The Department of Tourism, with the Minister and Deputy Minister, briefed the Committee on the revised budget. The Department said Covid19 has transformed the global landscape. All sectors have been impacted but none more than the travel and tourism sector. It was estimated that five to seven years was lost in the number of tourists globally. The tourism sector has in the past demonstrated strong resilience and will certainly be transformed and rise again. Early indications are that recovery of the sector may take between 12 and 24 months.
The impact of COVID-19 on the tourism sector has necessitated a review of the Department’s plans with due consideration of the emerging risks in the organisational performance management environment due to the pandemic. The review of the plans has taken into account the impact of the national lockdown, associated restrictions and high levels of uncertainty on the practical execution of some of the projects planned for 2020/21. With restrictions placed on travel and the phased opening of economic activities, departmental projects planned for 2020/21 that require site visits, construction, exhibitions, contact training and placement with host employers were anticipated to be especially affected. These projects relate mainly to the Expanded Public Works and Tourism Incentives Programmes. International and domestic marketing, exhibitions and events i.e. the work of the entity, South African Tourism, is equally affected. As SA tried to come to terms with the impact of the pandemic, work commenced on a Tourism Recovery Plan. As SA reprioritises resources to fight the pandemic, it was anticipated that the portfolio budget would be impacted, and the extent of which would only be confirmed during the adjustment budget.
The presentation addressed recovery, revised (reduced) budgets for programmes and the capability of the allocated budget to mitigate effects of covid19 on the tourism industry.
The Committee asked how the tourism sector can be saved from obliteration as many businesses have gone under and if confidence in the sector can be restored. Members wanted to know when the sector would reopen and where the Department was sourcing its data for its predications on the recovery period. Questions were directed towards the relief fund not assisting white businesses, the different situations in each province regarding the spread of the COVID19 virus,
There was concern around the R1 billion lost by the Department in the revised budget and the effect on this on particular programmes, opportunities and tourist attractions. Members asked if the Department was still marketing the country even though tourism was not functioning, how many companies benefited from the relief fund per province and if the money lost would be returned to the Department to support recovery efforts. Members wanted to know how the Department was looking at best and worst case scenarios.
The Chairperson said the Minister is in a tight corner because the sector wants to open and there is pressure from all sides. He reassured the Minister she has the support of the Committee and thanked her and the rest of the Department of Tourism for always availing itself to answer questions.
The Chairperson welcomed the Department of Tourism, the Minister of Tourism, Ms Mmamoloko Kubayi-Ngubane, and the Deputy Minister, Mr Amos Fish Mahlalela.
The Chairperson said the number of people that contracted the virus and the number of deaths because of the virus, are rising. The Chairperson conveyed condolences to everyone who has lost someone during this time. He mentioned the loss of a North West MEC, and many executives, including the Premier, who contracted the virus. He wished everyone recovering from the virus a speedy recovery. The Chairperson stressed the importance of complying with health regulations and directives put forward by the Corona Virus National Command Council to prevent the spread of the virus.
The Committee is meeting because of the effect the corona virus and its consequences on the budget. The Department, led by the Minister, briefed the Committee. The budget can only be adjusted upwards, downwards, or not at all. During the presentation, the Minister will show in which category the tourism sector falls.
The Chairperson handed over to the Minister and said in the case of connection problems, Ms L Makhubela-Mashele (ANC) will take over.
Foreword by the Minister
The Minister greeted the Deputy Minister, the Portfolio Committee, the Director-General (DG) and senior leadership of the Department of Tourism. The tourism sector has been hit hard by the pandemic. The first thing to note is the Annual Performance Plan (APP) is amended. The Strat Plan, as tabled when engaging with the Committee, stays the same. The Department kept the old figures. Once the Minister of Finance tables the revised budget, it will be presented to the Committee.
With the advanced level three announcement, a large part of the sector returned. The Committee always looks at what must be done. The wish lists which get submitted go through rigorous processes in government until the final announcements are made. Many areas in the country saw spikes in the number of infected people and number of deaths caused by the virus. This goes further than statistics. It reaches close to home and causes fear. It impacted several restaurants. The Minister said she visited restaurants and recalled concerns raised. Many of the restaurants do not sell alcohol as they do not have a licence to sell. Even restaurants that can sell alcohol are having problems. People stay at home voluntarily. Many restaurants have little to no clients, even ten clients a day is seen as luck.
Government opening the tourism sector is not the problem. People are weary because of the number of infected people and number of people dying, rises. Some people must isolate for 14 days because the person was exposed to someone with the virus. It is a difficult environment to operate under.
The Committee must take note the Department proactively identified areas where there will be difficulty with implementation because of the corona virus. An example of this is market access. Market access is not being able to spend or have activities since conferences and exhibitions are not taking place. Transformational targets and goals are suffering because of this. If businesses cannot go to market, businesses will find themselves in a difficult position.
Regarding finances, the Minister said there is confusion on what was done. When the Committee returns for the Annual Report, there will be a report on the Tourism Relief Fund (TRF). Progress was made despite the issues with the court, and delays. Those who believe the Department wants to discriminate against white businesses will hopefully be persuaded otherwise with the presentation.
It is not about discrimination. The emphasis is on people complying with South African laws. The emphasis is on recognising Broad Based Black Economic Empowerment (BBBEE) remains one of government’s policies. If we have it, it continues to be able to transform the sector for the betterment of the country. If everyone is not included in the economy, then the country’s democracy is at risk. The policies are put in place for a reason. The issues surrounding TRF will be addressed in the Annual Report.
The Minister said the Committee will see the allocation the Department announced for tourism in guides, in this financial year. The Department acknowledged many of them did not receive support. Mechanisms are needed to give them support. The provincial registrar was asked to assist the Department in verifying details of registered tour guides. The information provided by the provincial offices was taken to Home Affairs, to validate if the individual was still alive. The Unemployment Insurance Fund (UIF) offices were contacted to make sure the individual is not receiving UIF payments, to avoid double dipping. The first batch of results came back. There is difficulty with some provinces. Some provincial offices were closed due to Covid-19. Some level of understanding is needed in these times. The Department is playing catch up. Some individuals were found to benefit from the UIF, so were taken off the list.
The Minister closed off her remarks by wishing Ms Morongoe Ramphele (Department of Tourism DDG: Domestic Tourism) well as this is her last meeting before her early retirement. She handed over to the Director-General (DG), to take the Committee through the revised budget.
The Chairperson thanked Ms Ramphele for her work ethic, her input, and hard work. He wished her well for her future endeavours.
Mr Nkhumeleni Tharage, DG, Department of Tourism, briefed the Committee on the revised budget.
Presentation on the Revised Budget for the Department of Tourism Looking at the estimated global impact of covid19, there is a decline of international tourist arrivals. It is estimated five to seven years would be lost in the number of tourists. This is significant because it suggests South Africa will follow the same trend. It justifies the Department’s conservative approach and assesses if the approach is doable. Recovery could take between 12-24 months, and 12 months could be too optimistic. There are still uncertain times ahead in the industry but also in life.
There are areas affected by the adjustments and those adjustments are downward. The marketing part of the sector is negatively affected because of the environment the sector finds itself in. It will not make sense to put messages out there to come to South Africa when people are struggling to stay alive.
The presentation looked at the revised budget summary where all programmes were revised downwards [details in attached presentation]
Looking at the capability of the allocated budget in mitigating the effects of covid19 on the tourism sector, the current reprioritisation is aimed at supporting the efforts to fight the pandemic. This is based on the understanding that limited marketing and promotional activities can take place in the current environment and most activities will be planning related and no activations. The Expanded Public Works Programme (EPWP) funding will amongst others assist with upkeep of the tourism asset base within government to the extent possible as part of the broader sector recovery plan.
Domestic tourism will be the first point of recovery. After domestic tourism the Department cannot say if it will be followed by regional, and then by international. Countries, such as New Zealand, are starting to report almost zero cases and no active cases. Countries like these will possibly be accepted first. It will depend on who will be travel ready. The more the country recovers the more the country becomes a potential market. There are countries which are not taking precautionary measures and do not lend themselves to become a market to do business with.
Regarding Tourism Research, Policy and International Relations, there are many Covid-19 related savings, stemming from travel and accommodation. Meetings are online and no large gatherings occur.
Regarding research and knowledge management, most of the other research undertaken will not be happening. Rather, it will be Covid-19 related research. Conferences and innovation workshops will no longer take place.
Green Tourism incentives still has sufficient capital to service the programme adequately.
The Deputy Director-General (DDG) said the Department is responding to the current challenge of the APP. The Department will maintain its product base and skill sets and will be ready by the time of recovery. Resources were put forward to make sure public facilities in the hands of the state, is maintained. The Department is monitoring the environment closely.
Ms M Gomba (ANC) thanked Ms Ramphele for her work and contribution to the country, particularly to the tourism sector.
Mr H Gumbi (DA) asked how the tourism industry can be saved from obliteration as many businesses have gone under and will feel this hurt for a long time. He asked if confidence will be restored into the tourism sector again, as a stable sector providing jobs.
If the sector is up and running by December, as previously said, then hypothetically, a large part of the sector would employ people in December. He asked how the budget speaks to this. In the budget presentation, there is no indication when the sector will open.
He said he communicated with the Minister’s office around the charter boats industry in Durban and did not receive any feedback. He asked when to expect a response as the representatives want to return to work safely and in a way preserving jobs and human life. He asked how and when the sector can return.
Mr P Moteka (EFF) found it scary what Covid-19 is doing to the nation. He asked how many job opportunities will be affected by these adjustments as the loss of R1 billion is a lot of money. He also asked if the Department will still be able to do away with the grading cost in this financial year, since the grading is compulsory but free. He wanted to know what the Destination Development Programme, having lost R16 million, means.
He asked how many opportunities are lost out of this and what the Department is doing to ease this kind of pain. He said if R16 million is lost, then he wants to know what the Department is left with. He wanted to know how these adjustments affect tourist attractions in villages and in small towns and asked if these places will be cut from the APP.
Mr G Krumbock (DA) said everyone faces the same disadvantage, dealing with a new pandemic which is not well known. In the Western Cape it seems the peak is going to be later than expected. An implication of this for other provinces, when the sector re-opens, is those provinces will have the same kind of peak. It will appear later and then flatten. It may mean the peaks may not be at the end of August or the beginning of September, but later. This will likely be closer to the Christmas period, where people traditionally take annual leave and travel. If this is the case, he asked how the Department is strategising around it.
He said the Department may not be able to capitalise on this, mainly because of the choice between going to a country with little or no active cases, such as New Zealand, or coming to South Africa, which is just coming off of a peak in cases. He asked what work is being done around this to see what is possible and what is not.
He referred to the Minister mentioning the Covid-19 grant for businesses which meet the BBBEE requirements. He referred to the Minister saying it is not racially motivated, but rather an implementation of government policy. He said if A=B, and B=C then A=C: a simple, philosophical, logical statement. It unfortunately is based on the colour of the employer.
He said, if the Department is forecasting a 12 -24 months recovery period, there might be calls for further assistance to get up and running again, rather than just getting through the virus. He assumed the same policy will apply. He assumed getting assistance will be based on qualifying through BBBEE requirements being met, if you apply for a once off grant. He asked the Minister what advice she gives to potential employees looking to get into the industry. He asked if such persons must look at the race of the employer, based on policy, as some business will get help but others will not. It is a very practical consideration. Many employees will permanently lose jobs because employers of a certain colour might not get assistance in the future.
Mr M De Freitas (DA) asked how the 12-24 months timeframe is arrived at. Many countries have already opened borders and tourism has already started. He asked what empirical evidence there is to base the 12-24 month timeframe on. He also asked what is being done and how it is being communicated to the world, so the industry can start planning around it. It seems government is just sitting and waiting for the 24 months to be over and no booking or planning is taking place. Other countries are already marketing and advertising even though borders are closed. He asked what plans are in place to revive the tourism sector.
Mr K Sithole (IFP) asked how many companies benefited from the R200 million Relief Fund and if it can be broken down per province. He asked if the recovery system is focusing on domestic companies or if it is checking countries which do not have the pandemic as bad as South Africa.
As the number of cases increase, it seems recovery will likely be two to three years. He asked what protocols are in place to focus on in the coming years.
Mr Z Peter (ANC) agreed the country must continue with precautionary measures as the Queen of the Xhosa nation succumbed to the virus. He conveyed his condolences. He said BBBEE does not need to be explained because it is here to stay. The only thing which needs to be done is the Department must act responsibly and continue with the balancing act so other sectors do not suffer. The R1 billion lost is a lot of money. When Parliament comes back in full swing, there must be a strategy plan which invites all the key roleplayers to figure out what can be done to turn the situation around, moving forward.
Ms S Xego (ANC) welcomed the presentation on the adjustment. She said if it is used efficiently, it will change the lives of the people of South Africa. She welcomed Level Three regulations on opening tourism businesses. She appealed to the public to adhere to precautionary measures to keep safe. She asked if there are monitors or ways to enforce regulations in tourism businesses, to make sure the public adheres to regulations. As the virus is rumoured to be airborne, it can be everywhere.
Regarding the Relief Fund, marketing, and freelancing tourist guides, she said it is the same concept implemented by the Department of Transport to assist taxi drivers. She said she wished the same kind of help was available to part-time workers in restaurants. These persons are also affected in Level Five. There is a notice calling for submission for funds. She asked how long this notice is out there, since the deadline is 31 July. She wished Ms Ramphele well on her retirement.
Ms L Makhubela-Mashele (ANC) also wished Ms Ramphele farewell. She asked the DG if National Treasury undertook to say if the money will be returned to support the recovery efforts of the Department. Answers about the money being returned to the Department are needed to put the Committee at ease.
Regarding the issues around the EPWP work opportunities, she asked how the adjustment budget will affect those job opportunities. She also asked how this will look in percentages. The Tourism Greening Programme is a particularly good programme. It assists enterprises to implement energy efficiency to reduce electricity payments and other expenses. In the past financial year, the programme was not adequately reported on. She asked the DG to explain, in line with the revised APP, what the key elements are which will see the money used effectively to benefit small Bed and Breakfasts (BnBs) within townships and rural communities. She asked how the Committee can be reassured this money will help those BnBs and ensure it will have some savings to help it in these trying times.
Mr H April (ANC) wished the DDG well on her retirement.
The Chairperson asked how the Department looked at the possible scenarios. He asked what the best case scenario is and how the Department is preparing for the best case scenario. He asked what the worst case scenario and how the Department is preparing for the worst case scenario.
The tourism sector is gradually opening. Businesses are opening, but will not make profit. These are in survival mode. The problem is small businesses and businesses starting to get into the sector have no access to capital to cushion the economic blow related to the pandemic. He asked how the Department is working with the rest of the role players in the tourism sector to assist in this matter. With the pandemic, everything is uncertain. Many want to open because business is affected, and the Department receives the blame. The Department does not run the hotels, BnBs and so on. The Department ensures coordination, communication, infrastructure related to government, and budgets used to create an environment enabling people to start work. The risk planning can be presented to the Committee in the future.
Ms Xego said a transformation report will be presented to the public to assure South Africans transformation is taking place within the tourism sector. This will be done in September. Before then, the Committee will sit down with the Department and look it over.
Ms Ramphele (DDG: Tourism Sector Support Services) replied on the question of how many entities received the TRF in provinces. She said R200 million capped at 50 000 is going to support 4 000 entities. As it stands, the Department received 7 293 applications and managed to pay 3 861, nationally. The Western Cape had1 875 applications and the Department managed to approve 936. The Northern Cape had 222 and 119 were approved. The North West had 299 applications and a—157 were approved. Mpumalanga had 434 and 227 were approved. Limpopo had 529 applications and 281 were approved. Kwazulu-Natal received 1 149 applications and 581 were approved. Gauteng had 1 752 applications and 981 were approved. The Free State had 285 applications and 131 were approved.
Ms Shamilla Chettiar, DDG: Destination Development, Department of Tourism, replied to the questions on the EPWP and the destination development targets. She repeated the Minister’s sentiments, saying all the targets presented in the revised APP will be achieved within the current budget. The projects in the various small towns and villages presented in the revised APP are still at work.
The Department will be able to do it within the current budget. Regarding the impact on the EPWP work opportunities, the Department presented a downward revision of the work opportunities which will be achieved this year, in the revised APP. This revision is based on the conditions on the ground. The Department envisioned a prolonged reopening of the sector and considered if the Department can create safe conditions for students who were in classroom learning, to return to classroom learning. Also, if there are employers who can take these persons, various participants can be placed with those employers. The considerations around the adjustments and work opportunity figures are facts based on the conditions on the ground. The work opportunities set out in the revised APP are 2 500 and will still be achieved this year.
The DG addressed tourism greening. He said the sub-programme allows for applications from establishments. Those applications will determine if the business needs to be retrofitted, and the kind of saving which can be realised in relation to energy and waters. Previously what this programme did was train the youth and then the youth would go out and lead the charge. Unfortunately, this takes time and the current environment needs frequency. The Department does not want to lose the aspect of the youth gaining experience, but the situation requires expediency. The Department will relook the way operations are run, to make sure things are done efficiently.
The Department does not have a deal with National Treasury. It will be guided by what the Minister of Finance announces at the last emergency budget meeting. Going forward, all departments will be subject to zero base budgeting. The Department will have to make a compelling case to make sure it gets the necessary resources. The Department has no baseline, only the remaining +/- R1 billion to work with. For the 2021/2022 financial year the Department will not have this baseline, but will have to fight for more resources.
The 12-24 month timeframe is modelled after what has emerged from the journals. This is the information coming through. The recovery will be much longer than with the Severe Acute Respiratory Syndrome (SARS) virus. The Department has a risk adjusted approach. In the risk adjusted approach, an example is interprovincial travel. Domestic travel is not open yet. There are several activities which are not seen coming through yet. As it stands it is still uncertain what the etymological data will show going forward. If it continues to be negative the Department does not know what it means going forward and how it will affect decision making.
If the activities taking place now are at a much smaller scale, and people are cautious to visit these places, and look at the border not opening, between now and December, add another six months, this takes you to 12 months. Given an environment where there is no influx of tourists from other countries, next year, between January and June, there is an increase in those activities, those businesses will not even get to a place of recovery.
The Department knows there will be many businesses that will be back by then, but others will not have survived. The Department does not know if the 12-24 months is enough. The reality is the impact will be felt for a longer period of time than previous disasters.
Regarding EPWP, the Deputy Minister said the presentation made during the APP still stands and is not affected by the current adjustment. As indicated, the APP is adjusted according to what is currently presented. In terms of villages and small towns, programmes still in development still stand.
The green programmes performed very well. Good work was done on this. He said he took part in a programme where unemployed graduates ran the programme. All those who benefited from the programme were people from villages who had BnBs and guest houses. Participants were mainly women. Proceeding with the programme will make a lot of impact in the industry.
He said BBBEE is a government policy and it must not be looked at from a negative perspective. The intention is to build transformation and to benefit all South Africans and the economy, regardless of race. The policy is implemented and cannot be deviated from, for any reason. It addresses fundamental challenges South Africa faces. If it is not implemented the economy will remain skewed.
The Minister thanked everyone for the questions and comments. She addressed Mr Gumbi’s question and said her office responded to the charter boats representatives. He was not copied into the response. The issue falls under the Department of Transport, and is not regulated by tourism. It is difficult to help when it is not Tourism’s territory. This was communicated to the representatives. The charter boats representatives’ issues will be dealt with through the Department of Transport.
Grading cost will be dealt with in detail when the Department presents for South African Tourism (SAT). There is no cost involved. A decision was made. For this financial year, the Department will not take money for grading.
For the sake of sustainability, when an employee is employed, there is a check to see if the employer complies with the BBBEE policies as well as UIF policies. One of the challenges the Department faces is that many of the employers are not compliant and it affects employees. Some deducted from employees and did not pay UIF. The employee must check on the payslip if the UIF is deducted.
Many businesses, both Black and White, say it learned a lesson and asks for assistance to be better businesses. The Department’s responsibility is to assist the businesses. The Department must reach out and explain the requirements properly. Many who qualify did not know it qualifies. A White businessman thanked the Minister for paying because he was discouraged from applying.
Misinformation is dangerous to the tourism sector and the country. She urged the Committee and the Department to communicate the proper information to make sure all people who qualify, no matter colour, must apply.
Government is not sitting and waiting. The Department is not behind, and Ministers meet regularly to discuss what is happening in the world. There is constant global analysis and many countries appreciate what South Africa is doing. Looking at the numbers in South Africa causes panic because the numbers are high. Evaluations must be done. The Department created Tourism Covid-19 Protocols. The Act allows the sector a set of norms and standards to follow. Once finalised, it will be published. This creates confidence in the sector so people can see the sector has protocols in place, despite what is happening.
Other opportunities the Department sees are on the District Model. The Department must build confidence. This can be done by paying attention to districts which are not declared hot spots, seeing how the numbers look, and evaluating the tourism possibilities there to start grooming them as Covid-19 free and market them as tourist attractions.
Things are constantly changing. This is why models must constantly be updated. The Department communicates with the United Nations World Tourist Organisation (UNWTO) and the World Travel and Tourism Council (WTTC) frequently. WTTC represents the private sector globally. Big operators rely on the WTTCs opinions of countries. It is important to be in constant communication with them. The tourism recovery strategy is put in place to build confidence in the sector. There are attractions saying products are not meant for domestic markets and prices cannot be lowered. Unfortunately, it will suffer as the pandemic continues to progress. The Department will continue to communicate with these organisations and provide them with information so these organisations can make informed decisions. Products and properties belong to them. The Department can only provide support and guidance, it is up to the organisations to be adaptable to the environment or not.
The Minister of Health, Dr Mkhize will go public and explain what the virus being airborne means to the country. There are several things relating to part time workers in restaurants getting reprieve, but it is not the case. Tourism activities will continue to be affected as numbers rise.
The Department did not look at best case and worst case scenarios, as things are very uncertain. Things constantly change. To make decisions, a stable flow of information is needed. In March, the best case scenario is if the Department can handle the pandemic as well as the rest of the world, by May/June, tourism will resume.
Even countries who think they managed it, experience second waves of infection. So it is impossible to model best case and worst case scenarios. Continuous risk planning must be done. The impact on the sector is huge. This is why the Department wanted to open certain parts of the sector at Level Three, and worked tirelessly to get protocols in place for health and safety.
It is understandable the budget is redirected. It will not make sense to spend money on marketing when the health sector has no beds. Prioritisation took place. Hopefully in October when the virus is managed, the Department can go to Treasury and plead for funds to make its way back, to start marketing. The Department has not lost touch with SAT, the hubs are operational, and it will be explained how the sector remains in certain markets.
The Chairperson had a network problem. He thanked the Minister and her team for making sure within the tall difficulty the Department finds itself in, it remains focused on the principle.
In these times, new things are learned every day, every week, and every month. He said going to driving school and securing a driver’s license, does not mean you will not be in an accident or cause an accident the next day. This applies to any person who thinks he is not affected by the corona virus. Everyone’s behaviour must be the same to ensure the risk of transmitting the virus is minimal. People want to open and operate and make profits, but at what cost? One mistake can result in moving backwards and all the process will be for nought.
The Minister is in a tight corner because the sector wants to open and there is pressure from all sides. He reassured the Minister she has the support of the Committee and thanked her and the rest of the Department of Tourism for always availing itself to answer questions.
The meeting was adjourned
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