2019 Adjustments Appropriation Bill - DWS & Cooperative Governance briefings (Deputy Minister of Water and Sanitation present)

Standing Committee on Appropriations

27 November 2019
Chairperson: Mr S Buthelezi (ANC)
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Meeting Summary

The Department of Water and Sanitation presented on the 2019/20 Adjusted Appropriation Bill. The Department had reprioritised infrastructure allocations from underspending projects to those with a capacity to absorb. Funding was reprioritised towards the Blue Drop/Green Drop programme to improve drinking water and wastewater quality management, and the settlement accruals for the War on Leaks. Irregular expenditure was due to flawed supply chain management processes. The Water Trading Entity was not performing well.

In discussion, Members expressed concern about the lack of progress with the War on Leaks programme, as it provided opportunities for black youth employment. Members asked why such a programme had been launched without a budget. There was concern about dams that pipe water to Gauteng but are not providing water to surrounding communities. There were remarks and questions about top slicing; infrastructure spending; underspending and slow spending; irregular expenditure; contractor challenges; the Vaal River system and catchment managing agencies; water licensing; whether the Department agreed with budget cuts and how it could contribute to economic growth within that context; water service authorities; and corruption and consequence management.

The Deputy Minister Water and Sanitation told the Committee that were 12 221 bucket toilets remaining, with a six month target date for eradication. This could be completed by March 2020.

The Department of Cooperative Governance presented on the 2019/20 Adjusted Appropriation Bill. High staff turnover caused underspending on compensation of employees. Funds were shifted to goods and services. There was underspending on the Community Works Programme and on the Municipal Systems Improvement Grant which was intended to assist municipalities with spending. Only 27 percent of Community Works Programme workers could be trained due to delays in procurement by the implementing agents.

In discussion, Members expressed disappointment and concern about the Community Works Programme. It was submitted that the model was flawed. There were remarks and questions about the Department and the Treasury providing assistance by municipal debt; municipal support for the Community Works Programme; underspending of grants and the Equitable Share; local government finances, and accessibility of the National Disaster Management Centre.

The Committee report on the oversight visit to Eskom Holdings was adopted after amendments to reiterate that conditions must pertain to money granted to Eskom.

Meeting report

The Chairperson explained what the mandate of the Committee was. The Standing Committee on Appropriations (SCoA) dealt with all departments and entities, to find out what the impact of appropriated money was. The Minister of Finance proposed a budget, which could only become law once it had passed through Parliament. It only became an Act once the President had signed it off. The SCoA looked at the effectiveness with which the money it appropriated, was used. The Committee did not deal with entities that did not receive money through Parliament. Before 2015, the Committee did not deal with Eskom. It only came to the Committee once it needed funding. He welcomed the Deputy Minister of Water and Sanitation Mr David Mahlobo. Apologies were received from Ms M Dikgale (ANC), Mr N Kwankwa (UDM) and Mr A Sarupen (DA).

Briefing by the Department of Water and Sanitation on the 2019/20 Adjusted Appropriation Bill

The briefing was presented by Ms Babalwa Manyakanyaka, Chief Director: Corporate Services, Mr Frans Moatshe, acting Chief Financial Officer (CFO), and Mr Mbulelo Tshangana, acting Director-General. The Department reprioritised infrastructure allocations from underspending projects to those with a capacity to absorb. Funding was reprioritised towards the Blue Drop/Green Drop to improve drinking water and wastewater quality management, and the settlement accruals for the War on Leaks. Departmental Specifications, Evaluations and Bid Adjudication committees were currently functional. Irregular expenditure was due to flawed Supply Chain Management (SCM) processes. The DG accepted responsibility for filling vacancies. The Water Trading Entity account was not performing well. Performance of municipalities as water service authorities was under review. The water service boards were performing well as implementing agents, with procurement and SCM processes in good order.


Mr A Shaik Emam (NFP) commented that for the preceding five years, the Amatole Water Board had failed to produce documents requested by the Committee, after evidence of corruption had been discovered there on a Committee oversight visit. Out of R300 000, R166 000 had been saved. The board did not provide the documents requested. Corruption was rife at local and national levels.

Ms R Komane (EFF) commended the fact that the water boards could procure efficiently, as the DG had mentioned. She referred to the War on Leaks, and asked the Deputy Minister to address challenges. Why was the programme allowed to fail, when it had the potential of providing jobs to young people who were suffering? Other departments could be called upon to help with the programme.

Mr O Mathafa (ANC) asked about consultation with the National Treasury (NT) and the South African Local Government Association (SALGA). Top slicing remained a constant challenge. Was it a precedent followed by other departments, and were alternatives considered?

Mr X Qayiso (ANC) referred to water carried from Sterkfontein in the Free State, to Gauteng. People in the local areas were not getting water. There were four dams at Sterkfontein, and yet locally Quaqua was not getting water.

Mr Z Mlenzana (ANC) asked why water infrastructure grant targets were not met. How many bucket toilets still remained, and what was the target date for eradication?

The Chairperson agreed that building dams without providing water to people locally was a challenge. He asked the DG if it was fair to tell people that there was no water, because of SCM challenges. Infrastructure spending stood at 19 percent. 50 percent would not be reached by year end. Government had to show that it cared, through making work of bucket eradication.

Mr David Mahlobo, Water and Sanitation Deputy Minister, responded that dams designed to exclude surrounding communities pointed to the biggest problem that the Department of Water and Sanitation (DWS) had to face, namely reticulation. Pipelines would be built to relieve water problems. In future, water would be pumped from other dams to augment dams that were running low. He agreed with Mr Shaik that it was unacceptable for the Amatole board to not supply information requested. Whatever went wrong with the War on Leaks would be corrected. Cabinet would be approached. The challenge was that the project was launched without money at the outset, and there were implementing agents (IAs) that had to be paid. The aim had been to train 15 000 water conservation technicians, but 10 000 were not yet trained. There were programmes to equip the remaining 5 000 with other water skills. The Ministry of Finance had raised the matter of top slicing. It occurred when municipalities failed to pay debt. There was a huge debt owed to the water boards, which were unable to pay for energy. An inter-Ministerial task team was looking into the matter of municipal debt. There was a lack of agreement about top slicing. SALGA argued that government departments owed municipalities money. There were 12 221 bucket toilets remaining, with a six month target date for eradication. It could be completed by March 2020. There was the challenge of big projects in the Department that were unfunded. 

Ms Komane commented that there had to be timeframes to deal with underspending challenges. What were the challenges around payment of suppliers within 30 days? She asked for an update and figures about consequence management for non-performance and non-compliance.

Mr Mlenzana asked how the regional bulk infrastructure grant could impact on bucket eradication.

Mr Qayiso asked why there was slow expenditure in the second quarter. Why did the relation between faulty SCM process and irregular expenditure only become a matter of concern once irregular expenditure of R15 billion had been incurred?

Mr Shaik Emam remarked that oversight visits had revealed that were challenges around contractors being unable to complete the job because of lack of financial resources. Currently materials were imported from India, China and the USA. He suggested that the DWS set up a local industry to manufacture materials like water pipes. It could create jobs and enhance Broad Based Black Economic Empowerment (BBBEE). The Department could then provide the material and the contractor could provide the labour. Were the Department of Human Settlements and the DWS separate in terms of administration?

Mr D Joseph (DA) asked about a long term solution for the Vaal River system. Could other departments be involved? He referred to underspending in the second quarter, and asked if the Department had sufficient financial and engineering capacity.

Mr Mathafa referred to the Blue Drop/Green Drop programme to purify and improve the quality of drinking water and wastewater quality management. It was underfunded. When would it be implemented? When would challenges around catchment management agencies be resolved? He advised that there be regular reporting about irregular expenditure.

Ms D Peters (ANC) asked for clarification about payment to War on Leaks interns, and their utilisation in other programmes. It was inconceivable why a programme that was to involve 15 000 young people could have been launched without a budget. The President had launched it, and it had turned into an embarrassment. She asked for clarification about involving the Department of Higher Education and Training in the accreditation of interns. What had been done to involve Technical and Vocational Education and Training (TVET) colleges, and was it linked to the Jobs Fund? She asked when the DWS was going to deal with aspects of water licensing that still resembled Apartheid arrangements. There were black emerging farmers who had funds, but no water rights. The situation had to be reviewed. She asked about Vaal River initiatives. Industry was polluting the river and had to be held responsible. The DWS had to improve in planning to deal with slow spending and capacity challenges. There seemed to be a lack of concern about slow spending. 14.3 million South Africans were without water and sanitation. Bucket eradication was linked to human dignity. It was improper to depend on households to dig their own pit latrines. Norms and standards had to be developed for sanitation in schools. Small businesses went under when suppliers were not paid within 30 days. Did the DWS disagree with budget cuts? If so, what suggestions would it make? How could municipalities as water procurement agencies assist with water supply and infrastructure? There was the challenge of tap water not being safe to drink. Municipalities had to be supported. In the Eastern Cape, there was the situation were people had to carry coffins to a burial site through a river, because there was no bridge. Animals and people were drinking from the same source.

The Chairperson asked if skills deficiencies had been defined. The budget was not talking to the realities of water management. Why was there so much irregular and fruitless and wasteful expenditure, as well as underspending? South Africa was in need of project management skills. The Sectoral Education and Training Authorities (SETAs) could be employed for that. Contract management was a major problem. Was the DWS headed for an Eskom situation? Could it make a contribution to grow and transform the economy within a context of slow economic growth, especially to the benefit of black people and youth?

Mr Tshangana replied that the DWS was like Eskom in the sense that all industries relied on water. The DWS had to utilise water resources to supply bulk water security, and had to reticulate water to communities. In the Department of Human Settlements, 30 percent was set aside for women and youth. Money was shifted to municipalities that adhered to that. Bucket eradication could only proceed where water sewage lines were available. R600 million was committed to bulk water in the Free State. The DWS had established an internal construction unit. The Vaal River was polluted in four provinces. Waste water treatment was not functioning properly, as there were ageing big waste water treatment plants that were not functioning. Waste water management needed specialised skills to run it. Pollution forced consumers to pay more.

The Chairperson told the DG that he knew what the challenges were. If the Treasury could not help, the DWS could return to the SCoA.

Mr Tshangana continued that Human Settlements had to assist with waste water management in cities. Municipalities were slow with waste water management. There were water planners in the DWS, who were qualified to plan for water security. He referred to catchment management systems and that the 14 dams in the Vaal system were not talking to each other. The system had to be balanced. Demands for water supply outstripped availability. The ideal was for supply to exceed demand. Institutional arrangements had to be changed. It was desirable to create an infrastructure management agency at the national level. What was needed above all was good leadership at top management level. The DWS needed to undergo a fit for purpose exercise. He had met with the Minister about that. There had to be stability at top management level. There were critical positions vacant in finance, and there had been as succession of acting DGs. Critical positions were advertised for.

Mr Shaik Emam asked for statistics on sick leave. It seemed that 30 percent of the DWS staff were not at work.

Mr Tshangana replied that top managers on sick leave caused others to shoulder a double burden. The Human Resources (HR) division was looking at the data. People sometimes took sick leave because of toxic work environments. The War on Leaks programme could not be developed without costs and education. It was launched without a budget because the Water trading Entity account could not be used, and it could not be moved to the main account, as that would lead to irregular expenditure, as money would be used that was not earmarked for a project. The Department of Cooperative Governance (DCoG) had to support municipalities with water leaks. Data on leaks was available. Rand Water was helping to pay a stipend to War on Leaks recruits. A service provider had to be appointed to assist with recruiting. But debts had to be settled before the programme could proceed to phase 3. The bucket system was seen as a health hazard. Fixing one sewer line could make it possible to upgrade 3 000 toilets. The aim was to eradicate the 12 000 that remained, by mid-March of 2020. A White Paper on water resource management and water services had led to the Water Act. Policies had to be streamlined. The ultimate goal was the security of water supply. A water master plan had to decide about the role of local and district municipalities as water service authorities. The Department of Human Settlements (DoHS) and the DWS were under one Ministry, as Human Settlements could deal with bulk water challenges.

Ms Komane repeated her question about consequence management for underperformance and mismanagement, and timeframes pertaining to that.

Mr Tshangana replied that the R15 billion irregular expenditure was not to be condoned unless actions were taken. Irregular expenditure had to be traced back to individuals responsible. Actions were instituted against 250 individuals. There was no evidence to be found for 110. Of the remaining 139, 86 were found guilty, and 14 not guilty. A number resigned, rather than face consequences.

The Chairperson concluded that more interaction with the Department was needed.

Briefing by the Department of Cooperative Governance on the impact of the Adjustment Appropriation Bill

A briefing was presented by Ms Dorothy Snyman: CFO, and Mr Dan Mashitisho: Director-General Department of Cooperative Governance. High staff turnover caused underspending on compensation of employees. Funds were shifted to goods and services. There was underspending on the Community Works Programme (CWP), which made it impossible to create more work opportunities. There was underspending of the Municipal Systems Improvement Grant. Grant funding to municipalities was withheld due to non-compliance with the Division of Revenue Act (DORA) The Municipal Infrastructure Support Agency (MISA) had to assist municipalities with spending. An integrated urban development framework strategy was not presented to the Ministers and Members of Executive Councils (MinMec) forum by 30 September as planned. Cabinet adopted a concept for a district development model. 28 municipalities were supported to have functional ward committees in the Eastern Cape and North West provinces, with training on anti-corruption strategies. Only 27 percent of CWP workers could be trained due to delays in procurement processes by (Non-Profit Organisations) NPOs.


Ms Peters asked what DCOG and the Treasury were doing to assist municipalities who owed Eskom and water service authorities. Municipalities had services turned off because they could not pay. It was regrettable that so few people benefitted from the CWP, as it could assist households without income. Good work was being done in some communities, for instance where the yards of vandalised houses were used to cultivate vegetable gardens to supply the community. It was important that people were prepared to graduate out of CWP. Service providers were not as committed to deliver as the Department would have been. How much was paid as a stipend, and how many programmes were running countrywide? Was there a link between CWP and social workers? The CWP had to link with a need for social grants. 

At Jan Kempdorp, there were households with no income, where no-one qualified for social grants. The CWP could be used to organise support. There could be interventions to motivate households to do something for themselves.

Ms Komane commented that she had worked for the CWP in Rustenburg. The programme had to alleviate poverty, through changing the worst to something better. The model had to be reviewed. There was underperformance because DCoG did not have a hands-on approach. Implementation responsibility was given to IAs who knew nothing, took home the project management fee, and the poor were paid peanuts. She had managed a project for nine years. People had to be assisted to form cooperatives. NPOs were paying inflated prices for materials like hosepipes. The Department had to assist IAs, but there was a lack of interest, and the IAs did what they wanted.

Mr Mlenzana asked about incentives to municipalities to support CWP.

Mr Qayiso commented that underspending on CWP contributed to unemployment. What was the role of the Treasury? Was DCoG satisfied with budget adjustments? He asked for an update on interventions on behalf of poor municipalities to pay off debt to Eskom.

Mr Joseph asked how NPOs could be assisted to spend better on the CWP.

Mr Mathafa referred to underspending of grants and the Equitable Share. What help could be expected from the Treasury? There had to be better oversight to ensure that NPO spending on the CWP was effective.

The Chairperson asked why there was consistent underspending of the Municipal Systems Improvement Grant. What was being done to regenerate township economies, and what was done about ghost towns? The Committee had met with SALGA on the Division of Revenue Bill. Finances of local government were deteriorating.

Mr Mashitisho replied that municipalities owed Eskom R24 billion. Municipalities were in turn owed by residents and business. Eskom charged interest on debt, and consumers could not pay. The alternative was pre-paid electricity, instead of first using and then paying. There was a culture of non-payment. People paid Woolworths but did not want to pay for electricity. There was a correlation between good governance and payment for services. He agreed that the CWP model was flawed. The CWP was a government component and was run like the MISA. The use of NPOs had to be a part of the review of the model. The CWP only provided for eight days of work in a month and people also looked for other employment while on the programme. The reduction of the baseline affected all departments. The Department faced the challenge of wanting to focus on service delivery within a context of budget cuts.

Mr Mlenzana commented that the Treasury had been asked that the National Disaster Management Centre (NDMC) also be accessible at the local level. There were people who had waited for a long time for disaster relief.

Dr Mmaphaka Tau, Deputy Director-General: NDMC, replied that the municipality could be approached, and if it could not help, it could be escalated to provincial level.

The Chairperson responded that that would be futile. Structures were not working. The question was if there could be intervention from national. It would not do to refer people back to something that did not work.

Ms Flora Nkoana of DCoG said the CWP stipend was R97.50 per day. The target was 249 000 but currently the figure was 242 000. Details could be submitted.

The Chairperson asked about the financial status of municipalities.

Mr Mashitisho replied that DCoG worked with the National Treasury on a financial delivery plan. Financial status was linked to the governance crisis. The provincial treasuries would be included in the process.

The Chairperson concluded that the Treasury could not solve the problems of local government. Cooperative Governance had first bite, and was responsible for much. SCoA engagement with DCoG would continue in the following year.

Consideration and adoption of Committee report on oversight visit to Eskom Holdings

The report was adopted with additions and amendments. The Committee decided that insistence on conditions pertaining to money for Eskom had to be reiterated. The Chairperson advised that in future, Members write submissions before reports were tabled for consideration.

Consideration and adoption of Committee minutes

Minutes of 12, 14, 15, 19 and 20 November were adopted without amendments.

The Chairperson adjourned the meeting.


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