certain municipalities struggling to apply for this? Was there a programme to assist the struggling municipalities? 

Mr Z Makhubele (ANC) noted the assumption that the DEA was still waiting for the AGSA to respond to the DEA in that the system they had in place was working or not? Has there been engagement by the three institutions, the DEA, NT and AGSA? 

The Chairperson asked how auditing was done from the transfers to the entities/agents, and who conducted the auditing? How did Parliament receive the audited financial statements of funds transferred and spent by the transferring entities? How was the classification of the expenditure by the entities which should have received the transfers, did they treat the expenditure in line with the AGSA on goods and services, or was the spending not aligned with the classification requirements?  How were the risks presented by the AGSA managed by the Department? 

Ms Nosipho Ngcaba, Director-General, DEA said projects depended on the type and nature of interventions. If they were about controlling for invasive aliens and wetlands, then available resources would need to be looked at in order to know what resources to prioritise. There was no equal distribution to provinces; instead it was based on need. In waste management for example, which was more of a local government function, the municipality submitted proposals for landfills, so then they would have audits and so resources would be made available to them, along with training.  There were consultations between the DEA and AGSA which highlighted the risks. Each year when auditors audited the work of the DEA outside of the implementing agents, procurement, HR or IT, if these were not in existence with regulatory measures then the DEA would respond accordingly. If the DEA did not improve on the controls then that was how they would end up with a qualified audit. 

She said that there were implementing agents done through the AGSA itself, like public entities particularly SANParks. Those not done by the AGSA were found to have a process agreed with or by the AGSA on the terms of auditing. The AGSA could audit depending on its capacity. The summary of the audit outcomes could be presented if need be. 

The Chairperson said the question on goods and services was linked to how funds were audited, and in the process of audit how expenditure was measured. Entities spending transfer files were not subject to MCS requirements, therefore they would not have to classify expenditure on the MCS requirements. There was a concern raised as the report said that almost half of the money Parliament appropriated to DEA was transferred, and where they were transferred the AG did not do the auditing. The Committee had not received an account of how the entities had spent the money. The AGSA’s report was not received. 

Ms Ngcaba responded by saying that the AGSA had access to all projects by the DEA where money was spent. AGSA could access all audits of all projects. The terms of auditing by other auditors were agreed by the AGSA, and then when transfer payments were received there was a clear indication of the framework. The AGSA would look at those audits and give an opinion. All auditors had to follow a particular standard. Previously the DEA worked according to the transfer of payments regulatory and not according to the MCS requirements. 

The Chairperson said that the AGSA said that they only audited the expenditure as it was transferred to the entity, but they did not go to the entity to ask what they did with the funding received. His understanding was that where money was transferred to, the AGSA did not audit the books of those agents or entities.

Ms Bodewig clarified that the MCS were taken from the Regulatory Affairs Professionals Standards (RAPS), so then if any of the agents or recipients of the funds were using RFRS, there would be symmetrical requirements and there would not be any contradictions. The recipients would have to unpack who they were to the arrangement, whether RAPS or RFRS. There would not any differences in the accounting, and the auditors would respond to how they treated the information. 

The Chairperson asked if that would include the treatment of the expenditure, in that they were bound by government regulations. 

Mr Andries Sekgetho stated that if one looked at the R2.5 billion transfer, the AGSA was well aware of that with the R2.5 billion, if the money was for example transferred to SANParks, because it's a public entity and subject to requirements of MCS, it would be audited by the office of the AGSA, then the AGSA would do the auditing for SANParks. However, where funds were transferred to a specific entity or NPO, which was not subject to the auditing requirements, the AGSA would not conduct the audit, instead the entity must do their own audits according to their methodologies. National Treasury was trying to say that if one went to an audit, the principal of 1+2 = 3 applied and this was supposed to be supported by an invoice or treated accordingly. When the AGSA conducted an audit, there were certain regulations which were applicable to any government or/and public institution. One of the risks highlighted was that if money was transferred to an entity, the DEA would not be sure about the control and the principal-agent involvement, and there was a risk of accounting for 1+2=3, but then an equitable and transparent process was not followed though. When funds were transferred to various entities, the AGSA did not account for those various entities because they did not fall within being a government or public entity, so then it became assessed by a different auditor.  

Mr Ritesh Ramnanthan, Audit Manager, AGSA said that if the money was spent in accordance with goods and services then it would be needed to check who accounted for the funds, the assets and the expenditure. There was a whole process to this. When the funds were in the terms of National Treasury regulations, the AGSA did not go to see if the assets were purchased for the particular fund or how they were spent. The AGSA ensured that the funds were transferred and the department ensured internal controls on the funding. 

The Minister of Environmental Affairs, Ms Edna Molewa said that in her understanding, both the DG and CFO indicated that there was always an arrangement reached to work out an agreement or ethology of what must be audited and what must be looked at and how. Therefore, the audit would be performed in terms of the agreed standards and requirements between the AGSA, NT and DEA. Those would then be the terms of audit. The terms of reference provided by the NT and DEA was complied with. Linked to that was the issue of who was in charge of auditing. The AGSA said that it did not audit the transfers, and so forth. Presented was an agreed to methodology, who did it and whether the funds were done properly. This was how it was done. The entities not audited by the AGSA appointed auditing firms who then audited according to the terms and references. 

The Minister said that the MCS was drawn from grants and its principals. Before concluding, it would be inaccurate to think that there might be funds out there that were not audited. The fact was that audits were done to agreed standards and provision of information was done by all auditors. The DEA needed to discuss the agreed to standards. Who had gone to projects, the firms or the AGSA? The AGSA was always involved in sampling; they did not go to all projects. Lastly, on MCS, there was a letter written to the Minister of Finance to have a discussion on this matter. The matter needed to be resolved as next year the DEA should not still be trying to deal with this problem. Complexities needed to be unpacked and understood so that the DEA would be able to account for every cent allocated to the Department. 

Mr Makhubele agreed on the MCS, in terms of how funding was accounted for.  

Mr Andries Sekgetho said that there was an agreement with how audits would be carried out. By not being aligned to the MCS, this impacted on financial outcomes and opinions received. The DEA received exemptions in terms of its application of the MCS. At some stage the AGSA looked at issuing an opinion on whether the financial statements fairly reflected requirements of the reporting framework. The Department implemented controls so that in the next year they would be better accounted for. The AGSA could still issue an opinion at the end of the financial year. If there was any deviation then the AGSA could no longer say that the financial statement fairly reflected the reporting framework.

He said that the AGSA gave feedback on financial aspects, and because the AGSA was part of government and money should achieve a specific goal or target, the AGSA would have to be able to report on its performance. The AGSA was also required to give feedback on what was included in the performance report. In the performance report, the AGSA included certain targets and objectives that spoke to the Working on Fire objective. Certain projects were visit by the AGSA, but with the aim of being able to give feedback on terms of performance. 

Ms Pillay added that with reference to other auditors doing work at the projects, this referred to an internal process by management. Before the AGSA could come in and audit, management would have to have recorded expenditure and related assets. Management would have internal auditor visiting projects and finding out how reports should be done. Before AGSA could decide on which projects to go to, it would need to know what actual expenditure was, and this was to be reported first by management. Management’s internal process was used for the AGSAs reference. 

Ms Bodewig stated that in touching on what the Minister previously highlighted, National Treasury was involved in discussions on how this would be treated and notably this caused frustrations amongst all three parties. The previous Minister was briefed on this matter. National Treasury said a policy decision was taken to implement the programme, therefore which was then the intention of the policy. In unpacking the problem, one would ask how then should it be reflected and accounted for. What was being achieved and where was the DEA on trying to achieve this, were they on the right path, and if not how then did they get to the right path?

The Chairperson expressed his concerns on issues that were raised. He said that the Committee did not set the standards of accounting. These were set by the AGSA and National Treasury. Parliament had to make sure that this was followed. The standards were set, and the NT was responsible for this. If the standards were to be changed then this would be by NT, and not the Committee. For as long as the standards existed, it should be complied with. The annual report did not go through the BRRR in Parliament last year because there was a delay and by the time the briefing was supposed to be received with the report being finalised for consideration by Parliament, the order paper was too full to be approved, even now it still has not been approved. There were disputes between the AGSA and DEA. The AGSA briefed that there were two exemptions made, however last year there were three exemptions and this was concerning and hence discussions between both parties were key. 

He said that the AGSA said that where funds were transferred, they were not spent in line with the regulations of National Treasury, for instance in supply chain management. The entities would be entitled to do this as they were not a whole entity of government, like SANParks and iSimangaliso for example. The entities would not have to be aligned to government regulations and they may not spend the money as they should according to supply chain management, therefore then how would an external audit report be reported to the Committee from money spent by these said entities. The Chairperson requested for an external report. How would risks identified be mitigated and how would the Committee be able to get reports in seeing how money was spent by these entities. 

Mr Andries Sekgetho said that the audit processes was a very retrospective process. Audits to be conducted came in the financial year, then audits were conducted and feedback given. As a way for the Office of the AGSA to add value into the processes with its stakeholders, it aimed to be proactive as opposed to retrospective. He said that one of the initiatives implemented was the Quarterly Key Control Assessments where the AGSA would do a high level assessment in the quarterly period in order to help the entity or client avoid risks that would lead them to receiving an unfavourable audit outcome. Entities would get smiley face dashboards with red or green faces. He said that processes were slightly enhanced. One other key initiative implemented years ago was the interim review of the APP. If one looked at a whole performance of predetermined objectives from the AGSA, the intention of the AG’s Office was always to express an opinion, as the Public Audit Act stated that feedback must be given to any government institution in how they observed laws and regulations and also on their performance.

He added that it took quite some time for the AGSA and parties involved to understand how to report and how to give feedback in this regard. There were a large number of findings reported. As the predetermined objectives were audited, the main criteria required a plan. Following a plan there were compliances related to quarterly performances. The second criteria was the usefulness of the plan to various stakeholders i.e. would someone be able to pick up the plan and look at targets and therefore understand what the entity aimed to achieve with funds allocated? Then once the plan was in place, understandable and useful, then it got implemented then performance was reported back. The AGSA would take the report and check on what was reported, in how accurate and reliable it was.  He said that a lot of entities had a number of findings on the usefulness criteria. For most entities, planning happened upfront where the plan was submitted; there was no use in the AGSA coming in later telling the entity that the plan was not useful but then the plan was operated on for a long period. Therefore it was important for the AGSA to get hold of the APP before it was submitted to the Committee, then do an interim review and give management recommendations in terms of its usefulness relating to the SMART criteria. This allowed management the opportunity to make changes before the APP was submitted. This was to help the entity focus in its planning and performance and in making sure that core business ideals were focused on and useful. The review was high level, even though it might not be a full audit. 

Mr Ritesh Ramnanthan, Manager, AGSA, presented a review of the audit outcomes for the last three years. The South African National Biodiversity Institute (SANBI) had non-compliance due to material amendments in 2015/16. In 2014/15, SANParks and SANBI were unqualified with matters, as well as non-compliance related to performance information. 2013/14 SANParks had matters, as well as non-compliance which dealt with material amendments. The South African Weather Service (SAWS) also had non-compliance. In 2014/15 there was nothing to report on performance matters. In 2014/15 SANParks had matters related to usefulness and reliability.  In terms of usefulness, it was highlighted that useless targets were not measurable, and with regards to reliability the targets were incomplete.  On review of the 2017/18 APP, AGSA only looked at measurability and not a full audit was done, it was only a high level review of the APP. When the review was done, there were assurances given on the APP. The AGSA looked at the viability of the indicators and targets which was only done on selected projects and objectives, and not on the entire APP. 

He said that in looking at the process that the Department followed before submission of the APP, measurability and relevance was assessed for the final draft indicators and targets. This was communicated in the 2017/18 interim management report, which was not part of the audit opinion for the financial year. In the draft APPs and reviews, the AGSA looked at measurability and relevance: measurability were indicators verifiable with clear and unambiguous meaning, targets were assessed using the SMART criteria, and relevance was  whether they had relevance to the entity's mandate and realisation of the strategic objectives. On assessment 2017/16, there were key objectives listed in the ENE and these were linked back to the APP to see whether the DEA reported on the particular objectives listed in the ENE. It was found that they were all reported and listed in the APP. There were therefore no problems found relating to this matter. 

He said that SANParks were also assessed. There were listed objectives in the ENE that were linked back to the objectives of SANParks. All key objectives per ENE relating to SANParks were included in the 2017/18 APP and they were addressed and reported on. An APP review was done for DEA and SANParks. This was done for national and provincial departments and key entities within the portfolio. The findings found for 2017/18 APP was that DEA and SANParks did not have SMART targets. Technical indicator descriptions outlined what indicators were, these were not updated for the 2017/18 APP for DEA and for SANParks these lacked some information.  SANParks targets were not measurable, but the APP was amended. It was noted that adjustments were corrected for. 

He said that analysis for budget in DEA for 2016/17 and 2017/18 for the programmes were done. Budget was up or down by a small percentage, however Chemicals and Waste Management was up by 212%; this was to be continuously assessed in current and next financial years. In terms of transfer and subsidies, this was R4.4 billion which included EPWP transfers as well. The remaining budget showed that 49% went to goods and services, 43% went to compensation of employees and 7% went to payments of assets. 

He said that with regards to payment of grants budgeted for entities, there was 41% allocated to SANParks, 11% for iSimangaliso, 28% to SANBI and 20% to SAWS. On key matters and accounting for implementing agents according to the MCS, DEA was unable to account for it in the interim financial statement. This was discussed with regards to the EPWP. On improved methodology, some of the benefits was that there would be more robust processes going forward, and this would provide better understanding of core business and key objectives in DEA and entities. There would be a holistic review of performance and audit performance reported. The audit report would be aligned to auditing standards. The AGSA had a process called status of performance review which followed up procedures on financial and non-financial, internal and external reports and discussions done with Senior Managers. 

The Minister said that when one looked at the report from page 1 - 7, there were duplications with the work done with the compliance of the Department Planning, Monitoring and Evaluation (DPME). The matter raised was that it was critical to say where certain things were reported, whether finances followed functions or were they implemented on the functions, was monitoring and evaluation being done? Graphs on pages 5-6 spoke to the NDP and compliance for MTSF, all those highlighted were also reported at DPME level. Clarity on whether there would be dual accounting, how would one deal with this matter? This needed to be done at National Treasury, but that was before the DPME was in existence, so therefore the issue had to be resolved with the Head of DPME in order to avoid dual accounting. 

The Chairperson noted that the DPME helped government to achieve its processes in highlighting government priorities and what needed to be done as well as monitoring. The AGSA was an external body that provided oversight over DEA. The AGSA was not part of government, it was a Chapter 9 institution that carried out audits and provided quality assurance as well as in ensuring government did their job effectively. 

Ms Nosipho Ngcaba, Deputy General presented the DEA 2017/18 APP. The DEAs programme structure had not changed, there were still seven programmes. For Programme 3, there was a public entity under the programme, namely the South African Weather Service (SAWS). Programme 5 covered SANParks and iSimangaliso Wetland Authority, and Programme 7 had the Waste Bureau, which was a new entity. 

There was an amendment to the Waste Act after approval by Cabinet and tabling to Parliament for strengthening governance and establishment of the board. The objectives of Waste Bureau were to:

a) Function as a specialist implementing agent    

b) Promote and facilitate minimisation, re-use, recycling and recovery of waste

c) Manage the disbursement of incentives and funds        

d) Monitor implementation of industry waste management plans

e) Progressively build capacity to provide specialist support for the development and implementation of municipal waste management plans and capacity building programmes     

f) Support and advice on the development of waste management plans, tools, instruments, processes, systems, norms, standards and municipal waste management plans and capacity building programmes

She said that the Waste Bureau was not yet fully operational. There were currently only five personnel working at the Bureau. The Bureau would be responsible for some of the work that related to plastics levies and recycling programmes. The setup of the Bureau was subject to Parliament processes.  All funds allocated by National Treasury to the DEA would be used for high level strategic objectives. 

DEA Annual Performance Plan

Ms Limpho Makotoko, Chief Operating Officer, DEA, presented Programme 1 which was Administration. She said that the DEA did not exist as a separate Department at both the local and provincial level; it was combined with Tourism and Rural Development for example. This posed challenges in funding for environmental priorities and capacity challenges. As a result, DEA had a Local Government Support Strategy. She said that there were budget constraints, particularly in compensation as well as ceilings set on personnel. This necessitated exploring different service delivery models and reprioritisation of posts and in some cases, looking at the possibility of cutting posts however none of these were finalised. It was important for DEA to look at partnerships and collaborations regarding to exploring new service delivery models. 

She said that the DEA aimed to link to the Sustainable Development Goals (SDGs). There were challenges in this regard in the process of the domestication of the SDGs, therefore there was a need to strengthen collaboration. There was concern around the Green Fund. Green Fund was still run under a DEA programme instead of as a legally independent fund. This limited the fund's abilities to get investors. The Department maintained unqualified external audit opinion and expenditure levels, but also made sure that it contributed to transformation by ensuring that there was 75% in affirmative procurement. She said that environmental advisory services were responsible for mobilisation of funds. International donors planned to raise USD 10 million. She said that an investment catalogue was developed for the biodiversity and conservation branch. This identified ten projects. To date, nine projects were funded and being implemented. One project was not finalised, however there were intentions to finalise it in the current financial year. 

She said that the vacancy rate was to be maintained below public standards which was 10%, and the DEA aimed to maintain 8%. It also wanted to invest in up-scaling personnel to meet service demands through the implementation of 75% of workplace skills. She said that cuts were being experienced which meant some functions might have to be consolidated which would then require up-scaling of personnel. The Department planned to continue with capacity building by taking in 100 interns. She added that the Department was planning to maintain employment equity compliance targets and to try to attain the target of women. This would pose major challenges given the low vacancy rate. This target was difficult to meet because it was set at the national level and DEA had to aim for that level. She said that the Department was also making it easier to resolve work disputes and grievances. The average number of days for misconducts was 90 and 30 days for grievances.  

She said that the security of the working environment where internal and external risk assessments were conducted was maintained and 100% recommendations were implemented. Systems were developed to ensure that the DEA would improve on service delivery through the Master System Plan (MSP) which was updated every three years. The plan had four funded projects to be implemented in the financial year. The goal of the MSP going forward would be finalised. 

She said that the online ocean and coastal information management system was developed and implemented. The Department continued to issue media statements, opinion pieces and post participation events and would ensure that inclusive communication channels were utilised. On environmental awareness, DEA focused on two interventions and targeted in hosting four environmental awareness campaigns in the current financial year. Eight Integrated Environmental Management (IEM) training sessions were to be conducted per annum. The 2017/18 target was 16 IEM sessions.  

She said that there was a development of a local government support strategy. This focused on integrated environmental training in all provinces, areas around climate change rolled out in different municipalities and capacity building, including officials and air quality officers and environmental management officers. These were components that were included in the annual plan of the local government support strategy. Actions undertaken to complete the 100% target were to be reported. The Department was planning to commence with the implementation on the interventions of change in Research, Development and Extension (RD&E) framework and also commission one environmental sustainability research project. It finalised a work based climate change monitoring system. One spatial tool was finalised as well as finalising testing on South Africa's environmental information meta-database testing system. 

Mr Ishaam Abader, DDG: Legal, Authorisation, Compliance and Enforcement, DEA, presented Programme 2. Challenges highlighted were budget constraints for HR and financial resources and capacity issues regarding external stakeholders. There were challenges in the increase in the number of appeals. The number of appeals was steadily increasing, more than double from last year. The 90 day turnaround time and reporting requirements placed emphasis on compliance with timeframes. There was a need to balance between making good decisions and meeting timeframes. He said that parties and stakeholders to the appeal process found it difficult to provide inputs, comments or documents within the short time periods of the appeal process. There was an increase in the number of litigated matters, resulting in increased costs.

He said that opportunities for the Department were that budget cuts may fuel innovation for operations and also assist in crystallising outcomes for the sector. The budget and human resource cuts forced collaboration with stakeholders to maximise economies of scale. He added that the budget and human resource cuts also allowed for inter and intra departmental collaboration over regulation creating an opportunity for education of environmental legislation and also using alternative tools to achieve environmental outcomes. Operation Phakisa assisted DEA in bringing together all departments to ensure effective compliance and enforcement.

Dr Monde Mayekiso, DDG: Oceans and Coasts, DEA, presented Programme 3. He said that there was a need for ocean research. In addition to understanding where living (fishing) and non-living (mining) resources were, we must understand how climate change would impact Africa. For example, there was observation that the Indian Ocean was warming, but where would this heat energy go? In the next five years, the DEA aimed to examine this further. He said that DEA research now had the ship survey and growing computer power to do the long term observations and analysis. South Indian Ocean temperatures were increasing. This was closer to South Africa however in the North Indian Ocean there was less of an increase in temperature. Therefore the DEA was interested to look into this. 

He said that the Department had Phakisa Marine Protected Areas (MPA) proposals. In addition to covering the coastline, MPA of Phakisa was that the offshore zone (away from the coast) should also be covered in such a way that at the end there was 5% of the Economic Exclusives Zones (EEZ) covered, not just coasts. He said that the Department was planning to build a tidal pool in Port St. John's, where tourists were taken on shark tours. There would also be the construction of whale watching in a few months whereby vessels took people on boats and they would go observe whales out in the oceans. Another activity that would be permitted was shark cage diving. 

With regards to coastal management, the Department had to ensure that coastal developments were environmentally sustainable and that specific human uses were effectively regulated. He said that the Department would ensure that coastal water was not polluted to the extent that people could not benefit from it and that coastal biodiversity, habitats and ecosystem services were protected and the effective management of estuaries. He highlighted sources of marine pollution. 80% of all marine pollution was caused by land based activities. This was a global statistic, but South Africa experienced similar problems. There was a challenge from impacts of sewage disposal and bad peace. The DEA was managing coastal environments, and most pollution actually came from inland. 

He said that the status of South Africa’s marine water quality condition was unknown due to different analytical methods, i.e. some municipalities used freshwater methods in marine waters. Implications of making incorrect decisions, as a result of unreliable data or information, could be severe. The laboratory at Walter Sisulu University (WSU) would act as reference lab to produce reliable data and information. The mobile lab was important for remote areas as microbial samples needed less than 6 hours for analysis. He highlighted that there was an opportunity for coastal municipalities to send samples for analysis at much reduced rates which was important for the sustainability of the projects.

He said that the opportunities for unemployed graduates were currently three employed and numbers would increase as more sites were added. In 2016/17 the budget was at R11 million for equipment, laboratory space and operations. He then spoke about the Antarctica management programme. He said that the responsibility of managing South Africa’s involvement and presence in the Antarctic and regulating related activities rested with the DEA (DEA furthermore provided the logistic infrastructure and support for these activities), while the Department of Science and Technology (DST) coordinated and managed research and Department of International Relations and Cooperation (DIRCO) coordinated and managed international relations and obligations. The opportunities included science interest as South Africa already heavily invested in logistical and science infrastructure and was in close proximity to the Antarctica and Southern Ocean region which was key to the global weather systems, a major carbon sink, had vast marine resources and great potential for bio-prospecting. South Africa was the gateway to Antarctica. He said that Cape Town’s V&A Waterfront was one of the five Southern Rim Gateway cities to the Antarctic and the DEA would like to use the strategic location to generate more financial resources. The area had 24 million annual visitors; 80% South African in winter and 60% international in summer. The creation of an Antarctic centre would provide enormous scope and potential for awareness-raising and education, job creation and grass-roots skills generation as well as emphasising South Africa’s commitment to Antarctic research and providing an African education centre for Antarctic initiatives.

Ms Judy Beaumont, Deputy Director General: Climate change and air quality, DEA, presented Programme 4. She said that with regards to air quality management, South Africa played a key role in the international negotiations, as Chair of the Group of 77 plus China, and a lead negotiator for the Africa Group in the finalisation and adoption of the Paris Agreement in 2015. South Africa ratified the Paris Agreement in November 2016, before Conference of the Parties (COP) 22 in Marrakech, when the agreement entered into force. South Africa’s Nationally Determined Contribution included adaptation, and mitigation commitments between 2025 and 2030, as well as an indication of support needed. COP 22 agreed the work plan for finalisation of multilaterally agreed rules for implementation of the Paris Agreement, with a deadline of 2018. She said that COP 23 should make significant progress as the multilaterally agreed rules for the implementation of the Paris Agreement by 2020, focusing on technical negotiations to avoid political backtracking. South Africa continued to play a leading role in the negotiations. The Intergovernmental Panel on Climate Change (IPCC) 46th session in 2017 was to finalise the scope of the 6th IPCC Assessment Report; the Assessment Report continued to be the internationally recognised scientific basis for climate change action, including climate scenarios, impact scenarios, and response measures (adaptation and mitigation) for policy makers.

She said that over the last five decades significant changes in climate were observed in South Africa. Mean annual temperatures have increased by about 1.5 times the observed global average of 0.65°C, and hot and cold extremes have increased and decreased respectively in frequency. She explained that South Africa was a water stressed country, with severe climate variability, with associated extreme events (drought and floods) which impacted food production, health and well-being, with economically vulnerable communities being the most severely affected. The envisaged National Adaptation Strategy was aimed at enhancing coherence in planning and implementation of the climate change adaptation programmes across sectors and spheres of government. The Strategy guided efforts across sectors and spheres, towards the attainment of South Africa’s Paris adaptation commitments and further guiding South Africa’s transition towards climate resilience, as outlined in Chapter 5 of the National Development Plan

She said that South Africa had relatively high GHG emissions (within the top 20 in the world) as a result of our fossil fuel based economy. The National Climate Change Response Policy sets as one of its objectives, to make a fair contribution to the global effort to stabilise GHG concentrations in the atmosphere, at a level that avoided dangerous anthropogenic interference with the climate system

The Chairperson asked Ms Judy Beaumont to explain the air quality monitor changing from 0.79 in 2015/16 to 1.20 by 2017/18. 

Ms Judy Beaumont responded that the ideal target was one. One was the indicator whereby everything worked effectively. The programme started low because minimum emissions standards were tightened for particular matter, but the challenge was that air quality stations were not reporting as they should be so there was no full 145 stations reporting as they should be.  The indicator was not giving an accurate depiction what it should be giving. The 1.2 was going to allow the programme to work backwards to 1. 

Mr Shonisani Munzhedzi, Deputy Director General: Biodiversity and conservation, DEA, presented Programme 5. He said that the programmes priorities and impact areas for 2017/18 included the expansion and effective management of the conservation estate, implementation of the revised National Protected Areas Expansion Strategy (PAES), improvement of Management effectiveness of protected areas and the implementation of other forms of protection (Stewardship, Biospheres, Protected Environments, Biodiversity offsets, Exclusion zones on Critical Biodiversity Areas). There were a number of legislative tools to ensure conservation and sustainable use of biodiversity developed and implemented. The National Biodiversity Framework (NBF) was updated, and 2 draft BMPs for priority Bioprospecting species were developed (Aloe ferox and Honey bush). He said that the Draft NEMBA amendments (Biodiversity Bill) were submitted to Parliament to publish for public participation and draft amendments of norms and standards for the management of elephants gazetted for public participation. The draft regulations for the domestic trade in rhino horn/ products was also finalised for approval. This created conflict as people failed to understand the issues at hand. There was no international trade in rhino horn that was approved. The draft notice for prohibition of the powdering or shaving of rhino horn and domestic trade was finalised for approval.

He said that ecosystems were conserved, managed and sustainably used. The percentage of area of state managed protected areas assessed with a Management Effectiveness Tracking Tool (METT) score above 67% was 75% of area of state managed protected areas. Management effective systems were enhanced including new aspects hence the 75%. Four biodiversity economy initiatives were implemented with 800 000 hectares of Biodiversity Economy Land areas identified and mapped for transformation in different Provinces. 11 National Biodiversity Economy Nodes were approved and 500 hectares of land for indigenous species were identified and cultivated. He said that national game donation for transformation in the wildlife sector was approved and the annual plan implemented.

He said that the number of interventions and research programmes aimed at advancing the Biodiversity Science Interface were three interventions with the Research Indaba convened. The annual report on the implementation of the biodiversity research strategy was developed and the report on Scientific Assessment of Predation Management finalised. During the current financial year, four conference parties UNCCC COP 14, CMS, WHA and IBS interfaced with the programme.

Dr Guy Preston, Deputy Director General: Environmental Programmes, DEA, presented Programme 6. The Environmental Programmes had 14 different programmes along with the responsibility of biosecurity, information management and sector coordination. Over 600 projects were targeted across various programmes in all nine provinces. A breakdown of the programme was available to the Committee on request. 

He said that the problem with invasive species was that the country was already in a worse position as invasive species spread and grow. The current situation in the Western Cape was that if it was not for work done by the EP, there would be no water in the Western Cape. The work done by the EP helped in conserving water and mitigating against drought like scenarios. 

He said that EP looked at ways to add value to its work, ways that would create value added jobs and make products useful to government for example school desks, and confines and other products needed by local communities. The EP looked at ways to reduce invasive species and improve budget. There were problems with rivers and wetlands. The Working for Wetlands programme aimed to address these problems and increase the areas return on investments. Lake Fundudzi in Limpopo was completely rehabilitated. 

He said that the Department had challenges and opportunities. Treasury and auditing requirements (MCS) needed to be assimilated, with impacts on timeous delivery through the programmes (time and money spent on this aspect might impact negatively on the programme deliverables). There were also Programme inter-dependencies, both within and outside of the Department, which had its own challenges. All Programmes had specific challenges.  For example, the wild fires that recently ravaged through parts of the Western Cape were a natural (and very necessary) phenomenon, but the situation was exacerbated by the drought, the high temperatures, especially the strong winds, and then the situation with regard to invasive alien plants. Every one of the 80 structures that burned down in the January 2000 fires along Table Mountain, and seven of the eight structures that burned down in the March 2015 fires, were surrounded by invasive species.  He said that it pointed to the need for an integrated approach, where advocacy, training (e.g. fire-proofing homes on the urban edge), compliance and enforcement, incentives and opportunities, all came together to secure the desired outcome. The importance of research could not be over-estimated (e.g. the predictive work with FynbosFire/UNDP/GEF), and the difficulties in mainstreaming the routine activities was a known weakness in securing the desired outcomes.  Such challenges were specific to each of the programmes, and highlighted the complexity of the work being undertaken.

He said that increased collaboration and engagements with stakeholders were required, including cross-sector, business, government departments, well as internally between branches/units within DEA (especially public-private partnerships). Enhancing governance and accountability systems, including monitoring and evaluation and improved Occupational Health and Safety (OHS) remained a concern, given the numbers of participants, and the dangerous nature of the work (especially with respect to transportation). He added that a particular opportunity was arising with the approach to “Fempowerment” which included a focus on creating sustainable employment opportunities for both women and youth with a focus on an employer-centric approach to employment.

Mr Mark Gordon, Deputy Director-General: Chemicals and Waste Management, DEA, presented Programme 7. He mentioned how the programme moved from regulatory based approaches to approaches including radical reforms and transformation of the waste sector in its seventeen years. Most recently, the new Waste Amendment Act 2014 raised issues on how to capitalise on economic opportunities presented by the waste sector. Over the seventeen year period, the programmes tried to present a comprehensive legislative framework. For example, in 2014, it managed to contextualise the waste recycling economy, and by 2016, pricing strategies were established and organised to deliver waste economy sector package pricing.  Pricing strategies looked into extending user-producer responsibilities and delivering industry waste management plans. In 2017, specific focus was placed on chemicals and more circular economy approaches through the waste sector.

He said that with regards to the contributions to Sustainable Development Goals (SDG11), the waste sector was producing national waste collection standards since 2012 through General Household Surveys (GHS) and increasing population sizes. The programme was set to increase waste services to a target of 80% by 2019.

Challenges faced by the programme were as follows:

• There was a concurrent function between the DEA and local government, as well as a number of interdependencies with other departments, namely Department of Water and Sanitation (DWS), Department of Health (DOH) relating to waste management licenses, healthcare risk waste, asbestos and chemicals management
• Limited infrastructure remained a pushback, especially for the diversion of waste from land fill sites. For example, for waste separation at the source and for the separation and recycling of different recycling fractions. This remained in large a function of local government extending producer responsibility in trying to fill the gap between waste collection and land fill. There was a big intermediary space on how to deal with different recycling fractions.
• There were concerns with moving related polluter waste, and issues around market failure. It was found that these issues were linked to the under-pricing of waste therefore a pricing strategy and waste management plans were established in order to address these challenges.

Opportunities

• Job aspects related to SME development and waste management.
• There was big potential for the waste recycling sector in protecting the environment and human health from the harmful impacts of chemicals and waste.
• Contribution to improve water services at a local level.
• Providing better institutional regulatory arrangements for waste management and opportunities to leverage partnerships for donor and other private sector funding.

MTEF Allocations per economic classification - 2017/18 - 2018/19 - 2019/20

Ms Esther Makau said that for the three financial periods under review, compensation of employees was as follows:

• 2017/18: R1.03 billion
• 2018/19: R1.08 billion
• 2019/2020: R1.16 billion

She said that total transfer payments included payments to EPWP, Departmental Agencies and Accounts, Foreign Governments and International (GEF), Green Fund Allocation (which reduced from R110 million in 2017/18 to R0 in 2019/2020), and Non-Profit Institutions. Total payments for capital assets were unitary payments for the Environment House in Pretoria and machinery and equipment. The total payments for capital assets was set to increase from R6.8 billion in 2017/18 to R7.4 billion by 2019/2020.

Attention was highlighted towards to compensation of employees. The budget for compensation of employees was cut progressively; compensation of employees’ growth was above 4%. However projection growth for the whole of government was set to 7.6% per annum. Following this, concerns were raised with the Minister, and the Minister then managed to write to National Treasury alerting them on the problems that the DEA might face if such a matter was not addressed, for example, possibly overrunning DEA’s budget by the end of March 2018.  Goods and services figures were noted to be quite high, and this was largely due to fixed costs in operating of the vessels and operation Phakisa.

The EPWP budget allocation increased over the three year period from R2.8 billion in 2017/18, to R2.9 billion in 2018/19 then to R3.2 billion by 2019/20. The EPWP budget allocation was largely allocated to Environmental Protection and Infrastructure Programme (EPIP) including those of public entities, namely, SANParks, iSimanagliso and towards principal-agent relationships. Natural Resource Management (NRM) included Working on Fire and Working for Water, including SANParks and iSimangaliso. Additional allocation also included green fund transfers to Development Bank of Southern Africa (DBSA) and operational expenditure and compensation of employees. Budget allocations for Non-Profit Institutions were quite small.

The Chairperson asked for a comparison of previous and current figures of budget allocation so that one could measure whether there was a growth or decline over the presented period.

Ms Esther Makau pointed to a slide that showed the R6.6 billion growth in 2017/18 from R5.9 billion 2016/17. The DEA spent 99.9% of their allocated budget for 2016/17; therefore the growth appeared to not be of a significant rate. To add, it was noted that pages 16 and 17, as well as 100 and 101 provided a summary of the budget allocation figures over the three periods; however these were not included in the presentation.

Discussion

Ms H Kekana (ANC) asked the following three questions. Firstly, what type of waste was the DEA expected to import based on regulations? Was any of the waste imported and exported in the first year and under which regulatory framework(s)? Secondly, was there a situation where there was a reduction of unlicensed waste disposal facilities from 57 to only 12? Further clarity was asked for on whether the DEA reduced the overall number of unlicensed waste disposal facilities in the country. Thirdly, what plans did the DEA have in assisting waste separation at source within the short term and long term?

Mr Purdon asked why the expenditure percentage of the Administration programme for affirmative procurement was down from 75% in 2015/16 to 65% in 2017/18. There was a concern raised over the increasing vacancy rate; what reasons were there to explain the increase? Also related to the Administration programme, the number of bursaries issued fell from 73 in 2015/16 to 70 in 2017/18; what was the reason for the fall, and again on bursaries, how many people became employed at the end of their studies? Were all bursaries new or were they a continuation of the old ones? On slide 9, related to improved profile, support and enhanced capacity for the environment sector, why had all the targets declined. Lastly on the Administration programme, the local government support strategy was identified as a performance indicator, how were the planned actions measured? Looking into legal authorisation, compliance and enforcement, it was said that there was now an action plan for the population of rhinos, was there no (similar) plan before?

On oceans and coasts, Mr Purdon requested to see the situational analysis report on coastal rehabilitation developed. The question related to coast management was asked concerning the progress of whether the management lines were established in other coastal areas, and not just in national parks. On the current MPA study, how many MPAs were currently declared and how many of the 2015 proposals were in effect?

On the Biodiversity programme, Mr Purdon wanted to know how the aloe and the honeybush received priority. Of greater concern were job regulations for the domestic trade in rhino horn. The Committee was told that domestic and international trade of rhino horns was governed but there seemed to be a lot of confusion as people did not know whether this was effective or not. In this regard, education was key in informing people on this matter. The confusion among people and interested parties needed to be solved through effective communication. Lastly, on the MTEF, why was there a large portion of the budget allocated to the DEA Housing in Pretoria, how was the allocation concluded and how many people were employed at the house?

Ms J Edwards (DA) highlighted that the number of appeals more than doubled quite significantly from the previous years. The question was what reasons were there to explain the increase, did anything change and was there a reason for people appealing more now than before? With regards to waste management, from 2017 onwards it was said that there would be a greater focus on chemicals, which was commendable as most of the focus so far was on waste and its different spheres. On the challenges mentioned related to interdependencies with other departments, which departments were involved and how did the DEA intend to deal with the particular challenge? On the pricing of waste, what was being done to give waste a competitive value in South Africa for the following years?

Ms H Nyambi (ANC) referred to the baseline for employment equity targets for women in 2015/16. The target was 56% in 2015/16, but in 2016/17 it decreased to 50%, what did this mean and what were reasons for the decrease? On climate change and air quality, it was presented that the DEA was expected to have 116 monitoring stations reporting to the South African Air Quality Information System (SAAQIS) for 2015/16. The 2016/17 target was to have 75 monitoring stations reporting to SAAQIS, why was there such a large reduction when the aim should be to have all government monitoring facilities to be reporting to SAAQIS. The last question asked by Ms Nyambi was concerning Environmental Programme. The number of work opportunities created decreased in 2017/18 relative to the past three financial periods, why was there such a significant reduction in the number of staff?

Mr Makhubele asked why the environmental activities, particularly the training of teachers in the Administration Programme, decreased from 161 in 2015/16 to only 100 in 2016/17. There were more teachers that could be trained, so the reduction could not be on the basis of the availability of teachers because as it stood the need for training remained and therefore more was needed to be done in order to sustain or improve the numbers.

On the integrated environment sustainability research commission project, Mr Makhubele asked for clarity on what the project entailed and what were its actual expectations were? Seeing as the DEA did not have much to do with the convictions, it would be important to know what was to happen beyond the year. What was the success rate that could be useful?  In the annual action plan for the protection and management of the rhino population, the target for the 2015/16 seemed as if the DEA wanted to do something different than what it had been doing before, therefore what would that be and what was the difference between then and now, and what were reasons for this? Moreover, what difference would change be in this regard?

He said that there was talk on the environmental sustainability policy action plan along with its phase 1 – 12 interventions, could the DEA explain the exact functions of the different phases and explain the proper understanding of the policy action plan. With the number of EMP, DEA had developed two EMPs and now they were targeted to develop one in the current financial year and three in the 2016/17 financial year. The question was why was there a target to only develop one EMP, if not due to financial constraints, what other reasons were there that have led to this target? Were there any other EPMs besides the two in St Lucia and Richards Bay?

The Chairperson expressed that he was worried about the establishment of the waste bureau. For the bureau to be fully functional, the Bill needed to come to Parliament in order to amend the Waste Act so that it could deal with clauses 54, 55, 56 and 57. Because the Parliament process needed public participation and the participation of interested stakeholders, it would take a while to get processed. It was mentioned that there were only five officials in place, therefore the bureau could not be fully function as anticipated. Following the NT process, the bureau would be established, particularly in the tyre industry, similar to the Recycling and Economic Development Initiative of South Africa (REDISA).

He said that a transition was created to allow for a proper establishment of the bureau so that it could take over the waste stream and facilitate another waste stream. According to the budget, which was approved by Parliament, the issue raised was whether the bureau would be able to handle the responsibility of the tyre recycling initiatives and funding, given that it was still at the establishment phase? The second issue raised was relating to the monitoring stations – the information presented differed from that submitted during the budget appropriation process.

With regards to monitoring climate change and improving air quality, the DEA was set to increase the number of government owned monitoring air quality systems from 115 in 2016/17 to 125 in 2019/2020. The baseline was supposed to be 115 in the previous financial year moving to approximately 125. The target stated 175 instead of 125 as requested on the budget.

The concern raised was on the operations of air quality stations, since most were not operating and those operating did not submit the required information, there needed to be more emphasis on monitoring air quality especially in areas with high levels of pollution. How then was this reconciled? Linked to that, the minimum emission standards were observed during an oversight that emitters like Sasol should not be exempt post 2020. It was stated that Sasol still required exemption post 2020 which was seen as a problem. The DEA was asked to further comment on the particular matter. There was also the view that minimum emission standards were not in line with the World Health Organisation (WHO) standards, which was concerning,

The DEA aimed to identify priority areas for biodiversity which must be excluded from mining activities. The understanding was that there should be no mining in all protected areas, protection should have no mining, therefore why were there exemptions?  Only 12% of South Africa was protected, this was said to not be in line with the African Growth and Opportunity Act protocol negotiated which required that at least 17% of the landscape to be under protection. Again on the waste bureau, seeing as the bureau accounted for a large share of the allocation budget, how much was allocation to the operations?

Ms Limpho Makotoko responded to the question concerning affirmative procurement. The affirmative procurement indication of baseline was shown as 75%, but it dropped to 65%. The national target of affirmative procurement was 65%, therefore the baseline of 75% in 2016/16 had exceeded the national target, however now the 65% was in line with the national target. The DEA generally aimed to commit to complying with national targets set, therefore it currently aimed to keep to national targets.

She said that targets for mobilised resources for the previous year were approximately USD 20 million, but given the global financial environment and the decline in interested donors to invest in South Africa, the target had to be reduced to USD 10 million. The USD 88 million in 2015/16 was because the DEA was able to secure a once off funding of USD 57.5 million as a grant that looked at the programme of South Africa’s energy sustainability. The once off grant led to the high baseline, but that was not the standard, hence the high jump.

She said that the national target of the percentage of the vacancy rate was 10%, and the DEA had said that they wanted to maintain a target that was less than 8%. Regarding the bursaries, the DEA normally took in 30 full time external bursars. There was a two year placement plan for bursars, however this was not permanent, but there were contracts offered and the bursars could compete for the permanent posts once the posts become available. The employment equity target was set at 50% as a standard.

The waste bureau was supposed to implement the plan. The Minister already published a notice inviting waste plans, therefore based on those plans, the waste bureau should be able to execute its responsibilities during the transitional period. The other aspects of the allocation related to the plastics, the tyres and plastic bags. The budget allocated was for both human capital and operations. The budget received from the previous financial year and process were followed through. Waste needed to be listed in the FPA, which was communicated with the NT, however it was the NT that said that in terms of compliance they had to have the legal process in order to release the DEA. The process was said to take at least three years. Through support and functions of the DEA, most support functions were provided by the DEA, but then the technical aspects of the municipality work was driven by specialists who were already in position. 

The Chairperson expressed that he was concerned with the transition of the waste bureau and how it was to be managed. This was because the intention of the waste bureau was to be an agency that was going to manage the implementation of industry waste plans. There was currently one operation in place, so then what would the transition between the current one being suggested and the role of waste bureau given that industry had to support industry waste plans. The bureau was still in an establishment phase. Highlighted was the issue of managing the transition, now was this going to be done and whether it was going to impact on the current operations in terms of the current plan in place. 

He said that another question was on how much was being budgeted for the Administration programme. There was R155 million for tyres, R210 million for plastics therefore R365 million for both. What was the operational budget to operationalise the DEA's delivery? The current plan under operation was coming to an end in November 2017, however there was a process already that unfolded, this was already shared with the Portfolio Committee of Finance, in particular, where was the actual finance by the NT under the old regime, which was not the one that was agreed to in the form of new collection. That came to an end by the end of February with some two weeks spill over into March. So, there were two processes being discussed; (i) the collection directly by the current plan ended, however the plan which was still to be implemented was coming to an end in November. Waste was said to be in the making, the DEA had to sit down and look at various scenarios precisely to deal with what the Chairperson raised as a need. 

What if the current operators came and said that they would no longer collect money come second week of March/April? This scenario was looked at and what was it they did and the rolling out of the plan in was continuous, hence why the DEA began collecting information about who was who and who were the people on the current plan working with so that if there was a cut then the DEA would be able to know. The team reinforced that it could continue with the work. The team looked into how to get to the real end of the transition in November when the plan ended, even until that there was an interim plan in place up until the time when there was a fully-fledged bill. 

The DEA was assured by the person waving the bureau that with the people there i.e.  the staff, would be able to run a minimal plan proposed. Scenario planning had the DEA looking at what legalities should be put in place. There would not be an immediate cut of services. There was also the consideration of a new plan to be implemented. 

Ms Nosipho Ngcaba said that the budget for 2017/18 was R5.8 million, from R19 million in 2018/19 to R22 million, then to R5.8 million in the current year. 

The Chairperson said he would forward the request received by the Committee and take it from there. He was not confident about the monitoring of the transition. 

Ms Judy Beaumont said on quality monitor stations that the reference for 2016 was 116 government owned. 2017/18 was 75, and the reason for this was that from 2000 to 2019 the number of government monitoring stations grew. This should be cared for by all sections of government in particular provinces, districts, metro municipalities and South Africa Weather Services. She said that in the case of local government district and metropolitans, there was a situation in which current expenditure of monitors had not necessarily met with current and annual budgeting for maintenance of the stations therefore the 116 stations reporting into air quality system or having a profile on the South African air quality system, but not reporting the information that the party receiving was dragged down by the fact that the number of stations were there, but not reporting. Many stations were found to be reporting live, it was one thing to be reporting every month, but it was another thing to be reporting on an immediate basis live into the system. 

She explained that what then happened in those situations was to make sure to have monitoring that promoted accurate and timeous data, making sure that South Africa’s air quality was accurate in making sure South Africa was meeting air quality standards to the extent of national quality air indicator. There was the development of a national air quality strategy to address the problem. The national air quality steady now provided direction and guidance on the commissioning of air quality monitoring stations. So, it would not only provide commissioning and guidance in new monitoring stations, but more importantly it would lift up those stations in geographical areas deemed to be the most critical areas for monitoring and lifting up those stations that could be supported to meet the required reporting standards i.e. there was a need for the budget to be made available to get these stations reporting effectively. 

The strategy was identified, so what was to be monitored and how could government resources be optimised to make sure that the party involved was getting a good product. The red areas and those areas that had to have monitoring stations were located in them and those were mostly around priority areas and also around metropolitan areas. The Western Cape and coastal cities had red patches; level one monitoring of all pollutants, with a lot of the patches being around the Vaal, Highveld, Johannesburg and in the Pretoria area.  She said that there were areas on the map identified as yellow areas which were areas where there were level two monitoring, these areas were not critical areas to monitor. The areas could be monitored using much cheaper methods compared to the expensive areas. This was not a good story, but there needed to be a way in telling the truth about the situation before starting the structure. 

She said that over a period of time, the aim was to lift monitoring stations and add them over time and get the stations which were not working to get them to start working. The selected 42 were identified as being the most critical stations; reporting for national air quality indicators. It was critical that the stations reporting information were able to tell the country the whole story. In a nutshell, the number of stations were rewarded and the stations were on the land. Infrastructure had to be decided upon to those actually doing the reporting, the 75 were not dead monitors, but they were listed as providing real time data on time. The other stations were too slowly but surely getting back into operation. The main challenges was that the local authorities were not prioritising their main budget, and so they needed the DEA to help them with that, and they also needed monitoring stations to be completed therefore they had to find a way in working around them.  

The Chairperson asked for a concise summary as this was always helpful in understanding that there were 115 to be reduced to a workable approved budget. Information could not change, the budget showed completely different information, what the reason was for this? 

Ms Nosipho Ngcaba said that there the budget plan under Administration to support the capacity that was planned to provide to the municipalities R20 million per annum for the three financial years. In addition to what would be given to SAWS, the % was the support provided. There was technical support that led to actual maintenance of the infrastructure which SAWs was going to have to be given additional resources for because the entity would be hosting the South African Cultural Observatory (SACO’s).  The other aspect for reporting and analysing the information, what came out of each of those stations was what would then be provided to municipalities which was not available in the previous budget allocation, the DEA had to reprioritise under  programme one in order to provide that in 2020. 

The Chairperson asked whether to go with the 125 stations in the budget or the 75 in the APP?

Ms Judy Beaumont said that there was a distinction between total number of stations growing over time, so the infrastructure that was still standing on the ground, and the number of stations was still growing and the number of those that were working. 

The Chairperson highlighted that the budget was approved by Parliament based on information on the budget. 

Ms Judy Beaumont replied by saying that physical monitoring stations were still growing year by year. There were two different numbers being discussed.   

The Chairperson stated that there could not be motivation for the increase in the number of monitoring stations where it was said that they were going to increase, but then presented that there were only 75 operational ones. 

Ms Nosipho Ngcaba said in her response that the new stations would be functional, and the old existing stations were the ones that needed to catch up. 

The Chairperson again asked whether the 75 monitors were all new. 

Ms Judy Beaumont said that the 75 were the ones that were reporting correctly. The 125 were the total of those on the ground and the 75 was the ones playing catch up. 

The Chairperson was of the view that monitoring air quality impacted on the people, and the concern was whether industries were polluting or going over limits, because this ultimately impacted on people's health hence it was an important matter to resolve. The big issue for NGOs working in the environment centre was that there were monitoring stations which were supposed to monitor industries polluting more than what they were supposed to or not. The Committee needed motivation to operationalise those existing monitors. A point was raised that there were problems with monitoring stations and sometimes industries might be taking advantage of this because pollution levels were only measured from the monitoring stations, especially in the high priority areas. There was no else where it could be determined whether industry was polluting or not therefore making it a big problem there. 

Ms Judy Beaumont addressed the question on Sasol and the minimum emission standards, and the fact that they indicated that they might be applying for further postponement on their minimum emission standards. The Act did not make provision for any exemption for postmen for the time of compliance with the minimum emission standards. The DEA very recently received such an application to analyse the extent with which such a postponement would be appropriate or not. 

The Chairperson said his understanding was that 2020 was non-negotiable according to how the standards were set. If there was postponement for 2025, then there would be postponements for 2030 then 2035 because the industry would not want to invest in making sure that plants were compliant. Was there an intention by the DEA to do more in 2020? 

Ms Judy Beaumont said that the Act made provision for an application with certain conditions to postpone the data of compliance with the minimum emissions standards. The problem was the application. One would request postponement with minimum emission standards which was further followed with another application, this was the problematic part because it may be the case the Eskom, and however such an application was not yet received from Eskom. Eskom did not require retrofitting or any clean energies for those plants being decommissioned in the next few years. If there were any kind of extension of those power plants then that would require a very serious discussion, and so far there have not been requests relating to that yet. 

The Minister explained that dealing with monitoring stations was exclusively a direct function of municipalities perhaps over and above the discussion. The Chairperson was asked to have a joint discussion with the local government and Cooperative Governance and Tradition Affairs (COGTA) in order to see how they would be able to support municipalities out there because they were drowning down on the budget. The target set was said to be challenging from a finance point of view. 

Ms Judy Beaumont tried to be as diplomatic as she could give the legal nature of the matter of application for the exemption. When stations were assessed in 2014, the assessment was not done in mind with stations due to be decommissioned. Those were subtracted because they had to be dealt with separately. 

On recollection, there were stations that would have been fully complaint by a particular time, and those who may not have been compliant/suspected to be compliant by 2020. During the period when they were given exemptions, everybody was given an exemption, and those plants had to do certain things in order for them to move towards compliance. At the same time, when they get to that point, because of the legal nature of the problem, stations would be looked at and asked whether they have complied and why? The reason for non-compliance could not be because they did not or could not. If the reasons were valid then the matter would be looked at into.

She said that the DEA would have to work with various stations in order to reduce pollution over time and finally rid it completely or close the stations, however if the latter was done then the job security of workers would have to take into account therefore making the issue of sustainability on the matter quite tricky and the DEA would have to adequately engage with industry. On Sasol, the move towards compliance had to happen and zero emissions had to happen, but as previously highlighted this could not happen without risk of people losing their jobs in the short run, therefore this would have to be largely considered. 

The Chairperson said that the Committee was 100% in support of the issue of compliance by industry because he picked up that industry was unwilling and reluctant to invest in matters that concern the health of the environment and its people. Industry made billions of rands, however they were not willing to invest in the king of technology that reduced emissions. Sasol was taken to court and they were not successful. They had to comply and should not be able to bend the rules. It was emphasised that industry must be forced to comply. Emissions were said to be killing people and communities around those areas. If one was to visit the local hospitals in those areas and saw what was happening then one would come to terms with the serious matter of pollution harming people, therefore the DEA must make it very difficult to grant exemption, and exemption must only be provided under grave circumstances. 

Ms Ngcaba responded to the question related to the employment of people in the DEA House in Pretoria. Approximately 126 people were employed. 

The Chairperson asked if the budget was only for the building of the house or not.

The Minister said that the budget was also towards rental and buying the house back. 

Mr Munzhedzi answered questions related to Programme two. There were initiatives in place to support the strategic interventions in the management of rhinos which created some challenges, but the idea was that whatever support that was required to enhance and to add on what was already existing needed to be prioritized. What already existed in the context already strengthened interactions/investigations. The management of the rhino population and biological interventions would be continued. Long term sustainability would also be continued. When the rhino leg was done, it was shortly after the report was released which articulated issues along the same lines that needed to be taken into consideration.  The labs showed what the DEA had done and looking to do moving forward, while also bringing departments together including Department of Justice, Police and Defend and the South African Revenue Services (SARS). 

He said that law enforcement, community and demand management, responsive litigation and biological management interfered with what happened, therefore there were as much as 44 initiatives that came through to the rhino lab. There were certain things that needed to be prioritised into an annual plan, in the medium or long run. There were certain initiatives that had to be done in the current financial year hence the reference to the action plan. These must be captured in the action plan, which was currently underway and assigned to specific responsible people to make sure there was enough support. For example, the DEA had started with start-up procedures dealing with permitting when certain rhinos permits moved from one person to another, as in the norms and standards set up for consideration.  

The database and information management system had information that came into being considered as a threat analysis that needed to be class vested into decision making information that could assist in planning operations. There were a number of things that were into the space assessed based on action plans. Additional support was then required through initial interventions highlighted which were also to inform what came out of the rhino lab. 

There were seven high value plant species identified which must be subjected to biodiversity management plans. These species were known and were being harvested from the wild. BNP would provide the management framework, plus BNP was a legislated room for management of species and management authority was assigned to reporting mechanisms of how those species were being protected while at the same time utilized hence the reference to call prioritisation for the two highly utilized species, namely honeybush and aloe, and more species to be added later. The sluggish approach to BNP, especially on a species level was subjected to wild harvesting and/or some kind of utilisation. 

He said that in reference to domestic trade related to rhinos, the issue was widely discussed. As highlighted in the NDP, there were some misunderstandings in some areas and this was an issue of misinterpretation of cats and reality on the ground.  In 2009, the Minister held an auditorium meant to deal with the issue of trade. The Committee was aware of what transpired and what went through the courts of law. The DEA had responded to a number of questions and queries that came from newspapers and other articles providing clarity on the matter. Whether communication was adequate or inadequate was subjected to debate. There was a lot of clarity given and continued to be given, in the form of interviews, articles etc, in order to make sure that people were clear on this matter. People should know that there was no international trade authorized. In Sandton, a reposition was taken that there was no international trade and the DEA continued to subscribe to this fact. He said that there was movement of specimen from 1% to the other that had to be managed to a point where DEA took a decision to work with provinces on a procedure that would put DEA at the center of the decision making in that regard. The Minister and provincial MECs concurred with the move so that the matter could be managed properly. 

He noted that a lot had been done in the space and there was more to be done including points highlighted in the APP and the regulations themselves. The DEA did not want a slave where activities were happening and there was nothing, so it could not be that the ruling said it could be done but there were no mechanisms, especially from a regulatory point of view. 

There were other systems on how permitting and assistance were done, and all other issues being implemented. The Chairperson referred to mining activities where one exclusive zone had five or six different categories of protected areas as per the Protected Areas Act. Spatial nature reserves, national parks and nature reserves were all considered protected area which were in the form of "woodland" areas. There was another category called "the environment", not what SANParks or provincial authorities managed in the portfolio, but provincial authorities or national governments, especially provincial authorities as they may declare such areas as protected environments and such must be done as agreed for by the land owner i.e. formal agreement stating land would be subjected as a protected environment for a period specified with all the necessary documents in a contractual agreement. In those areas, NEMPA itself in section 48 stated that this one category may allow certain land users to happen which was not what happened in other areas. Therefore, SANParks was explicit in stating that there were no mining activities in National Parks, nature reserves, and in heritage sites. 

The Chairperson asked for an example of a protected environment. 

Mr Munzhedzi responded that there was a broader catchment area in Mabula in Mpumalanga, Kirisimere. The areas did not have to be fenced as they were looked at as protected environment area by the virtue of certain ecosystem attributed in that people would continue farming, doing whatever land use that was agreed to upon comparative with the protection of the area, that was how farming was done. There was a date set a date to talk on this in more detail. 

SANParks APP

Mr Fundisile Mketeni, CEO, SANParks, said that SANParks terrestrial protected areas were above 7.4% of the country. He said that SANParks management covered 67% (4 million hectares of land) of state owned terrestrial protected areas. The expansion was said to contribute to the 7.4% of terrestrial protected areas. Most SANParks were located in the rural and most deprived areas of South Africa. There were only a few in urban areas and urban systems, examples included Table Mountain and Knysna. 

He said that the CFO of the entity left the position at the end of March, and the position was advertised since then. The board was to appoint a new CFO soon. SANParks aimed to continue to grow the estate through the purchase of 3 715 million hectares of land. Sometimes contracts were negotiated, and other times the entity made purchases. Marines remained at 0km; sometimes this was due to conflict of land use areas where the SANParks had to then strive for coexistence in those areas. Plans were drafted so that when proclamation occurred there would be no difficulties. 14 parks were consolidated and completed. 

He said that the DEA developed a monitoring and tracking tool, the entity spent the year doing corrective measures and by the end of the third quarter they were at 63%, but moving forward for 2017/18, the entity would like to achieve at least 67%. On the state of area integrity assessments ratings, by the end of the third quarter the entity was at 53%, but again in 2017/18 the baselines would need to be determined so that they could know what was managed and what was to be managed moving forward. 

He said that the reduction of fossil fuel generated energy consumption began. It was agreed that the baselines for three SANParks was to be looked at, and two more were to be added, making it a total of five. Reduction of water was a new indicator. The entity looked into readiness of audits in five identified SANParks. Moving forward there would be a proper baseline. He said that in the Kruger National Park (KNP), things happened especially in the energy and water parts, which led to a 2% reduction of baselines. For rehabilitated and restored land, the figures were based on the budget received from DEA. Initial hectares were targeted at 38 537 hectares; follow ups at 209 630 hectares and 6 600 m3 of rehabilitated wetlands. 

He said that there were two Park management plans in progress. For 2017/18, two plans were drafted and revised for KNP and Richtersveld. There was a lot of interest expressed for KNP, in terms of what the entity did for water and species management as well as in conservation. In recorded fatalities, this was largely met with disagreements. The entity wanted to see percentage reductions on fatalities, both on rhinos and oceans as the ration of recorded numbers. This could be measured because once illegal activities were known then one could work against that. The entity also looked at the number of rhinos poached per annum in six SANParks (excluding the KNP). The baseline was at zero; however this did not mean that there were no attempts. The entity wanted zero killings of rhinos. The entity aimed to implement the rhino strategy in SANParks. There were camera traps in place, teaming and rhino protection plans and the deployment of canine systems and the training of rangers. The new rhino protection plan was said to be 100% ready and compiled for the 2017/18 financial year. SANParks looked at the Elephant Management Implementation Plan and this was identified because elephants were species of special concern. Thresholds were put in place for species, including rhinos and elephants, in that fatalities could not go beyond the said thresholds. 

He said that the entity was involved in cycad monitoring plans. There was a plan to be implemented for the protection of penguin, especially against issues of oil spills and ocean pollution. There was progress against the biodiversity monitoring plan. There was implementation of wildlife utilisation strategy. The strategy was developed, consulted and now read to be taken to the board. The entity continued to implement components of the cultural heritage management plan. He said that in terms of research and knowledge enhancement, the entity was producing research relevant to key issues faced by SANParks. There was contribution to peer reviewed research publications where 155 research publications were put in one book chapter that was published. 

Ms Lize McCourt, COO, SANParks presented on enhanced tourism returns in SANParks. She said that the percentage growth in operating tourism, year-on-year, had a baseline of 7% and the entity aimed to achieve a 10% for the 2017/18 financial year. Grants were increasing steadily, so the entity became more reliant on earned revenue, and tourism contributed 75% to the entity's revenue stream. There was a new indicator dealing with tourism growth which was linked to the baseline and targets by the entity. The indicator aimed to diversify tourism and attract more upcoming, middle class and black visitors into the entity's tourism product. She said that the total number of visitors to SANParks was 3% year-on-year growth, including both day and night visitors. The customer tourism index was highlighted to be key as the entity relied on customer revenue hence it strived to improve customer satisfaction. She said that revenue generated products included a baseline of five complete products in 2015/16, eight were completed in the third quarter of 2016/17 and twelve were targeted for 2017/18. On park visitor management plans, there were six plans.

Ms McCourt said that targets pertaining to the Environmental Public Works Programme (EPWP) were a result of the budget allocations. The SMMEs indicator was a new indicator for the entity. She said that enterprise developed required more than just opportunities, it also required to be developed with history in mind and therefore this indicator was to be developed in the next financial year. On the total number of green and blue economy projects, the Committee previously expressed concerns over the low numbers. The entity managed to implement one in the Tsitsikama MPA. There were no targets directly targeted at the blue economy as this was linked to the MPA, however once MPAs were declared then maybe the blue economy could be directly targeted.

She said that the number of social legacy projects had a baseline of three, however the 2017/18 target was set to five. The entity aimed to increase the number of KNP land claims. In terms of the environmental education plan, the number was increasing.  The entity was running into problems in that they had to keep school kids in classrooms and not on field trips, however the programme was amended to be more holiday based in order to make sure that environment education still took place. 

She said that the total number of free access of entrants increased. The free entrants came with the Presidential visit, the launch of the Meerkat Surveillance System and Kids Outreach Programmes. An additional baseline was to be included for three other visits linked to events. The baseline would be determined in the next financial year. She said that media engagements increased, except for events and this was because the Minister combined some events to be a media released instead of a celebratory day. The entity continued to measure the reputation rating. 

She said that the entity experienced problems with designated employment, especially with regards to women. The entity performed badly. Even if every vacancy was filled with a female employee, the target would still not be reached any time soon. The entity's vacancy rate was very low therefore making it a non-workable target. In a very short period of time, the entity managed to reach its target of employing people with disabilities. The target was to be maintained or exceeded moving forward. She said that the aim for male to female ratio was 50:50, and the entity was close to reaching the target, however in some areas the environment was still very much male dominated. 

She said that an implementation plan developed to meet agreed minimum targets, the target for meeting educational requirements was changed to 75%. Payroll spent on skills development programme was 1%. The aim was to increase the baseline to 3% by working with other programmes. In terms of the working environment, staff turnover was targeted at less than 5% and the vacancy rate at less than 5%, both targets were achieved. There was low turnover and low vacancy rates however due to budget constraints the entity looked into increasing the rates to 6% in order to remain with the approved allocated budget. Success rates at the CCMA were retained at 85%, which was 15% higher than the national average. This target was also retained. 

She said that on total number of business processes reviewed, the entity was trying to fast track automation and business processes, this came with connectivity and linkages to the ICT strategy projects implemented. Basic concepts needed to be set in place in order for the entity to establish efficiency. In compliance with governance requirements the target was aimed at 100%. 

Mr Mketeni presented the 2017/18 Budget and MTEF estimates. He said that the entity's main revenue sources came from tourism activities. Total revenue included transfer grants from the DEA. The biggest expenditure was accounted for by HR. The entity aimed to contain HR expenditure at 53%. The figure was said to increase and this would be explained at a later stage. The entity had to implement equal work and equal pay. The employees who earned less than R250 000 had to look at alternatives. The budget allocation for 2017/18 and EPWP allocations were highlighted. The DEA helped the entity with funding, including Knysna unfunded land and combating wildlife traffic. Funding helped develop assets, and these assets were to be given asset numbers in order to account for them properly. 

In working with partners, public and private sectors, neighbouring countries, particularly Mozambique have supported the entity. The entity communicated through social media as people were interested in the entity's work. Social media provided for robust debates and interactions. The entity took part in resource mobilization. Legal interventions included the Skukuza court, which was reopened. There was limited bail for suspected poachers. There were harsh sentences in the rhino space therefore showing support by the justice system. Public and private sectors largely assisted the entity, as well as Mozambique. 67% insurgence no longer came from the Mozambique side, but instead they came from the South African side. 

In terms of physical security the following were present: 

Layer 1: External surveillance and law enforcement 

Layer 2: Physical boundary 

Layer 3: Perimeter surveillance

Layer 4: Internal surveillance, these shows when people enter the park.  

Layer 5: Reaction capability

Layer 6: Integration systems where there was communication with people on the ground. 

He said that there was an increase in insurgence, and a slight decline in rhino poaching. He said that the entity was there to manage the asset, which was the rhinos. Therefore it wanted to see an improvement, whether this meant less killings or more breeding. The entity wanted to increase its operations and work with intelligence services in terms of proactive actions, as well as deploy technology in the IPZ. 

iSimangaliso Wetland Park APP 2017/18

Ms Terri Castis, Acting CEO, iSimangaliso, presented the iSimangaliso Wetland Park APP 2017/18. She said that iSimangaliso was listed in December 1999 for three World Heritage Values: unique ecological and biological processes, superlative natural phenomena and biological diversity. The entity was regulated by the World Heritage Convention. On empowerment and transformation, the entity supported 215 small businesses, established 80 bursary programmes to the youth, 50 of those graduated and 14 interns who were now permanently employed by iSimangaliso. The entity ran training programmes and 8% of the entity's revenue was allocated to claimants annually. 

Ms Castis said under Programme 1, the number of environmental monitors deployed in iSimangaliso. A target was set at 30, and additional funding from DEA was confirmed therefore the target was to be revised to account for the funding, moving it to 100. She said that for the number of hectares of invasive alien plant species treated, there was a dramatic increase from the baseline from 15 500 to a target of 25 000. There were issues around funding and efficiencies which were resolved and these were reflected in explaining reasons for the dramatic increase. She said that the number of kilometers of accessible coastline cleaned remained at 320. Applications processed in respect of developments in the bigger zone were targeted at 80%. For identified unauthorized developments, the target was 100%. She said that the percentage completion of the annual infrastructure maintenance programme was due to be completed in the targeted financial year. 

Ms Castis said that under Programme 2, the performance indicators were funding dependent, so they were below or above the baseline. She said that the number of temporary jobs created was 1 421 based on the funding and budget reflected in the APP. The number of training days was 4 800. The number of SMMEs participating in skills and development programmes was 50. She said that the programme was previously funded by the environmental facility, however the entity was now self-funding the programme. The number of bursaries planned to be awarded were 31 and the percentage of procurement from black owned suppliers was 76%. 

For Programme 3, the entity looked to increase revenue to 18.4%. This was significantly higher than the baseline. No dramatic increases were anticipated in revenue for the current financial year. She said that the entity reached the edge of price elasticity in the market. Visitor entries target was set to 520 000. 80% of lapses licenses and/or concessions were retendered. Percentage implementation of plan in respect of new tourism developments was targeted at 60% and it currently targeted three lodges. 

She said that under Programme 4, the big challenge with research was that the entity did not have research budget and so it was reliant on third party institutions and researchers to carry out the research. She said that through research application process, the entity tried to ensure that half of the applications related to management of the Park. The big project in previous and current financial year was the restoration of the St Lucia estuary. By June, the project involved the removal of a harmful spill by the river. There were systems in place that provided measurements of the quality of the water. The focus was the implementation of the plan moving forward. Another indicator outlined was the number of visitor market surveys using interns and tourism graduates. 

To present the World Heritage Values which involved the completion of the environmental education plan for the year, unsolicited visitors such as schools were helped by getting free entry access and guides. The entity would run the water programme in the current year which targeted 75 schools. She added that big plans were completed in the previous financial year regarding the EMPs. There were three EMPs in the iSimangaliso Park and they each had completed plans. The focus was on implementation and the implementation of the alien invasive plan which was completed and tabled with DEA in the last quarter. The cultural heritage plan was identified as a new plan which was in progress. 

On good governance and a sound control environment, she said that the aim was to achieve an unqualified audit opinion in the year. Staff skills were targeted at 90% and in the last financial year the entity achieved 97%. The objective was to provide effective information technology and other systems that supported business processes and the strategy was completed.

Ms Castis said that one of the challenges was keeping up with the constantly changing legal environment on service delivery and benefit creation. There were challenges outside the Park around service delivery, particularly around sewage, wastewater and unregulated developments. All these were monitored because of their possible impact on the World Heritage Values. Shortage of funding for programmes was another challenge. She said that there was a high dependency on key skills as there were limited skills available in the area. The entity employed eight new employees from its bursary and intern programmes. The entity was in the process of filling up four vacant posts which would contribute to employment equity and add additional skills to the entity as well as help with succession planning. 

Ms Abeeda Kadir, Chief Financial Officer, iSimangaliso Wetland Park, presented on budget estimates. She said that the budget was divided into the four programmes. For Park operations, the budget was R108 million compared to R57 million in the previous year. This was as a result of the increase in business plans and funding especially related to road planning. Transformation in the previous year was R3.2 million, which increased to R7.5 million due to funding for tour guides. Commercial should read R14.389 million and Governance and administration should read R3.857 million. Previously, Commercial was R19.9 million. She explained that the reduction was due to reduction in expenses and reduction in direct costs. The reduction in governance and administration was due to the World Bank contract coming to an end. Finance and administration budget for the previous year was R43 million, compared to R52.9 million in the current year. If depreciation was removed, total expenses were 9% of total expenditure. 

Ms Kadir said that salaries in 2015/16 were R21 million and R23 million in the current year due to the increase in the Consumer Price Index (CPI). This applied to repairs and maintenance. Training and skills increased from R3.1 million to R6.1 million. Increases was due to additional funding in Park operations. Infrastructure increased due to funding. Land rehabilitation increase as well and so did operations whereby security operations, electricity and water largely accounted for the increase. 

Discussion 

Mr Purdon asked iSimangaliso for more clarity on the changes made in the budget estimates. For SANParks, what was the relationship between SANParks and provincial parks because while zero rhinos poached in the KNP looked great, it was evident that poaching in Umfelozi was up by 26%? How was the entity happy with zero, while in provincial parks, Ezembelo for example, budget cuts occurred and it was therefore not able to help eliminate poaching? He said that the private ownership of rhinos was 30% nationally. Was there a combined effort or were parties involved, private, provincial and SANParks, in doing their own thing when addressing the issue of poaching. In the Tsitsikama there were three take zones comprising of 20% of the coastline. Were the zones changed or were they cast in stone, and what monitoring was taking place there? Was there any compliance, with regards to fishing? For tenders for science labs, where would the science labs be located? On the MTEF budget, what did the figures in brackets represent? Brackets usually represented negative figures. 

Mr Makhubele asked SANParks on the 2% target increase year on year, and the rhino poaching rate in the KNP of 0%. Even though there was a plan around rhino poaching, with all the resources and investments, particularly in KNP, why was there only a 2% decrease? The percentage needed to be higher. What was the reason for the low percentage? On the implementation of the wildlife utilisation strategy and implementation of SANParks wildlife heritage management plan, could the entity talk more on this relating to the issue of transformation and inclusivity in the economic involvement of those previously disadvantaged in local and neighbouring communities? Was there any progress made? 

 

The percentage growth on local black visitors was quite low, given the country's demographics, why such a low percentage target? This would mean that the entity was not as ambitious, was this the case? For iSimangaliso, on tourism, there was a mention of four community owned lodges, the equity went from 20% to 100%. This was too general and more clarity was needed on this. On fighting corruption, the entity did not indicate how to tackle this issue? On percentage procurement of black owner suppliers, the entity maintained a target of 76%, but the entity did not discuss what the ultimate goal was, as surely this was not 100%? When the President visited Mangozi, was the funding mentioned by the President linked to DEA or was it additional funding? 

Lastly, the strategic objective to develop plans and policies was not complete. It was not clear what the entity wanted to highlight. It was mentioned that the CEO of iSimangaliso was in Germany as a recipient of an Award. He hoped that the Award translated to some additional funding or its benefits trickled down to learnerships. The Award must be linked to the iSimangalisos mission and visions. 

The Chairperson mentioned that he visited the KNP last December, and he was impressed by the level of professionalism at the Park, particularly the rangers who were responsible for the protection and conservation of high valued species. These rangers were exposed to a lot of dangers from poachers. The levels of poaching remained very high. Something drastic needed to be done about rhino poaching. He said that there should be legislation on wildlife crime, particularly on rhino poaching that would introduce stricter sentences and introduce deterrents for people who killed animals. What was the understanding of the entity on the new domestic trade policy on rhino poaching? Would this have an effect on the KNP and other areas, and what would the effect be? 

Hunting was not allowed in protected areas; however there were adjacent privately owned reserves which allowed people to hunt. Seeing as fences were off between KNP and privately owned land, animals were free to roam. Therefore, when hunting took place on private land, animals from the KNP would not be exempt. This presented a grey area, therefore how would this be regulated? On expenditure on personnel, this was still high. The bulk of expenditure might be going to the rangers, however spending too much money on personnel deviated resources from its focus. Therefore over the medium term period, SANParks could look to reducing this percentage to below 50%. Would this be an idealistic target? 

Ms Castis replied that historically equity for land claim partners was a requirement in the entity’s PPP contracts, however the availability of funding for the community portion of the entity was challenging to secure. She said that the entity was not able to unlock funding which led them to approaching the private sector and asking if they could take 100% risk on funding, enabling them to receive 80% of the benefits. iSimangaliso was currently working on a project with the National Department of Tourism, if they were able to unlock funding in this project, then this would present an opportunity for them to be more aggressive in the demands placed to the private sector to allow for the inclusion of communities in projects.

She said that maintaining internal controls was identified as key in curbing corruption. One of the key aspects focused on was the refinement of due diligence in the supply chain management which dealt with corruption challenges and fronting. The long term procurement target was set at 85%. The DEA assisted iSimangaliso with funding of R126 million on its new Presidential project. The project looked into the development of Sodwana Bay looking to do the following:

- Injection of R97 million into the Bay

- Develop 31 RDP houses in the section of the park where people were still residing

- Approach the Human Settlement to fund an addition of 150 more RDP houses

- Secure additional funding for 70 environmental monitors and for the extension of the coastal management programme

- R8 million for alien clearing and R1 million for entrepreneurship development

- R1.5 million towards construction of schools and libraries that iSimangaliso has built, and also towards the provision of desks and other furniture

- R1.3 for 20 craft groups and R1.2 million for 26 groceries

Ms Castis said that the award in Germany to be presented to iSimangaliso CEO Andrew Zaloumis was for ‘Innovative Approaches to People Centred Conservation’. A list of all the beneficiaries of the conservation could be made available, should it be requested.

Ms Kadir provided clarity on the budget alignment. The budget for Park Operations at R108 768 was correct. The budget for Transformation at R7 573 was correct. The budget for Commercial should read R14 389 instead of R3 857. Policy, Planning and Research should read R3 857 instead of R14 389. Finance and Administration budget at R52 927 was correct.

Ms Ngcaba made a note that on the (new) budget slide, the qualifier was reprioritised in order to meet the demands of iSimangaliso in respect to the developments of the northern side of the park. The budget’s timeframe was the over the overall period of the project, rather than a focus on a single financial year.

Mr Mketeni highlighted that in terms of the conference resolutions, in each financial year the entity took on a small number of resolutions that it aimed to implement from the total number of resolutions to be completed. The entity put an implementation value on the selected resolutions which then it reported to DEA on a quarterly basis over the two-year period, and this was how it was carried over into the entity’s business bank.

There were structures in place led by the DEA that outlined the role of SANParks in national provinces. These structures provided assistance to working provinces, namely KwaZulu Natal and the Eastern Cape. Both provinces received development plans of the assistance to be provided, as per each provinces’ request. Following a meeting with the CEO in the Eastern Cape, there was an allocation of R800 0000 in place towards assistance with the development of operations of the project. Mr Mketeni advised the CEO that it would be better to work with the private sector. Moreover, the entity has already started with providing assistance to the two provinces, as requested by the DEA Minister and Director General. The entity’s operations remained limited to the SANParks.

He said that regarding the Tsitsikama zones, when the negotiations started, the communities requested five zones, however only three zones were enacted. There was a full monitoring plan on the offtake and monitors have since been appointed. The monitors were appointed to monitor daily bed limits and sizes. There was a roster of fishermen indicating the number fish they caught, however the numbers were currently unknown. The entity was also involved in research as a means of internal monitoring. The current structure of the plan required three test cases in the initial draw in trying to understand the impact in the zoned areas.

External research was done by Rhodes University and Nelson Mandela Metropolitan University in assisting with the zoning project. The entity was also looking into appointing additional staff as monitors; these monitors would monitor off take and collect data which was to be handed to the science labs. These science labs were in the Kgalagadi, Addo and Mokala National Parks. Last year there were science labs located in different provinces, namely in Marakele National Park, Kruger National Park and Mount Zebra National Park near Craddock. The brackets showed an increase in income to SANParks. The brackets were represented as income, and this was how the system has always operated. 

Mr Mketeni asked the Chairperson that at some point when the Committee decided to visit the Kruger National Park, they should consider taking other Committees, namely Justice, Police and Defence for an oversight tour. The entity emphasised that it needed other departments to work with them, and if there was to be a briefing then all departments would be briefed once rather than at different times. It was noted that the department of Police did an oversight once at the Park.

In addressing the challenge of hunting, there was a plan to regularise the western boundary in the Kruger National Park through the development of off-takes. There was a quota in palace, before this however a census carried out then the quotas were set, but challenges remained specifically relating to permitting.

The entity submitted reports to the DEA. Regarding the issue of transformation around the wildlife economy, the entity put out a call for the submission of requests for game loans and donations. Approximately 42 submissions were received and reviewed, and following this the impact of transformation would be assessed. In other projects like the Khomani San’s, the entity delivered four bridges of wildlife, and the project was doing well with the assistance of Peace Parks. Hunting was taking place in the area and it has since been expanded. The project was said to provide valuable lessons moving forward. The DEA set a target for SANParks in terms of contributing to deliver specific outcomes set.  

Ms McCourt added onto Mr Mketeni’s response on rhinos relating to the involvement of provinces and private reserves and the 2% reduction target. The entity was conscious of what the 2% reduction target reflected, as well as knowing its capabilities in what it could achieve. Having said that, it was inaccurate to assume that the entity was advocating for a 2% reduction in rhino brutality, instead however the measurement was based on the success rate of poachers, so basically the percentage of success of fatalities against poaching incidences i.e. a ratio of showing successful poachers were in their attempts, not a reduction in poaching incidences, hence the graph showed fatalities vs incidences, of which the entity was trying to narrow down.

In looking at transformation in wildlife utilisation, the entity was in the process of finalising a socio-economic development strategy.  The socio-economic strategy had specific targets around transformation and wildlife sales. The 5% of sales of high value species including buffalos, rhinos and other species went into a development trust for projects of neighbouring communities and also the opening of the wildlife economy. The strategy also gave direct implementation of the people and parks initiatives and talk through their forums. The socio-economic development strategy and implementation plan, the issue of the cultural heritage, wildlife utilisation, green and blue economies, as well as transformation.  

In terms of year on year growth of black visitors, it was indicated that the percentage growth was too low. The year on year growth only measured the year passed. The general visitors’ percentage was 3% for the year on year growth, however for black visitors this sat at 2%. There was already an agreement with the board to increase the percentage growth of black visitors to a 10% year on year growth. In order to achieve the set target, the product needed to be addressed into making it attractive to black visitors. This required research into finding out what visitors were looking for in order to make the parks more accessible and attractive to the said visitors. It was found that the average black middle class female did not want to do self-catering when they go away. This presented a problem seeing as 90% of accommodation offered by the entity was self-catering, therefore it might be ideal to get higher end accommodation so that they would not have to cook when they were away on holiday.

Ms Khungeka Njobe, Chairperson of the Board, SAWS, reemphasised the efforts around transformation. The board was putting a lot of pressure on management. In addition to this, management asked to put in place target actions made of various strategies including the wildlife utilisation strategy, which was to be discussed further in the next meeting. There was a whole range of activities, in terms of projects and various policy areas that aimed to adequately address the challenges of transformation faced by the entity. To add, Parliament was asked by the entity to put together a complimentary strategy for the entity. The reason for the emphasis on socio-economic development was geared towards the entity achieving transformation and empowerment goals, particularly for local communities. Management was asked to ensure that SANParks were a catalyst for development in local and neighbouring communities. There was also great emphasis in ensuring that programmes to be deployed were effective enough to stimulate economic growth. It was again emphasised that the board was putting more pressure on management with regards to not only transformation, but also in being a catalyst for the development of local and neighbouring communities. Soon, systematic changes of the programme would be surfaced.

The board, just as the Committee, was concerned with the HR expenditure in that the expenditure was not where it should be. Following engagement with management, management said there was a lot of activities or mandates that were given to the SANParks without necessarily matching funding. The organisation took responsibility because SANParks, in the medium term, remained a key point in terms of localisation. The entity was looking at ways to reduce expenditure and have it under control; this could be in cutting down on admin costs.

She said that HR expenditure needed to be watched carefully. The 56% expenditure was put as an upper limit in terms of HRs ratio of percentage expenditure, however this was not a perfect target. The target was set according to other service and knowledge institutions. Looking at ratios in other nature conservation agencies in the country, the SANPark average was fairly low as some of them had their HR expenditure targets at over 60%.  The Chairpersons suggestion of expenditure below 50% was appreciated, however at the moment the entity was struggling to keep the expenditure level under 56%. There were initiatives currently put in place to address this issue and consultations were being carried out. Once these steps and processes were completed then the Committee would be briefed on this matter.  

The Chairperson expressed his discontent with the response given by Ms Njobe. She had said that the entity appreciated the Chairperson’s suggestion, however it appeared as if it was going to be business as usual, which was disappointing for future interactions moving forward. The Committee assisted with donating high value species consisting of approximately 130 buffalos, 50 rhinos and 50 sable antelopes and 32 nyangas. A decision was taken by the government of the North West to donate the animals to a private party. There were two meetings held with the MEC to address the issue. The report was to be finalised, however the Committee felt that it should consult other people. Consultations were supposed to take place a month ago, however they were rescheduled and were said to start soon. The approach in which the province took was wrong and reckless as provincial authorities should not be involved in these dealings. Government cannot be donating high value and iconic species for free to private individuals some of whom were alleged to be friends with the government authorities. A stop must be put to this.

The Chairperson said that one of the issues raised by the assisting staff was that the Committee should recommend that the DEA came up with a regulatory policy. People were saying that because SANParks donated wildlife species, then they should do it too, however the problem was that they were doing it at a large scale and illegally. The wildlife economy, referring to the possibility of loaning or donating animals, highlighted that donations would always be there as part of encouraging entrance into the wildlife economy for those previously disadvantaged. This should be done in a very responsible way. The DEA should then prepare a preliminary report of their comments on the issue. The report by the Committee was not yet finalised, however it would be finalised soon, possibly in the next three weeks once the presentation from the scientists was received. One of the recommendations made was that it would be ideal for the DEA to try establish national norms and standards so that people engaging in these kinds of activities were guided by how things were supposed to be done.  This was partially to avoid people thinking that they were being personally attacked, which was not the case, instead the issue trying to be addressed was worth of public concern. The DEA was asked to comment on the above highlighted when they give feedback on issues raised around legislation.

Ms Njobe apologised for her earlier response and was in agreement with the criticism raised by the Chairperson. The board deliberated that there were initiatives underway and internal consultations taking place that would provide further details on the issue of reducing HR expenditure.

The Chairperson expressed that he was pleased with the clarity provided by Ms Njobe.

Mr Munzhedzi provided a response to two questions. Firstly, with regards to the rhino auditorium, the Committee and DEA set a date where the entity would comprehensively deal with answering the question. Secondly, the issue surrounding hunting in the KNP remained challenging. The interface with the province and heritage aspect was not as clear directly adjudicating the permits, but in working with SANParks this needed to be further looked into. There was a case study involving Limpopo and the SANParks. The process was a success and finished quickly. Hunting was still happening and the quotas were determined on the basis of the process defined and the permits were issued on the basis of that. Normally, the permits did not always correspond with requests made depending on species people were targeting or requested for, and also the requirements for certain species, for example with high level species, there were certain management plans required which was different compared to other species. The entity was to further deliberate in writing highlighting the challenges and dynamics in more detail.

He said that regarding the donation of game, the entity worked hard and increased their pace on the particular matter. There was a draft titled the National Game Framework Policy. This policy framework acknowledged management authorities needed to have their own policies that needed to be aligned with the National Policy Framework. The Framework remained in its draft stages and a Working Group and team were set up to table the draft, which would then go to the main tech involving Head of Department (HOD) and DG high level discussions.

The Chairperson commended Mr Munzhedzi’s response. It was the Committees responsibility that public finances were accounted for properly, if there was something wrong then questions needed to be asked to make sure that spending was done correctly. National norms and standards were definitely needed, the provinces also had a role to play, but it must do so within a national framework policy as stipulated, so that animals were protected.  

Meeting was adjourned