Forestry & Fisheries Quarter 4 performance; Marine Living Resources Fund Annual Plan

Environment, Forestry and Fisheries

17 September 2019
Chairperson: Mr T James (ANC)
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Meeting Summary

The Committee was briefed by the Department of Environment, Forestry and Fisheries (DEFF) on Fourth Quarter 2018/19 performance for the Forestry and Fisheries branches. Forestry's objective was to ensure increased production and productivity. It has to address the recommissioning of the Western Cape state forest plantations, which is 22,000 hectares of commercial forestry that was on lease basis in the past. Their third strategic objective was to lead and coordinate government food security incentives. Fisheries spoke about its leadership challenges, Working for Fisheries Programme, Aquaculture Catalyst Projects, Aquaculture Development Bill, Aquaculture Research Projects, Abalone and FRAP Stock, and Small Scale Implementation of Small Scale Fisheries. The Fisheries branch achieved only 53% of their targets. There are many vacancies in the Fisheries branch which is standing at a 21% vacancy rate and there is a moratorium on the filling of posts.

In reply to a question on the Fisheries Deputy Director General saga, the DAFF Director General spoke to the consequences of the suspension of the DDG. Members also asked about fisheries stock assessments and total allowable catch; status of abalone fish stocks; officials arrested for poaching; how many small scale fisheries are in place; scallops research; more information on Operation Phakisa; FRAP future revised policy and its one-year extension. Members complained about the need for more detail and clarity in the presentation; the many acting positions in Fisheries and Forestry and the need for a political overview from the Minister as it will help the Committee to understand what it is dealing with in these branches. The Chairperson complained that nobody talked about inclusive transformation and now FRAP is postponed. 

The Marine Living Resources Fund (MLRF) gave a high level profile of the Fund and its plans. It operates both as a branch in the department and as a public entity. The MLRF unlike other public entities does not have a board or CEO and the Director General is the accounting authority. MLRF generates its own income through fines, penalties, interest and contraventions of the Act. It can sell forfeited or seized assets including vehicles, vessels, aircraft, gear and fish. The main source of income is levies on fish that is landed. Its mandate is to promote the development, monitoring and sustainable use of South Africa fisheries and aquaculture sectors. Its priority this year is to complete the implementation of the small scale fisheries policy.

The Department was asked if monitoring the long coastline is feasible and how many aquaculture project have been developed by Operation Phakisa. DEFF was asked by the Committee to prioritize the filling of vacancies and to enhance communication. The DEFF welcomed the opportunity to return and provide a better overview on their programmes and on Operation Phakisa to the Committee.

Meeting report

Department of Environment, Forestry and Fisheries (DEFF) 2018/19
Mr Mike Mlengana, Director General: Agriculture, said DEFF will do an overview of the annual performance.

New Established Departments
Ms Nosipho Ngcaba, Director General: Environmental Affairs, explained that Proclamation 25 of 2019 established the new department, but it still confirms the existence of the old departments legally until the appropriation by Parliament when the Minister of Finance announces the new budget with effect from 1 April 2020. Following that, DAFF will then cease to have the funds for Forestry and Fisheries. The Department of Environment Affairs is also still a legal department although currently it does not include a budget for Forestry and Fisheries.

The third department, the new DEFF was established but it still a shell; it does not have a budget until the Finance Minister tables the budget then that department will have a budget vote. Proclamation 48 transferred legislation from the former department of DAFF to the Minister of DEFF. The Marine Living Resource Act, Forest Act, Environmental Legislation is now under the administration of the Minister of DEFF. So that is the legal situation. Copies of the proclamations will be made available.

Forestry Performance
Ms Morongoa Leseke, DEFF Acting DDG: Forestry Regulation and Oversight, said the 2018/19 objective was to ensure increased production and productivity in the prescribed areas, as well as the value chain. We had a target of making sure that we plant in temporary unplanted areas. The target set was to plant 550 hectares in our commercial plantations, which are found in four provinces: Limpopo, Mpumalanga, Eastern Cape and KwaZulu Natal. The target said was attained. Attainment was 586ha because we received above average rain. This target depended on adequate rainfall.

Recommissioning of Western Cape Forest
The second indicator was the recommissioning of the Western Cape state forest plantation. This is where we have 22 000 hectares of commercial plantations that were managed on lease basis in the past. The lease agreement is coming to an end this financial year. Therefore, in preparation of the state taking over, we planned to establish six legal entities. That was not attained because the communities could not agree whether they want legal entities or another management approach. This is the only area where the branch did not attain its targets.

Food Security Objectives
The third strategic objective was to lead and coordinate government food security incentives. DAFF had a mandate to ensure that there is food security for all. To contribute to that, we looked at a strategy called agroforestry. We set a target of two pilot projects that we managed to achieve. That was done in partnership with SAFCOL in their plantations in Limpopo and Mpumalanga. In those regions we were piloting groundnuts and moringa trees. The last strategic objective was to ensure conservation, protection, rehabilitation and recovery of depleted and degraded natural resources. We attained the target of 300 hectares that we set to rehabilitate 300 state indigenous forests.

Fisheries Performance
Ms Sue Middleton, Acting DDG: Fisheries Management, made this presentation. The presentation is more on what we did not achieve. The presentation will start with the last slide. That pie chart reflects that we achieved 53% of our annual targets. We did not achieve 35% and 12% was partially achieved. We can all agree that this is not a good progress report for the Fisheries branch. That is symptomatic of challenges that the Fisheries branch experienced during the financial year under question.

Leadership Challenges
We need to emphasize leadership challenges. Members must have noted that most of us introduced ourselves as acting. There are a lot of vacancies in the Fisheries branch which is standing at a 21% vacancy rate at the moment. Since being transferred to DAFF, we have lost over 200 posts that had to be abolished because there was a moratorium on the filling of vacant posts. Therefore, we not only have leadership challenges, but we have capacity challenges as well. It is not an excuse; it is an attempt at an explanation. In addition, as Minister Creecy also mentioned in the last meeting, our DDG is currently under precautionary suspension. That has added to the leadership challenges.

Working for Fisheries Programme
The “Working for Fisheries" programme which falls under the EPWP programme was meant to create annually 1092 jobs or 544 full time equivalents. We did not achieve this target. In fact, we hardly achieved anything in the Working for Fisheries programme. It has essentially collapsed, and it needs to be rebuilt this financial year. We only currently have one active Working for Fisheries project which is the Hamburg aquaculture project in the Eastern Cape. The Working for Fisheries programme does not have any staff; we are currently redressing that.

Aquaculture Catalyst Projects
The next target was achieved. It was the number of aquaculture catalyst projects identified and listed under Operation Phakisa. In fact, we exceeded that target by 12 and there was more. We were able to exceed the target because of the environmental impact assessment that was approved in Saldanha Bay that allowed more projects to come on stream. The third target we did not achieve is the small scale aquaculture support programme and concept note. It was not achieved because of supply chain challenges experienced during the year. But that target has since been completed in Quarter 1 of 2019/20.

Aquaculture Development Bill/Implementation Act
The next target not achieved was the finalizing the Aquaculture Development Bill. The fifth administration decided that it should be rolled over and dealt with by the sixth. Therefore, it needs to be revived under this administration. Our minister is currently taking this on advisement as to whether the Aquaculture Development Act will be revived or dealt with under a much bigger amendment. As for the Marine Living Resources Act, the jury is still out on that one.

Aquaculture Research Projects
We planned on completing four aquaculture research projects. The first one achieved was a new research project on the economics of sea urchins. The second research project on scallops was not achieved. Unfortunately, this was as a result of the department not being able to find parent breed stock for scallops in the Algoa Bay area - which is where such brood-stock is generally expected to be found. The department could not find any brood-stock and as a result the experiment could not continue. We suspect this may be one of the impacts of climate change but that is still being investigated. Two other objectives were achieved; these were aquaculture projects on aquatic animal health and on climate change. The third target dealt with the allocation of commercial fishing rights referred to as Fishing Rights Allocation Process (FRAP) in 2015.

Abalone and FRAP Stock
The objective on the allocation of rights in the abalone sector was not achieved. Abalone was meant to have been allocated during the 2015 FRAP process. The delegated authority at the time took a decision not to allocate rights in the sector due to the dire status of the abalone fishery. The stock is dramatically depleted and illegal poaching is out of control. Minister Creecy has indicated that she will take under advisement the future of the abalone fishery. She is currently looking at various representations on how to deal with the abalone fishery. Similarly under FRAP 2020, we were meant to revise the general policy on the allocation and management of fishing rights. The 12 sector specific policies were not achieved. As you may or may not know, two weeks ago, Minister Creecy went to cabinet where she got endorsement to extend the time frame for dealing with the fishing rights allocation process.

Small Scale Implementation of Small Scale Fishery
The small scale implementation of the small scale fishery policy is partially achieved. Rights were allocated to cooperatives in the Northern Cape, but still have to be allocated in the Western Cape, KwaZulu Natal and Eastern Cape. The time frame for that is September and October for small scale fishing rights to be allocated in the Eastern Cape and KwaZulu Natal. It is December for the Western Cape, by the start of the West Coast rock lobster fishing season.

We were able to make the scientific recommendation on the total allowable catch (TAC) and efforts in all commercial fishing sectors as per the schedule. The last targets that were achieved were the compliance, monetary control and surveillance targets. In terms of the number of inspections and joint operations under Operation Phakisa: Oceans Economy Initiative 5 (which is the security initiative and investigations into the conduct of right holders that targeted), these were achieved.

Financial Report
Ms Zoliswa Lufele, Chief Director: Finance, DAFF, made this presentation. The Fisheries programme budget is included in DAFF. The operation of the fisheries management branch has been taken care of under the Marine Living Resource Fund. 100% of the budget was spent.

For forest management, the total budget allocated was R587 million. What would be surrendered to Treasury is R781 000. The breakdown per economic classification was provided as were transfers and subsidies. The payment on households classified as leave gratuities is R10.575 million. Actual payment was R10.563m and only R120000 would be surrendered. On machinery and equipment, R28 000 to be surrendered. There is a slide with detailed current expenditure and the highest expenditure item is travel and subsistence which is R24.6 million. It is followed by expenditure on leases and property management at R17 million. The expenditure on inventory is sitting at R12.1 million. As for fleet services, it is R7.6 million. On payment of capital assets, Forestry uses a specialized vehicle for its activities which sits at R28 million. On transfers of subsidies, R5.2 million was transferred to Forestry South Africa. We have spent R10.5m on leave gratuities which then leaves R518 000 unspent. It has also been audited.

Marine Living Resources Fund Expenditure
Ms Sue Middleton, Acting DDG Fisheries Management, said grants received from National Treasury via DAFF cover the vessel operating cost, the Working for Fisheries programme and aquaculture. R441 million was transferred. Revenue from operating activities covers income from levies. Therefore, right holders pay levies on fish that they land and catch, a permit, fines and harbour fees. Other incomes refer to confiscation of fish and fish products. Other grants, sponsorships, assets and donations refer to assets and services from DAFF for the cost of staff employment. The MLRF does not have staff of its own, all the staff are situated in the mother department. Unspent or deferred grants were under expenditure on Working for Fisheries and Operation Phakisa. Total revenue was R712 million and there was an over expenditure of R4 779.

Discussion
Mr J Lorimer (DA) asked about the precautionary suspension of the Fisheries DDG. She was charged and possibly suspended last year, then reinstated, and now has been charged again. Could we get some detail on what happened? He would like to know what she is charged with and a timeline on this case. We have heard about leadership challenges in fishing. That seems to be the understatement of the year. This branch appears to be in shambles. He want to know why. Give us a quick answer, what went wrong? On the timeline for the complete transfer of financial control, when will Fisheries and Forestry be under the control of Minister Creecy? We have heard about all the acting positions, what is the plan for permanent appointments? When will that happen?

On Fisheries, what stock assessments are currently going on. He asked how the TACs have been determined and how budgetary and staff constraints have affected this. He asked for an update on our international hake certification. He asked what is happening with rock lobster. With particularly reference to the West Coast rock lobster recovery plan and strategy, how is that working. How can there be a strategy in place if we do not know what the population is? Is research being done sufficiently? On abalone, what is the future of the fisheries? We know that abalone that is seized is sold. How much is being seized and sold –what is happening to that money and how much is there? We know that abalone has been stolen from state storage facilities – how many times has it happened? When last did it happen? How much in value has been lost and what has happened to court cases for those thefts? He would like a comment on the viability of the state seizing poached abalone. Is it working? It seems that it might encourage the state to concentrate on merely seizing poached abalone rather than stopping the poaching. Six officials were arrested at Gansbaai last year. He would like progress on the case. Does DAFF control small boat fishing harbour? Is it in control of the Hout Bay fishing harbour? If it is not, who is? It seems that research is not being adequately funded, he would like a comment on that. He asked about the state of fisheries protection and research vessels. A few years ago, the contract was transferred a couple of times. It does not seem to have worked well. Are they operating or not? If not, why not? There are a lot of problems with the 2015 FRAP. He would like to ask how many small scale fisheries are in place? How many are working well? And those that are working well, could we have the names of them please?

Ms T Mchunu (ANC) asked about the audit outcomes for Fisheries, Forestry and Marine Resources Living Fund? There is an over expenditure on the MLRF, what are the reasons and is there an impact on the audit outcomes? The presenter indicated that money was given back to the Treasury for the other two. What hinders the branches from 100% expenditure? What are the prospects of roll overs for those funds?

Ms H Winkler (DA) asked Forestry about the 22 000 hectares currently under dispute with the draft trustee. These are commercial plantations, are these invader species? If so, who is managing the plantation in the interim whilst an agreement is reached? As we know, there is a spread of invasive species and these are quite water intensive. How is this being addressed? With the leadership challenge and the vacancies at 21%, what is the plan going forward? Right now it seems that it is not working at full capacity. What is the plan for the scallops research going forward? With the abalone rights and the illegal poaching, what is the department doing about trying to recoup the stock of abalone? She asked for detail on FRAP and the revised general policy on size that has not been completed. FRAP has a one year extension. What is going to happen in the interim though with the fishing rights?

Mr P Modise (ANC) was pleased that some of the faces have been seen before. However, the presentation was lacking. There were only three slides on the Forestry branch. What is happening in Forestry? The speaker spoke to leadership and capacity challenges. The presentation should speak to the mitigating factors that are being put in place. What are branches doing to mitigate these challenges? We are told that there was a moratorium. What are the reasons that necessitated it? There is no correspondence between compensation of employees and the travel and subsistence budget. If there are few staff due to vacancies, who is travelling? Where are they going? There is a contradiction there? Where is the oversight? What is being done if some of the indicators are not met? We are told targets are not achieved because there is no staff. Money is being spent but on what and by whom? She pleaded for meat in the presentations. Everybody is introducing themselves as acting. What is happening? It is Hollywood. Why are we not filling these vacancies? Are people players and referees at the same time? What is happening? Give us clarity.

Ms S Mbatha (ANC) requested that both the DGs present on Operation Phakisa because some members do not understand it. The presentation was not what we wanted. This Committee needs to ensure that Phakisa is being implemented to resolve the many problems. She was worried about the money that is going back to Treasury. Why was it not shifted to other areas so that no money goes back to Treasury? My worry is that it means there was no monitoring of such programmes. We need that money for employees to empower themselves. She knows they are still acting and the reconfiguration process needs to be done. How far is it? Was the new structure approved by DPSA?

The Chairperson commented that if the Minister was present the Committee would have expected an overview. It will help us to understand what we are dealing with. An overview would have helped us. Nobody talked about growing the economy in an inclusive transformation. Now if you postpone that as you have indicated for a year, what happens during the transition? Transformation cannot be postponed. If you postpone tell us what you are going to do in the interim. That question is critical for fisheries. There was little talk about creating jobs. A broad political overview would have minimized the Committee's many questions.

Mr Mlengana responded that what was lacking was an overview. Even with Fisheries, what are the objectives we are trying to achieve? But I will hand over to management to do a brief overview of Forestry and its categories and who owns what. There are forests that are owned by outside companies. They only rent land from us. And they were given a 70 year lease because of the assumption that on those lands, it takes 70 years for forests to grow.

On the audit outcomes, we have had one finding on Forestry's biological assets. When they look at forests, they evaluate the trees and determine the value. We need an update on how much of the forests were damaged. If there were fires the value decreases. We have to appoint a valuator to evaluate those biological assets. We do not clean our forests because of financial constraints compared to commercial enterprises. Forests get entangled with other growth and as a consequence it is difficult for a valuator to penetrate them and carry out an evaluation. When we cannot give an explanation or solution to that, we are fined. But I will invite my colleagues to talk more about that.

Ms Morongoa Leseke, Acting DDG: Forestry Regulation and Oversight, offered a background to Forestry. We are currently managing over 62 000 hectares of commercial plantations. They are in the Eastern Cape, Mpumalanga, KwaZulu Natal, and Limpopo. The Eastern Cape is the biggest, there is potential for afforestation. That means we can expand given the necessary resources. Secondly, we are responsible for managing 19 000 hectares of indigenous forests. There is 22 000 hectares of land that we are supposed to take over in the Western Cape. Similar to Fisheries, I need to make a disclaimer we have very limited personnel on the ground. A second issue is that as government we are not supposed to be managing commercial plantations because we are then highly conflicted. Instead of being a regulator, we find ourselves being an operator. In line with the white paper on sustainable forest management of 1996, government was advised to withdraw from managing plantations. It does not make sense because we are sitting with a strategic resource that could be generating a lot of jobs. It could be assisting the country that has got a shortage to maximize its fibre footprint. We are not managing these plantations economically or viably as the private sector would do it. And, we have been engaging on numerous levels to transfer these plantations where they would benefit the rural communities located there.

In brief, the Western Cape plantations were managed on a lease basis by a private company. What we have now in the interim to manage them, is we are negotiating to increase the number of teams. This is because we are an absentee landlord and there is continued destruction and stealing. It is not of our own making. Timber theft is a challenge throughout the whole country and even in the private sector. The deployed teams would deal with everything including invasive species. In terms of guarding the plantations, we want to employ environment monitors. We want to replicate that and deploy them across the 22 000 hectares. As an interim measure, we are looking at the community forest agreement to take forward the engagement that we had with communities to empower them in this sector. We would like to come back and make a presentation as we have a plethora of challenges in Forestry. We have staff challenges, and as you heard I’m acting. This position has been vacant since September 2017.

On the fourth quarter, focus is on what the targets were. We do not even know what informs those targets. Therefore, this is where the disjuncture is. We cannot fully satisfy you in that respect, because we are dealing with matters of the previous administration. However, we have tried in short to give some indication.

To quickly respond to a few of the other matters. The format for the APP is prescribed. We come and present it as it was tabled in Parliament. But we can structure the presentations differently to satisfy the Committee. The vacancies are because of the reconfiguration of the macro organization of government. There are work streams and the process is led by the Presidency and DPSA. It will ultimately be concluded when the Minister of Finance tables the revised budget. DPSA is leading the work stream on human resources. They will sign off on the final structure when the transfer finally happens. That is projected to happen by November. Therefore, currently we cannot fill the posts until that process is completed. But there are areas that we have prioritized. Another work stream deals with buildings, IT systems and so on. Therefore, the offices buildings were procured in a particular way, and those contracts will then by transferred to the new department. But all of that has to undergo a legal review process.

In terms of the MLRF, the Minister and Auditor General tabled the audit outcomes. The Department has already started a process where they requested Treasury to make an assessment on Fisheries. Last week there was a meeting with Treasury to receive a report which indicates that in terms of findings, the MLRF is fraught with a combination of factors. It was seemingly exacerbated by leadership challenges and the DG did not have powers to appoint. The powers were taken away and have recently been restored by the Minister. Therefore, the vacancies are an indication that there were challenges at the top level. The staff here will not be able to fully account for that. For the vacancies, we have an action plan. We will are now reviewing the posts and job evaluations are being undertaken. As soon as DPSA approves the structure, we will advertise and fill the posts for both Forestry and Fisheries portfolios. That is the undertaking by the new department and not necessarily the old one. Therefore, there is a plan and we will prioritize filling them.

Mr Mlengana commented that when his powers were taken from him, things deteriorated and there was chaos. In terms of Fisheries, he never got involved. There was chaos there and he was away from it. What happened as a result of the relationship between the executive authority and the Fisheries DDG created chaos all over the place. People were trying to influence the rule of law and the suspension was triggered by the Auditor General Report. One of the issues raised was the expenditure of public money. A lot of money was spent on one lawyer and they were appointed outside of processes. It was chaos. The DG got suspended as a result and after a year the court ruled that the suspension was unlawful.

On the abalone case, Mr Mlengana had given the evidence about the stolen abalone to the police and the Hawks. The Fisheries DDG was suspended when she failed to give answers. She was asked to explain why she appointed people without an advert, but there were no answers. This was simply ignored but about R84 million was spent on the appointed people. There has to be an account for that. There was no explanation and consequently she was suspended. The executive authority intervened and said it was wrong to suspend and we should reinstate her. Last week there was arbitration. He appealed to the Committee to let the process continue and we will get the results. Last year it kept on being sabotaged. There was no reason for a moratorium. His powers were taken away and there was chaos. It was unfortunate that it went that way and he was not blaming anybody. Maybe they were right, but it brought Fisheries to where it is now. The staff suffered when they needed leadership. Mr Mlengana said that he came from the private sector and he knows that if you eat shareholder value, you must account for it. We all know that as a standard. Therefore, he appealed that they support the Minister as she is now part of that process and she is trying to stabilize the deals. Your oversight should be to support her. He recalled how he had sat alone in this Committee, with the lawyers from outside who had money, going to Committee Chairperson and saying that he was chopping their contracts. He realised then that government was not what he thought it is. He is excited to see Minister Creecy putting things together and accountability coming up again, and letting the law take its course. This is good. He concluded that that is what happened and it was not a vengeance.

Ms Middleton answered a question on timelines for dealing with some of the acting positions. In our meetings with the DG we have prioritized the filling of three financial posts at an SMS level immediately. At a previous meeting we mentioned that the CFO post has been vacant since 2009, and that is still the case. We have prioritized the filling of the director of supply chain and director of financial management. Those are key positions in financial management. Yes, we got a disclaimed audit opinion in 2018/19 and those vacancies were identified by the AG and National Treasury as being a contributing factor to the disclaimer. We have prioritized the filling of some of the harbour posts, 12 fisheries harbours, especially harbour masters and the dockers. So those will be the first round of vacancies that we will fill and then we will come back to the others. In terms of the deep sea hake certification, that is due for recertification by the marine stewardship council later this year. The deadline was shifted towards November later this year. Just to explain it is a recertification and not just an annual audit. It is using version 2.1 of the marine stewardship certification which is much more stringent and rigorous than previous certification processes. As a department we are working closely with the industry association who have applied for the certification. One of the challenges with this certification is that we now have to do a joint stock assessment with Namibia. This because hake fisheries is a struggling fish stock. That in itself is a challenge especially on the sharing of data with Namibia.

In terms of abalone, there was a question on how many burglaries. The answer is six and we have estimated that the value of the stock stolen is very hard to put an accurate value on. But we estimate it is in the region of R20 million. On much money we received from the sale of confiscated abalone this financial year, the answer is none. The reason for that is that we were interdicted from selling it as a result of a court case. Our store is full, and we are in the process of at least trying to release some of the dried abalone. It comes in dry and wet. In terms of our policy we may sell only the dry one. Some of the stock is in a good state, and some in a bad deteriorated state. We probably have to destroy it. It is hard to put an accurate value on it as market value does fluctuate. It depends on when we are selling.

There are nine officials from Gansbaai who are implicated in collusion with poachers on the theft of abalone. They have all been criminally charged and are on bail. The criminal cases are proceeding but that is out of our hands. It is in the hands of security agencies. The officials are back because the 90 days cautionary suspension in terms of the PFMA has lapsed. The DG has instructed us to assign them away from Gansbaai. We have six vessels. Four fishery patrol vessels that we call FPVs and two research vessels. Those vessels are managed on our behalf by SAMSA. They are all operational, and are all at sea. The one research vessel is Afrikaner; she is very old and tends to break down from time to time. We are in discussion with National Treasury around a replacement plan for the vessel but otherwise the vessels are operational. Our challenge mainly is sufficient budget to keep them at sea for the number of days that we would like.

At the moment two small scale co-operatives are registered in the Northern Cape. They are operational and functional but experiencing some teething problems. They need some development and capacity building support in operating a cooperative. There are 73 registered small scale cooperatives in the Eastern Cape, and 44 registered cooperatives in KwaZulu Natal. The Western Cape cooperatives are still to be registered.

As mentioned before, we got a disclaimed audit opinion. MLRF is a public entity and is able to roll over funds and does not have to give back to Treasury unlike the department. On FRAP, she does not know whether it is fortunate or unfortunate, but the reality is by virtue of extending the time frame, we will have to grant an exemption which the Minister can do in terms of the Marine Living Resources Act. She will grant an exemption to the existing grant holders. Therefore, that means that the current right holders will be allowed to fish for another fishing season. The downside of that as the Chair points, is it is the same people who are continuing to fish for another calendar year. There is a delay in allowing new operators into the fishing sector that is the downside of the delay. But at the same time, the Minister is very clear on the fact that she would rather take the extra time to deliver a credible and legitimate process than rush and be faced with allegations of impropriety and legal challenges. So that’s the balancing act. Lastly, too many people with small allocations is too unviable, and we have to look at multisector species or multisector rights. In other words, if you get a West Coast rock lobster right, because the fishing session is so short, you probably need a right in another sector such as line fish so you can continue to fish throughout the year. Those are the kind of social and economic issues that have to be addressed.

Mr Belemane Semoli, Chief Director: Aquaculture and Economic Development, replied on Hout Bay and on scallop research. When it comes to the proclaimed fishing harbours, the Department is responsible for the management and operations of 12 fishing harbours in terms of the MLR Act. These harbours will range from the West Coast as far as Lambert’s Bay, to the South Coast as far as Still Bay. There are three main players within the proclaimed fishing harbours. The first being the Fisheries branch. Second being our sister branch Oceans and Coast. Their responsibility is around pollution and environmental matters in general. The third player is the Department of Public Works and Infrastructure. They are the custodians of the land, and therefore, are responsible for leasing of the property. They are responsible for major repairs of infrastructure. When it comes to our responsibility as Fisheries, it is day to day management and operations. These will include access control, human security, cleanliness of the harbours, slipping of the vessels and so on. Coming to Hout Bay, that has been one of the major challenges in terms of management. There are two issues that seem to be the problem there. One is access to housing. The community has been at loggerheads with the City for a number of years now about the housing. The second is access to fishing. Every time there is an issue, the community goes to the harbour and blocks access to the harbour. Even today this is happening because it was announced that some of the illegal housing structures will be demolished. So as we speak they are there and public order policing is there. We have Kalk Bay within the City and the major challenge is security. Recently we have spoken with the City to see how we can collaborate particularly around security. But that discussion is still at an early stage. But we have agreed that we are going to partner on security in all the fishing harbours and provide better management services.

Scallops is a new species and the reason for us to be interested in it is because of its market value. We are keen to develop it so that it can go to commercial phase but the challenge we have encountered is round availability of current stock within the natural environment. We have to rely on that stock so we can breed and multiply it. Due to climate change, the stock seems to have declined so we continue to do survey, to see if there is recovery. The last survey that we did in August 2018 only managed to see about seven stock. We think that going forward, there is a possibility of the stock recovering. We will do an assessment and it takes about two and a half years for the scallop to reach maturity. Therefore, this research will be on suspension for now and we will assess again in three years’ time if there is enough stock in the wild for us to capture and propagate it under a controlled environment. This year we are exploring a new research on clams. We are looking at clams as an alternative to scallops. We are now in the process of doing a survey around the Saldanha area because that is where they occur naturally. He added that it is possible it import scallops. However, it is not advisable to do so for biodiversity reasons. We want to protect our own biodiversity and promote our own indigenous fish species.

Dr Kim Prochazka, Acting Chief Director: Fisheries, responded to questions on stock assessments, TACs and how the Department’s budget affected that. Every year our research section provides 19 scientific recommendations for different resource groups that are either harvested commercially or through small scale fisheries. The stock assessment for those initiated is the way we effectively determine how many fish there are in the sea, and how many we can safely catch in the coming fishing season. The sophistication of these stock assessments depends on many things. Some Members will be aware that we have had challenges with our capacity to undertake these complex stock assessments. We really need to build internal capacity. Building internal capacity in fisheries stock assessment is not a simple process. It requires very highly skilled people trained mathematics and statistics. Such people are very hard to find. This is not only in South Africa but globally. We have put together training plans to attempt to build such capacity inhouse. But those plans rely on us appointing new staff and to be able to train them up; but we have had moratorium on filling posts. In the meantime, we still require these services to go on. We do have an in-house group of a few people, with stock assessment qualifications and abilities, but it is not sufficient to meet our needs. Therefore, to ensure we have the services available, we have outsourced some of these over the years. There has been a hiatus for the last two years but we are currently address that. Members may be aware of a number of suggestions that have been put forward in different forums over the last few years, for alternatives to outsourcing these services. These have been investigated but unfortunately none of them have been found to be practical or viable.

On West Coast rock lobster, we have prepared a presentation on the status of resources which would have addressed some of these questions. We hope to give that presentation to the Committee at a later date. But to provide a brief overview now, the status of the West Coast lobster resources is extremely low sitting at only 1.8% of its original pre-fished stock size. In terms of international norms, when one gets below 20% on stock size, it is time to do something about the resource and start recovery. Therefore, because of our history, we are sitting with a resource at an extremely low level and do require recovery. As the research group, we are responsible for building such recovery plans. The recovery plan includes asking where the resource is now, and where we want it to be over a specific time frame. We then calculate how to get there based on whatever time frame is set. Those recovery strategies are always based on the best information available, and on the current state of the resource. Therefore, those plans usually take the social economic considerations of the fisheries into consideration. Similarly, with abalone resources, they are severely depleted. Stocks of abalone are below 20%. In some of the fishing areas, for a long time no commercial fishing of abalone has been permitted. That is because those stocks are not highly depleted but things changed in the ecosystem. Rock lobsters have taken over the area which then eat the baby abalone growing there. It is unlikely that they will recover in those areas. In other fishing areas, we did put in place a recovery plan to increase abalone stocks. Unfortunately the plans rely very heavily on a very large reduction in the illegal fishing in those areas. But we have not been able to realize that.

Reduction in research funding means we get less information in and less data on captures. That affects some of our research surveys and affects our estimation of the stock status. There is an increased risk of over-fishing our resources. For long term sustainability, that translates into lower total allowable catches for a fishing season as one attempts to offset risk.

Ms Morongoa Leseke, Acting DDG: Forestry, replied about the R781 000 underspending saying that the Forestry branch was to occupy new offices, but there was a delay in acquiring the occupancy certificate. The second reason is due to the rotation in acting positions. On the contradiction between travel expenditure and the limited staff. What happens in Forestry is that when we have limited staff, we over extend the personnel that is there. We even went to the extent of taking our workers from different plantations to assist in situations where we did not have staff. I think that is where maybe we used a lot of the travel budget.

Ms Zoliswa Lufele, Chief Director Finance DAFF, commented on the surrendering of surplus funds and on audit outcomes. In 2016/17, National Treasury issued for the first time a compensation of employees budget. That meant that the department did not have the option to move funds from goods and services to compensation of employees or vice versa. Between 2017/18 and 2018/19 the compensation of employment (CoE) cuts meant we remained with an increase of only 3% on our salary budget. The Forestry budget transfers to Food and Trees for Africa of R400 000 and one to South Africa Wood Preservers Association could not take effect at the agreements were not finalized at the end of the financial year. Therefore, we had to surrender the money to Treasury.

Three critical matters were raised by the Auditor General. Those were biological assets as there were disposals we could not account for in our financial statement and we could not confirm that the figure is correct. We have put processes in place but the short staffing places us in a critical state. This is because even though we have put controls in place, it still requires human capital to implement these. The next item was our immovable property assets. We do not have a proper asset register for the plantations in the old homeland states like Transkei. We are still working on that. The third item on revenue management is linked to the shortage of staff.

Ms Ngcaba confirmed that the cuts given to departments on expenditure for personnel, affected all government departments. Even in DEFF we have been asked to cut R86 million over a period of three years. We need to cut further and ensure that we realize savings in light of the current fiscal environment.

Ms Ngcaba confirmed they can brief the Committee comprehensively on Operation Phakisa. Harbours are one of the priority areas of Operation Phakisa. Aquaculture is another area which we have reported on.

On our mitigation plans for the vacancies in Fisheries and Forestry, she has already had a discussion with the Acting DDGs and we have a plan to prioritize both aspects. On the matter of biological assets, it even affects our sand parks. We were informed recently by Treasury that there is a new standard being introduced for auditing and have to ensure that we comply with that across the department programmes. Lastly, on the viability of the abalone model and other species that are subject to illegal activities and confiscations, the Department has sold some of the confiscations and there is legislation on that. The state cannot say that we want more illegal activity in order to make money from those illegal operations. The Minister has asked us to prioritize investment and plans to curb poaching. Mr. Abader is working with a team in Fisheries to ensure that there is alignment with the Green Scorpions and that there are tightening measures for enforcement operations along the coast.

Mr Ishaam Abader, DDG: Legal, Authorisation, Compliance and Enforcement, commented that one of the initiatives of Phakisa is Initiative 5. It deals specifically with compliance and enforcement at sea. Abalone poaching is one of the biggest problems along the coast and we are definitely looking at compliance and measurement of that sector. The money generated by the confiscation does not make such a valuable contribution. The majority of funding MLRF receives is from the budget allocation, so in the bigger scheme of things, it does not make that much difference.

The Chair commented that both Fisheries and Forestry need more time to take the Committee on board, especially on challenges. We will engage the Minister especially on this priority of growing the economy, and for it becoming inclusive. With Forestry, there is very little being done to deal with indigenous forests across the country. For Fisheries, we have been told that it requires scientific research. We want to respect that but it will not take us away from what we are supposed to do, which is to transform and grow the economy for all of us. There are areas you can brief us on such as forests and Phakisa. We are representatives, we ask questions on behalf of the people, but of course we are guided by the priorities of the country. We have asked a lot of questions and that is because we have not met you before.

Briefing on the Marine Living Resources Fund on 2019/20 Annual Performance Plan
Ms Sue Middleton, Acting DDG Fisheries Management, made the presentation saying she would focus on the high level strategic objectives.

Mandate and Operations of MLRF
There is some background information to Fisheries that maybe useful. We operate both as a branch in the mother department as well as a public entity. As such we are required to table our own annual audited report as well as our own strategic plan. The MLRF was established under the Marine Living Resources Act of 1998. In terms of Section 10 of the MLRF, the DG of the department is the accounting authority. In other words, the MLRF unlike other public entities does not have a board and does not have a CEO. Every year the Minister approves the revenue and expenditure budget. Our financial year is the same as for government department. We are audited separately by the Auditor General.

MLRF Revenue and Expenditure
As a fund, any unexpended cash balance at the end of the year can be carried to the next year. Similarly, any of the expenditure is carried over to the next financial year. In terms of section 10 of the MLRF, we generate our own revenue and that revenue covers our operational costs by and large. But there is the exception of monies that we get directly from National Treasury. We get four allocations from Treasury via the mother department. We generate our own income through fines, penalties, interest and contraventions of the Act. As discussed, we can sell the proceeds of the forfeited or seized assets including vehicles, vessels, aircraft, gear or fish. We can invest and we can get interest from our investments. We can receive donations and our main source of income is levies on fish that is landed.

Mandate of the Fisheries Branch
For the Fisheries branch, in terms of the Act, we are responsible for promoting the development, monitoring and sustainable use of South Africa Fisheries and Aquaculture sectors. The six sub programmes are: aquaculture and economic development, research and development, marine resource management, monetary control surveillance, fisheries operations support, and financial management.

Priorities for Next Year
Our priority is to complete the implementation of the Small Scale Fisheries policy. The Minister has given us a deadline of December 2019 for the completion of the allocation of small scale fishing rights in the remaining three provinces of KwaZulu Natal, Western Cape and Eastern Cape. We have got to continue this process of FRAP. A mentioned FRAP has been postponed and the deadline extended until 2021. But a lot has to been done to allocate rights by mid 2021 and to deal with appeals by the end of December 2021.

Our key strategic priorities are the four catalyst aquaculture projects and Operation Phakisa. We want to develop a small scale aquaculture programme. That will include developing a concept note for providing support to small scale aquaculture farmers. We have got to address the Aquaculture Development Act which lapsed at the end of the Fifth Parliament, either reviving it or incorporating it in the amendment of the Marine Living Resources Act which is a longer process. Reviewing acts and legislation is not an overnight process. There are a number of aquaculture research projects we want to complete in 2019/20. That includes sea urchins, disease preventative measures, climate change and an assessment of coastal oxygenation and esterification. As for climate change, we want to revive the Working for Fisheries programme in support of small scale and alternative coastal efforts. We have to address the 12 sector specific policies. We need to develop recovery plans for the West Coast rock lobster and abalone. For the day to day enforcement efforts, we have six prioritized Fisheries for compliance and enforcement efforts. There is hake, abalone, rock lobster, line fish, pelagics and squid. Each of those has a number of targets for inspections and joint operations. Lastly, we want to carry out a minimum of 60 joint operations with other law enforcement agencies under Operation Phakisa: Ocean Economy Initiative 5.

Discussion
Ms Mbatha noted that it was mentioned that MLRF is under the Western Cape. But on slide 11 it mentioned that you are dealing with Eastern Cape, KwaZulu Natal and Eastern Cape. You said in your previous presentation that Eastern Cape is the biggest. Why are you saying that you are under the Western Cape when you have other provinces. It does not make sense. What is this high profile you mention? We have a problem with this high profile; maybe someone can explain it to us. This is because for me, if someone says high profile, there is information they want to hide from. Be on our level. Also, how and where does Indigenous Knowledge Systems (IKS) feature in this? Lastly, with disaster management on climate change, why do you have that? This is because that is one of the key issues you cannot control. It is a natural thing.

Mr Lorimer asked about the FRAP qualification. The results of the last FRAP were contested. Does the department have any plans to review it to change anything on that front?

The Chair commented on communication. We might be asking questions here, but we are not the ones who are affected by your decision to extend FRAP. My suggestion to say there needs to be proactive communication. Lastly, on the question about Fisheries being in the Western Cape, even with that, there needs to be some communication to help people understand. Why are we centralized in the Western Cape when we are the whole country? Therefore, it is an issue that we need to look at.

Ms Winkler asked whether Operation Phakisa: Ocean Economy Initiative 5 extends to monitoring of illegal trawling off the coastline, in South African territorial waters. What is the success rate of our trawls? There are four vessels allocated to this. How many kilometres of coastline are they expected to oversee individually, and is this feasible? Have we had an incident where we have caught illegal trawling vessels? What has happened and how many incidents have been reported? What is the state of illegal trawling on our coastlines?

Ms Mchunu noted that it is a high level presentation. She would like to check because there is an overview of the 2019/20 budget and MTEF estimates. Is that the budget because we would want to interrogate it more but it is just a slide. There is an expected decrease of revenue. We need to understand the estimate of R274 million in 2019/20 the MLRF will receive. The way it is written does not give you a good picture of what is going to happen. Do we have any depreciation of assets? If the transfer amount from DAFF is unknown at this point, is it not going to affect the expenditure rate of MLRF? She is more interested in the budget itself and on the development of implementation plans. Slide 15 talks about increased production and productivity in prioritized areas. But you only talk about one new research per year. Is it really going to increase the productivity and the value chain? She noted the jobs that should be created, but in terms of aquaculture and economic development included in the Operation Phakisa, why does the project number always remain at four for each financial year. Is there no way of increasing it? We really want to see economic growth particularly in previously disadvantaged communities.

Ms Nosipho Ngcaba responded that the fishing sector used to be part of Environmental Affairs at least 10 years ago. It was an industry that was based more in the Western Cape traditionally. It cannot proclaim fishing harbours, hence the commercial fishing rights. We did not have commercial fishing rights for the Eastern Cape part of the ocean. At the time we did an assessment before we spoke about a plan. When we come back we will show you the road map of what have been the changes over time. Part of the problem is that one cannot issue commercial fishing rights if we do not have research bases. Part of the challenge was that there was no research effort for adequate research on the Eastern Cape coast line beyond East London, at the time. So we need research that will give us high confidence to be able to justify issuing the total allowance of catch in certain parts of the ocean, within the economic exclusive zone to ensure sustainable fisheries. Hence there were experimental fisheries and small scale fishing rights allocated in some of the areas. So small scale fisheries is a new policy that is attempting to deal with transformation. But in the long term, there are targets on how be more inclusive and have a transformation goal that would be pursued. In attempting to change the policies, we have issued more fishing rights beyond the big four or five commercial fishing companies. With those fishing rights, evidence will show - from the performance reviews - that people get the rights but then sell them to the big companies. Minister Creecy has asked us to look at support for small scale fisheries, and the emerging and small commercial fishing right holders. Part of what we have to answer during the extension is how we are going to provide support to new entrants.

Secondly, fisheries are a natural resource. All natural resources are currently under pressure, and fishing in particular because of illegal fishing and climate change. For abalone, in some of those areas, we may no longer be able to issue the same quota level and will have to review. There are other issues also, for example, in terms of traditional knowledge. For the small scale fishing programme, we respected their architecture but some of them have intrusive fishing methods which could cause challenges for the sustainability of fisheries. She is just giving this as a background but she will not be able to deal with this comprehensively now.

Lastly, she should comment on illegal trawling. We talk to that broadly in terms of the Operation Phakisa: Oceans Economy: Initiative 5 that deals with compliance and enforcement. It is supposed to be holistic because we participate with other law enforcement agencies and institutions like SAMSA which is a maritime institute. Government has agreed to collaborate in monitoring compliance and enforcement. Through the information management system, we get information about algae blooms which informs fishermen. They get to know about the state of fisheries so that we avoid impacting the safety of citizens especially those that consume seafood. That information becomes available to communities. We can improve on communication. Part of what the Minister is intending with the FRAP process, is to hold a stakeholder meeting. There is a schedule that the branch is working to and will make the information available through media.

Mr Abader commented on illegal trawling. There is specifically no illegal trawling in Operation Phakisa. For example, in 2018/19, we confiscated about R28 million worth of fish and equipment and other illicit goods. That is opposed to the previous year which was about R40 million. There is a big difference in the numbers there. So just in terms of abalone alone, we have confiscated about R21 million during that year. Rock lobster was about R676 000. Associated equipment in relation to poaching was almost R5 million. That gives a sense of what we have been doing. We have the Oceans and Coastal Information Management System (OCIMS) that informs the activities around Operation Phakisa. Also significant to mention, we took part in an international operation with Interpol during the last financial year. Thirty Days at Sea was the operation name. In addition, to give an indication of the number of inspections during that period, we did 369 ship inspections. We found 49 environmental violations; there were 10 cases of serious environmental noncompliance dealt with through our criminal investigation process. For the first time we actually prosecuted a foreign vessel in Cape Town for dumping waste in our harbour. That is just a snapshot of Compliance and Enforcement.

Ms Middleton commented that in terms of 2015 FRAP, there was the question of the legal contestation. Are we going to review or change anything? The answer is legally we cannot. The only way in which decisions can be changed is if it is taken under review and the report sets aside the decision. Essentially FRAP2015 is done and dusted except for review action that may still come about. On the question of how long our coastline is. It has 3000 kilometres and 200 nautical miles from the coast is the exclusive economic zone. We have a big water space to cover. Exclusive economic zones which we are responsible for are our territorial waters. On Initiative 5, we are not aware of any illegal trawling and we are able to monitor every vessel. Every vessel has a tracking system. We are able to track where they are and we can tell whether they are trawling and whether that vessel has a permit to trawl or not. We can monitor foreign vessels which are not allowed to fish in South African waters. She apologised to Ms Mbatha and said that she did not mean to indicate that she is hiding something when she said "high level". That is not her intention. All she meant was that she would not go through all the targets for each year. But she did go through all the key strategic objectives. On revenue and the budget, we are anticipating that our revenue will go down. The reason for that is that the previous Minister in the interest of the pro-poor has taken a decision to exempt the small scale fisheries from paying levies for the first two years while they find their feet. Therefore, we are going to get less revenue than we did previously. Also, because we are transferring from one department to another, we are waiting for the adjustment budget to know exactly what transfer payment we will receive from National Treasury. Part of the transfer is still outstanding debt that is the subject to negotiations. We will table the 2018/19 Annual Report which has all the details of the budget and the audited expenditure, including depreciation of assets.

Mr Semoli replied about the value chain in terms of the aquaculture research they do. Yes, our research does actually follow the value chain approach. It is based on two things, to ensure that the circle is competitive and sustainable. That informs the research that we do. Whatever research project we choose falls within those categories. For the value chain approach, we start from the beginning; we need to understand the biology of the different fish species that we are interested in propagating. Once we understand the biology then we do the production, as well as the breeding, and then genetics. That is to ensure that the fish is robust when it comes to disease prevention and growth. Once we understand that, then we need to understand the nutrition requirements for different fish. Once we understand that we do the fit for development. Afterwards, we have to understand the kind of production systems that are essential for that particular fish to be grown under. We swiftly have to understand the environmental interaction. In other words, how is the environment going to affect the aquaculture operations? Vice versa how is the aquaculture going to affect the receiving environment? We subsequently look into the fish health and diseases research. Here we try to develop vaccines for the fish so that before we grow them, they are already vaccinated, which is a strong way of preventing disease. Afterwards, we do the food safety research to understand what kind of toxins and heavy metals would occur in a particular fish to ensure that we protect the consumer. Once we understand the safety and quality issues, we do what is called post-harvest research. That is to ensure that we preserve the quality of the fish while it is being transported to various markets or consumers, so that farmers can derive national benefits out of that. We have ongoing research to understand the market trends. That is our approach to aquaculture research.

The second question was on the Operation Phakisa: Oceans Economy projects. Why do we have four every year? I think it is important to note that we have 37 projects that are registered under Operation Phakisa. The department supports them in various ways depending on the needs of each project. The 18 or 19 new ones on the slide will be over and above the 37 that already existed. Therefore, we say that minimum target is four but this function is demand driven. We get approached by different potential farmers to say they want to start farming and how can the department assist them. Therefore, that four is just an estimate. In the next five years, we will probably have more than 50 projects registered under Phakisa.

The Chair noted that the Committee had concluded its baseline of trying to understand how the new department was qualified and what it is trying to do. We want to see your plan and ensure that it is actually growing the economy for all of us. He was comfortable with the support to the small scale fisheries. We want to know the targets are challenging you and that they are demonstrative. We want research and sustainability but not at the cost of opening up. His last point is on action. We will now start visiting some of these areas so that we may know more about what is happening. He makes those comments so the Department understands what we mean by change. We want growth but it must be inclusive. You have extended FRAP and he is saying that the Department must communicate it to us because the feedback helps all of us to understand where we are. However, we are happy with the information and commitment.

Ms Mbatha commented that awareness is very important. We want to know about the empowerment of youth, women and the disabled. It may not be so many people but we need to know. We may find in fisheries there is an impression that it is only for the white, then we need to see our fellow brothers and sisters being involved in all these things. We cannot sit here empowering one group, we are all South Africans.

The Chair adjourned the meeting.

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