Medium-Term Expenditure Trends: Department briefing

Meeting report

WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
4 November 2005
MEDIUM-TERM EXPENDITURE TRENDS: DEPARTMENT BRIEFING

Chairperson

Department briefing
Department: Adjustment Estimates of National Expenditure 2005

SUMMARY
The Committee was briefed about the expenditure trends of the Department for the past three years of the Medium-term Expenditure Framework (MTEF). Department officials informed Members about the infrastructure delivery; underspending on capital projects,;transfers that did not take place, as well as funds for drought which were not transferred to local government before 31 March 2004.The Members raised serious concerns about the skills capacity of the Department to deliver, and asked about their plans to rectify the situation.

MINUTES

Department briefing
Mr T Balzer, Department Acting Chief Financial Officer, informed the Committee that the underspending during the 2002/3 - 2004/5 period was the worst to date. Underspending had mainly occurred in capital projects. Many transfers had not taken place, and funds for drought had not been transferred to local governments before 31 March 2004. The underspending on water resource management for the same financial years, was due to the flood damage repair rollovers that had not been completed.

He presented the service delivery record for water resource management. One Catchment Management Agency (CMA) had been established in the Inkomati water management area. A proposal to establish a CMA in the Breede River Water Management Area (WMA) had also been gazetted for public comment. Some of the other activities were the completion of Xikundu Weir and treatment works, and Nandoni Dam.

He then briefed the Committee on infrastructure delivery. In the past three years, more than 1 200 water projects and more than 500 sanitation projects had been completed. More than 2.5 million people had been served with water at a basic level. There were more than 170 000 households serviced with VIP toilets. He informed Members that about 8 900 bucket toilets had been replaced. The Committee was told that more than R2.9 billion had been invested in the development of infrastructure.

Mr Balzer further presented on forestry output. The conversion of lowveldt forests to natural vegetation had started, and the Participatory Forestry Management Forums had been established, and the Broad-based Black Economic Empowerment Forestry Charter had been initiated. The Forestry Enterprise Development Policy had also been adopted. Members heard that there were local initiatives to combat poverty and promote economic benefits through forestry and forest activities.

Mr Balzer then spoke about the transfer of sustainable services to local government; the key investments in water resource infrastructure, new institutional arrangements; the restructuring of forestry for growth, and poverty eradication. The basic water supply backlog should be eradicated by 2008 .

Discussion
Mr J Arendse (ANC) enquired if adequate money were made available to achieve targets for sanitation and other infrastructure, did the Department have enough capacity to deliver. Mr Balzer replied that funding needed to support capacity building. In the sanitation area, no high-level skills were needed , but more management expertise.

Ms T Lishivha (ANC) asked about the role of the regional offices in drought relief money, and whether staff had capacity to monitor spending. Mr Balzer responded that the Department did play a role in monitoring how the relief money was spent.

Ms S Maine (ANC) inquired whether the Department had a plan to correct the problems. Mr Balzer replied that the Department had reprioritised spending and now had a more reasonable and clear vision. With regards to the 2006/07 budget, the Department Strategic Plan had highlighted clear imperatives that would be included in the Annual Report.

Mr Arendse asked about the possibility of forming another entity to manage the 84 000 hectares of land for reforestation – was the Department able to manage it alone? Mr Balzer replied that the Department did not intend to go into plantation management, so this section would be disposed of. The South African Forestry Company Limited was looking after the government’s 25% share in those outsourced entities. Exactly 10% of shares had been sold off to Black Economic Empowerment (BEE) companies; with 9% for employee shareholders. 6% would be retained by the government.

Ms Lishivhe asked progress in the provision of free basic services. Mr Balzer replied that the statistics on free basic services were available on the Department website.

The Committee was interested in Department capacity in terms of the management of its finances. Mr Balzer responded that the Department was looking at the skills available and they needed to import skills to improve their finance management. They needed to employ accounting companies to assist their accounting capacity.

The meeting was adjoined.