Medium Term Budget Policy Statement: Input from Departments of Minerals & Energy & Environment &Tourism
Budget Committee on Appropriation
31 October 2006
Meeting Summary
A summary of this committee meeting is not yet available.
Meeting report
JOINT BUDGET
COMMITTEE
31 October 2006
MEDIUM TERM BUDGET POLICY STATEMENT: INPUT FROM DEPARTMENTS OF MINERALS AND
ENERGY & ENVIRONMENT AND TOURISM
Co-Chairpersons: Ms L Mabe (ANC) and Mr B Mkhaliphi
(ANC) [Mpumalanga]
Documents handed out:
Department of
Minerals and Energy presentation on 2006/7 Medium Term Budget Policy Statement
Department of Environmental Affairs and Tourism presentation: Part1 & Part2
Department of Public
Service and Administration presentation
Department of Public
Enterprises presentation
Relevant document:
National Treasury: Adjusted Estimates of National Expenditure 2006/7
(available at www.treasury.gov.za)
SUMMARY
The Department of Minerals and Energy tabled its strategic objectives and
described the key achievements in mining, energy supply and fuels. The
Department indicated that the power outages had been a clear indication that
the capacity to provide electricity had been overtaken by the rate of economic
growth. It needed to procure more generation capacity, and upgrade existing
infrastructures, which had not been designed for their current loads. There
were still 3.4 million households without access to electricity. There was an
urgent need to increase household, school and clinic connections and build five
new substations per year, in order to reach national targets. The grant would
increase by 23.2% over the Medium-Term Expenditure
Framework (MTEF). During the past year the appropriation was R2.25
billion, with expenditure of R2.17 billion. There was 96.45% spending, with a
variance of R79 million. Most of the variance arose through municipal transfers
and subsidies being withheld owing to non-compliance with the Public Finance
Management Act. R10 million had been under spent on electrification. The
appropriation for the current year was R2.5 billion. DME had been granted a
rollover of R11 million. The estimated expenditure for 2007/8 was R2.7 billion
and for 2008/9 was R2.9 billion.
Questions from members related to the rollovers, securing of services abroad,
the non-grid supplies, under spending and non compliance by municipalities and
assistance given to them by the Department.
DME was asked if it could meet its targets. The electrification policies and
national plans were clarified. Concern was expressed on the lack of certainty
as to numbers of clinics and schools, and the backlog figures. Further
questions addressed weak electricity supply to rural areas, lack of information
to these areas, technical audits, alternative energy sources, skills
development in the Department, and the moving of funding from one programme to
another. Energy failures, nuclear plans, security of supply and the need to
cooperate with other Departments were stressed as priorities. It was suggested that
the Department must arrange a workshop with other Departments and try to set up
a joint project, for instance building a school, in which every service was
integrated for simultaneous delivery.
The Department of Environmental Affairs and Tourism reported that DEAT’s priorities aligned with ASGISA targets. It undertook
environmental impact assessments that spanned a number of projects. It had its
own expanded public works programmes and covered a number of small, medium and
micro enterprises in both the tourism and environmental sectors of its work.
The Department was responsible for trans-frontier conservation areas, parks
upgrades, and recapitalisation of the South African weather services. Research
and development included work on the research vessels, particularly the Marion
Island projects and other vessels that researched stock at sea and monitoring
of marine species. It gave support to municipalities on air quality, water
quality and waste management. The key focus areas were the development of sustainable
growth in the tourist industry, conservation and protection of the environment,
the promotion of global sustainable development, transformation of the
Department and public entities, and the growth of the tourism, environmental
and fishing sectors. Achievements in each area were briefly highlighted. The
allocation was now at R2.18 billion, and expenditure was fairly well on track,
with 48% spending up to the end of August. Cash management systems were in
place. Savings of 2% had been achieved. Rollovers had been requested and
approved by National Treasury in the sum of R28 million, relating to the Marion
Island Research Station. Adjustments to the baseline were requested in respect
of the S A National Parks, and backlogs in the
environmental impact assessment processes. A financial contribution was
requested for the first Climate Change meeting to be held in Africa. Some money
had been moved from goods and services to transfer payments. Gender and
transformation issues were briefly addressed.
Members’ questions related to the backlogs in the assessments, which had
hindered the work of other departments, the adjustments in expenditure
reflected as unfilled staff posts, and clarification on what was included in
administration costs. Movement of funds between programmes and the rollovers
were raised and it was questioned whether this showed poor planning. The
Matters of Emphasis in the Auditor General’s report were clarified. Capacity
issues, the relationship with private parks, and with
the training authorities were also discussed. The Department could fulfil its
obligations on the current grants but stressed that increased funding would
greatly increase its ability to promote tourism.
After lunch the Committee met with representatives of the Departments of Public
Service and Administration and Public Enterprises to receive information on the
Medium Term Expenditure Framework budget allocations. DPSA would seek to
contribute to employment creation and economic development. State capacity had
to be enhanced to achieve core objectives. Certain strategies would be
introduced to retain scarce skills. A new Public Sector Remuneration Framework
had been formulated to enhance delivery. Performance-related pay would receive
greater attention. The DPE would seek to foster efficient State-Owned
Enterprises and encourage the entrenchment of good corporate governance in the
private sector. Specific adjustment allocations to certain key entities were
explained.
Members asked various questions including the proposed dual career path model,
whether the single public service project had been postponed, the need to
address vacancies in the public sector, the phenomenon of ghost posts, the need
to enhance incentives in rural areas, when the Pebble Bed Modular Reactor would
come into operation and whether the allocation to Denel
would boost profitability.
MINUTES
Briefing by Department of Minerals and Energy (DME)
Adv Sandile Nogxina,
Director General: DME, apologised that the Minister could not be present, due
to the change in date of the meeting. He tabled a report but stated that he
would concentrate on only certain activities of the Department. He stated that
the DME focused on the priorities identified by the Accelerated Shared Growth
Initiative for South Africa (ASGISA) and there had recently been a shift in
focus to review internal structures to meet the challenges in capacity. DME
aimed to provide sustainable and broad based services and allow access to the
mineral and energy sectors. The strategic objectives were tabled, but were not
discussed.
Key areas of focus in mining had been the shift in policy to one of
implementation to ensure that certain matters were fast-tracked without
sacrificing effectiveness. Various pieces of legislation had been identified
and dealt with, and were detailed in the presentation.
In the area of energy supply there had also been some radical changes. In
December 2005 the power outages had been a clear indication that electricity
supply was no longer unhindered, and that the capacity to provide electricity
had been overtaken by the rate of economic growth. There was a need to procure
more generation capacity and invitations to tender were published. At the same
time DME embarked on an upgrade of ageing infrastructure. Historically, the
infrastructure was not meant to cater for rural households but was limited to
certain apartheid defined areas. There had been some success in
electrification, but there needed to be an improvement in capacity to generate
and the building of new power plants. There were still 3.4 million households
without access to electricity. There was a national target for universal access
to electricity by 2012.
Much of the refurbishment had been done, but there were many municipalities
where inadequate investment had been made into maintenance. It was necessary to
increase the number of household connections to 415 000 per annum and to target
2 500 schools and 100 clinics per annum, as well as build five new substations
each year.
DME’s projects relating to fuel included short,
medium and long term petrol supply options, fuel supply, upgrading of
pipelines, storage tanks and import terminals, better transport plans and the
planning of a new refinery. Import and export guidelines had been reviewed to
enable previously disadvantaged individuals (PDIs) to
import finished products. Cleaner vehicle fuels were introduced.
On the mining side, DME’s achievements included a 16%
reduction in the number of fatalities in mines, and an increase in involvement
of PDIs. Legislation had been a priority. The
database for derelict mines had almost been completed.
The grant would increase by 23.2% over the Medium-Term
Expenditure Framework (MTEF), totalling R5.6 billion. During the past
year the appropriation was R2.25 billion, with expenditure of R2.17 billion.
There was 96.45% spending, with a variance of R79 million. The bulk of that was
due to municipal transfers and subsidies being withheld owing to non-compliance
by municipalities with the Public Finance Management Act (PFMA). Subsidies
could not be transferred until there was full compliance. R10 million had been
under spent on electrification, due to challenges relating to service providers
and non-grid electrification, where technologies were sourced from abroad.
The appropriation for the current year was R2.5 billion. Over and above that
DME had been granted a rollover of R11 million. The rollovers represented
projects not yet completed, so that invoices could not be paid at the end of
the financial year. Some were attributable to renewable energy generators and
acquisition of new generator capacity. Expenditure between April and September
had amounted to R1.1 billion. Under spending was attributed to delays in
transfers and subsidies. The estimated expenditure for 2007/8 was R2.7 billion
and for 2008/9 was R2.9 billion.
DME’s planned outputs were tabled, but were not
discussed.
Discussion
Ms R Mashigo (ANC, NA) asked for
clarification on the R10 million and the services secured abroad.
Adv Nogxina stated that this related to non-grid
supplies. Tenders had been invited on a solar system for the non-grid. These
tenders had resulted in delays and the technology was eventually sourced in
Germany, as there were no local manufacturers of solar systems. Although the
project had been approved it was not possible to spend any funds before the
year end, as there had been no actual delivery.
Mr G Schneemann (ANC, NA) asked if DME was being
proactive enough in encouraging local manufacture of solar products to avoid
overseas spending.
Mr Z Kolweni (ANC, NCOP) asked for an indication of
the future of non-grid electricity in South Africa. He asked how readily
accessible it was.
Mr T Ralane (ANC, NCOP) mentioned that he had
previously raised with DME the question of municipal suppliers. On the one hand
the municipalities were under spending and funds were not allocated from DME,
but on the other they were applying to Development Bank of South Africa and
other commercial banks for loans for electrification programmes. The Committee
had found this situation during its recent oversight visit in North West
province. He asked how DME addressed the capacity problems in municipalities,
and stressed that he would like to hear how many had been assisted.
Adv Nogxina stated that he too was unhappy with the
under spending but reiterated that he was not prepared to release funds without
full compliance by municipalities with the PFMA. DME had embarked on an
initiative that it hoped would achieve a better balance. Whereas previously the
energy divisions had been located at Head Office, DME had now created regional
offices in each province and had sent officials out to deal directly with
municipalities. An office had been set up in Port Elizabeth, which had achieved
good successes in the O. Tambo region and had set up
satellite offices in Bizana and Umtata.
Training was being given on how to access the funding and how to work with the
PFMA provisions.
Mr Kolweni was pleased to hear of this and asked that
he be advised of the location of the offices in North West.
Co Chairperson Mr Mkhaliphi pointed out that the
Division of Revenue Act stated that DME must ensure that Eskom
electrification plans were in line with municipal plans. This clearly indicated
the need to get involved in the integrated development plans. It would entail
cooperation between all three spheres of government.
Ms A Mchunu (ANC, NCOP)
referred to the R37.2 million that could not be transferred to municipalities
for lack of compliance with the PFMA and noted that electrification would be
one way to alleviate poverty. She asked whether DME had taken active steps to
discover what the problems were. She was concerned about the rollovers as
promises were being made each year, but were not fulfilled.
Adv Nogxina replied that these questions involved a
number of issues. The municipalities were not prevented from applying for
loans. The Constitution had given them power to reticulate and supply
electricity as part of the basic services. It was up to the individual
municipalities to decide how this should be done. If they would prefer to
borrow money rather than comply with the PFMA then they were free to do so. As
the accountable person at DME, Adv Nogxina
was not prepared to release funds when he was not satisfied that sufficient
internal controls were in place to ensure proper spending. The PFMA cast duties
on both DME and the municipalities and each must comply. There should be
cooperation between all three tiers of government, but it was a practical
problem.
Mr Z Kolweni (ANC, NCOP) asked what exactly was being
done by DME to make the municipalities aware of the shortcomings and to train
them in the processes to be followed. He stated that the DME could surely
interact with the Department of Provincial and Local Government.
Mr Ralane asked if DME believed that the R5.6 billion
was sufficient to address the needs of electrification. The Co-chairperson
added that this should not be seen as an invitation to argue for more funding.
Adv Nogxina replied that DME was fairly satisfied
with the current allocation. It had managed to increase electrification and
support had been given to the South African Nuclear Energy Corporation (NECSA).
This support was needed as there was always the danger that skilled scientists
would be recruited away by rogue states. Whilst DME accepted that this was the
funding it must work with, it still wished to engage with National Treasury for
additional money in order to ensure that the 2012 targets were met..
Mr Ralane noted that DME had previously stated that
it would not electrify in areas where there were no houses. However, in Taung municipality, despite houses having been built, there
was still no electricity and the Department had now been asked for a list of
places where electrification had not taken place. He was worried that local
communities were being given expectations that were not fulfilled by
departments.
Ms Nelisiwe Magubane,
Deputy Director General, Electricity and Nuclear, DME, stated that she would
have to check the position in Taung. Sometimes there
was no electrification simply because the place concerned had not been
reflected in the plans.
Mr Ralane also questioned the targets for
electrification of schools and clinics and queried if these were achievable. He
was concerned about the remark that the data on the numbers of schools and
clinics was unreliable.
Mr Botha (ANC, NCOP) echoed these concerns and asked
how it was possible that Departments did not know of the numbers of
institutions under their control. He felt that households could get by without
electricity but that schools and clinics could not.
Ms Magubane confirmed that the data was not always
reliable. Private institutions were not covered and some schools and clinics
fell under provincial rather than local government. Allocations were made
according to the funds available. If DME decided to electrify more schools,
then they would have to reduce the figures for households. Each municipality
would have its own priorities. DME now insisted that the Municipal Manager must
sign off plans and include DME in integrated planning. DME would insist that
the plans were adhered to. The problem remained that some of the schools were
very remote and connection caused problems.
Ms B Dambuza (ANC, NA) commented that in rural areas
the electricity supply was often weak and unreliable. She queried whether
consumers were receiving value for money.
Adv Nogxina stated that when the process of
electrification had started, it had focused on household connection rather than
on infrastructure, as the infrastructure sustained apartheid plans and provided
electricity to only a few selected areas. Electrification had been expanded,
but there had not been correlating expansion of the infrastructure. DME was
attempting to improve the power and capacity of the rural substations so they
could cater for more connections.
Ms Magubane noted, in answer to a further question
from the Co-Chairperson, that DME also did undertake technical audits of
supplies by municipalities and Eskom and were
satisfied that value for money was being received as far as possible.
Ms Dambuza noted that there was no mention of skills
development in the budget and asked what was being done to address this issue.
She was concerned to note that there had been savings due to vacant posts not
having been filled. She asked what had been done to fill then, and questioned
how DME was managing to accomplish its objectives if there was a lack of
skilled staff.
Adv Nogxina replied that DME was one of the most
knowledge-intensive departments in the public service and employed a number of
scarce skills. These were widely varied, and included deep sea divers. There
was a wide range of scientists on the staff. Unfortunately the DME was the
victim of government policy, which called upon the private sector to employ PDIs. The staff at the Department, having
been well trained, and being well versed in policy and national issues, as well
as being paid lower salaries than the private sector could offer, were
head hunted and poached by the private sector. DME had now begun an internship
programme, taking graduates straight from university and training them. It had
also drawn up a scarce skills recruitment and retention strategy, which was
currently under consideration by the Department of Public Service and Administration
(DPSA).
Mr Schneemann (ANC, NA) noted that the strategy was
being checked by DPSA but queried what was being done in the meantime to ensure
that programmes were not negatively affected through shortage of staff.
Adv Nogxina stated that consultants were being
employed in the short term.
Ms Dambuza asked what was being done about poverty
alleviation.
Ms A Mchunu (ANC, NCOP)
noted that the presentation had made mention of closing the gap between the
first and second economies but had not directly addressed the third economy.
Ms Dambuza referred to page 181 of the National
Treasury report and asked for further clarification on the savings arising from
a shifting of functions. She asked if savings meant that nothing had been done
in that area.
Adv Nogxina clarified that there had been a moving of
R20.1 million from one programme to another. The reason for the delays was that
this was a research programme with a number of stakeholders, including the
Council for Scientific and Industrial Research, the Council for Geoscience and Mintek. The figure
was also mistakenly described; it in fact related to current expenditure. This
was a three-year programme, and all contracts had now been concluded.
Ms Mchunu stated that in 1986 an electrification
programme had begun in Kwazulu Natal, under the Joint
Services Board. However, this had been delayed, and then there seemed to be
changes in the programme. The person in charge had said that he had been told
to wait for further instructions. Posts had been erected but no lines had been
connected. There was something very wrong if the area managers were given no
written indication of what was happening. Oral communication would place them
in a difficult position because the community suspected that they were simply waiting
for bribes before supplying electricity.
Adv Nogxina noted that often the DME had found that
people in rural areas were completely unaware of the electrification plans. It
was clear that DME needed to work on an information strategy. The national electrification
plan was predetermined, with set time frames, and could not be changed at the
whim of any official.
Ms Magubane (Deputy Director General, Electricity and
Nuclear, DME) stated that around one third of the budget was allocated to Kwazulu Natal. DME was very much aware of the backlog and
plans had been presented two weeks previously to the provincial Cabinet that
focused on each district, setting out how, where and at what cost the
electricity would be provided. She undertook to make this information available
to the Committee.
Dr P Rabie (DA, NA) referred to page 182 of the
National Treasury Report, giving figures for the various projects. He noted
that the power cuts in the Western Cape had caused a great deal of loss to
businesses. He asked if there were plans to use the rollover to prevent further
power outages.
Adv Nogxina stressed that there was no link between
the energy failures in the Western Cape and the rollovers. DME had now designed
systems that would enable it to improve on the bulk infrastructure of the
country. It was busy adjudicating a tender for procurement of new generation
capacity. It was unfortunate that during the years that there was surplus
electricity, nothing was done to upgrade for the future as economic growth was
now necessitating urgent infrastructural development, as well as refurbishment.
Dr Rabie asked if the nuclear programmes were on
schedule.
Ms Magubane stated that DME was not involved in any
procurement programmes and dealt merely with policy issues. DME had ensured
that all the necessary legislation and international treaties were in place so
that if Eskom decided to pursue programmes, they
would be done under an existing framework. DME had completed a radio active
voice management programme and had signed treaties.
Mr Botha asked whether the Department would achieve
its goals. He stressed the importance of security of supply for the 2010 World
Cup. He asked if it would be possible to guarantee that there would be no
outages after 2012.
Ms Magubane stated that there were a number of
different reasons for power blackouts and brownouts. Those in Cape Town had
resulted from shortage of generating power, whilst those in Johannesburg had
resulted from poorly maintained infrastructure. DME was working with Eskom to try to ensure adequate capacity and had formulated
a twenty-year plan, with specific timelines. This had been approved by Cabinet
and update plans would be submitted each year, covering both the generation and
the maintenance of the infrastructure. Additional funding from National
Treasury would cater for the rehabilitation of infrastructure. Provision had
been made to assist Municipalities who had failed to maintain their
infrastructure and ensure upgrades. The needs for 2010 and 2012 had been factored
into the plans. In addition, the Gautrain project had
been included.
Mr Botha referred to the fact that 4.3 million
households had been connected but 3.4 million remained to be connected. He
asked if this figure included growth or was a backlog figure only.
Adv Nogxina stated the figure of 3.4 million was the
backlog and had not factored in the growth rate, which was estimated at around
2.5% per annum.
Mr G Schneemann (ANC, NA) asked whether DME undertook
joint planning with the Department of Housing, since the Breaking New Ground
project of 2004 had intended that all new housing developments must be
simultaneously built and serviced. He asked whether electrification would
include street lighting.
Adv Nogxina replied that the N2 project had included
a joint approach that was driven by the Department of Housing. He pointed out
that whether people were being relocated on a permanent or temporary basis, it
was necessary to connect all services. Not all the plans had worked
successfully. The projects were completely new and would take a little time to
settle. He confirmed that street lighting was included as part of the
programmes since it was linked to safety issues.
Mr Schneemann referred to the diversification of
energy sources mentioned in the presentation and asked whether sufficient
resources had been allocated to such programmes. Solar powered street lights
had been erected in his constituency, resulting in electricity savings. He
wondered if sufficient emphasis was being placed on similar research and
development projects.
Adv Nogxina stated that the diversification involved
both the bulk supply to power stations and primary energy sources for household
use. DME had looked at a number of technologies. Solar technology was still not
well developed and there remained many issues about its efficiency. There were
many challenges on the new standards. All new housing developments were to
include solar water heaters in an attempt to reduce the national energy demand.
The issues would need to be treated carefully.
Mr Schneemann stated that DME was always visible
after mine accidents but wondered what it was doing to improve mine safety and
avoid accidents.
Adv Nogxina replied that DME staff
were at the mines on a daily basis, checking safety and standards. This
had not been specifically included in the report as it was a routine operation
rather than a specific project. He agreed that they were most often seen at the
site of accidents, but there were proactive steps to try to reduce accidents
and fatalities and improve safety.
Ms Mashigo asked if DME was being proactive enough to
try to encourage local manufacture.
Adv Nogxina replied that Eskom
were currently running a pilot project looking at large solar energy plants in
the Northern Cape. Not a great deal of work had been done locally on these
technologies. It was hoped that a new South African National Energy Research
Institute could be established to look at alternative energy sources.
Mr Schneemann asked what was planned on liquid fuel
transportation and whether there were joint initiatives with the existing
companies.
Adv Nogxina confirmed that
various projects were examining the extension of pipelines, and improvement of
transport systems, as well as the upgrade of port facilities.
Co-Chairperson Ms L Mabe (ANC, NA) asked whether
there was any joint planning between departments. Even in urban areas, schools
were often built but no electricity was provided, making it impossible to run
computer and science classes properly. In some areas, such as Rustenburg,
further growth was being hampered by lack of supplies.
This question was answered together with the question on housing development.
Co-Chairperson Ms Mabe asked what DME was doing to
promote science and maths.
Adv Nogxina stated that this was not within the
jurisdiction of DME, who would only recruit scientists who had already
graduated. The Department of Education set the standards and the curricula.
Co Chairperson Ms Mabe asked how many connections had
been made in the past year.
Adv Nogxina stated that there had been 215 000
connections in the past year.
Mr Ralane made a proposal that the DME must hold an
indaba with other Departments, involving the Directors General of National
Treasury, Education, Water Affairs and Forestry, Public Works, and possible
even Sports and Recreation. They should identify a project, such as a school,
and follow a completely integrated model that provided all services. The
Provincial Infrastructure Grants were currently not being used properly and
could be available. Provinces had under spent R4.4 billion and these funds
should be used.
Mr Kolweni noted that during August the NCOP had
visited North West and the provincial legislature appealed that there should be
interaction with national departments on issues of service. He was pleased that
energy offices had been set up and asked DME to let him know where they were.
Briefing by Department of Environmental Affairs and Tourism (DEAT)
Ms Pam Yako (Director General: DEAT) reported that DEAT’s priorities had been set in line with ASGISA targets.
It played a role in environmental impact assessments that spanned a number of
projects, and also played a role in the second economy. DEAT had its own
expanded public works programmes (EPWP) and covered a number of small, medium
and micro enterprises in both the tourism and environmental sectors of its
work.
DEAT was also responsible for the trans-frontier conservation areas, parks
upgrades, and recapitalisation of the South African weather services. It dealt
with the South African National Biodiversity Institute on research and
development and also too responsibility for the botanical gardens. Research and
development included work on the research vessels, particularly the Marion
Island projects and other vessels that researched stock at sea and monitoring
of marine species. Through the Environmental Impact Assessments (EIAs) it would develop departmental capacity and gave
support to municipalities on air quality, water quality and waste management.
The key focus areas were the development of sustainable growth in the tourist
industry, conservation and protection of the environment, the promotion of
global sustainable development, transformation of the Department and public
entities, and the growth of the tourism, environmental and fishing sectors.
In regard to tourism, DEAT reported that the number of international arrivals
had increase 10.3% to 7.3 million visitors per annum. A plan
had been developed to cater for 2010. A monitoring system had been
developed to classify the numbers of tourists, their destinations, where they
would visit and stay, and their spending. DEAT had trained a number of people
in language skills, including Chinese, and supported several SMMEs, together with The Business Trust. A grading system had
been established for accommodation, and steps had been taken to increase the
number of black and female assessors.
In regard to the number of visitors, DEAT said that although it was currently
at 7.3 million, this was due to rise to 8.2 million during the MTEF. DEAT could
do far more if it had more money.
A Charter for Tourism had been established, a website had been set up and a
Code of Good Practice for the industry drawn and submitted to Cabinet. A
marketing campaign had been set in motion.
ASGISA had identified skills as one of the priority areas but in tourism the
relevant Sector Training Authority and the industry could not agree on the
skills that were needed, and therefore had not agreed on a training plan. An
audit of skills had now been undertaken and a conference had been held on 19
and 20 October to try to finalise a skills plan. This was work in progress and
it was hoped that by November the plan would have been finally agreed and
started, in readiness for 2010.
DEAT had held meetings and had agreed an accommodation plan with the
implementers of the World Cup. FIFA, for the first time, had agreed that
accommodation other than hotels could be used, which would benefit SMMEs. DEAT would be holding workshops in the host cities
in regard to the implementation of the plans and would be grading the
establishments. Grading would be subsidised to those within a 30-kilometre
radius of the cities. It had set up an information and booking portal.
Challenges remained in getting the necessary information from the Departments
of Home Affairs and Statistics South Africa.
DEAT was also working in the second economy. In the area of conservation it was
working on the finalisation of the long term fishing rights. It was working
with the Police Services and the Scorpions to identify and arrest poachers in
an effort to preserve and maintain the fish industry. It was attempting to
increase its enforcement capacity and to upgrade beaches to blue flag status,
both from a safety and a tourism perspective. It had merged a number of parks,
had managed to have two protected areas proclaimed, and five new marine
protected areas. It was busy finalising some land claims and had managed to
have five Heritage Sites declared, while working on another one. DEAT was
promoting conservation through public awareness campaigns and was trying to get
buy in from local communities. Work continued on transfrontier
conservation as well.
The Chairperson indicated that the Committee was short of time and specifically
requested the Department to address only certain issues. The allocation was now
at R2.18 billion, and expenditure was fairly well on track, with 48% spending
up to the end of August. Cash management systems were in place. Savings of 2%
had been achieved. Rollovers had been requested and approved
by National Treasury in the sum of R28 million. This related to the
Marion Island Research Station, and resulted from the delays occasioned by the
weather and having to wait until the ship was able to dock. However this
rollover represented only a small portion of the previous budget. It was
anticipated that this would be the last rollover as the project was nearing
completion.
The proposed changes to the 2006 Appropriation Act were addressed. Adjustments
to the baseline were requested in respect of the S A
National Parks, and in respect of backlogs in the EIA processes. A financial
contribution was requested for the first Climate Change meeting to be held in
Africa. Some money had been moved from goods and services to transfer payments.
The rollover mentioned before was also included.
The Chairperson requested Ms Yako to deal with the
slides on achievements.
Ms Yako stated that the EPWP programme of DEAT, and
the internal processes, had achieved good results in so far as transformation
was concerned. 57% of spending was linked to BEE projects. 18 million temporary
jobs had been created and 310 permanent jobs in the last year. In the following
year both temporary and permanent jobs would be created and 150 000 training
days implemented. Provincial programmes were to be upgraded to increase the
potential for tourism. It was hoped to develop greater participation and
establish a BEE scorecard and increase the number of protected areas.
Challenges included the backlog in EIAs but also included
the waste services backlog. Municipalities would deal with collection but DEAT
issued landfill permits. Not all landfill sites were under permits, and
therefore management of those sites was a challenge, as waste management had an
impact also upon the environment and health, including water standards.
Discussion
Co Chairperson Ms Mabe asked DEAT to clarify the
backlogs in EIAs, as many Departments had raised this
delay as one of the challenges hindering their work.
Ms Yako replied that the legislation required that
before development could be done there needed to be an EIA. The time this would
take had not been factored in to most developments. Many national and
provincial offices were short of staff. More funding had been given for the
impact assessments in some provinces to support them in clearing these
backlogs. A large infrastructure exchange programme had been planned with state
owned enterprises to plan and advise on EIA. It was
hoped to continue with the support to provinces.
Co Chairperson Ms Mabe asked how old the backlogs
were. She stated that Department of Correctional Services had raised these
specifically as the reason why prisons were not being built.
Ms Yako replied that she did not have the exact
figures with her, but about 7% of the EIAs did last
for longer than two years. Around 45 000 applications were received. She was
not sure on the Correctional Services applications. Some of the assessments
were more complex than others, depending on the zoning and the type of
activities in the area.
Mr Schneemann referred to the adjustments in
expenditure arising from unfilled staff posts. He asked why they had not been
fulfilled, and what impact this had on the effectiveness of the programmes.
Ms Dambuza noted that the number of vacancies had
also had an impact on the Employee Fund, yet adjustments had been made on the
administrative side. She asked for an explanation between the funds moved from
the employee side and the increased costs of the Department.
Ms Yako explained that this was contained on P 162 of
the Report. It concerned an EPWP programme that comprised administrative costs
and costs for implementation of the project. The performance of the programme
was delayed and therefore the posts could not be filled immediately. The funding
intended for posts had therefore been transferred across to households. The
implementation was now on track, and would not be affected by this transfer.
Ms Yako noted that the “administration” expenses
included the amounts paid in connection with the Kenyan environmental
conference.
Mr Schneemann noted that certain funds had been moved
between programmes. He asked for clarification and also asked why this had
arisen, as he was concerned that perhaps it indicated a lack of proper budget
planning.
Ms Yako stated that plans were indeed in place, but
DEAT had not foreseen that the provinces would struggle to implement the EIAs. Now that DEAT knew of the problem, it was better able
to rethink its plans and move forward.
Mr Tom Bouwer, Chief Financial Officer, DEAT, pointed
out that the variance in spending represented less than 1% of the total budget .
Ms Dambuza referred to P 159 of Treasury’s report and
noted that there had been a decline in the allocations for environmental
quality protection. She asked what was represented in this category.
Ms Yako stated that the move between the programmes
would be fully set out in the following year’s Annual Report. DEAT had had some
debate with the Auditor General and National Treasury on the classification of payments.
There was some dispute over what was classified as “goods and services” and
what as “transfer payments” and this point was raised as a Matter of Emphasis
in the Auditor’s report. This would be corrected in the following year.
Mr Bouwer added that Memorandums of Understanding,
cost recovery agreements and so forth were all in place, and that DEAT had
asked National Treasury to condone the errors so that the matter could be taken
forward in the correct way..
Ms Mashigo referred to the problems of capacity that
were slowing some of the EIAs and asked if any of the
grants contained a portion for capacity building.
Ms Yako stated that an audit had been done after
ASGISA was adopted, which showed that there was a backlog in EIAs in most provinces. However, the funding to complete
the assessments was not available. The Minister had therefore, with the
agreement of MinMec, agreed to reprioritise. After
discussion whether it was better to wait for the MTEF when the provinces could
request funding, the decision was taken to look at procurement instead of a
grant, and therefore consultants were appointed to assist with the backlog.
Therefore the allocation to goods and services at provincial level was shifted
to a national function
Ms Mashigo asked for an explanation of the
relationship between National Parks and Private Parks. She asked whether DEAT
controlled private parks, in particular if there was likely to be any negative
impact upon the local people.
Ms Yako replied that private parks were privately
owned and managed and therefore DEAT had no control over them. DEAT had
agreements with some of the parks that were adjacent to the National Parks, and
had drawn composite park management plans, dealing with matters such as
relationships with the neighbouring communities. The private ownership was one
of the challenges facing the sector in its conservation attempts. The impact of
Charter on private parks had not been determined.
Mr Sogoni asked why the skills training had been so
long delayed, as ASGISA required that plans for training should already be in
the implementation phases.
Ms Yako replied that there had not previously been a
defined and agreed development plan, involving all stakeholders. The SETA had
spent 97% of its budget on training, but the training had not been allied to
the priorities of the industry and the Department. The recent conference was
called in order to agree common goals and priorities of the Congress of South
African Trade Unions (COSATU) representing the various trade unions, the
Ministry, The Tourism Business Council of South Africa, and local communities
and NGOs. It was important to have buy-in from all bodies. This sector was
unique in that the majority of the employers in the sector were SMMEs and the SETA system was really not appropriate to
them. There was a discretionary fund but clearly it could not cover the 70%
SMME spread.
Mr Sogoni raised the question of the rollovers for
the Marion base and asked whether these would recur.
Mr Bouwer replied that the Marion Base was controlled
by the Department of Public Works but DEAT exerted some pressure to ensure that
they proceeded with the project as fast as possible. It was hoped that the
project would be finalised in the next financial year. The completion date was
set at June 2007. It was hoped that there would be no further rollovers.
Mr Sogoni asked what level of oversight was exercised
by DEAT to ensure that landfill sites were kept to standard.
Ms Yako stated that prior to January 2006 the
landfill sites had been the responsibility of the Department of Water Affairs
and Forestry. A date still had to be set for takeover by the provinces. DEAT
would check standards but there was a challenge in resourcing
and in ensuring full functionality. DEAT was aware too of the public health
issues.
Mr Sogoni asked whether DEAT would be seeking extra
funds from National Treasury.
Ms Yako stated as a general comment that DEAT was not
able to access sufficient funding to carry out all its work. Requests had been
put through to National Treasury but had not always been met. DEAT was
satisfied that it could meet the bulk of its obligations but Ms Yako indicated that with additional funding it could really
do a great deal more, particularly on the tourism side. She was confident that additional
funding would make it possible to increase the number of visitors to 10 million
and this issue had been raised with National Treasury
Afternoon session
Department of Public Service and Administration (DPSA) presentation
Prof Richard Levin (DPSA Director-General) highlighted the Millennium
Development Goals that underpinned the Department’s efforts at employment and
economic development. Various interventions had been planned to support the
Joint Initiative for Priority Skills Acquisition initiative such as mentoring
programmes and the recruitment of skilled immigrants. High unemployment was
linked to economic growth. Certain constraints to economic growth had been
identified such as the need to enhance state capacity. Particular skills such
as engineering, finance and economics and education
management were in urgent demand. Growth in public personnel expenditure was
explained. Vacancy rates in the public sector were outlined. An upward movement
in personnel expenditure was predicted. Personnel expenditure in the public
sector had increased at rates that exceeded inflation. Increases in
remuneration would be used as a strategy to retain scarce skills. Critical
infrastructure development would be improved in all spheres of government. A
new Public Service Remuneration Framework would be implemented. Dual career pathing would be introduced that allowed specialists to
advance without management duties. Professional/specialist salary levels would
be introduced. A total cost to employer remuneration system would be
considered. A greater emphasis would be placed on performance-related pay. A
co-operative agreement with India was in place. The small number of young
graduates employed in the public sector remained a concern.
Discussion
The Chairperson asked why the presentation made no reference to the cost
implications of the proposed strategy.
Prof Levin responded that the presentation maintained a macro-economic focus
highlighting a personnel expenditure review for the past five years. No costing
on the strategy implications and principles to retain skilled personnel was
available as yet.
The Chairperson indicated that the problem of vacancies had to be clearly
explained. The Department’s Chief Financial Officer should be present in future
to provide detail on cost implications.
Mr P Rabie (DA) asked for more detail on the dual
career path scenario. He asked why the single public service project had been
postponed and whether old retired civil servants would be recruited to augment
the staff complement.
Mr Schneeman (ANC) asked how the drain of skilled
public servants out of the sector could be curtailed to improve overall service
delivery. Vacancies throughout the public sector had a negative impact on
performance.
The Chairperson asked how the proposed framework would be funded and when the
first phase of the project would be implemented. Other departments relied on
the DPSA to assist them in resolving their particular capacity shortfalls.
Ms R Mashigo (ANC) referred to the practice of
creating new posts without abolishing previously existing ones. The direct
result of such a practice was an increase in personnel expenditure as the
existing posts continued to receive a budgetary contribution. “Ghost posts”
tended to be the direct result. Performance Management contracts had to be
established to govern the process of bonus payments.
The Chairperson indicated that the problem of ghost posts could be linked to
ghost employees. Ghost employees were a recurring problem in certain regions.
Prof Levin declared that the overall quality of human resource management in
the public service remained a general concern. Personnel administration was an
important component of the public sector and had to be improved. The
introduction of a decentralised approach to human resource management had
perhaps been too hasty. Various departments did approach the DPSA to assist in
certain aspects of human resource management. Vacancies tended to include the
phenomenon of ghost posts where existing posts were not discontinued.
Therefore, the current vacancy rate as reflected in the system did not
accurately portray the real situation. The lengthy process to fill vacancies
contributed to the high number of vacant posts and added to the underspend figure. The public sector struggled to compete
with the private sector in terms of remuneration and career prospects. However,
many committed professionals existed within the public sector and proposed
strategies to retain staff would be of benefit. New salary negotiations would commence
early next year. The single public service project had not been delayed and
contained various sub-projects such as the development of an E-Government
framework that required additional focus.
Ms Collete Clark (Human Resource Management) stated
that the Human Resource framework would be overhauled to address the real need.
The Eastern Cape contained numerous ghost posts in the education sector.
Educators were placed at different locations than originally planned in
accordance with a specific need that impacted adversely on the vacancy rate. An
extensive audit had been undertaken to consider the issue of ghost educators.
The human resource management system had been proposed to oversee allocation
and utilisation of personnel and the creation of new posts. Norms and standards
would be developed to govern the process. The demand for job creation tended to
place pressure on the public sector to appoint unskilled individuals. A
centralised approach was required to facilitate better control over budget utilisation
and post creation. Memorandums of understanding would be established with
tertiary institutions to produce increased numbers of requisite skills. A link
was needed between the various Sector Education and Training Authorities and
the government’s human resource development strategy.
The Chairperson asked what steps could be taken to address the problem of ghost
employees where salaries were issued to non-existent employees.
Ms Clark responded that disciplinary action would be taken against those individuals
that defrauded the public sector. A disparate approach to creating and
abolishing posts should be discontinued to prevent such practices.
Ms Dambuza noted that poor incentives existed in the
rural areas to attract and retain skilled staff.
The Chairperson requested that the costing figures on the envisaged human
resource strategy be provided to Members.
Department of Public Enterprises presentation
Mr Alec Erwin (Minister of Public Enterprises) stated that the objective of the
Department was to facilitate economic growth by fostering efficient state-owned
enterprises (SOEs) and play a leading role in
implementing corporate governance in the overall economy. The main allocation
adjustments related to the SOEs. The Department would
also promote and arrange sector and regional economic development
opportunities. Specific adjustment allocations were outlined. InfraCo would seek to enable a rapid increase in broad-band
availability to stimulate overall economic activity by means of its fibre-optic
cabling infrastructure. The state had decided to retain the particular assets
as opposed to selling them to the second licensed operator. The capital
allocation would be used to enhance South Africa’s capacity for broadcasting
the 2010 World Cup. Eskom and Transnet
would be paid for the communication infrastructure. International connectivity
would be established. The allocation to the Pebble Bed Modular Reactor would be
used to finance a Pilot Fuel Plant and a Demonstration Power Plant. Further
allocations would be used to improve the performance of Alexkor.
A settlement had been reached with the community in question and would be made
an order of court. Municipal infrastructure would be established. Denel and the various defence-related industries would be
positioned as strategic contributors to value-added manufacturing and job
creation. Certain increases in Vote 9 would also occur over the MTEF period.
Discussion
Mr Rabie asked when the Pebble Bed Modular
Reactor (PBMR) would come into operation and whether the new facility would
address the power shortages in the Western Cape.
The Chairperson declared that the decision not to privatise SOEs
was a sound one that deserved support.
The Minister responded that the Environmental Impact Assessment for the PBMR
still had to be completed. A change in design had necessitated the introduction
of a new complex application. Certain issues still had to be resolved between
the Department of Environmental Affairs and Tourism and the National Energy
Regulator. Construction was likely to commence in early 2008. The capital goods
market was problematic at the present juncture. Most of the indicated
allocation would be to place orders for the plant machinery. The target for the
completion of the PBMR was 2012. The problem in the Western Cape would be
resolved next year as a result of the doubling of the local plant capacity.
Peaking plants at Atlantis and Mossel Bay would be
introduced with additional Megawatt capacity. The PBMR would make a dramatic
improvement to electricity generation in South Africa. The plant could be
placed at areas of greatest need. An increase in line capacity would also
contribute to enhanced energy provision. States had to reconsider their
strategic assets such as SOEs and ensure that they
remained under state control to protect the national interest. For example,
broadband fibre was of great strategic value. The main shareholder should have
the national interest at heart. However, the private sector would not be
excluded from activities and opportunities. The private sector
telecommunications sector would flourish as a result of state investment in
broadband. The State wanted to put more broadband capacity in place. Denel had to remain operative to facilitate the overall
survival of the defence-related industry. Therefore, continued allocations were
important.
Mr Schneemann asked whether the allocation to Denel was intended to foster enhanced levels of
profitability.
Mr Erwin responded that capital had been supplied to enable partnerships with
key subsidiaries such as Saab and Zeiss to be
established. Strong subsidiaries would be developed through the capital
injection by means of re-equipment. The partner would also provide capital to
the subsidiary. Production facilities could be restructured and the needs of
the South African National Defence Force would be meet with regard to the
helicopter rotor-wing programme. Profitability would be attained in the
medium-term given the right conditions.
The Chairperson asked whether the Department was satisfied with the MTEF
allocations.
Mr Erwin responded that the increases to the Department itself were adequate.
The allocations to the SOEs were separate and would
be used to finance capital projects. The Department had to consider how much
should be allocated to the SOEs. An envelope of R7
billion would be used to support SOEs. The largest
amount would be allocated to the PBMR. The Department enjoyed a sound working
relationship with National Treasury. The Department would ensure that the
amounts allocated would result in dividends for the economy as a whole.
The meeting was adjourned.
Audio
No related
Documents
No related documents
Present
- We don't have attendance info for this committee meeting
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.