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WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
08 November 2006
ADJUSTMENT APPROPRIATION BILL, VOTE 34: BRIEFING BY DEPARTMENT
Acting Chairperson: Ms C September (ANC)
Documents handed out:
Adjustments to the budget for the Department of Water Affairs and Forestry 2005/06
Agreement between Republic of Botwsana, Mozambique, South Africa, Zimbabwe on Establishment of the Limpopo Watercourse Commission: Part1 & Part2
The Department of Water Affairs and Forestry presented the adjustments of the budget to the Committee. This included the roll over of some funds from the previous financial year and the shifting of some funds to account for unforeseen and unavoidable expenses. The Committee asked for clarity on some of the figures in the presentation and specifically expressed their concern over the lack of pay out of funds to resource-poor farmers. The Department accepted responsibility for this and explained their plans to correct it. The Committee also asked questions relating to the Department’s performance over the year, when the negotiations with unions on the staff transfers were likely to be concluded, the allocation of budgets across programmes in provinces, the involvement of Amakosi, the steps being taken in respect of sanitation and water targets for schools, the racial and gender profiles of staff, and dam safety issues. Further questions related to whether the allocations would meet the Department’s objectives, the problems with municipalities and drought relief funding/
The Committee resolved to deal with the draft Report at the next meeting. The programme for oversight visits in 2007 was briefly discussed.
The Chairperson welcomed and introduced the new Committee secretary, Ms R January. The Chairperson explained that the purpose of the meeting was for the Department to brief the Committee on the adjusted budget, and to take a closer look at vote 34.
Mr M W Sibuyana (IFP) asked what number of Members makes up a quorum.
The Chairperson commented that seven members constituted a quorum. Eight were present. The question of absenteeism would be dealt with.
Briefing by the Department on the Adjustment Appropriation Bill
Mr Trevor Balzer, Acting Chief Financial Officer, Department of Water Affairs and Forestry (DWAF), tabled a document explaining the reasons for the adjustments made to the Main Appropriation. He stated that there had been a R183 758 000 increase in the budget for the Department, representing a 4.1% increase. 94% of the increase was due to rollovers from the previous financial year approved by Treasury in August 2006. The Department had requested additional funding for unforeseen and unavoidable expenditure of R50 million for operational costs for forestry commercial plantations. National Treasury had elected also to regard this as a rollover as the Department had previously surrendered 4.5% of its 2005/6 budget. The total adjusted appropriation amounted to R4.66 million. The rollovers were tabled and summarised.
Mr Balzer reported that virements amounted to R50.057 million and represented “clearing the slate” to ensure that there was no further unauthorised expenditure in 2006/7. Details were provided, and he summarised that in respect of Programme 1, a contribution of R70 000 had been made to South African Management Development Institute (SAMDI) for a conference and R37.3 million had been moved from goods and services to upgrading IT equipment. In Programme 2, savings were made on the Water Resources Management, due to non-filling of posts, and the amounts moved to Water Services Programme 3 for filling critical posts. R12.57 million had been budgeted for subsidies for resource-poor farmers, but the necessary regulations had not been made to enable the subsidies to be paid out. Provision had been made for this amount in the following year. Savings would be utilised instead in the amount of R3.5 million for operation of the Orange-Senqu Commission and R9.2 million would be allocated to IT infrastructure. In Programme 3 there had been a total adjustment of 2.87 million, of which the bulk was used for filling critical posts, and the remainder to purchase computers and software.
A further shift of funds between votes resulted from a transfer of R17 million from DWAF to the Department of Provincial and Local Government for the Working on Fire Programme. It transpired that an amount of R3 million was incorrectly allocated and had therefore been transferred back.
Mr Balzer reported that current expenditure for the first seven months amounted to 45% of the adjusted appropriation. The Department was about one month behind on its spending programme. There had been little expenditure on the De Hoop Dam project due to delays on the part of the Department of Environmental Affairs and Tourism, and it was unlikely that this project, which represented 6% of budget, would be significantly advanced in this year. Expenditure for the operations of Water Services was still being partially spent on the Water Trading Account budget. There had been underspending of the R72.9 million allocated to transfer of staff to other institutions as the agreements with the South African Local Government Association (SALGA) and Unions had been delayed.
Mr J D Arendse asked for an explanation of the 16.7% increase in administration and why the Water Services finances had not increased in light of the current backlogs. Mr Arendse asked if this was due to the asset transfer to Local Government.
Mr Balzer wished to contextualise the adjustments, and clarified that they did not affect the baseline of the Department. They only dealt with the current financial year. The Department would deal separately with the baseline changes and there was a Medium Term Framework process to handle it. He agreed that there should be alignment between the targets and the budget. The Department had a clear indication of the adjustment to the baseline, which will be dealt with in the future weeks. National Treasury had been lenient giving two rollovers, but this was a once off event. Treasury decided two years ago that it would be dealt with annually.
Mr Arendse asked for clarity on the R2.9 million allocation for development of operating rules. He said that he could understand the high cost of something physical like weirs, but felt that rules were basically pieces of paper that surely did not represent significant costs.
Mr Balzer said that operating rules were a document, but the costs arose when the document applied; such as warnings when sluice gates must be opened. Gauging stations were part of the rules, and it was an integrated system. He explained that the sluice gates must be handled to anticipate flood waters, to mitigate damage to the river.
Mr Arendse also asked for clarity why the savings of R12.5 million, which were allocated to subsidies for poverty, were identical to the Orange-Senqu project.
Mr Balzer replied that the match of the R12 million savings and the allocation across to the project was the result of the process for balancing the budget.
Ms J Semple (DA) asked whether the subsidies for farmers were the result of poor farmers not being paid out. She also enquired whether the underspending arose because of lack of spending on drought relief, as Ms B Schreiner had suggested in a previous meeting.
Mr Balzer replied that some of the subsidies were paid but DWAF had to cease making payments to put regulations in place. The matter was being dealt with.
Mr Sindane, CEO, Department of Water Affairs and Forestry, commented that there was a committee between the Departments of Water Affairs and Forestry, Agriculture and Land Affairs to deal with the issue of resources for poor farmers. They were trying to set up a one stop shop and wanted to include the farmers’ needs in this. He added that in his view DWAF had failed to resource poor farmers adequately. DWAF did need to include the Department of Agriculture. He would get an update from the management meeting, and he commented that perhaps the Department should give a progress report on this aspect at every meeting. It was a source of embarrassment, and he would ensure that a substantial difference existed by the time DWAF came to give their progress report to the Committee.
Ms Semple commented that she would want to hear that the farmers had been paid.
Mr Sindane said that the process would be quicker with the one stop shop. It will be at the top of the agenda.
Ms Semple asked when the negotiations with the unions would be concluded.
Mr Balzer replied that the negotiations with the unions must go through the Department’s bargaining centre. The Department would like to have a framework agreement to determine how negotiations were done and ideally should deal with all transfers in a single document.
Mr K Moonsamy (ANC) said that shortcomings had been revealed during the public hearings. The Government had the right policy and programmes but the shortcomings arose in implementation. The lack of capacity should have been dealt with by now. He was concerned that there were four months of the financial year left and the Department was already a month behind. He suggested that there should be better cooperation between the Director General and the Minister to isolate and deal with areas of weakness. He hoped that the Department would not repeat the same issues. The Department needed to take special measures to ensure that the same mistakes were not repeated. It must work towards an unqualified audit report. The style of management was poor, there were too many vacancies and it could not function effectively. The Director General would need to draw up a check list of decisions to be implemented, otherwise they would become perennial problems.
Mr P Ditshetelo (ANC) asked for clarity on the unforeseeable and unavoidable expenses in the South and Eastern Cape. He asked whether there were any for the Northern Cape.
Mr Balzer replied that the R26 million allocated for specific programmes of the Department in different provinces was reflected in Vote 5.
Mr Ditshetelo asked what DWAF was doing to alleviate the water shortage situation in the North West.
Mr Sibuyana sought clarity on the R26 million under Water Resource Management for drought relief. He asked whether this was spread over all the provinces.
Mr Balzer replied that the Northern Cape had a number of budgets, which included money to deal with drought. The Minister of Finance did talk about the North, South and Eastern Cape in his speech.
Mr Sibuyana asked which forest was allocated in Bushbuckridge for R50 million, and whether the Amakosi were involved.
Mr Balzer said that the R50 million allocation for forestry was a decision taken in 2001 by cabinet to make the Blyde River National Park. This included some surrounding forests and land leased from the Amakosi. DWAF would have to rehabilitate the land and this required substantial funding.
Mr Ditshetelo said that this did not quite answer his question but that he would approach the Director General personally for further clarity.
Mr Sibuyana asked what measures were being taken to meet the Minister’s deadline for water to schools.
Mr Sindane said that the deadlines for schools were being dealt with by a subcommittee, who would see how they could meet or extend the deadline. The issue was back on the agenda and was receiving attention.
Mr Sibuyana asked whether there was any mechanism that would address and overtake the pace of need due to overpopulation.
Mr Sibuyana asked for a breakdown of the black and female human resource placements in the Department, and in particular whether these related to skilled positions.
Mr Sindane said that transformation was slow because the Department did wish to acquire skilled people. There were many assumptions for senior appointments.
Mr Sibuyana commented that under spending was more serious than justified over spending and asked whether DWAF had any mechanisms to correct the situation. Whilst he understood that underspending could be due to a lack of capacity, he would like to know the capacity situation.
Mr Balzer replied that there was a fine balance between under and over spending. The Department aimed for only 2% variance but had reached an unacceptable 5%.
Mr Sibuyana asked whether there was any solution in sight for the Water Boards and dam safety issues.
Mr Balzer said that dam safety underspending could be dealt with by shifting the money around the budget.
Mr Sindane added that in principle, the committee was invited to visit the dams but they needed to work out the logistics. It was preferable if the Department could visit with the Minister. DWAF would be looking into this and would make arrangements.
Mr Sibuyana asked whether there was transparency with the Amakosi and what was taking place.
Mr Sindane said that there was sometimes a lot of consultation in forestry but he did not know how much there was in Bushbuckridge. He will follow up on this issue, and would include the Amakosi in his investigations.
Mr Sibuyana asked how many people were involved in black economic empowerment (BEE) in DWAF.
The Chairperson said that it would be useful to differentiate whether the National Treasury was increasing old budgets or allocating completely new funds.
Mr Balzer clarified that 94% of the money represented “old money” and 6% was new money for drought relief. National Treasury did not allow reserve funds; so that DWAF would have to identify and deal with problems as they occurred.
The Chairperson asked whether the budget adjustments would meet DWAF’s objectives. She was concerned that in two or three months time the Committee would meet to hear the targets and would be told that the Department needed more money.
Mr Sindane commented that the adjustment money was not sufficient. DWAF had an uncomfortable discussion with National Treasury about it. DWAF was in a cluster with other Departments. It worked better that way but DWAF were uncertain why they had proposed an amount yet had received only about 10% of the money they asked for. This happened to all Departments in the cluster and the allocations were basically being shared down the Departments. It was clear that DWAF required a great deal for sanitation but Treasury had responded that this was not possible. DWAF wanted to try to ensure that their requests and the actual amount received could be brought closer in line so that it became a more constructive process.
The Chairperson asked what had hampered the Department in progressing with their programmes, as rollovers were not desirable. In regard to the De Hoop delays the Chairperson noted that this did not appear to be the fault of DWAF, but asked whether the unforeseeable amount would be remaining allocated there, or whether it would be used to deal with unexpected floods and droughts.
The Chairperson expressed hope that the subsidies to farmers would be sorted out, but asked how long this would take. She also asked whether DWAF would be seeking further funding to be set aside from the Department of Agriculture
The Chairperson asked how DWAF could make the provinces understand that they must spend the drought relief funding.
Mr Balzer said that Municipality disaster management had their own money for drought relief and they were responsible for under spending on these programmes. Mr Sindane added that the municipalities seemed to consider that although the drought was happening immediately, funding was only available long after the event. This arose because of the rules, and he would appreciate the assistance of the Committee in checking with Treasury if there was not some way to make the payments more quickly.
Mr Sibuyana asked for clarity on the wilful vandalism of water structures, which he believed was politically motivated because people did not have access to water.
Mr Sindane said that last week DWAF had a meeting with the MEC of SALGA, municipalities and water boards about the relationships in Mpumalanga. The decisions on water access and related matters were taken at different levels and there were often discrepancies between them. The Department wanted institutional reform that involved the municipalities and it should end the tension.
The Chairperson commented that clearly the Department had many changes to face. The Committee would take the presentation into account and would deal with the finances again soon, coupled with the strategic plan. It was clear that the Department must attend to spending the funds allocated as soon as possible.
Mr Sibuyana commented that it took courage for the Director General to accept the shortcomings of the Department, and commented that the Director General was the victim of a shift of responsibility.
Other business of the Committee
The Chairperson commented that the Annual Report draft report would need to be confirmed. In the following week the Committee would also be briefed on the agreement between Botswana, Mozambique and South Africa, and could be required to ratify that agreement. The following week would, in the absence of other decisions from the National Assembly, be the final week for Committee meetings.
If the Committee was given two weeks for oversight in the first term, they would spend one week in Gauteng and or the Free State and one week with the Water Research Commission.
She commented that the researcher for the Committee had been hospitalised and the Committee would be sending good wishes through.
She noted that the Committee would receive an invitation to a year-end gathering from the Minister and hoped Members would all respond positively to it.
The meeting was adjourned.
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