6th Parliament Committee Legacy Report

Meeting report

Legacy report of 6th Parliamentary Committee

Dr Sibusiso Khuzwayo, Committee Content Advisor, Department of Tourism, tabled the report of the Portfolio Committee on its activities undertaken during the 6^th Parliament, which ran from May 2019 to March 2024. The presentation centred on key highlights, the focus areas of the Committee during the 6^th Parliament, key areas for future work, key emerging challenges, and recommendations.

He said that during the 6th term, the Committee had managed to hold the executive accountable. The term was affected by multiple changes in the executive authority of the Department. There were changes in Ministers, with each Minister bringing new dynamics to the governance of both the Department and South African Tourism (SAT). Despite all the challenges, the Committee was able to assist the Department in audit outcomes from 2021-2023 by insisting on the appointment of a chief financial officer (CFO), who had enhanced financial systems and eradicated financial misstatements, implemented youth and women's programmes, and maintained unqualified audit outcomes.

At SAT, the Committee had been occupied with issues of financial malfeasance and maladministration whereby, for example, the then CFO and an acting chief executive officer (CEO) had been brought in to facilitate a transaction of almost R1 billion in sponsoring Tottenham Hotspur Football Club, based in England. The Committee had been able to stop the transaction.

Given a plethora of maladministration and poor governance at the Department and SAT, the Committee had taken a resolution to not appropriate budget to SAT for the 2023/24 financial year. The decision was reversed, as the Appropriations Committee had not been duly involved in the process. The challenge for the Committee was that this was a novel action by Parliament to exercise its power to withhold appropriating a budget to a government entity.

Concerning the Tourism Transformation Council, the Committee had recommended that the Council be reorganised as a wholly autonomous entity, jointly funded by the private sector and the line ministry. In May 2020, the Council was registered with the Companies and Intellectual Property Commission (CIPC) as an autonomous non-profit organisation (NPO). During this term, the Council was in the process of finalising several job profiles, the Joint Funding Agreement, operational policies and systems, and settling in at its business offices. In August 2021, the Joint Funding Agreement was signed by the Tourism Business Council of South Africa (TBCSA) and the Department of Tourism to set up a joint private-public sector financial vehicle for the operationalisation of the Council. While all this was at play, the tenure of the Council had ended in May 2022. At the end of 2023, a new Council was yet to be appointed.

Referring to the merger of Brand South Africa and South African Tourism, he reported that an announcement by the government had been made on reconfiguring all state entities to avoid duplicate mandates, among other things. This raised the possibility of a merger between Brand SA and South African Tourism, as the entities shared similar mandates. The Committee shared this vision, as it meant the sustainable use of public funds. The Committee had implored the Minister of Tourism to engage the Minister in the Presidency on this possible merger, and how it would likely affect tourism operations. Upon further engagements between the two ministers, the Minister of Tourism advised the Committee that the Presidency was no longer considering a merger between the two entities.

Dr Khuzwayo said the Tourism Act had not been amended due to delays with the finalisation of the review of the White Paper on the development and promotion of tourism. The Act had been planned for amendment during the term of the 5th Parliament, but changes in political heads at the Department and the decision to first review the White Paper saw this task carried through to the 6th Parliament. However, the Green Paper was finalised only towards the end of 2023. The amendment of the Act would have to be considered during the term of the 7th Parliament.

Concerning villages, townships, and small dorpies (VTSDs), the Committee had adopted a new approach to tourism development and marketing. It raised its concern with the continued focus and concentration of tourism development and marketing in main centres such as Cape Town, Durban, and Johannesburg. It encouraged the Department and SAT to direct future funding to projects in these areas. As a result, the National Conventions Bureau had intentionally directed event bidding to VTSDs, resulting in events being hosted in smaller towns to ensure a geographic spread and economic development.

The Committee, in collaboration with the Portfolio Committee on Police, hosted a joint workshop in 2019 on tourist safety and security, with the aim of finding lasting solutions to crime against tourists. Incidents of crime against tourists, both domestic and international, affected the brand image of South Africa as a safe travel destination and had an impact on the economy of the country. An outcome of the workshop was developing a tourism safety strategy by the Department of Tourism. The Department has been encouraged to work closely with the South African Police Service (SAPS), the provinces, and the Tourism Business Council of South Africa to establish tourism safety forums, train tourism monitors, and provide other lasting solutions to the challenge of crime.

The Committee continued to raise its concerns with the Department over implementing its tourism infrastructure projects. The Department continued to struggle with challenges related to poor planning, delays in the appointment of service providers, and contract management. To mitigate these challenges, the Department signed a memorandum of agreement (MoA) with the Development Bank of Southern Africa (DBSA) on 20 November 2020, appointing it as an implementing agent for its infrastructure projects. The MoA had been signed up until 31 March 2023. However, it could be extended where required. This would likely be the case, as the deadlines of some projects extended beyond 2024. Progress on some of the projects had been positive so far, and indicated that the projects would be completed within the set time frames.

Regarding focus areas during the 6^th Parliament, the Committee had been seized, amongst other things, with addressing governance challenges at SAT. In line with the oversight work of the Committee, the Auditor-General (AG) had found in the 2023/24 financial year that SAT did not have a board of directors between June 2022 and August 2022, which had created a vacuum from an oversight perspective. There have been multiple changes in the composition of the board, starting with an interim board appointed in September 2022, followed by the board being appointed in October 2022. The multiple changes to the board had exacerbated the instability across oversight functionaries for the entity. The oversight over the entity was being exercised by the three-member board appointed in April 2023. The Committee did not concur with the composition of the board, and had recommended to the Minister that the number be increased from three to five. However, this was never acceded to by the Minister. In line with the consistent recommendation of the Committee, the AG had recommended that the executive authority appoint a board so that key vacant positions in the entity could be filled. On 28 February 2024, the Cabinet announced the appointment of a fully-fledged board for SAT. The selection of board members appeared to adhere to the requirements of the Tourism Act, and the Committee commended this representation. It hoped the establishment of this structure would bring stability to the entity.

In addressing the impact of Covid-19, the Committee recommended that government should implement sector relief programmes to cushion tourism businesses from the devastating impact of the pandemic. To this end, the Department has implemented the Tourism Relief Fund and the Tourist Guides Relief Fund for registered freelance tourist guides. The government, in partnership with the private sector, had developed a tourism sector recovery plan (TSRP) to address the impact of Covid-19. The TSRP was later gazetted as a tourism master plan in 2023. The 7th Parliament may conduct close oversight on the implementation of this masterplan. The focus should be on how the new tourism master plan overlaps with the National Tourism Sector Strategy (NTSS).

Regarding the domestic tourism and geographic spread, the strategic focus on tourism oversight in the 6th Parliament was on VTSDs in particular. The reason for this approach was that poverty, unemployment, and inequality were more expressed in the VTSDs. As a result of this Committee analysis and approach, the Department and SAT, in their 2019 -2024 strategic plans and subsequent annual performance plans (APPS), had intensified their programmes aimed at addressing poverty through tourism in the VTSDs. The focus on VTSDs was a deliberate approach, and the allocation of budget had been shifted to these areas that were previously neglected.

The private sector and government have provided a wide array of tourism skills development programmes. These remained largely uncoordinated. The quality of tourism graduates and their readiness for the job market also remained a challenge. The Committee had recommended to the Department that other government departments should be engaged in advancing skills development in the sector. Important amongst these was a recommendation to include the technical and vocational education and training (TVET) colleges in offering coordinated and appropriate tourism skills development.

Looking at key areas for future work, Dr Khuzwayo said that, amongst other things, the Committee had identified legislative gaps in the tourism sector and would prioritise the amendment of the current Tourism Act (Act No. 3 of 2014). The Committee had sought to make amendments regarding the sharing economy; the tourism grading scheme; the tourism levy; broad-based black empowerment (B-BBE) and tourist guides. The Committee had sought to maximise tourism funding, introduce compulsory grading, and determine the regulations for the sharing economy within the tourism sector.

He further emphasised that the overarching oversight focus of the Committee had been on transformation of the tourism sector. It had realised that transformation in the sector had remained stubbornly and dreadfully slow since the dawn of democracy in 1994, and more work still needed to be done to entrench transformation. It would deliberately engage all relevant stakeholders inside and outside government to facilitate projects, programmes and collaborations that would expedite transformation and change the growth trajectory of the tourism sector. The Committee may ensure that the Department and SAT implement programmes to fast-track transformation, including disbursing funds for the Tourism Equity Fund that was halted by court interdicts.

The Committee further acknowledged that tourism development had been neglected in VTSDs. The focus would be on developing domestic tourism, with a special focus on the VTSDs. A focus would also be given to the National House of Traditional Leaders to facilitate the entrenchment of tourism in villages.

To improve skills development in the sector over the next five years, the Committee may conduct oversight on the Department of Tourism, South African Tourism, the Culture, Arts, Tourism, Hospitality and Sports Sector Education and Training Authority (CATHSSETA), and the Tourism Business Council of South Africa to ensure tourism training programmes were well coordinated and address the current industry needs through the development of an integrated small, medium and micro enterprise (SMME) and skills development plan. TVET colleges could be involved in coordinating training among all the interested and affected parties in the tourism sector.

Dr Khuzwayo said the Department should establish an integrated tourism SMME strategy to ensure that it provides integrated support services to existing and potential tourism enterprises in the country. This would result in successful emerging tourism enterprises, and lead to job creation and inclusive economic growth that would benefit all the people of South Africa.

The 7th Parliament was advised to follow up on various cases that had been opened by the Department and by various law enforcement agencies. The Department had been slow in facilitating prosecution of Departmental staff and companies that were found to have committed financial malfeasance and maladministration in implementing infrastructure projects. There should also be a follow-up on forensic reports commissioned by SAT through the Special Investigation Unit (SIU) about staff seconded to the entity.

The 7th Parliament should request access to the quarterly produced reports by the Department based on their APP, which could be attached as annexures for all quarterly reports tabled. After numerous requests, these documents were not made available to the Committee as part of quarterly reporting.

The 7th Parliament had also been advised to conduct close oversight on destination development, as this would assist the growth of tourism in South Africa. The programmes implemented by the Department of Tourism on destination development should be closely monitored.

The 7th Parliament would need to prioritise oversight visits, especially infrastructure projects that had stalled over the years and were finally being completed by the Development Bank of Southern Africa (DBSA). Some of these projects had been in the system for too long, and needed to be completed for the sector to grow and introduce new products. The Committee would also need to undertake follow-up visits to sites that were previously visited during the 6th Parliament, to observe if identified issues had been addressed and recommendations implemented by the relevant stakeholders.

Dr Khuzwayo said the 6th Parliament had observed that most challenges at the community level arose from poor public participation in the implementation of infrastructure projects. The 7th Parliament was encouraged to ensure proper public participation in all infrastructure projects the Department of Tourism implemented.

Pertaining to emerging challenges, the tourism sector recovery plan has been developed to respond to the impact of Covid-19. This document was later adopted by Cabinet in 2023 as a tourism master plan. The Tourism Relief Fund and Tourist Guides Relief Funds had also been established. The sector had been recovering at a good pace, and the impact of Covid-19 had slowly been waning away. However, the pandemic was a lesson that the country needed to develop its domestic tourism market as it led the sector in its recovery.

The constant changes in executive authority in the Department of Tourism had led to delays in the review of the White Paper on the Development and Promotion of Tourism in South Africa (1996) and the amendment of the Tourism Act (Act No.3 of 2014). These delays had hamstrung the 6^th Parliament in addressing the identified legislative and policy gaps in the sector.

The Committee was satisfied with the audit outcomes of the Department in obtaining an unqualified audit opinion, with findings on non-compliance with legislation in the 2022/23 financial year. The Committee had noted there was no improvement in the audit findings, given that the Department had received a financially unqualified opinion with findings on compliance with key legislation in the previous financial year. However, the Department was commended for submitting annual financial statements free from material misstatements. This was an improvement from the prior year, as the Department had made material adjustments to achieve an unqualified audit opinion.

The Committee was concerned that South African Tourism had received an unqualified audit opinion with findings on compliance with key legislation in the 2022/23 financial year. This meant the audit outcomes had remained unchanged from the 2021/22 financial year, with serious recurring findings. The entity had failed to address the findings made by the Auditor-General (AG) and the Committee in the previous audit period. This pointed to a failure in governance and an incapacity to deliver effective operations at the entity.

Dr Khuzwayo said there was a need to demystify tourism as a concurrent function. The constitution categorised tourism as a concurrent function. Local government represented the third sphere of government, and played a major role in the tourism sector. In addition to the responsibility of the national and provincial governments to pass, design and implement tourism legislation, policies and strategies, the local government was at the coal face of promoting and supporting tourism at the local level. The local government, however, did not fulfil its constitutional mandate.

By the end of the 6th Parliament, a new Tourism Transformation Council had not yet been established. This had ramifications for the monitoring of transformation trends in the tourism sector.

With regard to recommendations, it was recommended that the 7th Parliament Portfolio Committee on Tourism should consider the following:

• Lobby the Office of the House Chairperson for support for the Committee to conduct oversight in South Africa and abroad, as South African Tourism has offices in several international countries.

• Governance and operations at South African Tourism must be stabilised, including the staffing of senior executives, the creation of a conducive working environment, and board activities.

• The Tourism Amendment Bill must be introduced and processed early in the 7th Parliament.

• Stakeholder engagement had to be enhanced to support the tourism sector.

• There should be a follow-up on the operation plans for infrastructure projects implemented by the DBSA on behalf of the Department of Tourism.

• There should be a follow-up on all cases the Department of Tourism opened based on the forensic reports.

• The Department and South African Tourism must ensure that they implement all the recommendations made by the Auditor-General on a yearly basis.

• There must be centralisation of the tourist guides' database, and harmonising of the level of appointment of provincial tourist guides registrars.

See attached for full presentation

Discussion

Ms G Mchunu (MK) suggested the focus should be more on the recommendations. On the recommendation about the Tourism Amendment Bill, she suggested the Minister should report on the progress. Concerning the recommendations from the AG, the Department should aim for a clean audit, and there should be ongoing engagements on the matter. She suggested the focus of the Committee should be on monitoring and developing its own strategic plan.

Dr Khuzwayo informed Members there were statutory process that had to be followed, and that was making it impossible to have all the matters resolved within three months. The Chairperson of the Committee had to send a letter to the ministry, stating clearly what the Committee needed to be briefed on by the Department. The Committee would have its management meeting, where all the matters raised by Members would be sifted. All urgent matters would be scheduled first. He further indicated that Parliament had not yet developed its strategic plans for the 7^th Administration. Once that was done, the Committee could develop its own strategic plans, but that did not mean the Committee should stop thinking about ideas for its strategic plans. Some of the issues raised by Members involved SAT, while others had to do with the Department.

Mr R Gouws (DA) wanted to know how much money was generated through tourism, seeing that it had been allocated a budget of R2.3 billion. He asked for clarity regarding confusion between the National Tourism Sector Strategy (NTSS) and the tourism master plan; wanted to know if dual-pricing was something the Committee should look at concerning domestic tourism; enquired if the Committee was getting quarterly reports from the SAT, and if it had key performance indicators (KPIs); and asked if the budget of BrandSA was from the Department, and how much it was for it to be able to do its work.

Dr Khuzwayo replied that the Department had an allocation of R2.4 billion, and the entity usually received 53% of the Department's budget. He also indicated that the NTSS had been a short-term intervention measure during the Covid-19 period, while the Tourism Master Plan was a long-term strategy ending in 2026, developed before Covid-19. He explained that Brand SA was an entity or project of the Presidency, and had been getting its budget share from the money allocated to the Presidency. For the 2023/24 budget period, the Presidency had been allocated R219m. He was of the view the Department of International Relations and Cooperation (DIRCO) could take care of Brand SA.

He said SAT produces quarterly reports and usually comes to the Committee with its internal auditors with plans on how it would address recommendations from the AG. He responded that dual pricing had never been implemented, even though it could be done. The TBSA board could deal with the matter.

Before Covid-19, tourism's contribution to employment had been 9.5%. After the pandemic, it had been sitting at 3.5%, but it was increasing. That was why the sector continued to be important for employment because it had an impact on both direct and indirect employment.

Ms E Linde (DA) commented that having a process plan for oversight was important. The Committee needed to have intensive reports from the Department. She suggested that the Department conduct an induction for the Committee so that everyone was on the same page because the new Members needed a strong foundation to do the Committee's work.

Ms H Ismail (DA) proposed the Minister should brief the Committee about the finalisation of legislation and the public participation processes regarding the policy. She asked that the Committee be forwarded reports on the implementation of the recommendations of the AG, including forensic reports; indicated that all outstanding reports should always be on the agenda, and inputs from the Department should be conveyed to the Committee; commented that the merger between Brand SA and SAT should be pursued; and suggested an oversight strategy for the Department should be developed to record progress. There should be a plan of action regarding meetings with other departments because it clearly could not work alone. She wanted to know if it would be a good idea for provinces to brief the Committee on their plans.

Dr Khuzwayo explained the legislation stated that each province had its tourist guide register, and there was a national one as well. The Minister would have to update the Committee on this matter. He indicated that Parliament had not yet developed its strategic plans for the 7^th Administration. Once that was done, the Committee could develop its own strategic plans, but that did not mean the Committee should stop thinking about ideas for its strategic plans. He said some of the issues raised by Members had to do with SAT, while others had to do with the Department.

Ms L Tito (EFF) proposed the research team should brief the Committee about what the Department was all about in order to empower the Members so that they could engage with the Department better. She said it was better to focus on the oversight with regard to the recommendations from the content advisor. She commented that the presentation had informed the Members well about the burning issues in tourism.

Mr S Maeco (ANC) remarked that the approach adopted by the Committee on VTSDs had mandated the Department and SAT to develop a working document to oversee the implementation of this approach. This should be added as a recommendation to the document to be developed. He suggested the Committee should be provided with a progress report on the delays with tour operator licences, because that had serious implications for job creation; asked that a list of beneficiaries and audited financial statements regarding the Tourism Relief Fund be forwarded the Committee; that it be provided with an organogram of the Department and a progress report on the filling of vacancies; and asked the Committee to be provided with a list of all funded projects, and suggested that a study tour on all these projects should be done to evaluate progress.

Ms L Ligaraba (ANC) suggested there should be timelines on recommendations about stakeholder engagements; proposed that the Small Enterprise Finance Agency (SEFA) and the DBSA be invited to the Committee for a progress update; and indicated that cases opened by the Department should be speeded up, because it was aiming for a clean audit.

Dr Khuzwayo said that stakeholder engagement was taking form in a number of ways. There were processes that were being followed.

The Chairperson enlightened Members that there were standard processes that were being followed by the Committee when doing its work. The Legacy Report was a handover process. She had spoken with the Committee secretary about a training workshop involving the Committee, the Department and SAT. She said all committees had to do their planning for the year and develop a five-year plan. The Committee had to deal with outstanding pieces of legislation as well, while monitoring the budget of the Department and its entity, and it would have to develop a plan for its oversight programme.

Mr Maeco remarked that it appeared it was difficult for the Committee to agree on the three-month approach for the timelines. He insisted it would not be difficult, because the Committee was dealing with a report that covered the work that had been done, and what had not been done. The Chairperson would ensure that whatever had been proposed by the Committee would happen.

Dr Khuzwayo said an overarching letter to the Minister would be sent for her to respond, because it would contain all the matters raised by the Committee.

Mr Disang Mocumi, Committee Secretary, said the committees were getting quarterly memos from the House Chairperson indicating the areas on which they should focus. Everything was determined by the House Chairperson of the Committees. However, Parliament had to develop its own programme first, which would then be filtered through to the committees.

The Chairperson added that the basket of priorities usually came from the Office of the Speaker and the House Chairperson. She indicated the Committee had identified SEFA and the DBSA as "red flags" for its first engagement with the Department. She pointed out the Committee had the right to engage with the provinces, as long as it was in its line of work and did not encroach on the preserve of the National Council of Provinces (NCOP). Joint meetings could also be held with other committees as long as the programme allows it. Lastly, she proposed the Committee should produce annual reports to make things easier when compiling its Legacy Report.

The meeting was adjourned.