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FINANCE SELECT COMMITTEE
10 MAY 2006
MEETING WITH DEPARTMENT OF WATER AFFAIRS AND FORESTRY
Documents handed out:
Department of Water Affairs and Forestry Presentation
National Transfer Progress – Water Service
National Treasury: Financial Management Grant
National Treasury: Provincial Capex and Pig
The Department said that in the Water Services Operating and Transfer Subsidies they were able to conclude the majority of transfer agreements by the target date of 31 March 2006 (39 agreements which represented a 70% completion rate). Special arrangements had to be made for those municipalities that had weak administrative and technical capacity. The total Revised Operating and Transfer Subsidy was R934.434 million. To date about R960 million had been spent. The R26 million in over-expenditure was covered by a cross-subsidisation from their other trading operations where they had over-recovery in income.
Mr T Balzer, the Acting Chief Financial Officer, said that in the Water Services Operating and Transfer Subsidies they were able to conclude the majority of transfer agreements by the target date of 31 March 2006 (39 agreements which represented a 70% completion rate). Special arrangements had to be made for those municipalities that had weak administrative and technical capacity. These special provisions were built into the agreements.
The Department’s progress up to the 30th of April could be summarised as follows: 43 out of 58 agreements (74%) had been signed; 1841 (23%) staff had been transferred to municipalities; 3584 (44%) of staff were seconded; 246 schemes with a total asset value of approximately R4.979 billion (72%) was transferred and R362 million (43%) was spent on the refurbishment of infrastructure to bring it up to operational level.
The total Revised Operating and Transfer Subsidy was R934.434 million. To date about R960 million had been spent. The R26 million in over-expenditure was covered by a cross-subsidisation from their other trading operations where they had over-recovery in income. Most of the over-expenditure came from Limpopo as they have argued that their annual budget was always R20 million or R30 million too little.
Mr M Robertson (ANC) (Eastern Cape) asked if the Department can effectively monitor how the provinces spent their money.
Mr Balzer said that the monitoring took place in line with section 26 of the Division of Revenue Act as part of the National Transferring Officer’s responsibilities. The Director-General also had a monitoring responsibility and virtually ran the program. The Department also had a fairly sophisticated monitoring and information process related to the refurbishment. However, the Department was not perfect and was always trying to improve things.
Mr M Goeieman (ANC) (Northern Cape) asked why it was taking so long to finalise agreements in some of the municipalities. While some were at 100%, others were only at 10% completion. Why were the staff transfer figures so low? What were the special provisions that were put into the agreements with the poorly performing municipalities?
Mr J Sindane, the Director-General, said that some of the difficulties were caused by the fact that the municipalities themselves had to sign the agreements, and before they could do this they had to be happy with them. The process of renegotiating and adjusting the agreements created the delays.
Mr E Sogoni (ANC) (Gauteng) asked if there were any municipalities that the Department was not providing with subsidies. When was the process of transferring staff supposed to be completed and what was going to happen after that?
Mr Balzer said that the figure was low as these were the numbers that were seconded to the municipalities as part of the agreements signed with those municipalities. Staff only went to the municipalities once an agreement had been finalised.
The Chairperson asked if the Department used a formula to determine how much each municipality received. Did they ask for business plans? What were the implications of the Department only completing 74% of the agreements and transferring only 72% of the funds?
Mr Balzer replied that the Department’s allocations were not formula-based but based on the budgets that were required for specific infrastructure schemes. There was under-spending because the refurbishment project was a three year programme. The position reflected in the presentation was a programme position not a financial year position. The implications on service delivery were that in the absence of service agreements with municipalities, the Department carried on operating and spent the money. Where there was an agreement, the responsibility shifted to the municipality along with the budget and the staff.
The meeting was adjourned.
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