National Department of Tourism Quarter 2 & 3 performance; Acting Chairperson Election


28 February 2018
Chairperson: Ms L Makhubele-Mashele (ANC) (Acting)
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Meeting Summary

The Department of Tourism briefed the Committee on the 2nd and 3rd quarter performance for the financial year 2017/18. The department had met 89% of its targets by the end of the 2nd quarter and 79% by the end of the 3rd, citing the failure of service providers as one of the challenges facing the department in meeting its targets. To solve this problem, members wanted to know what consequences the Department had in place for service providers that failed to deliver. The overall performance of the Department was generally good as the number of tourists had increased by 2.4% with 10.3 million tourists visiting the country by the end of the year. There were however cancellations related to incidents of crime and drought which the department was trying to reduce through information sharing techniques in targeted markets, and would be able to evaluate the impact of this in the coming year.

The Department was on track with its plans to host the 2018/19 BRICS summit and the Indian Ocean Rim Association (IORA) meeting, as stakeholder consultations had been finalized. The plan to upgrade 25 beaches to Blue Flag status had not been finalised by the end of the 3rd quarter because of contracting issues but would be finalised by the end of the financial year. Members were keen to know what the department was doing to help beaches maintain their Blue Flag status. In terms of job creation, the department had surpassed its target by the end of the 3rd quarter and was on track to meet its annual target of creating 3 085 full time equivalent jobs. The Department had also surpassed its targets in the representation of persons with disabilities, women at the Senior Management Service level and black representation in both quarter two and three.

By the end of the 3rd quarter the Department had spent 73% of its budget which raised concern from members over fiscal dumping. The Department’s plan to overspend on the compensation of employees also raised questions as to why this was the case, and members wanted to know how the Department was engaging treasury on the same. With regard to the Tourism Amendment Bill, the Department reported that it would not be able to finalise the bill by the end of the financial year because of delays in reviewing policies that related to the sharing economy and tour guiding. It had however submitted a draft for review to state law advisors and the Department of Performance Monitoring and Evaluation. Among several other concerns, members raised questions as to why the public had not been involved for comments in amending the Tourism Act, whether the trainings offered by the department for their different programmes were accredited and if overtime work done by the human resource department to reduce the department’s vacancy rate was within labour laws. Members also called for the department to use fairness in the distribution of resources amongst provinces and would like to see a larger footprint of the department on the ground to include locals as part of the economic transformation agenda.

Meeting report

Opening Remarks
The Committee Secretary welcomed the delegation from the Department of Tourism and thanked committee members who attended the funeral of the late chairperson of the committee. He asked everyone present to give a moment of silence in respect of the passing of the chairperson.

Election of Acting Chairperson
The Committee Secretary, in reference to National Assembly rule 176 (1), called for the nomination of an acting chairperson to preside over the meeting.

Mr S Bekwa (ANC) proposed Ms L Makhubele-Mashele (ANC) to be the chairperson of the meeting, This was seconded by Ms E Masehela (ANC) and Ms S Xego (ANC).

The Committee secretary asked Ms L Makhubele-Mashele (ANC) to assume the position of committee chairperson as directed by committee members.

Ms Makhubele-Mashele thanked ANC members and members of the committee for electing her as Acting Chairperson and welcomed the Director General and his delegation from the Department of Tourism. She highlighted the good working relationship that had been maintained by members of the committee and the Department of Tourism, and expressed the commitment of the Committee in holding the Department accountable for the betterment of the community and South Africa at large.

Briefing by Department of Tourism on 2nd and 3rd Quarter Performance 2017/18
Mr Victor Tharage, Director General, Department of Tourism, sent in apologies from the Minister of Tourism, Mr Derek Hanekom and his deputy Ms Elizabeth Thabethe who were attending a cabinet meeting.

The Director General began with an overview of the overall performance of the sector indicating an improvement in the number of tourists by 2.4% with a total of 10.3 million tourists visiting the country. He attributed this growth to some policy aspects such as the waiver of visas for Russian citizens which saw a 51% increase in the number of Russian visitors. He however noted that there was room for improvement as there was a decline of 2.8% in the number of visitors from Africa because of changes in airline route connectivity and price hikes. There was also an increase in the number of cancellations which were mostly related to incidents of crime and drought which had been reported in the tourists’ respective countries. In terms of meeting its targets, the Department had achieved 89% of its targets by the end of the 2nd quarter and 79% by the end of the 3rd quarter. The failure of service providers to deliver was by far the greatest challenge faced by the department in meeting its targets.

Ms Aneme Malan, Deputy Director General: Tourism Research Policy and International Relations, DoT, noted that her team had achieved all its targets for the 2nd quarter and had only one outstanding target at the end of the 3rd quarter, relating to the training of youth as data capturers for the National Tourism Information and Monitoring System (NTIMS). Her division had published two tourism policy bulletins in the 2nd quarter and developed a policy position on the implications of sharing the economy for the accommodation subsector. The Department had also developed four reports to monitor and evaluate tourism projects namely the State of Tourism Report, the Evaluation Report on Food Safety Programme, the Evaluation Report on Tourism Incentive Programme and the 2016/17 National Tourism Sector Strategy implementation report (NTSS). She further noted that the Department was on track with its plans to host the 2018/19 BRICS summit and the Indian Ocean Rim Association (IORA) meeting, as stakeholder consultations had been finalised.

Ms Shamilla Chettier, Deputy Director General: Destination and Development, DoT, briefed the Committee on the developments in her division, highlighting that they had only one outstanding target at the end of quarter two relating to the Indi-Atlantic route. This was because of delayed assessments in demand and supply but was positive that the target would be achieved by the end of the financial year. In the 3rd quarter, her division had planned to upgrade 25 beaches to Blue Flag status but encountered delays in contracting which had currently been resolved, and would therefore achieve this target by the end of the financial year. On the creation of full-time equivalent jobs, the department had exceeded their target in the 3rd quarter by creating 902 jobs as opposed to the targeted 771 jobs, further stating that the Department was on track to meet their annual target of creating 3 085 full time equivalent jobs.

Ms Morongoe Ramphele, Deputy Director General,:Tourism Sector Support Services, DoT, reported that out of the 29 targets set by her division in the 2nd quarter, only two were not achieved while another two had not been achieved but significant work had been done. Among those not achieved were the conducting of surveys on the implementation of the amended tourism sector Broad-Based Black Economic Empowerment (B-BBEE) code, and the training of tourist guides at World Heritage Sites (WHS), which were largely due to the failure of service providers. The department had also targeted to provide support to 400 Small, Medium and Micro-sized Enterprises (SMME’s) on training and development but was able to support 321 leaving out 79 SMME’s. In the 3rd quarter, the Department did not conduct three information workshops because it lacked capacity as a result of restructuring. The Department had however established a new incubator within the financial year and supported five Community Tourism enterprises to enter the tourism value chain. To reduce the problem of fraudulent tour guiding, the Department was looking to upgrade the security features on the tourist guides’ identification badges as some of the complaints raised by tourists related to fraudulent marketing, theft within hotels and poor service delivery. The Department was also engaged in a local government tourism induction programme for potential rural tourism in eight municipalities and was on track in training youth for the National Cleaner Production Centre of South Africa.

Ms Lulama Duma, Deputy Director General: Corporate Management, DoT, highlighted that her team had met 82% of its targets in the 2nd quarter and 75% in the 3rd quarter. The inability of her division to meet its targets was largely because of an increase in the Department’s vacancy rate in the second quarter after the restructuring process. She however noted that corrective measures had been taken through an internal recruitment drive and the working of overtime by human resource staff which saw major improvements in the vacancy rate at the end of the 3rd quarter. The Department had surpassed its targets in both quarters on the representation of women at the Senior Management Service level, the number of people with disabilities and black representation with 50%, 3% and 91.5% respectively at the end of the 3rd quarter. The Department was however not going to be able to submit the amendments to the Tourism Act to Parliament within the financial year because of delays in reviewing policies that related to the sharing economy and professionalising tour guiding.

Mr Ralph Ackermann, Chief Financial Officer, DoT, reported on the Department’s financial position indicating that it had spent 73% of its budget by the end of 31 December 2017. In terms of expenditure as per percentage of budget, 79% had been spent on administration, 85% on tourism policy and planning, 43% on destination development and 63% on enterprise and visitor support services. The Department’s spending had also increased in January and February as it was ‘chasing expenditure’ with R580 million to spend before the end of the financial year. The department is expected to overspend on the compensation of employees by approximately R12 million and had already asked treasury for approval of the same. By the end of March, the Department had estimated that it would have spent 98% of its budget.

Mr Tharage ended the presentation by saying that the Department was on track in achieving its 77 targets for the year, with the exception of the Tourism Amendment Bill and the National Tourism Information Gateway which would allow ports of entry to profile the whole country and not just the locality. He further noted that the Department had reduced the number of employees from 648 to 508 but was still facing challenges with the compensation of employees.

Ms P Adams (ANC) asked how the Department was engaging the ports of entry in profiling not only their provinces or cities but the whole of South Africa. She was particular about the wording of logos used in marketing tourist destinations as in the case of Cape Town, which had been marketed as a destination in the Western Cape. How was the Department influencing the marketing of Cape Town as a destination in South Africa and not just the Western Cape? What was the outcome of this engagement? On the compensation of employees, what had led to overspending and what did ‘unskilled’ labour mean? Had the Department budgeted to skill them? Why was the public not involved in the amendments to the Tourism Act and how can quarter three data still be preliminary when the fourth quarter was almost done? On the representation of persons with disabilities which the Department had surpassed in both quarters, she wondered whether it was because it had set itself a low target and urged it to strive for 5% representation. She raised concerns on the overtime work being done by human resource staff to reduce the Department’s vacancy rate, emphasising that it should be within the confines of labour laws. What strategic risks had the Department moved to the operational risk register and what were some of the proposals and recommendations made by the Risk Management Committee on the same? For the training programmes conducted by the Department, were the service providers giving certificates upon completion? How did the Department measure its local government induction programmes and was there a follow up after induction? What was the selection criteria for the five Community Tourism Enterprises that were supported to enter the tourism value chain and how did the Department select sites for the incubator programme besides seeking information from the province? Did the province have statistics to inform their decision?

Ms Xego expressed that the Department’s performance in the 2nd and 3rd quarter was generally not bad and it was also not bad at sharing information and maintaining a good working relationship with the Portfolio Committee. She however asked what the Department meant when it referred to one of the programmes as ‘not achieved – intervention required’ specifically, from whom the intervention was needed. Was it within the Department or Parliament? To reduce the number of cancellations, how was the Department engaging other countries and provinces about the drought? And for service providers that failed to deliver, what consequences had the Department put in place to reduce this occurrence? She expressed worry on the deployment of resources amongst provinces, calling for fairness in the distribution of resources and expected the Department to talk about all rural provinces when referring to rural tourism. As a solution to the challenge of finding unemployed graduates, she recommended that the Department maintain its own database for unemployed persons in addition to that of the Department of Labour. For Blue Flag beaches, was the Department working with the Department of Transport to avoid duplication and was there a programme in place for beaches to maintain their Blue Flag status? Concern was raised on the support the Department was giving to SMME’s, further urging them to be national in thinking and in the deployment of resources.

Mr Bekwa appreciated the presentation from the Department stating that it was comprehensive and covered most areas from all quarters. He however raised concerns on how the Department was planning to create employment opportunities for the people on the ground as they needed to be included in transforming the economy. It was important to see more of the department’s footprint at the constituency level so as to uplift the people on the ground, in accordance with the Freedom Charter.

Ms E Masehela (ANC) raised an issue on the training of data capturers that did not take place in 101 municipalities out of the 257 planned because the Department could not find unemployed youth. This was difficult to understand because there were many youth in municipalities that were unemployed. This situation arose probably due to a lack of information or awareness altogether. Information was sought on the list of municipalities that were not covered so that they could be informed of these training programmes. She however commended the Department on this training initiative and asked what Ms Ramphele meant when she mentioned ‘not achieved; significant work done’ during sections of her presentation on the tourism service sector.

The Acting Chairperson asked why 79 enterprises did not receive training and development as indicated on slide 38, and what future plans the Department had to ensure that all targeted enterprises were trained to avoid disempowering them. What challenges was the department also referring to on their planned induction workshop to prevent them from occurring in the future? On matters pertaining to expenditure, she raised concerns about the Department's plan to ‘chase expenditure’ citing it as a concern for fiscal dumping. This was particularly due to the Department having spent 73% of its budget by the end of the 3rd quarter. Could the Department enlighten the Committee on its planned spend for the remaining funds and how was the it engaging Treasury in addressing the shortfall it was facing in the compensation of employees? Clarification was also sought on the success of the incubator programme to inform members on how the hidden gems, targeted by the Department, had been exposed to the world of tourism which could also serve as an indicator of how many others can be brought into the same space. On the issue of the tourism projects, the she wanted to know why the Department had added seven additional projects which had not been planned for because they appeared to have overachieved on projects but had not met their targets on TIP’s. What was the nature of these projects? How were they sourced and what was the criteria behind the selection?

Mr Tharage replied that the Department’s labour practices were organised and within technical guidelines on matters relating to overtime work. The risks identified by the Department included: the Department not being able to meet its transformation targets, the delivery of infrastructure projects, issues relating to monopoly and collusive behaviour and the impact of technological developments. Certificates were indeed given to participants that attended training under The Cleaner Production Centre and the reason the public was not involved for comments when amending the Tourism Act was because the Department had a very intense consultative process with experts from Silicon Valley especially on the issue of tourist guides and the sharing economy. He also informed the Committee that the Department currently had a draft bill which was undergoing review by state law advisors and the Department of Performance Monitoring and Evaluation.

The Department defended its position as the only Department with a greater representation of persons with disabilities saying that it had surpassed both its target and that of the government which had been set at 3% and 2% respectively.

The Director-General responded to claims of fiscal dumping saying that the Department was limited to the amount of information it could share with the Committee because of the technical guidelines outlined in preparing of reports, but a closer look into the other projects the Department was involved in would further illustrate how it was spending its funds. He gave an example of the energy saving programme with Robben Island that had been successful in saving just under two million in diesel and added that it was not feasible for projects to be planned and implemented within the same year because of the rigorous negotiations involved between entities. On the question of the success of the hidden gems raised by the Chairperson, the programme was considered to be successful but required a lot of time for businesses to become sustainable, especially those working to target markets outside of South Africa. In response to Mr S Bekwa’s question on including people on the ground for economic transformation, the Department had involved people in their projects as in the Executive Development Programme for Women where it was exposing women to the actual business of tourism. On the issue of Blue Flag Beaches, the Department understood that beaches were a mandate of the municipality and that their role was to assist, while further noting that the programme had been working well so far.

Ms Ramphele said that the Department had data showing the number of applications received, the number of those trained and the number of those selected to go for the trade shows per province, which it would circulate to the committee for their own assessment. On the issue of selecting incubators, she responded that the Department conducted feasibility studies to inform their decision and that the future plan was to have an incubator on tour operators that would not be physically placed but would focus on all tour operators within the country. The incubators had an impact on SMME’s by making it possible for the department to draw partners from banks and the South African Institute of Chartered Accountants (SAICA), which were willing to give SMME’s information on the financial and compliance issues involved with their trade. The Department could not meet its targets on local government capacity building because of its partners who would shift dates forward thereby causing delays. In response to Ms Masehela’s question on what the Department meant by ‘not achieved; significant work done’, she explained that it was a performance assessment tool where performance above 50% signified that the target had not been achieved but some work had been done and was therefore easier to achieve. The five Community Tourism Enterprises that were supported to enter the tourism value chain were selected by looking at the number of tourists that visited the community.

The Chairperson, in the interest of time, asked the Department to furnish the Committee with a written report on questions that had lengthy responses by Friday, 2 March, to allow for distribution to members by Monday the 5th of May.

On the maintenance of Blue Flag beaches, Ms Chettier said that there was a Green Coast Programme in place that sought to help potential beaches become Blue Flag Beaches and helped to reinstate those that had lost their status because of poor maintenance of infrastructure or cleanliness. The challenge of maintaining Blue Flag Status however rested with the municipalities which required municipalities to take care of the beaches post attainment of status. On the seven additional projects added by the department that facilitated the creation of full-time equivalent jobs as raised by the Chairperson, she explained that it was not properly written in the presentation as they had initially planned for the seven projects within the year.

While responding to Ms Adams question on who unskilled workers were, Ms Duma said that unskilled workers referred to interns who were mostly unemployed youth that did not have any skills but the department was building their skill by giving them training. On the target of persons with disabilities, she pointed out that the Department had exceeded its target and that going forward it would be something to look at. The issue of overtime work by human resources was indeed a concern but only occurred in the 2nd quarter and was not an ongoing problem.

Ms Malan responded to the question of training not taking place in 101 municipalities saying that it was difficult to find people that met the minimum requirements. The criteria for selection was unemployed graduates and not unemployed youth, South African Citizens and persons between the age of 18 and 35. This problem had however been solved as the Department had finalized recruitment at the end of February and would have to go back to the department’s records to confirm the distribution amongst municipalities.

Mr Ackermann reiterated that the Department was not involved in fiscal dumping. He explained that once a service had been rendered or goods had been delivered, he would fasten the process of recording invoices onto the system so that payments could be processed. On compensation of employees, the Department was aware of its budget but the limit set by Treasury was already too low. The department had already addressed their concern with treasury and were hoping to be granted a higher limit so that the problem can be solved in the coming year.

On Ms Xego’s question concerning how the Department had engaged other countries and departments about the drought, Mr Tharage said that the Department through South African Tourism (SAT) had sent the message out to all their core markets and will be able to evaluate the impact of these undertakings in the coming season. To further emphasise the role of Treasury in assisting the Department to move forward, he put it forth to the Committee that it was necessary for treasury to take additional measures to prevent the department from remaining in the same space, even though they were mindful as a Department in their spending.

The Chairperson thanked everyone for being part of the meeting and mentioned that the Committee would be meeting SAT on Wednesday 7th March 2018.

Outstanding Committee Agenda
Revised Draft Committee Programme for First Term, 2018.
Draft Committee minutes.
The meeting was adjourned.


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