Draft Portfolio Committee on Environmental Affairs Budgetary Review and Recommendation Report [available once published on ATC]
The Department of Environmental Affairs (DEA) presented details of the Chemicals and Waste Operation Phakisa to the Committee where much ground was covered, namely, methodology, work streams, initiatives, awareness campaigns and the way forward.
The Committee asked for a separate, follow-up presentation on the consumer drive to ‘separate at the source’, so that there can be clarity as to how it will function. DEA also endeavoured to return to the Committee to discuss the following in more detail: how tariff formulations were going to work and how certain statistics were arrived at (for example, 36 million tons of ash waste production). It was also agreed that a way must be found to ensure that all the money collected through the levy must reach the implementers of its intended purpose. Further questions were posed on the guidelines for product design, e-waste, ring-fencing of funds to municipalities and metros, transfer stations and involvement of the private sector. It was remarked that although the intention of the Department was well placed, there was much wishful thinking and unanswered questions. Another Member stressed this work of the Department was one that was in progresss
The Committee then adopted its draft Budgetary Review and Recommendations Report with amendments despite not receiving the 2016/17 Annual Report of the Department.
Chairperson Opening Comments
The Chairperson noted the apology of Minister Edna Molewa due to other commitments. Deputy Minister Barbara Thomson took ill and was admitted to Pietermaritzburg Hospital. The Chairperson, on behalf of the Committee, wished her a speedy recovery. Ms Nosipho Ngcaba, Department of Environmental Affairs (DG) Director-General, was attending another event. Mr M Mabika (ANC) was writing exams. Mr P Mabilo (ANC) also tendered an apology.
The Chairperson found it unacceptable that the Department’s presentation was received late – if the meeting was on a Tuesday, the presentations must be emailed to the Committee on Thursday prior to the meeting and not Monday before the meeting.
The Department highlighted that the presentation was sent on Friday last week.
The Chairperson stressed that this should not happen again and whoever was responsible in the future will have to account to the Committee.
There are introductions by the delegates from the Department of Environmental Affairs, namely, Mr Mark Gordon, Deputy-Director General (Chemicals and Waste Management ): DEA, Ms Mamogala Musekene, Chief Directorate-General Waste and Municipal Support: DEA, and Ms Hombakazi Blou, Directorate Administrative Support: DEA.
Operation Phakisa: Chemicals and Waste Economy
Mr Mark Gordon, DEA DDG: Chemicals and Waste Management, began the presentation by stating the chemical and waste sector had a critical role to play in the economy. Firstly, SA had a responsibility to protect the environment for present and future generations through the promotion of sustainable conservation and ecologically sustainable development and use of natural resources. Secondly, there was a view to turn SA’s waste into goods and services for social and economic development and there was a need for effective transformation of the sector. Thirdly, government had a mandate to promote economic opportunities in the chemicals and waste sectors. Fourthly, by 2023, there was the goal to increase contribution of this sector to 1-1.5% of GDP from 0.62%. This will be achieved through accelerating the waste recycling economy and growing the waste-to-energy economy.
Mr Gordon continued that Operation Phakisa operated on the methodology of hosting a number of laboratories which had several aspirations. Firstly, to reduce negative environmental and health impacts of waste and risks posed by harmful chemicals. Secondly, to increase commercialisation of the circular economy and create value from resources currently discarded as waste. Thirdly, foster inclusive growth through positioning of SA as a globally competitive producer of sustainable products.
In terms of the methodology of Operation Phakisa, it involved an intensive consultative process with all relevant stakeholders to define ambitious targets and identify big ideas to reach them, by defining detailed three feet plans with defined timelines, a committed budget and legal support where implementation was wholly owned by stakeholders.
Looking at existing statistics, currently, SA was generating 111 Mt of waste per annum of which 75% ended up in landfills and about 25% was recycled. It was contributing 0.62% to the Gross Domestic Product (GDP) and employing between 60 000 – 90 000 informal waste-pickers. Approximately there was 10% annual growth in the private waste economy, about 110 000 formal jobs in the chemical sector and 35 000 formal jobs in the waste economy.
The project planned to divert 19.7 m tonnes from landfill of which 13.6 m tonnes will be recycled. There were different contributions from distinct waste streams - organic waste (39.7 m tonnes) and ash (36 m tonnes) were the biggest contributors in terms of total annual waste production. The total waste diversion potential was planned to increase from 25% in 2016 to 42% in 2023 (and increase 19.7 m tonnes). Recycling potential was planned to increase from 13% in 2016 to 25 % in 2023 (an increase in 13.6 m tonnes).
Mr Gordon highlighted that 20 initiatives were proposed with a GDP contribution of R35.8 billion in 2023, from 24.3 billion in 2016 (and increase of R11.5 billion). This will lead to an increase of about 127 000 jobs in 2023 (with a total of 243 000 jobs in the waste sector in 2023).
Four workstreams were defined across the Chemicals and Waste economy, namely,(1) bulk industrial waste (maximising utilisation and beneficiation of bulk industrial waste), (2) municipal (maximising diversion of waste from landfill sites through reuse, recycling and recovery), (3) product design and waste minimisation (reducing volume of packaging and food waste ending in landfill sites) and (4) chemicals (reducing negative health, safety and environmental effects of harmful imported chemical products).
The Phakisa hosted participants from business, government and the social sector, averaging 95 people a day, over six weeks for the different laboratories. The participation, critique and debates were very good and robust. DEA was confident these initiatives had the economic modelling and the business case to support whatever was to be unlocked and implemented.
20 initiatives across 4 workstreams, including 2 cross-cutting initiatives, were identified:
-Bulk industrial waste: 1.) Increase ash uptake for alternate building materials; 2.) Accelerate innovation and commercialise existing research and development; 3.) Export ash and ash products; 4.) Zero sewage sludge to land(fill); 5.) Towards zero meat production waste to land(fill) by 2023
-Municipal: 6.) Introduction of an e-waste levy to increase collection rate; 7.) Unlocking government ICT legacy volumes; 8.) Achieving a minimum of 50% of households separating at source by 2023; 9.) Introduction of materials facilities and pelletization plants to increase plastic recycling rates; 10.) Produce building aggregates and construction inputs from rubble and glass
-Product design and waste minimization: 11.) Developing capacity through a specialised programme which upskilled agri-stakeholders to minimize food loss; 12.) Consumer awareness campaign to use and consume ugly food; 13.) Compilation / update of packaging design guidelines; 14.) Formalising the packaging industry producer responsibility plans; 15.) Establish a refuse-derived fuel plants across SA
-Chemical: 16.) Establish a refrigerant reclamation and reusable cylinder industry; 17.) Ban import of harmful chemicals (e.g. leaded paint/paint pigments); 18.) Collect and dispose stockpiles of harmful substances (asbestos, mercury)
-Cross-cutting Initiatives: 19.) Coordinate Small, Medium and Micro Enterprise (SMME) development opportunities across initiatives; 20.) Roll out national awareness campaigns.
Mr Gordon said the high impact initiatives for ash, gypsum, slag and biomass will divert 15.5 Mt of waste from landfills and create approximately 28k direct jobs. For example, from the Ash, Slag and Gypsum initiatives (initiatives 1, 2 and 3), approximately 24 500 jobs will be created and 10.3 Mt of waste will be diverted (over the next five years), 1 000 direct jobs will be created through use of ash as a soil conditioner and 1 000 direct jobs will be created through Acid Mine Drainage.
In terms of municipal waste workstream (initiatives 6,7,8,9 and 10) and its impact on the diversion of waste from landfills, for example, about 3.7 Mt of waste will be redirected from landfill sites annually, about 15 000 directs jobs and 21 200 indirect jobs will be created and a GDP contribution of about R2.1 billion from the five initiatives.
With waste minimisation stream and its overall impact, for example, under initiatives 11 and 12, about 287 direct jobs will be created, 245 000 tonnes of food losses would be prevented and R1.2 billion of food losses would be avoided. For initiatives 13 and 14, 2 464 direct jobs would be created, 146 000 tonnes of waste would be diverted, R36 million contribution to GDP, 305 direct jobs created and, in terms of initiative 15, 120 000 tonnes of waste would be diverted and R80 million contributed to GDP.
Mr Gordon highlighted the impact of the three proposed chemical workstream initiatives - for example, in terms of initiatives 16 and 17, 2 000 direct jobs and 1 000 indirect jobs were envisioned to be created, diversion of 225 000 tonnes of waste cylinders, 114 000 global warming potential tonnes of ozone depleting gas emissions stopped and R540 million contribution to GDP. There was not much economic potential in dangerous chemical stockpiles.
In terms of initiative 19, the coordination of SMME development across Phakisa initiatives will support development of 4 300 SMMES, creating approximately 41 000 jobs. For example, about 4 300 new SMMEs will be created by the Phakisa. To this end, there was negotiation of the ring-fencing of a portion of the R1.5 billion fund being created by the National Treasury in partnership with the Department of Small Business Development (DSBD) for the Phakisa. There was also a special emphasis on women, youth and black entrepreneurs. Funding will be sourced through DEA delivery unity budget or seconded from partner organisations such as the Small Enterprise Development Agency (SEDA), Small Enterprise Finance Agency (SEFA), DSBD.
Under initiative 20, DEA was looking at consumer behaviour, awareness and how to increase awareness, which were paramount in implementation of the initiative (‘eat ugly food’, e-waste, separate waste at source, safe disposal of waste). While a guideline and law will be provided, actual implementation was at household level. The awareness campaign will also include industries in terms of the use of harmful chemicals in paint, updating of packaging design guidelines to increase recyclability of packaging, building aggregates and construction inputs from rubble and glass.
Mr Gordon concluded that to implement these initiatives will require public investment of R1.809 billion over the next five years which will be required to unlock about R7.295 billion of private investment. Treasury was attuned to these amounts. In terms of how this will be budgeted for, DEA was yet to get the final allocations. Discussions with Treasury were on-going. Since 1 September, when the presentation and discussion of Phakisa initiatives took place, the project received, among others, Ministerial approval and a Cluster-sign off and presentations to four out of nine Provincial Executive Councils. Among others, a Municipal Indaba (26 October 2017) and Cabinet presentation (25 October and 1 November) were pending.
Mr T Hadebe (DA) asked DEA to unpack and explain the consumer drive to ‘separate waste at source’ - since this will involve local municipalities, this process will involve a lot of capital expenditure. How was the ‘separation at source’ going to be funded and implemented?
Mr Gordon responded that DEA was proposing different guidance for different metropolitans in terms of some of the initiatives they undertook themselves and some lessons they had learned over the years. Separation at source implementation was happening voluntarily in Johannesburg, Cape Town, Bloemfontein, Tshwane and Durban. DEA will provide guidance in terms of how it will be rolled out. There was a lot of engagement with the Department of Cooperative Governance and Traditional Affairs (COGTA), municipalities and metros present at the Phakisa that agreed on the system of how it would be unloaded. In so far as funding was concerned, through division of revenue, municipalities were funded for waste in two aspects, namely, in terms of waste collection and the waste infrastructure side. DEA was looking into how funding can be used more efficiently, re-diverted and recycled within current allocations from Treasury. Municipalities get money for building of landfill sites. It was envisioned that in three years’ time it may be unnecessary to construct landfill sites because of the amount of recyclables that will be recycled and diverted away from the site. That money which was saved could amount to R40 million per site and can be used to fund some of the infrastructure. DEA was working closely with Treasury also on ring-fencing some of the monies that will be directly used there. There were two initiatives in DEA’s industry plans, the E-Waste Levy and the Packaging levy. There could also be a mechanism, which Treasury was supporting, which created incentives for households to separate waste with a volumetric incentive that ‘the less you put out, the less you pay’.
Ms Mamogala Musekene, DEA Chief Directorate: General Waste and Municipal Support, added the proposal envisioned a ‘three-receptacle’ system, which can be divided into wet (for example, organic food waste), dry (for example, paper and packaging) and residual waste (non-recyclable that will end up at the landfill site). Certain municipalities already tried to create household incentives for separating of waste (for example, vouchers). A system of buy-back centres were also utilised for communities that wished to sell back recyclables. Transfer-stations were envisioned to cut down on transportation costs because facilities tend to be far from communities. The tariff model was also being reassessed for the rate payers to get the benefit from the effort they were putting into the separation. The pelletisation plants, though they were part of a separate initiative, will be integrated at municipal level. The focus was on the eight metros and the target for 2023 was that 50% of households in the eight metros should be separating. While the National Waste Management Strategy will be pushing for all municipalities, for Operation Phakisa the metros were elevated because of the amount of waste being produced in these municipalities.
The Chairperson asked how the waste was collected, transported and finally recycled.
Ms Musekene said there were existing models being used. For example, in Mokopane, Mogalakwena Municipality (in Limpopo province), there was partnership with a private party wherein the municipality did not spend money on private party collecting. There was arrangement where the private party will collect the recyclables and it did not cost the municipality. On the other hand, other municipalities might have a subsidised arrangement because issues of density and coverage would also effect the logistics cost. Depending on the situation on site, the municipality can choose a model that would work around the costing. The situation in which the waste was put into one truck, thus wasting efforts of households to separate rubbish, was also going to be averted. In terms of SMME development, some opportunities were linked to logistics because DEA will have the transporters that would need to be taking the recyclables to Materials Recovering Facilities (MRFs) and others to composting, if it was food waste.
The Chairperson asked if there was no detailed plan currently regarding the consumer drive to ‘separate at the source’, transportation to the landfill site and recycling, and whether various models were being considered.
Mr Gordon replied that with these initiatives came a by-law which will totally discourage and ban some products from landfill sites (for example, tyres). The Department had a two-pronged approach - the ‘stick’ and ‘carrot.’ The ‘stick’ was commanding municipalities to separate at source. There will be a standard and a policy tool to force separation at source. Part of the ‘how’ was through provision of some kind of incentive. Treasury will assist through allocations. Municipal managers need to know that there was a ring-fenced amount that was going to be used to incentivise separation at source. The big discussion in the Phakisa was around some of the funding arrangements. Municipalities complained about funding and execution. Bags, bins and trucks were found to be among the key items that municipalities were in need of. Essentially, money was available at municipality level -it was about reorganising the money at that level. At the impending Municipal Indaba, which will be held next week, this kind of detail will be interrogated. Mayors and municipal managers must commit to making this happen at metro level. With a view to preventing chaos, 50% was the starting target. Something must happen to the waste on that day once a week. Waste will be redirected to transfer stations, i.e. MRFs, and existing recycling centres, where some kind of sorting will take place before it can go to landfill. Once DEA got the lessons learnt in the eight metros, then it will be rolled out more broadly. There was a detailed business plan for this waste stream that will be made available to the Portfolio Committee. This initiative was almost the biggest plan to promote SMME development. There was an unprecedented opportunity for SMMEs to engage in the space of recycling waste before it went to landfill.
The Chairperson asked for a separate, follow-up presentation on the initiative around separation at source so that there can be clarity as to how it will function.
Ms J Edwards (DA) ask why the Minister said, in a previous meeting, that there were 400 000 waste pickers when, referring to the presentation, the statistic was that 60-90 000 informal waste pickers will be added to the economy. Referring to the presentation, what else will be done to ensure packaging did not go to landfill? Referring to guidelines that were going to be put in place for product design, more detail was required on these guidelines – who would draft them? Also looking at the presentation and introduction of the E-Waste levy, how did DEA plan to deal with E-Waste in the future? Will it be exported? How will the levy work? Looking again at the presentation, how will the portion of the R1.5 billion fund, being created by National Treasury in partnership DSBD for this Phakisa, be ring-fenced if the law had to be changed in order to ring-fence any money? With the “major funding needs” highlighted in the presentation, did the Department have plans on how to engage with the private sector? How will the R209 million be secured? Looking at transfer stations, will they be government-owned or privately-owned? Will this be part of the private-sector drive? With ‘direct’ and ‘indirect’ jobs created, how were these figures reached or worked out? Will measures also be put in place to separate the recyclable material at landfill?
The Chairperson advised that all questions pertaining to ‘separation at source,’ be postponed to the follow-up presentation.
Mr Gordon agreed that DEA will return with the detail concerning ‘separation at source.’ Firstly, in response to Ms Edwards regarding the statistic of 60-90 000 informal waste pickers, the SA Waste Pickers Association registered about 90 000 waste pickers. The 400 000 waste pickers to which Minister Molewa referred were waste pickers working in the waste space as an estimate throughout the entire country i.e. informal waste pickers not necessarily registered and that work in the waste space. Secondly, regarding the packaging plan, a final notice was put out last year calling for final plans where producers, manufacturers and importers of products were asked and obliged to submit plans. These plans must address the entire value chain from production and manufacturing to recycling and disposal. According to the Extended Producer Responsibility principle, manufacturers, through the producer networks, have to submit plans to say how they will deal with the product after the consumer used it. The manufacturers were then held accountable. In terms of Section 28 of the Waste Act, these plans were a legal tool and producers and manufacturers were considered illegal if they did not belong to a plan. Thirdly, with these plans, like the E-Waste plan, there were accompanying levies. This levy, like the tyre levy, will be a government collection levy system through a Money Bill, which was a current customs excise duty Money Bill, that will be amended to provide for these new levies, which, as of the pronounced date, will be collected through the SA Revenue Service directly from manufacturers, importers and producers. The levy was ring-fenced. Fourthly, while, currently, a lot of E-Waste in SA was dismantled and components exported, DEA was asking for beneficiation to take place in SA. Jobs need to be created from the dismantling, disassembly, refurbishment, repurposing and reusing of all electronic waste products. The E-Waste levy will incentivise the entire value chain. There was agreement and consensus in the Phakisa, together with industry, that, by law, there will be a government collection levy system. The policy of Treasury was to ring-fence and allocate funds through collection of the levy.
The Chairperson pointed out that the notion of ring-fencing did not exist - levies introduced were sometimes defeated by the system. Levies were introduced specifically because money was to be collected towards a particular objective but, when money was allocated according to needs of the country, not all the money ended up with (or was diverted from) the department which was to execute that specific purpose (for example, recycling of tyres). It was possible that nearly half of the money collected through the proposed levy for E-Waste would be diverted from DEA. There must be a rethinking of how this initiative can better be executed. A way must be found to ensure that all money collected through the levy must reach implementers of its intended purpose.
Mr R Purdon (DA) highlighted that while, as a whole, intentions were good, there was a lot of wishful thinking and many question marks. Firstly, the Municipal Infrastructure Grant funds were not ring-fenced and the reality was that the money was often spent elsewhere. Moreover, many municipalities, as well as certain metros, performed dismally. There was a great need to thrash out how tariffs tied into Operation Phakisa. Secondly, on the bulk industrial waste, in terms of ash, on a previous visit to Eskom, the expert that was guiding the group made it very clear that ash material was not good material for bricks. Moreover, referring to the presentation, while it was stated that there was a total of 36 million tons of ash waste production, based on the expert advice, there appeared to be a shortfall of 17 million tons of ash, taking into consideration that 40 million tons of ash a year was produced by Eskom and 13 million tons a year was produced by Sasol. Therefore, the statistic of 36 million tons a year was disputable. Serious attention had to be paid to some of the figures.
Mr S Makhubele (ANC) stressed the Committee must not be under the impression that the plan was a final product – it was still very much a work in progress. It was important to recognise that the key challenge was not that SA was lacking in excellent policies - the challenge was coming up with enforcement. It was important to formulate policies that were not difficult to enforce and to consider the fact that SA was still a developing country with many challenges. While Phakisa will rely mostly on the private sector coming on board, the private sector had not, in all seeming, committed yet. It will only commit once it new that what was coming was viable economically. It was important to be practical so as not to make public promises which cannot be fulfilled. In terms of Phakisa’s mandate and true potential, transformation did not only mean creating opportunities for big companies but, most importantly, it was about creating economic opportunities for new entrants to the mainstream economy. Fronting should be guarded against.
Mr Gordon took the comments very seriously. DEA will come back with the details on how tariff formulations were going to work. It will also be helpful if National Treasury could join DEA in that meeting to explain exactly how those allocations were going to work – Treasury was involved heavily in the discussions and gave DEA the assurance in terms of the revenue and funding that will be made available for this transition at the municipal space. Concerning the ash statistics in dispute, DEA would like to show the Committee this in the detailed plan. Experts from, among others, Eskom and Sasol, were involved in the Phakisa process and the amount provided was 36 million tons. Moreover, different power stations produce differently and there were different qualities of ash. The quality of the ash determined its usage (e.g. brickmaking, cement).
Concerning private sector funding, caution was needed with respect to the reliance on the private sector. The private sector was present throughout the Phakisa meetings. During the signing-off ceremony, the private sector, for example, Eskom and Sasol, had, however, made certain commitments. Transformation was exactly about creating opportunities, by way of SMMEs, for new entrants in the mainstream economy. In terms of Ms Edwards’ question earlier about the packaging guidelines, the guidelines were produced by the Department of Trade and Industry (DTI) and industry through its own institutions, like the South African Bureau of Standards and the National Regulator of Compulsory Specifications. Industry was committed. The Plastic Association, for example, had members which paid fees. These associations had a code of conduct which specified guidelines and standards for packaging. DEA aimed to reach all the different industries and had received a very firm commitment.
Ms Musekene added that the statistics showed that direct jobs were worked out based on specifics on the ground while indirect jobs were worked out using what was known as a ‘multiplier.’ In economic terms, based on every job created, there was a conversion formula which can help to determine indirect jobs created. Concerning awareness-raising campaigns, it was highlighted that DEA currently had a forum with industry looking at how to raise awareness. There were focus areas within that, for example, a national campaign, in the wake of the ‘Keep South Africa Clean’ campaign, was still going to be launched.
The Chairperson noted there were various issues to be followed-up on. As soon as it was presented to Cabinet, the Committee would like some of the details around the Chemicals and Waste Phakisa. There was a need to have discussion around the issue of levies, for example, the plastic levy. Industries seemed to be unduly profiting. What was its impact? How much will be used for the intended purpose? The notion of ring-fencing must be dispensed with. It was concerning that there were only three initiatives that dealt with chemicals.
Mr Gordon clarified there were actually four initiatives (asbestos, lead, mercury and canisters) dealt with in the Phakisa which spoke to the chemical sector. A lot of the work that was done was around licensing, prohibitions, controls, banning, phase-downs and phase-outs etc. Unfortunately, this branch did not have a lot of economic potential. Since the focus in Phakisa was on job creation, GDP contribution and waste diversion, a lot of work that was done by DEA in the area of chemicals was not done in Phakisa.
Draft Portfolio Committee on Environmental Affairs Budget Review and Recommendations Report (BRRR)
The Chairperson pointed out that it would have been ideal to deal with DEA’s Annual Report before the BRRR. In the absence of the Report, the Committee’s BRRR may not be dealt with in the House. The BRRR was nevertheless before the Committee for Members to make comments on it.
Going through the draft Report page by page, Members made a number of grammatical amendments.
Mr Purdon highlighted that while the Report referred to irregular expenditure of R3 087 620, the actual irregular expenditure presented by the Auditor-General was R4 138 874 million, which the Report did not reflect on.
The Chairperson agreed that the R4 138 874 million, which was, collectively, irregular expenditure for the SA Weather Service (SAWS), SA National Parks (SANParks) and the SA National Biodiversity Institute (SANBI), must be reflected in the Report. Irregular expenditure of SANParks must also be reflected as it was under SAWS.
Further grammatical amendments were proposed by Members
Mr Purdon suggested irregular expenditure of SANBI should also be included in the Report.
It was agreed that the total irregular expenditure (i.e. R4 138 874 million) should appear under ‘Committee Observations’.
Mr Makhubele moved for adoption of the Draft Report.
The motion was seconded by Ms H Kekana (ANC).
The Draft Budgetary Review and Recommendation Report of the Portfolio Committee on Environmental Affairs was adopted with amendments.
The Chairperson said the amended Report would be sent to Members by the Committee Secretary.
Mr Hadebe appealed to the Committee staff to make use of Microsoft Word because when drafting the minutes and reports, incorrect spelling would immediately be highlighted.
The Committee would next meet on Tuesday. In two weeks time it would host its colloquium on Climate Change.
The meeting was adjourned.
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