Tourism Budget Vote Report

Meeting report

The Chairperson greeted the Members. She introduced herself as Ms L Mnganga-Gcabashe from the ANC, and the Chairperson of the Portfolio Committee on Tourism. She mentioned that the Committee Secretary had encountered some glitches with his laptop, which was being addressed by IT, and she inquired whether he was now on the platform.

The Committee Secretary confirmed his presence.

The Chairperson asked about the quorum, expressing concern that some Members might be occupied with other plenary meetings scheduled between 10:10 and 12:00. She requested the Committee Secretariat to check if there was a quorum to proceed with the report and adopt it.

The Committee Secretariat informed the Chairperson that no apologies had been received from Members unable to attend and suggested a quick roll call to determine the quorum. He mentioned they could delay the meeting for three minutes if necessary.

Once a Member entered the meeting, the Chairperson welcomed everyone again, declared the meeting officially opened, and acknowledged the presence of the Minister and Deputy Minister on the platform. She stated that there was only one item on the agenda, which involved going through the budget vote report as per the previous week's briefing, followed by questions, discussions, and the adoption of the report. She asked the Committee Secretary if they were on the item of considering and adopting the report and inquired if someone would summarise the report for the Members.

Report of the Portfolio Committee on Tourism for Budget Vote No. 38: Tourism

Dr Sibusiso Khuzwayo, Committee Content Advisor, addressed the meeting by first greeting the Chairperson, Minister, Deputy Minister, Members, and colleagues. He checked if he was audible and indicated that he would summarise the discussions, focusing on the observations and recommendations made to the Minister, as the rest of the information had already been presented and circulated to the Committee. He proposed highlighting specific important sections due to time constraints instead of going page by page, which was acceptable to the Chairperson.

He summarised the policy mandates of the Department, including the Economic Recovery and Reconstruction Plan, the White Paper under review, the National Development Plan (NDP), and the National Tourism Sector Strategy (NTSS). He noted that the Committee might need the Department to take them through these documents comprehensively at a later stage.

He then focused on the budget allocation for the Medium Term Expenditure Framework (MTEF) period, highlighting the total oversight budget of R7.5 billion, with R2.38 or R2.4 billion allocated for the current year. He pointed out a 2.1% budget increase from 2023/24 to 2026 and emphasised that 52% of the R7.5 billion budget is transferred to South African Tourism.

Skipping to specific pages, Dr Khuzwayo clarified budget allocations across different programmes, noting that most of the budget for Programme 3 goes towards destination development and enhancement projects. He discussed the focus on improving facilities owned by municipalities, investment promotion platforms, and infrastructure maintenance projects, which would create about 17 900 job opportunities, including those through the Expanded Public Works Programme (EPWP).

He advised Members to consider the detailed budget allocations when preparing for debates, evaluating whether the budget for each programme is sufficient and possibly reallocating funds as necessary. He concluded by highlighting the Committee's observations from their discussions on 10 July, with a disclaimer that the summary may not capture all details.

Dr Khuzwayo continued by stating that, as the Chairperson had mentioned, there would be an opportunity towards the end for Members to address any issues they felt were overlooked or should be removed. He emphasised that this decision rested with the Chairperson and Members, who would decide whether they agreed with the summaries of the discussions on the 10th or wished to add further issues.

Regarding the Committee's observations, he noted a governance issue, particularly emphasising continuity within the Executive. He highlighted that while most ministries saw changes in leadership with new administrations, the Ministry of Tourism was fortunate to retain its Minister from the sixth administration, which aided in maintaining stability and continuity. Despite inheriting numerous challenges, the Minister had successfully resolved many issues during her tenure, with ongoing efforts to address remaining concerns. He anticipated that the Committee would receive updates on these matters, including appointments to the South African Tourism board and the resolution of acting positions within the entity, such as CEO, CFO, and Chief Marketing Officer, which had been swiftly addressed during the Minister's tenure.

Dr Khuzwayo stressed the importance of stability within South African Tourism (SAT), noting that the board oversaw 52% of the portfolio's budget. Any instability within SAT could significantly impact the Committee, given the substantial allocation of the budget to this entity. He highlighted that out of the total budget allocated to the portfolio for the current year, a significant portion, amounting to R1.2 billion, was directed to SAT, underscoring the critical need for stability within the entity. He emphasised the Committee's role in ensuring rigorous oversight of SAT's financial management and operational performance, particularly in light of budget constraints that had affected departmental operations. He acknowledged that while budget cuts had necessitated reprioritisation, further discussions on the strategic plan would allow for a more focused approach.

Dr Khuzwayo also discussed the impact of budget cuts on the Department's programmes, particularly affecting initiatives under the EPWP, which provided essential labour-intensive jobs and skills development projects. He noted that despite these challenges, the Department had continued to target key programmes such as youth and women's initiatives, demonstrating resilience in the face of financial constraints. He raised concerns about staffing issues, highlighting that only a fraction of requested posts had been approved due to affordability, potentially affecting program implementation. He commended the Department's efforts in initiatives like the Green Tourism Incentive and Market Access Support Programme, aimed at enhancing sustainability and supporting small and medium-sized enterprises (SMEs) in the tourism sector.

Regarding financial matters, Dr Khuzwayo pointed out the discrepancy between the Department's budget allocation to SAT and contributions from the private sector through the Tourism Marketing South Africa (TOMSA) levy. He suggested revisiting the voluntary nature of the TOMSA levy to potentially make it compulsory, ensuring greater financial support for SAT's marketing efforts. He highlighted concerns about contract management within SAT, stressing the need for transparency and accountability in all agreements. He underscored the importance of intersectoral alignment and intergovernmental relations, particularly in addressing issues such as visa regimes and tourist safety.

Dr Khuzwayo outlined several recommendations to the Minister of Tourism, including expediting the White Paper on tourism development and promoting financial controls to address audit outcomes. He emphasised the need for stability within both the Department and SAT, aligning the five-year strategic plan with national development priorities, and enhancing oversight to ensure efficient programme implementation. He urged improvements in contract scrutiny, intersectoral collaboration, and the TOMSA levy, highlighting these as crucial areas for enhancing the tourism sector's effectiveness and sustainability.

Dr Khuzwayo further stated that the Development Bank of South Africa and the Infrastructure Development Bank should be engaged by the Minister to provide quarterly reports to the Committee. He suggested that these reports should be a standing item, ensuring transparency about the substantial funds managed by these entities. He proposed separate detailed reports for each, apart from the Department's regular quarterly reports, to provide thorough updates on their activities and financial management.

He also recommended establishing a multidisciplinary team within the Department, possibly in collaboration with the Department of Public Service and Administration (DPSA), to oversee infrastructure projects. This initiative aimed to address capacity constraints and improve project oversight, ensuring effective implementation and budget utilisation. Additionally, he urged enhancements in implementing the Tourism Transformation Fund, advocating for detailed quarterly feedback reports to monitor its progress effectively.

Addressing internal audit functions, Dr Khuzwayo highlighted the importance of strengthening these within both the Department and its entities to address findings more proactively and prevent recurrent issues highlighted by the Auditor-General.

Regarding the TOMSA levy, he proposed increasing contributions, potentially making it compulsory in consultation with the private sector to bolster funding for tourism marketing efforts. He underscored the need for transparency in contract management, acknowledging the Committee's role in oversight post-contract signing.

He concluded by emphasising the importance of intergovernmental relations to remove barriers affecting tourism, including visa regimes. He highlighted the need for updates on international engagements and trends impacting the tourism sector. He called for regular briefings on these matters to ensure the Committee remained informed and responsive to industry developments and policy implications.

Discussion

The Chairperson expressed gratitude to Dr Khuzwayo for his detailed report and proceeded to facilitate discussions among the Committee Members regarding the tabled report.

Ms E Linde (DA) commended Dr Khuzwayo and his team for producing a comprehensive and insightful report that greatly benefits the Committee's oversight responsibilities. She raised several points for discussion and clarification.

Ms Linde first queried the allocation of 52% of the budget to IT, seeking insights into how this figure was determined and suggesting a review to possibly reallocate funds for a more substantial departmental budget. Secondly, she sought clarification on Dr Khuzwayo's assertion that tourism might not be included in the State of the Nation Address (SONA), expressing concern about this potential omission.

Additionally, Ms Linde expressed keen interest in presentations on upcoming projects within the Department, noting their importance for the Committee's understanding and oversight. Lastly, she highlighted concerns regarding contractual obligations, specifically noting pages 18 and 19 where underperformance by Department of Public Service and Administration and the Small Enterprise Finance Agency (SEFA) was mentioned. She proposed a recommendation to consider cancelling these contracts in line with recent ministerial objectives.

The Chairperson acknowledged Ms Linde's contributions, ensuring that her points were duly noted for further discussion and consideration.

Mr S Maeco (ANC) proposed additional recommendations. He suggested inviting SEFA to present on the progress of the tourism equity fund and the enhancement of relations between the Department and ministry.

Further, Mr Maeco recommended incorporating measures to ensure stability, discipline, and effective consequence management within the Department and its associated entities. He also proposed a timeframe of three months for the Department of Public Works and Infrastructure to complete maintenance on related assets, underscoring the importance of timely action in these areas.

The Chairperson acknowledged Mr Maeco's contributions, emphasising the importance of these suggestions for the Committee's deliberations and decision-making process.

Ms H Ismail (DA) began by addressing connectivity issues and sought clarification on a section of the report's introduction. She noted a paragraph mentioning the Portfolio Committee's mandate and functions, highlighting a phrase in red stating they need the attention of the Minister of Tourism. Ms Ismail expressed concern that this statement lacked clarity and urged for it to be further elaborated or separated for better understanding.

Secondly, she echoed the importance of holding DPSA and SEFA accountable, referencing previous requests for detailed Memorandums of Understanding (MOUs). She stressed the potential consequences if these MOUs were not finalised promptly, particularly in relation to infrastructure projects. Ms Ismail requested Dr Khuzwayo to provide additional insights on this matter before confirming the recommendation.

The Chairperson thanked Ms Ismail for her contributions and opened the floor for further discussion and responses from Committee Members. She encouraged a detailed response from Dr Khuzwayo on the issues raised, emphasising the need for clarity and understanding regarding the recommendations and concerns voiced by Members.

Responses

Dr Khuzwayo began by thanking the Chairperson and Members for their input and improvements to the report. He addressed the issue of the 52% allocation to the entity, noting that while the Minister was questioned on this, it was up to the discretion of the Committee whether to invite her to elaborate further. Dr Khuzwayo explained that a significant portion of this allocation typically goes towards marketing, which is crucial for attracting tourists and stimulating job creation within the private sector. He highlighted the competitive nature of global tourism and how adequate marketing budgets ensure South Africa remains attractive compared to other destinations like Kenya.

Regarding the State of the Nation Address and the budget considerations, Dr Khuzwayo clarified that the report was based on the 2024/25 budget, not previous addresses or budgets. He emphasised that while tourism was not explicitly mentioned in the recent address, it had been consistently supported in previous budgets.

On the issue of the MOU with DPSA, Dr Khuzwayo agreed with the Chairperson's suggestion to defer to the Minister's engagement with them before deciding on cancellation. He noted improvements in infrastructure project implementation by DPSA but acknowledged ongoing issues that needed scrutiny.

Regarding Public Works and their role in tourism projects, Dr Khuzwayo explained the existing EPWP programme and how it funds maintenance within national parks and other tourism-related facilities. He cautioned against setting a strict three-month deadline for Public Works, suggesting instead that the Department engage with provinces and municipalities to enhance implementation.

Dr Khuzwayo supported refining recommendation 6.3 to include aspects of discipline and consequence management within the Department. He reiterated the need for the Committee to be fully briefed on these matters before making decisions, underscoring the importance of ongoing engagement and scrutiny of key stakeholders involved in tourism infrastructure and funding.

The Chairperson expressed gratitude for the contributions and suggested a joint meeting with the relevant Finance Committee to discuss the MOUs involving DPSA and SEFA, acknowledging the sensitivity of involving different Portfolio Committees. This approach would ensure thorough oversight and alignment before reaching a decision. The Chairperson affirmed that while the Minister continues with Executive processes, the Committee would familiarise itself comprehensively with the issue.

Addressing the readiness to adopt the report, the Chairperson sought confirmation from Members that all discussions had been exhausted. She emphasised that decisions and discussions within the Portfolio Committee were independent of Executive involvement, noting the presence of the Minister, Deputy Minister, and officials as observers.

Ms Linde expressed gratitude for the Chairperson's approach regarding the MOUs. She indicated the Democratic Alliance's intention to reserve the right to vote on the report until further clarity and updates were provided, especially concerning new MOUs in the upcoming financial year.

The Chairperson acknowledged that the Committee had completed its work, emphasising the collective effort involved.

Ms Linde agreed, affirming the importance of recognising the Committee's efforts.

The Chairperson thanked everyone for their contributions and moved on to the next agenda item.

Adoption of the report

Mr Maeco expressed appreciation for the report and the clarifications provided by Dr Khuzwayo. He noted acceptance of the report and adoption by the ANC, with amendments from both the Democratic Alliance and the ANC, highlighting the thorough oversight process.

The Committee Secretariat responded affirmatively, stating they would take the Member's input as a proposal for adoption and requested a seconder to proceed with the adoption of the report.

Ms Mchunu (ANC) seconded the adoption of the report.

Ms Ismail raised a previous concern regarding section 1.1 of the report, noting a missing word. She suggested that the report should be edited for clarity and coherence if the word had not been added.

The Committee Secretary noted the Member’s input.

The report was duly adopted. See report here https://pmg.org.za/tabled-committee-report/5894/

Announcements

The Committee Secretary updated that the House Chairperson, newly appointed, has not yet provided the framework for preparing the Portfolio Committee's programmes for this term. However, the Committee will convene to plan interactions for Members, with details to follow.

The Chairperson thanked the Committee Secretary and made a personal announcement before closing. She requested the support team to remain on the platform after adjournment to express gratitude to the Minister, Deputy Minister, DG, and the entire Department for their participation. She concluded by thanking the Members for their contributions and reminded everyone of the urgency of attending other plenaries due to parliamentary commitments.

The Chairperson then adjourned the meeting.