Tourism Budget: Committee Report

Meeting report

Opening remarks by the Chairperson

The Chairperson opened the meeting by greeting the attendants and followed by announcing the duration of the meeting. He reminded the Committee that the agenda, minutes and the Draft Report were sent in advance to all the Members. He mentioned the focus of the current meeting and reminded the attendants that they were allowed to ask the questions. The meeting would also deal with the minutes from 04 May, 11 May as well as 26 and 27 May.

He hoped everyone was continuing to be vigilant in the midst of COVID-19. His was concerned about the effects of the virus in South Africa (SA) and the world as a whole and highlighted the poor response of South Africans to the virus. He insisted that the citizens should adjust to the ‘new normal’. The Chairperson touched on how the national economy was affected by the pandemic. On a previous day, the government had revised the projections that in addition to current unemployment rate SA was likely to have more than 1.5 million people who were going to lose their jobs; some entrepreneurs would never recover due to the collapse of economy. As part of the plan to curb the crisis, lending institutions would have to be very flexible in helping entrepreneurs.

He then handed to Dr Sibusiso Khuzwayo, Committee Content Advisor, to proceed with his presentation of the Report.

Report of the Portfolio Committee on Tourism on Budget Vote 38: Tourism

Dr Khuzwayo indicated that he would quickly proceed past the initial pages that set the background and all the preliminary issues concerning the budget, as these were outlining matters that had already been dealt with by the Committee. In the recommendations part he would spend more time here as these would require Members’ inputs.

Starting from where the Chairperson had touched on, he reiterated how the tourism sector had been affected by the pandemic. He mentioned the multiple legislation and policy mandate that governed the sector.

The budget allocation of the sector for 2020/21 was R2.48 billion and would be raised to R2.68 billion by 2022/23. Project two was allocated about 52 percent of the total budget and most of this was allocated in the marketing division. He directed the Members to a table in the report that detailed the budget breakdown. Due to the pandemic there had been some adjustments to the budget; there were also some budget reduction in some entities such as South African Tourism (SAT) – which has lost revenue streamed that it normally received. As a result, the budget of the entity was constrained although it would not affect the current year 2020/21 as the entity returned more than R8 million to National Treasury.

This was followed by the observations. He indicated that the observations section was mixed up because some of the issues were mixed between SAT and the Department of Tourism so the report did not separate the mandate of these entities in terms of the observations.

Observations

The observations were numerated in the report. He emphasised that the budget allocation was not enough to achieve the huge mandate that had been given to SAT and the Department. The new approach that focused on villages, townships, small towns and small dorpies could not be covered by the current budget and there was still more work that needed to be done by the Committee in raising fund raising and redistribute them.

He moved on to the next observation that spoke of the legislative and policy review that would state that the Committee had noted that there would be tourism amendment Act that was coming but there was a problem with the timeline; there was a need for a timeline. There were also problems related to quality assurance and the need to review the white paper.

The Chairperson interjected by indicating that the Members were expecting presentation slides; he confirmed that only the report was sent to the Members before the meeting.

Dr Khuzwayo responded that the slides were not prepared as he assumed that the report would take that part.

Continuing with the observations, the next observation looked at the organizational stability. The Committee had noted that Director-General (DG) had been re-appointed for another term and the chief executive; this would raise the stability of the board, Department and SAT but there was an issue of budget cut for the compensation of employees which needed to be looked at by board members.

The next observation was on corporate governance. It had to do with the audit findings from the previous audit period to say that the Auditor-General (AG) had indicated issues in relation to the financial management, internal control and the board. The board entity, along with the Department, still needed to demonstrate to the Committee if those issues were being addressed.

The following observation was in alignment with the Committee approach on villages, townships, small towns and small dorpies. As much as the tabled documents addressed the Committee’s approach to an extent but the Committee still felt that more still needed to be done to align that approach to the work of the Department.

The next observation was on intersectional collaboration. It was a Committee approach that emphasised the need for the Department to work more with other entities within government and the private sector. There was also an issue of the Department that was still continuing to struggle to implement projects with other stakeholders.

Another observation was on the re-industrialization of the economy and digitalization of the sector. The concern was about the loss of jobs for employees by technology. Another observation was on development and promoting domestic tourism, where Committee said, with the advent of the corona pandemic, more focus now needed to be on domestic tourism and the Committee had appreciated the work that had been done. Despite this more work still needed to be done as the domestic tourism needed to be the future of the country instead of the shift from international to domestic; the Committee also raised an issue of opening up SADC and African markets.

The following observation dealt with the issue of transformation acceleration which was raised by Members saying that there was transformation in the sector and more work still needed to be done on ownership.

There was also an observation of funding the State of the Nation Address (SONA) commitment. Here there was lack of budget for the South African Police Services (SAPS) that was deployed by the President to tourist destinations and there were also no clear structures of how this would be implemented.

Another was the observation on using the Working for Tourism Programme to improve tourism in VTSDs, particularly the infrastructure projects. The problem here was on The Government Technical Advisory Centre (GTAC) process – which the Minister undertook to the Committee – that there would be a formal submission to the Committee of a status update; this was an issue that the Committee still needed to follow up. Under the observation of alignment with the District Development Model (DDM), the issue was that the Committee still needed to do the follow up with the Department.

Under the remodelling of full-time equivalent jobs, the problem was the process of changing the names – they still needed to be workshopped with the Committee in terms of what would be the effects.

There was also an observation on the impacts of the coronavirus on the tourism sector, as the Chairperson mentioned in his opening remarks, that more businesses were impacted and jobs were going to be lost; there was going to be few tourist arrivals and this would affect the tourism sector. There was also an issue that the longer the tourism sector was closed due to the pandemic, the more it was going to be affected in the long run.

On the observation of Tourism Relief Fund, court challenges and subsequent delays, he highlighted that R200 million was set aside, kept at R50 000 for tours and businesses but then there were delays as the Minister was taken to court by AfriForum. The issue was that the allocation amount was too little for the sector as it was so much affected by the pandemic and so more funds were required.

There was also an observation on upfront payments and multi-year projects; there was a need for entities to refrain from paying for services that were not yet delivered. Another observation was made on The Tourism Recovery Plan which still had to be presented to the Committee.

Members also had observed on the proposed tourism industry standards protocols for COVID-19 operations. Some work had been done but the Committee still needed international movement – even domestic tourism was limited to business tourism; there was a lot that still needed to be done. There was also an observation to rethink the tourism strategy and adjust it to suit the pandemic. For example, there was a need to move towards domestic tourism and increased use of technology, as tourism would not be the same after the pandemic.

There was also an observation on creating demand vs. market-driven marketing; there was a need to explore the new market areas and a need for a movement creating demand. There was also an observation on the commercialization of South African tourism services and this was a matter that still needed to be unpacked further; the Committee needed to look at its implications in terms of budget and business processes.

Lastly, there was also an observation on outsourcing of services. It was not a bad thing as such because of the nature of the business they are doing; they will still needed to sign joint market agreements and still had to have people in market and international offices. This meant that the SAT could not completely get rid of outsourcing but the Committee advised for the limitation of outsourcing.

Recommendations

Dr Khuzwayo followed by providing recommendations based on the observations that he had presented. The recommendations were divided in two sections which were the recommendations in relation to the Department of Tourism and then recommendations in relation to the SAT.

Recommendations in relation to the Department of Tourism

He recommended that the Minister of Tourism should expedite legislative and policy review for the Department and provide timeframes for the development of the Tourism Amendment Bill; ensure that the review of the White Paper on the development and promotion of tourism in SA considered the current tourism delivery environment, such as the sharing economy; collaborate with the tourism industry when developing the planned COVID-19 impact reports on the tourism sector, and ensure that these include the analysis of the future of tourism jobs and adaptation mechanisms to future jobs; ensure that the departmental programmes were perfectly aligned with government priorities and programmes, such as the DDM; advocate in Cabinet for more tourism funding assistance in addition to the R200 million Tourism Relief Fund as the sector would remain on lockdown level five for the foreseeable future, with many tourism businesses on the verge of closing down.

He further recommended that the Minister should ensure that in addition to the improvement of the visa regime for South Africa, the Department should engage the Department of Home Affairs to look at the possibility of recognising other reputable visas, such as that for the United Kingdom, Australia, United States of America, and Schengen – to allow tourists to come to South Africa. The Minister should also develop a comprehensive plan that detailed collaborative partnerships between the Department, SAT, the private sector, provincial departments and provincial destination marketing organisations to maximise the available budget for marketing across government and private sector; demonstrate to the Committee that the Department formalised partnerships with other sector departments that assisted in fulfilling the mandate of the Department through formal institutional arrangements; implement initiatives that promote domestic tourism to engender transformation and resilience of the tourism sector against the volatility of international markets; channel the Working for Tourism funding to the implementation of community-based tourism enterprises instead of funding projects within SANParks.

He also recommended that the Minister should ensure that the funding criteria of the Tourism Transformation Fund, the Tourism Equity Fund, and the Tourism Incentive Programme were in favour of previously disadvantaged communities, particularly enterprises in villages and townships.  He should develop a clear implementation plan to integrate the Tourism Safety Monitors to the SAPS initiatives; review the Rural Tourism Strategy and the Heritage Tourism Strategy to implement practical projects to be funded through the Working for Tourism infrastructure budget in facilitating tourism development in the VTSDs.

The Minister should also engage the private sector in refocussing domestic tourism and dropping prices to stimulate domestic tourism and to boost the recovery of the sector in mitigating the aftermaths of COVID-19. There was also a need for the Minister to provide detailed and focussed plans that ensured equitable tourism development and promotion in villages, townships and small dorpies (VTSDs) to boost domestic tourism, working in partnership with local government, the industry and the SAT. Lastly, the Committee recommended that the Minister should ensure that transformation was the key driver of all departmental and SAT programmes to expedite inclusive growth that benefited all citizens, particularly ownership.

Recommendations in relation to South African Tourism

In this section the Committee should recommend that the Minister of Tourism should expedite the development of the National Tourism Recovery Strategy (NTRS) to ignite the tourism sector after COVID-19; develop a comprehensive collaboration and partnerships plan between SAT, Provincial destination management organisations and municipalities to drive domestic tourism initiatives; ensure that the process of repositioning and repurposing public entities currently being undertaken by the National Treasury did not erode the mandate of SAT in marketing the country internationally and locally; The Ministry must also quantify the marketing budget available across all the spheres of government and maximise optimal marketing across markets and platforms. He should also expedite digitalisation of the tourism sector to modernise marketing and maximise presence across global and domestic digital platforms; develop a comprehensive domestic growth strategy that would cover various domestic market segments, and takes into consideration the VTSDs.

He further recommended that the Minister should infuse deliberate-inclusive growth in the plans of SAT to deal decisively with transformation in the sector; work closely with the airlines to ensure that the cost of travel did not affect SA as a long haul destination; develop a comprehensive collaboration strategy between the private sector and SAT in funding targeted marketing activities in both international and domestic tourism spaces; target international and African markets that brought both volume and value; focus on the higher spending international tourism markets in SA in order to drive Total Direct Foreign Tourism spend to increase the contribution of the sector to the county’s Gross Domestic Product;  intensify the focus on the new high-growth markets in Africa, China and India. The Minister should also table, to the Committee, a focussed strategy developed for these high growth markets.

He also recommended that the Minister should expand the presence of SA in the African markets to include many countries in order to stimulate intra-Africa travel and mitigate the volatility and fluidity of the international tourism markets; improve internal controls and governance of the organisation; collaborate with the provinces, cities, and towns to improve tourism airlift in the country and for international routes; integrate technology in destination SA to improve the tourist experience and competitive advantage; work with provincial destination management organisations to capacitate municipal officials to bridge the tourism marketing and business tourism knowledge gap; lastly, the Minister should work with the private sector to stimulate the South African Incentives market.

Discussion

The first Member thanked the presenter and said that he was happy with the presentation; he had no comment.

Mr H Gumbi (DA) said that he was also covered with the report.

Ms M Gomba (ANC) also thanked the Chairperson and said she had no comment.

Mr K Sithole (IFP) thanked the presenter for the job well done. He said that the Committee should put timeframe on the following report numbers: 10.17, 10.18, 10.22, 10.25, 10.29 and 10.33 so that they could be monitored according to the timeframe.

The Chairperson indicated that there were timeframes; the Committee agreed with the Department that in September 2020 a report would be published on transformation in the tourism sector; another timeframe was the end of FY2020/21.

Mr P Moteka (EFF) emphasised the importance of timeframes and asked for clear timeframes that would not confuse people in the villages as this would come back as a problem to them.

Mr Gumbi indicated that Mr G Krumbock (DA) had challenges with his signal which was why he could not join the meeting.

Ms L Makhubela-Mashele (ANC) thanked the Chairperson and followed by directing the Content Advisor of the report to number 7.2.1 of the draft which was a paragraph that she saw a need for it to be qualified so that it would be clearer. She also directed the drafters to point number 9.3 where she saw an error about two resignations in the entity in SAT; she corrected that there was one resignation which was the chief strategic officer and that the chief quality officer’s contract had ended. She further pointed to number 9.1.3 that spoke about the general observation that talked to work opportunities; she argued that the point needed to be outlined in more details and the same thing needed to be done on number 9.1.5, which spoke about the delays in implementing tourism relief fund. She thanked the drafters for a well-detailed report.

The Chairperson noted that all points made by Members. He then said that the report would indicate the specifics of the Department’s performance as far as directors were concerned around issues of transformation relating to equity. Secondly, responding to the specifics which Mr Moteka was talking about, the Chairperson indicated that the projects that were in the districts – including the specific projects – would have to be specified and be brought to the attention of the Department. Thirdly, he emphasised that the delays that were raised by Ms Makhubela-Mashele would be dealt with. He also corrected the report drafters on using the word ‘dorpies’ instead of ‘towns’ and said that the words have the same meaning.

He mentioned that if it was not for COVID-19, an advice would be sent to the people of South Africa to make contributions around transformation chapter which would be looked at in September 2020. Lastly, he gave recommendations to the Department on how to raise tourism relief funds.

Dr Khuzwayo suggested that there should be an umbrella timeframe which was near the end of 2020/21 financial year.

The Chairperson agreed with the idea.

The Committee Report on Budget Vote 3: Tourism was adopted with amendments.

The Chairperson assured the amendments would be done.

Consideration and adoption of minutes

The Chairperson tabled the minutes of 04 May 2020.

The minutes were adopted without amendment.

The Chairperson moved to the minutes of 11 May 2020 and asked for a mover.

The minutes were adopted without amendment.

The Chairperson moved to the third set of minutes: 26 May 2020

Ms Gomba moved for the adoption of these minutes.

Mr Sithole seconded the motion.

The Chairperson moved to the last set of the minutes:  27 May 2020

Ms Makhubela-Mashele moved to adopt the minutes.

Ms Gomba seconded the adoption.

Announcements

A Member announced that the Committee received a meeting notice from the Tourism Business Counsel of South Africa (TBCSA). The meeting would be for information-sharing with the Committee.

The Chairperson confirmed that he received a call from TBCSA and he agreed, on behalf of the Committee, to have the meeting with them; what was left was for the Committee to agree on the date and time. He followed by asking if there were any objections to that proposal.

Ms Makhubela-Mashele stated that she was satisfied with the Chairperson’s response to TBCSA as this meeting was necessary so that the Members would share, with the counsel, their views on COVID-19 impact on the tourism sector.

The Chairperson assured the Members that time and date for this meeting would be agreed on later.

On the last note: an invite would be issued to South Africans to make inputs of their experiences on transformation in the tourism sector in the country. Secondly, he would arrange a meeting with the chairpersons of tourism in provinces so that they could implement the aspect of programmes on the tourism oversight forum and then interact with them.

It was important for the Committee and the government to emphasise that although the economy would be opened and life must return to normality, people needed to be extraordinarily vigilant as members of the society so as to curb the spread and flatten the COVID-19 infection curve.

He closed by thanking Members and the support staff for the productive engagement in the meeting.

The meeting was adjourned.