Department of Water Affairs and Forestry Budget Review

SELECT COMMITTEE ON LAND AND ENVIRONMENTAL AFFAIRS
8 May 2007
DEPARTMENT OF WATER AFFAIRS AND FORESTRY BUDGET REVIEW

Chairperson: Rev P Moatshe (ANC)

Documents handed out:
Department of Water Affairs and Forestry (DWAF) Strategic Plan 2007/9 – 2009/10 and Budget 2007/8 by Mr JL Sindane
Budget Department of Water Affairs and Forestry: Vote 34
DWAF Strategic Plan 2007/9 – 2009/10 and Budget 2007/8 by Ms Ngele

SUMMARY
The department outlined DWAF’s strategic plan and budget for the Medium Term Expenditure Framework period 07/08 – 09/10; the budget for the department; and the department’s administration programme. 

As there were only a few committee members present at the meeting, a substantial discussion did not take place.  The bad state of the Haartebeespoort dam was mentioned by the Chairperson. 

MINUTES
Presentation on Strategic Plan and Budget
Mr J Sindane (DG,  DWAF) said that the plan that the department was presenting was for a three year period, covering the Medium Term economic Framework (MTEF) period of 07/08 – 09/10.  Gender equality and equity were at the centre of the strategic plan.  The aim was to rally DWAF staff and its public entities to work together to implement government policies falling under the department’s mandate. The plan covered Water Services, Water Resources Management and Forestry, as well as support services for Corporate Services and Finance.  Water resources management included National Water Resources Infrastructure that would soon be incorporated into an infrastructure agency.  DWAF’s role was to support and strengthen municipalities to meet water and sanitation targets. 

DWAF would continue to plan the development of their water resources to support economic growth and provide water for basic needs.  The department felt that the redistribution of access to water was a necessity and would be collaborating with Land Affairs and Agriculture.  They would be driving the transformation in the forestry industry through legislation and the Forestry Broad Based Black Empowerment (BBBEE) Charter.

Water Resources Management
Mr Sindane said that the supply of water was a critical input for the achievement of the aims of Associated Shared Growth Initiative of South Africa (ASGISA) and the State of the Nation Address (SONA).  The building of new water resources infrastructure and the involvement of communities during the implementation of the infrastructures benefited the first and second economies directly.  He said that the reallocation of water was essential to bring about equality.  The department would be continuing with all their major projects.  Including the De Hoop dam in Limpopo, Nandoni Distribution Works, Hluhluwe Regional Water Supply, Mdloti River Resource Project (the raising of the Hazelmere dam).  He said that the Berg Water Project would be commissioned this year.  They would also continue to implement measures to ensure the protection of the countries water resources through, amongst others, The Working for Water Programme.  The department’s project for the establishment of a national water resource infrastructure agency was underway.  They planned to formulate and implement a governance framework to ensure the proper governance and provision for support of the public entities.  They were continuing with the establishment of CMA’s and the encouragement of local government involvement to promote the management of water resources.  He said that the department was now aware, with experience, that they needed to accelerate service delivery in order for them to reach their water and sanitation targets.  Mr Sindane pledged to continue to support municipalities to ensure the high quality of drinking water.  DWAF wanted to promote a closer working relationship between water boards and municipalities.  As well as a greater collaboration with provincial departments of local governments and provincial departments of health (with regards to drinking quality).  And a greater collaboration with South African Local Government Association (SALGA). 

Forestry
DWAF planned to implement a detailed programme to ensure BBBEE as stated in the SONA.  The forestry Charter was also completed, it addressed many of the other elements below the SONA.  This charter would be a transformation as well as a practical development strategy for this sector.  The charter detailed concrete roles and resources for government and the private sector to achieve higher rates of investment.  It also contained ways to reduce the cost of doing business locally.  The department planned to process 15 000ha of forestry licence applications to ensure a net increase of 10 000ha per annum by small and medium black growers. 
In 07/08 DWAF planned to transfer its Category A and B plantations, namely, the largest plantations of Manzengwenya and Mbazwana and possibly Injaka as well pending the finalisation of land claims by RLCC.  They would finalise the proposal for Forestry Science Technology and innovation Strategy, develop capacity and approach treasury for implementation funding.  A key element of the charter was to speed up the process of skills development.  Bursaries for people in forestry were granted last year for the first time in many years.  DWAF planned to integrate forestry into the national school curriculum in 07/08 and also input further into all tertiary institutions offering forestry qualifications. 

DWAF was involved in forestry and water activities in SADC to achieve regional integration, and planned to improve management of cross border relations as a result of shared watercourses.  They also participated in post conflict reconstruction in Africa, as well as in NEPAD structures and international for a, such as World Water Forum and UN Forum on Forestry. 

DWAF Budget
Mr T Balzer  (Acting CFO, DWAF) said that the budget for over the period of 2007 – 10 was spread across four programmes, namely, administration, water resource management (WRM), water services and forestry.  For the 07/08 financial year Admin programme received R502 million, WRM R2 430 million, Water services R1 913.7 million and forestry R460.5 million.  There was an augmentation to the trading account where WRM got R1 347 million.  WRM received the highest allocation of the entire budget at 46%.  Of the budget allocation breakdown by economic classification, Goods and Services received the highest allocation of 39%, Transfers and Subsidies 38% Compensation of Employees 21% and Payments for Capital Assets 2%.  With regards to capital expenditure R750 million was spent on economic infrastructure and R455 million on Social Infrastructure. 

DWAF 07/08 main functions were:

Administration
This programme conducts the overall management of the DWAF and provides support services.  Admin sub programmes included minister, management, corporate services, information services and information management.  Good and services had the highest allocation of 64% of the admin budget.  Admin expenditure rose at an average rate of 15.3% from R332.2 million in ¾ to R509,7 million in 06/07.  This was mainly due to the devolution of funds from the Department of Public Works in 05/06, “once off” personnel related costs for the transfer of water schemes rolled over from 05/06 to 06/07.  The information Services increase was due to IT upgrades.  From 06/07 to 09/10 would increase at average annual rate of 3.6%.  This increase was due to the establishment of the learning academies for developing skills for this sector.  Also, for the provision of a gender office and the finalisation of restructuring.  

Water Resource Management
This ensured that water resources were used and managed sustainably and equitably. 
WRM sub programmes included equitable and sustainable supply, protection policies and measures, institutional regulation and development, strategic alignment, stakeholder empowerment, African co-operations, water resource admin, support and operation and infrastructure development and rehabilitation.  Expenditure in this programme grew at an annual average rate of 26% from R1.1 billion to R2,2 billion in 06/07, driven by expenditure in the sustainable supply, infrastructure development and rehabilitation and the institutional regulation sub programmes.  The decrease in operations of water resources expenditure from 5/06 to 06/07 was due to shift of Working for Water Programme.  The sustainable supply expenditure increase was due to additional allocations for Working for Water and Working on Fire.  Institutional regulation increased from R12.3 million in 05/06 to R26,6 million in 06/07.  This increase was due to institutional reform process that was underway in the department and the establishment of Catchment Management Agencies.  WRM had a 51,2% average annual increase between ¾ to 06/07.  This was due to the increasing need for support and admin services.  Infrastructure and rehabilitation increased due to additional allocations for the construction of the De Hoop Dam and funding for improving dam safety.  The African Co-operation Programme increased due to Zaragoza exhibition in Spain.

Water Services
This programme ensured access to effective, sustainable and affordable water and sanitation services.  Through policy development, planning, regulating and monitoring the sector.  The sub programmes in WS were, provisioning policies, water and sanitation services, water sector support and policies, Institutional support and policies, transfers policies, transfer of functions, African initiative and participation, water service admin and support, operations of water services.  Expenditure decreased at an average annual rate of 5,1% from R2,4 billion in 03/04 to R1,5 billion in 06/07, due to the transfer of expenditure on new water and sanitation projects to the Municipal Infrastructure Grant (MIG) in 04/05.  Expenditure increased at an average rate of 19,9% from R1,5 billion in 06/07 to R2,5 billion in 09/10.  This increase was due to additional allocations for bulk infrastructure and schools and clinics water supply and sanitation.  African participation sub programme increase of 45,2% over the MTEF period was for the department to continue developing the capacity aimed at achieving the Millennium Development Goals, best practice promotion, capacity building of NGO’s and the training of engineers and technicians. 

Forestry
This programmes promotes the conservation of plantation and indigenous forests, their commercial and community use, to achieve optimal economic and social benefits and to promote rural development through policy development, regulation and facilitation monitoring and evaluation.  Forestry sub programmes were, forest oversight, forestry governance and development, community empowerment, fire regulation and oversight, fire governance, state forest Trans and regulation, state forest admin and oversight, state forest management, sustainable forest management, forest management and support, forestry support services.  Expenditure in forestry increased on average by 2,9% from R411,6 million in 03/04 to R448,4 million in 06/07.  This increase was due to a R38,5 million claim that was granted to Yorkeor in terms of a court judgement on the cancellation of a long-term timber supply contract.  The industrial plantation trading account ceased operation in 02/03.  Revenue linked to state owned forestry enterprises was paid to the National Revenue Fund.  The revenue recovered from forestry operations was reassigned to the department for 03/04 to 05/07 and R50 million was rolled over in 06/07 to cover operating costs for Mpumalanga commercial forestry. 
Forestry oversight sub programme, had an increase of R40 million from 06/07 to 07/08 due to the implementation of the BBBEE forestry charter.

R2 266 million was earmarked for certain purposes.  These earmarked funds made up 31% of the entire budget allocation for DWAF.  The activities for which these funds were earmarked for the devolution of funds from Public Services, Working for Water, Working on Fire, the De Hoop Dam (phases 2B to 2G), Water services operating subsidy (national), water and sanitation, schools and clinics, bulk infrastructure, conditional grant for local government. 

Water trading Account
This account was established to ensure the availability of water to key water users in SA.  Three main components remained, following the transfer of water schemes to Local government during 06/07:
The integrated water resource management component that funded the implementation of water resource management activities.  Revenue was created by a water resource management charge on all registered users.  The Working for Water Programme was funded by this component. The integrated systems, the second component, ensured that water transferred from water rich areas to areas where locally available water resources could not meet the demand. The last component was bulk water supply; revenue in this component was earned through the sales of bulk water from stand alone water schemes to users. 

There were significant changes in revenue and expenditure items, this was due to the closure of the equipment trading account and the integration of these items into the water trading account.  Revenue was expected to increase from R4,2 billion to R6,1 billion over the MTEF period. 

DWAF Administration Programme
Ms Ngele (DDG –Corporate Services, DWAF) said that the short term interventions for building departmental capacity were to source financial specialists from the Office of the accountant General, an internship programme with 70 interns in the finance sector, a Japanese placement programme with 56 technical specialists and to have 50% of vacancies within the department filled. 

The medium term interventions were establishing a learning academy, with 30 trainee scientists, 14 forestry scientist trainees and 17 trainee engineering technicians, as well as an exchange programme.  Departmental capacity could also be built by increasing competency levels in financial management, financial skills, management skills, performance management, technical skills, monitoring and evaluation. 

Institutional realignment
This would map the historical development of water resources and services, analyse the relevance and viability of legislature, and also assess the capacity of DWAF institutions to implement their mandate with regards to Water Boards, Water User’s Association and Catchment Management Agencies. They would also identify barriers to institutional reform, assess the extent of alignment of institutions to DWAF mandate.

Organisational Realignment:
They would be conducting a comprehensive organisational review of structural design and culture. They would need to re-orientate DWAF to meet government’s objectives; to improve organisational performance they would have to apply normative performance standards, achieve full compliance and to engender a culture of performance.  The organisation and empowerment of women was a priority for DWAF. They had already established a women’s organisation.  They had developed and implemented a strategic framework for gender equality and women empowerment.  The relevant capacity building interventions were also implemented.  Recommendations from the audit report produced had been implemented. 

They had implemented policies and strategies, developed systems and re-engineered processes for the HR turnaround. 

With regards to youth development they were working on job creation, skills development as well as social cohesion. 

The meeting was adjourned.