The Portfolio Committee on Water and Sanitation (the Committee) convened virtually for a briefing on the 2023/24 appropriated budgets and annual performance plans (APPs) of entities undertaking work on behalf of the Department of Water and Sanitation (DWS). The APPs of the Breede-Gouritz Catchment Management Agency (BGCMA), Inkomati-Usuthu Catchment Management Agency (IUCMA) and the Water Research Commission (WRC) were presented for deliberation.
The observation was made that the budget allocation for employee-related costs was beyond 50% of the proposed budgets. The Committee sought justification for the excessively high salaries and raised concerns that critical operational matters might be compromised. The Committee was informed that the mandate of the agencies is service-orientated and requires personnel with specialised technical skills. The services are delivered by scientists and engineers in the field of water resource management. The agencies acknowledged that employee costs could be perceived as a problem and suggested that a system review might be needed.
The Chairperson said Freedom Day and Workers Day should both be celebrated considering the events leading up to the first elections on 27 April 1994 and because many people around the world have fought for 1 May to be recognised. He was aware of the different schools of thought on both matters but held the view that the days should be remembered.
Breede-Gouritz CMA presentation
Mr Bongani Mnisi, Board Chairperson, BGMCA, stated that although the name of the agency changed to Breede-Olifants CMA in April 2023, when it was listed as a public entity, the presentation would be based on the activities of the BGCMA. The APPs would be adjusted by September 2023.
Mr Jan van Staden, Chief Executive Officer, BGCMA, presented the targets for the following medium-term strategic focus areas. Targets for the 2022/23 financial year are in brackets.
Water Resources Management (WRM)
% of land use planning and rezoning applications commented on – 90% (90%);
Water Use Management
% of registrations finalised (incoming requests logged) – 85% (85%);
Institutional and Stakeholder Relations
Number of learners and stakeholders capacitated and awareness in WRM – 5 000 (5 000);
Water Allocation Reform
% of HDIs and resource-poor farmers supported on water use – 100% (100%);
Water Resource Protection
Number of water resource points monitored – 80 (80);
% of reports complying with listed financial reporting prescripts – 100% (100%); and
Management and Governance
% of compliance reports and non-financial reporting prescripts produced – 100% (100%).
Ms Zanele Mngoma, Chief Financial Officer, BGCMA, stated that a 7.25% budget increase is proposed for the 2023/24 financial year. The proposed sources of funding totalling R87.9 million consist of R42.1 million from the augmentation grant, R33.8 million from water resource charges and R11.8 million from interest received on late payments. The entity is a service-orientated agency hence 67.1% of the budget is allocated to employee-related costs.
Inkomati-Usuthu CMA presentation
Mr Sam Mthembu, Board Chairperson, IUCMA, said the reduction in the budget allocation was presenting difficulties in fully implementing the APP. The catchment area usually experiences heavy rains and floods every year in January and February. The agency meets regularly with the local COGTA to find solutions to negate the effects of the floods. To stimulate job creation, the entity would be spending 40% on BBBEE suppliers.
Mr Charles Mohlala, Chief Executive Officer, IUCMA, highlighted the targets of the key priorities for the 2023/24 financial year:
Increased stakeholder satisfaction
Implementation of the stakeholder engagement plan – 100%;
Enhanced human resource capabilities
Disabling injury frequency rate / employee turnover rate – 80%;
Maintain financial sustainability
Working ratio – <80%
Debt collection ratio – 71%; and
Protection and use of water resources
Implementation of the ICT strategy – 30%
Identified COBIT gaps addressed – 100%
Ms Sylvia Mabunda, Chief Financial Officer, IUCMA said the budget was computed using R174 million as a base but due to limited funding, the amount was adjusted downward. The proposed budget would be allocated in terms of the following programmes:
Water resource management – 53%;
Human resources and business support – 26%;
Finance – 13%; and
Administration and governance – 8%.
Water Research Commission presentation
Dr Jennifer Molwantwa, Chief Executive Officer, WRC, said the term of the new board started on 1 May 2023 prior to the approval of the APP.
The Chairperson asked if the APP had the approval of the new board.
Dr Molwantwa confirmed that the APP had the support of the new board. She presented the programme structure to implement the 2023/24 strategy as follows:
Programme 1: Administration and governance: development plans implement – 5%;
Programme 2: Corporate services: working ratio – 80%;
Programme 3: Finance: water research data observatory implemented – 0%;
Programme 4: Research and innovation: resilience products – 50% / adaptation products – 30%; and
Programme 5: Knowledge and stakeholder engagement: number of candidates supported – 200.
Mr Fazel Ismail, Chief Financial Officer, WRC, presented the following breakdown in the sources of funding:
Levy income – R301 million (72%);
Leverage income – R104 million (25%);
Interest income – R7 million (0.01%); and
Other income – R290 000.
He explained that 50% of the total income of R413 million is allocated to research and development investment, but not all research work results in products.
Ms R Mohala (EFF) asked when the seven remaining catchment management agencies (CMA’s) would be established. In light of the limited capacity of the agencies, she wanted to know what enforcement actions had been sought against non-compliant users. She asked how many non-compliant users had the IUCMA referred to the NPA. She wanted to know which programmes would be compromised considering the decreased budget allocation. She enquired about the major challenges in the CMA’s area of jurisdiction and the strategies adopted to address challenges.
Mr A Tseki (ANC) had trouble analysing the APP of the IUCMA because it did not reflect prior year performance indicators. Without a comparison to prior year experience, the plans appeared to be brilliant. He was concerned about the salaries which were beyond 50% of the budget because it might compromise critical areas such as operational costs, capital outlay and maintenance. He asked if the Committee should merely accept the proposed tariff increases because they had already been approved. He questioned the BGCMA graph on grants received because it reflected that no money was received prior to the 2019/20 financial year while the agency had been in existence before 2019. He appreciated the cooperation between the IUCMA, Mozambique and Eswatini. The issue of debt management had been flagged by the Department because of the money owed by municipalities to the water boards. He sought clarity on why the CMA’s did not raise debt management as a matter of concern. The IUCMA budgeted R128 million funding from the Department but the amount needed to be adjusted downward. He asked how the priorities would be reshuffled based on the reduced funding. The Committee would have to provisionally approve the plan because the plan for the revised amount would have to presented. He asked if the R2 million that the IUCMA had budgeted for capital outlay included the purchase of new machines. He sought clarity from the WRC about conducting research on new societal issues.
The Chairperson asked if the BGCMA would be helping Gauteng and share their experience of removing foreign growth in dams and rivers in Hartbeespoort Dam. He noted that the presentation did not indicate specifics about stakeholder relations in terms of the number of young people, people living with disabilities and women. He asked what informed the 7.25% expenditure increase. In his view, salary costs representing 67.1% of the budget meant that the entity was simply existing to employ people. There seemed to be no mechanism to scale down on salaries. He regarded this as a serious point and urged the entity to change the status quo. The entity was granted R42 million of the requested R52 million in augmentation grant. He asked if the revised amount was creating a crisis and how the budget would be reshuffled. He noted that the achievements of the IUCMA were not presented in a manner that would allow oversight. Additionally, the maintenance budget of R600 000 is fairly low considering that infrastructure had been dilapidating speedily. He questioned the reduction in leverage income of the WRC from R104 million in the 2023/24 budget to R74 million in the 2024/25 budget. He asked for justification for the reduced amount. He sought an explanation for the human resource costs of the WRC being four times more than the running costs.
The Chairperson addressed the Ministry and stated that in future, meetings would not start if the Minister or Deputy Ministers are not present.
Deputy Minister Judith Tshabala replied that she took note of the Chairperson’s statement. She was sent on behalf of the Ministry to lead the Department and the agencies in giving an account of their financial positions.
Deputy Minister David Mahlobo apologised for joining the meeting late and asked that the agencies be allowed to respond to the questions from Members.
Breede-Gouritz CMA response
Mr Mnisi found the questions helpful in assisting the CMA to reflect and plan better. It was tricky to show the human resource targets achieved in terms of women, young people and people living with disabilities. But 60% of the officials are female and 94% are black and include interns and students in the water resource management field. To save costs and ensure that services are deployed effectively in the Western Cape, three entities were merged to form the new Breede-Olifants CMA. On compliance issues, he replied that it was necessary for stakeholders to come on board. For example, to ensure a proper response, farmers would report if they noticed issues of concern in their areas. Addressing the challenges is a long process and requires honesty from stakeholders. He remarked that it might take time to compare the prior year’s achievements with the current year but undertook to respond in writing on the prior year’s targets. Regarding the salaries beyond 50% he explained that, unlike a production company, the entity provides services rendered by scientists and specialists to ensure quality water. The entity would be able to do more if more money was available.
Ms Mngoma said debt management was very challenging. An agency had to be appointed to help with debt collection and billing. She was aware that municipalities owe the water boards a lot of money but this was not the case with the CMA’s. The entity works transversally and was willing to assist with the Hartbeespoort Dam clean up.
Mr Van Staden said the graph referred to by Mr Tseki was not a true reflection of grants because the entity had been receiving grants since 2007 and not from 2019 only. He undertook to correct the graph. On compliance issues, he remarked that directives are being followed to bring compliance in terms of contraventions identified during the audit process. Some cases had been referred to the local police and the NPA but he cautioned that these type of issues take long before it lands up in court. The verification and validation (V&V) process to confirm lawful water use was not easy to conduct because people are selling properties and making changes to the names and addresses of businesses which was making it difficult to identify the rightfully registered property owner. The process is based on sending confirmation letters but the postal service is not reliable. Building an electronic system is presenting problems because not all water users have an email address which was making contact with water users challenging. The status of confirmed water users was becoming an important issue hence the confirmation process would continue. He said that the pollution problem in the Roodeplaat Dam in Gauteng is more complex than the projects along the rivers in the Western Cape but the entity was willing to share project experience. He explained that the high salary costs are attributed to the service delivery aspect of their mandate which involves water resource management. He compared it to tax services provided by SARS. The entity does not own infrastructure but the work requires lots of administrative tasks and specialised functions by highly qualified officials.
Inkomati-Usuthu CMA response
Mr Mohlala remarked that most polluters respond positively to directives. Three of the four matters referred to the NPA remain unresolved while one fine was issued against a mine. The entity has good relations with the Human Rights Commission and the SAPS but was still finding it difficult to do investigations on environmental matters. Completing the V&V process to ensure the integrity of data was challenging. Not all water users are known but the entity was counting on the cooperation from farmers. He reiterated previous comments about the entity not owning infrastructure and relying on decision support systems including satellite technologies around monitoring of the dam to provide real-time information. The relations with colleagues in Eswatini and Mozambique have matured. Regular meetings are held in terms of data sharing and dealing with risks.
Water Research Commission response
Dr Molwantwa explained that leverage funding is obtained through partnerships to fund research. Funders include the Bill and Melinda Gates Foundation. The presentation was reflecting actual figures for the current year while leverage funding for the outer years is based on estimates. The salaries above 38% must be viewed in terms of funding the researchers. But she acknowledged that it could be perceived as a problem and suggested that a system review might be needed.
The Chairperson called on the IUCMA to respond to questions about the entity’s financial position.
Inkomati-Usuthu CMA response
Ms Sandra Govere, Finance Manager, IUCMA, replied that the entity was experiencing challenges with collections, especially with reference to historic debt. A debt management strategy was developed which was proving to have good results but data quality was still a problem. On municipalities, she said one of the biggest municipalities signed an agreement to repay the debt. The matter is being managed through high-level strategic engagements. Ways and means are being found internally to augment the gap brought about by budget cuts including leveraging on existing MOUs and relations with other entities to generate additional funding. Following this meeting, the entity would be engaging the Department to understand what additional support might be available. Alternatively, the activities of the entity would have to be relooked to ensure delivery of the mandate.
Deputy Ministers’ closing remarks
Deputy Minister Mahlobo said a decision was taken on the establishment of the remaining CMA’s. Certain ones had been gazetted. The matter would be presented for public comment. There was a request to extend the powers of the existing CMA’s but extending delegations must be supported by majority assessment and due diligence in terms of capability. Both aspects are dependent on departmental funding. He explained that most of the debt is owed by water boards on the basis that municipalities are not paying for services. The non-payment was impacting the Department’s trading account. The water boards are owing the Department close to R70 billion. On a limited scale, some of the CMA’s have been doing collections of historical debt. The Department should be in a position to support the CMA’s in strengthening governance. He was pleased with the new boards. The Department offered to support the CMA’s but they must continue with the V&V process and work with the water boards to produce catchment management structures to ensure that all water users are properly managed.
Deputy Minister Tshabala said entities were making use of in-house capacity which was contributing to 70% of the budget being allocated to salaries. She expected the agencies to explain their type of work and mandates but suggested that it should be submitted in writing to better explain the situation.
The Chairperson appreciated the commitment to provide a written response.
The meeting was adjourned.
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