Department of Environmental Affairs Annual Report, National Treasury & AGSA input; DEA 2018/19 Annual Performance Plan; with Minister

Environment, Forestry and Fisheries

27 March 2018
Chairperson: Mr M Mapulane (ANC)
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Meeting Summary

The Department of Environmental Affairs (DEA) told the Committee it intended to contribute to the priorities outlined in the State of the Nation Address (SONA), such as job creation, with a special focus on young people, education, socio-economic transformation involving small businesses, cooperatives and township enterprises, and good governance. It aimed to create 75 043 work opportunities through the implementation of the government’s Expanded Public Works Programme (EPWP) for the environment sector, to create and maintain 1 000 jobs in the waste tyre recycling programme, and to support 207 small, medium and micro enterprises (SMMEs) in the sector. In its service delivery improvement programme, its critical service standards included dealing with fraud and corruption allegations within certain time frames, and ensuring that legitimate invoices from suppliers were paid within the prescribed 30 days.

Arising from the late tabling of the Department’s annual report and financial statements for 2016/2017, the Accountant General’s office pointed out that the DEA was responsible for ensuring that proper classification and correct accounting of its expenditure was adhered to. This would require the reclassification of several programmes so as not to delay the next audit by the Auditor General of South Africa (AGSA). In discussion, it was determined that it would be ideal for the DEA to present its annual performance plan (APP) before the commencement of the new financial year. The Committee approved the plan in accordance with the allocation which Treasury had made.

The Chairperson insisted that the inclusion of baseline information was vital. There was a considerable variation in the figures provided for the diversion of waste tyres as part of the DEA’s recycling programmes. There was confusion as to whether the Committee was being provided with targets or actual performance figures, and there were indications the tyre recycling project was a failure. The DEA confirmed it would respond to the Committee on the baseline in writing.

Members referred to the Department’s training programmes, and asked how many graduates were being absorbed into the DEA. How did it monitor the impact of its interventions at the local government level? How much was it paying annually for Environment House in Pretoria? What progress had been made in combining mining, agriculture and water under a “One Environment” system? They also wanted detailed information on how many jobs were being created through the DEA’s involvement in the Expanded Public Works Programme (EPWP).

Meeting report

Department of Environmental Affairs: Annual Performance Plan

Ms Nosipho Ngcaba, Director-General: Department of Environmental Affairs (DEA), said there were certain adjustments to the 2018/19 annual performance plan (APP). Since environment was a concurrent function between the national and provincial levels of government, the APP dealt with how these spheres of government organised themselves, and the environmental structure going forward. Some of the targets were shared between the national and province governments. There were areas where there were concurrent functions -- for example, in terms of air quality and waste management. In these areas, the national and provincial levels provided guidance in terms of legislation and implementation, funding and support.

Ms Limpho Makotoko, Chief Operating Officer (COO): DEA said the APP was aligned with the annual strategic plan of the DEA. The goals of the DEA were to optimise the economic contributions of the sector, to ensure that ecological/environmental integrity were safeguarded and enhanced, and that The three priority areas of DEA were to create regulatory certainty, to focus on ecosystem services (marine and terrestrial), and the industrialisation of the economic sector.

The DEA was aligned with, and intended to contribute to, the priorities outlined in the State of the Nation Address (SONA), such as job creation (with a special focus on young people), education, socio-economic transformation (small business, co-ops, township enterprises) and good governance.

To respond to the job creation priority, the DEA aimed to create 75 043 work opportunities through the implementation of the government’s Expanded Public Works Programme (EPWP) for the environment sector, to create and maintain 1 000 jobs in the waste tyre recycling programme, and to support 207 small, medium and micro enterprises (SMMEs) in the sector.

Its response in education, with 100 young people on its annual internship programme, involved the implementation of the DEA’s internship and environment leadership programmes. 100 young South Africans would be recruited to participate in the environment learnership programme, and 100 teachers in various provinces would receive training in different aspects of environmental management.

From the perspective of socio-economic transformation, the DEA would implement biodiversity economy initiatives and other Departmental programmes, train 200 entrepreneurs in the biodiversity sector; provide business opportunities and use the services of over 2 400 SMMEs in the implementation of various programmes. 65% of budgets for goods and services would be spent on affirmative procurement and to develop and source funding/investment for 10 business plans/ proposals for biodiversity economy entrants.

The DEA would also implement improved governance and oversight mechanisms.

Ms Maktoko proceeded to describe the DEA’s programmes’ strategic objectives, performance indicators and targets for 2018/19.

Programme One: Administration

Programme 1’s indicators fell under 10 strategic objectives. These were equitable and sound corporate governance; value focused-funding and resourcing (leveraged public and private sector investments);an adequate, appropriately skilled, transformed and diverse workforce; an efficient and effective information technology service; an improved profile, support and enhanced capacity for the environment sector; effective partnerships, cooperative governance and local government support; a strengthened knowledge, science and policy interface; effective knowledge and information management for the sector; and enhanced international cooperation supportive of South Africa’s environmental/sustainable development priorities.

Among the key indicators and corresponding 2018/19 targets were a percentage expenditure level of 98%; the financial value of resources raised from international donors to support SA and African environment programmes (US$ 20 million raised); and the number of environmental capacity building programmes conducted, with two interventions resulting in 100 teachers being trained and 100 young people recruited for environment learnerships.

Programme Two: Legal, Authorisations, Compliance and Enforcement

The targets of Programme 2’s indicators fell under two strategic objectives. These were a coherent and aligned multi-sector regulatory system and decision-support across government (as reflected in the policy initiatives in the strategic plan); and the management of threats to environmental quality and integrity.

Among the key indicators and corresponding 2018/19 targets were the percentage of administrative enforcement actions resulting in compliance (75%); the number of administrative enforcement notices issued for non-compliance with environmental legislation (220); and the number of criminal cases finalised and dockets handed over to the National Prosecuting Authority (NPA) (44).

Programme Three: Oceans and Coasts

Ms Makotoko said the targets of Programme 3’s indicators fell under four strategic objectives. These were: threats to environmental quality and integrity managed; strengthened knowledge, science and policy interface; ecosystems conserved, managed and sustainably used; and enhanced sector monitoring and evaluation.

Among the key indicators and corresponding 2018/19 targets were the percentage of Exclusive Economic Zone (EEZs) under Marine Protected Areas (18 MPAs declared); the Oceans and Coasts monitoring and evaluation programme developed and implemented in 10 priority areas in four coastal provinces, and reports compiled.

Programme Four: Climate Change and Air Quality

The targets of Programme 4’s indicators fell under three strategic objectives, which were a coherent and aligned multi-sector regulatory system and decision support across government; negative impacts on health and wellbeing minimised; and enhanced sector monitoring and evaluation.

Among the key indicators and corresponding 2018/19 targets were the number of sector adaptation plans finalised and implemented.

Programme Five: Biodiversity and Conservation

Ms Makotoko outlined the targets of Programme 5’s indicators, which fall under 5 strategic objectives. These were a coherent and aligned multi-sector regulatory system and decision support across government; ecosystems conserved, managed and sustainably used; improved access, fair and equitable sharing of benefits; and strengthened knowledge, science and policy interface.

Among the key indicators and corresponding 2018/19 targets, were the number of legislative tools to ensure conservation and sustainable use of biodiversity developed and implemented.

Programme Six: Environmental Programmes

The targets of Programme 6’s indicators, which fell under four strategic objectives, included improved socio-economic benefits; ecosystems conserved, managed and sustainably used; threats to environmental quality and integrity managed; and enhanced sector monitoring and evaluation.  

Among the key indicators and corresponding 2018/19 targets were the number of full-time equivalents (FTEs) created (39 991); the number of work opportunities created (75 043, with women accounting for 41 274, or 55%); and 48 778 youths benefiting from the implementation of Environmental programmes (65% of the work opportunities created).

Programme Seven: Chemicals and Waste Management

The targets of Programme 7’s indicators fell under 10 strategic objectives. These were a coherent and aligned multi-sector regulatory system and decision support across government; threats to environmental quality and integrity managed; negative impacts on health and wellbeing minimised; enhanced sector monitoring and evaluation; and growth in industries that depend on environmental services. A 19% waste tyre diversion rate was the baseline for 2016/17.

Among the key indicators and corresponding 2018/19 targets were the number of environmental performance assessments conducted at waste management facilities (25 environmental performance assessments conducted); the percentage of waste tyres diverted from landfill sites (50% of waste tyres); the number of micro-collectors and waste pickers benefiting from recycling programmes (400); and the number of jobs created in the sector (1 000).

2018/19 Service Delivery Improvement Programme

Ms Makotoko referred the Committee to the DEA’s service delivery improvement programme. These were the critical service standards which the DEA had to comply with. The first standards were around dealing with fraud and corruption allegations within certain timeframes; ensuring that legitimate invoices from suppliers were paid within the prescribed time frame of 30 days; processing Presidential Hotline queries; responding to Parliamentary questions; all DEA complaints and incidents responded to through compliance and/or enforcement action; and national environmental impact management applications being finalised within the stipulated time frames per year, subject to the number of applications received.

The service delivery improvement programme assessed departmental compliance to the timeframes that were set in the different pieces of legislation and the government standards that had been set.

National Treasury on DEA adjusted appropriation

Ms Zanele Mxunyelwa, Acting Accountant-General: National Treasury (NT), said the DAE had received an adjusted appropriation of R6.4 billion for 2016/17 financial year, of which R4 billion had been budgeted for as ‘transfer payments.’

NT had conducted extensive consultation after the Auditor General of South Africa (AGSA) responded to the NT position released in November 2017. NT had resolved that there were material differences to be considered, in addition to the previous reviews considered at the time of the issuing of the first position. The key role players were the AGSA teams (technical and legal), the Provincial Accountants-General and National Treasury. It was necessary for the cases of the DEA to be re-considered and be dealt with individually, as the classification was subjective and complex. Furthermore, there were eight projects of the DAE that had been subjected to a further review at the request of the AGSA, the outcomes of which would be presented at this meeting.

While the DEA was responsible for ensuring that proper classification and correct accounting of the Department’s expenditure was adhered to, AGSA had the responsibility to express an opinion on the correctness of the classification of the expenditure

The challenges that attended distinguishing between transfers and subsidies versus goods and services or capital assets covered five areas of concern:

  • Interpreting different categories was subjective and complex (each case needed to be dealt individually);
  • It could result in the loss of identity of state assets and non-maintenance;
  • The non-recognition of service delivery initiatives of government;
  • It highlighted concerns with respect to transparency and accountability in the use of state financial resources; and
  • Classification was incorrectly defined by the mode of delivery of service or goods.

 

The legal frameworks that were relevant to classification were the Economic Reporting Framework (2009), the Standard Chart of Accounts (SCOA), Internationally Recognised Principles of Government Finance Statistics, and the modified cash standards of reporting. In the revised classification, consideration of the following major elements was required for correct classification:

  1. Funding of operations;
  2. The Department’s Key Performance Indicators;
  3. Responsibility to deliver; and
  4. Payment of management fees.

 

Ms Mxunyelwa said that in terms of National Environmental Management Act (NEMA), the DEA may take reasonable measures to remedy a situation where there was significant pollution or degradation of the environment. It had established various programmes under the auspices of the Expanded Public Works Programme (EPWP) initiative, which was used as a vehicle for the delivery of the services by the DAE to ensure that, while delivering on its mandate, there was employment creation, or a reduction in the levels of unemployment. The EPWP utilised a labour-intensive approach to the delivery of services. However, the use of EPWP initiatives did not influence the accounting classification of the expenditure incurred in the delivery of such goods or services.

She concluded that the NT would issue a revised position on the classification of the specific DEA expenditure reported as transfers in the 2016/2017 financial report

Classification of DEA expenditure related to EPWP

Ms Kakanyo Mosikare, Director: National Treasury, echoing Ms Mxunyelwa, said NT had gone through a process of identifying the correct classification. The actual difference was not based on the principal agent arrangement that existed, but concerned classification. In determining the correct classification, the NT had interrogated the various frameworks which guided classification. It had looked at the economic reporting format issued in September 2009, which the national and provincial Departments should be using in classifying transfers and subsidies versus goods and services or capital assets. There had been consultations were with other colleagues within the Office of the Accountant-General, the Budget Office, and the AGSA.

Eight scenarios had been studied, five of which had been revised. As the Acting Accountant-General had highlighted, NT needed to look at whether the DEA was being funded, or was funding the other entity for its operations, looking at whether the other entity was actually responsible for the activities and, in so doing, look at the DEA’s performance indicators. If the DEA had those performance indicators in its APP, that made the DEA responsible for that activity, and it should be reporting on it. If the Department was paying the other entity a management fee, it was another indicator that the other entity would not be reporting as their own services, or tangible assets. Therefore, the DEA should be reporting these services or capital assets.   

Ms Mosikare proceeded to outline the revised classifications of payments. The following programmes’ classifications of payments had been revised:

  • Programme No. 1: ‘Working on Fire,’ where the contracted entity was the Fire Protection Associations (FPA);
  • Programme No. 4: ‘Working for Water’ and ‘Working for Ecosystems,’ where the contracted entity was the Independent Development Trust (IDT);
  • Programme No. 5: ‘Working for Water,’ ‘Working for Ecosystems’ and ‘Working for Forests,’ where the contracted entity was the Gamtoos Irrigation Board;
  • Programme 6: ‘Working for Waste,’ where the contracted entity was Sisa Waste Management CC; and the Environmental Protection and Infrastructure Programme (EPIP), where the contracted entity was SANParks.

 

In each case, the initial classification of payments as ‘transfers’ had been reclassified as ‘goods and services and, in the case of the acquisition of capital assets, ‘payments for capital assets.’ The reasons for the revised classification were that the Department was not funding operations but was responsible for the activity; the activity was part of the KPI of the Department; and management fees had been paid to the contracted entity.

On the basis of this analysis, NT would meet with the Accounting Officer so that the matter could be dealt with in depth, and the NT could issue a formal position paper. This position paper would be given to the parties to ensure finality on the issue so that in future there would not be delays in the audit. When there were issues with the AGSA, parties were encouraged to approach the NT for further guidance so as to avoid further delays.

The Chairperson commented that the presentation had been very good, and the parties could see light at the end of the tunnel. This represented progress, unlike in the past. It had been clearly stated that the DEA had to look at the individual cases, look at the classification, develop a position, and then the AGSA could audit on that basis. This was quite a significant milestone. The question was, when would the position paper be finalised? The auditors would like an exhaustive list of all the issues.

Ms Mxunyelwa responded that the DEA and AGSA would have to reach agreement and consult on the classification. The position paper should be complete in the first week of April, which could then be forwarded to AGSA so as not to delay the next audit.  

AGSA’s response

Ms Alice Muller, Corporate Executive: AGSA, registered the gratitude of National Treasury in this process. It started in 2013/14, when the medium term expenditure framework (MTEF) was introduced. There had already been uncertainty at the DEA as to how it should classify. For the first time, there was clarity in this regard. There was a need to finalise the position paper. The DEA would need to make the necessary changes to the financial statements which they needed to submit. The uncertainty puts pressure on the audit process.

Another negative had been the tense relationship between AGSA and the DEA. Now that there was clarity, however, it was possible to engage collectively on these issues. A milestone had been reached. She apologised to the Director-General and the Minister because AGSA had tried to meet with them, but awareness of this meeting had been obtained only during Tuesday of last week. There had been no opportunity to schedule a convenient time for such a meeting. However, going forward, there would be a collective engagement between the various stakeholders -- the DEA, AGSA and National Treasury. Appreciation was extended to the Committee for providing a space in which to resolve the matter.

The Chairperson thanked AGSA and confirmed that the Committee had been trying for a long time to get a presentation from AGSA. The Committee was happy that the matter had been finalised. While the DEA may not agree with everything which had been presented, the criteria had been set.

DEA’s response

Ms Ngcaba suggested that the presentation which had been prepared for today should not be presented.

The Chairperson confirmed that when its presentation was being prepared, DEA did not have the benefit of the information just provided. Would the DEA prefer to proceed with the presentation or wait to engage with the other stakeholders so that when it returned, it would have received the position paper and was at one with AGSA and National Treasury?

Ms Ngcaba agreed that the DEA’s presentation should not be presented. Now there was better guidance. There were one or two contradictions. Referring to NT’s analysis of arrangements, she said the “Working on Fire’ programme had been procured through a tender process. In terms of accounting, the DEA would address AGSA’s recommendations. There was an inconsistency, however, that was subject to further interpretation.

Referring to the ‘Working for Ecosystems, Working on Wetlands’ programmes, another important consideration should be who owned the land and the assets versus who was implementing the clearing operations. This was a matter which would cause a contradiction when the IDT entered the picture. In the ‘Working for Water, Working for Ecosystems’ programmes, the IDT was not clearing DEA land, but private and public land. In the end, the maintenance was undertaken by the landowner, not DEA.

Similarly, in reference to the Working for Water, Working for Ecosystems, and Working for Forests’ Programmes, the Gamtoos Irrigation Board, a public entity, had responsibility in terms of the catchment management areas, which encompassed both private and public land. Since the land was not owned by the DEA, it was not in charge of maintenance. This, again, was an important differentiation which had to be looked at by Treasury.

Regarding the ‘Working for Waste’ programme (No. 6), environment was a concurrent function and landfill sites were owned by municipalities -- that is, local government -- not by the DEA. Since municipalities therefore had the responsibility for implementation in this regard, it was important the given recommendations were relooked into.

Concerning the EPIP, SANParks was implementing infrastructure in their property. They were paid for service in terms of the management fee. In the allocation of funds, however, SANParks, as a public entity, remained responsible. This may have to be looked into by National Treasury.

Ms Edna Molewa, Minister of Environmental Affairs, welcomed the opportunity to resolve the matter under discussion. It would have been ideal to meet with the other stakeholders before today’s meeting, but unfortunately time did not permit it. The issues that had been raised by the Director-General could preferably be thrashed out in further discussion with the stakeholders and in the finalisation of the position paper, instead of in the context of the Committee meeting.

The DEA was aware that it had an obligation to account and it had always taken this responsibility seriously. It had learned important lessons in this process, including that dialogue was important when such problems were encountered. The DEA was happy that the Acting Accountant-General had come on board in this matter. Many other government departments were in a similar situation. It was proposed that this matter be discussed at Cabinet level, so that Government as a whole was better equipped to account. The Portfolio Committee needed to be thanked for the manner in which it had handled the matter. The provincial MEC of Environmental Affairs in the Western Cape had raised the same matter. It should also be dealt with at provincial level.

Discussion

The Chairperson registered his concern at the response of the Director-General, as it seemed to suggest that there was still some contestation, especially in so far as the indicated contradictions were concerned. It was not clear whether today’s meeting represented a breakthrough. The Director-General had dampened what had appeared to be a very good mood. It had seemed that the stakeholders were at a point where there was progress. Criteria had been established and there would be compliance with them.

Ms Mxunyelwa indicated that there was no problem, and that she understood where the Director-General was coming from. Based on the relevant legal provisions, it would be clarified to the Director-General why the recommendations were still valid.

Minister Molewa said that the DEA and the Accountant-General have not met yet. Things of this nature were in need of clarification. In the end, when the position paper was finalised, it would be one where all were in agreement.

The Chairperson agreed.

Mr R Purdon (DA) thanked the presenter for the comprehensive briefing. Under Programme No. 1, who were the Fire Protection Associations (FFA) referred to in the ‘analysis of arrangements,’ and how did they tie into local municipalities? Further, who were the IDT and how did they tie in with local and district municipalities?

Dr Z Luyenge (ANC) appreciated the progress that had been made between the various stakeholders as to the way forward. To reach an amicable method of working with each other would require an interface, and an interface also required a mutual understanding among the participants. Parties could not only meet on formal occasions. If informal meetings where information-sharing and updates occurred did not take, place, it would create problems.

Mr Makhubele appreciated the forum for resolving the matter. It was important for the various stakeholders to interact and collectively report back to Parliament. If there were still areas of disagreement, the Committee would hear them at that point. Although the Committee had today received a one-sided report, there had nevertheless been progress in determining a way forward.

The Chairperson requested that the answer to Mr Purdon’s questions be postponed for a separate engagement. They did not necessarily deal with the accounting. The next colloquium would deal with environmental programmes. Comprehensive submissions would be received on all the entities that the DEA was using for implementation. The Committee could then engage with the questions which Mr Purdon had raised.   

The Chairperson thanked all the presenters. The resolution of this issue had been on the Committee’s agenda as it had not yet considered the annual report of the DEA. It had not yet been tabled. It was meant to have been dealt with last year, but because of this matter it was still outstanding. The Committee had been concerned that this issue had to be resolved. It was important to study the report before the APP could be given the green light. After the recess, the DEA had to prepare its financial statements. Another meeting would have to be organised to ensure the position paper had been finalised.

DEA’s MTEF Allocations

Ms Esther Makau, Chief Financial Officer (CFO): DEA, referred to the total expected allocations for the Department’s seven programmes for the MTEF period covering the 2018/19, 2019/20, and 2020/21 financial years. She highlighted that while the compensation of employees had increased by 5.4% in 2017/18 compared to the previous year, the projected increase for 2018/19 was 9.4%. The projected allocation for the EPWP for the next three financial years was R2. 999 bn, R3.233 bn and R3.410 bn respectively.

Ms Makau provided the Committee with details of the DEA’s funded priorities.

The key administration expenditure items in 2018/19 were for office accommodation (R78 million) and the unitary payment for the DEA’s Environment House in Pretoria (R147.4 million). For Oceans and Coasts, the allocation for the coming financial year was R492 million, while for biodiversity and conservation, the allocation amounted to R773 million. Chemicals and waste management had attracted a budget of R550 million.

Discussion

Ms H Nyambi (ANC) said the Department’s APP addressed the issue of young graduates, and asked if these graduates would be absorbed into the workforce of the DEA. She wanted to know how the DEA would ensure the training of teachers and learners would result in the desired goals or objectives. How did the DEA monitor and assess the impact of its interventions or programmes? While the local government support strategy was commendable, how did it measure the impact of its support to the local government? How regularly did it do so?

Dr Luyenge commended the drive towards a job creation mechanism, which had been a problem. There needed to be clarity on the number of jobs created by the EPWP. Beneficiation plans had to resonate with where the relevant communities were. Were the funds transferred to local governments monitored to ensure they were used for the purposes intended, as they had their own priorities, apart from the environmental function? Could the DEA specify the cooperatives with which it was engaged, as this would be very helpful when Committee Members carried out their constituency work? In so far as beneficiation was concerned, it was important that the youth had part of the ownership of the various industrial programmes that had been introduced. The DEA was intending to declare 18 marine protected areas (MPAs) in the 2018/19 financial year -- how many did it intend to declare in the 2017/18 financial year? How many government-owned air quality monitoring stations were actually functioning?

Mr Purdon asked the DEA to clarify the yearly payment on the Environment House in Pretoria. Where mention was made in the APP of youth job creation, what constituted ‘young’ people -- under 35 years? Why had foreign money been allocated? Where did most of that money come from? The targets for improved compliance with environmental legislation seemed very low. How did they compare with the previous financial year’s targets? Programme 3 stated that the national Oceans and Coasts water quality monitoring programme had been implemented in 10 priority areas in four coastal provinces -- how were these priority areas identified? Had there been any liaison with the Department of Tourism on the issue of water quality? The 2018/19 target for land under conservation was 13.2% -- by what year did the DEA intend to achieve its aim of 17%?

Ms J Steenkamp (DA) asked for more detail on the DEA’s priority to combine the mining, agriculture and water sectors under the ‘One Environment’ system. In Programme 1, it was specified that the target for 2018/19 was that the financial value of resources raised from international donors to support SA and African environment programmes was $20 million -- which countries had South Africa spoken to, or intended speaking to? Under Programme 7, it was stated that the target for the total number of environmental performance assessments conducted at waste management facilities was 25 -- how many facilities were there in total? The 2018/19 target for the percentage of waste tyres diverted from landfill sites was 50% -- did this include the backlog, or was the figure solely in reference to tyres diverted in 2018/19? The 2018/19 target for the number of micro-collectors and waste pickers benefiting from recycling programmes was 400 -- how many micro-collectors and waste pickers were there in total? Finally, the 2018/19 target for the number of jobs created in the sector was 1 000 -- would these be ‘permanent’ jobs?

Mr Makhubele asked whether the activities and interventions which the Committee were being briefed on concerning the drought were based on the forecasts. Were they scientifically-based? In Programme 1, the 2018/19 target was to spend 98% of the budget. While not endorsing over-spending, it was advisable that the DEA should be working on spending 100% of its total budget.

The Chairperson said that the inclusion of baselines in the APP was vital. Ordinarily, the Committee should have interrogated the annual report of the DEA to look into the performance of the Department and whether what had been set as a plan had been achieved. The Committee had not received the annual report of the previous financial year because of the issues raised in AGSA’s report. The Committee was blank regarding the DEA’s performance of the previous financial year. Today, the Committee had been given the APP, yet there were no baselines, which made it even more difficult. This should be a lesson-learned going forward.

Regarding the baseline on the diversion of waste tyres, the Committee was confused as to what the actual baseline was. The Committee was now being told that it was 19% of all tyres that were captured in South Africa and diverted to landfill sites. On 13 March, the Committee had had an engagement with the Waste Bureau. The baseline which the Committee had been given was different from the 19%, and had been about 56%. The percentage of tyres which gets diverted from the landfill sites had not been in the official presentation, but was something that had come out of the question and answer session. Even on that presentation, the Committee had raised concerns that the previous information that the Committee had received on diversion had been in the region of 70% -- that 70% of tyres manufactured in South Africa and sent to landfill sites were diverted from the sites as a result of the implementation of the Recycling and Economic Development Initiative of SA (Redisa). There had been a decline and variation in the reported baseline. Could the Committee get some clarity on what baseline the Committee was relying on now? What information was correct? If it was indeed 19%, this meant that the Redisa was a monumental flop.

Regarding the allocations, after the position paper of the Accountant-General had been discussed with the DEA, the Committee expected a revised presentation. It was unclear how this would impact on the approved budget. Based on the previous conversation with the Accountant-General and the AG, the allocations would need to be looked at in terms of what constituted goods and services and transfers. As soon as this was done, a follow-up presentation would be needed, based on the revised allocation.

Mr T Hadebe (DA) asked the Minister about the interdict by the National Union of Metalworkers of SA (NUMSA) and Transform SA to stop the signing of the Independent Power Producer (IPP) renewable energy contract. What effect would this have on South Africa’s carbon footprint trajectory and South Africa’s obligations towards the Paris Agreement?

DEA’s response

Minister Molewa said the court case against the Department of Energy, and Eskom in particular, did to some extent have an impact on the DEA’s work. If the case was lost, payment would not necessarily be made to those who were providing the service. Some of the money that was received from international donors contributed to programmes geared towards ‘greening’ South Africa’s energy space and emissions trajectory. Because DEA was an overarching department that did the work of monitoring and ensuring that others implemented, this work would be continued. South Africa had made a commitment internationally. The trajectory had to be met. R200 billion had already been spent on the IPP programme. Subject to verification, energy contributed 81% to 85% of the emissions of South Africa. 82% of the reduction which the DEA had measured so far was coming from wind power. South Africa had to do all in its power to work together towards accomplishing the emissions trajectory, including those who took government to court and the private sector.

However, concerning job creation, the transition to a green economy would give rise to its own issues. The question was, how should South Africa react? There was a need for South Africa to move with international trends, and the government was prepared to do so. The President’s call at the investment summit would, to some extent, deal with these issues. Concerning the interdict, when it was made, the DEA had interacted with the Department of Energy (DOE). It had been decided that any matter affecting South Africa’s emission’s trajectory must be taken into consideration.

Regarding the issue of under reporting, DEA had been submitting reports to the audit body on a quarterly basis. At the end of each year, the DEA collated the data of the four quarters. It was not a replacement for the annual report, but on a quarterly basis data had been available. Concerning the absence of baselines, the CFO would refer the Committee to the baselines, because there were some in the report.

Ms Ngcaba referred to the 13.2% target for land under conservation, and said the 17% target was an international standard set by the Convention on Biological Diversity (CBD). This target had to be met by parties in 2020. Based on South Africa’s nationally-determined capacity, priorities and funding, its own target was 14.2% by 2020. A protected areas strategy had been presented to the Committee, which defined the areas and biomes which were not fully covered by the current system of protected areas. The protected areas had to be properly managed to meet the targets. The DEA had reported on the last quarter of the previous financial year. In that report, the AG had indicated that there were no findings concerning the performance.

At this juncture, when Parliament and the Committee were considering the allocation, the categories would be in line with what the DEA had. The Exempted Micro-Enterprise (EME) had already been signed off by Treasury. It would not be incongruent for the Committee to consider the APP while awaiting the final adjustment, which could be finalised only around July or August.

The Chairperson asked if the allocation would be adjusted.

Ms Ngcaba answered that it was the classification that would be adjusted. After this process, the shift to ‘transfers’ would be approved only in July or August. For the time being, the DEA had to work according to the budget as tabled by the National Treasury.

Lastly, concerning the 2018/19 target for percentage expenditure, which was 98% of the budget, the CFO could explain the aim was not 100%, the reason being mainly that some of the transactions do not go through.

Ms Makotoko responded on the absence of baselines. In the APP, the 2016/17 baseline for the various programmes was given in a separate column, but in the presentation the baseline was not included, as it was a summary. All the relevant information was provided in the table in the APP.

Concerning DEA’s local government support strategy, it was a five year plan which ended in 2018/19. The Department was currently assessing the impact of this strategy. Every year, through monitoring and evaluation, it assessed whether it was able to meet the needs of the municipalities.

With the DEA’s youth learnership programmes, its desire was to absorb all of the learners into the DEA. The challenges that the DEA had regarding matters of compensation made it difficult to absorb them but some had been absorbed while others had been absorbed by the environmental entities.

Minister Molewa added that the DEA did absorb learners in different categories and spheres of government. The overall objective was to ensure that the learners finally got employed. The main objective was also to ensure experiential learning took place. This was a necessary requirement for progressing in their professional lives.

Minister Molewa left the meeting.

Ms Makotoko referred to the engagement on donor funds and where these funds were sourced. The biggest funder, which donated $16 million, was the Global Environment Facility (GEF). The German Fund and the World Heritage Convention were other examples. There was a list which could be provided to the Committee.

Ms Makotoko gave more detail concerning DEA’s priority to overlap with the mining sector, agriculture and water under the ‘One Environment’ system. It had embarked on an environmental legislation nationalisation process, which looked into the gaps and overlaps of the applicable legislation in the sector, involving the DEA and provinces, and the entities. This included gaps with other departments and ensuring that the respective pieces of legislation were rationalised. The Department of Planning, Monitoring and Evaluation (DPME) would assist in this process and take it further.

Finally, in so far as the definition of ‘youth’ was concerned, 35 years was the age limit for youth.

Ms Veronic Steyn, Chief Director: Budget and Financial Management, DEA, said the Department had entered into a Public-Private Partnership (PPP) agreement when it decided to construct the Environment House in Pretoria. The unitary payment would be paid back monthly over a period of 20 to 25 years.

The Chairperson confirmed whether that means was that the R147.4 million would be paid back over 20 years?

Ms Ngcaba answered that, in terms of Treasury regulations for PPPs, the private party funded up front. This was then paid off by the DEA over a period of 20 to 25 years. In this context, the DEA increased the amount that would be paid up front by the DEA so that it reduces the number of years in the longer term. After 20 years, the building would be owned by the DEA. Currently, it was run by the private party. In 20 years, the DEA could decide whether it would run it or whether the private party would continue to do so.

Mr Purdon asked whether the sum that would be paid was R347 million over 20 years?

Ms Ngcaba confirmed this, taking into consideration the interest, payments and VAT that had been worked out.

The Chairperson asked when the building had been constructed.

Ms Ngcaba said that it had been built in 2012, and the DEA had moved in two years later.

The Chairperson asked whether it was not a very steep amount that was being paid.

Ms Ngcaba reminded the Committee that the DEA was leasing, not owning, the building. In the long run, however, the DEA would own the building. The current amount included operating costs, such as water and electricity.

The Chairperson asks whether all the operating costs were covered in the specified amount.

Ms Ngcaba confirmed this.

Mr Mark Gordon, Deputy Director-General: Chemicals and Waste Management, DEA, responded to the concerns raised in relation to the baseline of waste tyres, and indicated that 42% of waste tyres had been diverted in 2015/16. As far as the DEA’s own audit numbers were concerned, this number had subsequently decreased in 2016/17 to 19%. The target for 2018/19 was 50%.

The Chairperson, however, raised a concern that this was not the figure which the Committee had received, unless it had to refer to the record.

Ms Ngcaba clarified that the Waste Bureau had explained what they had handled from October 2017 up until now, and had compared this to what had been in the report of Redisa as of May. The target which had been referred was what the DEA had had in its APP last year. The baseline of the DEA in the APP was 42% in 2015/16. The same baseline had applied to 2016/17. The Bureau had worked out that they were about 30%, so they had projected 35%. The 35% had led to the current budget of R200 million. Redisa had had that diversion rate with R600 million per annum. The current allocation for the Waste Bureau was R348 million for the next year. The aim was to achieve 40%, then to take it closer to 50%, and eventually to 70%, which was included in the amendments which the DEA was proposing. 

The Chairperson pointed out that the Committee had initially received a figure of about 70%. The content advisors would retrieve this information. This programme had been hailed a success because of the diversion rate. In a presentation by Redisa, the presenter had spoken about a 56% diversion of tyres. However, each time the DEA was asked about the diversion rate, a different number was provided. This tendency was confusing the Committee.

Ms Ngcaba confirmed that in the APP document of 2015/16, the baseline was 42%.

THe Chairperson reminded Ms Ngcaba that Redisa had confirmed a 56% diversion rate.

Ms Ngcaba responded that Redisa’s reported figure included exports. Redisa had confirmed that their target was 70%, but that was not what their actual performance was. Their performance was 42% in 2015/16. This was what had been tabled in Parliament. The actual performance in 2016/17 was reported to be 19,2%. The figure of 54% had never been tabled in a formal report.

Mr Gordon explained that the 54% included exports. Redisa never had the permission of the DEA to include the counting of exports into the diversion target. In the current report, what the DEA was reporting was the actual diversion rate. The 19% was derived from the DEA’s own investigations, which excluded exports. The 2017/18 target of 50% was an increase from the 42% of 2015/16.

The Chairperson responded that the Committee would ask the content advisor to retrieve the target and the actual diversion rate that was given at the time the programme was introduced. One of the performance highlights had been the extent to which the programme had managed to divert waste tyres. It was important that there was consistency in the reporting of the targets. The actual could not be influenced by anything other than facts. If the facts keep on changing, the Committee would get confused. The Committee may get a sense that it could not rely on any of the information.

Ms Ngcaba assured the Chairperson that the information had been audited. The DEA’s verification from the performance audit confirmed a lower than anticipated ‘actual performance.’

The Chairperson asked whether Redisa had been lying to the DEA, providing information which the DEA had taken and given to the Committee in Parliament. A report was needed.

Mr Gordon said that sometimes confusion arose between what the target and what the actual was. The DEA had been reporting the actual.

The Chairperson asked whether the DEA thought the Committee would be confused about that distinction. That kind of an assumption could not be made. The Committee knew what a target and what actual performance referred to.

Ms Ngcaba said that the DEA would respond to the Committee on the baseline in writing.

Mr Gordon referred to the 25 environmental performance assessments conducted at waste management facilities, and said the DEA had approved hundreds of waste management facilities over the years. What the DEA did every year was to identify a sector that needed to be audited. Among other things, the number depended on the DEA’s capacity to do, over and above its licensing functions. The performance assessments were performed on facilities that were identified. The DEA did not have the exact number of facilities that had been licensed. This number could be found and provided, however. Assessments were performed on facilities to determine how they were performing.  

Ms Judy Beaumont, Deputy Director-General: Oceans and Coasts, DEA, said there were two parts to the work of selecting priority areas for coastal water monitoring,. The first part involved 15 private projects which had been agreed upon in coastal provinces and municipalities. They were selected on the basis of whether they were solution “hotspots” that may be affecting communities, such as the Swartkops River estuary. It was important to understand what the background solutions were to problems in an area before the DEA started setting actual thresholds for projects. Another important factor was that the selected project was growing industrial development. In the second part the DEA identified specific thresholds. Based on the above thresholds, the DEA could go into consultations with, for example, the Department of Tourism, and see which projects were situated in tourism centres.

Concerning Marine Protected Areas, and what the programmes were last year and what targets were being set this year, 22 marine protected areas had been gazetted in 2016 for public comment. During 2017, there had been negotiations with the Department of Mineral Resources (DMR) and the Petroleum Agency of South Africa (PASA), among others, because there were a number of marine protected areas where there were concerns about the future exploration interests from both a mineral and an oil exploration perspective. In close collaboration with the Department of Agriculture, Forestry and Fisheries (DAFF), the DEA was very close to finalising the draft regulations, which were ready for gazetting, and the 18 MPAs would be presented to Cabinet.

The Chairperson asked whether these regulations addressed the Marine Spatial Planning Bill? Moreover, once the Bill became an Act, would it not interfere with the process?

Ms Beaumont confirmed that this was the case. The Marine Spatial Planning Bill facilitated cooperation among the various stakeholders in the use of the marine area, and collaborative and cooperative decision-making in respect of a particular geographical area. This could involve the various departments -- the DEA, DMR, DAFF, and Department of Tourism -- that had specific interests in a particular geographic area. The first Marine Area Plan would be tabled in Parliament this year under the Marine Spatial Planning Bill. The Marine Protected Areas, however, had been gazetted under the National Environmental Management: Protected Areas (NEMPA) Act.

There had been two questions that pertained to the climate change programme. Regarding the number of government-owned air quality monitoring stations were actually functioning, there were 116 areas that were reported to the South African Air Quality Information System (SAAQIS), and government-owned stations were reporting live to enable the line of reporting. Concerning the planning around the current drought, there were two processes which were related and intersected at the technical and ministerial level. These levels met regularly. The longer-term adaptation planning was planned or based on the most recent updated climate scenarios in South Africa, which were also checked with international climate modelling.

Ms Ngcaba responded on whether the enforcement targets were not too long, and said that the APP dealt with the degree to which administrative enforcement action had resulted in compliance. In 2016, 208 out of 277 (about 75%) administrative enforcement actions had resulted in compliance. The estimate for 2017 was approximately 77%. In terms of the administrative enforcement notices that were issued for non-compliance with the legislation, the 2018/19 target was 220. The targeted number of criminal cases to be finalised and dockets handed over to the NPA were 44, growing from 31 cases previously.

Mr Guy Preston, Deputy Director-General: Environmental Programmes, DEA, explained the duration of jobs. The DEA had what was termed a Full Time Equivalent (FTE), which was 230 days in a year. The DEA had a 2018/19 target of 39 991 for the number FTEs to be created. Its target for the number of work opportunities created was 75 043, where individuals would work 53% of the days (approximately 122 days). However, one also had to factor in attrition, as some people did not stay for a long time, while others stayed for many years. There was quite a lot of variation and the DEA would like to get the numbers closer together. However, there were some forms of DEA work which were just short-term in nature, while others were long-term and had skilled and semi-skilled people working on them.

The Chairperson said the only follow-up area was the baseline on the waste tyre diversion rate, on which the Committee would consult its content advisors. It was also ideal that the DEA presented its APP before the commencement of the new financial year. The Committee approved the APP as per the allocation which Treasury had made. After the end of the financial year, the process of drafting an annual report began, and it must be presented before the end of August. The Committee then looked at it to check whether the DEA had done what it said it would do, to ensure there was proper accountability. In the current situation, the Committee had the 2018/19 APP without having approved the 2017/18 Annual Report. It was important to get a picture of the overall performance of the DEA against the allocation of resources. The Committee did not have the benefit of the annual report of the AGSA, so it did not know what the performance of the DEA was. The problem with the AGSA had to be resolved so that the cyclical programme could resume, and the Committee could hold the DEA properly accountable.

The meeting was adjourned.

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